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https://www.courtlistener.com/api/rest/v3/opinions/3769734/ | DECISION
This cause came on to be considered upon a notice of appeal, the transcript of the docket and journal entries, the transcript of proceedings and original papers from the Madison County Municipal Court, and upon a brief filed by appellant's counsel, oral argument having been waived.
Counsel for defendant-appellant, Vonda K. Whited, filed a brief with this court pursuant to Anders v. California (1967),386 U.S. 738, 87 S. Ct. 1396, which (1) indicates that a careful review of the record from the proceedings below fails to disclose any errors by the trial court prejudicial to the rights of appellant upon which an assignment of error may be predicated; (2) lists two potential assignments of error "that might arguably support the appeal," Anders, supra, at 744; (3) requests that this court review the record independently to determine whether the proceedings are free from prejudicial error and without infringement of appellant's constitutional rights; (4) requests permission to withdraw as counsel for appellant on the basis that the appeal is wholly frivolous; and (5) certifies that a copy of both the brief and motion to withdraw have been served upon appellant.
Having allowed appellant sufficient time to respond, and no response having been received, we have accordingly examined the record and find no error prejudicial to appellant's rights in the proceedings in the trial court. Therefore, it is the order of this court that the motion of counsel for appellant requesting to withdraw as counsel is granted, and this appeal is hereby dismissed for the reason that it is wholly frivolous.
YOUNG, P.J., KOEHLER and WALSH, JJ., concur. | 01-03-2023 | 07-06-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1526639/ | 549 S.W.2d 267 (1977)
EMPLOYERS MUTUAL LIABILITY INSURANCE COMPANY OF WISCONSIN, Appellant,
v.
FARM BUREAU MUTUAL INSURANCE COMPANY OF ARKANSAS, Appellee.
No. 76-110.
Supreme Court of Arkansas, In Banc.
April 4, 1977.
Smith, Williams, Friday, Eldredge & Clark by William H. Sutton and Joseph E. Kilpatrick, Jr., Little Rock, for appellant.
Bailey, Trimble & Holt by R. Eugene Bailey, Little Rock, for appellee.
GEORGE ROSE SMITH, Justice.
In this dispute between two casualty insurance companies, the narrow issue is whether an exclusion in the appellee's policy deprived an unnamed insured of liability coverage for bodily injury sustained by an employee of the named insured. The decision turns upon the meaning of the word "insured" in the policy. This appeal is from a summary judgment holding that the unnamed insured was excluded from liability protection. We cannot agree with that interpretation of the policy.
All the facts are stipulated, the parties having agreed that there is no factual question to be decided, the sole issue being the meaning of the exclusion just mentioned.
Farm Mutual issued the policy to be interpreted, a policy of automobile liability insurance covering trucks owned by the named insured, Jim Dixon. The policy provided, in a paragraph entitled "Definition of Insured," that "the unqualified word `insured' means the named insured and, if the named insured is an individual, his spouse, and also any person while using the automobile..., provided the actual use of the automobile is by the named insured or spouse or with permission of either." The privotal exclusion provides that the coverage now involved does not apply to "bodily injury to any employee of the insured." (Our italics.) The decision turns upon whether the reference to the insured is restricted to the named insured, Dixon.
The facts are really not important. The insured vehicle, Dixon's truck, had been *268 driven by Dixon's employee, W. D. Kissire, to Arkansas Kraft's plant at Morrilton. Arkansas Kraft's employee, T. C. Lee, admittedly with Dixon's permission, was "using" the truck in the process of unloading it. In that process Dixon's employee, Kissire, was injured. Farm Mutual denied liability, on the ground that the exclusion means that there was no coverage for bodily injury to an employee of Dixon, the named insured. Arkansas Kraft's excess insurer, the appellant, contended that there was coverage for Arkansas Kraft, because Kissire was not its employee, so that Arkansas Kraft was protected against liability for Kissire's injury. The appellant settled with Kissire and brought this suit against Farm Mutual for reimbursement.
The decisions elsewhere are of scant assistance, for as an A.L.R. annotation points out: "On this question the courts appear to be in hopeless conflict, with some holding the exclusion inapplicable where the injured person was an employee of the named insured and an additional insured was the party seeking protection under the policy, and other courts taking a contrary position." Annotation, 48 A.L.R. 3d 13, 25 (1973). Courts that apply the exclusion to injuries to the named insured's employees often do so on the ground that the exclusion is apparently meant to apply to injuries already covered by the insured's workmen's compensation insurance, which is not the situation when an additional insured, such as Arkansas Kraft, is concerned.
In aligning ourselves with those courts which hold that coverage is provided for an unnamed insured when the injured person is the named insured's employee, we need not look beyond the basic rule that an insurance policy is to be construed strictly against the insurer. Here Farm Mutual's policy flatly states in its definition that the unqualified word "insured" means not only the named insured but also any person using the vehicle with his permission. The pivotal exclusion uses the unqualified word "insured"; so Arkansas Kraft is presumably included. In drafting the policy Farm Mutual was certainly on notice, from conflicting judicial interpretations, that the limited reference was so ambiguous as to be open to contradictory interpretations. Elsewhere in the policy Farm Mutual referred to the "named insured" no fewer than 28 times, with the evident intention of excluding persons who would otherwise fall within its broad definition of "the insured." It would have been so simple for the draftsman of the policy to use the phrase "named insured" a 29th time, had that been his intention, that we are unwilling to say that he accomplished the same result by his bare reference to "the insured."
Reversed and remanded for the entry of judgment in favor of the appellant.
HOLT and ROY, JJ., not participating.
HICKMAN, J., and GEORGE HOWARD and JAMES C. LUKER, Special Justices, dissent.
GEORGE HOWARD, Jr., Special Justice, concurring and dissenting.
I concur in the reversal of the trial court's judgment in behalf of Farm Bureau Mutual Insurance Company of Arkansas, but I dissent to remanding the case for entry of judgment in favor of appellant, Employers Mutual Liability Insurance Company of Wisconsin. I believe the case should be remanded for trial in order to develop fully the unresolved factual issues readily apparent facially from the stipulation of the facts between the parties.
It is true the parties concluded the alleged stipulation by asserting "As there is no factual question to be decided, the sole question to be determined by the Court is that of whether exclusion (d) above negated coverage to Arkansas Kraft and its employee, Thomas Lee, for injuries sustained by Drew Kissire, an employee of Jim Dixon." However, it is incumbent upon the trial court, in considering a motion for summary judgment, to search the record in order to determine if there is only an issue of law involved.
Other than the date of the accident in which Wallace Kissire sustained his injuries and the admission that Kissire was an employee *269 of Jim Dixon, the stipulation cast a cloud of doubt, indeed it is so arguable, as to whether Kissire's injuries were proximately caused by the negligence of Thomas C. Lee, employee of Arkansas Kraft Corporation, and further, whether Lee had permission from Jim Dixon to use Dixon's vehicle as an employee of Arkansas Kraft Corporation, or was merely a borrowed employee.
This Court has emphasized that one of the objects of the motion for summary judgment is to dispose of litigation on motion where the facts are not disputed and the law can be applied to them. Ashley v. Eisele, 247 Ark. 281, 445 S.W.2d 76.
In Aetna Life Insurance Company v. Spencer, 182 Ark. 496, 32 S.W.2d 310 this Court held:
"Contracts of insurance should receive a reasonable construction so as to effectuate the purposes for which they are made. In cases where the language used is ambiguous, it should be construed in favor of the insured because the policy is written on forms prepared by the insurer. Of course, legal effect should be given to all the language used, and the object to be accomplished by the contract should be considered in interpreting it." (Emphasis Added)
What the contracting parties intend and the purposes to be accomplished are not covered by the stipulation. Moreover the record is void of any expression from Jim Dixon, Farm Bureau's insured, as to his understanding of the scope and coverage of the policy involved.
It is well established that the rule that insurance contracts are to be construed against the insurer is purely a rule of construction which comes into play as an aid to construction only when, after using all other effort to ascertain the intention of the parties, the contract is yet ambiguous as to which of two things was intended one favorable to the insurer and the other to the insured. It is not at all a rule to be used in seeking a meaning favorable to the insured. It is the last straw moving the scale which has been left uncertain by an ambiguity. Aetna Life Insurance Company v. Spencer, supra; See Also: Gulf Refining Insurance Co., et al v. Home Indemnity Co. of New York, 78 F.2d 842.
For the reasons discussed above, I would remand this case for trial in order to develop the unsettled issues of fact involved.
JAMES C. LUKER, Special Justice, dissenting.
The question before us is the interpretation to be placed upon the words "the insured" as used in exclusion (d) of Farm Bureau's policy, which exclusion provides that there is no coverage for "bodily injury to any employee of the insured." (Emphasis added)
Lengthy annotations at 50 A.L.R. 2d 78 (1956) and 48 A.L.R. 3d 13 (1973) report decisions from State and Federal Courts in over thirty states. As the majority opinion points out, these Courts are "in hopeless conflict". Two United States District Courts have been called upon to anticipate what Arkansas Courts would do when presented with this question, and have reached opposite conclusions. See Curran v. Security Insurance Company, 195 F. Supp. 562 (W.D.Ark.1961) finding that the exclusion was not applicable to prevent coverage for an additional insured for injuries to an employee of the named insured; and Employers Mutual Liability Insurance Company v. Houston Fire and Casualty Insurance Company, 194 F. Supp. 828 (W.D.La. 1961) finding that the exclusion negated coverage for an omnibus insured where the injured party was an employee of the named insured.
The majority reaches its decision by applying the long standing rule of liberal construction in favor of an insured. But, in this case, since the parties to this action are both insurance carriers, which is entitled to the benefit of the rule? In my opinion, it is neither, and we should look to the intentions of Jim Dixon when he obtained the automobile liability policy issued by Farm Bureau.
*270 As is pointed out in the dissenting opinion of Special Associate Justice Howard, contracts of insurance should receive a reasonable construction so as to effectuate the purpose for which they are made and the object to be accomplished. Aetna Life Insurance Company v. Spencer, 182 Ark. 496, 38 S.W.2d 310. Employers v. Houston, supra, quotes extensively from American Fidelity and Casualty Company v. St. Paul-Mercury Indemnity Company, 248 F.2d 509 (5th Cir. 1957) which reasoned that:
"A business assured, like Osborne, has two primary fields of exposure: (1) to employees; and (2) to third parties, members of the public and persons not in the status of employees. The two present different hazards of frequency and severity and traditionally are underwritten separately. The first group is cared for by Employers Liability insurance which, includes as well, if applicable, state or federal workmen's compensation coverage. This insurance is carefully limited to persons in the status of employees and excludes all others. The second group is cared for by Public Liability coverage, either for general operations as Larsen's CGL policy, or specifically in connection with automobiles as in American's automobile policy. These invariably exclude employees of the assured and, to eliminate any doubts, exclude liabilities imposed under workmen's compensation acts. The obvious result is that the prudent business man obtains two types of insurance and, of course, pays two premiums.
"Since, for business men, if not for the general public, business and law have long abandoned the naive idea that the payment of losses are "free" to the assured, the purpose of an assured to integrate his program and reduce cost is thwarted if the policies, so carefully dovetailed, are construed to duplicate coverage. In this sense it is not a matter of the legal concept of liability (master-servant compared to third party), or the coincidence that an employee may be able to contrive a third party relationship on which to base a damage suit. The thing of importance is that for an injury received in the course of the named assured's employment, his employee is enabled to recover ultimately from the employer's Public Liability insurer (and hence him), the very kind of losses or damages which the assured has paid another to underwrite.
"Of course, these payments must ultimately come from somewhere, and it is the fact of business life that claims paid will, as they must, someday come from the assured's pocket.
"Since (the named insured) obtained and paid for Employers Liability coverage, is it likely that for injuries to these employees while in his service, he intended to provide and pay for more?"
It is my opinion that Employers v. Houston and American Fidelity v. St. Paul-Mercury, supra, reach the better result. In each, the Court was simply unable to believe that the named insured, the one who will ultimately pay the price, intended the result reached by the majority in the present case. Neither can I.
I would affirm the judgment of the Circuit Court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1792125/ | 517 S.W.2d 401 (1974)
AMPCO AUTO PARKS, INC., Appellant,
v.
R. W. WILLIAMS et ux., Appellees.
No. 18392.
Court of Civil Appeals of Texas, Dallas.
October 31, 1974.
Rehearing Denied November 27, 1974.
*402 H. Dee Johnson, Jr., Johnson & Cravens, Dallas, for appellant.
B. Reagan McLemore, Price, Fisher, Hill, Patton & McLemore, Longview, for appellee.
CLAUDE WILLIAMS, Chief Justice.
The problem presented by this appeal is that of divisible bailment. Specifically, the question is whether an automobile parking station, as bailee, is legally liable to the owner of undisclosed personal property contained in the trunk of an automobile left at the station to be parked and which was thereafter negligently lost.
Ampco Auto Parks, Inc. (AMPCO) operated a commercial parking station in Dallas, Texas. On July 22, 1972 R. W. Williams was visiting in Dallas and driving a rented automobile. The trunk of the automobile contained clothing and other personal belongings owned by Mr. and Mrs. Williams. In addition to ordinary clothing the list of personal property included such items as silver dollars, silver quarters, pictures, antique family heirlooms, jewelry, and a pre-Columbian bell (1000 B.C.). These items had a value of $4,086.10. On the day in question Williams parked the rented automobile at AMPCO's parking lot and received a "stub" from an employee. At that time none of the items of personal property were visible to anyone outside the car and Williams did not inform AMPCO's employee concerning the contents of the trunk of the automobile. In fact he deliberately did not tell the AMPCO employees of the valuables contained in the trunk. A short time later the automobile, and its contents, was stolen from the parking station. Mr. Williams and his wife brought this action against AMPCO seeking to recover the value of the personal property contained in the trunk of the automobile. It was alleged that AMPCO was a bailee of the contents of the vehicle as well as the vehicle itself, and was negligent in allowing same to be stolen. The owner of the automobile was not a party to the suit. AMPCO responded with a general denial.
Trial was had before the court and a jury. In response to special issues submitted the jury found that AMPCO was negligent in failing to protect from theft the vehicle and its contents and that such negligence was a proximate cause of the loss. The court submitted to the jury special issue number five, together with its instruction, as follows:
Do you find from a preponderance of the evidence that at the time and on the *403 occasion in question the defendant acting as a reasonable and prudent person should have foreseen that the plaintiffs' automobile contained valuable articles of clothing therein?
You are instructed that the defendant is charged with notice of not only the property of which he has actual knowledge, but also the property he could reasonably expect to find contained within the plaintiff's automobile.
In response to this question the jury answered "We do not."
AMPCO moved for judgment upon the verdict. Williams also moved for judgment and requested the court to set aside and disregard the jury's answer to special issue number five. The sole ground for this motion was that "it was a special defensive issue not supported by the pleadings." The trial court, in its judgment, recited that: "The court finding that Special Issue No. 5 was a special defensive matter which was not raised by the pleadings, the same is hereby disregarded." The court then rendered judgment in favor of Williams for the sum of $4,086.10. We are of the opinion and so hold that the trial court erred in rendering such judgment and we therefore reverse and render.
It is settled law in this state that in a bailment for the mutual benefit of the bailor and bailee, the bailee owes the bailor a duty of ordinary care and safekeeping the subject matter of the bailment. It is equally well settled that the duty of ordinary care arises out of the relationship of bailor and bailee, which must of course be created by contract. In this case appellant AMPCO admits that it accepted bailment of the automobile but contends there was never any contract or agreement between it and Williams that AMPCO would accept bailment of the undisclosed valuable personal property contained in the trunk of the automobile. This brings into consideration the concept of a split or divisible bailment.
The law recognizes the well-settled distinctions between the liability of a bailee of a bailed vehicle, and its liability for contents of the vehicle. In most cases the liability of a bailee for hire of an automobile, such as a parking station proprietor, or a garage keeper, the loss of, or damage to, the contents of the automobile, is made to depend on the absence or presence of notice or knowledge of the contents. 8 Am. Jur.2d, Bailments § 64, at 969-970 (1963) and cases therein cited.
In 14 Blashfield, Automobile Law and Practice § 476.4, at 416 (1969) the rule is thus stated: "In the absence of notice or a special agreement, it has been held that a parking lot proprietor cannot be held liable for the loss of articles left in a parked automobile other than the usual ordinary equipment of the automobile, but, with regard to property in plain view, or of which he has notice, he has the obligation to exercise reasonable care for its safekeeping."
To the same effect see 27 A.L.R.2d 796 § 2; 8 C.J.S. Bailments § 15b (1962); and Feather, Bailment-Articles Left in Automobiles, 10 Baylor L.Rev. 216 (1958), in which a large number of cases from states throughout the United States are cited in support of this rule of divisible bailment.[1]
*404 In Texas there has apparently been very little litigation concerning the exact problem facing us in this case. In Shamrock Hilton Hotel v. Caranas, 488 S.W.2d 151 (Tex.Civ.App.Houston [14th Dist.] 1972, writ ref'd n. r. e.), plaintiff's wife, after completing a meal in the Shamrock Hilton Hotel Restaurant, departed the dining area leaving her purse behind. The purse was found by the hotel busboy who, pursuant to instructions of the hotel, dutifully delivered the purse to the restaurant cashier. A short time thereafter the cashier gave the purse to a man other than the husband of the lady who lost the purse. The purse allegedly contained $5.00 in cash, some credit cards, and ten pieces of jewelry said to be worth $13,062.00. Plaintiff sued the hotel for the value of the contents of the purse and recovered judgment. In affirming the trial court's judgment the court of civil appeals recognized the general rule in other jurisdictions that a bailee is liable not only for lost property of which he has actual knowledge but also the property he could reasonably expect to find contained within the bailed property. The court concluded that the burden rested upon the plaintiffs to prove the jewelry was a part of the total bailment and the issue of whether it was reasonably foreseeable that such jewelry might be contained within the lost purse ordinarily should have been submitted by plaintiffs. Since it was not submitted, and no objection was made to the omission of such issue, the court held that the issue was tried by consent and found in favor of plaintiffs. The court concluded, that as a matter of law, it could not say that there was no evidence upon which a jury could reasonably find that it was foreseeable that such jewelry might be found in a purse under such circumstances as presented. The court pointed out that people who are guests in hotels such as the Shamrock Hilton, a well-known Houston hotel, frequently brought expensive jewelry with them. Thus, in affirming the trial court's judgment in favor of plaintiffs, the appellate court held the hotel liable for constructive knowledge of the contents of the purse under the peculiar circumstances presented.[2]
In a recent case, Allright, Inc. v. Elledge, 515 S.W.2d 266 (1974), the Supreme Court, in answering certified questions, held that a bailee's liability for articles left in an automobile cannot be limited unless the bailor is aware of the limitation and has adequate bargaining power in accepting or rejecting the limitation. In the instant case, of course, the question is not one of limiting the liability for the bailed articles, but whether the undisclosed articles contained in the locked trunk of the automobile were in fact the subject of the bailment. A bailee's duty for the protection of personal property may arise out of either an express or an implied contract bailment on delivery of the property. Because this relationship is a contractual one, the duty and liability ordinarily cannot be thrust upon a bailee without his knowledge or consent, but must be voluntarily assumed. Rust v. Shamrock Oil & Gas Corp., 228 S.W.2d 934 (Tex.Civ.App. Amarillo 1950, no writ) and Adair v. Roberts, 276 S.W.2d 565 (Tex.Civ.App.Texarkana 1955, no writ).
While there do not seem to be any Texas cases dealing directly with the question here presented we are of the opinion that the rule of law laid down in the cases from other jurisdictions, and the rationale *405 in the Caranas case, supra, should be followed. Appellees admit that the articles of personal property were confined and concealed within the trunk of the automobile and therefore could not have been observed by employees of appellant AMPCO at the time the automobile was tendered for parking. Appellee Williams not only failed to advise the employees of AMPCO of the presence of particular items but deliberately and purposefully refrained from doing so. He testified that he was careful not to tell the AMPCO employees concerning the existence of the property. He said that he made a practice of never telling parking lot employees about such property because it might encourage theft of the property. Thus the record demonstrates there was neither express knowledge nor notice on the part of AMPCO concerning the existence of property in the trunk of the automobile having a value in excess of $4,000.00 and including articles of antique jewelry, objects of art, silver coins, etc. While it might be reasonably anticipated by an operator of a parking garage that the trunk of an automobile might contain the usual objects such as spare tires, jacks, etc., it is difficult to charge one with knowledge of such valuable and extraneous objects as were found in the rented car being used by the Williamses. This presents a different situation than that in Caranas where it could be argued that a person should anticipate the contents of a lady's purse. Even so, as pointed out in Caranas, the question of notice is one of fact to be determined by the fact finder.
We hold that the issue number five submitted by the court to the jury, together with its accompanying instruction and definition, correctly presented the issue to the jury on the vital question of whether the defendant could reasonably foresee that the automobile contained valuable articles which is an essential element to legal liability under the law of bailment. The negative answer of the jury to that issue is sufficient to completely bar the appellees from recovering.
The action on the part of the trial court in disregarding the jury's answer to special issue number five was obviously error. A judgment non obstante veredicto can only be granted by a trial court where an instructed verdict would have been proper. Texas Rules of Civil Procedure, rule 301. Special issue findings ought to be disregarded by the trial court only when such issues were immaterial or have no support in the evidence. Eubanks v. Winn, 420 S.W.2d 698, 701 (Tex.1967). From what has been said it is obvious that an instructed verdict would not have been proper in this case. The issue submitted was not immaterial since it went to one of the essential elements of appellee's case against appellant, namely the implied knowledge of the contents of the vehicle so as to create a valid bailment. As said in Caranas, supra, the burden was upon appellees to establish this necessary element of knowledge, either express or implied. It was a part of Williams' case in this instance. The issue was not a defensive issue since the burden was not upon AMPCO to establish a lack of knowledge of the contents of the vehicle. AMPCO's general denial raised the issue which was properly submitted by the trial court and which was answered by the jury in such a manner as to deny liability against appellant. The Williamses do not contend here that the answer of the jury to special issue number five was not supported by evidence. There is ample evidence in this record to support the jury's answer. Thus, there was no basis in law for the trial court to disregard the jury's answer to this material question.
We sustain appellant's point of error and reverse the trial court's judgment and here render judgment that appellees Williams take nothing from appellant AMPCO.
NOTES
[1] Ohge v. LaSalle-Randolph Garage Corp., 328 Ill.App. 665, 66 N.E.2d 725 (1946); Drybrough v. Veech, 238 S.W.2d 996 (Ky. 1951); Munson v. Blaise, 12 So.2d 623 (La.App.1943); Rogers v. Murch, 253 Mass. 467, 149 N.E. 202 (1925); Schulte, Inc. v. North Terminal Garage Co., 291 Mass. 251, 197 N.E. 16 (1935). Liggett v. Glen Oaks Club, 28 N.Y.S.2d 84 (Supp.App.T.1941) aff'd without op., 30 N.Y.S.2d 855; Palotto v. Hanna Parking Garage Co., 46 Ohio Law Abst. 18, 68 N.E.2d 170 (Ct.App.1946); Willis v. Jenson, 82 Utah 148, 22 P.2d 220 (1933); Barnette v. Casey, 124 W.Va. 143, 19 S.E.2d 621 (1942); Riggs v. Bank of Camas Prairie, 34 Idaho 176, 200 P. 118 (1921) (recovery allowed for disclosed, but not for undisclosed, contents); Mickey v. Sears, Roebuck & Co., 196 Md. 326, 76 A.2d 350 (1950); Sawyer v. Old Lowell Nat'l Bank, 230 Mass. 342, 119 N.E. 825 (1918); Cerreta v. Kinney Corp., 50 N.J.Super. 514, 142 A.2d 917 (1958); Pennington v. Farmers' & Merchants' Bank, 144 Tenn. 188, 231 S.W. 545 (1921); Weisman v. Holley Hotel Co., 128 W.Va. 476, 37 S.E.2d 94 (1946); Parkrite Auto Park v. Badgett, 242 S.W.2d 630 (Ky.1951); Campbell v. Portsmouth Hotel Co., 91 N.H. 390, 20 A.2d 644 (1941); and Hallman v. Federal Parking Service, Inc., 134 A.2d 382 (D.C.Mun.Ct.App.1957).
[2] Judge Sam B. Johnson, in a dissenting opinion, pointed out that if a bailment was created under these circumstances it was certainly unintentional; that neither the plaintiff nor the hotel could be said to have an intent to create a bailment of the expensive jewelry. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1977862/ | 177 B.R. 776 (1995)
In re 354 EAST 66TH STREET REALTY CORP., Debtor.
Bankruptcy No. 893-83583-478.
United States Bankruptcy Court, E.D. New York.
February 6, 1995.
*777 Berkman, Henoch, Peterson & Peddy, P.C. by Ronald M. Terenzi, Garden City, NY, for debtor.
*778 Robinson, Brog, Leinwand, Reich, Genovese & Gluck by Robert Leinwand, Christine Black, New York City, for Coolidge New York Equities Ltd. Partnership.
DECISION AND ORDER
DOROTHY EISENBERG, Bankruptcy Judge.
This matter is before the Court pursuant to the hearing on the Disclosure Statement filed by 354 East 66th Realty Corp. (the "Debtor"). In its Plan, the Debtor proposes to apply the adequate protection payments already made to Coolidge New York Equities Limited Partnership ("Coolidge" and/or the "Secured Creditor") to reduce its secured claim against the Debtor. If the adequate protection payments made to Coolidge are applied to reduce its debt, this will wipe out the undersecured portion of Coolidge's claim, leaving it with its fully secured claim. Coolidge has opposed such treatment, claiming that it has a right to retain the net rents as both adequate protection for its perfected lien on the rents, and as repayment for this additional collateral pursuant to Section 552(b) of the Bankruptcy Code.
FACTS
The Debtor filed for relief under Chapter 11 of the Bankruptcy Code, on June 22, 1993 (the "Filing Date"). The Debtor has remained in possession and control of its property pursuant to Sections 1107 and 1108 of the Bankruptcy Code.
The Debtor is a New York corporation formed to own and operate the building designated and located at 354 East 66th Street, New York (the "Property"). As of the Filing Date Home Savings Bank (the "Bank") held a note and mortgage (the "Mortgage") whereby the Debtor as mortgagor pledged the Property for the repayment of $1,700,000 pursuant to a Consolidation and Spreader Agreement dated March 31, 1989. The Mortgage contains an assignment to the Bank of all leases, together with all rents and income of any nature derived from the Property. The Bank filed a secured claim in the Debtor's case in the amount of $2,268,755.56, as of the date of the filing of the Petition. During the post petition period, the Mortgage was purchased by and assigned to Coolidge.
Prior to the assignment of the Mortgage to Coolidge, the Bank and the Debtor negotiated a consensual Cash Collateral Order which was so ordered by this Court on December 16, 1993 (the "Cash Collateral Order").
In January, 1994, pursuant to the Cash Collateral Order, the Debtor paid in excess of $39,000 to the Bank. Commencing in February, 1994, the Debtor has paid to the Bank, and its successor in interest Coolidge, the sum of $15,000 per month. The Cash Collateral Order provides that the payments received by the Bank (and Coolidge) are meant to be adequate protection payments. This $15,000 per month is net of all necessary payments to maintain the property while the Debtor is in Chapter 11.
By applications dated November 23, 1993, and April 1, 1994, Debtor, with the Bank's and Coolidge's consent, sought, and was granted, orders of this Court authorizing payments in the amount of $119,173.59 and $35,000 respectively, toward pre-petition real estate taxes.
On October 3, 1994, a valuation hearing was held in order to determine the market value of the Property for confirmation purposes. At the conclusion of the hearing, the Court determined that the value of the Property is $2,068,965. Therefore, as of the date of the valuation hearing and for plan confirmation purposes, the value of the Property is $2,068,965. Pursuant to Section 506(b) of the Bankruptcy Code, Coolidge was undersecured as of October, 1994, and had an unsecured claim for the difference between its claim as of the date of the filing and the value of the Property as of October, 1994. In making its valuation, the Court took into consideration the present value of the future projected cash flow of the Property (i.e., the capitalization rate).
No valuation of the Property as of the Filing Date was made by the Court. However, there are some indications that the value of the Property has increased since the Filing Date. For example, the rent roll is currently in excess of $40,000 per month, *779 whereas the rent roll was approximately $37,000 per month while operated by the Secured Creditor's appointed receiver at the commencement of the case. The Debtor continues to maintain the premises and its value has not diminished. The Debtor has made payment of $154,173.59 towards pre-petition real estate taxes, and is current with all post petition taxes. The value of Coolidge's collateral has certainly not decreased from the date of the filing of the Petition. The Debtor has also paid an aggregate of $218,685.08 to Coolidge pursuant to the Cash Collateral Order as of the end of December, 1994, which amount is approximately equal to its unsecured claim. Therefore, the Debtor believes that these payments called adequate protection payments have reduced Coolidge's claim so that it no longer has an unsecured claim.
The Debtor's Plan classifies and treats the claims and interests of the Debtor as follows:
Class 1 consists of administrative claims and is unimpaired as the administrative claims shall be paid in full on the Effective date.
Class 2 consists of priority claims under 11 U.S.C. Section 507(a)(7), estimated to be $60,000, and payable $20,000 on the Effective Date and $2,000 per month for two years, until fully paid. This Class is impaired.
Class 3 consists of the secured portion of Coolidge's claim, and is valued at $2,068,955. The original Note and Mortgage shall be reinstated in the amount of the outstanding principal ($1,711,439.17). The arrears, amounting to $338,631.31, will be paid over the course of six months from the Effective Date, together with 9% per annum interest as follows: $50,000 on the Effective Date with monthly payments thereafter in the amount of $50,000, with the final payment of all amounts outstanding due on the first day of the seventh month following the Effective Date. The Debtor shall also be granted a right of first refusal on any sale of the Note and Mortgage, and the pre-payment terms are altered from the original Note and Mortgage. This class is impaired.
Class 4 consists of all unsecured claims against the Debtor, exclusive of the undersecured portion of Coolidge's claim. These creditors are to be paid one hundred (100%) percent in twenty-four (24) monthly installments commencing one month after the Effective Date. This class is impaired.
Class 5 consists of the "Equity Security Interests". The interests shall be cancelled and all such claimants shall receive no dividends or property, and the interests shall be distributed to the New Shareholders as defined in the Plan.
As demonstrated above, the Debtor's Plan is premised on the elimination of Coolidge's unsecured claim, and the repayment of its secured claim with interest for the unpaid arrears. One of the critical components to a cramdown of objecting creditors is the accepting vote of at least two-thirds of one class of impaired creditors, which in this case the Debtor expects to be the Class 4 unsecured creditors. Coolidge has objected to the Disclosure Statement, claiming that by virtue of its perfected lien on the rents, it is entitled to treat the payments made under the Cash Collateral Order as adequate protection payments solely to compensate Coolidge for the Debtor's use of the rents. As a result, all the rents collected by the Debtor as adequate protection payments should be added to and increase this claim, which is reduced in turn by the amount of the payments made to Coolidge, resulting in a "wash" with respect to the amount of Coolidge's claim. Coolidge believes it continues to have an undersecured claim and as such would dominate the unsecured class, leaving the Debtor without an accepting class. The Debtor asserts that the payments received by Coolidge pursuant to the Cash Collateral Order must be credited against Coolidge's original claim. As a result, Coolidge no longer has an unsecured claim and therefore will not control the Class 4 unsecured creditors. Resolving this dispute will determine the threshold issue of whether the Debtor's plan is capable of obtaining the votes of at least one class of impaired creditors. If Coolidge continues to have an unsecured claim in the full amount of its undersecured claim, it will dwarf the other members of the class by its negative vote, and there will be no other consenting impaired class entitled to vote on the Plan.
*780 The issue to be decided is how to apply the post-petition net rent payments made to the Secured Creditor, when the secured creditor is undersecured, but has a perfected lien on future rents.
DISCUSSION
The issue before the Court is undecided in this Circuit, and requires a careful analysis of Sections 506 and 522 of the Bankruptcy Code as well as relevant case law, applicable prior to the Bankruptcy Reform Act of 1994. Section 506 of the Bankruptcy Code governs the amount of the secured creditor's allowed secured claim and the creditor's entitlement to interest post-petition. Section 506 of the Code provides as follows:
(a) An allowed claim of a creditor secured by a lien on property the value of which the estate has an interest . . . is a secured claim to the extent of the value of such creditor's interest in the estate's interest in such property, . . . and is an unsecured claim to the extent that the value of such creditor's interest . . . is less than the amount of such claim . . .
(b) To the extent that an allowed secured claim is secured by property the value of which . . . is greater than the amount of such claim, there shall be allowed to the holder of such claim, interest on such claim, and any reasonable fees, costs, or charges provided for under the agreement under which such claim arose.
This section of the Bankruptcy Code is generally understood to mean in part that undersecured claims are not entitled to accrual of interest, fees and costs, but oversecured claims are so entitled, to the extent of the value of the property securing the debt. United Savings Ass'n v. Timbers of Inwood Forest Associates, Ltd., 484 U.S. 365, 108 S.Ct. 626, 98 L.Ed.2d 740 (1988) ("Timbers").
Section 552 of the Bankruptcy Code sets the parameters for a secured creditor's rights in and to post-petition rents, as follows:
(b) . . . [I]f the debtor and an entity entered into a security agreement before the commencement of the case and if the security interest created by such security agreement extends to property of the debtor acquired before the commencement of the case and to proceeds, product, offspring, rents or profits of such property, then such security interest extends to such proceeds, product, offspring, rents or profits acquired by the estate after the commencement of the case to the extent provided by non-bankruptcy law . . .
This section of the Bankruptcy Code grants to the creditor secured by a lien on rents a separate interest in addition to the secured creditor's interest in the real property. See Timbers, 484 U.S. at 374, 108 S.Ct. at 632. These two fundamental concepts appear to be at odds with one another in this case. On the one hand, Coolidge is not entitled to receive adequate protection payments if there is no diminution of the value of its collateral interest on its claim while it is undersecured. On the other hand, Coolidge does have a separate set of rights as a result of its perfected security interest in the rents, which rights differ from a creditor without such a perfected lien.
Cases examining this issue run the gamut, reflecting the possible ambiguity created by these provisions of the Bankruptcy Code.[1]Timbers provides guidance to an extent, but does not resolve the tension among the statutes. However, as the Supreme Court's only decision related to this issue, Timbers bears further scrutiny. The debtor in Timbers owned and operated an apartment project in Houston, Texas. United Savings Association of Texas held a note in the principal amount of $4,100,000, secured by a lien on the apartment project, together with an assignment of rents. It was undisputed that United Savings was undersecured, and the debtor had agreed to pay United Savings the post-petition *781 rents from the project, minus operating expenses. United Savings moved for relief from the stay, and continuance of the stay was conditioned upon the receipt of certain monthly payments. The Supreme Court examined the issue of whether the undersecured creditor was entitled to interest and costs accruing post-petition.
The Supreme Court distinguished between the debtor's claim and the collateral securing the claim as follows:
Section 506(b) provides that `to the extent that an allowed secured claim is secured by property the value of which . . . is greater than the amount of such claim, there shall be allowed to the holder of such claim, interest on such claim.' . . . Since this provision permits post-petition interest to be paid out only of the `security cushion,' the undersecured creditor, who has no such cushion, falls within the general rule disallowing post-petition interest . . .
Timbers, 484 U.S. at 373, 108 S.Ct. at 631.
The Supreme Court in Timbers also recognized that secured creditors with liens on rent have rights greater than those which did not have perfected liens on rents. See Id. at 373, 374, 108 S.Ct. at 631-32, 632. However, these additional rights were not enumerated in Timbers, and must be counterbalanced by the Supreme Court's further statement that one of the purposes behind Chapter 11 is to provide for the "conscious allocation of reorganization benefits and losses between unsecured and secured creditors." Id. at 373, 108 S.Ct. at 631.
Keeping the principles enunciated in Timbers in mind, the Court turns to the arguments made by Coolidge. The thrust of Coolidge's contention is that by virtue of its perfected interest in the rents of the property, it is entitled to not only receive the full value of its claim as determined by the valuation of the Property, but to receive any additional net rents, thereby receiving a stream of payments during the pendency of the case above and beyond its claim. Coolidge's argument is based on an assumption that the net rents increase the value of the Property as determined by this Court. The increase in value of the Property is then reduced as Coolidge receives the net rents. This offsetting creates a "wash", having no effect on the pre-petition claim or the value of the Property. In support of its contention, the Bank relies on In re Vermont Investment Limited Partnership, 142 B.R. 571 (Bankr.D.D.C. 1992); In re Birdneck Apartment Associates II, L.P., 156 B.R. 499 (Bankr.E.D.Va.1993), and several other cases.
These cases all recognize that post-petition rents are collateral distinct from the real property which generates them. This Court also recognizes that post-petition rents comprise separate collateral. However, the Court parts ways with these courts with respect to the impact of this additional collateral where the creditor is undersecured at the time of the valuation hearing. The additional collateral does give Coolidge greater rights than those of secured creditors without the additional lien, as recognized by Timbers. One of these rights is the right to apply the net post-petition rents to Coolidge's claim to the exclusion of the other creditors. Coolidge's additional interest in the rents was also recognized and taken into consideration when the Court made its determination as to the value of the Property. However, the Court is hard pressed to make the leap in logic urged by Coolidge that the additional security interest entitles Coolidge to receive payment in excess of its original claim while Coolidge is undersecured. Although Coolidge argues that the Debtor's use of the rents erodes Coolidge's security, this is not the case. The rents are a component of the collateral, a portion of which is being paid to Coolidge and a portion of which is going towards maintenance of the property. When Coolidge receives the monthly net rents, it has in effect realized the benefit of the rental collateral, which payment is to be applied to reduce the debt accordingly. See In re Oaks Partners, Ltd., 135 B.R. 440, 451 (Bankr. N.D.Ga.1991) ("Oaks Partners"). The debt or claim remains the same.
ADEQUATE PROTECTION PAYMENTS
When a secured creditor has an interest in all of the Debtor's assets, it is common practice to have a hearing early in the case to determine what, if any, adequate *782 protection payment should be made to the creditor. Unless it is apparent that the secured creditor is obviously oversecured and has a substantial equity cushion, adequate protection payments are often awarded to the secured creditor. The purpose or intent of granting adequate protection payments are to maintain the status quo for that creditor and to protect the creditor from diminution or loss of the value of its collateral during the ongoing Chapter 11 case. If that creditor is oversecured or if there is no reason to believe that the collateral will diminish, then adequate protection payments may not be granted. When adequate protection payments are granted, in the event that the value of the collateral decreases, and the secured creditor cannot realize the full value of the collateral to support its claim as of the date of the filing of the petition, it may keep the adequate protection payments since it was intended that these payments protect the secured creditor from loss. However, unless there is a diminution in the value of the creditor's interest, i.e. its collateral, the adequate protection payments should be applied to reduce the debt.
The Court finds the reasoning in Oaks Partners persuasive. In Oaks Partners, the Court determined whether the net rent payments made post-petition to the bank were to be applied to the debt or whether they were to be applied towards adequate protection of the security interest in the rents. As in our case, the rents have been used to maintain and operate the property in accordance with the bank's consent, and all excess funds have been turned over to the bank. The Court correctly took into consideration the rights of the parties in the event that no bankruptcy petition had been filed:
It is important to recognize that absent bankruptcy, if a creditor such as First Union enforced its assignment of rents and took possession of the rents without foreclosing, it would still need to apply those rents to the debt as it existed at the time the rents were received. The only way First Union could collect the rents and not apply them to the debt would be to foreclose and become the owner of the property before collecting rents. However, the bankruptcy filing invokes the automatic stay which prevents the creditor from foreclosing. If (the bank) is allowed to keep the rents and not apply them to the debt, then one of the purposes of the automatic stay is defeated. In effect, allowing (the bank) to take their rents and not apply them to the debt amounts to a retroactive granting of relief from the stay.
Id. at 450.
In other words, turning over the net rents to Coolidge without any reduction of Coolidge's claim would in effect vitiate the automatic stay. This could not have been the intent of Congress when Section 522 was enacted.
In addition, if the Court were to permit Coolidge to retain the net rents without applying them to reduce the debt while Coolidge is undersecured, Coolidge's claim would never decrease, to the detriment of the Debtor's reorganization efforts and the remaining creditors. The payments would drain the Debtor's estate, and the allocation of loss to the remaining creditors would amount to a windfall to Coolidge by paying them more than the amount of the original claim.
WHETHER THE SECURED CREDITOR IS ENTITLED TO INTEREST WHEN IT HAS A LIEN ON A CHANGING COLLATERAL BASE
When a secured creditor has an interest in future rents, it has an interest in the collateral that arises when it is earned. This additional collateral is still only collateral for the original debt. The funds earned are not property of the secured creditor, but are its added collateral to support the secured creditor's obtaining the full benefit of its claim. In this case, the Debtor has already paid the additional net income from the rents to Coolidge so that the undersecured portion of its claim has already been repaid. From this point in time, Coolidge is no longer undersecured and the continuing net rental payments, although called cash collateral payments, now result in reducing the secured portion of Coolidge's claim, and Coolidge is oversecured.
*783 If the Court were to continue to allow the Debtor to apply the net rents received by Coolidge to reduce its claim without the payment of interest, then the longer the Debtor stays in bankruptcy, the further Coolidge's claim would be reduced, by not providing Coolidge with the interest it is now entitled to. This would result in a windfall to the Debtor just as surely as deeming the receipts of all net rents a "wash" would result in a windfall to Coolidge. Neither one is correct.
In this case, Coolidge is now entitled to interest on the defaulted payments which it has not received. The Debtor's plan has recognized this and has offered to pay interest on the arrears.
In order to read the various sections of the Code, i.e., §§ 502, 552 and 1129 together in harmony, it is abundantly clear that these sections must be applied in the context of a Chapter 11 case where the ultimate goal is reorganization. Therefore, the Court finds that the cash collateral payments received by Coolidge in excess of full payment of its undersecured claim shall be applied both to reduce the remaining secured claim and towards interest that now commences to accrue on the remainder of the defaulted claim. As a result, neither Coolidge nor the Debtor shall be the sole beneficiaries of the rents generated by the Property and any incentive for either party to delay the proceedings is neutralized. This approach strikes an equitable balance between the Debtor's goal of reorganization and the competing interest of adequately protecting Coolidge's rights as a secured creditor with a perfected lien on the property and on future rents.
In this case Coolidge, having received net rental payments from the Debtor over and above its undersecured claim, no longer has an unsecured claim and may not vote in that class. Therefore, the Debtor will be permitted to attempt to obtain the consent of the unsecured class. In addition, the Debtor's Plan appropriately provides for payment of interest on the defaulted portion of its claim, and therefore Coolidge's request that this Court find that the Debtor has not presented a confirmable plan is denied.
CONCLUSION
1. This Court has jurisdiction over the subject matter and the parties pursuant to 28 U.S.C. §§ 1334 and 152(a).
2. This is a core matter under 28 U.S.C. § 157(b)(2)(L).
3. The Court finds that the Debtor appropriately allocated the net rents received by Coolidge towards the reduction of the undersecured portion of Coolidge's claim. It appears that payments already made have reduced Coolidge's original claim and has eliminated any undersecured claim. However, from the point in time that the net rents received by Coolidge equal or exceed the undersecured portion of Coolidge's claim, the subsequent cash collateral payments shall be applied towards reduction of the remaining secured debt, and towards interest that now commences to accrue on any unpaid portion of Coolidge's secured claim.
4. Coolidge's request that the Disclosure Statement not be approved because it is unconfirmable is denied.
5. The Debtor's June 30, 1994 Disclosure Statement is capable of confirmation and is hereby approved.
Settle an order in accordance with this Decision.
NOTES
[1] For a thorough discussion of the current case law on this issue, see, C. Taylor Ashworth, Christopher Graver, Application of Post-Petition Rent Payments to Undersecured Claims: Shaking the Timbers of Conventional Wisdom (1994 National Conference of Bankruptcy Judges). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2109348/ | 153 Wis.2d 638 (1989)
451 N.W.2d 778
UNITED STATES FIDELITY & GUARANTY COMPANY, Plaintiff-Respondent,[]
v.
PBC PRODUCTIONS, INCORPORATED, and Phillip J. Wittliff, Defendants-Appellants,
FIREMAN'S FUND INSURANCE COMPANY and Howard W. Larson, Defendants.
No. 89-0324.
Court of Appeals of Wisconsin.
Oral argument August 22, 1989.
Decided December 13, 1989.
*639 For the plaintiff-respondent the cause was submitted on the briefs of Peterson, Johnson & Murray, S.C., with Randy S. Parlee of counsel, of Milwaukee.
*640 For the defendants-appellants the cause was submitted on the briefs of Cook & Franke, S.C., with Robert L. Elliott of counsel, of Milwaukee.
Before Moser, P.J., Sullivan and Fine, JJ.
FINE, J.
This declaratory-judgment case presents insurance coverage issues. It arises out of an automobile accident that severely injured Philip J. Wittliff. Wittliff, an employee of PBC Productions, was injured when a van owned by PBC and driven by Howard Larson, also an employee of PBC, collided with a logging truck.[1] All parties concede that Wittliff and Larson were acting in the scope of their employment for PBC at the time of the accident.
PBC has business automobile insurance under a policy issued by United States Fidelity and Guaranty Company. Larson was an "insured" under the policy since he was driving PBC's van at the time of the accident with PBC's permission.
Following the accident, Wittliff gave notice to USF&G that he intended to make claims against the policy based on Larson's alleged negligence under both the liability and uninsured motorist coverages. USF&G then brought this action seeking a declaration that there was no such coverage.[2] USF&G moved for summary judgment, and, pursuant to sec. 802.08(6), Stats., Wittliff requested summary judgment declaring that the USF&G policy provided both liability and uninsured motorist *641 coverage. The trial court granted summary judgment to USF&G. Wittliff appeals.
[1]
Wittliff raises two main issues. First, he contends that there is liability coverage under the USF&G policy for Larson's alleged negligence. Second, Wittliff argues that if there is no liability coverage, he is entitled to recover from USF&G under the policy's uninsuredmotorist provisions. The resolution of these issues turns on the policy language and the material provisions of the Worker's Compensation Act, ch. 102, Stats. We decide these matters de novo, see Richie v. American Family Mut. Ins. Co., 140 Wis.2d 51, 54, 409 N.W.2d 146, 147 (Ct. App. 1987), and bear in mind that "[i]t is well settled that policy language is to be given its common and ordinary meaningnot necessarily what the insurer intended, `but what a reasonable person in the position of the insured would have understood the words to mean.'" Ibid. (quoting Kremers-Urban Co. v. American Employers Ins., 119 Wis.2d 722, 735, 351 N.W.2d 156, 163 [1984]). We may not, however, rewrite a policy to provide coverage where there is none. Bulen v. West Bend Mut. Ins. Co., 125 Wis.2d 259, 264, 371 N.W.2d 392, 394 (Ct. App. 1985).
USF&G argues that its PBC business automobile policy does not provide liability coverage for Wittliffs claims against Larson, and points to two exclusions:
C. WE WILL NOT COVEREXCLUSIONS
This insurance does not apply to:
. . . .
2. Any obligation for which the insured or his or her insurer may be held liable under any workers' compensation or disability benefits law or under any similar law.
. . . .
*642 5. Bodily injury to any employee of the insured arising out of and in the course of his or her employment by the insured.[3]
On their face, both paragraph 2 and paragraph 5 bar coverage. First, with respect to paragraph 2, PBCan insured under the policywas liable to Wittliff for worker's compensation. Second, with respect to paragraph 5, Wittliff is seeking recovery for "bodily injury"; PBC is an "insured" under the policy; Wittliff is, therefore, an "employee of the insured"; and, finally, Wittliff's injuries arose "out of and in the course of his . . . employment by" PBC. The exclusions do not apply, however, if there use of the word "insured" refers to Larson, rather than to PBC, since Larson may not be held liable for worker's compensation benefits (paragraph 2), nor is Wittliff employed by Larson (paragraph 5).
[2]
It is settled law in this state that when an employee seeks to recover for damages sustained as the result of a co-employee's negligence, and the co-employee is an insured under the employer's policy, the word "insured" in the exclusions at issue here refers to the co-employee tortfeasor, and not to the employer. Severin v. Luchinske, 271 Wis. 378, 383, 73 N.W.2d 477, 479 (1955).[4]See also Zippel v. Country Gardens, Inc., 262 Wis. 567, 55 *643 N.W.2d 903 (1952). Accordingly, the exclusion contained in paragraphs 2 and 5 do not apply.[5]
[3]
Our determination that the exclusions contained in paragraphs 2 and 5 do not apply to preclude coverage by USF&G for Wittliff's injuries does not end our inquiry. Section 102.03(2), Stats., makes the worker's compensation system Wittliffs sole remedy against both PBC and Larson. In return for an extra premium of $50, however, USF&G deleted an exclusion from the policy that provided that there was no liability coverage for "[b]odily injury to any fellow employee of the insured arising out of and in the course of his or her employment." This waived USF&G's right to rely on the immunity from suit granted Larson by sec. 102.03(2) to the extent of the policy's limits. See Backhaus v. Krueger, 126 Wis.2d 178, 181-183, 376 N.W.2d 377, 379 (Ct. App. 1985).
[4]
In conclusion, since Larson is an insured under the USF&G policy, since the exclusions in the policy do not apply, and since USF&G has waived its reliance on the co-employee immunity conferred upon Larson by sec. 102.03(2), Stats., the USF&G policy provides liability coverage for the damages Wittliff alleges he sustained as a result of Larson's negligence. We do not, therefore, address Wittliff's alternative argument that the USF&G policy afforded him uninsured motorist coverage. See *644 Gross v. Hoffmann, 227 Wis. 296, 300, 277 N.W. 663, 665 (1938) (only diapositive issue need be addressed).
By the Court.Order reversed.
NOTES
[] Petition to review denied.
[1] The logging truck was insured by Fireman's Fund Insurance Company. There is no issue here concerning the liability, vel non, of the logging company, its driver, or Fireman's Fund.
[2] USF&G concedes that there would be under insurance coverage if the Fireman's Fund logging company policy limits were exhausted.
[3] USF&G issued policies to PBC for the time periods of December 23, 1986 to December 23, 1987 and from December 23, 1987 to December 23, 1988. With some exceptions, the policies are identical. Like the parties, our references are to the initial policy.
[4] Wittliff also cites Miller v. Carriers Ins. Co., 60 Wis.2d 760, 211 N.W.2d 508 (1973) (per curiam), in support of this proposition. Miller, however, is a non-headnoted per curiam decision, and, accordingly, is not "of general precedent value." See 60 Wis. 2d 749 ("*Pursuant to court direction only those opinions of general precedent value have been headnoted.").
[5] USF&G concedes that Severin governs, but contends that the decision was a result-oriented violation of appropriate canons governing the interpretation of insurance contracts. We are, however, bound by supreme court precedent. See State v. Grawien, 123 Wis.2d 428, 432, 367 N.W.2d 816, 818 (Ct. App. 1985). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1721614/ | 108 So. 2d 512 (1959)
Vivian METZ, Appellant,
v.
Herbert E. METZ, Appellee.
No. 58-658.
District Court of Appeal of Florida. Third District.
January 22, 1959.
Rehearing Denied February 16, 1959.
*513 Irving Steinhardt, Miami, for appellant.
Talbot W. Trammell, Miami, for appellee.
PEARSON, Judge.
The appellant and the appellee were divorced in this jurisdiction on October 9, 1953. The appellee was a nonresident defendant. The decree awarded custody of the six year old daughter of the parties to the mother. On November 19, 1957 the father filed a petition for modification of the final decree, seeking to participate in the custody of his daughter. After answer and hearing the chancellor entered an order supplementing the final decree, which in part reads as follows:
"Ordered, Adjudged and Decreed that the final decree of this court rendered in the above styled cause be supplemented so as to give defendant, Herbert E. Metz, the right to visit his child, Susan Arline Metz, each year from 12 o'clock noon on the first day of July until 12 o'clock noon on the first day of August, commencing in the year 1959. If defendant should desire to take said child out of the State of Florida, he is authorized to do so but is hereby required to deposit with plaintiff's attorney the sum of Three Hundred Fifty Dollars ($350.00) in cash or in the form of a cashier's check, made payable to plaintiff's order, to defray the expense of bringing said child back to Florida, should defendant not bring her back voluntarily. Upon said child's return to the jurisdiction of this court, the sum of money deposited by defendant which was not used to effect said child's return shall be refunded him.
"It is further Ordered, Adjudged and Decreed that this court shall retain jurisdiction over the parties hereto.
"It is further Ordered, Adjudged and Decreed that defendant shall pay Ten Dollars a week to Susan Arline Metz for her maintenance and support."
The mother appeals and urges as error the provision of the order which (1) grants divided custody to the father, (2) permits the father to take the child from this state, (3) provides for a bond of only $350.00, and (4) provides for payment of only $10.00 per week as child support. She *514 also assigns as error the denial by the court of her prayer for suit money and attorney's fee.
A large portion of appellant's argument is directed to the wisdom of the divided custody order and that provision in the order which allows the father to remove the child from this state. However, it is not our function to reassess the factors which determined the chancellor's decision, so long as we find testimony in the record sufficient to support the conclusion of the chancellor that the welfare of the child will best be served by allowing both her parents to share in her custody. See Frazier v. Frazier, 109 Fla. 164, 147 So. 464. It is further apparent that having made such a determination it is not an abuse of discretion for the chancellor to provide for the father to have his daughter with him in his own home during a part of the summer vacation.
Next we find that this amount set for child support is within the realm of reason in view of the conflicting evidence presented.
More serious questions are presented by the provisions relating to a cash bond and the denial of suit money and attorney's fee. The express purpose of the deposit in the nature of a bond is to insure the return of the child to the State of Florida and to the mother's custody after the father has taken her from the state, and his custody rights have terminated. The bond is not penal but remedial in nature and the amount thereof must have some relationship to the expenses which the mother may incur in regaining custody of the child and returning her to Florida.
It is apparent that in the event the father should fail to return the child to this jurisdiction the mother would have to resort to the courts of the State of Virginia and in all probability would have to go to that jurisdiction to enforce her rights. It is our view that under the circumstances a cash bond in the amount of $1,000.00 would be proper.
The chancellor's approval of the proposal that the deposit in the nature of a bond be made with the plaintiff's attorney was probably made by agreement of the parties to gain the advantage of directness. However, it cannot be approved in view of its uncertainty. It is true that the attorney as an officer of the court may be used as an arm of the court to effect the provisions of a decree. Upon the other hand, the relationship of attorney and client is not a permanent one. The attorney for the plaintiff may be unknown or possibly unavailable to either party at any given time in the future. It is proper that the registry of the court be used for the deposit of funds in connection with the execution of claims.
The third question involves an examination of section 65.16 Fla. Stat., F.S.A., which provides as follows:
"(1) Whenever any legal proceeding is brought for the purpose of enforcing a decree or order of the court, providing for the payment of alimony or support for children, the court may, in the exercise of a sound judicial discretion, allow to the divorced wife such sums of suit money, including a reasonable attorney's fee, as from the circumstances of the parties and the nature of the case shall be fit, equitable and just.
"(2) Any order so made under the provisions of this section shall be enforced in the same manner as are other chancery orders or decrees."
The appellant urges that she is entitled to an allowance under this section and relies upon McNeill v. McNeill, Fla. 1952, 59 So. 2d 57. We find that her position is correct. See also Simpson v. Simpson, Fla. 1953, 63 So. 2d 764, where the court points out that "enforcing" should be given a broad and liberal interpretation.
*515 In the case at bar the petitioner and former husband testified that he earns $3,900.00 a year and that he has $1,100.00 in a savings account. His former wife has remarried and she has no funds other than those provided by her present husband. Under these circumstances and pursuant to section 65.16, supra, the chancellor should have allowed to the former wife suit money including a reasonable attorney's fee.
The order appealed is affirmed in part and reversed in part. That portion of the order which provides for a deposit with plaintiff's attorney in amount of $350.00 is reversed, and the cause remanded to the chancellor with directions to amend this part in his order by providing for a deposit of $1,000.00 in the registry of the court and for the further purpose of allowing to the appellant suit money including a reasonable attorney's fee.
Affirmed in part and reversed in part.
CARROLL, CHAS., C.J., and HORTON, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2093747/ | 460 F. Supp. 873 (1978)
In re Calvin Warren BREIT and Mildred Jacobs Breit, Bankrupts.
David H. ADAMS, Trustee, Calvin Warren Breit and Mildred Jacobs Breit, Appellants,
v.
UNITED STATES of America, INTERNAL REVENUE SERVICE, Appellee.
Nos. 76-156-NN, 76-157-NN.
United States District Court, E. D. Virginia, Newport News Division.
September 13, 1978.
*874 Edwin C. Kellam, Joseph J. Lawler, Norfolk, Va., for bankrupts.
Robert C. Stackhouse, Norfolk, Va., for trustee.
Gregory Hrebiniak, Trial Atty., Tax Div., U. S. Dept. of Justice, Washington, D. C., for appellee.
OPINION AND ORDER
CLARKE, District Judge.
This appeal challenges a decision of the Bankruptcy Judge that the Internal Revenue Service has a valid claim for income taxes against appellants Calvin and Mildred Breit for the year 1973. Specifically, appellants contend that they were entitled to deduct $550,000 in loans from the Virginia National Bank to Thomas Circle Inn, Inc., as a net operating loss on their 1973 tax return because the loans were in reality investments by appellants in that corporation. The Bankruptcy Judge, however, found as a fact that the loan from the bank was to the corporation and not to appellants.
The pertinent facts of this case, as discerned from the record and from the brief decision of the Bankruptcy Judge, are as follows: Sometime in 1971, one Norman Groh and G. L. Lavenstein, who were in the business of owning, operating, and developing hotels and motels, formed a corporation that they called Thomas Circle Inn, Inc. and designated a "Subchapter S corporation" for federal income tax purposes. They invested little, if any, money in the corporation. A short time later, on behalf of the corporation, they negotiated a leasehold on a Ramada Inn in Washington, D.C. In December 1971, Groh and Lavenstein sold their entire interest in the corporation for $150,000, of which appellant Calvin Breit paid at least $75,000. Nevertheless, Groh and Lavenstein agreed to remain obligated as guarantors of the lease until its expiration.
In 1973 Groh, acting as catalyst, persuaded the Virginia National Bank to make two loans to Thomas Circle Inn, Inc. The first loan of $200,000 was to be used by the corporation to repay a loan held by one Atlantic National Bank. Another $350,000 was borrowed to serve as a down payment on the purchase of the Ramada Inn by the corporation. Appellants Breit, C. Arthur Rutter, Groh, and the estate of the by-now-deceased Lavenstein (of which the bank was executor) agreed to guarantee the loans. When it could not complete performance *875 on the contract of purchase, Thomas Circle Inn, Inc. lost the $350,000. Although the loans were never repaid, the Breits deducted them on their 1973 income tax return, contending that the payments were not loans from the bank to the corporation but rather investments in a Subchapter S corporation by its owners and thus deductible under section 1374 of the Internal Revenue Code.[1]
Because they sought the benefit of a deduction, appellants had the burden of proving that they are entitled to it. A decision of the Internal Revenue Service is presumed to be correct, and appellants have the burden of proving the contrary. E. g., Welch v. Helvering, 290 U.S. 111, 115, 54 S. Ct. 8, 78 L. Ed. 212 (1933); General Insurance Agency, Inc. v. Commissioner of Internal Revenue, 401 F.2d 324, 329 (4th Cir. 1968). The Bankruptcy Judge ruled that appellants had not carried their burdens successfully, that the facts and legal conclusions in the Government's brief contained "no significant flaws," and that the Government's claim for taxes and the disallowance of appellants' deduction were therefore valid. This Court must accept the findings of fact of the Bankruptcy Judge unless they are clearly erroneous. Rule of Bankruptcy Procedure 810. However, the Court is free to draw inferences from undisputed facts. See, e. g., Shaw v. United States Rubber Co., Naugatuck Chemical Division, 361 F.2d 679 (5th Cir. 1966).
The sole, central issue in this case is the nature of the two 1973 loans. If they were loans from the bank to the corporation, appellants could not have invested them in the corporation and may not deduct them as operating losses. On the other hand, if the transactions were actually loans from the bank to appellants who then invested the funds in the corporation, the $550,000 was a capital contribution deductible under section 1374. E. g. Blum v. Commissioner of Internal Revenue, 59 T.C. 436 (1972). The issue is a mixed question of law and fact. Although the decision of the Bankruptcy Judge is brief indeed, he did find as an ultimate fact that the loan was made to the corporation and not to appellant Calvin Breit. After examining the record in this case, the Court is convinced that this finding was not clearly erroneous
No single factor determines whether the loans were in fact by the bank to appellants followed by a capital contribution on their part. Each case must be decided on its own particular facts. E. g., Blum v. Commissioner of Internal Revenue,, supra, at 439; Santa Anita Consolidated, Inc. v. Commissioner of Internal Revenue, 50 T.C. 536, 550 (1968). While appellants are not estopped from challenging the nature of the transaction, J. A. Maurer, Inc. v. Commissioner of Internal Revenue, 30 T.C. 1273 (1958), the record does not support their claim that the guaranteed loans were equity contributions on their part.
Appellants advance several arguments in support of their argument. Most of these points are stated explicitly, but one point, while unstated, is critical to their case. Appellants cannot claim a deduction based upon their status as guarantors of the loans, for a contract of guaranty is an assumption of secondary liability and not a deductible "indebtedness" within the meaning *876 of section 1374. See, e. g., Underwood v. Commissioner of Internal Revenue, 535 F.2d 309 (5th Cir. 1976); Perry v. Commissioner of Internal Revenue, 47 T.C. 159, 163 (1966), aff'd on other grounds, 392 F.2d 458 (8th Cir. 1968); American Industrial Corp. v. First & Merchants National Bank, 216 Va. 396, 219 S.E.2d 673 (1975). Only after the guarantor performs on the guaranty contract will the debtor's indebtedness to the creditor become an "indebtedness" to the guarantor under section 1374. See Putnam v. Commissioner of Internal Revenue, 352 U.S. 82, 85, 77 S. Ct. 175, 1 L. Ed. 2d 144 (1956). Since appellants produced no evidence that the bank has attempted to collect from them[2] or from the other guarantors (see Deposition of Doyle E. Hull, page 6, lines 10-23), appellants rest their claim upon their alleged ownership of the corporation. The loans, they assert, were really made to them as owners of the corporation, but were recorded as transactions between the bank and the corporation in order that the bank might collect a higher interest rate. (See Deposition of Calvin W. Breit, page 4, lines 3-7; Deposition of Norman D. Groh, page 7, lines 3-7.) But, having deducted the entire amount of the loans, appellants have the burden of proving that they owned all of the corporate stock, and they failed to meet that burden. True, Calvin Breit testified that he and his wife were sole owners. However, Norman Groh, who with G. L. Lavenstein, first owned the corporation, could testify only that appellants paid at least $75,000 of the $150,000 selling price and that the remaining $75,000 was paid either by appellants or by C. Arthur Rutter. If Rutter was not a co-owner, it is difficult to understand why he would have agreed to be one of the guarantors on the two loans in question. The record indicates that Thomas Circle Inn, Inc. was jointly owned by appellants and Rutter. Therefore, the Bankruptcy Judge was quite justified in finding that the corporation was not the alter ego of appellants.
Appellants also contend that the financial condition of the corporation at the time of the loans reveals the "true" nature of the transactions. The corporation, they say, was "totally insolvent and incapable of continuing on in the absence of additional capital." Thus, continues the argument, the bank was relying upon the guarantors for repayment. Groh and Calvin W. Breit so testified in their depositions, and appellants rely heavily on a statement by Doyle E. Hull, a corporate officer of the bank, that the corporation was overdrawn and the bank was looking to the guarantors for repayment. Mr. Hull, however, did not participate in the loan transactions, and his comments were in part responses to hypothetical questions and in part a recitation of past bank records. Significantly, appellants failed to depose M. M. Miller, the bank senior vice president, who was loan officer. In other words, appellants introduced no direct evidence that the bank knew of the corporation's alleged insolvency when it approved the loans. Without such evidence of knowledge by the lender, the insolvency of the corporation is of little significance. See, e. g., Santa Anita Consolidated, Inc. v. Commissioner of Internal Revenue, 50 T.C. 536, 552-53 (1968).[3]
Other circumstances surrounding the loan transactions do not, in this case, indicate that the loans were being made to appellants. Hull, the bank officer, testified that no financial statement or borrowing resolution from Thomas Circle Inn, Inc. was on file for either loan. Theoretically this fact *877 would help to support appellants' theory, but it is not decisive. Miller, who negotiated the transactions for the bank, could have confirmed and explained the alleged by-passing of normal procedures but appellants made no effort to depose him. Perhaps the bank required no statement because the data supplied by a relatively new corporation with limited operations might have been nonexistent or extremely unreliable. Appellants also never revealed the membership of their board of directors, and for all the Court knows, appellants may have been the only directors and a borrowing resolution would have been meaningless. The burden was on appellants to show that the bank required no resolution or statement because the corporation was merely serving as a "vehicle." They did not do so.[4]
Appellants argue that the purpose of the loans is either helpful to their case or, alternatively, irrelevant. This argument is without merit. The transaction was arranged, they say, for the sole purpose of enabling the bank to recover a higher interest rate. This arrangement allegedly disguised the true arrangement between appellants and the bank. While Calvin Breit and Groh did support this contention in their testimony, such evidence was insufficient to show that the higher interest rate was the bank's motivation. Even the bank officer who testified made no reference to the motivation, and the few documents offered in evidence do not mention it. Appellants' counsel also stated in oral argument that the Court should consider the purpose of the form of the loan but not the ultimate purpose of the funds loaned i. e., repayment of a corporate debt and initial payment on the purchase of the leasehold property. The Court emphatically disagrees. The purpose of the funds is quite relevant in determining whether the transactions were loans to appellants. In this case, the purpose of the loans is undisputed. Appellants offered absolutely no evidence that the funds would or could be used for any purposes other than the corporation's. The burden was on appellants to show that they were free to use the money as they wished. Instead, the evidence clearly shows that appellants represented to the bank that the funds were solely for the corporation's use and that the bank loaned the funds in reliance on that representation.
Appellants ask the Court to find that the bank in substance loaned the sums to them, not the corporation, and that appellants then proceeded to advance such funds to the corporation. Appellants, however, have presented insufficient proof. In fact, the evidence in this case is contrary to their contention. The loan request offered as Government Exhibit 2 states unequivocally that the $350,000 loan was made to Thomas Circle Inn, Inc. The request also indicates that the corporation was assuming an unconditional obligation to pay on a fixed maturity date. Aside from the testimony of two guarantors, appellants offered no evidence that the bank had no expectation of repayment from the corporation.[5] Perhaps the bank officials who handled the loan and the records of the corporation and the bank contain evidence to the contrary, but they are conspicuously absent here. This Court must presume that the Commissioner's ruling is correct unless and until appellants overcome that presumption with *878 convincing evidence. Appellants have not done so. Therefore, the decision of the Bankruptcy Judge is hereby AFFIRMED.
NOTES
[1] 26 U.S.C. § 1374 provides in pertinent part:
(a) General rule. A net operating loss of an electing small business corporation for any taxable year shall be allowed as a deduction from gross income of the shareholders of such corporation in the manner and to the extent set forth in this section.
(b) Allowance of deduction. Each person who is a shareholder of an electing small business corporation at any time during a taxable year of the corporation in which it has a net operating loss shall be allowed as a deduction from gross income, for his taxable year in which or with which the taxable year of the corporation ends . . ., an amount equal to his portion of the corporation's net operating loss . . .
(c) Determination of shareholder's portion.
. . . . .
(2) Limitation. A shareholder's portion of the net operating loss of an electing small business corporation for any taxable year shall not exceed the sum of
. . . . .
(B) the adjusted basis . . . of any indebtedness of the corporation to the shareholder . . .
[2] In oral argument, appellants' counsel argued that if the Court found that the loan was not from the bank to the appellants alone, then the loan should be considered as one to the entire group of guarantors of which appellants were a part. Thus, appellants would be allowed to deduct part but not all of the $550,000. Because this point was apparently not raised before the Bankruptcy Judge, the Court will not consider it.
[3] Even if the bank did look to the guarantors for repayment, appellants have advanced no reason why they should be entitled to deduct the entire $550,000. Their fellow guarantors (Rutter, Groh, and the Lavenstein estate) were equally liable in the event of nonpayment by the corporation, and appellants failed to show why all the guarantors should not share equally in the deduction.
[4] Another factor which might have cast suspicion on the true nature of the loans, but which appellants did not cite, was the basis of credit. Both loans were unsecured. Yet this factor alone does not preclude a finding of a bona fide indebtedness. See, e. g., American Processing & Sales Co. v. United States, 371 F.2d 842, 852, 178 Ct. Cl. 353 (1967); Santa Anita Consolidated, Inc. v. Commissioner of Internal Revenue, 50 T.C. 536, 553 (1968). As appellant Calvin Breit testified in his deposition (page 13, lines 10-14), the corporation's assets (other than the leasehold and the option to buy) were extremely limited. Therefore, a secured loan was impossible in this case, and the only security which would protect the bank was a guaranty. Santa Anita Consolidated, Inc., supra, at 553-54.
[5] The corporation was operating a Ramada Inn in a city that attracts millions of tourists each year. It is not inconceivable that the bank expected the corporation to repay the loans from cash flow rather than profits. Appellants offered no evidence to the contrary. See Santa Anita Consolidated, Inc., supra, at 553. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1742547/ | 848 F. Supp. 287 (1994)
UNITED STATES of America
v.
C.R. BARD, INC.
Cr. No. 93-10279-WF.
United States District Court, D. Massachusetts.
April 8, 1994.
Richard Cooper, Eva M. Petko, Betsy K. Wanger, Gerald A. Feffer, Williams & Connolly, Washington, DC, Ralph D. Gants, Palmer & Dodge, Boston, MA, for defendant C.R. Bard, Inc.
Michael K. Loucks, U.S. Attys. Office, Boston, MA, for U.S.
MEMORANDUM AND ORDER
WOLF, District Judge.
INTRODUCTION[1]
There is in this case a binding plea agreement pursuant to Federal Rule of Criminal Procedure 11(e)(1)(C). The court is called upon to accept it, or reject it and give the defendant the opportunity to withdraw the *288 plea. See Fed.R.Crim.P. 11(e)(3) and (4). I have decided to accept the plea agreement, and I will impose the sentence which it provides.
The court has discretion with regard to whether to accept a plea agreement that is binding. It is obligated to exercise that discretion in a reasoned way. When, as here, the joint sentencing recommendation is the result of arms' length negotiations between capable counsel, this court believes the agreement should be accepted if it is reasonable. To put it another way, it should be accepted unless there is a good reason to reject it. See United States v. Noble, 653 F.2d 34, 36 (1st Cir.1981) (involving a Rule 11(e)(1)(A) charge bargain); United States v. Ammidown, 497 F.2d 615, 622 (D.C.Cir. 1973). This is particularly true if the plea will save substantial prosecutorial and judicial resources, and implicitly reflects the prosecutorial assessment that a plea by one defendant will strengthen the investigation and prosecution of other present or potential defendants. See Ammidown, 497 F.2d at 622; United States v. Carrozza, 807 F. Supp. 156, 159-60 (D.Mass.1992), aff'd, 4 F.3d 70 (1st Cir.1993).
Nevertheless, I have scrutinized the plea agreement to determine whether it is reasonable. In considering the reasonableness of the agreement, I have considered the facts, the terms of the plea agreement, and the Sentencing Guidelines, which do not apply because this conduct occurred before their effective date, but provide a point of reference to assess reasonableness. I have also considered the factors established by statute to be considered in imposing any sentence. See 18 U.S.C. § 3553(a)(2).
As I will describe in detail, I find that the agreed sentence would be within the Guidelines if the Guidelines were applicable. The sentence is also sufficient to satisfy the purposes of sentencing set forth in 18 U.S.C. § 3553(a)(2). The sentence properly reflects the seriousness of the offense and serves the purposes of specific and general deterrence. It should forcefully send a message not only to Bard, but to other corporations and the individual human beings who act for them. It should also protect the public from further possible crimes by Bard, promote respect for the law, and provide just punishment for the offense. Id.
FACTS
The essential facts of this case are as follows. C.R. Bard, Inc. has pled guilty to 391 felonies. These are one count of conspiracy, in violation of 18 U.S.C. § 371; 17 counts of mail fraud involving submissions to the Food and Drug Administration ("FDA)", in violation of 18 U.S.C. § 1341; eight counts of submitting false statements to the FDA, in violation of 18 U.S.C. § 1001; 363 counts of shipping adulterated medical devices, in violation of 21 U.S.C. § 333(a)(2), including 75 counts of shipping medical devices from an unapproved facility, 108 counts of shipping products that had been changed without the required FDA approval of that change, and 98 counts of shipping devices for human testing where such testing had not been approved; and two counts of failing to submit required reports to the FDA, in violation of 21 U.S.C. § 333(a)(2).
These are serious criminal violations. In essence, Bard knowingly and willfully kept adverse information from the FDA, made product changes that affected the safety or effectiveness of angioplasty catheters produced by its USCI Division without the required FDA approval, and illegally did testing on human beings without the required exemption from the FDA.
There were reports of product malfunction, injuries, and deaths associated with the catheters identified in the Information. Two patients died during or shortly after a medical procedure involving a Mini Profile angioplasty catheter during the time period charged in the Information; 50 patients had the tip of the Probe B catheter break off inside them during a catheterization procedure; and at least 17 patients had coronary bypass surgery following a Probe B tip break.
The court need not and will not make findings as to whether or not these deaths, or any injuries resulting from the tip breaks, were proximately caused by Bard's criminal violations. It is sufficient to recognize that these are the kinds of foreseeable consequences *289 that violations of laws designed to protect the public health and safety may have. The people at Bard who had responsibility for making products important to the care of seriously ill patients failed in their responsibility to comply with these laws.
It appears to this court that as a result of the subversion of the FDA process designed to assure that medical products are safe and effective, Bard made inherently risky procedures more dangerous. As Mrs. Linda Talbott eloquently explained,[2] patients must rely primarily on their doctors to decide if procedures are sufficiently safe to be warranted. Doctors, in turn, must rely on the FDA and the company for the information necessary to make such decisions on a properly informed basis. Bard's crimes deprived the FDA, doctors, and their patients of the benefit of crucial information. See United States v. Dotterweich, 320 U.S. 277, 280, 64 S. Ct. 134, 136, 88 L. Ed. 48 (1943). In doing so, Bard betrayed an important trust.
Each of the 391 criminal violations was committed intentionally. The false statement violations were committed knowingly and willfully. The mail fraud violations, the shipping violations, and the failure to submit required reports were done with the intent to defraud or mislead.
These were not isolated violations. They involved several Bard products, and extended over more than two years.
THE PLEA AGREEMENT
The sentence to be imposed as a result of the plea agreement is $30,500,000 payable within 30 days as part of the civil settlement;[3] $15,250,000 payable in one year as part of the criminal fine; $15,250,000 payable within two years as the remainder of the criminal fine; and a $78,200 mandatory special assessment.
The plea agreement also provides, although it is not part of the sentence, that Bard will implement specified corporate remedial measures and keep them in effect for four years. Bard is also obliged to cooperate fully and truthfully in the investigation and prosecution of its present and former officers and employees. Six have been indicted, including the former Chairman of the Board and Chief Executive Officer, who has been removed from his position, but continues to be paid by Bard.
THE PLEA AGREEMENT IS REASONABLE
There are a number of factors which together influence the court to conclude that the plea agreement is reasonable. First among these is the fact that the six individuals who allegedly acted for the defendant in conspiring to subvert the FDA process intended to assure the safety and effectiveness of inherently risky medical instruments are being prosecuted. I would not have accepted this plea without this provision.
Often, in my experience, companies will offer to plead guilty if the investigation or prosecution of its individual employees is dropped. I would have found that particularly inappropriate in this case. A corporation is a legal fiction. Individuals act for a *290 corporation. Individuals commit crimes on behalf of a corporation. In this case, Bard's crimes have heightened risk to human life.
It is essential, in my view, that the law seek to hold individuals responsible for those crimes. They are properly presumed innocent. An individual's guilt will have to be proven beyond a reasonable doubt in a criminal case. It is, however, essential in a case like this, that individuals as well as corporations be the targets of criminal prosecution.
For, in a case like this, it is inadequate, and indeed somewhat frustrating, to seek to punish only a corporation. Sentences are, among other things, intended to address the defendant's conscience and influence future behavior. It is difficult to deal with what is essentially a legal abstraction in seeking to do that.
This is a fundamental and enduring problem. As my learned colleague, Judge Douglas Woodlock, had occasion to note in an opinion several years ago, when the Lord Chancellor of England sentenced a corporation centuries ago, he remarked: "Did you ever expect a corporation to have a conscience when it has no soul to be damned and no body to be kicked?" Securities and Exchange Commission v. John Adams Trust, 697 F. Supp. 573, 579 n. 6 (D.Mass.1988) (quoting Edward, First Baron Thurlow (1731-1806), as quoted in M. King, Public Policy and the Corporation 1 (1977)); see also J. Coffee, Jr., "No Soul to Damn: No Body to Kick: An Unscandalized Inquiry Into the Problem of Corporate Punishment," 79 Mich.L.Rev. 386 (1981).[4]
There is a poignant echo of Baron Thurlow's observation in the Presentence Report. Another of Mrs. Beavers' relatives, one of her adult granddaughters, wrote about her love for her grandmother and what she feels she and her family have been cheated of because of Mrs. Beavers' death. She ended her submission to the Probation Department by saying:
I know this probably won't mean anything to you, but while I have a chance to put in my two cents worth, just call it a healing thing, I would like to see those S.O.B.'s tried for murder. And I'm sure if the word was out, there are many, many more. But I know this is not possible, and their pocketbook is why this was done in the first place and that is the only thing that will hurt them. I hope you can kick their ass. Thank you for your time. I feel much better now.
In this case, the individuals allegedly responsible for Bard's crimes are being tried, not for murder, but for serious federal crimes, which could result in serious terms of imprisonment. Criminal prosecution of individuals in this case has the potential to provide a better sense of just punishment for the crimes committed. It also has the potential to send a message to corporate officials everywhere that crimes can have serious personal consequences and, therefore, to deter future criminal conduct.
This case shows that it is not appropriate to rely exclusively on corporations alone to send this message. In my view, various individual employees allegedly involved in these crimes have been treated generously by Bard. They have received substantial severance pay. The corporation's former Chief Executive Officer is still getting full pay. All are having their legal fees paid by Bard, with an undertaking to repay them if convicted, but it is doubtful if that will be possible.
I also note, however, that Bard is cooperating with the Government to the Government's full satisfaction in the prosecution of those individuals. That is a benefit of the plea agreement, as it increases the possibility that the individuals responsible for Bard's crimes will be held responsible for them.
The agreed sentence is also reasonable because Bard is paying a substantial penalty in the form of fines and debarment by the Defense Logistics Agency. While it is essential to the reasonableness of the plea agreement *291 that individuals not be relieved of potential criminal responsibility, it would also in my view be unreasonable if only the individual employees had been charged and were subject to possible punishment. This would be especially true with regard to lower-level managers.
This is a case in which a pervasive and powerful corporate culture exalted the value of profit above the value of human life. The Presentence Report quoted one Bard engineer who wrote a memorandum during the time of these crimes. He apparently had qualms about them. He said in his memorandum to his colleagues:
We never give our people enough time to accomplish their jobs but rather rush the program to the next step before it is ready. We feel enormous pressure from upper management and marketing to continue despite the unsolved technical issue.... We chose not to address these design flaws, but rather to begin production and fix these things on the way. We now find ourselves in the most uncomfortable position of trying to decide what to sell without adequate tests in place to identify the quality of our results ... Test protocol: how was this missed? Were we so with the program that we failed to anticipate that something could be wrong? Does asking tough questions or making waves put one in the political shithouse?
One would hope that there were human beings at Bard who had these qualms. Remarkably to me, and disturbingly, in this case there was no public whistle-blower. Evidently no one in the company felt he or she could go to anybody at Bard to attempt to stop the deliberate scheme to subvert the FDA process intended to assure the safety and effectiveness of its catheters. Indeed, when people raised these reservations, they were urged to abandon them, or at least to stop expressing them, with implicit threats that their jobs and the jobs of others could be jeopardized. It also appears that there was a corporate culture in which nobody felt that he or she could publicly go to the FDA without a well-founded fear of retribution by Bard.
The trial of the individual defendants should determine which, if any, people are criminally responsible for the crimes which Bard admits were committed.[5] In the view of this court, however, the officers and directors of Bard during the relevant period are morally responsible for a corporate culture which placed potential profit above the value of human life.
This is particularly disturbing in this case, where the corporation made instruments to be used by doctors. Doctors in this country, acting in the Hippocratic tradition, have as a first principle of medical ethics, "Do no harm." Ideally, a company which makes medical instruments should be the institutional embodiment of a reverence for life. In this case, Bard exhibited an institutional ethic of greed and indifference to life.
Since it was greed that was the obvious motive for this culture, it is appropriate that Bard pay a substantial financial penalty. $61,000,000 in criminal fines and civil settlement is a substantial and reasonable penalty. The Government estimates that Bard derived gross sales (total revenues from all relevant catheters net of returns and recalls) of $61,000,000 from its unlawful activities. The plea agreement provides for a criminal fine and civil settlement equal to the estimated gross sales.
I am satisfied that Bard's net profit from these illegal activities, although difficult to determine with precision, was well below that figure. As a result, this plea agreement does not merely require Bard to pay back the profit obtained from its misconduct, it requires Bard to pay the Government all of the estimated revenues it obtained from illegally marketed products, and it ensures that Bard will have lost far more from its conduct than it gained.
*292 The $30,500,000 criminal fine appears to be within the fine range which would have been required if the Sentencing Guidelines were applicable. U.S.S.G. § 2F1.1; Government's Sentencing Memorandum at 14-16. This fine is more than three times higher than the next highest fine ever imposed in an FDA case. Government's Sentencing Memorandum at 7. In addition, Bard has been debarred by the Defense Logistic Agency, which should cost it income in the future. Id. at 10.
At the change of plea hearing, I expressed concern about whether the defendant could and would pay the $61,000,000 fine and civil settlement. Subsequent submissions and representations indicate that Bard has the capacity to pay the fine. I am satisfied that this is a real penalty, which the defendant can and will pay.
In assessing reasonableness, I have also been influenced by the fact that the plea agreement contains provisions for minimizing the risk that Bard will commit similar offenses in the future. The fine should discourage repetition of criminal conduct, but the plea agreement does not rely on the fine alone.
As contemplated by the Sentencing Guidelines, Bard is required by the plea agreement to reorganize in many ways to minimize the risk that its crimes will recur. See U.S.S.G. § 8B1.2 ("Remedial Orders"). Indeed, while I condemn Bard for its criminal conduct, I do credit it with having accepted responsibility for its past behavior, while not attempting to diminish, excuse or justify it, and with taking steps designed to prevent it from recurring. Among those steps are the implementation of a new corporate compliance program, the hiring of a new Vice President for Scientific Affairs with responsibility for medical and regulatory affairs company wide, the creation of a Regulatory Compliance Committee of the Board of Directors, the retention of an outside regulatory compliance consultant to inspect Bard each year and report his or her findings and suggestions to both Bard and the FDA, and the adoption of additional reporting obligations to the FDA.
In addition, the FDA will subject Bard products to especially intensive scrutiny under its Applications Integrity Policy. This means, among other things, that all time limits for the FDA to act on Bard's applications to test or market medical devices are suspended. This should assure that the FDA has the time to perform its functions properly, and does so.
As I discussed previously with counsel, the agreed sentence does not provide for restitution for victims. Although this is not the case in which to determine who has been victimized by Bard's conduct, it does appear that there are real human victims. The pleas of these perceived victims are eloquently expressed in their statements to the Probation Department. We heard one today from Mrs. Talbott.
Another example came to me from a man who lost his father. He wrote to the Probation Department, in part:
The premature loss of my father, Francisco [], has caused our mother, Amalia, undue mental stress, emotional and physical stress. She has been forced from a secure lifestyle into an uncertain, stressful and complex existence. She has had to learn to manage property, budget for everyday living expenses, and be fearful for her retirement. She has had an added financial burden due to lack of insurance, steady income, and new responsibilities. She has suffered depression and loneliness since the death of the man she'd been married to for over 35 years. With her second grade education [and] Hispanic upbringing, she has been forced to learn a new way of life, and it has taken its toll.
The criminal sentence provided by the plea agreement does not provide restitution for the possible victims of Bard's crimes. In this case, however, that does not render the agreed-upon sentence unreasonable. Orders of restitution are discretionary. See 18 U.S.C. § 3663(a)(1). The court may decline to order restitution if the complication and prolongation of the sentencing process outweighs the need to provide restitution. See 18 U.S.C. § 3663(d). This is such a case.
It would be very time-consuming and complicated to litigate in this criminal case whether catheters involved in Bard's crimes *293 proximately caused injuries to numerous individuals. Much more importantly, at the end of that process, the court could only award victims compensation for their medical expenses and lost earnings. See 18 U.S.C. § 3663(b)(2). The court could not award damages for pain and suffering or punitive damages, which may be available in civil suits. Accordingly, individual civil suits are a much more appropriate means of addressing restitution, if the possible victims have notice of their possible claims.
Since the plea hearing I have been concerned that the plea agreement did not provide for notice to possible victims. There had been publicity and Bard had written to cardiologists, but I questioned whether this was sufficient to get essential information to people who may have been victimized by Bard's crimes. These concerns were heightened when the submissions revealed that the Beavers family was first informed by a newspaper report that a Bard catheter was used in the procedure during which Mrs. Beavers died.
However, since the plea there has been massive publicity which led to many calls to the United States Attorney's Office. In addition, the parties have assisted the Probation Department in an effort to notify possible victims of Bard's crimes, and the Beavers family would have been informed by that process had it not learned earlier of Bard's involvement.
Many possible victims have responded to the Probation Department. None have objected to the acceptance of the plea agreement or sentence.
In addition, Bard has agreed to the court's suggestion that a letter satisfactory to the court and the FDA, which has already been drafted and reviewed, be sent to cardiologists, explicitly explaining the crimes and the products involved.[6] The letter will ask doctors to send a copy to patients injured during angioplasty using a relevant Bard catheter, or to give Bard the information necessary to send the letter to the patients directly. If Bard gets that information, it will be shared with the United States Attorney's Office and the Probation Department.
This procedure should assure that possible victims receive adequate notice to decide if they have a claim they wish to assert in civil litigation. As I said, individual civil cases are much better than this criminal sentencing for the resolution of such claims.
CONCLUSION
For the foregoing reasons, the court finds that the agreed sentence provides just punishment for Bard. It should prevent Bard from committing comparable crimes in the future. It should also send a message to corporate officials and the companies they personify that to subvert the Food and Drug Administration process intended to assure the safety and effectiveness of medical products is not just wrong, it is dumb.
If they violate the law, they will be caught. Most of them will lose their jobs. They will be prosecuted personally and face the prospect of imprisonment. In addition, the companies that employ them will pay substantial financial penalties and, in the process, their crimes will receive widespread publicity.
If this message is received and taken seriously by other companies and those who personify them, perhaps this disturbing case will ultimately have some redeeming value.
ORDER
In connection with the 391 felonies to which Bard has pled guilty, I hereby impose the following sentence.[7]
*294 Bard shall pay criminal fines in the amount of $30,500,000, to be paid as follows. $15,250,000 shall be paid on or before April 5, 1995, and a second and final installment of $15,250,000 shall be paid on or before April 5, 1996. In accordance with the plea agreement, the specific sum of $30,500,000 includes interest.
In addition, Bard shall pay the Clerk of this Court a mandatory special assessment of $78,200, $200 for each of the 391 counts, not later than April 19, 1994.
Bard shall also pay the sum of $30,500,000 to the United States on or before May 5, 1994, in accordance with the terms of the civil settlement agreement.
NOTES
[1] This Memorandum and Order is the slightly edited transcript of the statements made by the court in sentencing C.R. Bard, Inc. on April 5, 1994, to which citations and footnotes have been added.
[2] By Order dated March 7, 1994, the court granted a request to allow one member of the family of Eunice Beavers, a woman who had died during angioplasty involving a Bard catheter, to address the court at the sentencing hearing. Subsequently, two former employees of Bard who have been indicted in a related criminal case and are also defendants with Bard in a civil action brought by Mrs. Beavers' estate, filed a motion to preclude any member of the Beavers family from speaking at the sentencing hearing because of their concern that the resulting publicity would injure their ability to receive a fair trial in the civil and criminal cases. The court denied the motion because it found: (a) some information concerning the impact of Bard's conduct on possible victims should be part of the public record because the public has a legitimate interest in information necessary to evaluate the reasonableness of the plea agreement and the court's decision to accept or reject it; and (b) "`impartial jurors have been selected in many highly publicized [] cases by use of rigorous voir dire of the jury venire' and jurors chosen would be `emphatically and clearly instructed to decide the case only on the evidence presented in court.'" In re Globe, 729 F.2d 47, 53 (1st Cir. 1984) (quoting Colon Berrios v. Hernandez Agosto, 716 F.2d 85, 92 (1st Cir.1983)). Accordingly, Mrs. Beavers' daughter, Linda Talbott, was allowed to address the court at the sentencing hearing.
[3] The civil settlement relates to default claims and liability. It is not part of the criminal penalty.
[4] Indeed, as Professor Coffee has noted, the dilemma presented in seeking to sentence a corporation was recognized well before Baron Thurlow's time. "In the thirteenth century Pope Innocent IV forbade the practice of excommunicating corporations on the unassailable logic that, since the corporation had no soul, it could not lose one. He thus became the first legal realist." 79 Mich.L.Rev. at 386 n. 2.
[5] Bard has admitted there was a conspiracy of members of its corporate management to commit many federal felonies. The six individual defendants are, of course, each presumed innocent. It is possible that in their case the conspiracy to which Bard pled guilty, or each individual's membership in it, will not be proved beyond a reasonable doubt. There remains, therefore, the possibility that only the corporation will be held liable and punished for crimes it acknowledges some of its employees committed.
[6] As this case involves a binding Rule 11(e)(1)(C) plea agreement, the court could not order Bard to send this letter. However, recognizing the risk that the court would reject the plea agreement because of its reservations concerning the adequacy of notice to possible victims, Bard commendably undertook to send the letter.
[7] On March 7, 1994, the court ordered that Bard's acting Chairman and Chief Executive Officer attend the sentencing hearing and invited other officials of Bard to attend. The acting Chairman and Chief Executive Officer appeared and addressed the court, unequivocally admitting, and expressing regret for, Bard's crimes. He stood as the representative of Bard as sentence was pronounced. In addition to counsel, he was accompanied by two executives of Bard and two "outside" members of its Board of Directors. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1765357/ | 369 S.W.2d 299 (1963)
Paul Bruce BROWN et ux., Petitioners,
v.
FRONTIER THEATERS, INC., Respondent.
No. A-9404.
Supreme Court of Texas.
June 26, 1963.
Rehearing Denied July 17, 1963.
*300 John P. Dennison, Pecos, for petitioners.
Richard L. Toll, Russell & Tomlin, Pecos, for respondent.
SMITH, Justice.
This suit was originally brought in the District Court of Reeves County, Texas, by James Perry Brown, Blanchelizabeth Brown, and her husband, Paul Bruce Brown, against Frontier Theatres, Inc., seeking damages for household and kitchen equipment, clothing, money, heirlooms and other personal property, which was destroyed in a fire on May 11, 1958. James Perry Brown was dismissed from the suit, and the cause went to trial before the court and a jury, with Blanchelizabeth Brown and her husband, Paul Bruce Brown, as the sole remaining plaintiffs and Frontier Theatres, Inc., as defendant. For convenience, the parties will hereinafter be referred to as the Browns and Frontier Theatres.
After approximately two days of trial before a jury, the jury was dismissed by agreement of the parties. The trial was completed before the court and resulted in a judgment in favor of the Browns and against the Frontier Theatres for the sum of $21,258.00 for loss of property, with interest from May 11, 1958, the date of the loss.
Frontier Theatres perfected an appeal to the Court of Civil Appeals for the Eighth Supreme Judicial District of Texas at El Paso. That Court has reversed the judgment of the trial court and rendered its judgment that the Browns take nothing. 362 S.W.2d 360. The judgment of the Court of Civil Appeals is reversed.
On and prior to May 11, 1958, the defendant was the owner of the Eagle-Drive-In Theatre. This theatre was destroyed by a fire which consumed the personal property involved in this suit. The drive-in theatre was a structure approximately 60 feet high and contained an apartment which occupied the lower 8 or 8½ feet. The upper 51½ or 52 feet of the structure consisted principally of a theatre screen on the interior portion and a large neon sign on the exterior.
This theatre was one of three owned and operated by Frontier Theatres, Inc., in the Pecos area and Mr. Russell Ackley was the city manager for Frontier Theatres, Inc. Mr. Ackley had authority to employ such personnel as was necessary for the operation of the business, and Mrs. Brown was employed by him to operate the Eagle-Drive-In Theatre. This employment began about August 24, 1957, and continued until the date of the fire. Under the terms of the employment agreement, the Browns were to live on the theatre grounds on a 24-hour day basis and would serve as caretakers of the defendant's property; they were to report to Mr. Ackley in the event *301 any repairs were needed; they were given no authority to make repairs and their responsibility was limited to reporting such needed repairs to the city manager.
Under the agreement, Frontier Theatres furnished the Brown family the apartment portion of the structure for use as a residence. The Browns were also furnished a ground site adjacent to the apartment, upon which they were permitted to place a trailer house which was used as a part of their residence. Mr. Ackley had full knowledge that the Browns had moved all of their personal property into the apartment and the trailer house.
The evidence indicates and the trial court found that the upper 51½ or 52 feet of the structure immediately above the apartment was under the exclusive management and control of Frontier Theatres and was not a part of the apartment. This upper portion of the structure, including the screen, the neon sign and all electrical wiring and appurtenances thereto, was retained by Frontier Theatres; and the maintenance thereof was the sole responsibility of Mr. Ackley. It was in this part of the structure that the Browns discovered electrical sparks emanating from the electrical wires connected to the neon sign. Mrs. Brown testified that sparks were "running up and down metal strips on the side of the building," that she pulled the switch and reported the trouble to Mr. Ackley; and Mr. Ackley sent an electrician to the scene. The electrician made some repairs and informed Mrs. Brown that it was safe to turn the switch and use the neon sign. The sparks again appeared, and Mrs. Brown again called Mr. Ackley. Mr. Ackley, when told that sparks were still "running up that metal strip," instructed Mrs. Brown to operate the neon sign. Mrs. Brown testified: "I asked him [Mr. Ackley] about it and he said that well, if the man [the electrician] said it was all right, you go ahead and operate it And to turn the lights on." Mrs. Brown testified that on Saturday of the same week the sparks were first discovered she had another conversation with Mr. Ackley. This conversation took place at the State Theatre; and when told by Mrs. Brown that she was still concerned about the condition of the wiring because the difficulty had continued, Mr. Ackley said: "go ahead and use the lights. Or to use the sign." The sign was called the "Eagle." He said for me to "turn the eagle back on." Mrs. Brown testified that in view of this conversation she felt that it was safe to operate the neon sign.
The next day [Sunday] about 9 o'clock, when the evening show was in progress, the fire occurred. According to one of the patrons of the show on that evening, the fire was first seen at the "top right-hand corner" of the screen. This witness testified that on several occasions prior to the fire he had been in the apartment and was somewhat familiar with the premises and had knowledge of the fact that the Browns lived there. He also knew that the Browns had considerable personal property in the apartment and that upon seeing the fire, he went to the apartment and carried out some of the things. He testified that the fire was up in the tower structure above the apartment at first, that he was forced to stop going in and carrying things out because "the roof started falling in."
We have set out the evidence at some length in order to show a basis and support for the material findings of fact and conclusions of law by the trial court. It cannot be said as it was said in the case of Ditto v. Ditto Investment Company, 158 Tex. 104, 309 S.W.2d 219, that the filing of findings and conclusions was improper. In determining whether the trial court's findings are supported by any evidence of probative value, we will give credence only to the evidence favorable to the findings and will disregard all evidence to the contrary. The findings of fact and the conclusions of law will be construed together; and if the findings of fact are susceptible of different constructions, they will be construed, if possible, to be in harmony with the judgment and to support it. See: Gulf *302 Liquid Fertilizer Company v. Titus, Tex., 354 S.W.2d 378 (1962); Elder, Dempster & Co. v. Weld-Neville Cotton Co., 231 S.W. 102 (Tex.Com.App.1921).
This case comes to us with the holding that regardless of whether the duties allegedly owed by Frontier Theatres with respect to the chattels involved be found to rest solely upon a master-servant relationship between the parties, or solely upon a landlord-tenant relationship; or, upon a finding that both such relationships existed simultaneously under the employment agreement, the Browns cannot recover. The Court of Civil Appeals gives several reasons for such holding, and those reasons will be briefly stated:
In discussing the landlord-tenant relationship theory, the Court seems to have based its conclusion that Frontier Theatres was under no duty to keep the premises in repair, and particularly was under no duty to repair the electric wires connected to the neon sign, unless there existed some type of contract or agreement between the landlord and tenant imposing a duty upon the landlord to keep the premises in repair, or a covenant to keep the premises in a reasonably safe condition. The Court held that since there was no such contractual obligation, Frontier Theatres was under no duty to repair the electric wiring, and that therefore, Frontier Theatres was not liable to the Browns.
The Court of Civil Appeals, in connection with its discussion of the master-servant relationship theory, observed that before there can be a recovery there must have been established, in a case such as this, that a legal duty was owed by one person to another; a breach of that duty; and damages proximately resulting from such breach. The Court recognized that where the relationship of the parties is that of master and servant, the duty need not be one imposed by contract between the parties, but may be one implied by law from the circumstances and relationship of the parties. The Court, however, held that a legal duty on the part of the master to warn and protect the servant exists as to dangers only within the knowledge of the master and that no legal duty exists to warn and protect where the servant knows and appreciates the danger. The Court of Civil Appeals reached the conclusion that since the evidence was undisputed that the Browns knew of the dangers incident to the electric sparks originating in the wires connecting to the neon sign and knowing of such dangers and having voluntarily encountered them, they were not only barred from a recovery because Frontier Theatres had breached no duty, but because the Browns were also guilty of contributory negligence as a matter of law, in failing to remove their property from the premises. To support its holding on the issue of contributory negligence, the Court applied the rules announced in McKee v. Patterson, 153 Tex. 517, 271 S.W.2d 391 (1954).
In our opinion the evidence establishes that the parties to this suit occupy the dual relationship of master-servant and landlord-tenant. We are also of the opinion that if under the facts of this case Frontier Theatres has breached the duty owed to the Browns under either relationship, liability should be imposed upon Frontier Theatres for the loss of the personal property of the Browns.
Landlord-Tenant
Frontier Theatres concedes in their brief in the Court of Civil Appeals that under the undisputed testimony the relationship of landlord and tenant existed. Therefore, the only question here presented is whether the landlord, Frontier Theatres, owed such a duty to the tenant, the Browns, as would render it liable for the loss or damage to the personal property involved.
The following is a summary of the findings of the trial court which are important to the resolving of the issue here presented: (1) the upper 51½ or 52 feet of the tower above the apartment, the screen, the neon sign and all electrical wiring and apparatus *303 pertaining thereto was under the exclusive management and control of Frontier Theatres, and was the sole responsibility of Mr. Ackley; (2) the fire was caused by and resulted from defects in the electrical wiring connected to the neon sign in that portion of the tower over which Frontier Theatres retained exclusive management and control; (3) the electrical defects were reported to Mr. Ackley prior to the fire, and that Mr. Ackley failed to have such electrical wiring repaired, and that Mr. Ackley instructed Mrs. Brown to continue the operation of such theatre, using such neon sign; and (4) the Browns were following and relying entirely upon such instructions at the time the fire occurred. Such findings are clearly supported by the evidence.
In our opinion these facts bring this case within the rule that where a landlord retains possession or control of a portion of the leased premises the landlord is charged with the duty of ordinary car in maintaining the portion retained so as not to damage the tenant. Archibald v. Fidelity Title and Trust Co., Tex.Civ.App., 296 S.W. 680. When such duty is breached and damage results therefrom, the landlord is liable to the tenant who suffers injury due to the defects in the portion over which possession or control is retained. See: Lang v. Henderson, 147 Tex. 353, 215 S.W.2d 585. Therefore, by the retention of control of the upper portion of the tower structure, Frontier Theatres was under the duty to maintain and operate that portion in a reasonably safe and prudent manner so as to prevent damage to the Brown's property located in the lower portion of the tower. This Frontier Theatres failed to do.
The trial court has found that Frontier Theatres was negligent in failing to repair the electrical defects that were the cause of the fire, and that Frontier Theatres' negligence in this regard was the proximate cause of the fire that resulted in the loss of property to the Browns. We are of the opinion that the findings of negligence and proximate cause must be sustained, and that Frontier is liable for the damages that resulted unless the Browns were contributorily negligent.
Contributory Negligence
Frontier Theatres would have us hold that Mrs. Brown was contributorily negligent as a matter of law in continuing in occupation of the premises with knowledge that there was some defect in the electric sign, and in failing to use the means at hand of which she had full knowledge, to turn off the sign and thereby prevent the fire. In our opinion the record in this case will not support such a conclusion.
The record establishes that upon receipt of information that there was some difficulty in the electric equipment, Mrs. Brown pulled the electrical switch and stopped the sparks. Immediately thereafter she called Mr. Ackley, the landlord's city manager, who told her that he would have the defect repaired. A repairman for the sign company worked on the lights and told Mrs. Brown that the sign was safe and assured her that there was definitely no danger in the sign because he had never known of a fire starting from neon. Subsequently, sparks were again noticed, and again Mrs. Brown notified Mr. Ackley about them. Mr. Ackley stated that if the repairman said it was all right, then the lights were to be turned on. The mere fact that Mrs. Brown knew of these sparks and knew that they constituted a dangerous condition does not necessarily make Mrs. Brown contributorily negligent as a matter of law. McAfee v. Travis Gas Corp., 137 Tex. 314, 153 S.W.2d 442.
Contributory negligence such as will bar Mrs. Brown from recovering for the damage to her property would necessitate a holding by this court that the only rational inference that can be drawn from the above stated facts is that Mrs. Brown's conduct fell below the standard of reasonable care, and that her failure to act with reasonable care was a legally contributing *304 cause, co-operating with the negligence of Frontier Theatres in bringing about her loss. It is the general rule in Texas that where the undisputed evidence establishes the existence of a danger and the injured party has knowledge or is chargeable with knowledge of the danger and, without justification, exercises no care whatever, then there is shown a case of contributory negligence as a matter of law. Henwood v. Gilliam, Tex.Civ.App., 207 S.W.2d 904, wr. refused. Gulf, C. & S. Ry. Co. v. Gascamp, 69 Tex. 545, 7 S.W. 227. But where, as here, there is some evidence of care and the question is one of the sufficiency of the care taken, it cannot be said as a matter of law that there is contributory negligence. Lang v. Henderson, supra; Henwood v. Gilliam, supra. That Mrs. Brown was contributorily negligent is not the only rational inference that can be drawn from the facts; therefore, she cannot be held to be guilty of contributory negligence as a matter of law.
Damages
In awarding damages the trial court divided the items for which recovery was allowed into six categories: (1) items having market value; (2) used or secondhand household items, clothing, etc.; (3) household utensils, equipment, etc.; (4) furniture, books, bedding, linens, etc.; (5) miscellaneous personal property; and (6) irreplaceable goods and chattels. Frontier Theatres does not complain of the damages awarded by the trial court for the items listed under the first five categories; however, complaint is made that there is no evidence to support the award of $4,833.29 in damages for the following items which are classified as irreplaceable goods and chattels; two slumber spreads ($666.66); one wedding veil, shoes and point lace collar ($666.66); one key-wound heirloom watch ($666.66); two emerald rings ($933.33); one 36 cal. Colt pistol and holster ($500.00); one English letter box ($233.33); one cameo pin ($333.33); one coin collection ($666.66); and one land patent or deed signed by U. S. Grant ($166.66). The record reveals that each of these items was completely destroyed by the fire, and that their character was in the nature of heirlooms. In making its award of damages the trial court deducted 1/3 of the evaluation placed on each of these items by Mrs. Brown; but since no contention has been made by Mrs. Brown that the trial court erred in this regard, we need not consider the propriety thereof.
Frontier Theatres does not attack the reasonableness of the award of damages as to any of these items, but it is Frontier Theatres' position that there is no evidence such as will support the award of damages made. In view of the disposition of this case by the Court of Civil Appeals this issue was neither considered nor disposed of; the issue is now properly before this court. We disagree with Frontier Theatres' contention.
The law recognizes that articles of small market value of which their owner is despoiled may have a special value to him as heirlooms, and there is evidence in the record that with the exception of the coin collection and the land patent the primary value of these items to Mrs. Brown was their sentimental value. For example: the wedding veil, one of the the emerald rings, the shoes and the point lace collar belonged to her grandmother; the pistol belonged to her grandfather; the watch belonged to her great grandmother; and the two slumber spreads were made by hand by her great, great, great grandmothers.
As a general rule recovery for sentimental value for personal property cannot be had in a suit for the loss of property for personal use such as wearing apparel and household goods. International & G. N. Railway Co. v. Nicholson, 61 Tex. 550; See also; 1 Sedgwick on Damages, § 251. This rule has been applied in Texas so as to deny the recovery for sentimental value in a suit for the loss of heirlooms. St. Louis, I. M. & S. R. Co. v. Green, (1906), 44 Tex. Civ. App. 13, 97 S.W. 531, no writ hist. However, in our opinion such is *305 not the rule to be applied in a suit to recover for the loss or destruction of items which have their primary value in sentiment.
It is a matter of common knowledge that items such as these generally have no market value which would adequately compensate their owner for their loss or destruction. Such property is not susceptible of supply and reproduction in kind, and their greater value is in sentiment and not in the market place. In such cases the most fundamental rule of damages that every wrongful injury or loss to persons or property should be adequately and reasonably compensated requires the allowance of damages in compensation for the reasonable special value of such articles to their owner taking into consideration the feelings of the owner for such property. Green v. Boston & Sowell Railway Co., 128 Mass. 221, 35 Am.Rep. 370; Bateman v. Ryder, 106 Tenn. 712, 64 S.W. 48; Pennington v. Redman Van and Storage Co., 34 Utah 223, 97 P. 115; Harvey v. Wheeler Transfer & Storage Co., 227 Wis. 36, 277 N.W. 627; see also: 4 Sutherland on Damages (4th ed.) § 1099; 6 Joyce on Damages, § 1121; 63 A.L.R. 240, 261; 12 A.L.R. 2d 902, 929; 15 Am.Jur.Damages, § 127. Where such special value is greater than the market value, it becomes the only criterion for the assessment of damages. Shewalter v. Wood, Mo.App., 183 S.W. 1127.
As to the coin collection and the land patent signed by U. S. Grant, there is no evidence in the record either as to their market value or their sentimental value; therefore, the award of damages for the coin collection in the amount of $666.66, and the award of damages of the land patent in the amount of $166.66 is not supported and no recovery may be had therefor.
The judgment of the Court of Civil Appeals is reversed, and judgment is here rendered that the Browns take nothing on their claim for damages for the loss of the coin collection and the deed signed by U. S. Grant. In all other respects, the judgment of the trial court is affirmed. All costs are adjudged against Frontier Theatres, Inc.
GRIFFIN, J., dissenting. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1130345/ | 537 So. 2d 4 (1988)
CIT FINANCIAL SERVICES, INC.
v.
Edith W. BOWLER.
87-84.
Supreme Court of Alabama.
November 18, 1988.
*5 Michael S. Jackson of Melton & Espy, and Beers, Anderson, Jackson & Smith, Montgomery, for appellant.
H. Dean Mooty, Jr. of Capell, Howard, Knabe & Cobbs, Montgomery, for appellee.
HOUSTON, Justice.
Edith W. Bowler's husband, Dr. Bowler, obtained a loan from CIT Financial Services, Inc. ("CIT"), in the amount of $30,000 and secured it with a second mortgage on the Bowlers' jointly-owned home. Ms. Bowler's name and purported signature appear on the loan and mortgage documents. The evidence shows that a female posing as "Ms. Bowler" forged Ms. Bowler's signature on the loan documents. Neither the loan officer handling Dr. Bowler's loan for CIT nor the notary public who signed the acknowledgement witnessed the signature of the imposter. The loan officer did call a telephone number given to him by Dr. Bowler and ascertain that a person, who identified herself as Ms. Bowler, had signed and did understand the contents of the documents on which the signature "Edith W. Bowler" appeared. It is undisputed that the person to whom he talked was not Ms. Bowler.
In 1986, Ms. Bowler filed a multi-count complaint against CIT, Dr. Bowler, and others, claiming damages for fraud, negligence, wantonness, and violations of the federal Truth-in-Lending Act, and asking the court to declare the note and mortgage void. In her complaint, she alleged that her signatures on the loan documents were forgeries. The negligence and wantonness claims were submitted to the jury.
During the trial, CIT amended its answer to plead the defenses of ratification, estoppel, and laches. The jury returned a verdict in favor of Ms. Bowler and against CIT in the amount of $50,000 compensatory damages and against Dr. Bowler in the amount of $100,000 compensatory damages and $100,000 punitive damages. The trial court entered judgment on those verdicts. In addition, the trial court gave CIT a $50,000 judgment against Dr. Bowler on CIT's cross-claim. The trial court declared the note and mortgage void as to Ms. Bowler, and found that CIT had violated the Truth-in-Lending Act. After the trial court denied its motion for J.N.O.V. or, in the alternative, for new trial, CIT appealed to this Court. Dr. Bowler did not appeal. We affirm in part; reverse in part; and remand.
I. Jury Claims
CIT contends that it is entitled to a judgment as a matter of law, or, alternatively, that it is entitled to a new trial on the ground that the trial court erred in refusing its written requested jury charge on ratification.
At the outset, we note that CIT was not entitled to a judgment notwithstanding the verdict. Guided by the scintilla rule, we find that there was sufficient evidence introduced to produce a conflict warranting a jury's consideration of the negligence claim. Bradford v. McGee, 534 So. 2d 1076 (Ala.1988). The jury specifically found that CIT was not guilty of wantonness. There was also a scintilla of evidence that Ms. Bowler ratified the mortgage, and the scintilla of evidence rule applies to affirmative defenses, as well as to a plaintiff's claims. McHugh v. Harrison, 266 Ala. 138, 94 So. 2d 756 (1957).
A ratification occurs when a principal retains the benefits resulting from his agent's unauthorized acts with knowledge of the material facts surrounding the transaction. Tuskegee Institute v. May Refrigeration Co., 344 So. 2d 156 (Ala.1977); see Gray v. Great American Reserve Ins. Co., 495 So. 2d 602, 607 (Ala.1986); Cole v. Racetrac Petroleum, Inc., 466 So. 2d 93 (Ala. 1985); Farmers & Ginners Cotton Oil Co. v. Hogan, 267 Ala. 248, 100 So. 2d 761 (1957); see, also, Annot., 82 A.L.R. 3d 613, 651, and Code 1975, § 7-3-404. The record shows that Ms. Bowler was at home when a real estate appraiser appraised the home for this second mortgage; that the loan proceeds were deposited into Dr. and Ms. Bowler's joint checking account; that Ms. Bowler discovered the loan documents and the second mortgage two or three months after Dr. Bowler closed the loan; that Ms. Bowler knew that substantially all of the *6 loan proceeds ($27,391.67) were deposited into this joint checking account; and that Ms. Bowler wrote several checks on this joint checking account after she was aware that the loan proceeds had been deposited into this account. Ms. Bowler was divorced from Dr. Bowler approximately 11 months after the loan was closed, and this second mortgage was an issue in the divorce, and the divorce judgment required Dr. Bowler to satisfy CIT's second mortgage. This evidence would establish at least a scintilla of evidence that Ms. Bowler ratified the mortgage. However, the trial court refused CIT's written requested jury charge on ratification and did not orally instruct the jury on the law of ratification. CIT made a timely objection to the trial court's refusal of this charge. "In a jury case a party is entitled to have its case tried to a jury that is given the appropriate standard by which to reach its decision." Kyle v. Selma Medical Center Hospital, 534 So. 2d 589 (Ala.1988). A wrongful refusal of a requested jury instruction constitutes a ground for new trial. Matthews v. S.A. Martin & Martin Motors, 394 So. 2d 943 (Ala.1981). A new trial was requested and one ground assigned therefor was the refusal to give the requested charge on ratification. The trial court in refusing to give the requested charge stated that ratification is not a defense to negligence or wantonness. The trial court is correct, and it was not error for it to refuse the requested charge on ratification, since only the claims on negligence and wantonness were submitted to the jury.
In Campbell v. Burns, 512 So. 2d 1341, 1343 (Ala.1987), we wrote:
"Upon review of a jury verdict, we presume that the verdict was correct; we review the tendencies of the evidence most favorably to the prevailing party; and we indulge such reasonable inferences as the jury was free to draw from the evidence. We will not overturn a jury verdict unless the evidence against the verdict is so much more credible and convincing to the mind than the evidence supporting the verdict that it clearly indicates that the jury's verdict was wrong and unjust. Mid-Continent Refrigerator Co. v. Fulton Grocery, Inc., [503 So. 2d 1222 (Ala.1987) ]."
Does the evidence clearly indicate that the jury verdict was wrong and unjust as to the amount of damages awarded Ms. Bowler against CIT? We are persuaded that it does not. We affirm the $50,000 jury verdict against CIT in favor of Ms. Bowler.
II. Non-Jury Claims
Ms. Bowler alleged in her complaint that CIT violated the Truth-in-Lending Act by failing to disclose the terms of the credit transaction and her right of rescission and by failing to cancel the mortgage upon request. The trial court awarded her damages in an amount equal to the outstanding balance of the mortgage. We hold that Ms. Bowler was not entitled to damages under the Truth-in-Lending Act. The Truth-in-Lending Act applies only to consumer credit transactions and expressly exempts from its coverage extensions of credit primarily for business purposes. 15 U.S.C. § 1603(1); 12 C.F.R. § 226.3(a); Sherrill v. Verde Capital Corp., 719 F.2d 364 (11th Cir.1983). The undisputed evidence shows that Dr. Bowler executed the loan with CIT primarily for business purposes. The loan application reveals on its face that the purpose of the loan was to finance the opening of a private medical practice. There was also evidence indicating that, at the time of applying for the loan, Dr. Bowler requested that some of the proceeds be allocated toward paying off credit card debts. However, out of the $30,000 extended to Dr. Bowler by CIT, only $2,149.00 was applied to the credit card debts. Because Dr. Bowler entered the loan transaction with CIT primarily for a business purpose and not for a personal, family, or household purpose, it was a commercial loan and thus exempt from coverage of the Truth-in-Lending Act. Accordingly, the trial court erred in applying the Truth-in-Lending Act to the loan.
For the foregoing reasons, the judgment is affirmed as to the negligence claim and is reversed as to the Truth-in-Lending claim.
*7 AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
TORBERT, C.J., and MADDOX and BEATTY, JJ., concur.
ALMON, J., concurs in the result. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1721611/ | 108 So. 2d 473 (1959)
Robert FULTON, Appellant,
v.
STATE of Florida, Appellee.
Supreme Court of Florida.
January 9, 1959.
Rehearing Denied February 17, 1959.
*474 William R. Davenport, Pensacola, for appellant.
Richard W. Ervin, Atty. Gen., and Odis M. Henderson, Asst. Atty. Gen., for appellee.
TERRELL, Chief Justice.
Appellant was tried and convicted on an information charging manslaughter by culpable negligence in the operation of his automobile. A motion for new trial was overruled, he was adjudged guilty and sentenced to confinement in the State penitentiary at hard labor for a period of five years. This appeal was prosecuted from the judgment so entered.
The sole point urged for reversal is whether the evidence is sufficient to support a verdict and judgment of guilty of manslaughter by culpable negligence.
The essential facts precipitating this action are not in dispute and are substantially as follows: Appellant was driving easterly on what is known in Escambia County as Nine Mile Road. The day was clear, it was soon after 3:30 P.M., April 28, 1955, and there was very little traffic on the highway which was straight and unobstructed, had a 200 feet right-of-way and was paved with blacktop 22 feet wide. At the foot of a long incline on the highway there was a bridge the same width as the pavement. Appellant attempted to pass a Pontiac driven by Mary McCart who was accompanied by a companion. Appellant was driving a Ford automobile; as he approached the Pontiac about the middle of the bridge, the right front fender of his Ford struck the left rear fender of the Pontiac causing it to go out of control, sway to the right, strike the bridge twice, travel about 150 feet, turn over three times, then travel 50 feet before it came to rest headed in another direction. From the point the Ford struck the Pontiac, it ricocheted to the left curb of the bridge, went out of control, crossed the road in front of the Pontiac, went down an embankment, thence up the embankment and came to rest right side up approximately 300 feet from the point of impact. It left no skid marks on its path. The driver of the Pontiac was killed as result of the collision.
Appellant grounds his claim for reversal on the contention that the evidence fails completely to show excessive speed or that he was guilty of culpable negligence. He cites a number of cases, among them Cannon v. State, 91 Fla. 214, 107 So. 360; Jackson v. State, Fla.App. 1958, 100 So. 2d 839; Miller v. State, Fla., *475 75 So. 2d 312, and others to support his contention. I have read these cases but I think they are predicated on such different circumstances that they cannot be said to control the case at bar. In fact if this court has ever prescribed a pattern or formula for the determination of culpable negligence, it had reference to the particular case and was not intended to be general. No such formula could be general because so many and different factors may be involved in culpable negligence. There is nothing mystical about culpability. It comprehends blame, censure or some aspect of erratic conduct. To support manslaughter as used in § 782.07, Florida Statutes, F.S.A., one's conduct must reveal a reckless disregard or indifference for the life, safety or rights of those exposed to its effects, or it must show an indifference to consequences regardless of who is affected. If one takes no account of the fact that others are on the highway and have as much right to be there as he has or is totally oblivious to their rights, his conduct may be culpable.
In addition to the facts heretofore pointed out, the evidence shows that immediately before the accident appellant had consumed a steak dinner, during which and not exceeding two hours before he consumed four bottles of beer. He was driving a dangerous instrumentality, so pronounced by this court nearly forty years ago. How fast he was driving no one can tell, the evidence as to that is in conflict. Some of it says 55 to 60 miles per hour and some says as fast as 80 miles. There is evidence which shows that defendant was "stunned" after the accident and that his breath had on it the aroma of whiskey. It is shown that deceased was driving orderly in her lane or on her side of the highway and since it was 22 feet wide, it is clear that defendant had from 11 to 15 feet of paved highway to pass the Pontiac.
In view of these facts, I think the jury had reasonable ground to assume that defendant's conduct revealed a reckless disregard or indifference for the life, safety and rights of the deceased. I think there was ample showing of indifference to consequences regardless of who was on the highway and that he was oblivious to the presence of deceased. It is conclusively shown that Mary McCart came to her death as a result of defendant's negligent conduct; that he had ample room to pass her in safety and that he was driving over a bridge which of itself should have prompted him to condition his speed to the circumstances which, if he had done, he would have easily passed the deceased and no harm would have resulted. Culpable conduct is generally determined by the results that follow. Speed is not the determining factor. One might drive 90 miles an hour and get by with it if he did not kill or maim someone or a police officer did not pick him up.
In this connection, it is not amiss to call attention to the fact that §§ 317.21 to 317.33, inclusive, Florida Statutes 1955, F.S.A., define certain rules of the road to govern those using the highways and punish those who refuse to observe them. Appellant gave no heed whatever to those detailing one's duty overtaking and passing motor vehicles traveling in the same direction. The very purpose of these and other regulations is to caution motorists to drive carefully to create a wholesome respect for others and their rights on the highways. In addition to this, we are constantly admonished by federal, state, county and local highway authorities, civic clubs, newscasters and others to drive carefully. Motorists should realize that it is a privilege to own a driver's license to traverse the highways and that such a license is not only a badge of care and good character, but that the one who has it respects the rights of others on the highways.
Defendant admits that the accident took place because of his negligence, inattention or mistake of judgment in not allowing clearance enough between his car and that of the deceased when passing her on *476 the bridge, but he contends that his conduct did not constitute culpable negligence. It is not shown or contended that the death of Mary McCart was the result of an unavoidable accident. It is shown on the other hand that she did nothing to cause the accident but that she was driving orderly in her lane of the highway and was an innocent victim of appellant's negligence. One cannot collide with another on the highway in the manner shown here and excuse himself by claiming mistake of judgment in not allowing clearance enough to pass his victim's car. The law makes it his duty to drive at a speed and with such care that his car will always be under control and prevent such errors of judgment. This fact alone, aside from the fact that he lost control of his car and struck deceased's car with such force as to turn it three somersets, shows culpable conduct. The law may excuse a pure accident, but it does not excuse gross and culpable negligence.
It is accordingly shown that appellant wilfully violated the rules of the road; that his conduct revealed a reckless disregard for the right of the deceased on the highway and that he was oblivious to her presence there. There was ample predicate for the verdict and judgment.
It is therefore affirmed.
THOMAS and THORNAL, JJ., and STURGIS, District Judge, concur.
ROBERTS, DREW and O'CONNELL, JJ., dissent.
ROBERTS, Justice (dissenting).
This is an appeal from a verdict and judgment convicting the appellant of manslaughter by culpable negligence in the operation of an automobile.
The accident resulting in the death of the decedent occurred when the appellant attempted to overtake and pass a car being driven by the decedent while the vehicles were on a bridge. There was no traffic on the bridge nor on the highway within eyesight of the collision at the time it occurred. Traffic on the highway was light. The bridge was the same width as the highway, and there were no obstructions to the view while driving along the highway. The speed limit was the same on the bridge as on the highway at that time, 60 miles per hour. The right front fender of the appellant's car struck a "glancing blow" on the left rear fender of the decedent's car, causing both cars to go out of control and careen along the bridge and beyond it. The appellant said that the back end of the decedent's car appeared to swerve out towards his car at the moment he was attempting to pass it. The appellant's car did not turn over. That of the decedent turned over three times. The decedent was thrown from her car at some point following the impact and died of chest injuries shortly thereafter. Neither the appellant, who was alone in his car, nor the decedent's niece, who was a passenger in her car, received serious injuries only minor bruises and bumps.
The evidence of the speed at which the appellant was travelling was inconclusive. Nor is the exact cause of the accident clearly shown, although the jury could have inferred that the appellant was negligent in not allowing enough space between his and the decedent's car in attempting to pass and that the tragedy would not have occurred in the absence of such negligence. Such conduct standing alone, however, would seem to be nothing more than an error in judgment and, as such, entirely inadequate to support a manslaughter charge based on culpable negligence. Cf. Miller v. State, Fla. 1954, 75 So. 2d 312; Maxey v. State, Fla. 1953, 64 So. 2d 677, 678. The appellant had had a couple of beers with his meal shortly before the accident, but there was nothing in the evidence to show that his sobriety was affected by the beer.
*477 The degree of negligence sufficient to support a criminal charge of manslaughter based on "culpable negligence" has been many times stated by this court. See Maxey v. State, supra, and cases cited. And, in all the circumstances here, I am of the opinion that the evidence is not conclusive of appellant's guilt of that degree of negligence sufficient to justify a verdict of guilty of manslaughter.
Here, as in Maxey v. State, supra, the testimony "is neither consistent with guilt nor inconsistent with innocence." This being so, I think the ends of justice would be best served by reversing the judgment and ordering a new trial.
I therefore respectfully dissent.
DREW and O'CONNELL, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1721615/ | 430 S.W.2d 635 (1968)
STATE of Missouri, Plaintiff-Respondent,
v.
Floyd PHILLIPS, Defendant-Appellant.
No. 32101.
St. Louis Court of Appeals, Missouri.
July 16, 1968.
*636 Newmark & Baris, Irl B. Baris, St. Louis, for appellant.
Thomas W. Shannon, Pros. Atty., Robert Hoffman, Asst. Pros. Atty., St. Louis, for respondent.
CLEMENS, Commissioner.
This case presents the question of criminal liability for giving an insufficient funds check to a payee who knew when accepting the check that it was not good and agreed not to present it for payment until later.
The State charged that the defendant unlawfully, and with intent to defraud, issued a $2,000 check, then knowing he had insufficient funds in the bank for its payment. (Although the offense is now a felony, it was then a misdemeanor; § 561.460, V.A.M.S.) The jury brought in a guilty verdict and assessed a $500 fine. The defendant appeals from the ensuing judgment.
The defendant challenges the denial of his motion for acquittal, contending the evidence did not show an intent to defraud since he did not falsely represent an existing fact. We agree.
The State's evidence: Defendant Floyd Phillips operated a home improvement business and from time to time bought materials on open account from the Crescent Plumbing Supply Company. Mr. Sam Rotskoff, Crescent's manager, demanded that Phillips make a substantial payment on the account. Phillips went to Rotskoff's office and talked about his business prospects and the status of the account. He gave Rotskoff a $2,000 check, dated that same day. But Rotskoff said Phillips asked him to hold the check for a week or ten days and told him that he expected the check would be good then since he had a lot of money coming in shortly. Rotskoff testified:
"Q. In other words, then, at the time you received the check he gave you the impression that the check would not clear, but that he expected to get some money, by virtue of which the check would then be good in ten days; is that correct?
"A. That is why I took it, right."
Rotskoff did hold the check. When he deposited it ten days later Phillips' bank refused payment because of insufficient funds. (Phillips did make substantial deposits soon after giving Rotskoff the $2,000 check, but other checks reduced the balance below $2,000.) Pursuant to § 561.470, V.A.M.S., Rotskoff notified Phillips that the check had been dishonored but Phillips did not pay it within five days.
As defendant contended when he moved for acquittal, the State's evidence showed that when Phillips gave Rotskoff the check Phillips did not represent it to be good. Phillips' only representation was that the check would be good laternot a *637 representation of an existing fact but of a future condition. That did not show the required intent to defraud. We reach this conclusion on the general principles of fraud law in Missouri and the specific application of the principle by other courts.
Section 561.460, under which defendant was convicted, specifically requires an "intent to defraud." One of the essential elements of fraud is a misrepresentation of a past or existing fact. This element is not fulfilled by "a promise to do something, or of some event to happen in the future." State v. Krouse, 171 Mo.App. 424, 156 S.W. 727[3]; State v. Houchins, Mo., 46 S.W.2d 891.
One Missouri case applied this principle to facts akin to ours. In State v. Young, 266 Mo. 723, 183 S.W. 305[4, 5], the defendant was charged under the false pretenses statute (now § 561.370) with giving a worthless check with intent to defraud. He contended that when he gave the check he warned the payee there was not yet enough money in the bank to cover it but that there soon would be. In holding this was a valid defense the court reasoned that "the effect of such an agreement to have the money in the bank to pay the check on a future day would be to make of the alleged pretense but a mere promise, and so remove it from the category of crimes." That case concerned a different statute but like our case the statute required an intent to defraud.
The Young case, supra, is in harmony with the law of other states. In State v. Eikelberger, 72 Idaho 245, 239 P.2d 1069[3, 4], 29 A.L.R. 2d 1176, the Supreme Court of Idaho said: "A vast majority, if not all of the courts, are in accord that under a statute such as we now have under consideration a disclosure by the drawer to the payee at the time of the issuance of the check that he does not have sufficient funds in or credit with the bank to meet the check, purges the transaction of its criminal character, for the reason that fraudulent intent, an essential ingredient of the crime, is absent and the transaction is essentially one of extending credit to the drawer." Other courts have followed the same principle: People v. Jacobson, 248 Mich. 639, 227 N.W. 781[2, 3]; Hubbard v. Commonwealth, 201 Va. 61, 109 S.E.2d 100[2]; State v. Howd, 55 Utah 527, 188 P. 628[2].
To avoid this result and establish the vital element of intent to defraud, the State relies on the five-day-notice statute, § 561.470, V.A.M.S. As said, Rotskoff notified Phillips that the check had been dishonored and Phillips failed to pay within five days. Although the statute declares those facts are "prima facie evidence of intent to defraud," the State's evidence refuted that inference. This, because of Rotskoff's admission that Phillips told him to hold the check for a week or ten days, at which time it would be good. The statute creates a rebuttable inference of fact, not an irrebuttable presumption of law. When the State's evidence of the actual facts came into the case, the statutory inference disappeared. State v. Cook, Mo., 282 S.W.2d 533[1, 2]; Simpson v. Blackburn, Mo.App., 414 S.W.2d 795[6-8]. Therefore, we accept the actual fact of no intent to defraud and reject the contrary statutory inference.
Since the State's evidence not only failed to establish but actually refuted the charge that the defendant issued the check with intent to defraud, the trial court should have granted defendant's motion for acquittal. The judgment of conviction must be reversed.
PER CURIAM.
The foregoing opinion of CLEMENS, C., is adopted as the opinion of this court. Accordingly, judgment is reversed.
ANDERSON, P. J., and RUDDY and WOLFE, JJ., concurs. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1487231/ | 936 F. Supp. 1093 (1996)
UNITED STATES of America
v.
James N. LEWIS.
Civil Action No. 95-076P.
United States District Court, D. Rhode Island.
September 5, 1996.
*1094 *1095 Richard W. Rose, United States Attorneys Office, Providence, RI, for Plaintiff.
John M. Cicilline, Randy Olen, Providence, RI, for Defendant.
MEMORANDUM AND ORDER
PETTINE, Senior District Judge.
Defendant James Lewis has been indicted for violation of the Child Support Recovery Act (CSRA), 18 U.S.C. § 228. The defendant has filed a Motion to Dismiss the Indictment, arguing that the CSRA exceeds Congress' authority under the Commerce Clause and invades state sovereignty under the Tenth Amendment. For the reasons discussed below, I find that the CSRA is constitutional and that this Court may retain jurisdiction. Therefore, the defendant's Motion is denied.
FACTUAL BACKGROUND
On September 26, 1995, the defendant was indicted under the Child Support Recovery Act (CSRA), 18 U.S.C. § 228. The indictment charges that the defendant, starting January 7, 1993, willfully failed to pay a past due child support obligation as determined by the Circuit Court for Broward County, Florida. The indictment further alleges that the child is a resident of Rhode Island, while the defendant is not.
According to the defendant, on December 4, 1989, he was the defendant in a paternity suit in the Circuit Court in Broward County, Florida. On January 12, 1993, the Florida Hearing Officer in that court issued a report which established paternity and child support on the basis of the child's mother's affidavit. The report states that the defendant failed to appear at several scheduled blood tests.
The defendant alleges that he never received notice or service of process in these state court proceedings. Since his arrest in the present case, the defendant has apparently petitioned the Broward County Circuit Court to set aside the judgment on the grounds that he had never received notice of the state court proceedings. According to the defendant, Circuit Court Judge Thomas Lynch has reopened the matter and will hold a hearing on the defendant's motion to vacate the judgment.
The defendant is currently released on bail and awaits trial on the CSRA charge. He has filed a Motion to Dismiss the Indictment, alleging that the CSRA is unconstitutional. The defendant's Motion is proper under Fed. R.Crim.P. 12(b), which permits pre-trial motions for issues that can be decided without trial, including defects in the indictment. The Motion to Dismiss is now before this Court.
LEGAL DISCUSSION
The CSRA states, "[w]hoever willfully fails to pay a past due support obligation with respect to a child who resides in another State shall be punished as provided in subsection (b)." 18 U.S.C. § 228(a). The statute defines "past due support obligation" as "any amount (A) determined under a court order or an order of an administrative process pursuant to the law of a State to be due from a person for the support and maintenance of a child or of a child and the parent with whom the child is living; and (B) that has remained unpaid for a period longer than one year, or is greater than $5,000." 18 U.S.C. 228(d)(1). The defendant argues that the CSRA goes beyond the scope of Congress' authority under the Commerce Clause and invades the exclusive province of the states under the Tenth Amendment.
Nine district courts and the Second Circuit have upheld the constitutionality of the CSRA; four district courts have found the CSRA unconstitutional. Compare United States v. Sage, 92 F.3d 101 (2d Cir.1996); United States v. Ganaposki, 930 F. Supp. 1076 (M.D.Pa.1996); United States v. Collins, *1096 921 F. Supp. 1028 (W.D.N.Y.1996); United States v. Nichols, 928 F. Supp. 302 (S.D.N.Y.1996); United States v. Kegel, 916 F. Supp. 1233 (M.D.Fla.1996); United States v. Bongiorno, 1996 WL 208508 (D.Mass. 1996); United States v. Sage, 906 F. Supp. 84 (D.Conn.1995), aff'd, 92 F.3d 101 (2d Cir. 1996); United States v. Hopper, 899 F. Supp. 389 (S.D.Ind.1995); United States v. Murphy, 893 F. Supp. 614 (W.D.Va.1995); United States v. Hampshire, 892 F. Supp. 1327 (D.Kan.1995); with United States v. Parker, 911 F. Supp. 830 (E.D.Pa.1995); United States v. Bailey, 902 F. Supp. 727 (W.D.Tex. 1995); United States v. Schroeder, 894 F. Supp. 360 (D.Ariz.1995), reconsideration denied, 912 F. Supp. 1240; United States v. Mussari, 894 F. Supp. 1360 (D.Ariz.1995), reconsideration denied, 912 F. Supp. 1248.
The courts holding that CSRA is unconstitutional have found that the CSRA does not substantially affect interstate commerce as required under the Commerce Clause, that the CSRA upsets the federal-state balance envisioned by the Constitution and incorporated by the Tenth Amendment, and that federal jurisdiction is inappropriate because of the domestic relations exception and abstention doctrines. I shall consider each of these contentions in turn.
THE COMMERCE CLAUSE
Section 8 of Article I of the United States Constitution provides that, "The Congress shall have Power ... To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." Starting with NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 57 S. Ct. 615, 81 L. Ed. 893 (1937), courts have broadly interpreted Congress' power under the Commerce Clause. In fact, the Supreme Court had not invalidated a federal statute as exceeding Congress' authority under the Commerce Clause for over fifty years, until April 1995, when the Court decided United States v. Lopez, ___ U.S. ___, 115 S. Ct. 1624, 131 L. Ed. 2d 626 (1995). Lopez involved a challenge to the Gun-Free School Zones Act of 1990, which made it a federal crime to possess a firearm within a school zone. 18 U.S.C. § 922(q). The Court found that Congress had exceeded its power in regulating "a local student at a local school." Lopez, at ___, 115 S.Ct. at 1634. The Court pointed out that the Gun-Free School Zones Act did not regulate an economic activity, contained no jurisdictional element requiring an interstate nexus, and had no explicit legislative history delineating its connection to interstate commerce. Id., at ___ - ___, 115 S.Ct. at 1631-32.
In Hodel v. Virginia Surface Mining & Reclamation Ass'n, 452 U.S. 264, 101 S. Ct. 2352, 69 L. Ed. 2d 1 (1981), the Supreme Court adopted a two-pronged approach to evaluate whether Congress has exceeded its authority under the Commerce Clause. Accordingly, to evaluate the Constitutionality of the CSRA, this Court must first determine whether a rational basis exists for the conclusion that the regulated activity sufficiently affects interstate commerce. Id. at 276, 101 S.Ct. at 2360. If such a rational basis exists, this Court must then decide whether the specific regulation is reasonably adapted to the goals permitted by the Constitution. Id. Further, courts must not invalidate Congressional legislation simply because of judicial disagreement with Congress' policy decisions. FCC v. Beach Comm., Inc., 508 U.S. 307, 313-14, 113 S. Ct. 2096, 2101-02, 124 L. Ed. 2d 211 (1933). Lopez did not overrule, and, in fact, applied this rational basis test. ("[T]he Court has ... undertaken to decide whether a rational basis existed for concluding that a regulated activity sufficiently affected interstate commerce."). ___ U.S. at ___, 115 S.Ct. at 1629.
Lopez identified three categories of activity that Congress may regulate under the Commerce Clause:
First, Congress may regulate the use of the channels of interstate commerce. Second, Congress is empowered to regulate and protect the instrumentalities of interstate commerce, even though the threat may come only from intrastate activities. Finally, Congress' commerce authority includes the power to regulate those activities having a substantial relation to interstate commerce, ... i.e., those activities that substantially affect interstate commerce.
*1097 Lopez, at ___ - ___, 115 S.Ct. at 1629-30 (citations omitted). As the activity regulated by the CSRA is arguably within Congress' Commerce Clause authority under both the first and third categories described in Lopez, I shall consider the two separately.
Channels of Interstate Commerce
The CSRA can be upheld as constitutional because the regulation of child support payments is, in itself, the regulation of the channels of interstate commerce. "The authority of Congress to keep the channels of interstate commerce free from immoral and injurious uses has been frequently sustained and is no longer open to question." Caminetti v. United States, 242 U.S. 470, 491, 37 S. Ct. 192, 197, 61 L. Ed. 442 (1917). "What is regulated [by CSRA] is the payment of a debt from one state and the satisfaction of that debt in another, whether the mechanism used to make this transaction is the United States Mail, an electronic funds transfer, or some other interstate channel." Nichols, 928 F.Supp. at 314. The defendant argues that, because the CSRA penalizes the failure to make child support payments, the crime could be committed without any use of the channels of interstate commerce. As the Second Circuit explained:
Such reasoning would mean that Congress would have no power to prohibit a monopoly so complete as to thwart all other interstate commerce in a line of trade. Yet the Sherman Act, 15 U.S.C. §§ 1, 2, is within the Commerce Clause power. To accept [the defendant's] reasoning would disable the United States from punishing under the Hobbs Act, 18 U.S.C. § 1951, making it a crime to "obstruct" interstate commerce, someone who successfully prevented interstate trade by extortion and murder. There would be no trade to obstruct.
Sage, 92 F.3d at 105. Under the defendant's reasoning, Congress would be permitted to regulate parents who underpay their required child support but not parents who fail to pay their required child support at all. Such an interpretation is unfathomable.
The court in Parker found that the CSRA did not regulate commerce because the failure to pay child support was not a commercial transaction:
Arm's-length commercial actors are not involved in any way. The marketplace for goods and services and prices of commodities are not affected at all. There are no affiliates or cohorts that comprise part of a greater economic network or enterprise.... The activity as issue, therefore, has simply nothing to do with commerce in the context of the limited power given to the federal government and withheld from the states in the Commerce Clause.
Parker, 911 F.Supp. at 835. However, Supreme Court precedent does not support the proposition that the Commerce Clause can only implicate voluntary, "arms' length" transactions. United States v. Bishop, 66 F.3d 569, 581 (3d Cir.), cert. denied, ___ U.S. ___, 116 S. Ct. 681, 133 L. Ed. 2d 529 (1995). The Supreme Court has held that the regulated activity need not be commercial in character to fall within the accepted bounds of the Commerce Clause. Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241, 256, 85 S. Ct. 348, 356, 13 L. Ed. 2d 258 (1964). "Not only ... may transactions be commerce though non-commercial; they may be commerce though illegal and sporadic, and though they do not utilize common carriers or concern the flow of anything more tangible than electrons and information." United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 550, 64 S. Ct. 1162, 1172, 88 L. Ed. 1440 (1944) (upholding federal regulation of interstate insurance contracts). For example, the Court upheld a statute criminalizing the transportation of women across state lines for immoral purposes, even though women are not commercial articles of merchandise. Hoke v. United States, 227 U.S. 308, 320, 323, 33 S. Ct. 281, 283, 284, 57 L. Ed. 523 (1912). Similarly, for liability to attach under the CSRA, either the debtor parent or the child must have crossed state lines. 18 U.S.C. § 228.
The CSRA essentially penalizes the failure to pay an interstate debt. The First Circuit has held that, "debt collecting ... involves interstate commerce directly...." National Revenue Corp. v. Violet, 807 F.2d 285, 288 (1st Cir.1986) (holding that Rhode Island statute governing debt collection violated the dormant Commerce Clause). The CSRA *1098 only applies where there is a court order requiring the transfer of money across state lines to fulfill a child support obligation. Thus, the CSRA clearly involves channels of interstate commerce and is a permissible use of Congress' authority under the Commerce Clause.
Substantial Effect on Interstate Commerce
Congress' authority under the Commerce Clause to pass the CSRA may also be upheld under Lopez's third category, as an activity substantially affecting interstate commerce.
Unlike the Gun-Free School Zones Act invalidated in Lopez, the CSRA includes a specific jurisdictional element. A defendant is criminally liable for failure to pay overdue child support only for a child who resides in a different state. 18 U.S.C. § 228(a). Post-Lopez courts have considered the presence of a jurisdictional element to be very important to a Commerce Clause analysis. For example, the First Circuit upheld the constitutionality of a statute prohibiting possession of a firearm with obliterated serial numbers, relying on the statute's specific requirement that the firearm have been transported in interstate or foreign commerce. United States v. Diaz-Martinez, 71 F.3d 946, 953 (1st Cir. 1995) (analyzing 18 U.S.C. § 922(k)); see also United States v. Cardoza, 914 F. Supp. 683 (D.Mass.1996) (upholding 18 U.S.C. § 922(g), which prohibits felons from possessing firearms that have been transported in interstate commerce); United States v. Garcia-Beltran, 890 F. Supp. 67, 72 (D.P.R.1995) (upholding 18 U.S.C. § 2119, which prohibits carjacking vehicles that have been transported in interstate commerce).
While the mere presence of a jurisdictional element does not render the statute per se constitutional, the jurisdictional element in the CSRA meaningfully demonstrates the regulated activity's nexus with interstate commerce. Bishop, 66 F.3d at 585. The CSRA applies only if the defendant live in a different state from the child owed support. Under the statute's requirements, either the defendant or the child must have moved from one state to another. "The passage of a person from one state to another is interstate commerce within the meaning of the Constitution ..." Simmons v. Zerbst, 18 F. Supp. 929, 930 (N.D.Ga.1937) (upholding constitutionality of Fugitive Felony Act). Moreover, the CSRA's jurisdictional element necessitates that a defendant's compliance with the child support order in question would involve the transfer of money from one state to another.
The Lopez Court points out that Congress made no express findings regarding the effects of gun possession in school zones on interstate commerce when passing the Gun-Free School Zone Act. ___ U.S. at ___, 115 S.Ct. at 1631. While acknowledging that Congress need not make such formal findings, the Court states that "congressional findings would enable us to evaluate the legislative judgment that the activity in question substantially affected interstate commerce, even though no such substantial effect was visible to the naked eye...." Id., at ___, 115 S.Ct. at 1632. The existence of explicit legislative findings of a nexus between the regulated activity and interstate commerce can establish the constitutionality of statute even without jurisdictional elements. See, e.g., United States v. Kremetis, 903 F. Supp. 250, 251-52 (D.N.H.1995) (upholding 21 U.S.C. § 841(a)(1), possession of cocaine with intent to distribute).
Congress made specific factual findings in the legislative history of the CSRA which demonstrate the statute's nexus with interstate commerce. According to the House Report on the CSRA, 32% of families with an absent father live below the official poverty line. H.R.Rep. 771, 102d Cong., 2d Sess. (1992). Congress determined that every year more than $5 billion in child support goes unpaid, at least 40% of which is owed by parents living in different states from their children. 138 Cong.Rec. H7325 (statement of Rep. Schumer); 140 Cong.Rec. S9430 (statement of Sen. Kohl). Despite the Uniform Reciprocal Enforcement of Support Act, which was intended to facilitate interstate enforcement of child support orders, one Congressperson cited a study finding that only 41% of state courts actually enforce other states' support orders. 138 Cong.Rec. H7326 (statement of Rep. Hyde). Another Representative stated that, "the ability of *1099 those States to enforce such laws outside their own boundaries is hobbled by a labyrinth of extradition laws and snarls of red tape." 138 Cong.Rec. H7325 (statement of Rep. Schumer). The House Report on the CSRA stated that:
approximately one-third of child support cases concern children whose fathers live in a different state and, thus, require interstate collection. According to that [GAO] report, fifty-seven percent of the custodial parents in interstate cases reported receiving child support payments only occasionally, seldom, or never. Although there are many reasons for which a parent may fail to make a child support payment, research in this area reveals that a significant number of the parents who fail to pay do so intentionally. The statistics above suggest that their chances for successfully avoiding such payments increase markedly when they cross state lines.
H.R.Rep. No. 771, 102d Cong., 2d Sess. (1992). Congress also connected the nonpayment of child support to the accompanying need for federal public assistance, such as Aid to Families with Dependent Children and Medicaid. 138 Cong.Rec. H7325 (statement of Rep. Schumer). Thus, in numerous ways, the CSRA's legislative history demonstrates that the failure to pay interstate child support orders is an activity that Congress can regulate within its Commerce Clause authority. The Commerce Clause was intended to allow Congress to regulate interaction between different states and their citizens, which otherwise might lead to disputes over which state's law governs. See, e.g., New York v. United States, 505 U.S. 144, 180, 112 S. Ct. 2408, 2430, 120 L. Ed. 2d 120 (1992). Precisely because states are independent sovereigns and cannot intrude on each other's sovereignty, federal action is necessary to ensure that interstate debtor parents comply with state support orders.
In Lopez, the government relied upon attenuated arguments to connect gun possession in school zones with interstate commerce. First, the government argued that gun possession can result in violent crime, and violent crime is costly to victims and, through insurance, to all citizens. Lopez, ___ U.S. at ___, 115 S.Ct. at 1632. The Court responded that, under such "costs of crime" reasoning, any activity that might lead to violent crime could be federally regulated, no matter how tenuously related to interstate commerce. Id. Second, the government argued that the presence of guns in schools poses a threat to the educational process, which leads to less productive citizenry and, eventually, a downturn in the nation's economy. Id. The Court found that this "national productivity" argument would allow Congress to regulate any activity that could conceivably affect an individual's economic productivity. Together, the "cost of crime" and "national productivity" arguments would, in essence, allow federal regulation of any activity.
In contrast, the CSRA's connection to interstate commerce is far more direct. As discussed above, the failure to pay child support is itself an interstate economic activity, involving an obligation to transfer money from a person in one state to a person in a different state. "The non-custodial parent reaps an economic gain each time a support payment is withheld, while the offspring suffers an economic loss." Sage, 906 F.Supp. at 90.
While the Lopez court viewed Wickard v. Filburn, 317 U.S. 111, 63 S. Ct. 82, 87 L. Ed. 122 (1942), as "perhaps the most far reaching example of Commerce Clause authority over intrastate activity," it did not overrule Wickard. ___ U.S. at ___, 115 S.Ct. at 1630. In Wickard, a farmer was penalized for harvesting more wheat than he was allotted under the federal Agricultural Adjustment Act. 317 U.S. at 114-15, 63 S.Ct. at 83-84. Even though the Act regulated wheat that could be grown for home consumption, the Court found that the amount of wheat produced for home consumption, when considering all the farmers who grow their own wheat in the aggregate, could affect national wheat prices. Id. at 118-19, 127-28, 63 S.Ct. at 85-86, 90-91. Wickard stands for the proposition that courts must look to the consequences of the regulated activity by all relevant people in order to determine whether the activity substantially affects interstate commerce. In the present case, if all parents owing interstate *1100 child support refused to pay, at least one-third of all children entitled to support would not receive the money, according to 1989 statistics, leading to a total deficit of more than $5 billion. H.R.Rep. No. 771, 102d Cong., 2d Sess. (1992). As the court in Kegel stated, "if it is appropriate for Congress to regulate individual activity to assure that the market price of wheat will remain high, it is no less appropriate that Congress regulate individuals to assure that the standard of living of the custodial parent and child are not devastated, to the end that interstate commerce, in its broadest sense is substantially impacted." 916 F.Supp. at 1238-39.
Unlike the law struck down in Lopez, the CSRA contains a jurisdiction requirement, has legislative history explaining its connection to interstate commerce, and relies on a direct causal connection between the activity regulated and its substantial effects on interstate commerce. For these reasons, I find that the activity regulated in the CSRA, failure to pay an interstate child support obligation, substantially affects interstate commerce.
THE TENTH AMENDMENT
The Tenth Amendment to the Constitution provides: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." Traditionally, courts have taken one of two approaches in evaluating whether Congressional action impermissibly invades state sovereignty under the Tenth Amendment. The first approach provides that rights under the Tenth Amendment are coextensive with limits to Congress' authority under its enumerated powers. See United States v. Lerebours, 87 F.3d 582, 585 (1st Cir.1996). The second approach considers whether a federal statute improperly invades state sovereignty. See Koog v. United States, 79 F.3d 452 (5th Cir.1996). The defendant advocates the second approach, interpreting the Tenth Amendment as preserving a core of state sovereignty, which Congress and the federal courts cannot invade. However, the two approaches can be reconciled through a careful analysis of Supreme Court decisions on Tenth Amendment challenges to Congressional legislation.
In Garcia v. San Antonio Metro. Trans. Auth., the Court appeared to adopt the first approach to the Tenth Amendment's limitation on Congressional action, defining state sovereignty as only that authority beyond Congress' enumerated power. 469 U.S. 528, 549, 105 S. Ct. 1005, 1016, 83 L. Ed. 2d 1016 (1985). The Court held that the states retain sovereign authority "only to the extent that the Constitution has not divested them of their original powers and transferred these powers to the federal government." Id. The Court quoted James Madison's statement to the Members of the First Congress: "Interference with the power of the States was no constitutional criterion of the power of Congress. If the power was not given, Congress could not exercise it; if given, they might exercise it, although it should interfere with the laws, or even the Constitution of the States." Id. Thus, under the Court's approach in Garcia, CSRA is immune from a Tenth Amendment challenge because Congress passed CSRA under enumerated legislative powers, specifically, the Commerce Clause.
Garcia, however, was not the Supreme Court's last word on the Tenth Amendment. In 1992, the Court invalidated a federal statute which gave states a choice between enacting certain regulations or assuming ownership of radioactive waste. New York v. United States, 505 U.S. 144, 112 S. Ct. 2408, 120 L. Ed. 2d 120 (1992). In New York, as in Garcia, the Court explained that the Tenth Amendment limits Congressional action by requiring Congress to act only within its enumerated powers. But the New York Court went on to state that:
The Tenth Amendment ... restrains the power of Congress, but this limit is not derived from the text of the Tenth Amendment itself, which, as we have discussed is essentially a tautology. Instead, the Tenth Amendment confirms that the power of the Federal Government is subject to limits that may, in a given instance, reserve power to the States.
Id. at 157, 112 S.Ct. at 2418. This passage suggests that the Supreme Court was adopting *1101 the second approach to the Tenth Amendment, namely that the Tenth Amendment preserves a core of state sovereignty which Congress and the federal courts cannot invade.
Nonetheless, the Court in New York declined to adopt one approach over another:
In the end, just as a cup may be half empty or half full, it makes no difference whether one views the question at issue in this case as one ascertaining the limits of power delegated to the Federal Government under the affirmative provisions of the Constitution or one of discerning the core of sovereignty retained by the States under the Tenth Amendment. Either way, we must determine whether any of the three challenged provisions of the Low-Level Radioactive Waste Policy Amendments Act of 1985 oversteps the boundary between federal and state authority.
Id. at 159, 112 S.Ct. at 2419.
The New York Court's decision, read in full, reconciles the two different approaches because it requires that courts not only determine if the Constitution confers on Congress the raw power to regulate a certain activity, but also requires courts to evaluate whether Congress' chosen method of regulation impermissibly invades state sovereignty. In New York, the Court stated that Congress undoubtedly had the raw power to regulate disposal of low level nuclear waste. "Regulation of the ... interstate market in waste disposal is therefore well within Congress' authority under the Commerce Clause." Id. at 160, 112 S.Ct. at 2420. Nonetheless, the Court found that Congress' chosen method of regulation impermissibly invaded upon state sovereignty because the take-title provisions of the Low-Level Radioactive Waste Policy Amendments Act of 1985 essentially amounted to Congress directing the states to enact regulations regarding the disposal of nuclear waste. Id. at 188, 112 S.Ct. at 2434. According to the Court, "[The Constitution] simply does not give Congress the authority to require the States to regulate." Id. at 178, 112 S.Ct. at 2429.
Thus, the New York Court requires that, in evaluating Tenth Amendment limits on Congressional legislation, courts examine the method by which Congress chooses to regulate a particular activity in addition to whether Congress has the raw power to regulate the activity. The method of regulation required by the New York Court is analogous to the often-neglected second prong of the Commerce Clause analytical framework, the determination as to whether the specific regulation is reasonably adapted to the goals permitted by the Constitution. Hodel, 452 U.S. at 276, 101 S.Ct. at 2360. In determining whether the method of Congressional regulation is reasonably adapted to the ends permitted by the Constitution, courts should consider the federal-state balance envisioned by the Constitution, particularly the Tenth Amendment. Although a federal statute may substantially affect interstate commerce, the statute may still be unconstitutional if the method of regulation unduly invades state sovereignty, as embodied in the Constitution.
In sum, a proper analysis of the Tenth Amendment's limits on Congressional power requires courts to examine not only whether Congress has the raw power to regulate, but also whether Congress' chosen method of regulation interferes with state sovereignty. See also ACORN v. Edwards, 81 F.3d 1387, 1393 (5th Cir.1996) (holding that courts must determine both whether Congress has the power to regulate the activity and whether the method of regulation chosen invades state sovereignty). Having already concluded that the Commerce Clause confers on Congress the power to enact CSRA, I must now discuss the method of regulation Congress has chosen.
Federal Relitigation of Issues Decided by State Courts
The defendant argues that the method of regulation embodied in the CSRA, by allowing review of state court orders, upsets the federal-state balance set forth in the Constitution. Several district courts which have found the CSRA unconstitutional have based their decision, in part, upon the necessity for federal courts to review state court child support orders. The court in Schroeder stated,
[A]ctual application of the CSRA would force federal courts to review and apply *1102 orders of state courts in violation of principles of federalism and comity. A defendant being prosecuted under the CSRA could arguably defend the action by challenging the validity of the underlying state court support order. Either the federal court would be forced to review the support order, or stay the pending federal criminal case while the support order is collaterally attacked in state court. Neither of these scenarios is desirable in light of the principles of comity and the speedy trial provisions federal courts are bound by in criminal matters.
Schroeder, 894 F.Supp. at 368; see also Bailey, 902 F.Supp. at 729. Most courts upholding the CSRA have not responded to this argument because, in general, defendants have not raised serious challenges to the validity of the underlying state court orders. To the extent that courts have addressed this question, they generally have presumed that the CSRA requires no review of state court orders. Ganaposki, 930 F.Supp. at 1083 ("[T]he CSRA goes no further than the enforcement of state court decrees and is not an attempt by Congress to legislate with respect to the amount of child support payment in any particular case; any ruling that support must be paid and the amount to be paid is left to the states."). In Collins, the defendant had filed a motion to modify the state child support order, which was pending at the time of his indictment under the CSRA. 921 F.Supp. at 1033. The court found that, under California law, a modification of a child support order would be retroactive only to the date of the motion to modify and thus would not affect the past due support at issue in the criminal prosecution. Id. at 1033, n. 4.
In the present case, the defendant claims that he received no notice of the state court proceedings which resulted in the child support order. The defendant alleges that he is not the biological father of the child awarded support. He also was not present when the court decided the amount of child support that he would be able to pay. Therefore, the defendant has put directly at issue the validity of the underlying state court support order. I must first determine whether the statutory language of the CSRA actually permits the relitigation of issues decided by the state court.
Statutory Construction
The government argues that the Court may not look beyond the "four corners" of the state child support order and that the defendant may not collaterally challenge the merits of that order. The CSRA criminalizes the failure to pay a child support obligation, as determined by an administrative or court order. A cursory reading of 18 U.S.C. § 228 leaves unclear whether a defendant can be convicted for failure to pay any child support order or whether the order must be valid and meritorious. When a statute is facially ambiguous, its intended meaning can often be best discerned from its legislative history. United States ex rel. S. Prawer & Co. v. Fleet Bank of Maine, 24 F.3d 320, 327 (1st Cir.1994). I quote at great length from the legislative history of the CSRA, as it proves quite instructive on this issue:
The operative language establishing the requisite intent under [the CSRA] is "willfully fails to pay." This language has been borrowed from the tax statutes that make willful failure to collect or pay taxes a Federal crime, 26 U.S.C. §§ 7202, 7203. Thus, the willful failure standard of [the CSRA] should be interpreted in the same manner that Federal courts have interpreted these felony tax provisions. In order to establish willfulness under those provisions, the government must establish, beyond a reasonable doubt, that at the time payment was due the taxpayer possessed sufficient funds to enable him to meet his obligation or that the lack of sufficient funds on such date was created by (or was the result of) a voluntary and intentional act without justification in view of all of the financial circumstances of the taxpayer. U.S. v. Poll, 521 F.2d 329, 333 (9th Cir.1975). The willfulness element in the tax felony statutes requires proof of an intentional violation of a known legal duty, and thus describes a specific intent crime. U.S. v. Birkenstock, 823 F.2d 1026, 1028 (7th Cir.1987). The word "willfully" under the tax felony statutes imports a bad purpose or evil motive. U.S. v. Bishop, 412 *1103 U.S. 346, 361, 93 S. Ct. 2008, 2017, 36 L. Ed. 2d 941 (1973). The Committee intends that the willful failure standard of [the CSRA] be given similar effect as the willful failure standard contained in these tax felony provisions.
H.R.Rep. No. 771, 102d Cong., 2d Sess. (1992); see also 138 Cong.Rec. S17131. Thus, Congress clearly intended that defendants be allowed to offer inability to pay and lack of notice of legal duty as defenses to a CSRA prosecution, even though those issues would presumably have been resolved in state court proceedings.
Another basis for admissibility of evidence relating to the merits of the original support order can be found in the statute's definition that a past due support obligation must have been "determined under a court order or an order of an administrative process pursuant to the law of a State...." 18 U.S.C. § 228(d)(1)(A). Although courts have not interpreted this phrase of the CSRA, the Supreme Court has discussed analogous language. In considering whether a defendant charged with reentry after deportation could challenge the merits of the underlying deportation proceedings, the Supreme Court distinguished the current reentry statute from the prior, superseded criminal statute based solely on their statutory language. United States v. Mendoza-Lopez, 481 U.S. 828, 836, 107 S. Ct. 2148, 2154, 95 L. Ed. 2d 772 (1987). The Court stated:
Congress thus had available to it in at least one of the predecessor sections § 180(a) express language that would have permitted collateral challenges to the validity of deportation proceedings in a criminal prosecution for reentry after deportation. It nonetheless failed to include in § 1326 the "in pursuance of law" language of § 180(a).
Id. The prior reentry after deportation language, "in pursuance of law," is almost identical to the CSRA's "pursuant to the law of a State." Both clauses clearly imply that the underlying proceeding must have been lawful in order for federal criminal sanctions to attach.
If the CSRA did not permit any review of state court support orders, convictions under the CSRA might violate the Due Process Clause of the Fifth Amendment. The Supreme Court found that imposing criminal sanctions for reentry after deportation violated the Due Process Clause where direct judicial review of original deportation was, in effect, denied. Id. at 837, 107 S.Ct. at 2154. The Court held that, "Our cases establish that where a determination made in an administrative proceeding is to play a critical role in the subsequent imposition of a criminal sanction, there must be some meaningful review of the administrative proceeding." Id. at 837-38, 107 S.Ct. at 2154-55; see also United States v. Joseph, 833 F. Supp. 904, 905 (S.D.Fla.1993) (finding that admission of state court conviction based on constitutionally invalid plea in federal prosecution for reentry after deportation would violate Due Process Clause). In one of the first CSRA prosecutions, the federal court considered the merits of the defendant's arguments that his state court divorce decree was obtained in violation of the Due Process Clause and the Soldiers and Sailors Civil Relief Act. Hampshire, 892 F.Supp. at 1331-33. The defendant stated that, since he was an AWOL soldier in the custody of the county jail, he had no meaningful opportunity to be heard or to appeal his divorce action. Id. at 1331. The court found that the defendant had not alleged facts sufficient to establish a due process violation and that judgments rendered in violation of the Soldiers and Sailors Relief Act were only voidable, not void. Id. at 1332; see also Collins, 921 F.Supp. at 1032, n. 3 ("If, in a case involving an administrative child support ruling, a defendant [charged under the CSRA] were to move to suppress evidence of the existence of [an] administrative support ruling on the ground that it was obtained in violation of his right to due process, the court may be obliged to conduct a hearing to determine this issue."). Based on this analysis, I conclude that the CSRA does allow relitigation of the merits of the underlying state court order.
State Sovereignty
Since the CSRA must be construed to encompass relitigation of issues that may have been decided by the state court, I must now determine whether such *1104 relitigation violates the notion of a federal-state balance, as conceived under the Constitution. In considering the connection between the state court custody decree and criminal prosecution under the CSRA, we must first look to the doctrine of collateral estoppel. Under the full faith and credit statute, 28 U.S.C. § 1738, federal courts must give state court judgments the collateral estoppel effect that another court of that state would give. Parsons Steel, Inc. v. First Alabama Bank, 474 U.S. 518, 523, 106 S. Ct. 768, 771, 88 L. Ed. 2d 877 (1986); Isaac v. Schwartz, 706 F.2d 15 (1st Cir.1983). Florida law recognizes collateral estoppel when the issue of fact was actually litigated, between the same parties, and decided in a valid and final judgment. Department of Health & Rehab. Serv. v. B.J.M., 656 So. 2d 906, 910 (Fla.1995). However, collateral estoppel does not apply when a more lenient burden of proof was used in the first proceeding than in the second. See, e.g., Stevenson v. Chicago, 638 F. Supp. 136, 140 (N.D.Ill. 1986). In the present case, the issues resolved by the state court in issuing its child support order were decided by a preponderance of the evidence. See Department of Health & Rehab. Serv. v. Moore, 603 So. 2d 13, 14 (Fla.Dist.Ct.App.1992). However, in order to convict the defendant under the CSRA, the government must prove every element, including the defendant's willfulness, beyond a reasonable doubt. Thus, issues decided against the defendant in the state court judgment must be relitigated because the government needs to prove them beyond a reasonable doubt, rather than by a preponderance of the evidence.
The dual sovereignty doctrine permits successive state and federal prosecutions for the same act, because each sovereign has a strong interest in prosecuting its own offenses without interference. Heath v. Alabama, 474 U.S. 82, 89, 106 S. Ct. 433, 437, 88 L. Ed. 2d 387 (1985). "When a defendant in a single act violates the `peace and dignity' of two sovereigns by breaking the laws of each, he has committed two distinct `offences.'" Id. at 88, 106 S.Ct. at 437 (citing United States v. Lanza, 260 U.S. 377, 382, 43 S. Ct. 141, 142, 67 L. Ed. 314 (1922)). Similarly, "state court [evidentiary] rulings in a criminal trial are not binding on a federal court. This follows from the basic notion that in our federal system state and national sovereignty are separate and distinct from one another, and each political entity has power to determine what are offenses against it and to try and punish such offenses independently." United States v. Miller, 14 F.3d 761, 763 (2d Cir.1994).
The Armed Career Criminal Act, which significantly enhances sentences for firearm possession based on prior convictions, is one of the most common situations in which federal courts in criminal proceedings consider state court judgments. 18 U.S.C. § 924(e). The Supreme Court has held that defendants may collaterally challenge their previous state court convictions only on the basis that they were denied their right to counsel under Gideon v. Wainwright, 372 U.S. 335, 83 S. Ct. 792, 9 L. Ed. 2d 799 (1963). Custis v. United States, 511 U.S. 485, ___, 114 S. Ct. 1732, 1738, 128 L. Ed. 2d 517 (1994). Courts have also used as sentence enhancers state court convictions that were nonfinal due to pending challenges. Clawson v. United States, 52 F.3d 806 (9th Cir.), cert. denied, ___ U.S. ___, 116 S. Ct. 252, 133 L. Ed. 2d 177 (1995); United States v. Acosta, 861 F. Supp. 1 (D.R.I.1994), aff'd 67 F.3d 334 (1st Cir.1995), cert. denied, ___ U.S. ___, 116 S. Ct. 965, 133 L. Ed. 2d 887 (1996). The Court's prohibition in Custis on almost all collateral attacks of state court convictions was based upon statutory construction of the Armed Career Criminal Act, not upon Tenth Amendment or federalism concerns. Custis, 511 U.S. at ___ - ___, 114 S.Ct. at 1735-37; cf. Lewis v. United States, 445 U.S. 55, 100 S. Ct. 915, 63 L. Ed. 2d 198 (1980) (holding, based on statutory interpretation, that conviction for being a felon with a firearm could be predicated on prior uncounseled felony conviction). In the present case, statutory construction of the CSRA, unlike the Armed Career Criminal Act, clearly indicates that many of the issues decided in the state court support order must be relitigated in this criminal prosecution.
Nonetheless, federal prosecution under the CSRA does not undermine the state court's child support order. The federal court's decision concerns only the defendant's criminal *1105 liability, not the continued applicability of the state court's support order. This situation is completely different from a federal court enjoining a state court action. See Parsons Steel, 474 U.S. at 525, 106 S.Ct. at 772. Even if the government fails to prove beyond a reasonable doubt that the defendant willfully failed to pay his child support, the state may continue to seek child support from him. Any decision in federal court, even a finding that the defendant was unable to pay the support ordered or was not the child's father, would not be binding on the state court enforcing its support order, in part because different burdens of proof are involved in the two proceedings. Stevenson, 638 F.Supp. at 140. The ability of a federal court to consider the merits of the child support award stems from the very federalism that the defendant proclaims. Because the state and federal governments are separate sovereigns, they may each pursue the prosecutions of violations of their own laws in the manner that they see fit. Likewise, a federal court's ruling on § 1983 civil rights action would not be binding on a state court's criminal prosecution, in order to protect that state's sovereignty, as recognized by the Tenth Amendment.
A similar question was presented to the Ninth Circuit in Sharifzadeh v. INS, 24 F.3d 249 (Table), 1994 WL 140652 (9th Cir.1994). The defendant's immigration visa was based on a second marriage to a United States citizen, but he was still legally married to his first wife at the time of entry. Id. After entry, the defendant obtained an annulment of his first marriage. Id. Subsequently, the Board of Immigration Appeals (BIA) found the defendant to be excludable at entry because his second marriage had been invalid at that time. Id. The defendant argued that BIA's failure to give his annulment retroactive effect violated the Tenth Amendment and the Full Faith and Credit Clause. Id. The Ninth Circuit held, "Deciding that Fahraji was excludable at entry does not undermine the annulment decree, or have any bearing on the validity of the annulment or Hawaii's authority to grant the decree." Id. at **1. Likewise, relitigation of some of the issues addressed in a state court order solely for the purpose of a criminal prosecution in no way undermines the validity of that state court order.
Congress is not forging new ground by requiring litigation of an underlying state law issue in a CSRA prosecution. Since 1934, it has been a federal crime to cross state lines to avoid prosecution of a state felony. 18 U.S.C. § 1073. As part of a federal prosecution under 18 U.S.C. § 1073, the defendant's violation of state criminal law must be proven:
Before a conviction could be had under the [federal] statute, the burden would rest on the United States to establish beyond a reasonable doubt that the defendant had committed in some one of the states or territories the offense denounced in the statute, and that he was subject to prosecution in the state where the offense was committed and had fled therefrom to avoid prosecution.
United States v. Miller, 17 F. Supp. 65 (W.D.Ky.1936); see also Lupino v. United States, 185 F. Supp. 363, 367 (D.Minn.1960) (holding that one element of a violation under § 1073 is that the defendant actually committed the underlying state offense). A federal prosecution under 18 U.S.C. § 1073 is independent of any actual state prosecution of the underlying state law crime. Lupino, 185 F.Supp. at 367.
According to its legislative history, the CSRA's goal "is to strengthen, not to supplant, State enforcement efforts." 138 Cong. Rec. H7326 (statement of Rep. Hyde). The CSRA is intended to protect state court judgments. Because of cumbersome bureaucracies, states often fail to enforce other states' child support orders. Congress decided to add a criminal penalty to discourage parents from taking advantage of this lack of enforcement of other states' orders. The litigation of the defendant's ability to pay and knowledge of his legal duty are intended only to insure that criminal penalties do not attach for actions which were not "willful." If a federal prosecution of an act already subject to state prosecution is allowed, surely the lesser invasion of federal relitigation, only for federal purposes, of some issues *1106 decided by a state court in a civil case must also be permitted.
I find that relitigation in a CSRA prosecution of issues decided by the state court does not invade state sovereignty under the Constitution, as formalized by the Tenth Amendment. Thus, the CSRA is reasonably adapted to the goals permitted by the Constitution, and its enactment was within the powers of Congress under the Commerce Clause.
DOMESTIC RELATIONS EXCEPTION
One traditional area of state judicial sovereignty is in the issuance of divorce, alimony, and child custody decrees. Ankenbrandt v. Richards, 504 U.S. 689, 703, 112 S. Ct. 2206, 2214, 119 L. Ed. 2d 468 (1992); Barber v. Barber, 21 How. 582, 16 L. Ed. 226 (1859). Despite the lack of explicit constitutional authority for such an exception, federal courts have long refused to exercise jurisdiction over such "domestic relations" matters. Ankenbrandt, 504 U.S. at 696-97, 112 S.Ct. at 2211-12. Federal courts believe that state courts are uniquely qualified to decide divorce, alimony, and child custody disputes, as such cases often involve retention of jurisdiction for considerable periods, use of social workers and state protection agencies, and considerable expertise in family law. Id. at 703-04, 112 S.Ct. at 2214-15.
Some courts have found that the CSRA runs afoul of the domestic relations exception to federal jurisdiction. Bailey, 902 F.Supp. at 729. I disagree. First, the Supreme Court has specifically held that the domestic relations exception applies to federal diversity jurisdiction under 28 U.S.C. § 1332. Ankenbrandt, 504 U.S. at 700-01, 112 S.Ct. at 2213-14; Rubin v. Smith, 817 F. Supp. 987, 990 (D.N.H.1993). However, the present case arises under the CSRA, a federal criminal law, and thus this Court has federal question jurisdiction under 28 U.S.C. § 1331.
Second, cases under the CSRA do not involve the issuance of a divorce, alimony, or child custody decree. The mere fact that the present case is related to a child support award is not sufficient to warrant the use of the domestic relations exception. Courts have found the domestic relations exception inapplicable in a suit for fraudulent concealment of marital assets during a state divorce proceeding; Strasen v. Strasen, 897 F. Supp. 1179, 1182 (E.D.Wis.1995); in a § 1983 action against the plaintiff's ex-husband and the police for assuming physical custody of their child without notice; Rubin, 817 F.Supp. at 991; and in a diversity suit for tortious interference with custody of a child; Minot v. Eckardt-Minot, 13 F.3d 590, 592 (2nd Cir. 1994) (upholding the district court's decision to abstain, however). All of these cases were obviously related to underlying divorce or child custody proceedings in state court. However, such connections, like the relation of a CSRA criminal prosecution to the underlying child support order which the defendant allegedly failed to pay, are insufficient to warrant a domestic relations exception to federal courts' otherwise proper jurisdiction.
ABSTENTION
Arguably, this Court should decline jurisdiction over this case and allow the Florida court to decide the defendant's Motion to Vacate its Judgment before proceeding with this federal prosecution. The defendant has previously made a motion to stay these proceedings until the state court has resolved his pending motion. However, "[a]bstention from the exercise of federal jurisdiction is the exception, not the rule." Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 813, 96 S. Ct. 1236, 1244, 47 L. Ed. 2d 483 (1976). Federal courts have a "virtually unflagging obligation ... to exercise the jurisdiction given to them." Id. at 817, 96 S.Ct. at 1246. Four different types of abstention potentially could apply to this case: (1) Burford; (2) Colorado River; (3) Younger; (4) Rooker-Feldman. Keeping in mind the general rule against abstention, I will address each one in turn.
Burford abstention was named for Burford v. Sun Oil Co., where the Supreme Court declined federal jurisdiction in a suit to enjoin the decision of a state railroad commission, an agency in a complex state regulatory system devised for the conservation of oil and gas in the state. 319 U.S. 315, 63 S. Ct. 1098, 87 L. Ed. 1424 (1943). As the Supreme Court has since explained,
*1107 Where timely and adequate state-court review is available, a federal court [should abstain]: (1) when there are "difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar;" or (2) where the "exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern."
New Orleans Public Service Inc. v. Council of New Orleans, 491 U.S. 350, 361, 109 S. Ct. 2506, 2514, 105 L. Ed. 2d 298 (1989) (citations omitted). The Supreme Court has raised the possibility that Burford abstention might be appropriate in cases relating to family law, but only if the cases presented complex issues of state law that the state courts would best decide. Ankenbrandt, 504 U.S. at 705-06, 112 S.Ct. at 2215-16. The Second Circuit did uphold a district court's Burford abstention in a tort suit for custodial interference. Minot v. Eckardt-Minot, 13 F.3d 590 (2d Cir.1994). However the Second Circuit based its decision on the new and unsettled nature of this tort, which would therefore raise difficult questions of state law in the case. Id. at 593-94. The court stated that, "Even though this area of the law is ill-suited to federal court determinations, the family-law nature of the subject matter would not alone justify abstention in this case." Id. at 594. Another court found Burford abstention inapplicable in a suit for fraud during divorce proceedings because "[a]t its heart, this case is about fraud, not family law," and because the cases presented no complex questions of state law that would interfere with the state's system for addressing family disputes. Strasen, 897 F.Supp. at 1185. As discussed above, at its heart, the CSRA is a criminal law for failure to pay a debt, not a family law suit.
Although the general rule is that a pending state action does not bar a federal court from considering the same matter, under Colorado River Water Conser. Dist. v. United States, federal courts may abstain because of pending state suits in exceptional circumstances when necessary for "wise judicial administration." 424 U.S. 800, 817-18, 96 S. Ct. 1236, 1246, 47 L. Ed. 2d 483 (1976). As Colorado River abstention has been interpreted, courts may weigh such factors as which court assumed jurisdiction first, whether either court assumed jurisdiction over property, the inconvenience of the federal forum, the desirability of avoiding piecemeal litigation, the presence of federal law issues, and the adequacy of the state court proceeding to protect the parties' rights. Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 19-28, 103 S. Ct. 927, 938-44, 74 L. Ed. 2d 765 (1983). However, courts have frequently emphasized that Colorado River abstention is only appropriate in very unusual, exceptional situations. Elmendorf Grafica Inc. v. D.S. Amer. (East) Inc., 48 F.3d 46, 50 (1st Cir.1995). In this case, the defendant has filed a motion to vacate the Florida court's child support order. The Florida court has reopened the case to hold a hearing on this motion. Arguably, therefore, a state court proceeding is currently pending. However, an analysis of the Colorado River factors indicates that the present case does not present exceptional circumstances warranting abstention. This Court had jurisdiction prior to the reopening of the state court proceedings. The defendant petitioned to reopen the state court case in November 1995, several months after his criminal indictment in this case. This Court's jurisdiction is not inconvenient and is the appropriate jurisdiction for prosecutions of federal crimes. Most importantly, under the CSRA, the defendant's legal duty and ability to pay must be proven beyond a reasonable doubt, with the safeguards attendant to a criminal trial. If this Court deferred to the Florida court's judgment, the defendant's rights would not be adequately protected, nor would substantive questions of federal law be decided. In light of all these factors, I find abstention under Colorado River inappropriate.
In Younger v. Harris, the Supreme Court held that our country's system of federalism prohibits federal courts from enjoining pending state criminal prosecutions. 401 U.S. 37, 91 S. Ct. 746, 27 L. Ed. 2d 669 (1971). Younger has been extended to encompass pending civil actions in state *1108 court, where the civil statute is in aid of and closely related to criminal statutes. Huffman v. Pursue, Ltd., 420 U.S. 592, 604, 95 S. Ct. 1200, 1208, 43 L. Ed. 2d 482 (1975). In Moore v. Sims, the Supreme Court ruled that the lower federal court should have abstained, where the plaintiffs were challenging the constitutionality of state custody law and seeking an injunction of concurrent state family court proceedings. 442 U.S. 415, 99 S. Ct. 2371, 60 L. Ed. 2d 994 (1979). Younger abstention is not warranted where the federal court's decision will "not enjoin or interfere with any state proceeding [that is] pending." Rivera-Puig v. Garcia-Rosario, 983 F.2d 311, 319 (1st Cir.1992). Where the federal action is merely related to issues involved in a pending state family court proceeding, abstention is not necessary. Rubin, 817 F.Supp. at 992. In the present case, the defendant's prosecution under the CSRA will in no way enjoin or interfere with the state court's enforcement of its own decree.
The final type of abstention that arguably could be applicable in this case stems from the Rooker-Feldman doctrine. Under the Rooker-Feldman doctrine, federal district courts cannot entertain challenges to state court orders, even when those orders violate federal law. Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S. Ct. 149, 68 L. Ed. 362 (1923). In District of Columbia Ct. of Appeals v. Feldman, the Supreme Court held that a D.C. bar applicant who was denied a waiver for a bar admission requirement could not challenge that decision in federal district court. 460 U.S. 462, 103 S. Ct. 1303, 75 L. Ed. 2d 206 (1983). The Court stated that only the Supreme Court can review final determinations of state courts, including the District of Columbia Court of Appeals, under 28 U.S.C. § 1257. Id. at 476, 103 S.Ct. at 1311. District courts are not supposed to entertain arguments which are inextricably intertwined and inseparable from state court judgments. Id. at 483 n. 16, 103 S.Ct. at 1315 n. 16. One court held that the Rooker-Feldman doctrine was not applicable when the state court had not fully adjudicated the issue before the federal court and where decision on those issues would not require appellate-style review of the state court. Strasen, 897 F.Supp. at 1183. In the present case, the current federal prosecution is clearly separable from the Florida court's paternity and child support order. This Court will not review the state court's order for errors but, rather, will allow the defendant to present defenses relating to issues which could have been decided in the previous state court case. In addition, the defendant's paternity apparently was decided in the Florida court without the defendant's presence, and thus the defendant's legal duty to the child and his ability to pay were not "fully adjudicated." This relitigation of issues does not constitute "appellate-style review." Therefore, I find that the Rooker-Feldman doctrine does not apply.
Moreover, the applicability of all of these types of abstention to federal criminal prosecutions is unclear. Very few courts have used abstention doctrines in criminal cases. Although the parties have agreed that the Speedy Trial Act is not applicable to the present case, I would certainly have concerns about undue delay incumbent in waiting for the resolution, and perhaps appellate review, of the state court case. Even if the state court decided the defendant's legal duty to pay support and his financial condition, these issues will not be proven beyond a reasonable doubt, as required by the legislative history of the CSRA. H.R.Rep. No. 771, 102d Cong., 2d Sess. (1992). Thus, staying this prosecution to wait for the state court's decision about whether to vacate its original judgment will not even prevent relitigation of these issues. In reviewing a lower court's decision to refer primary jurisdiction to a federal agency, the Ninth Circuit stated, "Our concern with the district court's stay and referral is heightened by the fact that this action is a criminal prosecution.... Requiring the government to litigate issues central to a criminal prosecution in collateral agency proceedings is at odds with the general rule of prosecutorial discretion over the bringing of criminal indictments." United States v. General Dynamics Corp., 828 F.2d 1356, 1366 (9th Cir.1987); see also United States v. Woodard, 376 F.2d 136 (7th Cir. 1967) (concurrence) (stating that if it were not a criminal case, abstention would be appropriate so that the state courts could interpret *1109 their own laws). In sum, I find that this Court has jurisdiction over the present case and that abstention would be inappropriate.
CONCLUSION
For the reasons discussed above, I find that the CSRA does not exceed Congress' authority under the Commerce Clause and that the CSRA does not encroach on state sovereignty, as embodied in the Tenth Amendment. Furthermore, federal jurisdiction over this case is proper, as neither the domestic relations exception nor the abstention doctrines are applicable. The defendant's Motion to Dismiss the Indictment is therefore denied.
SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1127209/ | 377 So. 2d 603 (1979)
Mary B. DOWNS, Administratrix of Estate of James Otis Downs and U.S.F. & G. Company
v.
James W. CORDER, Jr.
No. 51566.
Supreme Court of Mississippi.
December 5, 1979.
Robertshaw & Merideth, Gary P. Snyder, Greenville, Smith, O'Hare & Atkinson, Boyd P. Atkinson, Cleveland, for appellant.
Campbell & DeLong, James L. Robertson, Greenville, for appellee.
Before ROBERTSON, LEE and BOWLING, JJ.
BOWLING, Justice, for the Court:
This appeal is from an order of the Circuit Court of Sunflower County sustaining *604 a demurrer to the declaration of appellant, Mary B. Downs, Administratrix of the Estate of James Otis Downs, deceased. The sole question before this Court is whether or not the declaration alleged facts sufficient to set out a cause of action that would withstand a demurrer. The merits of the case, after testimony is presented to prove the alleged cause of action, are not now before the Court.
The declaration alleged that the deceased, James Otis Downs, was employed by Green Refrigeration Company of Indianola, Mississippi. It further alleged that the defendant/appellee had contracted with Mississippi Valley Gas Company to install a complete central heating and airconditioning unit in appellee's home. Mississippi Valley Gas Company in turn contracted with Green Refrigeration Company, employer of the deceased, to do certain work necessary for the installation, including all necessary duct work.
The declaration further alleged that on August 24, 1977, the deceased, while working for his employer,
... [M]ore specifically under defendant's house, pursuing his normal work duties for Green Refrigeration Company, that of wrapping installation material around the airconditioning duct work that had been installed early that morning by a co-worker. Decedent, while attempting to wrap the aforementioned duct work, came in contact with uninsulated wiring hanging from an uncovered junction box, and, as a result, died from electrocution... .
Said uninsulated wiring was not due to any repairs or maintenance that had been performed by Green Refrigeration Company in connection with the installation of the heating and airconditioning unit in the home of the defendant, James Corder, Jr., but was a latent condition that had existed for sometime prior to August 24, 1977.
It was further alleged that:
Furthermore, Green Refrigeration Company and its employees because of the nature of the work to be performed for Mississippi Valley Gas Company of Greenville, Mississippi, for the benefit of the defendant, James W. Corder, Jr., were not put on notice in any way, nor had any reason to believe, that there were any hidden defects or dangers on said defendant's premises ... Plaintiff alleges that her husband's death was a direct result of the negligence and carelessness of the defendant in maintaining wiring in such a dangerous, defective condition as it was on the afternoon of August 24, 1977. Plaintiff further alleges that defendant knew or should have known that wires with unprotected ends had never been disconnected from the power source, and, therefore, created an extremely dangerous condition under his house for the decedent and other workers. Plaintiff states that the defendant failed to inspect the crawl space under his house for the purpose of discovering defective, dangerous wiring and failed to repair, disconnect or remove any such defects or dangers which would have been shown by a proper inspection .. that the defendant failed to furnish to the decedent a safe place to work and further failed to warn decedent of the dangerous and defective condition of the electrical wiring under defendant's residence.
The declaration went on to allege that the decedent was not an electrician and had no expertise in that field and did not hold himself out to the public as such.
The lower court, in sustaining the demurrer to the declaration, relied primarily on the cases of Jackson Ready-Mix Concrete v. Sexton, 235 So. 2d 267 (Miss. 1970), and Spruill v. Yazoo Valley Oil Mill, Inc., 317 So. 2d 410 (Miss. 1975). Appellee contends that these cases are controlling in the present case. Before discussing these cases as they apply to the "allegations" of appellant's declaration, we need to set out the general law in regard to the charges in the declaration as reflected by the textbooks and cases.
In 65 C.J.S. Negligence, section 63, page 734, the rule is stated that,
*605 The owner, occupant, or person in charge of premises owes to invitees or business visitors thereon the duty of exercising reasonable care to keep the premises in a reasonably safe and suitable condition, or of warning invitees or business visitors of hidden or concealed perils of which he knows or should know in the exercise of reasonable care... .
It is further stated that:
The duty of reasonable care owed to an invitee includes the exercise of such care and protection of the invitee and the finding of reasonably discoverable conditions which may be dangerous, and if such are found, the occupant of the premises has a duty to correct them, or to warn the invitee thereof.
In Jackson Ready-Mix Concrete, supra, the plaintiff Sexton was a licensed electrician doing work as a full time independent electrical contractor. He had performed such work for Ready-Mix for several years. This included electrical safety inspections by Sexton on the company's premises. On the occasion of Sexton's injury he was employed by Ready-Mix to install an additional electric line on an existing pole belonging to Ready-Mix. Sexton had worked on this pole previously. It was broad daylight and Sexton climbed the pole to perform the work called for by his profession and for which he was employed to do by Ready-Mix. He had with him safety equipment which he did not use. While at the top of the pole near an exposed power line, he permitted his unprotected elbow to come in contact with the line, receiving a shock which caused him to fall to the ground. The case was actually tried and the facts developed. The jury rendered a verdict for Sexton. On appeal, this Court held that under the facts, as briefly set out above, Sexton did not have a cause of action and the case was reversed and judgment rendered for Ready-Mix.
In Spruill, supra, the declaration alleged that Bobby Ray Spruill, deceased, received injuries resulting in his death while trying to restore electricity to the facility owned and operated by appellee, Yazoo Valley Oil Mill, Inc. Appellee company, under contract, was purchasing electricity from Greenwood Utilities. After a power failure at the mill, Greenwood Utilities, Spruill's employer, directed him to work toward ascertaining the trouble, and restoring the mill's electricity. The declaration alleged that Spruill and another employee, following standard operating procedures of the utility company, made an examination of the transformers by visually inspecting them and by touching them in an effort to determine the trouble. While working on the transformer, according to the declaration, there was an explosion involving a transformer which resulted in Spruill's death. This Court, in affirming the lower court's action in sustaining a demurrer to the declaration, relied on the prior opinion in Jackson Ready-Mix Concrete, supra, and held that,
... [T]he owner or occupier is under no duty to protect them [independent contractors and their employees] against risks arising from or intimately connected with defects of the premises, or of machinery or appliances located thereon, which the contractor has undertaken to repair. Closely related to this exception is the rule that the owner is not liable for death or injury of an independent contractor or one of his employees resulting from dangers which the contractor, as an expert, has known, or as to which he and his employees "assumed the risk." [Emphasis supplied].
It is readily seen that the full trial in Jackson Ready-Mix and the declaration in Spruill does not compare with the charges in the declaration in the present case. The allegations clearly come within the rule of liability as hereinbefore set out. It charged that the deceased was on the premises as an invitee solely for the purpose of assisting with placing insulation around the airconditioning duct work. He was not an electrician and had nothing to do with the electrical part of the premises. It was charged specifically that the employer of the decedent had nothing to do with any electrical condition on the premises, or the inspection or repairing of any electrical appliances, *606 and had no notice of any danger or defective condition regarding the electrical system of the premises. The declaration further charged that appellee knew or should have known that wires with unprotected ends had either never been properly insulated or that a protective covering or plate had never been placed over said wires, and, therefore, created an extremely dangerous condition. There was a charge of failure to inspect and failure to warn about a dangerous condition known by appellee, or that should have been known by him. As stated at the outset, a development of the evidence relating to the charges in the declaration may not show liability on the part of appellee. It is clear, however, that the declaration does charge sufficient duties owed by appellee and sufficiently charges a negligent breach of those duties so as to withstand a demurrer.
It is elemental and there is no need to cite authorities that all well-pleaded allegations of the declaration have to be taken as true in considering whether or not a demurrer thereto should be sustained or overruled. In our opinion, the lower court, under the allegations of this declaration, should have overruled the demurrer.
REVERSED AND REMANDED.
PATTERSON, C.J., SMITH, and ROBERTSON, P. JJ., and SUGG, WALKER, BROOM, LEE and COFER, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1590374/ | 686 N.W.2d 206 (2004)
NEXT GENERATION REALTY, INC., an Iowa Corporation, and Homebuyers Consultants, an Iowa Corporation, Appellants,
v.
IOWA REALTY COMPANY, INC., an Iowa Corporation d/b/a Iowa Realty, First Realty, Ltd., an Iowa Corporation d/b/a First Realty, MidAmerican Energy Holdings Company, an Iowa Corporation, and Des Moines Area Association of Realtors, an Iowa Nonprofit Corporation, Appellees.
No. 03-0470.
Supreme Court of Iowa.
September 1, 2004.
*207 Glenn L. Norris and George F. Davison, Jr. of Hawkins & Norris, P.C.; Christopher T. Cook of Wandro, Lyons & Baer, P.C.; and Dennis C. Schemmel of Schemmel Law Offices, P.C., Des Moines, for appellants.
John D. French and Amy M. Gernon of Faegre & Benson L.L.P., Minneapolis, MN; Mark McCormick of Belin Lamson McCormick Zumbach & Flynn, A P.C., Des Moines; and Kimberly J. Walker and Chad R. Anderson of Faegre & Benson L.L.P., Des Moines, for appellees Iowa Realty Company, Inc., First Realty, Ltd., and MidAmerican Energy Holdings Company.
F. Richard Lyford and Joan M. Fletcher of Dickinson, Mackaman, Tyler & Hagen, P.C., Des Moines, for appellee Des Moines Area Association of Realtors.
PER CURIAM.
This antitrust suit was dismissed on summary judgment,[1] and the plaintiffs have appealed, vigorously contending there are material facts very much in dispute. There is some attraction to this contention because the parties certainly disagree on matters relating to the disputed issues. The dismissal was nevertheless correct because a controlling legal principle in the field of antitrust law renders the disputed issues irrelevant.[2] So we affirm.
Defendants, Iowa Realty Company, Inc. and First Realty (Iowa Realty defendants), are real estate brokerage firms that do business in the Des Moines area. Iowa Realty purchased First Realty in 1995. Now both firms are wholly owned by Home Services of America, Inc., which is wholly owned by MidAmerican Energy Holding Company. Customarily, Des Moines realtors charge a 7% commission for selling previously owned homes: half going to the seller's agent, half to the buyer's.
The Iowa Realty defendants are members of defendant Des Moines Area Association of Realtors (DMAAR). DMAAR is a professional association of real estate agencies that offers members the Multiple Listing Service (MLS). This service provides *208 a vehicle for listing and selling residential real estate.
Plaintiff, Next Generation Realty, Inc. (Next Generation), is a real estate broker in the Des Moines area. Although Next Generation was a DMAAR member through 2001, it seldom used the MLS for its clients' listings; Next Generation used the MLS for only 2% of its sales. Instead, Next Generation relied on "office exclusive" listings, which are not accessible to other MLS participants. This was part of Next Generation's business strategy, and it advertised that not using the MLS saved its customers money. Plaintiff Homebuyer's Consultants, which operated only during 1998, offered services to buyers on a negotiated-fee basis. Because it did not represent sellers, it did not contribute a single listing on the MLS.
DMAAR requires that members report office exclusive listings within forty-eight hours of posting. This way all members can obtain accurate information concerning the status of properties, even though other brokers cannot sell office-exclusive listings. In March 2000 DMAAR set its fee for exclusive listings at $35, which covered DMAAR's expenses. Next Generation protested, claiming the fee was highly prejudicial because it dealt almost entirely with exclusive listings.
Next Generation did not report its office-exclusive listings to DMAAR, resulting in delinquent fees totaling $20,160. On September 11, 2001, the DMAAR board voted to suspend Next Generation's MLS privileges until its past-due fees (which by then totaled $36,120) were paid in full. Next Generation did not pay the fees and was expelled.
On October 30, 2001, DMAAR elected its officers and directors for 2002. Iowa Realty agents received enough votes to form a majority of the board, but those elected did not assume their positions until 2002.
Plaintiffs' claims are grounded in two Iowa statutes. Under Iowa Code section 553.4 (2003), they claim Iowa Realty defendants conspired to take control of DMAAR through an unorthodox election and conspired to expel plaintiffs from DMAAR and its MLS. They append an assertion to this claim to allege horizontal price-fixing. The claim under Iowa Code section 553.5 is that defendants engaged in a monopolistic practice by refusing to share MLS real estate commissions with them.
The trial court dismissed the petition on alternative grounds. In affirming the dismissal though, we need consider only one. There was no antitrust injury, and without an antitrust injury, the provisions of Iowa Code chapter 553 do not apply.
I. In adopting Iowa Code chapter 553, the legislature left us without authority to innovate from the federal courts' understanding of federal antitrust law. In the preliminary appeal involved in this dispute, we again pointed out that Iowa Code section 553.2 provides that the chapter is to be "`construed to complement and be harmonized with the applied laws of the United States which have the same or similar purpose,' and `shall be made to achieve uniform application of the state and federal laws prohibiting ... monopolistic practices.'" Max 100 L.C. v. Iowa Realty Co., 621 N.W.2d 178, 182 (2001) (quoting Iowa Code § 553.2).
The authorities we are obliged to follow make it clear that antitrust laws were not intended to deal with claimed wrongs inflicted on individual parties. Their function is only to foster the public's access to a freely competitive market. Antitrust is in place to protect the market, not any individual merchant doing business there. The marketplace is often unfair, *209 sometimes brutal; sometimes tortious acts take place there. Chapter 553 presupposes all this. But, until an act impacts on the public's access to a competitive market, the injured are left to proceed with traditional tort or contract remedies. Iowa Code chapter 553 simply does not provide a remedy for a private wrong. Cases holding this include Dial A Car, Inc. v. Transportation, Inc., 82 F.3d 484, 486-87 (D.C.Cir.1996); National Ass'n of Review of Appraisers & Mortgage Underwriters, Inc. v. Appraisal Foundation, 64 F.3d 1130, 1135 (8th Cir.1995); Products Liability Insurance Agency, Inc. v. Crum & Forster Insurance Cos., 682 F.2d 660, 663-64 (7th Cir.1982).
The record here contains no hint that the public was inhibited from access to services of real estate brokers. The proofs are unanimous to the contrary. Iowa Realty's share of the local market decreased from 71.7% in 1996 to 61.5% in 2001, roughly a 10% decline. Next Generation's market share was 2.6% in 1999, and is projected at 6.2% by 2006. There were fifty-one Des Moines real estate agencies in 1996, and the same number in 2001. Of those fifty-one firms in 2001, twenty were recent entrants, after 1996. Plaintiffs' own growth during the period has been remarkable.
In resisting the assertion that the market had been adversely affected by the wrongs plaintiffs assert, the defendants offered an impressive analysis by a highly qualified expert in the field. He supported his opinion with a careful statistical analysis. Although plaintiffs think otherwise, the issue was not joined on the question when plaintiffs offered the anecdotal evidence of one witness, unsupported by any statistical data. She elected not to enter the Des Moines real estate business because of defendants' conduct.
II. The trial court correctly rejected plaintiffs' price-fixing contention because that contention lacked any support in the record. Although MLS participants typically apply a commission rate of 7%, there is no evidence that the information exchanged through MLS participation causes or induces MLS participants to always charge and subsequently split the 7% commission rate on sold properties. The practice of splitting a 7% commission was established many years ago in the Des Moines business community, and there is no suggestion that the defendants in any way took part in originating the practice or furthering its continuance.
The petition was correctly dismissed.
AFFIRMED.
All justices concur except TERNUS and WIGGINS, JJ., who take no part.
NOTES
[1] Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Schoff v. Combined Ins. Co., 604 N.W.2d 43, 45 (Iowa 1999). See generally Iowa R. Civ. P. 1.981.
[2] The same dispute was involved in our opinion in Max 100 L.C. v. Iowa Realty Co., 621 N.W.2d 178 (Iowa 2001), in which we reversed the granting of the temporary injunction. Following remand, the district court conducted a hearing, reviewed extensive discovery taken following the remand, and made extensive findings, which these plaintiffs urge for our consideration. We, however, find those findings of scant relevance here. The hearing on a temporary injunction is preliminary, and the one here was made irrelevant when we ordered it vacated in the prior decision. Temporary injunctions, by their very nature, are preliminary and thus do not contribute to any determination of facts in dispute. Econ. Roofing & Insulating Co. v. Zumaris, 538 N.W.2d 641, 648 (Iowa 1995). It would be especially inappropriate to factor the temporary-injunction evidence ruling here. Since it was entered, parties have been added and dropped, and extensive discovery has been undertaken. We base our review on the record made since then. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1426001/ | 774 F. Supp. 748 (1991)
UNITED STATES of America
v.
Gulzar KHAN, Defendant.
No. 91-CR-666 (ERK).
United States District Court, E.D. New York,
October 4, 1991.
Peter Kirchheimer, Brooklyn, N.Y., for defendant.
Jonathan S. Sack, Asst. U.S. Atty., Brooklyn, N.Y., for U.S.
MEMORANDUM
KORMAN, District Judge.
The enactment and successive broadening of the Federal Magistrates Act (the "Act"), now comprising 28 U.S.C. §§ 631-39, 604, 1915 and 18 U.S.C. §§ 3401-3402, 3060, reflects the ongoing efforts of Congress to enlarge the role of the United States magistrate judge "to the end that the district court judge could have more time to preside at the trial of cases." H.R.Rep. No. 1609, 94th Cong., 2d Sess. 6, reprinted in U.S.Code Cong. & Admin.News 6162, 6166 (1976). The question here presented is whether, within the confines of Article III restrictions and within the bounds of a fair reading of the Act, the taking of a guilty plea may be placed within the panoply of duties properly discharged by a United States magistrate judge.
*749 The issue is of particular consequence because of the rapidly exploding criminal case load and because taking a guilty plea is a time consuming exercise. In the first eight months of this year 1,254 defendants were charged by indictment or information in the Eastern District of New York. At this pace almost 1700 defendants will be charged this year. Of these, 1,400 defendants are likely to plead guilty in a proceeding that takes anywhere from twenty to forty-five minutes.[1]
Aside from the time it takes from an equally burgeoning trial calendar, it is frequently necessary to interrupt a trial or shorten a trial day in order to accommodate defendants who desire to plead guilty. Indeed, this is precisely the circumstance that gave rise to the assignment in this case. On July 11, 1991, the defendant's pretrial motion to withdraw his previously entered plea of guilty was scheduled to be heard. Because the allocution pursuant to Fed. R.Crim.P. 11 would have interrupted a lengthy ongoing criminal trial, the defendant and the United States Attorney consented to allowing Chief Magistrate Judge Chrein to conduct the allocution.
The reference to the Chief Magistrate was conditioned on my subsequent review of the transcript of the proceedings to ensure that the plea was knowingly and voluntarily made and that it had been taken in compliance with Fed.R.Crim.P. 11. Of course, pursuant to Fed.R.Crim.P. 32(d), which permits a defendant to withdraw a guilty plea prior to sentence "upon a showing by the defendant of any fair or just reason," a defendant could obtain such review of the plea allocution as a matter of right. Moreover, although the United States Attorney does not enjoy such a comparable formal vehicle for correcting a deficiency in the plea prior to sentencing, there is no rule that precludes him from asking a district judge to cure any error in the plea allocution prior to sentence.
While the United States Attorney agreed to the reference here, he has declined in subsequent cases to consent to the referral of the defendant's motion to plead guilty to a United States magistrate judge. Citing certain unarticulated concerns regarding the issue whether such a reference may be properly be made, he fears that guilty pleas referred to United States magistrate judges will be subject to subsequent challenge. Accordingly, although the United States Attorney does not object to the entry of a judgment of conviction here, I have undertaken to address the issues whether a defendant's pretrial application to enter a guilty plea may be referred to a United States magistrate judge and whether the consent of the United States Attorney is required for such a referral.
DISCUSSION
In 1968, Congress first replaced the former office of the United States commissioner with the newly formed federal magistrates system. Federal Magistrates Act of 1968, Pub.L. No. 90-578, 82 Stat. 1107, codified as amended at 18 U.S.C. §§ 3401-3402; 28 U.S.C. §§ 631-39 (1988). Congress conferred on magistrates not only all powers formerly exercised by commissioners, it also conferred on magistrates the power to try minor offenses when all parties consent, and to perform such additional duties assigned by the district court as are "not inconsistent with the Constitution and laws of the United States." 28 U.S.C. § 636(b)(3). The "additional duties" could include, but were not restricted to
(1) service as a special master in an appropriate civil action, pursuant to the applicable provisions of this title and the Federal Rules of Civil Procedure for the United States district courts;
(2) assistance to a district judge in the conduct of pretrial or discovery proceedings in civil or criminal actions; and
(3) preliminary review of applications for post-trial relief made by individuals convicted of criminal offenses, and submission of a report and recommendations to facilitate the decision of the district judge having jurisdiction over the case as to whether there should be a hearing.
28 U.S.C. § 636(b)(1) and (2).
*750 The enactment of former Section 636(b) reflected the intent of Congress to enlarge significantly indeed, dramatically the function of the judicial officers serving directly below the level of the district court so as to ease the latter's overwhelming caseload. In particular, Congress sought to permit the district judges "to devote more of their time to dispositive adjudications." United States v. Diaz, 922 F.2d 998, 1004 (2d Cir.1990). Congress also intended to raise the standards of the judicial officers serving as magistrate judges. See United States v. Raddatz, 447 U.S. 667, 685-86, 100 S. Ct. 2406, 2417, 65 L. Ed. 2d 424 (1980) (Blackmun, J., concurring) ("It is also significant that the Magistrates Act imposes significant requirements to ensure competency and impartiality, including a rule generally barring reduction of salaries of full-time magistrates.") (citations omitted).
The experience under former section 636(b) demonstrated that magistrates were fulfilling their intended function of assisting "the district judge to the end that the district court judge could have more time to preside at the trial of cases," H.R.Rep. No. 1609, 94th Cong., 2d Sess. 6, reprinted in 1976 U.S.Code Cong. & Admin.News 6166. Congress was disturbed, however, by a series of cases that construed former Section 636 in a manner that limited the "additional duties" that could be conferred on magistrates. See e.g. Wingo v. Wedding, 418 U.S. 461, 94 S. Ct. 2842, 41 L. Ed. 2d 879 (1975); TPO v. McMillan, 460 F.2d 348 (7th Cir.1972); Ingram v. Richardson, 471 F.2d 1268 (6th Cir.1972). Accordingly, former Section 636(b) was rewritten in 1976 to restate and clarify "the Congressional intention that the magistrate should be a judicial officer who, not only in his own right but also under general supervision of the court, shall serve as an officer of the court in disposing of minor and petty criminal offenses, in the preliminary or pretrial processing of both criminal and civil cases, and in hearing dispositive motions and evidentiary hearings when assigned to the magistrate by a judge of the court." H.R.Rep. No. 1609, 94th Cong., 2d Sess. 5, reprinted in 1976 U.S.Code Cong. & Admin.News 6165.
Section 636(b), as amended in 1976, authorized district court judges to delegate judicial duties to magistrates under four separate lines of authority set forth in 28 U.S.C. § 636(b), of which three merit discussion here. First, it authorized a judge to designate a magistrate to "hear and determine any pretrial matter pending before the court," except for eight enumerated classes of motions that are viewed as effectively dispositive of the case. Id. at § 636(b)(1)(A) (emphasis supplied). Second, a district judge is authorized to designate a magistrate "to conduct hearings, including evidentiary hearings, and to submit ... proposed findings of fact and recommendations for the disposition by a judge of the court," of any of the eight categories of excepted dispositive motions and of "applications for post-trial relief made by individuals convicted of criminal offenses and prisoner petitions." 28 U.S.C. § 636(b)(1)(B). Third, in addition to the specifically enumerated duties set forth in section 636, a district court judge is authorized to refer to a magistrate any "additional duties as are not inconsistent with the Constitution and laws of the United States." 28 U.S.C. § 636(b)(3). The Senate Judiciary Committee's report emphasized the expansive nature of this "catch-all" provision.
A similar provision is contained in the existing legislation. This subsection enables the district courts to continue innovative experimentations in the use of this judicial officer. At the same time, placing this authorization in an entirely separate subsection emphasizes that it is not restricted in any way by any other specific grant of authority to magistrates.
. . . . .
If district judges are willing to experiment with the assignment to magistrates of other functions in aid of the business of the courts, there will be increased time available to judges for the careful and unhurried performance of their vital and traditional adjudicatory duties, and a consequent benefit to both efficiency and the quality of justice in the Federal courts.
S.Rep. No. 625, 94th Cong., 2d Sess. 10-11 (1976).
*751 The House Judiciary Committee Report reflected a similar expression of intent:
Under this subsection, the district courts would remain free to experiment in the assignment of other duties to magistrates which may not necessarily be included in the broad category of "pretrial matters." This subsection would permit, for example, a magistrate to review default judgments, order the exoneration or forfeiture of bonds in criminal cases, and accept returns of jury verdicts where the trial judge is unavailable.
H.R.Rep. No. 1609, 94th Cong., 2d Sess. 12, reprinted in, 1976 U.S.Code Cong. & Admin.News 6172.
Moreover, the Senate Judiciary Committee stated that section 636(b) should be read broadly enough to permit magistrates to perform judicial duties under existing statutes and rules that refer specifically to a "judge" or a "court."
The initial sentence of the revised section uses the phrase "notwithstanding any provision of law to the contrary ". This language is intended to overcome any problem which may be caused by the fact that scattered throughout the code are statutes which refer to "the judge" or "the court." It is not feasible for the Congress to change each of those terms to read "the judge or a magistrate." It is, therefore, intended that the permissible assignment of additional duties to a magistrate shall be governed by the revised section 636(b), "notwithstanding any provision of law" referring to "judge" or "court."
S.Rep. No. 625, 94th Cong., 2d Sess. 7.
This expansive expression of congressional intent is echoed in a number of subsequent Supreme Court decisions. Most recent among these is Peretz v. United States, ___ U.S. ___, 111 S. Ct. 2661, 2671, 115 L. Ed. 2d 808 (1991), in which it was held that "permitting a magistrate to conduct the voir dire in a felony trial when the defendant raises no objection is entirely faithful to the congressional purpose in enacting and amending the Federal Magistrates Act." The Court added:
The generality of the category of "additional duties" indicates that Congress intended to give federal judges significant leeway to experiment with possible improvements in the efficiency of the judicial process that had not already been tried or even foreseen. If Congress had intended strictly to limit these additional duties to functions considered in the committee hearings or debates, presumably it would have included in the statute a bill of particulars rather than a broad residuary clause.
Id. 111 S.Ct. at 2667. See also United States v. Raddatz, 447 U.S. 667, 675, 100 S. Ct. 2406, 2411, 65 L. Ed. 2d 424 (1980); Mathews v. Weber, 423 U.S. 261, 267-70, 96 S. Ct. 549, 552, 46 L. Ed. 2d 483 (1976).
The consent of the defendant in Peretz to the referral of the voir dire obviated concerns that had led the Supreme Court to hold in Gomez v. United States, 490 U.S. 858, 109 S. Ct. 2237, 104 L. Ed. 2d 923 (1989), that the Federal Magistrates Act does not permit referral of a felony voir dire over a defendant's objections. Gomez adhered to the "settled policy [of] avoid[ing] an interpretation of a federal statute that engenders constitutional issues." Gomez, 490 U.S. at 864, 109 S.Ct. at 2441. A contrary interpretation of the Act in Gomez would have raised the "substantial question whether a defendant has a constitutional right to demand that an Article III judge preside at every critical stage of a felony trial." Peretz, 111 S.Ct. at 2665. The Gomez majority had demanded, accordingly, that Congress express its intent clearly, "because the Government was asking [the Court] to construe a general grant of authority to authorize a procedure that deprived an individual of an important privilege, if not a right." Id. 111 S.Ct. at 2666.
The defendant's consent in Peretz persuaded the court to reach a very different conclusion in that case.
Most notably, the defendant's consent significantly changes the constitutional analysis.... [W]e have no trouble concluding that there is no Article III problem when a district court judge permits a magistrate to conduct voir dire in accordance with the defendant's consent. The absence of any constitutional difficulty removes one concern that motivated us in Gomez to require unambiguous evidence of Congress' intent to include *752 jury selection among a magistrate's additional duties. Petitioner's consent also eliminates our concern that a general authorization should not lightly be read to deprive a defendant of any important privilege.
. . . . .
Of course, we would still be reluctant, as we were in Gomez, to construe the additional duties clause to include responsibilities of far greater importance than the specified duties assigned to magistrates. But the litigants' consent makes the crucial difference on this score as well.... [T]he duties that a magistrate may perform over the parties' objections are generally subsidiary matters not comparable to supervision of jury selection. However, with the parties' consent, a district judge may delegate to a magistrate supervision of entire civil and misdemeanor trials. These duties are comparable in responsibility and importance to presiding over voir dire at a felony trial.
Id. 111 S.Ct. at 2667.
The language and legislative history of section 636 suggest that the taking of a guilty plea upon the consent of the defendant, like the jury voir dire in Peretz, is within the scope of duties that may be delegated under the "additional duties" clause. A plea of guilty is a shorthand way of describing a motion by a defendant to be permitted to plead guilty. When made before trial, which is when most such motions are made, it fits literally within the language of section 636(b)(1)(A) that permits the delegation of "any pretrial matter pending before the court" to a magistrate "to hear and determine." 28 U.S.C. § 636(b)(1)(A). Cf. United States v. Rojas, 898 F.2d 40, 42 (5th Cir.1990) ("The voluntariness of the plea was obviously a pretrial matter and as such could be referred to a magistrate.")
The nature of the guilty plea, however, suggests that the "pretrial matters" clause does not provide the appropriate source for the reference to the magistrate judge. Once such a motion is granted, it resolves the central issue in the case, and all that remains is the entry of a judgment of conviction. Under such circumstances, the determination whether to accept such a plea should be subject to de novo review by the district court judge rather than to the more limited review afforded by the "clearly erroneous or contrary to law" standard.[2]
While a motion to plead guilty is akin to a dispositive pretrial motion, it is not one of the enumerated dispositive motions that may be referred pursuant to 28 U.S.C. § 636(b)(1)(B). Nevertheless, a motion to plead guilty differs from other dispositive motions in a way that clearly suggests that the referral of such a motion may be made to a United States magistrate judge pursuant to the "additional duties" clause. In taking a guilty plea, a judicial officer is not, in large measure, performing an adjudicatory function. The defendant's guilt or innocence is not being contested. The defendant desires to plead guilty, normally pursuant to an agreement entered into with the United States Attorney and, even when no such agreement has been made, the United States Attorney has no standing to object to an unconditional plea of guilty.
Although the judicial officer must be sensitive to indications that the defendant may be coerced or confused, the judicial officer is not required to resolve any active controversy. The defendant confesses his crime to the judicial officer, generally with the advice and oversight of an attorney, and the judicial officer works largely to ensure that the defendant understands his rights and that the defendant waives them knowingly and freely by his plea. McCarthy v. United States, 394 U.S. 459, 465-66, 89 S. Ct. 1166, 4170-71, 22 L. Ed. 2d 418 (1964). The discharge of such a duty is not of "far greater importance" than the specified duties assigned to magistrates. Peretz v. United States, 111 S.Ct. at 2667.
Particularly apposite here is United States v. Rojas, 898 F.2d 40 (5th Cir.1990), which addressed the issue of the reference to a magistrate of a contested pre-sentence motion by a defendant to withdraw his plea *753 of guilty on the ground that it was not voluntarily made. In rejecting the defendant's objection to the reference, the Court of Appeals held:
Even if we accept Rojas' contention that determining the voluntariness of a plea is so critical a stage in a criminal proceeding that it must be done by a judge, there was no unauthorized action here. The magistrate in this case did not "determine" the matter but only made a recommendation and findings of fact. The final decision whether to accept the recommendation was made by the district judge, after he had both heard Rojas' own arguments and reviewed the magistrate's findings of fact. Thus even if the determination of the voluntariness of a plea is so important that it should be considered analogous to those issues specifically exempted from a magistrate's authority in section 636(b)(1)(A), the magistrate here exercised no greater authority than she could have for issues specifically exempted, i.e., making a recommendation.
898 F.2d at 42.
Moreover, the Federal Magistrates Act expressly permits the magistrate to play a role in the resolution of issues in contested proceedings that is arguably of more significance than the role played by magistrates in the administration of the Rule 11 allocution. The Act expressly permits the referral of suppression hearings in which a defendant challenges the voluntariness of confession. 28 U.S.C. § 636(b)(1)(B); United States v. Raddatz, 447 U.S. 667, 100 S. Ct. 2406, 65 L. Ed. 2d 424 (1980). More importantly, a judge may refer to a magistrate post conviction motions "prisoner petitions," 28 U.S.C. § 636(b)(1)(B) which frequently challenge the voluntariness of a guilty plea. Surely, if a magistrate may be authorized to make an after-the-fact finding resolving the issue whether a defendant knowingly and voluntarily pled guilty, such a judicial officer may be authorized to make a similar finding resolving the issue whether a defendant is knowingly and voluntarily pleading guilty in an uncontested proceeding.[3] Indeed, the task of taking guilty pleas is one that magistrates regularly perform in misdemeanor cases where the defendant has agreed in writing to be tried before the magistrate. Fed.R.Crim.P. 58(b)(3)(A).
Under these circumstances, it does no violence to the legislative scheme to construe the "additional duties" clause of section 636(b)(3) to include the taking of a guilty plea. Nor is the assignment of such a duty to a magistrate precluded by the language of Fed.R.Crim.P. 11(c) that requires "the court" to administer personally the prescribed allocution.[4] Fed.R.Crim.P. 24, which deals with jury selection, has similar language, yet the Supreme Court in Peretz found no impediment to the delegation of jury selection to a magistrate. See 111 S.Ct. at 2667-68. Similarly, Fed. R.Crim.P. 31 expressly provides that a jury verdict shall be returned to "the judge" in open court, and Fed.R.Crim.P. 25 provides that if a judge becomes disabled during the course of a trial "any other judge regularly sitting in or assigned to the court ... may proceed with and finish the trial." This language notwithstanding, the House Judiciary Committee expressly suggested that the "additional duties clause would permit magistrates to accept returns of jury verdicts where the trial judge is unavailable." H.R.Rep. No. 1609, 94th Cong. 2d Sess. 12, reprinted in, 1976 U.S.Code Cong. & Admin.News 6172. Indeed, it seems clear from the legislative history that, as a general matter, Congress did not intend the *754 use of the word "judge" or "court" in various rules and statutes that vest certain responsibilities in judges to preclude the delegation of the particular responsibility to a magistrate. See S.Rep. No. 625, 94th Cong., 2d Sess 7; In re Grand Jury Appearance of Cummings, 615 F. Supp. 68, 71 (D.C.Wis.1985).
The principal remaining issue is whether this delegation offends the restrictions of Article III of the Constitution. The recent Supreme Court decisions cited above broadly support the constitutionality of consensual delegations to magistrate judges. Among these, Peretz is perhaps the most direct in its plain conclusion that "[t]here is no constitutional infirmity in the delegation of felony trial jury selection to a magistrate when the litigants consent." Peretz, 111 S.Ct. at 2669. The Peretz Court held not only that the personal protections of Article III may be waived, but also that such delegation does not trigger Article III's structural guarantees, which are not subject to waiver.
We have previously held that litigants may waive their personal right to have an Article III judge preside over a civil trial. The most basic rights of criminal defendants are similarly subject to waiver. Just as the Constitution affords no protection to a defendant who waives these fundamental rights, so it gives no assistance to a defendant who fails to demand the presence of an Article III judge at the selection of his jury.
Even assuming that a litigant may not waive structural protections provided by Article III, we are convinced that no such structural protections are implicated by the procedure followed in this case. Magistrates are appointed and subject to removal by Article III judges. The "ultimate decision" whether to invoke the magistrate's assistance is made by the district court, subject to veto by the parties. See United States v. Raddatz, 447 U.S. 667, 683 [100 S. Ct. 2406, 2416, 65 L. Ed. 2d 424] (1980). The decision whether to empanel the jury the selection of which a magistrate has supervised also remains entirely with the district court. Because "the entire process takes place under the district court's total control and jurisdiction," id., at 681, there is no danger that use of the magistrate involves a "congressional attemp[t] `to transfer jurisdiction [to non-Article III tribunals] for the purpose of emasculating' constitutional courts, National Insurance Co. v. Tidewater Co., 337 U.S. 582, 644 [69 S. Ct. 1173, 1209, 93 L. Ed. 1556] (1949) (Vinson, C.J., dissenting)...." Commodity Futures Trading Commission v. Schor, 478 U.S. [833] at 850 [106 S. Ct. 3245, 3256, 92 L. Ed. 2d 675 (1986)].
Peretz, 111 S.Ct. at 2669-70 (citations omitted).
Of comparable significance is the holding in United States v. Raddatz, 447 U.S. 667, 674-76, 100 S. Ct. 2406, 2411-12, 65 L. Ed. 2d 424 (1980). In Raddatz, the Supreme Court reviewed the referral to a magistrate, over the defendant's objections, of the defendant's motion to suppress certain incriminating statements made by the defendant. In his recommendation, which was subject to de novo review, the magistrate rejected the defendant's argument that the statements were made involuntarily. The Supreme Court upheld the referral and declared that "although the statute permits the district court to give to the magistrate's proposed findings of fact and recommendations `such weight as [their] merit commands and the sound discretion of the judge warrants,' that delegation does not violate Art. III so long as the ultimate decision is made by the district court." Id. at 683, 100 S.Ct. at 2416 (citations omitted).[5]
In the present case, the difficulties regarding review of a magistrate's conduct or findings such as those raised by the Peretz dissent, see 111 S.Ct. at 2677 (Marshall, *755 J., dissenting), or by the Gomez majority, see Gomez, 490 U.S., at 873-75, 109 S.Ct. at 2446-47, are almost entirely absent. In reviewing a plea allocution, the district court judge is not limited to the record. Because review of pleas are undertaken prior to sentence, the district court judge may personally address the defendant to resolve any doubts raised with respect to the voluntariness of the plea or to cure any defect that appears in the record.[6]See, United States v. Rojas, 898 F.2d 40, 42 (5th Cir.1990) ("An incorrect recommendation, as opposed to a poorly supervised voir dire, can easily be corrected by the district judge's rejecting the magistrate's recommendation and even holding a second evidentiary hearing if necessary.").
The final issue that must be addressed is whether the consent of the United States Attorney is necessary for the valid assignment of a guilty plea to a magistrate under statutory and constitutional strictures. In re United States (United States v. Sayeedi), 903 F.2d 88 (2d Cir.1990), held that a magistrate "may not preside over jury selection ... over the Government's objection." Id. at 89. The taking of a guilty plea, however, involves a very different sort of proceeding than that of jury selection.
Article III of the Constitution provides that "[t]he Trial of all Crimes ... shall be by Jury." U.S. Const. art. III, § 2. This command confers upon "the Government, as a litigant, ... a legitimate interest in seeing that cases in which it believes a conviction is warranted are tried before the tribunal which the Constitution regards as most likely to produce a fair result." Singer v. United States, 380 U.S. 24, 36, 85 S. Ct. 783, 790, 13 L. Ed. 2d 630 (1965). Indeed, this interest has been codified in Rule 23 of the Federal Rules of Criminal Procedure, which provides: "Cases required to be tried by jury shall be so tried unless the defendant waives a jury trial in writing with the approval of the court and the consent of the government." Fed. R.Crim.P. 23(a).
Against this backdrop, Judge Lumbard, writing for the In re United States panel, concluded that:
As the Government's consent is necessary for a trial without a jury, we see no reason why it should not be necessary for the selection of the jury before a Magistrate. The Government is entitled to have an Article III judge preside during jury selection in those cases where it believes that this would better serve the public interest.
It may well be that selection of the jury before an Article III judge will insure that any rulings regarding the qualification and challenging of jurors will be free from errors from which the Government never has the opportunity to appeal, and even from errors which may jeopardize any verdict returned by the jury.
Id. at 91.
The United States has no similar interest in the taking of a guilty plea. The defendant wishes to plead guilty and the United States Attorney is perfectly willing to have him plead guilty.[7] The United States Attorney's principal, if not sole, substantive interest in the plea is that of repose. This interest, which is significant, see McCarthy v. United States, 394 U.S. at 465-66, 89 S.Ct. at 1170-71, is not undermined by having a magistrate take the plea. Any defect apparent from the record or asserted by either party prior to sentencing may be cured by the district judge prior to the imposition of sentence. Indeed, this possibility for early review of problems assures *756 a greater likelihood that the plea will withstand subsequent challenge: District judges at sentencing do not normally review the transcripts of the pleas that they take. When, however, a magistrate judge takes a plea subject to the conditions of the referral here, the district judge will necessarily review the transcript and consider any procedural complaints raised by the parties. This provides both the government and the defendant with an additional layer of scrutiny not otherwise generally available to them. As Justice Blackmun stated in his concurring opinion in United States v. Raddatz, "[i]n asking us to invalidate the magistrate program, respondent in effect requests removal of the second level of procedural protections afforded him and others like him. In my view, such a result would tend to undermine, rather than augment, accurate decisionmaking." 447 U.S. at 685, 100 S.Ct. at 2417 (footnotes omitted).
As the language from Justice Blackmun's opinion suggests, United States v. Raddatz, which approved the referral of a contested suppression hearing to a magistrate over the objection of the defendant, is dispositive here. The hearing in Raddatz involved principally a determination of the voluntariness of statements made by the defendant and, as the Supreme Court acknowledged, "the resolution of [such] a suppression motion can and often does determine the outcome of the case." Id. at 677-78, 100 S.Ct. at 2413. By comparison, as previously outlined, the magistrate is not being asked to resolve any issue that is subject to a dispute between the defendant and the United States Attorney. If the referral in Raddatz did not require the consent of the defendant, the referral here does not require the consent of the United States Attorney.
CONCLUSION
The taking of guilty pleas, within the bounds of 28 U.S.C. § 636(b)(3) and of Article III of the United States Constitution, may be referred to United States magistrate judges upon the consent of the defendant. That referral is valid, moreover, even if the United States Attorney does not similarly consent to the referral. While the consent of the United States Attorney is not deemed essential to the referral of a guilty plea to a United States magistrate judge, I will honor any objection to such a referral that rests on the facts of a particular case. Indeed, it is not my intention to refer all guilty plea allocutions to a magistrate. The issue addressed here is whether the United States Attorney may arbitrarily deprive a district court judge of the discretion to make such a referral.
NOTES
[1] In year ending June 30, 1990, 1,274 defendants were charged by indictment or information in the Eastern District of New York. Of these, 1,040, or almost 82% pled guilty. Administrative Office of the United States Courts, Annual Report 204 (1990).
[2] The ruling of the magistrate in matters referred "to hear and determine" may be reconsidered by the district court judge only "if clearly erroneous or contrary to law." 28 U.S.C. § 636(b)(1)(A).
[3] This role is also somewhat similar to that played by a magistrate when, as specifically suggested by the House Committee Report cited above, he or she "accept[s] returns of jury verdicts where the trial judge is unavailable." H.R.Rep. No. 1609, 94th Cong., 2d Sess. 12, reprinted in 1976 U.S.Code Cong. & Admin.News 6172. When accepting a jury verdict, the judicial officer polls the jury to ensure that the verdict represents the intended and uncoerced verdict of each juror.
[4] The requirement that "the court" address the defendant personally was added in a 1966 amendment to Rule 11 and was intended to resolve "some confusion over this matter" in the case law. Fed.R.Crim.P. 11 advisory committee's note. The cases cited by the Advisory Committee as supporting inquiry by "the court" appear to be concerned with having the advice administered on the record as opposed to relying on defense counsel to perform the task. See e.g., United States v. Diggs, 304 F.2d 929, 930 (6th Cir.1962). These and other considerations that weigh in favor of a judge administering the allocution, see McCarthy, 394 U.S. at 465-66, are not undermined when the allocution is administered by a magistrate judge.
[5] The Supreme Court also rejected the defendant's claim that the referral of the suppression hearing violated the Due Process Clause. Id. 447 U.S. at 677-81, 100 S.Ct. at 2413-15. Similarly, the Due Process Clause would not likely preclude administration of the Rule 11 allocution by a magistrate over the defendant's objection. The defendant's consent in this case obviates the need to address the due process issue here.
[6] Such review is similar to that permitted when a dispositive pretrial motion is referred to a magistrate to hear and recommend pursuant to 28 U.S.C. § 636(b)(3). As the House Judiciary Committee observed:
Normally, the judge, on application, will consider the record which has been developed before the magistrate and make his own determination on the basis of that record, without being bound to adopt the findings and conclusions of the magistrate. In some specific instances, however, it may be necessary for the judge to modify or reject the findings of the magistrate, to take additional evidence, recall witnesses, or recommit the matter to the magistrate for further proceedings.
H.R.Rep. No. 1629, 94th Cong., 2d Sess. 3, reprinted in 1976 U.S.Code Cong. & Admin.News 6163 (emphasis supplied).
[7] If there is a plea agreement that requires judicial approval, the magistrate judge may recommend only acceptance or rejection subject to de novo review at sentencing when the agreements will generally have effect. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1729497/ | 398 So. 2d 1093 (1981)
STATE of Louisiana
v.
Terry Paul HAARALA.
No. 80-KA-2668.
Supreme Court of Louisiana.
May 18, 1981.
*1095 William J. Guste, Jr., Atty. Gen., Barbara Rutledge, Asst. Atty. Gen., Marion B. Farmer, Dist. Atty., James S. Farmer and Abbott J. Reeves, Asst. Dist. Attys., for plaintiff-appellee.
Robert A. Buckley, Chalmette, for defendant-appellant.
DENNIS, Justice.[*]
The defendant, Terry Paul Haarala, was convicted by a jury of simple burglary of the J. K. Hardware Store in Bogalusa, Louisiana, a violation of La.R.S. 14:62, and sentenced to four years' imprisonment at hard labor. He appeals his conviction in nine assignments of error. We find none of the assignments meritorious and accordingly affirm his conviction and sentence.
The instant offense arose from the following factual sequence. On March 19, 1980 at approximately 3:45 a. m., a Bogalusa resident who lived near the J. K. Hardware Store and Starnes Drugstore was awakened by someone beating on the drugstore back door. The resident alerted the Bogalusa Police. Two officers, upon arrival, entered an alleyway behind the drugstore and discovered the defendant crouched behind an air conditioning unit apparently sleeping. They asked the defendant to stand up, and upon arising, a pipe cutter fell from the defendant's overall pocket. Upon further investigation, the police officers found that a hole had been cut in the fence enclosing the hardware store's pipe yard. They saw tennis shoe tracks in the pipe yard and noticed that the defendant was wearing tennis shoes which were covered with mud and grease similar to that in the pipe yard. The officers found a ball peen hammer on the defendant and a pneumatic scathing chisel at the foot of the back door of the drugstore about five feet from where the defendant was crouching. They seized these items and arrested the defendant. Subsequently, the owner of the hardware store identified the hammer, chisel, and pipe cutter as belonging to his store.
*1096 ASSIGNMENT OF ERROR NO. I
The defendant contends that the trial court erred in failing to disqualify three prospective jurors from service in his trial. The defendant concedes that no objection to these jurors was urged below. This court has long recognized that allegations concerning the competency of jurors are tardy when first raised after verdict. La.C.Cr.P. art. 841; State v. Collins, 359 So. 2d 174 (La.1978); State v. Alexander, 351 So. 2d 505 (La.1977). Accordingly, this assignment is without merit.
ASSIGNMENT OF ERROR NO. II
The defendant argues that the trial court abused its discretion in denying his motion for a continuance filed the day of the trial. The defense counsel alleges that he had received assurances that another client's case would be tried first, and when this case was continued, he was inadequately prepared to try the defendant's case.
Article 712 of the Code of Criminal Procedure gives the trial judge discretion to grant a continuance if good grounds for such are shown. As a general rule, the denial of a continuance is not grounds for reversal absent an abuse of discretion and a showing of specific prejudice caused by the denial. State v. Durio, 371 So. 2d 1158 (La. 1979); State v. Hammontree, 363 So. 2d 1364 (La.1978).
In the present case, the defense counsel had adequate time to prepare. He had been actively engaged in the representation of the defendant for about ten weeks prior to trial; the accused's June 23rd trial date was set immediately following his arraignment on April 10, 1980. Discovery was completed well prior to trial. The defendant's defense strategy apparently never materially varied and was not unduly complicated. No specific claim of prejudice was made, nor does support for such a claim appear in the record. Despite ample advance notice of the accused's trial date, the defense failed to seek a continuance until the day of trial. Under these circumstances, we find the defendant's argument without force.
ASSIGNMENT OF ERROR NO. III
By this assignment, defendant contends that the trial judge erred in denying his motion for mistrial based on the prosecution's repeated references to other crimes and the state's failure to give pretrial notice of its intention to introduce such evidence.
Defendant Haarala was originally charged in separate bills of information with both simple burglary of the J. K. Hardware Store and with attempted simple burglary of Starnes Drugstore. Both cases were called for trial on June 23, 1980, at which time the `state announced that it would try only the hardware store burglary count. Shortly thereafter, in his opening remarks to the jury, the prosecutor made reference to the defendant's beating on the back door of the Starnes pharmacy. The defense objected to this allusion as evidence of another crime, reference to which was impermissible during the opening statement since, at that time, there was no evidentiary basis for the admission of such evidence as res gestae. La.R.S. 15:447-48. The trial court agreed, but denied defendant's request for mistrial, La.C.Cr.P. art. 770, upon the state's assurances that evidence adduced at trial would demonstrate the attempted burglary of Starnes and the previous burglary of J. K. Hardware formed one continuous transaction. The defendant made his objection general to testimony which tended to indicate criminal conduct involving the drugstore and specifically objected several times to such testimony by various state witnesses. At the close of the state's case-in-chief, the trial court denied defendant's motion for a mistrial, convinced that the state had shown the references to the drugstore were admissible as res gestae.
The defendant argues that references to the attempted break-in of the drugstore did not serve to prove any contested issue at trial, but rather, sought only to depict the accused as a bad person. Since evidence of other crimes is not admissible for that purpose, defendant claims that the trial court committed reversible error in failing to *1097 grant his motion for a mistrial. La.C.Cr.P. art. 770; State v. Prieur, 277 So. 2d 126 (La.1973). Even assuming that the admission of such evidence was proper, defendant further urges that the state failed to provide him with pretrial notice of its intent to introduce this evidence as required by State v. Prieur, supra.
As a general rule, the prosecution may not introduce evidence of other criminal acts of the accused unless the evidence is substantially relevant for some purpose other than to show that the accused is a bad man and thus more likely to have committed the crime. State v. Monroe, 364 So. 2d 570 (La.1978); State v. Sutfield, 354 So. 2d 1334 (La.1978). This rule results from the belief that admission of this type character evidence creates a great risk of unjust convictions because the jury is likely to give the evidence excessive weight and convict the defendant merely because he is a bad man, because the defendant may well be unprepared to face such attacks, and because the jury is likely to be confused by proof of collateral issues. State v. Prieur, 277 So. 2d 126 (La.1973); Comment, Other Crimes Evidence in Louisiana, 33 La.L.Rev. 614 (1973).
The general prohibition against the use of other crimes evidence does not bar admission of criminal acts which are an inseparable part of the whole deed. 1 Wigmore, Evidence § 218 (3d ed. 1940). In Louisiana, such acts are denominated as part of the res gestae and admitted under the authority of La.R.S. 15:447-48. A very close connexity between the charged offense and the other crimes evidence sought to be introduced under the res gestae exception is required. See State v. Schwartz, 354 So. 2d 1332, 1334 (La.1978) and cases cited therein. This close connexity in time and location is essential to the exception because no notice of the state's intention to introduce evidence of offenses which are part of the res gestate is required. See La.C.Cr.P. art. 720; State v. Prieur, supra; Pugh, Louisiana Evidence Law 100-01 (Supp.1978) excerpting 35 La.L.Rev. 525, 526-27 (1975).
This Court has approved the admission of other crimes evidence when it is related and intertwined with the charged offense to such an extent that the state could not have accurately presented its case without reference to it. State v. Boyd, 359 So. 2d 931, 942 (La.1978); State v. Clift, 339 So. 2d 755, 760 (La.1976). In such cases, the purpose served by admission of other crimes evidence is not to depict the defendant as a bad man, but rather to complete the story of the crime on trial by proving its immediate context of happenings near in time and place. McCormick, Law of Evidence 448 (2d ed. 1972). The concomitant other crimes do not affect the accused's character, because they were done, if at all, as parts of a whole; therefore, the trier of fact will attribute all of the criminal conduct to the defendant or none of it. And, because of the close connection in time and location, the defendant is unlikely to be unfairly surprised. 1 Wigmore, Evidence § 218 (3d ed. 1940).
After carefully reviewing the record, we conclude that the references to a possible attempted break-in of the drugstore were properly admitted as part of the res gestae. The beating on the drugstore door prompted the complaint to the police and the subsequent investigation. Reference to this disturbance was necessary to show the immediate context out of which the charged offense arose and to present accurately the state's case. The state theorized that the tools were taken from the hardware store in order to break into the drugstore across the alleyway. The police officers testified that they had examined the alleyway fifteen minutes earlier and found nothing suspicious. Therefore, the burglary of the hardware store and the attempted burglary of the drugstore had to take place within a few minutes of each other. Also, the defendant was certainly not unfairly surprised by the reference to the attempted break-in of the drugstore because that charge had been scheduled for trial the same day.
*1098 Because the other crimes evidence was properly admitted without notice, no error is presented by this assignment.
ASSIGNMENT OF ERROR NO. IV
The defendant complains that though the trial judge sustained his objection to opinion testimony being offered by one of the state's witnesses, he erred in not also admonishing the jury to disregard such testimony. However, the record indicates that the defendant did not request an admonition. Accordingly, this assignment is without merit.
ASSIGNMENT OF ERROR NO. V
The defendant contends that the trial court erred in allowing one of the investigating officers to testify that he observed tennis shoe prints in the greasy pipe yard area of the hardware store which were similar to those made by the shoes the defendant was wearing. The officer conceded that the prints in the pipe yard could have been made by anyone wearing the same type of shoe and that no cast had been taken of these footprints.
Although a witness may testify only as to facts within his personal knowledge, and unless properly qualified as an expert, may not offer his own opinions, he is not prohibited from testifying as to natural inferences drawn from facts he has personally observed. E. g., State v. Taylor, 347 So. 2d 172 (La.1977); State v. Passman, 345 So. 2d 874 (La.1977). In the present case, the officer directly observed both the footprints left at the hardware store and the shoes worn by the defendant at the time of his arrest. On the basis of these observations he was competent to testify that the prints found at the hardware store were of the same pattern as would have been made by the defendant's shoes. Thus, the trial judge did not err in admitting such testimony.
ASSIGNMENT OF ERROR NO. VI
The defendant contends that the trial court erred in permitting the introduction into evidence of various tools without first requiring a foundation as to the relevancy of said tools to the instant prosecution.
The tools were seized and tagged as evidence in this case by the investigating officers. Thereafter, the tools were placed in the police evidence locker. At trial, the owner of the hardware store noted certain peculiarities about the tools which distinguished them as belonging to his business. The ball peen hammer was identified by a safety sticker and a distinctive design left by the oil and grease; the pipe cutter was identified by virtue of a new cutting wheel which the owner of the store had placed on it two days prior to the defendant's arrest; the chisel bore a "V" imprint which he had notched on it. Following the store owner's testimony, the trial court permitted the introduction of all three items.
Under the circumstances presented here, it is clear that the tools introduced into evidence at trial are, more probably than not, the same items that were taken from Klinczak's hardware store. All three exhibits were identified both visually and by chain of custody. Lack of positive identification goes to the weight of the evidence rather than to its admissibility. Ultimately, connexity is a factual matter for determination by the trier of fact. State v. Paster, 373 So. 2d 170 (La.1979); State v. Drew, 360 So. 2d 500 (La.1978).
This assignment is without substance.
ASSIGNMENT OF ERROR NO. VII
The defendant argues that the trial court erred in failing to instruct the jury as to the limited purpose for which the jury might consider evidence of the attempted entry into drugstore.
The defendant did not challenge the accuracy of this instruction below however. An alleged error in the jury instruction is not preserved for appeal in the absence of a contemporaneous objection. La. C.Cr.P. art. 841; State v. Jefferson, 379 So. 2d 1389 (La.1980). We note also that the other crimes evidence was admissible as part of the res gestae as earlier discussed. The trial judge adequately cautioned the jury that the defendant was not to be found *1099 guilty merely because he may have committed another offense. This assignment is without merit.
ASSIGNMENT OF ERROR NO. VIII
In this assignment, the defendant contends that the trial court erred in denying a continuance with regard to his motion for a new trial and sentencing.
Trial of this case was held and completed June 23, 1980 and sentencing was scheduled for August 29, 1980. Shortly after trial, defendant's present counsel was retained to represent the accused at sentencing and on appeal. On the date set for sentencing, counsel filed a motion for a new trial, urging that the jury's verdict was contrary to the weight of evidence and that the ends of justice would be served by granting the new trial. Counsel asked that a hearing on the motion and sentencing be postponed for two weeks in order to allow him to prepare. The trial judge denied the motion upon learning that the present counsel had been retained over a month earlier and he had not yet requested a transcript. After defense counsel argued briefly, the motion for a new trial was denied. The defendant was thereafter sentenced to four years' hard labor.
The denial of a motion for continuance on grounds of counsel's lack of preparedness does not warrant reversal unless counsel is able to demonstrate specific prejudice resulting from this denial. State v. Durio, 371 So. 2d 1158 (La.1979). There is no such allegation of prejudice here; defendant's right to challenge the sufficiency of the evidence adduced below is fully protected by review in this Court. State v. Peoples, 383 So. 2d 1006 (La.1980). In view of the considerable time available for the new defense counsel to prepare for the motion and the absence of allegations of specific prejudice, this assignment is without merit.
ASSIGNMENT OF ERROR NO. IX
In defendant's last assignment, he challenges the sufficiency of the evidence supporting his conviction. Specifically, he claims that the state failed to demonstrate: 1) that he had actually entered the hardware store's pipe yard, and 2) that this fenced area constituted a structure within the meaning of La.R.S. 14:62.
The hardware store owner testified that the hole in the fence to the pipe yard had been enlarged to a diameter of about eighteen inches. Prior to the night of the defendant's arrest, there was only a small hole in the fence through which pipe was sometimes passed. The state offered testimony by the investigating officers that the defendant's tennis shoes were greasy at the time he was apprehended and that their tread pattern appeared to match the prints inside the pipe yard. The tools found in the defendant's possession were identified by the owner of the hardware store as his. Viewed in a light most favorable to the prosecution, the evidence in the record is clearly sufficient to support the jury's findings that the defendant entered the pipe yard and to meet the Jackson standard of review. Jackson v. Virginia, 443 U.S. 307, 99 S. Ct. 2781, 61 L. Ed. 2d 560 (1979).
We also reject the defendant's claim that the state failed to prove that the pipe yard is properly considered a structure under La.R.S. 14:62. The state witnesses testified that the pipe yard was completely enclosed and inaccessible to entry by the public. The outer walls of the two stores adjoining the hardware store extended beyond the rear of the hardware store. The resulting alcove was enclosed by the erection of a two by four open wire fence along the line formed by the rear of the surrounding businesses and by placing a tin roof over the entire area. The fence extended from the ground to the roof. We conclude that this enclosure is properly considered a "building-type structure," the invasion of which is prohibited by La.R.S. 14:62. See State v. Alexander, 353 So. 2d 716 (La.1977); State v. Baggett, 292 So. 2d 201 (La.1974).
This assignment lacks merit.
For the reasons above stated, the defendant's conviction and sentence are affirmed.
AFFIRMED.
NOTES
[*] The Honorables O. E. Price, Fred W. Jones, Jr. of the Court of Appeal, Second Circuit, and G. William Swift, Jr. of the Court of Appeal, Third Circuit, participated in this decision as Associate Justices pro tempore, joined by Chief Justice Dixon and Associates Justices Marcus, Dennis and Watson. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2247651/ | 590 F. Supp. 816 (1984)
AMERICAN COMMERCIAL LINES, INC., Owner, and Inland Tugs Co., Owner, pro hac vice, of the Barge CHEM-104 in an Action for Exoneration From and/or Limitation of Liability, Petitioners,
American Commercial Lines, Inc., and Inland Tugs Co., Corporations, Plaintiffs,
v.
The UNITED STATES of America, Defendant.
Gerald FOX, Plaintiff,
v.
The UNITED STATES COAST GUARD and the United States of America, in personam, Defendants.
Gerald FOX, Plaintiff,
v.
AMERICAN COMMERCIAL BARGE LINE COMPANY, a corporation, and Monsanto Company, a corporation, Defendants.
Nos. 83-489C(1), 83-1364C(1) and 83-2242C(1).
United States District Court, E.D. Missouri, E.D.
July 9, 1984.
*817 *818 Michael D. O'Keefe, Thomas R. Jayne, Thompson & Mitchell, St. Louis, Mo., for American Commercial Barge Lines Co.
Kenneth R. Heineman, Louis F. Bonacorsi, St. Louis, Mo., for Monsanto Co.
Gary E. Peel, David Herndon, L. Thomas Lakin, Lakin, Herndon & Peel, P.C., Henry Sintzenich, East Alton, Ill., for Gerald Fox.
J. Paul McGrath, Debra J. Kossow, Asst. Atty. Gen., Torts Branch, Civil Div., U.S. Dept. of Justice, Washington, D.C., Joseph B. Moore, Asst. U.S. Atty., Dept. of Justice, William A. Cassels, Commander, Second Coast Guard District, St. Louis, Mo., for U.S.
MEMORANDUM
NANGLE, Chief Judge.
This admiralty action is a consolidation of three (3) separate actions which arose out of the alleged grounding of the barge CHEM-104 on or about March 4, 1981, while in the tow of the M/V R.W. NAYE. However, Cause Numbers 83-1364C(1) and 83-2242C(1) are no longer before this Court because plaintiff Gerald Fox has dismissed with prejudice his causes of action against the United States of America and Monsanto Company.
Cause Number 83-489A(1), the remaining action, consists of three (3) counts. In Count I, American Commercial Lines, Inc. (hereinafter "ACL") and Inland Tugs Co. (hereinafter "Inland Tugs") claim the benefit of the Limitation of Liability Act, 46 U.S.C. § 181 et seq., and seek exoneration from liability or limitation of their liability to the value of their interest in the CHEM-104 at the termination of her voyage following the alleged grounding. In Counts II and III, respectively, ACL and Inland Tugs sought the recovery of damages to barge CHEM-104 proximately caused by the alleged negligence of the United States in maintaining the navigable channel and a declaratory judgment against the United States for indemnity for all liability and expenses incurred in defending the claims of third persons. During the trial of this action this Court directed a verdict in favor of the United States with respect to Counts II and III. Therefore, Count I is the only remaining original claim by ACL and Inland Tugs.
Three (3) claimants responded to the limitation action in Count I of No. 83-489A(1) and asserted claims: 1) Gerald Fox (hereinafter "Fox"); 2) the United States; and 3) Monsanto Company (hereinafter "Monsanto"). The United States dismissed its claims and is no longer before this Court.
Fox seeks recovery of $1,000,000.00 from ACL and Inland Tugs in the limitation proceeding *819 for damages he allegedly suffered as a result of his exposure to styrene fumes following the alleged grounding of barge CHEM-104.
Monsanto filed a two (2) count first amended counterclaim. Count II is no longer before this Court as a result of Fox's dismissal with prejudice of his claim against Monsanto. Monsanto's only claim before this Court is Count I of its first amended counterclaim, wherein it seeks a declaratory judgment in its favor that would require ACL and American Commercial Barge Line Company (hereinafter "ACBL") to indemnify it for any liability and expenses incurred by Monsanto in defending claims of third parties as a result of the alleged grounding of barge CHEM-104.
Monsanto also brought a cross-claim against the United States for indemnification and/or contribution, but said cross-claim was dismissed by this Court. ACL and Inland Tugs also brought a third-party complaint against Monsanto for contribution with respect to Gerald Fox's claim, but said third-party complaint was dismissed by this Court.
In sum, there are three (3) claims pending before this Court: 1) ACL's and Inland Tugs' claim for exoneration from or limitation of liability; 2) Fox's claim against ACL and Inland Tugs; and 3) Monsanto's claim against ACL and ACBL for indemnity.
This case was tried to this Court sitting without a jury. This Court having considered the pleadings, the testimony of the witnesses, the documents in evidence, and the stipulations of the parties, and being fully advised in the premises, hereby makes the following findings of fact and conclusions of law, as required by Rule 52 of the Federal Rules of Civil Procedure. Fed.R.Civ.P. 52.
A. FINDINGS OF FACT
1. ACL, Inland Tugs and ACBL are Delaware corporations with their principal places of business in Jeffersonville, Indiana. ACBL and Inland Tugs are separate and distinct corporations and wholly-owned subsidiaries of ACL.
2. Monsanto is a Delaware corporation with its principal place of business in St. Louis, Missouri.
3. Fox is a Missouri resident and a corporal in the Missouri State Water Patrol (hereinafter "Water Patrol").
4. ACL is the owner of the M/V R.W. NAYE (hereinafter "NAYE"), a river towboat, and barge CHEM-104, an unmanned, unpowered, steel hulled chemical barge.
5. Inland Tugs operated the NAYE and barge CHEM-104. On March 4, 1981, the value of the barge CHEM-104, including its cargo, was $315,000.00.
6. On March 4, 1981, the barge CHEM-104 was in the tow of the NAYE at or near Mile 253 on the Upper Mississippi River while said towboat was in the process of navigating its tow northbound. The tow of the NAYE consisted of fifteen (15) barges, three (3) wide by five (5) long, with barge CHEM-104 as the port stern barge in the tow. Of the fifteen (15) barges, thirteen (13) were empty and two (2) were loaded. Barge CHEM-104 and another barge were the two (2) loaded barges. Barge CHEM-104 was laden with a cargo of liquid styrene, owned by Monsanto, and carried by Inland Tugs under a contract of carriage between ACBL and Monsanto. The barge CHEM-104 was loaded to a draft of nine (9) feet and two (2) inches. The other loaded barge was loaded with salt and located on the stern of the center string. The NAYE was faced up entirely to the salt barge and partially to the barge CHEM-104.
7. Liquid styrene is a toxic and flammable liquid.
8. The placement of the barge CHEM-104 in the port stern string was not unsafe. Captain Nochta, the captain of the NAYE on March 4, 1981, and a duly licensed river pilot and tankerman, had complete discretion to place the barges into any configuration that he determined safe for navigation and this Court credits his testimony that it was safe to place the barge CHEM-104 in *820 the port stern string. It is speculation to assume that the barge CHEM-104 would not have grounded if it had been placed in the center string of the tow. It was neither unreasonable nor negligent for ACL and Inland Tugs to vest sole discretion with respect to tow configuration in their captains.
9. During the late afternoon of March 4, 1981, at approximately 5:40 p.m., the NAYE was proceeding northbound on the Upper Mississippi River under the helm of Pilot Michael Chism, a duly licensed river towboat pilot, when the barge CHEM-104 grounded on an unknown and unmarked sandbar or other object ten (10) to fifteen (15) feet outside of the navigable channel while making the crossing between Ellswood light, below the crossing, and Burr Oak light, above the crossing, at approximately Mile 253.5.
10. Prior to committing himself to making the crossing, Pilot Chism stopped the NAYE and its tow at the beginning of the crossing and made a visual observation of the existing conditions in the river channel. Both Pilot Chism and Captain Nochta were aware that the U.S. Coast Guard had not made its first buoy run[1] of the year because many buoys were missing or dragged off position. Three (3) of the five (5) black buoys that mark the channel on the right descending bank (Missouri side of the river) were missing and only one black buoy, located approximately one (1) mile up river near Red's Landing, was visible.
11. Pilot Chism was familiar with this stretch of the river and had successfully navigated this crossing on numerous prior occasions.
12. This was the first run by either Pilot Chism or Captain Nochta on the Upper Mississippi following the winter of 1980-81. It is common practice for towboats to begin their navigation season on the Upper Mississippi River before the Coast Guard makes its first buoy run. On March 4, 1981, several towboats, other than the NAYE, had already successfully been up the river past Mile 253.5. At least twelve (12) vessels had "made lock" at Lock and Dam No. 25, which is above Mile 253.5, prior to March 4, 1981. Two (2) other vessels owned and operated by ACL and Inland Tugs had, prior to March 4, 1981, navigated this portion of the river without encountering or reporting any difficulty in traversing the crossing at Mile 253. In addition, prior to March 4, 1981, the River Industry Advisory Committee had lifted all draft and two size limits and deemed the river safe for operations. Therefore, neither Pilot Chism nor Captain Nochta was negligent by navigating this portion of the river prior to the Coast Guard's first buoy run of the season. It also was not negligent for ACL and Inland Tugs to send the NAYE on the Upper Mississippi prior to the Coast Guard's first buoy run of the season.
13. Pilot Chism knew that the imaginary line between Ellswood light and Burr Oak light did not delineate the navigable portion of the channel. To successfully navigate the crossing between Ellswood light and Burr Oak light, without grounding, it was necessary for Pilot Chism to navigate south of the imaginary line between those lights, which is what he did. In addition to the lights, however, Pilot Chism also relied on the established landmarks, his knowledge of the channel at Mile 253, and the single, visible black buoy to chart his course along the crossing. It was unreasonable and negligent for Pilot Chism to rely, even in part, on the black buoy because he knew or should have known that said buoy was not reliable in early March prior to the U.S. Coast Guard's first buoy run up the river. In fact, the *821 visible black buoy was 100 feet north of its intended station.
14. The barge CHEM-104 grounded on the black buoy or Missouri side of the river. As the grounding occurred, the barge CHEM-104 listed to starboard and the NAYE rode up on top of said barge, puncturing a hole in the cargo tank. Liquid styrene spilled into the river. Captain Nochta came up to the pilot house immediately after the grounding and radioed the Coast Guard Marine Safety Office (hereinafter "CGMSO") in St. Louis, Missouri. He gave the CGMSO the location of the grounding, the type of cargo leaking into the river, the name of the vessel, and the name of the company involved. The CGMSO advised Captain Nochta that they would contact other proper authorities and alert them as to the location of the grounding and the spill.
15. While the barge CHEM-104 was aground, Captain Nochta secured the other fourteen (14) barges which had broken loose subsequent to the grounding. He tied the other fourteen (14) barges to the Missouri bank/black buoy side of the river, approximately one (1) mile downstream of the grounding. The NAYE then returned to the barge CHEM-104 and pulled it off ground. Upon being pulled off ground, the leakage of liquid styrene ceased but fumes were still escaping. During the period of time it was grounded, approximately one (1) hour and twenty (20) minutes, over 26,000 gallons of liquid styrene spilled into the river. Representatives of ACL boarded the NAYE and the CHEM-104 approximately four (4) hours after the barge was pulled off ground. ACL representatives temporarily repaired the barge and the styrene fumes were completely contained. Captain Nochta acted reasonably and prudently subsequent to the grounding.
16. The crew of the NAYE was neither trained to make repairs to the holes in barge CHEM-104 nor had the materials aboard to make such repairs. It was neither unreasonable nor negligent for ACL and Inland Tugs to refrain from so training or so equipping the personnel aboard their vessels.
17. There were two (2) depth sounders, also known as transducers, aboard the NAYE on March 4, 1981. A depth sounder can be used to determine the distance between the river bottom and the hulls of the barges to which they are attached. Given the drafts of each barge and the length of the pole extending down from the barge to which the depth sounder is attached, the pilot can determine how much water is beneath the tow.
18. On March 4, 1981, Pilot Chism and Captain Nochta were using only one (1) of the two (2) depth sounders on the NAYE's tow. It was attached to a pole one (1) foot below the lead (empty) barge in the center string, which barge had a draft of one (1) and one-half (½) feet. However, on March 4, 1981, Pilot Chism was unaware of the depth that the sounder was set, to indicate an area not navigable by the NAYE and its tow. There was no evidence that the sounder alarm went off prior to the grounding of the barge CHEM-104.
19. Pilot Chism was negligent in two (2) ways with respect to the depth sounders. First, he was negligent in not being aware of the depth to which the attached sounder was set. Second, both he and Captain Nochta were negligent in not attaching the second depth sounder to the lead barge of the stern string or to the barge CHEM-104 itself, where the barge CHEM-104 was in the stern string rather than the center string. The depth sounder attached to the lead barge in the center string was not in a position to record or register the depth over which the port string barges were going, including the barge CHEM-104 which contained a toxic chemical.
20. It was neither unreasonable nor negligent for ACL and Inland Tugs to vest their captains and pilots with discretion as to the use of depth sounders.
21. A rebuttable presumption of negligence on the part of Pilot Chism arises from the fact that the barge CHEM-104 grounded outside of the navigable channel. Said presumption was not rebutted by ACL *822 and Inland Tugs. The strength of said presumption is bolstered by the fact that other vessels had made this crossing prior to March 4, 1981, without incident.
22. The grounding of the barge CHEM-104, and the subsequent escape of styrene, was proximately caused by: a) the negligence of Pilot Chism in relying on the black buoy to make the crossing; b) the negligence of Pilot Chism in navigating the NAYE and its tow; and c) the negligence of Pilot Chism and Captain Nochta in not attaching a depth sounder to one of the port string barges.
23. ACL and Inland Tugs lacked both knowledge and privity of the negligent acts of Pilot Chism and Captain Nochta. ACL and Inland Tugs were not primarily negligent in any manner. ACL and Inland Tugs did not breach their duty to provide a competent master and crew on the NAYE or to provide a seaworthy vessel.
24. After Captain Nochta contacted the CGMSO, the CGMSO contacted the Lincoln County Sheriff's Office who in turn contacted Corporal Fox of the Water Patrol at approximately 6:25 p.m. Fox was aware of the toxic nature of styrene but did not have available to him any breathing apparatus or special clothing to protect himself against exposure while he was in the vicinity of the spill.
25. The liquid styrene which leaked into the river was carried downstream by the current and eventually dissipated. However, around 7:30 p.m., Corporal Fox determined that, due to the flammable nature of styrene, persons living in the area west and south of Mile 254 to Mile 241.4 should be evacuated. From 7:30 p.m. to 9:00 p.m., Fox drove his personal automobile around the evacuation area notifying residents of possible fire hazards and suggesting that they leave the area. At approximately 9:30 p.m., Fox determined that the threat of fire had subsided and that the residents could safely return to their homes. Fox remained at the nearby Lock and Dam 25 until 11:00 p.m. talking with the lock master before returning to his home. Fox was not negligent in any respect and did not assume the risk of styrene exposure.
26. Fox's exposure to the styrene fumes was short in duration and mild in concentration. Fox was never closer than one (1) mile from the site of the spill.
27. On March 5, 1981, Fox admitted himself to the Lincoln County Memorial Hospital complaining of a sore throat and eye irritation. He was treated and released. These symptoms disappeared in a matter of days. Fox's sore throat and eye irritation were proximately caused by his exposure to styrene fumes.
28. Fox does have a symptomatic mitral valve prolapse (hereinafter "MVP"), which is a congenital disorder that causes chest pains. Fox's MVP condition preexisted his brief exposure to styrene and was neither caused nor aggravated by said exposure. Fox had symptoms of MVP, such as chest pains and anxiety, prior to March 4, 1981. Subsequent to March 4, 1981, Fox became aware that he had an MVP after a series of medical exams. These medical exams were prompted, in part, by Fox's superior who witnessed Fox have an attach of chest pains. The limitations on Fox's ability to perform the duties of his job with the Water Patrol are a direct result, not of his exposure to styrene, but this pre-existing MVP condition and his emotional reaction to knowledge that he has an MVP condition.
29. Fox was damaged in the amount of his medical bills during the month of March, 1981, for treatment of his throat and eye inflammation caused by styrene exposure. These bills total $551.30. In addition, Fox is entitled to compensation in the amount of $1,500.00 for his pain and suffering, in the form of throat and eye inflammation, caused by styrene exposure. Fox is not entitled to damages for his MVP condition and its consequences which were not caused or aggravated by styrene exposure.
30. On December 12, 1979, ACBL and Monsanto entered into a Line Haul Barge Contract Agreement for the transportation of chemicals owned by Monsanto. In Article *823 XII of said agreement, Monsanto agreed to pay "any damages, expenses, costs, liability or other expenses of ACBL [or its affiliates] to any third party, arising from any discharge of its cargo into navigable waters."
31. Subsequent to the December 12, 1979, contract, ACBL and Monsanto entered into negotiations to modify their contract. On April 24, 1981, Thomas Frazier, III, acting within the scope of his agency or employment with ACBL, wrote in a letter to Monsanto that "if new agreements are signed, ACBL will as an accommodation to Monsanto, accept legal liability for the consequences of the accident that occurred March 4, 1981, involving the CHEM-104 in the tow of the M/V R.W. NAYE notwithstanding the terms and conditions of our existing contract."
32. On June 3, 1981, a Monsanto official sent a telex to ACBL stating that "[i]n regard to your letter of April 24 it is our understanding that ACBL accepts legal liability for the CHEM-104 incident on March 4, 1981."
33. In response, Thomas Frazier, III, sent a telex to Monsanto on June 4, 1981, stating:
For the period from the inception of our contract, until a temporary agreement is worked out with Alliance, ACBL will assume liability, for discharge of cargos other than acrylonitrile, for damages to third parties, including those arising from the CHEM-104 incident (the only known incident) contingent upon satisfactory new agreements being worked out between ACBL/Monsanto/Alliance. The foregoing conforms to my letter of April 24, which is substantially different than as stated in your Telex of 6/3.
34. On June 8, 1981, Monsanto sent the following telex to ACBL:
Effective this date, Monsanto and AMS have reached agreement on an interim ninety-day unit tow contract. As per the second paragraph of ACBL's June 4 Telex to Monsanto, ACBL assumes third-party liability under Monsanto/ACBL line haul agreement dated 12/12/79.
ACBL did not object to anything in the June 8, 1981, telex. On August 13, 1981, W.V. Green, acting within the scope of his agency or employment with ACBL, acknowledged the replacement of the December 12, 1979, agreement between ACBL and Monsanto with new agreements among ACBL, Monsanto, and Alliance Marine. The new contract omitted the previous Article XII, except with reference to one particular kind of cargo, and left each party to assume its own liability, if any.
35. The language used by the parties in their correspondence is ambiguous and capable of more than one reasonable interpretation. However, based on the language used, the prior agreement in Article XII, and the surrounding circumstances, the intent of the parties was for ACBL to assume all liability, both its own and Monsanto's, for damages to third parties arising out of the grounding of the barge CHEM-104 on March 4, 1981. In this regard the testimony of Thomas Frazier, III, was not credible. Monsanto performed all conditions precedent to enforcement of said agreement.
B. CONCLUSIONS OF LAW
This Court has subject matter jurisdiction over this action pursuant to general admiralty and maritime law and 28 U.S.C. § 1333.
1. Fox's Claim of Negligence
This Court finds that the sole proximate cause of the grounding and resulting damages in this case was the negligent acts of the NAYE by Pilot Chism and Captain Nochta. See Findings of Fact Nos. 13, 19, 21, 22. Although a tug is not an insurer or bailer of its tow, it has a duty to exercise reasonable care and that degree of maritime skill that prudent navigators employ in similar circumstances. AgriTrans Corporation v. M/V Clarence G. Frame, No. 81-1562A(D), slip op. at 12 (E.D.MO. December 30, 1983). See also Stevens v. The White City, 285 U.S. 195, 202, 52 S. Ct. 347, 349, 76 L. Ed. 699 (1931); MidAmerican Transportation Company, Inc. *824 v. National Marine Service, Inc., 497 F.2d 776, 779 (8th Cir.1974), cert. denied 425 U.S. 937, 96 S. Ct. 1671, 48 L. Ed. 2d 179 (1976). Here, Pilot Chism was negligent in relying on the black buoy, in not being aware of the depth to which the attached sounder was set, and in not attaching the second depth sounder to the lead barge of the stern string or to the barge CHEM-104 itself. See Findings of Fact Nos. 13, 19, 22. Captain Nochta was also negligent in not attaching the second depth sounder.
In addition, because the barge CHEM-104 grounded outside of the navigable channel, see Finding of Fact No. 9, a presumption arises that the NAYE was negligently navigated by Pilot Chism. See Finding of Fact No. 21. Mid-America Transportation Company, Inc., 497 F.2d at 779. ACL and Inland Tugs did not show a reasonable explanation for the accident and, thus, did not rebut this presumption. Id. See also Steamer Webb, 81 U.S. (H. Wall.) 406, 414, 20 L. Ed. 774 (1871); Bisso v. Waterways Transportation Co., 235 F.2d 741, 744 (5th Cir.1956). The evidence did not support the position that the grounding was an unavoidable accident.
Fox's other theories of negligence, such as the placement of the barge CHEM-104 and navigating prior to the first buoy run, are without merit. See Findings of Fact Nos. 8, 12. In addition, ACL and Inland Tugs were not primarily negligent in several of the respects claimed by Fox. These include, the failure of ACL and Inland Tugs to restrict the discretion of its captains and pilots with respect to tow configuration, the use of depth sounders, or navigating on the Upper Mississippi prior to the Coast Guard's first buoy run. See Findings of Fact Nos. 8, 12, 20. It also was not negligent for ACL and Inland Tugs to refrain from training or equipping its crews to personally handle ruptures in chemical barges. See Finding of Fact No. 16. See generally, Signal Oil and Gas Co. v. Barge W-701, 654 F.2d 1164, 1170 (5th Cir.1981).[2]
2. ACL And Inland Tugs' Claim For Exoneration or Limitation
Because, as discussed supra, Pilot Chism and Captain Nochta negligently caused the grounding of the barge CHEM-104, ACL and Inland Tugs are not entitled to exoneration from liability. With respect to limitation of liability, the pertinent provision of the Limitation of Liability Act provides, as follows:
The liability of the owner of any vessel, whether American or foreign, for any embezzlement, loss, or destruction by any person of any property, goods, or merchandise shipped or put on board of such vessel, or for any loss, damage, or injury by collision, or for any act, matter, or thing, loss, damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of such owner or owners, shall not, ... exceed the amount or value of the interest of such owner in such vessel, and her freight then pending.
46 U.S.C. § 183(a) (emphasis added). The significance of § 183(a) is that the "errors in navigation or other negligence by [the] master or crew are not attributable to [the owner] on respondeat superior for limitation purposes." Tittle v. Aldacosta, 544 F.2d 752, 756 (5th Cir.1977). To establish the "privity or knowledge" exception with respect to a corporate defendant, and thus defeat a claim for limitation, it must be shown that the negligence in question was that "of an executive officer, manager or superintendent whose scope of authority includes supervision over the phase of the business out of which the loss or injury occurred." Coryell v. Phipps, 317 U.S. 406, 410, 63 S. Ct. 291, 293, 87 L. Ed. 363 (1943).
In the case at bar, the only negligence proven by Fox was that of Pilot *825 Chism and Captain Nochta. Fox did not prove that one of the classes of persons enumerated in Coryell, and acting on behalf of ACL or Inland Tugs, had privity or knowledge of the negligent acts of Chism and Nochta which proximately caused the accident in question. See Findings of Fact No. 23. Accordingly, ACL and Inland Tugs are entitled to the benefit of the Limitation of Liability Act. However, there remains the question of the amount of the limitation fund.
The value of the limitation fund is the value of the interest of the owner in the offending vessel and her pending freight at the end of her voyage following the incident. 46 U.S.C. § 183(a). A barge is a separate and independent vessel. It is not part of the motor vessel for purposes of determining the limitation fund. In re Cook Transportation System, Inc., 431 F. Supp. 437, 441 (W.D.Tenn.1976). The fact that another vessel is connected to the barge causing the harm does not convert both vessels into a single unit for determining liability. The owner's liability is limited to the vessel actually responsible for the harm. In re American Commercial Lines, Inc., 353 F. Supp. 872, 874 (E.D.Ky. 1973). Here, the offending vessel was the barge CHEM-104. The NAYE was not the offending vessel for the purpose of limitation. The value of the CHEM-104, and thus the limitation fund, was $315,000.00 on March 4, 1981. See Finding of Fact No. 5.
3. Fox's Damages
Fox's damages, for which ACL and Inland Tugs are liable, total Two Thousand Fifty-One and 30/100 Dollars ($2,051.30). See Finding of Fact No. 29. This amount compensates Fox for his medical bills and his pain and suffering in connection with the irritation of his eyes and throat, which irritation was caused by his exposure to styrene. See Finding of Fact No. 27. Fox's MVP condition and its consequences were not caused by his exposure to styrene. See Finding of Fact No. 28.
4. Monsanto's Cross-Claim
Monsanto claims that the correspondence between Monsanto and ACBL in the spring of 1981, see Findings of Fact Nos. 30-35, created a contract whereby ACBL agreed to indemnify Monsanto for all liability to third parties for damages arising out of the grounding of the barge CHEM-104. ACBL admits that said correspondence modified the prior arrangement, whereby Monsanto assumed third party liability for damages resulting from accidents involving its chemicals. See Finding of Fact No. 30. However, ACBL contends that under the modified arrangements ACBL agreed to accept only ACBL's third party liability with respect to the barge CHEM-104. ACBL argues that it did not also agree to accept Monsanto's liability arising out of the incident.
The construction of a maritime contract is a matter governed by federal maritime law. Navieros Oceanikos, S.A. v. S.T. Mobil Trader, 554 F.2d 43, 47 (2d Cir.1977); Capozziello v. Brasilerio, 443 F.2d 1155, 1157 (2d Cir.1971). The guiding principle for a court construing a maritime contract is to give effect to the parties' intentions. Treasurer Salvors v. Unidentified Wrecked and Abandoned Sailing Vessels, 556 F. Supp. 1319, 1335 (S.D.Fla. 1983) (citations omitted). A court may not look to extrinsic evidence to determine the intent of the parties, unless the written language is ambiguous. Corbitt v. Diamond M Drilling Co., 654 F.2d 329, 332-33 (5th Cir.1981); American Export Isbrandtsen Lines, Inc. v. United States, 390 F. Supp. 63, 66 (S.D.N.Y.1975). Moreover, where the written language is ambiguous it must be construed against its drafter. Navieros Oceanikos, S.A., 554 F.2d at 47.
In the case at bar, the written language of the parties is ambiguous with respect to the extent that ACBL agreed to assume liability for the barge CHEM-104 accident. See Finding of Fact No. 35. It matters not which item of correspondence this Court focuses on, because they all are *826 ambiguous on this crucial issue. The April 24, 1981, letter from ACBL uses the language, "accept legal liability for the consequences...." See Finding of Fact No. 31. The June 4, 1981, and June 8, 1981, telexes refer to "damages to third parties" and "ACBL assumes third-party liability," respectively. Each of these is not clear as to whether ACBL agreed to assume, contrary to the prior arrangement, only its own liability or whether ACBL agreed to assume all liability with respect to the incident in question.
Although the question is a close one, it is the opinion of this Court that the latter interpretation effectuates the true intent of the parties. Several factors support this result. First, ACBL was offering to modify the liability aspect of the original contract "as an accommodation," see Finding of Fact No. 31, or inducement to Monsanto to modify other aspects of the original contract. Assumption by ACBL of the liability of both ACBL and Monsanto with respect to the barge CHEM-104 accident, is more consistent with the accommodation purpose. Second, the parties knew how to be specific with respect to the extent of agreements to transfer liability. The original agreement provided that Monsanto assumed the third party liability "of ACBL." See Finding of Fact No. 30. The absence of such limiting or specific language in the modifying agreements strongly suggest that a limited transfer of liability was not intended. ACBL, if it intended as it argues, could easily have included "of ACBL" after "legal liability." Finally, the lack of clarity in these agreements must be construed against ACBL because it authored the offers to modify the original agreement. Accordingly, this Court concludes that ACBL is obligated to assume all liability, both its own and that of Monsanto, for damages to third parties arising out of the grounding of the barge CHEM-104.
Furthermore, because the agreement between Monsanto and ACBL is a personal contract, it is not subject to limitation under the 46 U.S.C. § 181 et seq. S & E Shipping Corporation v. Chesapeake & Ohio Railway Company, 678 F.2d 636, 644 n. 14 (6th Cir.1982).
5. Conclusions
In sum, ACL and Inland Tugs are entitled to limitation of liability and are liable to Fox for damages in the amount of $2,051.30. ACBL is obligated to Monsanto to assume all third party liability for damages with respect to the grounding of the barge CHEM-104. Said obligation is not subject to limitation.
NOTES
[1] The U.S. Coast Guard maintains navigational buoys on the Mississippi River. They mark the outer limits of the navigational channel. Red buoys mark the left limit of the navigational channel and black buoys mark the right limit of the navigational channel. The buoys require regular maintenance to prevent them from becoming mispositioned by river currents and other forces. The navigational season on the Upper Mississippi ends in November or December and the Coast Guard usually does not make channel patrols until early spring due to ice conditions.
[2] Fox's additional claim that ACL and Inland Tugs are liable for violating 33 U.S.C. § 351 is frivolous and without merit. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2358257/ | 692 F. Supp. 698 (1988)
ALLSTATE INSURANCE COMPANY, Plaintiff,
v.
Machel HILBUN, Defendant.
Civ. A. No. J88-0002(L).
United States District Court, S.D. Mississippi, Jackson Division.
August 24, 1988.
*699 Stephen P. Kruger, Upshaw, Williams, Biggers, Page & Kruger, Jackson, Miss., for plaintiff.
David Ringer, Florence, Miss., for defendant.
MEMORANDUM OPINION AND ORDER
TOM S. LEE, District Judge.
This cause is before the court on the motion of defendant Machel Hilbun to dismiss for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). Plaintiff Allstate Insurance Company (Allstate) timely responded to the motion and the court has considered the memoranda of authorities together with attachments submitted by the parties.
Plaintiff Allstate brought this declaratory judgment action against defendant pursuant to 28 U.S.C. § 2201. Jurisdiction is claimed to exist under 28 U.S.C. § 1332, diversity of citizenship. Section 1332 states in pertinent part that
(A) the District Court shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $10,000.00, exclusive of interest and costs, and is between
(1) citizens of different states[.]
Although defendant concedes that her citizenship is diverse from that of Allstate, she contends that dismissal is appropriate for lack of subject matter jurisdiction because the amount in controversy does not exceed $10,000 as required by section 1332. It is clear, however, that the potential liability of plaintiff far exceeds the statutory jurisdictional amount and that defendant's motion should therefore be denied.
The instant controversy has resulted from an automobile accident on October 30, 1987 involving the vehicle which defendant was driving as well as two other automobiles, one driven by David Richardson and the other by Ellen Crawford. At the time of the accident, defendant was an insured under a policy of automobile insurance with Allstate which provided uninsured motorist bodily injury coverage with limits of $100,000 per person and $300,000 per occurrence.[1] Following the collision, defendant made demand upon the insurance carriers for both Richardson and Crawford for payment of all damages she had sustained in the accident. Richardson's carrier denied coverage claiming that the accident was *700 caused by the negligence of Crawford; Crawford's carrier claimed that Richardson's negligence caused the collision.
In addition to her claims against the other drivers' insurers, defendant also made demand upon Allstate to determine whether the respective carriers for Richardson and Crawford regarded themselves as "having insurance coverage for the event" and if not, to pay her claims for all damages sustained in the accident under the uninsured motorist provision of the Allstate policy. However, since both Richardson's and Crawford's carriers had taken the position that plaintiff's claim was not covered, not because of a lack of coverage but rather because the accident was not the fault of their insureds, Allstate instituted this action seeking a declaratory judgment that neither Richardson nor Crawford is an uninsured motorist pursuant to applicable Mississippi law[2] and that it is therefore under no duty to pay any monies or assume any liability for damages sustained by the defendant. The limit of liability under the uninsured motorist provision of the Allstate policy at issue is $100,000 per person for bodily injury. Despite the fact that the limit of liability is in excess of $10,000, the requisite jurisdictional amount for diversity jurisdiction, defendant contends that this cause must be dismissed for lack of subject matter jurisdiction since "the actual damages/injuries sustained by me and unto the vehicle in which I was driving are not at this time, in excess of $10,000.00."[3]
In actions for declaratory or injunctive relief, the amount in controversy is measured by the value of the object of the litigation. Leininger v. Leininger, 705 F.2d 727, 729 (5th Cir.1983). That is, the amount in controversy "is the value of the right to be protected or the extent of the injury to be prevented." Id. In the case at bar, the "object of the litigation" is the policy and the "value of the right to be protected" is plaintiff's potential liability under that policy. The plaintiff here, Allstate, seeks to be relieved of all possible liability, up to the limits of the policy, amd this runs in excess of $10,000. "It is the value of this right which [plaintiff] seeks to protect in this proceeding and meets the test of jurisdiction." Travelers Insurance Company v. Young, 18 F. Supp. 450 (D.N.J. 1937); see also Commercial Casualty Insurance Company v. Humphrey, 13 F. Supp. 174 (S.D.Tex.1935) (test of jurisdiction in declaratory judgment action by insurer is not what defendant may claim under policy but rather maximum amount for which plaintiff may be liable under policy); cf. Stonewall Insurance Company v. Lopez, 544 F.2d 198, 199 (5th Cir. 1976) (amount in controversy not limited to potential liability under insurance contract but includes pecuniary value of insurer's obligation to defend).
It is generally accepted that the amount claimed by the plaintiff is controlling for purposes of determining the jurisdictional amount, if that claim is made in good faith, unless it is established "to a legal certainty" that plaintiff's claim is for less than the jurisdictional amount. Payne v. State Farm Mutual Automobile Insurance Company, 266 F.2d 63 (5th Cir.1959). The defendant in this action, who, but for the fact that this is a declaratory judgment action would normally be the plaintiff, has at no time in this litigation stated the actual amount of damages which she is claiming. In fact, she has made no formal claim in this lawsuit against Allstate, although she has moved, contemporaneously with answering plaintiff's complaint, for a determination *701 as to whether she must file before this court a compulsory counterclaim against Allstate for her damages.[4] The only statement defendant has made concerning her damages is that they are "at this time" not in excess of $10,000. Plaintiff's interesting choice of phraseology certainly leaves open a possibility that she will ultimately seek more than $10,000 in actual damages. Moreover, defendant, in correspondence with Allstate and in answer to Allstate's complaint for declaratory relief, has threatened in fact, promised to seek punitive damages from plaintiff for what defendant describes as plaintiff's willful and wanton refusal to pay benefits under the policy. Punitive damages can be included to reach the amount in controversy requirement if, under the governing law of the suit, they are recoverable. Bell v. Preferred Life Assurance Society, 320 U.S. 238, 64 S. Ct. 5, 88 L. Ed. 15 (1943). And, since under Mississippi law there is a recognized cause of action for "bad faith" failure to pay in an insurance context which may give rise to a claim for punitive damages, Employers Mutual Casualty Company v. Tompkins, 490 So. 2d 897 (Miss.1986), then any amount sought by defendant against Allstate in punitive damages could be included within the "amount in controversy."
Although defendant has not yet instituted her counterclaim against Allstate, including the "promised" claim for punitive damages, it is clear that the right to be protected or the extent of injury to be prevented, as far as Allstate is concerned, is not only the underlying uninsured motorist claim, governed by the policy limits of $100,000, but also preclusion of a promised bad faith suit against it. In the court's view, even in the absence of any claim for punitive damages against Allstate, its potential exposure extends to the $100,000 limit of liability under the uninsured motorist provision of the policy. With the addition of a claim for punitive damages, not only threatened but promised by defendant, plaintiff's potential liability could exceed even that amount. It is clear, therefore, that the "amount in controversy" extends well beyond the $10,000 established by 28 U.S.C. § 1332. It follows, therefore, that jurisdiction is proper in this court.
Accordingly, it is ordered that defendant's motion to dismiss for lack of subject matter jurisdiction is denied.
NOTES
[1] The Allstate policy was issued to defendant's father, Robert Bruce Hilbun. As a resident of her parents' household, defendant was an insured under the terms of the policy.
[2] Under Miss. Code Ann. § 83-11-103(c)(ii) (Supp.1981), an uninsured motor vehicle is defined as, inter alia, "[a] motor vehicle to which there is [bodily injury liability] insurance in existence, but the insurance company writing the same has legally denied coverage thereunder...." Plaintiff brought this action to determine whether or not Richardson and/or Crawford are statutory uninsured motorists and to declare plaintiff's obligations to defendant under its policy of insurance.
[3] This assertion was first made by defendant in an affidavit filed in this cause on February 12, 1988. This same statement was repeated in her memorandum in support of her motion to dismiss:
The actual damages or injuries sustained by Machel Hilbun and unto the vehicle in which she was driving, are not at this time in excess of Ten-Thousand Dollars ($10,000).
[4] Included in defendant's answer is a motion for a determination of the necessity of defendant's filing a compulsory counterclaim against Allstate pursuant to Rule 13 of the Federal Rules of Civil Procedure. She took this approach rather than actually filing a counterclaim seeking damages from Allstate because she allegedly believed she might be "inadvertently waiving her ... defense of lack of subject matter jurisdiction" by filing such a counterclaim. However, a defense based on lack of subject matter jurisdiction is not waivable; it can, in fact, be raised by the court sua sponte and can be raised at any time, even on appeal. A court's lack of subject matter jurisdiction may even form the basis of a collateral attack upon any judgment by that court. Accordingly, defendant's professed fears of waiving any objection to subject matter jurisdiction are unfounded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2593649/ | 743 F. Supp. 444 (1990)
UNITED STATES of America
v.
Henry Clay SAUNDERS.
Crim. No. 90-00074-A.
United States District Court, E.D. Virginia, Alexandria Division.
July 27, 1990.
*445 W. Neil Hammerstrom, Asst. U.S. Atty., Henry Hudson, U.S. Atty, Alexandria, Va., for U.S.
Drewry B. Hutcheson, Jr., Alexandria, Va., for defendant.
SENTENCING MEMORANDUM
ELLIS, District Judge.
INTRODUCTION
Defendant Henry Clay Saunders is before the Court for sentencing after a jury trial on May 14, 1990 to Count I of an Indictment charging defendant with Aggravated Sexual Abuse in violation of 18 U.S.C. § 2241(a).
The trial record reflects that on February 9, 1990 at 2:30 to 3:30 am, defendant drove Patricia Duckett to a secluded wooded area on Fort Belvoir, Virginia property. Once there, he told her "I am going to bang you up or have sex with you." Duckett told him "no" and began to scream. To silence her and overcome her physical resistance, defendant choked her, pulled her hair and bit her lip, causing it to bleed. He also pulled down her pants and then twice forced her to have sexual intercourse with him in the vehicle.
Following the rapes, defendant instructed Duckett to put on her pants. He then drove west on Backlick Road towards Interstate 95. At a Backlick Road traffic light prior to the entrance ramp to Interstate 95, Duckett jumped out of the vehicle and ran to a gas station. She told a tow truck driver in the parking lot of the station that she had been raped and requested that he call the police. The Fairfax County Police and the United States Army Military Police were then notified.
Duckett was admitted to the DeWitt Army Hospital at 8:00 am on February 9, 1990. Serology tests were performed revealing the presence of semen on two vaginal smears, one vaginal swab, and on the panties taken from Duckett during the examination.
Earlier in the evening, defendant and Duckett had purchased a $20 rock of crack cocaine, which they smoked at his house. Prior to this, Duckett had accompanied defendant as he drove an 18 year-old friend, Jackie Harris, to Arlington so that this friend could sell some crack. Defendant then drove his friend and Duckett to Washington, D.C. where the friend attempted to purchase more crack cocaine.
Pursuant to 18 U.S.C. § 3553, the Court sets forth the following findings and reasons in connection with the sentence imposed on defendant.
A. Uncontested Matters:
With the exception of the matters listed below, the government and defendant have no objection to the Presentence Investigation Report ("PSIR"). Accordingly, with the exception of those matters, the Court adopts the findings and conclusions of the PSIR as its findings and conclusions in this sentencing proceeding.
Defendant advised the Court that the offenses listed in Paragraphs 17, 18, 19, 20, 21 and 23 of the original PSIR were erroneously attributed to defendant. Upon confirmation *446 of this by the Probation Officer and without objection from the government, a corrected PSIR was submitted deleting these offenses.
Without objection by the government, the Court orders that an undated letter "to whom it may concern" from Margaret Barbour be made a part of the PSIR.
B. Contested Matters:
Defendant contests the Probation Officer's conclusion that the career offender designation is applicable to defendant. This contention is without merit. § 4B1.1 provides that,
[a] defendant is a career offender if (1) the defendant was at least eighteen years old at the time of the instant offense, (2) the instant offense of conviction is a felony that is either a crime of violence or a controlled substance offense, and (3) the defendant has at least two prior felony convictions of either a crime of violence or a controlled substance offense.
Defendant satisfies all three requirements. He does not dispute that he satisfies criteria 1 and 2: (i) he was 37 at the time of the instant offense and (ii) the instant offense is clearly a crime of violence. But defendant does dispute whether the third criterion is met. Specifically, he argues that his past criminal history has been mischaracterized with respect to both the nature and the number of his prior offenses. This argument is groundless. The probation officer's determination to designate defendant as career offender is based on defendant's convictions for (i) armed robbery on February 4, 1977; (ii) felonious assault on May 7, 1984; and (iii) unlawful wounding on August 16, 1989. All three offenses are felonies, and all three are crimes of violence, for they all have "as an element the use, attempted use, or threatened use of physical force against the person or property of another." See United States v. Thompson, 891 F.2d 507, 509 (4th Cir.1989) (definition of crime of violence in 18 U.S.C. § 16[1] is incorporated into the Sentencing Guidelines for purposes of career offender calculation). Thus, defendant satisfies all three career offender criteria and is, therefore, properly designated a career offender.
C. Conclusions:
1. Defendant's adjusted offense level is 31.
2. Defendant's offense level total is 37.[2]
3. Defendant's Criminal History Category is VI and the Career Offender Provision, U.S.S.G. § 4B1.1, applies.
4. The range of punishment under the Guidelines is 360 months to life, with 3 to 5 years of supervised release required.
5. The Guidelines range of fines is $20,000 to $200,000, with an additional statutory special assessment of $50 for each felony count. 18 U.S.C. § 3013(a)(2)(A).
6. Probation is not authorized.
D. Motion for Departure:
Defendant seeks a downward departure based on the contention that the "victim's wrongful conduct contributed significantly to provoking the offense behavior." U.S.S.G. § 5K2.10. Specifically, defendant relies on the fact that he and the victim smoked crack cocaine together on the night of the rape and that she is reputed to have, in the past, engaged in sexual relations in exchange for drugs. Neither circumstance justifies a departure. As § 5K2.10 makes clear, victim conduct is ordinarily not sufficient to warrant a departure in the context of criminal sexual abuse offenses. This is a sensible result in light of the fundamental point that the law protects all persons *447 from rape, regardless of their past virtue and history, or even their criminal conduct. That the defendant and the victim smoked crack together the night of the incident, or that the victim may have engaged in sexual relations in exchange for drugs, in the past, are not actions that "significantly contributed to provoking" the rape. Accordingly, defendant's motion for a departure under § 5K2.10 is DENIED.
Defendant also moves for a departure, pursuant to U.S.S.G. § 4A1.3, on the ground that his criminal history category overstates the seriousness of his past criminal conduct. Defendant argues that even though his criminal history, on its face, satisfies the requirements for application of the career offender provision, the application of the provision in this case is unjustified because it results in a sentence that is disproportionately severe given the nature of the instant offense. Specifically, application of the career offender provision will add approximately ten years to his minimum guideline range. Thus, defendant moves the Court to apply § 4A1.3 to § 4B1.1, and depart downward from the minimum guideline range required by application of the career offender provision.
The Court concludes that the Guidelines do not allow such a departure. Both the language and structure of § 4B1.1 point persuasively to the conclusion that the departure provisions of § 4A1.3 do not apply to career offenders. Thus, § 4B1.1 provides that where the offense level from the career offender table is greater than the otherwise applicable offense level, "the offense level from the table ... shall apply." (emphasis added). Similarly, the criminal history category for a career offender "in every case shall be Category VI." (emphasis added). This mandatory language, coupled with the absence of any reference to § 4A1.3 or departures strongly suggests that the Sentencing Commission intended no criminal history downward departures for career offenders. Consistent with this conclusion is the Sentencing Commission's explicit incorporation of the § 4A1.2 criminal history computing instructions into § 4B1.1. This limited and specific incorporation of one part of § 4A1 invites the inference that no other part of that section applies to career offenders.
This conclusion finds further support in Congress' rationale for the career offender provision. Congress intended that "`career' offenders ... receive a sentence of imprisonment `at or near the maximum term authorized.' The ... `maximum term authorized' should be construed as the maximum term authorized by statute.[3]" U.S.S.G. § 4B1.1, Background Note, citing S.Rep. 98-225, 98th Cong., 1st Sess. 175 (1983), 128 Cong.Rec. 26,511-512 (text of "Career Criminals" amendment by Sen. Kennedy), 26,515 (brief summary of amendment), 26,517-518 (statement of Sen. Kennedy). To give effect to Congress' intent to sentence career offenders near the statutory maximum, the Sentencing Commission designed § 4B1 to exclude downward departures based on a court's analysis of a defendant's criminal history. Under § 4B1, the analysis of a defendant's criminal history begins and ends with the application of the Section's three criteria[4], which, as noted, are designed to carry out Congress' intent that career offenders receive sentences at or near the maximum statutory term. This intent would be defeated were courts permitted to resort to § 4A1.3 to justify downward departures for career offenders. Accordingly, defendant's motion for a departure on the basis of § 4A1.3 is DENIED.
*448 Nor is there any other basis justifying a downward departure in defendant's case. The Sentencing Reform Act of 1984 requires courts to impose a sentence within the guideline range "unless the court finds that there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines" and that the circumstances should result in a sentence different from the one prescribed by the guidelines. 18 U.S.C. § 3553(b); see also U.S.S.G. § 5K2.0. Thus, departures are appropriate upon satisfaction of a two-prong test. The first prong requires identification of a particular aggravating or mitigating circumstance that the guidelines have failed to take into account. Once having identified that circumstance, the court can depart only if it further determines that, by virtue of the circumstance, a different sentence should result from the one prescribed by the guidelines. See United States v. Goff, 907 F.2d 1441 (4th Cir.1990); United States v. Van Dyke, 895 F.2d 984 (4th Cir.1990); United States v. Summers, 893 F.2d 63, 66 (4th Cir.1990). Here, defendant has identified no aggravating or mitigating circumstance not taken into account by the Guidelines. Given this, the Court's inquiry ends and no departure on this basis is permissible. Accordingly, defendant's Motion for a Departure on the basis of 18 U.S.C. § 3553(b) and § 5K2.0 is DENIED.[5]
E. Sentence Imposed:
The Court commits defendant to the custody of the Bureau of Prisons for a period of 360 months on Count I. Upon release from confinement, the defendant is to serve a period of 3 (three) years of supervised release. As a special condition of supervised release, defendant is to complete a program of drug testing and drug rehabilitation at the discretion and direction of the Probation Office.
The Court also imposes a $50 special assessment, pursuant to 18 U.S.C. § 3013(a)(2)(A). Given defendant's lack of financial assets, the Court declines to impose either a fine or the costs of incarceration or supervised release.
F. Statement of Reasons for the Court's Sentence:
In setting life imprisonment as the maximum punishment for aggravated sexual abuse (rape), Congress recognized the vicious and heinous nature of the crime. The Court, in sentencing defendant at the low end of the Guideline range, effects Congress' will since, given defendant's age (37), a 30 year sentence is the essential equivalent of life imprisonment. The sentence imposed, therefore, adequately satisfies the Guidelines' goals relating to deterrence, retribution and incapacitation.
Copies of this Sentencing Memorandum shall be issued to all counsel of record, the United States Probation Office, the United Bureau of Prisons, and the United States Sentencing Commission.
NOTES
[1] 18 U.S.C. § 16 (West Supp.1989) defines a crime of violence as,
(a) an offense that has as an element the use, attempted use, or threatened use of physical force against the person or property of another, or
(b) any other offense that is a felony and that, by its nature, involves a substantial risk that physical force against the person or property of another may be used in the course of committing the offense.
[2] Because defendant is a career offender convicted of a crime punishable by a maximum of life imprisonment, six levels must be added to his adjusted offense level. See U.S.S.G. § 4B1.1.
[3] The maximum term authorized for the offense at issue here, aggravated sexual abuse, is life imprisonment. 18 U.S.C. § 2241(a).
[4] The rationale of § 4B1.1 is that when the Section's three criteria are satisfied, the risk of recidivism is sufficient to warrant enhanced punishment. The degree of enhancement is solely a function of the seriousness of the instant offense as reflected in the maximum statutory punishment. Put another way, under § 4B1, a defendant's criminal history determines only whether the risk of recidivism warrants enhanced punishment. But importantly, criminal history plays no role in determining the degree of enhancement. There is some logic, therefore, that criminal history, since it is not used to measure the degree of enhancement, should not be used as a departure basis to lessen the degree of enhancement.
[5] Since the Court finds no basis for a departure, it does not reach the issue whether a lesser sentence would be appropriate for this defendant. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2503947/ | 104 F. Supp. 2d 696 (2000)
R.L. SHILOH-BRYANT
v.
DIRECTOR, TDCJ-ID.
Civil Action No. 6:98CV37.
United States District Court, E.D. Texas, Tyler Division.
May 8, 2000.
*697 Roi Le' Shiloh-Bryant, Tennessee Colony, TX, pro se.
John Bennett, Staff Counsel for Offenders, Huntsville, TX, for petitioner.
Edward Larry Marshall, Attorney General Office, Austin, TX, Kristen Elaine Jernigan, Office of Attorney General, Habeas Corpus Division, Austin, TX, for respondent.
ORDER GRANTING PETITION FOR WRIT OF HABEAS CORPUS
STEGER, District Judge.
The above-entitled and numbered civil action was heretofore referred to United States Magistrate Judge Judith K. Guthrie, who issued a Report and Recommendation concluding that the petition for a writ of habeas corpus should be granted. The Director has filed objections to the Report and Recommendation.
The Report of the Magistrate Judge, which contains her proposed findings of fact and recommendations for the disposition of such action, has been presented for consideration, and having made a de novo review of the objections raised by the Director to the Report, the Court is of the opinion that the findings and conclusions of the Magistrate Judge are correct and the objections of the Director are without merit.
It is particularly noted that the Director specifically objects to Magistrate Judge Guthrie's alleged contention that the Petitioner has been denied a federal right to effective assistance of counsel on discretionary review. The Director also asserts that relief is barred by the non-retroactivity rule of Teague v. Lane, 489 U.S. 288, 109 S. Ct. 1060, 103 L. Ed. 2d 334 (1989). In reviewing the Report and Recommendation, along with all of the other records compiled in this case, it is clear that the Director is misrepresenting the conclusions of Magistrate Judge Guthrie. Judge Guthrie clearly noted that there is no right to counsel on discretionary review. She also clearly noted that this case does not involve allegations of ineffective assistance of counsel on discretionary review; instead, it concerns ineffective assistance of counsel on appeal. In Evitts v. Lucey, 469 U.S. 387, 105 S. Ct. 830, 83 L. Ed. 2d 821 (1985), the Supreme Court held that state prisoners are entitled to the effective assistance of counsel when state law provides for appeals as of right. Judge Guthrie correctly concluded that the issue before the Court concerns the parameters of the Petitioner's "appeal as of right" as determined by state law. Texas law at both the time the Petitioner's appeal was decided and at the present time requires appellate counsel to notify his client that his conviction has been affirmed and that he can pursue discretionary review on his own. Ex parte Wilson, 956 S.W.2d 25 (Tex. Crim.App.1997); Ex parte Jarrett, 891 S.W.2d 935 (Tex.Crim.App.1994). Judge Guthrie found that the Petitioner's appellate attorney did not fulfill his duty under state law and that the Petitioner was thereby denied his right to at least file a petition for discretionary review. She correctly concluded that the Petitioner was denied effective assistance of counsel on appeal. She also correctly found that the rules governing effective assistance of appellate counsel were in effect at the time the appellate court decided the Petitioner's appeal and thus relief in this case is not barred by Teague.
As a final matter, Magistrate Judge Guthrie did not have the benefit of the *698 Supreme Court's decision in Roe v. Flores-Ortega, 528 U.S. ___, 120 S. Ct. 1029, 145 L. Ed. 2d 985 (2000), when the Report and Recommendation was filed. The Supreme Court held that the proper framework for evaluating a claim that counsel was ineffective on appeal is governed by Strickland v. Washington, 466 U.S. 668, 104 S. Ct. 2052, 80 L. Ed. 2d 674 (1984). Under Strickland, a defendant must show (1) that counsel's representation fell below an objective standard of reasonableness based on the facts of the particular case, viewed as of the time of counsel's conduct, and (2) that counsel's deficient performance prejudiced the defendant. In the present case, the Petitioner's appellate attorney's representation fell below the objective standards of reasonableness as previously set forth in Jarrett and that such deficient representation prejudiced the Petitioner by denying him his right to at least file a petition for discretionary review. Consequently, Magistrate Judge Guthrie's conclusions are still correct in light of the standards set forth in Roe v. Flores-Ortega. Therefore the Court hereby adopts the findings and conclusions of the Magistrate Judge as the findings and conclusions of the Court. It is accordingly
ORDERED that the petition for a writ of habeas corpus is GRANTED. The Petitioner's conviction is reversed unless the Texas Court of Criminal Appeals within ninety days from this date grants the Petitioner an out-of-time appeal and permits him to file a petition for discretionary review. It is further
ORDERED that a copy of this order shall be mailed to the Troy C. Bennett, Jr., Clerk, Texas Court of Criminal Appeals, Supreme Court Bldg., P.O. Box 12308, Capitol Station, Austin, Texas 78711, by certified United States mail, return receipt requested. It is finally
ORDERED that the order referring the case to Magistrate Judge Guthrie is VACATED.
FINAL JUDGMENT
The Court having considered the Petitioner's case and rendered its decision by opinion issued this same date, it is hereby ORDERED that the petition for a writ of habeas corpus is GRANTED. The Petitioner's conviction is reversed unless the Texas Court of Criminal Appeals within ninety days from this date grants the Petitioner an out-of-time appeal and permits him to file a petition for discretionary review.
REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
GUTHRIE, United States Magistrate Judge.
Petitioner R.L. Shiloh-Bryant, an inmate confined in the Texas prison system, brings this petition for writ of habeas corpus pursuant to 28 U.S.C. § 2254. The petition was referred for findings of fact, conclusions of law and recommendations for the disposition of the case. The focus of the petition concerns whether the Petitioner's attorney on appeal was ineffective.
Facts of the Case
On May 24, 1991, the Petitioner was indicted by an Anderson County Grand Jury for the offense of possession of a deadly weapon in a penal institution, which included an enhancement paragraph. The indictment, in relevant part, reads as follows:
... ROY BRYANT, hereinafter styled Defendant, on or about the 3rd day of September, A.D.1990, ... did then and there knowingly, intentionally, and recklessly possess and conceal a deadly weapon, to-wit: a knife like object known as a shank, manifestly designed, made, or adapted for the purpose of inflicting death and serious bodily injury, and the said defendant was then and there confined in a penal institution, ...
On November 2, 1992, a jury trial began. On November 4, 1992, the jury found the *699 Petitioner guilty. On the same day, the jury proceeded to find the enhancement paragraph to be true and assessed punishment at 15 years imprisonment in the Texas prison system.
The Petitioner filed a notice of appeal. On November 29, 1993, William M. "Bill" House was appointed to represent the Petitioner on appeal. The conviction was affirmed by the Twelfth Court of Appeals on December 28, 1994. The Petitioner did not file a petition for discretionary review, and the mandate affirming the conviction was issued on February 13, 1995. The Petitioner alleges that he did not file a petition for discretionary review because House never told him that his conviction had been affirmed and never fulfilled his obligation of telling him about his right to file a petition for discretionary review.
The Petitioner filed an application for a writ of habeas corpus in state court on March 4, 1997. He noted that Bill House filed an appellate brief in late January, 1994. He states that in 1994 he received only one letter, another correspondence and a copy of the brief from House. He never heard from him again. He wrote to House twice in 1995 about the status of his appeal and did not receive a reply. He wrote to him again in 1996. On February 4, 1997, he wrote to the Federal Public Defender in Ft. Worth about the status of the appeal. In a letter, dated February 25, 1997, Assistant Federal Public Defender Peter Fleury told him that the conviction had been affirmed. The letter included a copy of the opinion. In his state application for a writ of habeas corpus, the Petitioner complained that Bill House never told him that his conviction had been affirmed. He argued that he had been denied the opportunity to file a petition for discretionary review because of ineffective assistance of counsel. The Texas Court of Criminal Appeals denied the application without written order on December 18, 1997.
The present petition was filed on January 20, 1998. The petition was dismissed as being barred by the statute of limitations. On April 16, 1999, the Fifth Circuit vacated the decision and remanded it for further consideration. The Director filed an answer on the merits on August 23, 1999. Pursuant to an order of the Court, the Director filed a supplemental answer on January 7, 2000. The supplemental answer included an affidavit from Bill House and copies of the prison system's incoming legal/special mail logs for the unit where the Petitioner was incarcerated. The mail logs cover a four month period of time starting on the day the Twelfth Court of Appeals issued its decision. There is no entry in the logs showing that the Petitioner ever received a letter from Bill House. An evidentiary hearing was conducted concerning the Petitioner's claims on March 30, 2000.
Evidentiary Hearing
The Petitioner and Bill House testified during the evidentiary hearing. The Petitioner testified that he was confined at the Hughes Unit from the time he was convicted until January, 1999. The trial began on November 2, 1992. The Petitioner was found guilty and sentenced to fifteen years in prison. The Petitioner was represented by Barbara Law at trial. She filed a notice of appeal on the Petitioner's behalf. Bill House was appointed to represent him on November 29, 1993. The Petitioner testified that his conviction was affirmed on December 28, 1994. Bill House, however, never told him that his conviction had been affirmed. He never told him about his right to file a petition for discretionary review. The Petitioner testified that he thus did not file a petition for discretionary review. He learned that his conviction had been affirmed by a federal public defender in a letter dated February 25, 1997.
The mail logs were admitted into evidence without objection. The Petitioner noted that the mail logs cover a four month period of time starting on December 28, 1994. The mail logs cover the period of time when the Twelfth Court of *700 Appeals issued its decision and when the mandate was issued affirming the conviction. The Petitioner testified that any mail from Bill House would have been logged. The mail logs do not show that the Petitioner ever received a letter from Bill House.
The Petitioner finally testified about Bill House's affidavit. He noted that House provided a sample copy of a form letter that he sends to defendants telling them that their conviction has been affirmed and telling them about their right to file a petition for discretionary review. The Petitioner noted that the letter is dated June 1, 1998. The Petitioner argued that the letter is not relevant to whether House sent him a letter in December, 1994, or January, 1995. The Petitioner reiterated that he never received a letter from Bill House telling him that his conviction had been affirmed and telling him about his right to file a petition for discretionary review.
Bill House testified that he could not find his file concerning the Petitioner's case. He testified that it is his practice to notify his clients by mail when their convictions are affirmed. He has used the form letter for many years. He tells his clients how to file a petition for discretionary review pro se if he does not intend to represent them on a petition for discretionary review. He believes that he sent a letter to the Petitioner.
On cross-examination, House examined the mail logs and agreed that there is not an entry showing that the Petitioner received a letter from him. He testified that he does not know why a letter was not logged. House testified that he does not have an independent recollection of the case. He also testified that he is not familiar with the Jarrett case, although he may have read it. He, nonetheless, noted that it his is normal practice to contact his clients.
When questioned by the Court, House testified that he has been an attorney since 1991. He previously represented many inmates who were charged with committing crimes. He does not represent many inmates anymore because the State created a defender program to represent inmates. House testified that he is still appointed to represent inmates when there is a conflict. He testified that it is unusual for him to represent an inmate on appeal when an attorney with the defender program represented the inmate at trial. His practice today primarily involves criminal and family law. He normally represents his clients through appeals. With respect to Jarrett, he testified that he is not familiar with the name of the case that requires him to notify defendants when their convictions are affirmed and to tell them about their right to file a petition for discretionary review, although he is aware that a case has been issued requiring him to do so. He simply is not familiar with the name of the case. House testified that he does not recall when he first started telling clients about their right to file a petition for discretionary review, although he did develop that practice at one point in time. He attached the 1998 letter to his affidavit because that was the earliest case that came to mind, although he sent such letters prior to 1998. He again testified that he does not recall when he started sending such letters.
Discussion and Analysis
The role of federal courts in reviewing habeas corpus petitions by prisoners in state custody is exceedingly narrow. A person seeking federal habeas corpus review must assert a violation of a federal constitutional right. Lowery v. Collins, 988 F.2d 1364, 1367 (5th Cir.1993). Federal habeas corpus relief will not issue to correct errors of state constitutional, statutory, or procedural law, unless a federal issue is also present. Estelle v. McGuire, 502 U.S. 62, 67-68, 112 S. Ct. 475, 116 L. Ed. 2d 385 (1991); West v. Johnson, 92 F.3d 1385, 1404 (5th Cir.1996).
*701 At the time the Petitioner's appeal was affirmed by the Twelfth Court of Appeals, the law was clearly settled that criminal defendants have a right to effective assistance of counsel and federal habeas corpus relief is available when a prisoner is denied effective assistance of counsel. Bryant v. Scott, 28 F.3d 1411 (5th Cir. 1994); Lyons v. McCotter, 770 F.2d 529 (5th Cir.1985). In order to succeed on an ineffective assistance of counsel claim, a habeas petitioner must show that (1) counsel's performance was deficient, and (2) that deficiency prejudiced the petitioner. Strickland v. Washington, 466 U.S. 668, 687, 104 S. Ct. 2052, 80 L. Ed. 2d 674 (1984). The law was also settled that state prisoners are entitled to the effective assistance of counsel when state law provides for appeals as of right. Evitts v. Lucey, 469 U.S. 387, 105 S. Ct. 830, 83 L. Ed. 2d 821 (1985). By 1994, the Fifth Circuit had granted habeas corpus relief in cases where a state prisoner had been denied effective assistance of counsel on appeal. Lombard v. Lynaugh, 868 F.2d 1475 (5th Cir.1989). The Fifth Circuit also noted that prejudice is presumed when the deficiencies of counsel resulted in "an actual or constructive complete denial of any assistance of appellate counsel." Id. at 1480. It is thus clear that by the time the Petitioner's conviction became final, he had a right to effective counsel on appeal to the extent that Texas law gave him the right to appeal and that federal habeas corpus relief is available if he was denied such right.
The present case concerns whether the Petitioner is entitled to federal habeas corpus relief because his appellate attorney failed to timely notify him about his right to file a petition for discretionary review in the Texas Court of Criminal Appeals. The Director argues that such relief should be denied because it would be a new rule of law and relief is barred by the non-retro-activity rule of Teague v. Lane, 489 U.S. 288, 109 S. Ct. 1060, 103 L. Ed. 2d 334 (1989). He asserts that the applicability of Teague is a threshold matter that must be decided before a federal habeas court can reach the merits of a claim.
The Fifth Circuit recently discussed the approach that should be employed in applying Teague in Matthew v. Johnson, 201 F.3d 353 (5th Cir.2000). The Director correctly noted that the applicability of Teague is a threshold matter. Id. at 359 (citations omitted). Three steps must be employed in applying Teague. Id. First, the court must determine when the petitioner's conviction and sentence became final. Id. Second, the court must "survey the legal landscape" as it then existed and determine whether a state court considering the petitioner's claim at the time his conviction became final would have felt compelled by existing precedent to conclude that the rule he seeks was required by the Constitution. Id. The third step is considered only if the court finds that the petitioner's claim necessitates a new rule. Id. Under those circumstances, the court must determine whether the new rule falls within either of two narrow exceptions before the court may announce it and apply it. Id.
As previously stated, at the time the Twelfth Court of Appeals affirmed the Petitioner's conviction in 1994, the law was clearly established that a defendant is entitled to the effective assistance of counsel when state law provides an appeal as of right. Evitts v. Lucey, supra. In light of Evitts v. Lucey, the Court must look to state law to determine the parameters of the Petitioner's "appeal as of right." The rights of the Petitioner at the time his conviction was affirmed were spelled out by the Texas Court of Criminal Appeals in Ex parte Jarrett, 891 S.W.2d 935 (Tex. Crim.App.1994). The decision was announced on September 21, 1994, which was three months before the Twelfth Court of Appeals issued a decision on the Petitioner's appeal. It was the clearly established law when the Petitioner's conviction became final. The Texas Court of Criminal Appeals noted that it had been long established *702 that a criminal defendant had a right to make a request for discretionary review. Id. at 940. The Court went on to say that "if this right is abridged or denied through the misfeasance or nonfeasance of counsel there is an abridgment of the Sixth and Fourteenth Amendments through which the State benefits and the individual's rights are constitutionally curtailed. See, Cuyler, 446 U.S. at 344, 100 S.Ct. at 1715. See also, Ayala, 633 S.W.2d at 528." Id.
It is again noted that the second step in the Teague analysis requires this Court to "determine whether a state court considering the petitioner's claim at the time his conviction became final would have felt compelled by existing precedent to conclude that the rule he seeks was required by the Constitution." The Texas Court of Criminal Appeals made it clear that it thought that if a defendant's right to make a request for discretionary review was abridged or denied through the misfeasance or nonfeasance of counsel, the Sixth and Fourteenth Amendments of the Constitution would be violated. The Texas Court of Criminal Appeals held that appellate counsel had a duty to consult with and advise his client about the meaning and effect of the opinion of the court of appeals and that he had a duty to advise his client about the possibility of review by the Texas Court of Criminal Appeals. Id. at 941. Consequently, in light of Evitts v. Lucey, it is clear that the Petitioner had a federal right to effective assistance of counsel on appeal to the extent that a right to appeal was provided by state law, and it is equally clear that at the time the Petitioner's conviction became final he had a right to be informed about the right to file for discretionary review and to be told about that right by his appellate attorney. He was not entitled to have his case heard on discretionary review or have an attorney on discretionary review, but he had a right to at least file for discretionary review and be told about that right by his attorney.
The Director argues that relief is not available in light of Teague because the Supreme Court has not specifically addressed whether a petitioner is constitutionally entitled to be notified that his conviction was affirmed and notified of his right to file a petition for discretionary review. The Director's approach, however, erroneously focuses on whether the Supreme Court has decided the issue, as opposed to what a state court would have felt compelled to conclude. Matthew v. Johnson, 201 F.3d at 359. The Director is trying to narrowly limit the application of Evitts v. Lucey, supra, which focuses of the right to appeal as dictated by state law. Furthermore, the Director is trying to broadly apply Teague to prevent the application of existing rules to novel facts. The Fourth Circuit was confronted with a similar approach when the Commonwealth of Virginia argued that the Teague prohibition against applying "new rules" should be applied broadly in ineffective assistance of counsel cases in Ostrander v. Green, 46 F.3d 347 (4th Cir.1995). The Fourth Circuit made the following comments:
A "rule" is a principle of law we apply to factual situations be they few or many within the rule's intended meaning. Though cases are the hardware out of which we fashion rules, rules are more than just cases. Sometimes courts fashion broad rules intended to govern an array of factual settings; often they frame more narrowly. When we ask whether a proferred holding would be a "new rule," we must therefore bear in mind the level of generality at which the prevailing rule or rules are meant to be applied. Turner, 35 F.3d at 883. Just as habeas petitioners could always avoid the Teague bar if we define "rules" at an abstractly broad level of generality (e.g. "due process"), so also could respondents erect the bar in almost every case if we characterize a "rule" as "the most specific conclusion or holding [the petitioner] hopes we reach[.]" Id. (emphasis in original deleted). History does repeat itself, but *703 not frequently or comprehensively enough to provide a case law exemplar for every set of facts.
Id. at 354. The Court concluded that the ineffective assistance of counsel formula was broad enough for evaluating a myriad of factual contexts. "An existing normative rule applied to a novel set of facts becomes `new' only if the rule's boundaries are extended, and not merely because its interstices are filled." Id.
The Court is of the opinion that the present case merely applies established case law concerning ineffective assistance of counsel claims to the facts of this case. The basic issue is whether counsel's representation on appeal was deficient and whether the Petitioner was prejudiced by such deficient representation. The context of whether counsel's representation was deficient must relate back to state law. Counsel's duties in the present case were established in Jarrett. In Ostrander, the Fourth Circuit was of the opinion that there was no "new rule" of law involved in applying the facts of that case to a basic ineffective assistance of counsel claim. The undersigned is of the opinion that the present case likewise does not involve a "new rule" of law, rather it concerns the application of established rules to the unique facts of this case.
During closing arguments, the Director also argued that the Supreme Court has never held that there is a right to effective assistance of counsel on discretionary review. The Director stressed that in Wainwright v. Torna, 455 U.S. 586, 102 S. Ct. 1300, 71 L. Ed. 2d 475 (1982), the Supreme Court reversed a Fifth Circuit decision granting habeas corpus relief where retained counsel failed to timely file an application for a writ of certiorari to the Florida Supreme Court to review a conviction. The Supreme Court's decision was based on Ross v. Moffitt, 417 U.S. 600, 94 S. Ct. 2437, 41 L. Ed. 2d 341 (1974), where the Supreme Court held that there is no right to counsel on discretionary review. This case does not concern, however, whether the Petitioner had a right to counsel on a petition for discretionary review. Instead, it concerns the duties of an attorney on appeal prior to that time. In Evitts v. Lucey, the Supreme Court discussed Ross v. Moffitt and confirmed the basic principle that there is no right to counsel on discretionary appeal but there is a right to effective assistance of counsel when state law provides for appeals as of right. 469 U.S. at 401-02, 105 S. Ct. 830. Again, the focus of attention in this case must be on the appellate rights provided to the Petitioner by state law at the time the Twelfth Court of Appeals affirmed his conviction.
The Court notes that the Texas Court of Criminal Appeals modified the requirements set forth in Jarrett in Ex parte Wilson, 956 S.W.2d 25 (Tex.Crim.App. 1997). The Court of Criminal Appeals reaffirmed the basic principle that there is no constitutional right to counsel for discretionary review. The Court modified Jarrett to the extent that appellate attorneys would no longer be required to advise defendants as to the merits of discretionary review. Id. at 27. Nonetheless, the Texas Court of Criminal Appeals reaffirmed the basic principle in Jarrett that an appellate attorney has the obligation to tell his client "that his conviction has been affirmed and he can pursue discretionary review on his own" and that the defendant has been denied his Sixth Amendment right to effective assistance of counsel if "appellate counsel's action or inaction denies the defendant his opportunity to prepare and file a petition for discretionary review." Id. at 26-27.
It is finally noted that the facts of the Jarrett case are somewhat similar to the present case. The appellate attorney, just like the attorney in the present case, specified that he informed his client about his rights by mail. The Texas Court of Criminal Appeals made the following comments in response to the attorney's representation:
However, the letter that counsel claims to have sent is not attached, nor the *704 address to which counsel claims to have sent said letter, nor the manner in which said letter was sent to applicant, all of which may be germane to the habeas judge's findings of fact. Further, there is no indication the habeas judge determined whether applicant received said notification, pursuant to our original order.
Id. at 940. The type of questions mentioned by the Texas Court of Criminal Appeals should likewise be considered in the present case.
This brings us to the facts of the present case. The Petitioner testified that his appellate attorney never told him that his conviction had been affirmed and never advised him that he could pursue discretionary review on his own. His attorney testified that it is his practice to tell his clients by letter that their conviction has been affirmed and to tell them that they have a right to file a petition for discretionary review on their own. He was not certain, however, when he started mailing such letters to his clients, and he could only speculate as to whether he sent such a letter to the Petitioner. He had no proof that he ever sent such a letter to the Petitioner. Counsel did not have, for example, a copy of a certified letter with a return receipt showing that the Petitioner actually received the letter. On the other hand, the incoming legal mail logs support the Petitioner's assertion that he never received a letter from his appellate attorney. In light of the Petitioner's testimony and the mail logs and the absence of any definitive evidence to the contrary, the Court must conclude that the Petitioner's attorney did not fulfil his duty of telling the Petitioner that his conviction had been affirmed and that he can pursue discretionary review on his own. The Court must also conclude, as a matter of law, that counsel's failure to fulfil his duty prejudiced the Petitioner because the Petitioner was unable to pursue his right under state law to make a request for discretionary review. The Petitioner is entitled to federal habeas corpus relief. The proper remedy is to grant the Petitioner an out-of-time appeal and to place him back in the position to timely file a pro se petition for discretionary review.
Recommendation
It is accordingly recommended that the above-styled petition for writ of habeas corpus should be granted. The Texas Court of Criminal Appeals should be given ninety days from the issuance of the Final Judgment to grant the Petitioner an out-of-time appeal and to permit him to file a petition for discretionary review. The Petitioner's conviction should be reversed if the Texas Court of Criminal Appeals fails to timely give the Petitioner an out-of-time appeal.
Within ten (10) days after receipt of the magistrate judge's report, any party may serve and file written objections to the findings and recommendations contained in the report.
A party's failure to file written objections to the findings, conclusions and recommendations contained in this Report within ten days after being served with a copy shall bar that party from de novo review by the district judge of those findings, conclusions and recommendations and, except on grounds of plain error, from appellate review of unobjected to factual findings and legal conclusions accepted and adopted by the district court. Douglass v. United Services Auto. Ass'n., 79 F.3d 1415, 1430 (5th Cir.1996) (en banc). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3775113/ | OPINION
{¶ 1} B.F. ("B.") appeals from a judgment of the Montgomery County Court of Common Pleas, Probate Division, which denied his petition to adopt his step-son, H.M.F., without the consent of the boy's biological father, S.C. ("S.").
{¶ 2} The probate court acted within its discretion in concluding that S. was justified in failing to support or communicate with his son in the year preceding the *Page 2
filing of B.'s petition for adoption. As such, we will affirm the judgment of the probate court.
I {¶ 3} H.M.F. was born on January 9, 2002, to Sa. N. ("Sa.") and S., who have never been married to one another. Sa. married the petitioner, B., in 2004. B. filed a petition to adopt H.M.F. in November 2007. B. alleged in his petition that S.'s consent to the adoption was not required because S. had failed, without justifiable cause, to communicate with and to provide for the maintenance and support of the child for at least one year preceding the filing of the petition.
{¶ 4} The evidence established that S. had regular visitation with his son for the first years of his life. However, after Sa.'s marriage to B., she began to curtail S.'s visitation, citing S.'s smoking and drinking and her son's exhaustion after these visits. Frequent scheduling conflicts also developed, including the need for the boy to visit with other family members. During this period, B. would sometimes allow S. to take the boy for a visit when Sa. was not home and without her knowledge.
{¶ 5} In October 2006, S. moved to Virginia in search of better employment opportunities. He testified, however, that the move did not work out as well as he had hoped in this respect. His car broke down shortly before his move, and the town where he lived with his mother in Virginia was 40 miles away from any significant employment opportunities. S. testified that he only had a few short-term jobs in the months after his move.
{¶ 6} In early September 2007, S. obtained employment at a mattress factory lasting five or six months, during which time he claimed that child support was withheld *Page 3
from his paycheck. He presented a paycheck which showed that child support had been withheld but did not provide evidence about who was the beneficiary of this child support or where it was sent. S. had a daughter, C, from another relationship, for whom he was also obligated to pay child support, but at some point he obtained custody of his daughter. It is unclear when S.'s daughter began to live with him, thus terminating his obligation to pay child support to her mother. A caseworker from Montgomery County Child Support Enforcement Agency testified that it received no payments from S. on his son's behalf during the period reflected on his paycheck from the mattress factory or in the year preceding the filing of the petition to adopt.
{¶ 7} S. was laid off in February 2008. S. testified that, after he obtained custody of C., he did not receive child support from C.'s mother. When S. was not working, his only income was SSI and $230 per month from a work program to help with his daughter. He did not receive unemployment benefits because he had not had a chance to file. S. admitted that, other than the child support deductions from his paychecks, he did not pay any child support for his son from November 2006 to November 2007. He also did not send any gifts, clothes, or food. Sa. testified that the last time she had received any child support was in March 2006, when she received $34 that was diverted to her from S.'s income tax return.
{¶ 8} With respect to communication, the parties agree that S. last saw his son on the son's birthday in January 2006. S. claimed that he had not initiated any telephone contact with the boy since he moved because he knew that Sa. would not allow it. He claimed that he did not pursue the issue of visitation or other contact in court because he was behind on his child support and thought that the child support *Page 4
issue would work against him if he sought help with contacting the child. Sa. testified that S. made no attempt to visit or communicate with his son after he moved to Virginia.
{¶ 9} Based on the evidence presented, the probate court concluded that S.'s consent to the adoption was required. B. appeals, raising two assignments of error.
II {¶ 10} B.'s first assignment of error states:
{¶ 11} "THE COURT'S DECISION THAT THE FATHER'S CONSENT WAS NECESSARY GOES AGAINST THE MANIFEST WEIGHT OF THE EVIDENCE BECAUSE THE EVIDENCE CLEARLY AND CONVINCINGLY DEMONSTRATED THAT THE NATURAL FATHER HAD FAILED TO SUPPORT OR COMMUNICATE WITH THE CHILD FOR THE ONE YEAR PERIOD BEFORE THE PETITION WAS FILED WITHOUT JUSTIFIABLE CAUSE."
{¶ 12} B. claims that the probate court's decision that S. was justified in failing to communicate with and to support his son in the year preceding the filing of the petition to adopt was against the manifest weight of the evidence.
{¶ 13} The right of a parent to the care and custody of his or her children is one of the most fundamental in law. Santosky v. Kramer
(1982), 455 U.S. 745, 753, 102 S.Ct. 1388, 71 L.Ed.2d 599; In reAdoption of A.M. B., Montgomery App. No. 21973, 2007-Ohio-2584, at ¶ 12. This fundamental liberty interest of parents in the care, custody, and management of their children is not easily extinguished.Santosky, 455 U.S. at 753-754. Adoption terminates those fundamental rights. R.C. 3107.15(A)(1). Accordingly, adoptions are generally not permissible absent the written consent of both *Page 5
parents. R.C. 3107.06; In re Adoption of Jones (1990),70 Ohio App.3d 576, 578.
{¶ 14} Pursuant to R.C. 3107.07(A), a parent's consent to adoption is not required when that parent "has failed without justifiable cause to communicate with the minor or to provide for the maintenance and support of the minor as required by law or judicial decree for a period of at least one year immediately preceding either the filing of the adoption petition or the placement of the minor in the home of the petitioner." The party petitioning for adoption has the burden of proving, by clear and convincing evidence, that the parent failed to support or communicate with the child during the requisite one-year period and that there was no justifiable cause for the failure. In re Adoption ofHolcomb (1985), 18 Ohio St.3d 361, paragraph four of the syllabus;In re Adoption of J.M.N., Clark App. No. 08-CA-23 and 08-CA-24,2008-Ohio-4394, ¶ 11. Once the petitioner has established, by clear and convincing evidence, that the parent has failed to communicate with or support the child for the one-year period, the burden of going forward with evidence shifts to the parent to show some facially justifiable cause for the failure. In re Adoption of Bovett (1987),33 Ohio St.3d 102, paragraph two of the syllabus. The burden of proof, however, remains at all times with the petitioner, who must establish the lack of justifiable cause by clear and convincing evidence. Id. at 104.
{¶ 15} Whether justifiable cause for failure to pay child support or for failure to communicate has been proven by clear and convincing evidence in a particular case is a determination for the probate court and will not be disturbed on appeal unless such determination is against the manifest weight of the evidence. In re Adoption of Masa (1986),23 Ohio St.3d 163, 166, citing In re Adoption of McDermitt (1980), *Page 6 63 Ohio St.2d 301, 306.
{¶ 16} Although the court found that S. had failed to support or communicate with his son in the year preceding the filing of B.'s petition to adopt, it also found that he was justified in failing to support and communicate with the child. We will address each of these issues in turn.
{¶ 17} On the issue of support, the probate court found that "[S.'s] financial circumstances were dire" during the year in question. Specifically, the court found that S. had earned very little money, approximately $1,400, which he had used to support his daughter. The court further found that, although his income had been "meager," S. had been willing to support his son and had believed that he was, in fact, doing so through payroll deductions. The Court found that "because of his meager financial resources, there was justifiable cause for [S.'s] failure to support" in the year preceding the petition for adoption.
{¶ 18} On the issue of communication with the child, the probate court found that Sa. had significantly discouraged communication, thus justifying S.'s failure to communicate with his son. The court stated: "From [Sa.'s] manner of testifying and her demeanor, it was quite apparent to the Court that she wants to erase [S.] from her and their son's lives. It is obvious that she has a new life with a lucrative career, new husband, another child and she wants this to be her family. * * * [Sa.'s] pattern of behavior made [S.] feel that any effort made to contact his son was completely futile."
{¶ 19} Significant interference by a custodial parent with communication between the non-custodial parent and the child, or significant discouragement of such communication, are relevant to whether there is justifiable cause for the non-custodial *Page 7
parent's failure to communicate with the child. In re Adoption ofS.B.D., Miami App. No. 2006-CA-25, 2006-Ohio-5133, at ¶ 30, citingHolcomb, 18 Ohio St.3d 361.
{¶ 20} Because the trier of fact sees and hears the witnesses at trial, we must defer to the factfinder's decisions whether, and to what extent, to credit the testimony of particular witnesses. State v.Lawson (Aug. 22, 1997), Montgomery App. No. 16288. Here, we recognize that the probate court could have reached a different conclusion based on the evidence presented. However, the probate court saw and heard the witnesses at the hearing, and we must defer to its determination of the weight to be given to the evidence and which of competing inferences should be drawn from that evidence. State v. DeHass (1967),10 Ohio St.2d 230, paragraph one of the syllabus; In re Adoptions of Groh,153 Ohio App.3d 414, 2003-Ohio-3087, at ¶ 31. . The probate court's conclusion that B. had failed to show, by clear and convincing evidence, that S.'s consent to the adoption was not required was not against the manifest weight of the evidence.
{¶ 21} The first assignment of error is overruled.
III {¶ 22} B.'s second assignment of error states:
{¶ 23} "THE COURT ABUSED ITS DISCRETION WHEN IT ADMITTED THE RESPONDENT'S EXHIBIT BECAUSE IT WAS NOT PROPERLY AUTHENTICATED AND CONTAINED INADMISSIBLE HEARSAY."
{¶ 24} B. contends that the probate court should not have admitted S.'s paycheck from Virginia into evidence because it was not authenticated. B. objected to the admission of the paycheck, but his objection was overruled. *Page 8
{¶ 25} B. claims that the paycheck was not authenticated because S. "never testified that it was in fact a pay stub." He also points out that S.'s testimony about the paycheck "did not match what the pay stub specifically stated." He asserts that the paycheck was hearsay and did not fall within any exception to the hearsay rule.
{¶ 26} A condition precedent to the admissibility of documents is that documents must be authenticated or identified. Rodgers v.Pahoundis, 178 Ohio App.3d 229, 2008-Ohio-4468, at ¶ 124; St. Paul Fire Marine Ins. Co. v. Ohio Fast Freight, Inc. (1982), 8 Ohio App.3d 155,157. Generally, authentication or identification is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims. Rodgers at ¶ 124; Evid. R. 901 (A). "The common manner of identifying a document is through testimony of a witness with knowledge." St. Paul Fire Marine, 8 Ohio App.3d at 157. The evidence necessary to support a finding that the document is what a party claims it to be has a very low threshold, which is less demanding than the preponderance of the evidence. Burns v. May (1999),133 Ohio App.3d 351, 355, citing State v. Winfield (Feb. 7, 1991), Ross App. No. 1641. B.'s assertion that S. never identified the document in question as his paycheck is without merit. S. stated several times during his testimony that he had sent his paycheck to the court with a letter objecting to the adoption proceedings. Based on the transcript, the judge seems to have located the paycheck inside an envelope addressed to the court during the course of the hearing. She then handed it to S. and told him to look at it. He responded that he knew they were taking support out. Although S. had previously stated that the paycheck would show over $1,000 in child support deductions, the check actually showed that $671 had been withheld for this purpose. *Page 9
S. also testified that he had circled the notation on the pay stub that reflected the amount of child support he had paid. The exhibit that was admitted contained such a marking. Although we acknowledge that S. did not accurately state the amount of child support reflected on the check before the judge presented it to him, we reject B.'s claim that S. had not sufficiently identified the document in question.
{¶ 27} We also note that S. did not dispute the child support caseworker's testimony that no money had been received by her agency on his son's behalf. S. admitted that he did not know where the money deducted from his paycheck had gone, although he had believed that it had gone to his son. In view of this testimony, we believe that the paycheck was not offered for the truth of the matter asserted — that child support had been paid. Rather, it was offered in support of S.'s claim that he had believed he was paying child support. Accordingly, the paycheck was not hearsay. Evid. R. 801(C).
{¶ 28} Finally, the probate court's finding that S. was justified in failing to support his child was based on his "dire" financial circumstances and his "meager" resources. The court was presented with unrefuted evidence from the child support enforcement agency that no support was received on behalf of S.'s son during the time in question, and the court does not appear to have placed great emphasis on S.'s belief that he had been paying child support. As such, any error in the admission of the document would have been harmless.
{¶ 29} The second assignment of error is overruled.
IV {¶ 30} The judgment of the probate court will be affirmed. *Page 10
FAIN, J. and GRADY, J., concur.
Copies mailed to:
Shawn P. Hooks Robert L. Mues, S.C. Hon. Alice O. McCollum *Page 1 | 01-03-2023 | 07-06-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1891147/ | 93 S.W.3d 469 (2002)
FCLT LOANS, L.P., Successor in Interest to First City Bank-Inwood Forest, N.A., Appellant,
v.
The ESTATE OF Louise P. BRACHER; Antoinette Bracher Lawrence, Individually and as Co-Executrix of the Estate of Louise Bracher; Barbara K. Olson, Individually and as Co-Executrix of the Estate of Louise Bracher; James V. Bracher, Individually and as Co-Trustee of the David A. Bracher Family Trust; Victoria Bracher Noyes, Individually and as Co-Trustee of the David A. Bracher Family Trust; and David A. Bracher, Appellees.
No. 14-00-00577-CV.
Court of Appeals of Texas, Houston (14th Dist.).
October 17, 2002.
*473 Mynde S. Eisen, Houston, for appellants.
Cathleen C. Herasimchuk, Marcus E. Faubion, Rusty Hardin, Houston, for appellees.
Rusty Hardin, for Barbara Olson.
Panel consists of Justices EDELMAN and FROST and Senior Chief Justice MURPHY.[*]
OPINION ON MOTION FOR REHEARING
PAUL C. MURPHY, Senior Chief Justice (Assigned).
Appellant's motion for rehearing is overruled; the opinion issued in this case on February 28, 2002, is withdrawn, and the following opinion is issued in its place.
This appeal comes before us on competing motions for summary judgment in a suit brought by appellant, FCLT Loans, L.P., to recover a debt allegedly owed to FCLT by Louise Bracher's estate. The trial court granted appellees' motions, denied FCLT's motion, and entered judgment that FCLT take nothing. We reverse the judgment in part and affirm in part, and we remand for further proceedings consistent with this opinion.
FACTUAL BACKGROUND
In 1980, Victor Bracher executed a note with First City BankInwood Forest, N.A., secured by a Deed of Trust covering eight tracts of land in Harris County. Two years later, Victor and his wife, Louise, established three trusts, each named for one of the couple's three children: the Antoinette Bracher Lawrence Trust, the Barbara K. Bracher Trust, and the David A. Bracher Family Trust. These trusts were each initially funded with several properties, although none of the properties used to secure Victor's 1980 note were included. Each trust named Victor and Louise as both grantors and trustees, and each permitted them to direct the distribution of the income and principal of the trust. Each trust also contained a "spendthrift" clause, providing *474 that before actual receipt by a beneficiary of any income or property from the trust, the property could not be attached by any of the beneficiary's creditors.
Victor died in 1987, and Louise Bracher was appointed independent executor of his estate. In 1988, Louise signed a Modification, Renewal and Extension of Real Estate Note and Liens and Deed of Trust ("Renewal Note") with First City, in the amount of $388,822.37. Louise signed the note both individually and in her capacity as independent executor of Victor's estate. By its terms, the Renewal Note came due on February 18, 1991.
After a series of mergers and name changes, First City was placed into receivership. The Renewal Note was eventually assigned to FCLT in 1995. In 1997, FCLT sent Louise a notice of default and demand for payment on the Renewal Note.
Shortly after FCLT sent the default notice, however, Louise died. Louise's daughters, Antoinette Bracher Lawrence and Barbara Olson,[1] were appointed coindependent executors of her estate. By their terms, both the Antoinette Bracher Lawrence Trust and the Barbara K. Bracher Trust were distributed to Lawrence and Olson, respectively. The David A. Bracher Family Trust ("Family Trust"), however, remained intact, with two of Victor and Louise's grandchildrenJames Bracher and Victoria Bracher-Noyeslater appointed co-trustees.
PROCEDURAL BACKGROUND
In February 1998, unaware that Louise Bracher had died, FCLT filed the present lawsuit against her, seeking the amount due under the Renewal Note plus attorney's fees. A year later, FCLT amended its petition to name as defendants (1) the Estate of Louise Bracher; (2) Lawrence, both individually and as co-executor of Louise's estate; (3) Olson, both individually and as co-executor of Louise's estate; and (4) David Bracher. In addition to seeking payment under the Renewal Note, FCLT further alleged that the defendants "dissipated" the assets in Louise's estate and that Lawrence and Olson breached their fiduciary duties by allowing this dissipation of estate assets. In June 1999, FCLT again amended its petition, adding three new defendants: (1) the Family Trust; (2) Bracher-Noyes, both individually and as co-trustee of the Family Trust; and (3) James Bracher, both individually and as co-trustee of the Family Trust. FCLT's second amended petition also added a claim, under the heading "Fraud," alleging the defendants acted knowingly and intentionally.
David Bracher filed a motion for summary judgment in December 1999. In February 2000, three of the other defendantsBracher-Noyes and James Bracher (both individually and as co-trustees) and Lawrence (in her individual capacity only)filed a separate summary judgment motion (the "First Joint Motion").[2] FCLT responded by again amending its petition. Ultimately, FCLT's petition asserted the following five causes of action:
(1) A claim against Lawrence and Olson[3] for their refusal to pay the *475 amount due under the Renewal Note.
(2) Claims against Lawrence and Olson, as co-executors of Louise Bracher's estate, and against Lawrence, Olson, James Bracher, and Bracher-Noyes for "dissipation of assets."
(3) Claims against Lawrence, Olson, James Bracher, and Bracher-Noyes for breach of fiduciary duty.
(4) Claims against Lawrence, Olson, James Bracher, and Bracher-Noyes, both as individuals and as executors or trustees, for conversion.
(5) A claim against Lawrence and Olson for engaging in fraudulent acts.
FCLT sought a judgment in the amount of the debt plus interest and attorney's fees, a turnover order for all assets currently in or received from Louise's estate or the trusts to pay FCLT's debt, an accounting from the co-executors of Louise's estate and the co-trustees of the Family Trust, and an injunction against further distributions from Louise's estate or the Family Trust.
After FCLT amended its petition, David Bracher filed an amended motion for summary judgment, while the remaining defendants filed a new motion for summary judgment (the "Second Joint Motion").[4] FCLT also filed its own motion for summary judgment.
The trial court granted all defendants' motions and ordered that FCLT take nothing. In twelve points of error, FCLT complains the trial court erred by (1) granting summary judgment based on limitations; (2) granting summary judgment based on the statute of frauds; (3) granting defendants' summary judgment motions based on "no evidence"; and (4) denying FCLT's motion for summary judgment (a) against Louise's estate on the debt; (b) against Lawrence and Olson individually for breach of fiduciary duty and for holding and dissipating assets subject to FCLT's debt claim; (c) against James Bracher and Bracher-Noyes, as cotrustees, for holding assets in the Family Trust subject to FCLT's debt claim; (d) against James Bracher and Bracher-Noyes individually for breach of fiduciary duties and for receiving and dissipating assets subject to FCLT's debt claim; (e) against David Bracher for receiving assets subject to FCLT's debt claim; (f) for an accounting; (g) for foreclosure and/or garnishment of assets subject to FCLT's debt claim and for an injunction against further dissipation of such assets; and (h) for FCLT's attorney's fees.
STANDARD OF REVIEW
The following standard for reviewing a traditional motion for summary judgment is well-established: (1) the movant must show that no genuine issue of material fact exists and that it is entitled to summary judgment as a matter of law; (2) in deciding whether there is a disputed material fact issue precluding summary judgment, proof favorable to the nonmovant will be taken as true; and (3) every reasonable inference must be resolved in the nonmovant's favor. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex.1985). On a "no evidence" summary judgment, we review the proof in the light most favorable to the nonmovant and disregard all proof and inferences to the contrary. Lampasas v. Spring Ctr., Inc., 988 *476 S.W.2d 428, 432 (Tex.App.-Houston [14th Dist.] 1999, no pet.). A no-evidence summary judgment is improperly granted if the nonmovant counters with more than a scintilla of probative proof to raise a genuine issue of material fact. Id. More than a scintilla of proof exists when the proof "rises to a level that would enable reasonable and fair-minded people to differ in their conclusions." See Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex.1997) (quoting Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 25 (Tex. 1994)).
Where, as here, both sides move for summary judgment, and one motion is granted while the other is denied, we must review the summary judgment proof and determine all questions presented, rendering such judgment as the trial court should have rendered. Commissioners Court v. Agan, 940 S.W.2d 77, 81 (Tex.1997). Because the trial court's order does not specify the grounds upon which summary judgment was granted, we may affirm the judgment on any theory advanced in the motions that is meritorious. Carr v. Brasher, 776 S.W.2d 567, 569 (Tex.1989).
APPELLEES' MOTIONS FOR SUMMARY JUDGMENT
In its first three points of error, FCLT contends the trial court erred by granting appellees' motions for summary judgment based on (1) limitations, (2) the statute of frauds, and (3) "no evidence" of one or more essential elements of FCLT's claims. Because we may affirm the court's judgment on any meritorious ground asserted, we will review each cause of action alleged by FCLT and determine whether appellees have established their entitlement to summary judgment on any ground.
Debt
FCLT first alleges "Defendants Lawrence and Olson have refused and continue to refuse to pay the legitimate debt of the estate." FCLT's debt claim is based on Louise Bracher's failure (and the subsequent failure of her estate) to pay money allegedly due under the Renewal Note. FCLT does not assert that Bracher-Noyes, James Bracher, or David Bracher are personally liable on the Renewal Note. Thus, we need not address any grounds for summary judgment asserted by these three appellees on FCLT's debt claim.
In the First Joint Motion, Lawrence (in her individual capacity) asserted she is entitled to summary judgment because there is no proof that she signed the Renewal Note, as required under section 3.401 of the Uniform Commercial Code.[5] In the Second Joint Motion, Lawrence and Olson argue FCLT's claim is barred by the "statute of frauds" set forth in section 3.401, as well as section 26.01 of the Business and Commerce Code.[6] FCLT does not contend that Lawrence or Olson signed the *477 Renewal Note, nor does it allege they made any promise or agreement in writing to answer for Louise's alleged debt to FCLT. Accordingly, as to both Lawrence and Olson in their individual capacities, we conclude summary judgment was appropriate.
In their capacities as co-executors, however, Lawrence and Olson have not demonstrated their entitlement to summary judgment. Under the Probate Code, a person having a debt against an estate "may enforce the payment of the same by suit against the independent executor." Tex. Prob.Code Ann. § 147 (Vernon 1980). There is no dispute Louise Bracher signed the Renewal Note. Lawrence and Olson asserted no summary judgment ground on FCLT's debt claim other than the statute of frauds. Accordingly, we find the trial court erred in granting summary judgment on this claim in favor of Lawrence and Olson, in their capacities as co-executors of Louise's estate.
"Dissipation of Assets"
Under the heading "Dissipation of Assets," FCLT's petition raises four separate claims. First, FCLT alleges Lawrence and Olson, in their capacities as co-executors of Louise's estate, fraudulently transferred assets from the estate to themselves and the Family Trust. Second, FCLT claims Louise Bracher fraudulently transferred assets into the three trusts.[7] In the Second Joint Motion, Lawrence and Olson, in their capacities as co-executors of the estate, assert that FCLT's fraudulent transfer claims are barred by limitations. Under the Uniform Fraudulent Transfer Act ("UFTA"), a cause of action for fraudulent transfer must be brought either (1) in most cases, "within four years after the transfer was made"; (2) in cases where the alleged transfer was made to an insider for an antecedent debt, "within one year after the transfer was made"; or (3) in cases where the plaintiff alleges actual intent to defraud, "within one year after the transfer or obligation was or could reasonably have been discovered by the claimant." TEX. BUS. & COM.CODE ANN. § 24.010 (Vernon 2002).
With respect to any transfers allegedly made by Lawrence and Olson from Louise Bracher's estate, no such transfers could have been made until after Lawrence and Olson were appointed co-executors. This appointment did not occur until after Louise's death in 1997. FCLT's lawsuit was filed well within the limitations period. Accordingly, summary judgment on this particular claim was inappropriate.
Regarding FCLT's claim that Louise Bracher fraudulently transferred assets into the trusts, Lawrence and Olson argue the allegedly fraudulent transfers occurred, if at all, when the three trusts were funded. Because Louise Bracher's last affirmative act placing assets into the trusts occurred in 1988, Lawrence and Olson assert FCLT's cause of action accrued no later than 1988, and thus is barred by the UFTA's four-year statute of limitations. We disagree.
Under the UFTA, a "transfer" of real property is made
when the transfer is so far perfected that a good faith purchaser of the asset from the debtor against whom applicable law permits the transfer to be perfected cannot acquire an interest in the asset that is superior to the interest of the transferee.
*478 Id. § 24.007(1)(A) (Vernon 2002). By the express terms of the trusts, Louise Bracher retained full control over the right to sell or otherwise dispose of the property in those trusts during her lifetime. Therefore, none of the property held in the trusts could have been transferred, for UFTA purposes, until Louise's death in 1997. Only then was the transfer of property "so far perfected" that a potential purchaser could no longer acquire a superior interest in the property from Louise Bracher. Accordingly, we conclude FCLT's cause of action based on alleged fraudulent transfers from Louise Bracher to the trusts was brought within four years after the alleged transfers were made.
Because limitations was the only summary judgment ground asserted by Lawrence and Olson, in their capacities as coexecutors of Louise's estate, the trial court erred in granting summary judgment in their favor on FCLT's claim for "dissipation of assets."
FCLT's third and fourth claims under the "dissipation" heading are that the refusal of Lawrence, Olson, James Bracher, and Bracher-Noyes to pay FCLT's debt claim from trust assets is a fraudulent transfer,[8] and that any transfer of assets from the three trusts to the individual defendants[9] constitutes a fraudulent transfer. Essentially, FCLT alleges that in addition to the transfers from Louise into the trusts, any subsequent transfers from the trusts, as well as the refusal to pay FCLT's debt claim from the trust assets, are themselves fraudulent transfers under the UFTA. In the First Joint Motion, Lawrence, Bracher-Noyes, and James Bracher argued (1) FCLT's claim is excluded as a "debt" under the UFTA, and (2) there is no evidence to support several essential elements of FCLT's claim.
Lawrence, Bracher-Noyes, and James Bracher first argue any property that was subject to FCLT's Deed of Trust lien could not have been fraudulently transferred because such property was not an "asset" under the UFTA. See Tex. Bus. & Com.Code Ann. § 24.002(2)(A) (Vernon 2002) (defining "asset" to exclude "property to the extent it is encumbered by a valid lien"); see also id. § 24.002(12) (defining "transfer" as any mode of disposing of or parting with "an asset or an interest in an asset"). It appears from the record, however, that FCLT's fraudulent transfer claim does not include the specific properties named in the Deed of Trust accompanying Victor Bracher's 1980 note. Accordingly, this portion of the First Joint Motion does not apply to FCLT's fraudulent transfer claim.
In the "no evidence" portion of their argument, Lawrence, Bracher-Noyes, and James Bracher asserted there was no evidence that any alleged transfer of assets met any of the tests for a fraudulent transfer set forth in the UFTA.[10] With *479 respect to alleged transfers of trust assets, we agree FCLT presented no summary judgment proof that such transfers met any of the grounds for fraudulent transfers under the UFTA. At most, FCLT presented proof that assets were transferred from the trusts, but FCLT failed to point to any summary judgment proof that these transfers met the requirements set forth in section 24.006. For example, FCLT failed to provide any proof that the trusts were insolvent at the time of an alleged transfer, or that they became insolvent as a result of a transfer. We conclude that, to the extent FCLT alleges that Lawrence, Bracher-Noyes, or James Bracher transferred assets from the three trusts to themselves or others, FCLT failed to present summary judgment proof that those transfers were fraudulent, and therefore summary judgment was appropriate on that portion of FCLT's claim.
Because Olson was not a party to the First Joint Motion, her only asserted ground for summary judgment on FCLT's fraudulent transfer claims against her individually is limitations. As noted above, the UFTA has a four-year statute of limitations on most claims. Tex. Bus. & Com. Code Ann. § 24.010. Any claim against Olson for fraudulent transfer of trust assets could not have accrued until after she took possession of the trust assets on Louise's death in 1997. Accordingly, the trial court erred in granting summary judgment on this claim to Olson individually.
FCLT also alleges appellees received assets from Louise Bracher or her estate that were fraudulently transferred. Under the UFTA, a creditor may, under certain circumstances, recover judgment from the transferee for the value of a fraudulently transferred asset, attach the transferred asset or other property of the transferee, or obtain an injunction against the transferee preventing further disposition of the asset or other property. See Tex. Bus. & Com.Code Ann. §§ 24.008, 24.009 (Vernon 2002). Because we conclude the trial court erred in granting summary judgment on some of FCLT's fraudulent transfer claims, those appellees receiving assets alleged to have been fraudulently transferred may be subject to the remedies set forth in the UFTA, and thus they remain proper parties to FCLT's fraudulent transfer claims. See id.
Finally, David Bracher asserts he was entitled to summary judgment because FCLT failed to produce any proof of the amount or value of assets allegedly transferred or received by him. In response, FCLT refers to James Bracher's deposition, during which he identified at least two checks, totaling over $20,000, that were made out to David Bracher from the Family Trust. FCLT alleges this trust is comprised of funds that were fraudulently transferred from Louise's estate. We cannot *480 say that FCLT has presented no proof of the value of assets transferred to David Bracher.
Therefore, with respect to FCLT's claim for dissipation of assets, we conclude: (1) the trial court erred in granting summary judgment in favor of Lawrence and Olson, as co-executors of Louise's estate; (2) the trial court erred in granting summary judgment in favor of Olson, individually, based on any alleged transfer she made; and (3) the trial court did not err in granting summary judgment in favor of Lawrence, individually, and Bracher-Noyes and James Bracher, individually and as cotrustees of the Family Trust, based on any alleged transfers they made.[11] To the extent that the individual appellees each received assets that were alleged to have been fraudulently transferred by Louise or the executors of her estate, however, they should not be dismissed from the lawsuit as defendants with respect to FCLT's fraudulent transfer claims.
Breach of Fiduciary Duty
Next, FCLT alleges Lawrence and Olson breached alleged fiduciary duties by allowing the assets in Louise's estate to be dissipated before paying FCLT's alleged debt. FCLT also claims Bracher-Noyes and James Bracher breached fiduciary duties by allowing the Family Trust's assets to be dissipated as well.
In the First Joint Motion, Lawrence, Bracher-Noyes, and James Bracher moved for summary judgment on the ground that there is no evidence by which FCLT established the existence of a fiduciary duty. Fiduciary duties arise either from certain formal relationships that are recognized as fiduciary as a matter of law, or from the existence of an informal, "confidential" relationship between the parties. Insurance Co. of N. Am. v. Morris, 981 S.W.2d 667, 674 (Tex.1998). The existence of a confidential or fiduciary relationship is ordinarily a question of fact, and the issue only becomes a question of law when it is one of no evidence. Crim Truck & Tractor Co. v. Navistar Int'l Transp. Corp., 823 S.W.2d 591, 594 (Tex. 1992). A party asserting breach of a fiduciary duty must establish the existence of a confidential or similar relationship giving rise to a fiduciary duty. See Bado Equip. Co. v. Bethlehem Steel Corp., 814 S.W.2d 464, 475 (Tex.App.-Houston [14th Dist.] 1991, no writ). FCLT has provided no proof of any relationship between FCLT and Bracher-Noyes or James Bracher that may give rise to a fiduciary duty. Accordingly, Bracher-Noyes and James Bracher are entitled to summary judgment on FCLT's breach of fiduciary duty claim.
With respect to Lawrence, however, FCLT asserts a fiduciary duty arose by virtue of Lawrence's duties as an independent executor. The relationship between an executor and the estate's beneficiaries is one that gives rise to a fiduciary duty as a matter of law. Huie v. DeShazo, 922 S.W.2d 920, 923 (Tex.1996). However, no such formal recognition exists for the relationship between an independent executor and the estate's creditors. An executor's fiduciary duty to the estate's beneficiaries arises from the executor's status as trustee of the property of the estate. Humane Soc'y v. Austin Nat'l Bank, 531 S.W.2d 574, 577 (Tex.1975). Under the Probate Code, a decedent's estate immediately vests in the devisees, legatees, and heirs at law of the estate, subject to payment of the decedent's debts. Tex. Prob. *481 Code Ann. § 37 (Vernon Supp.2002). The executor thus holds the estate in trust for the benefit of those who have acquired a vested right to the decedent's property under the will. See id. FCLT points to no provision in the Probate Code or elsewhere that an independent executor also holds the estate property in trust for those with claims against the estate. FCLT cites only section 146 of the Probate Code, which imposes certain duties on an independent executor, including a duty to approve and pay proper claims against the estate. Tex. Prob.Code Ann. § 146(a) (Vernon Supp.2002). This statutory duty does not support a claim that an independent executor holds estate assets in trust for the benefit of creditors, nor does it otherwise give rise to a fiduciary duty.
Our research has revealed two cases in which Texas courts, with minimal analysis, have described the relationship between an independent executor and a creditor of the estate as "fiduciary." In Ertel v. O'Brien, 852 S.W.2d 17 (Tex.App.-Waco 1993, writ denied), the appellate court held a bank acting as independent executor of an estate "breached its statutory and fiduciary duties" and was individually liable to a creditor for the bank's failure to pay a valid claim against the estate. Id. at 21. The authorities cited in Ertel, however, provide support for two distinct propositions: (1) by statute, an executor is subject to individual liability for failing to pay a proper claim against the estate; and (2) the executor of an estate is held to the same fiduciary standards as a trustee. See id. at 20-21. The court provides no analysis or explanation why an independent executor's fiduciary duty to the estate should be expanded to include a duty to the estate's creditors.
In Ex parte Buller, 834 S.W.2d 622 (Tex. App.-Beaumont 1992, orig. proceeding), a habeas corpus proceeding, the court notes an independent executor "stands in a fiduciary relationship" with the estate's creditors. Id. at 626. In support of this proposition, the court cites two Texas Supreme Court cases: Pearce v. Stokes, 155 Tex. 564, 291 S.W.2d 309 (1956), and Cochran's Adm'rs v. Thompson, 18 Tex. 652 (1857). Both cases are distinguishable because each deals with court-appointed (as opposed to independent) administrations. In Pearce, the issue was whether an estate administrator could set aside the forced sale of the decedent's property by one holding a mortgage on that property, where the sale occurred after the decedent's death, but before administration of the estate began. The court held the administrator could set aside the sale, stating the administration of an estate "is for the benefit of all creditors, not just those who have secured claims or other claims of high priority." 291 S.W.2d at 312. Thus, the court in Pearce was concerned not with the relationship between the executor and the estate's creditors, but rather the relationship among the various creditors. We do not read Pearce to say the executor in that case owed a fiduciary duty to the estate's creditors. In Thompson, the court notes the appointment of an administrator in that case was "merely a trust to pay the claims of creditors, and then to restore the remainder of the assets to the heirs." 18 Tex. at 656. The appointment of an executor or administrator may, depending on the language in the court's order, create a trust on behalf of the estate's creditors and, therefore, a fiduciary duty to the creditors. Under the present statutory scheme, however, we cannot say an independent executor automatically holds the estate assets in trust for the benefit of estate creditors.
We conclude that the relationship between FCLT and Lawrence, as independent executor of Louise Bracher's estate, does not give rise to a fiduciary duty as a *482 matter of law. Furthermore, FCLT failed to provide any proof supporting the existence of a confidential or similar relationship between Lawrence and FCLT. Accordingly, summary judgment was properly granted in favor of Lawrence.
In the Second Joint Motion, Olson asserted she was entitled to summary judgment based on the statute of limitations. Breach of fiduciary duty claims are governed by the four-year statute. Tex. Civ. Prac. & Rem.Code Ann. § 16.004(a)(5) (Vernon Supp.2002). Any fiduciary duties that Olson allegedly owed to FCLT would not have come into existence until after Louise Bracher's death in 1997, when she became co-executor of Louise's estate. Because her alleged duty could not have arisen before 1997, any claim against Olson for breach of this purported duty likewise could not have accrued before that time. Therefore, Olson is not entitled to summary judgment on limitations.
Accordingly, on FCLT's breach of fiduciary duty claim, we conclude the trial court erred in granting summary judgment in favor of Olson, but the court did not err in granting summary judgment in favor of Lawrence, Bracher-Noyes, and James Bracher.
Conversion
FCLT next alleges that by refusing to use assets in their possession to pay FCLT's debt claim, Lawrence, Olson, Bracher-Noyes, and James Bracher have converted those assets to the detriment of FCLT. In their Second Joint Motion, appellees asserted this claim fails because FCLT never had title to or the right to possess the assets that were allegedly converted. We agree. To bring a conversion claim, the aggrieved party must have either ownership, possession, or the right to immediate possession of the property. Crutcher v. Continental Nat'l Bank, 884 S.W.2d 884, 888 (Tex.App.-El Paso 1994, writ denied). A lien on property does not provide title to that property, but rather the right to have satisfaction out of the property to secure the payment of a debt. Id. Because the plaintiffs in Crutcher had only a right to obtain satisfaction of a debt (i.e., a lien), the court held they had no cause of action for conversion. Id. at 889. Similarly, FCLT does not claim title to, possession of, or a right to immediate possession of the property in question. FCLT claims only a lien on certain property for payment of its alleged debt. We conclude that summary judgment was properly granted against FCLT on its conversion claim.
Fraud
Finally, FCLT alleges Lawrence and Olson engaged in fraudulent behavior by knowingly and intentionally engaging in the acts complained of elsewhere in the petition. Lawrence and Olson contend they are entitled to summary judgment on FCLT's fraud claim because FCLT has presented no evidence to support the essential elements of common-law fraud. Specifically, FCLT failed to provide summary judgment proof showing the existence of (1) a false, material misrepresentation (2) that was knowingly or recklessly made (3) with the intent that the statement be relied upon by FCLT. See Sears, Roebuck & Co. v. Meadows, 877 S.W.2d 281, 282 (Tex.1994) (per curiam). To the extent FCLT's petition may be read as raising an independent cause of action for common-law fraud, summary judgment for Lawrence and Olson is proper.
FCLT's MOTION FOR SUMMARY JUDGMENT
FCLT's nine remaining points of error are all directed at the trial court's denial of FCLT's motion for summary judgment. Where a party moves for summary *483 judgment on its own claim for affirmative relief, the moving party must conclusively establish each essential element of that claim. See MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex.1986) (per curiam). If the party opposing the summary judgment relies on an affirmative defense, that party must then come forward with summary judgment proof sufficient to raise an issue of fact on each element of the defense to avoid summary judgment. Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex.1984).
Louise Bracher's Estate
In its fourth point of error, FCLT argues the trial court erred in denying its motion for summary judgment against "the Estate of Louise Bracher"[12] based on FCLT's debt claim. This point of error also asserts "trust assets and estate assets were subject to the debt and should have been used to pay the debt." Thus, FCLT's fourth point of error refers not only to whether it is entitled to judgment on the debt claim, but also to the separate question of which assets FCLT can reach to collect such a judgment. Despite the multifarious nature of FCLT's point of error, we address it because we can ascertain with reasonable certainty the alleged errors raised by FCLT. See Zeolla v. Zeolla, 15 S.W.3d 239, 241 n. 2 (Tex. App.-Houston [14th Dist.] 2000, pet. denied).
With respect to its debt claim, FCLT presented summary judgment proof of the following:
(1) Louise Bracher executed the Renewal Note, payable to First City BankInwood Forest, N.A.;
(2) the Renewal Note became due on February 18, 1991;
(3) the Renewal Note was assigned to FCLT, the current owner and holder of the Renewal Note;
(4) Louise defaulted on the Renewal Note and, despite demands, she and the executors of her estate have failed to pay the amount owing; and
(5) as of January 10, 2000, the amount owed on the Renewal Note is $701,017.84 in principal and interest, with interest accumulating at $106.77 per day.
This proof is sufficient to establish FCLT's claim for a debt. See Loomis v. Republic Nat'l Bank of Dallas, 653 S.W.2d 75, 78 (Tex.App.-Dallas 1983, writ ref'd n.r.e.). Lawrence and Olson responded to FCLT's summary judgment motion only by asserting the statute of frauds as a defense. As discussed above, the statute of frauds does not preclude FCLT from asserting this claim against Lawrence and Olson in their capacities as co-executors of Louise's estate. We conclude FCLT has shown its entitlement to summary judgment on its debt claim against Lawrence and Olson, in their capacities as co-executors of Louise's estate.
FCLT next contends it conclusively established that all assets in the three trusts are subject to FCLT's debt claim *484 because the spendthrift clauses in the trusts are void with respect to claims by Louise Bracher's creditors. FCLT relies on section 112.035 of the Texas Property Code, titled "Spendthrift Trusts," which provides:
If the settlor is also a beneficiary of the trust, a provision restraining the voluntary or involuntary transfer of his beneficial interest does not prevent his creditors from satisfying claims from his interest in the trust estate.
Tex. Prop.Code Ann. § 112.035(d) (Vernon Supp.2002). FCLT asserts this section creates a statutory lien in its favor on all assets placed in the three trusts. However, FCLT cites to no Texas cases involving the situation presented here, in which the creditor seeks to satisfy its claim from assets in which the debtor no longer has a beneficial interest. In other words, whether or not section 112.035(d) would have permitted FCLT to satisfy its debt claim from the trust assets while Louise was alive, FCLT has not conclusively established its right to recovery from the trusts after her death.[13] The trial court did not err in denying summary judgment based on FCLT's alleged statutory lien on the trust assets.
FCLT also argues assets distributed from Louise's estate prior to paying FCLT's claim were subject to the debt. Under section 37 of the Probate Code, property of a decedent received by the estate's beneficiaries is subject to payment of the decedent's debts. Tex. Prob.Code Ann. § 37. To enforce a claim against the beneficiaries, however, the creditor must show, specifically, what property came into their hands from the estate. Perkins v. Cain's Coffee Co., 466 S.W.2d 801, 802-03 (Tex.Civ.App.-Corpus Christi 1971, no writ). FCLT's summary judgment proof consists solely of Lawrence's testimony that she and others received "a few pieces of furniture," "some artwork," "a little bit of jewelry," and "a couple pieces of clothes" from Louise's estate. This testimony alone is insufficient to establish the distributed assets with enough specificity to enable the court to properly decree FCLT's lien. See id. at 803. Furthermore, FCLT has not shown conclusively that this property was subsequently sold, commingled, or lost its character so as to impose personal liability on the recipients. Id.
We sustain FCLT's fourth point of error with respect to the trial court's denial of FCLT's motion for summary judgment on its debt claim against Lawrence and Olson, as co-executors of Louise's estate. FCLT's fourth point of error is otherwise overruled.
Lawrence and Olson, Individually
In points of error five and six, FCLT contends the trial court erroneously denied summary judgment against Lawrence and Olson, individually, based on FCLT's *485 claims they (1) breached their fiduciary duties, (2) hold trust assets subject to FCLT's debt claim, and (3) dissipated assets subject to FCLT's debt claim. For reasons discussed above, FCLT has not conclusively established the existence of a confidential relationship between itself and the executors of Louise's estate. Thus, summary judgment was properly denied as to FCLT's claim for breach of fiduciary duty.
Next, FCLT asserts that Lawrence and Olson are personally liable for holding and dissipating assets subject to FCLT's debt because all assets in the trusts were subject to the debt, citing section 112.035(d) of the Property Code. We already have determined FCLT failed to establish as a matter of law that after Louise Bracher's death, the trust assets were subject to FCLT's debt claim under section 112.035(d). Thus, summary judgment was properly denied as to claims based on holding or dissipating trust assets. FCLT's fifth and sixth points of error are overruled.[14]
Bracher-Noyes, James Bracher, and David Bracher
In its seventh, eighth, and ninth points of error, FCLT asserts the trial court erred in denying FCLT summary judgment against Bracher-Noyes and James Bracher, both individually and as co-trustees of the Family Trust, and against David Bracher individually. FCLT's claims against these appellees rest on the proposition that all of the assets in the trusts were subject to FCLT's debt claim. Because FCLT has not established this proposition as a matter of law, summary judgment is inappropriate on its claims that assets in the Family Trust were improperly held, received, or dissipated by Bracher-Noyes, James Bracher, or David Bracher.
Furthermore, FCLT moved for summary judgment against Bracher-Noyes and James Bracher on its claim for breach of fiduciary duty. As discussed above with respect to appellees' motions for summary judgment, FCLT failed to present any summary judgment proof of a relationship between FCLT and the trustees of the Family Trust that would give rise to a fiduciary duty. Accordingly, summary judgment on this claim was properly denied. FCLT's points of error seven through nine are overruled.
Accounting
In its tenth point of error, FCLT claims the trial court erred in denying its motion for summary judgment to compel an accounting from Lawrence and Olson, as co-executors of Louise's estate, and from Bracher-Noyes and James Bracher, as co-trustees of the Family Trust. FCLT does not cite a single authority nor set forth any legal argument to support its contention that it is entitled to an accounting. A point of error not supported by authority is waived. Wright v. Greenberg, 2 S.W.3d 666, 673 (Tex.App.-Houston [14th Dist.] 1999, pet. denied). We overrule FCLT's tenth point of error.
Foreclosure, Garnishment, and Injunctive Relief
FCLT next complains the trial court erred in denying its summary judgment *486 motion for (1) foreclosure and/or garnishment of assets, and (2) an injunction against further dissipation of assets. Although FCLT refers to both trust and estate assets in the statement of its point of error, FCLT identifies only trust assets to which it claims an entitlement to foreclose or garnish. Because FCLT has not shown as a matter of law that all trust assets were subject to its debt claim, the trial court did not err in denying summary judgment on FCLT's request to foreclose or garnish those assets.
FCLT also claims it was entitled to an injunction preventing appellees from further dissipating or otherwise disposing assets from the trusts or estate. FCLT's brief points to no authority for its alleged entitlement to such injunctive relief. Accordingly, FCLT's complaint that the trial court erred in denying the injunction by summary disposition is waived. See Wright, 2 S.W.3d at 673. FCLT's eleventh point of error is overruled.
Attorney's Fees
Finally, in its twelfth point of error, FCLT complains the trial court erred by not awarding FCLT its reasonable attorney's fees. Because the trial court granted summary judgment to appellees on all of FCLT's claims, it did not address FCLT's request for attorney's fees. However, because we conclude FCLT was entitled to judgment as a matter of law on its debt claim against Lawrence and Olson as co-executors of Louise Bracher's estate, we will consider whether FCLT has also established its entitlement to attorney's fees on that claim.
Attorney's fees may not be recovered from an opposing party unless such recovery is provided for by statute or by contract. Travelers Indem. Co. of Conn. v. Mayfield, 923 S.W.2d 590, 593 (Tex.1996). In this case, the Renewal Note provides for the recovery of FCLT's attorney's fees through the incorporation of a fee provision in Victor Bracher's original 1980 note. Paragraph 4 of the Renewal Note provides that Louise Bracher "agrees to be bound by and to abide by all of the terms and conditions contained in the [1980] Note and the Deed of Trust." The 1980 note states that if suit is filed to collect on a default, the debtor is liable for "a reasonable amount as attorney's or collection fees." Thus, FCLT is entitled to recover a reasonable fee from the representatives of Louise Bracher's estate in their capacities as co-executors of the estate.
As part of its summary judgment proof, FCLT submitted the affidavit of Mynde S. Eisen, FCLT's attorney, in support of FCLT's request for attorney's fees. In her affidavit, Eisen attested the following fees were reasonable: (1) $39,000.00 for services performed on behalf of FCLT to collect on the claims against appellees; (2) $29,900.00 in out-of-pocket costs and expert fees; (3) $10,000.00 to defend or prosecute an appeal; (4) $5,000.00 to prepare or respond to a request for review by the Texas Supreme Court; and (5) $5,000.00 to defend or prosecute an appeal in the supreme court. This affidavit is uncontested by appellees. We therefore sustain FCLT's twelfth point of error and render judgment for FCLT against Olson and Lawrence, in their capacities as co-executors, in the amounts of $68,900.00 in attorney's fees and costs for trial, $10,000.00 for appeal to this court, and $10,000.00 in conditional fees in the event of a petition for review and subsequent grant by the Texas Supreme Court.
CONCLUSION
Based on the foregoing, we conclude as follows:
*487 (1) Because the statute of frauds does not preclude FCLT's debt claim against Antoinette Lawrence and Barbara Olson in their capacities as co-executors of Louise Bracher's estate, and because FCLT has conclusively established its entitlement to judgment on this claim, we reverse the summary judgment granted in favor of Lawrence and Olson as coexecutors and render judgment in favor of FCLT. We also render judgment against Lawrence and Olson, as co-executors of Louise's estate, for $78,900.00 as reasonable attorney's and collection fees, plus $5,000.00 in conditional fees for any petition for review to the Texas Supreme Court and $5,000.00 in conditional fees for any subsequent grant of review by the supreme court.
(2) FCLT's fraudulent transfer claims are not barred by limitations; therefore, we reverse the summary judgments in favor of Lawrence and Olson as co-executors of Louise's estate and Olson individually and remand these claims to the trial court for further proceedings.
(3) Because limitations does not bar FCLT's claim for breach of fiduciary duty against Olson, we reverse the grant of summary judgment in her favor on this claim and remand for further proceedings.
(4) We affirm the trial court's judgment in all other respects.
NOTES
[*] Senior Chief Justice Paul C. Murphy sitting by assignment.
[1] Some time after the trusts were created, Barbara Bracher married and changed her name to Barbara Olson.
[2] Olson had not yet appeared in the lawsuit at the time the First Joint Motion was filed.
[3] On this and some other claims in FCLT's petition, FCLT does not specify the capacity in which the named defendants are being sued. For purposes of our review, we will treat these claims as having been raised against each such defendant in both the defendant's individual and representative capacity.
[4] The Second Joint Motion was filed on behalf of Lawrence and Olson, both individually and as co-executors of Louise's estate, and James Bracher and Bracher-Noyes, both individually and as co-trustees of the Family Trust. In contrast to David Bracher's motion, the Second Joint Motion was not captioned as an amended motion. Thus, the First Joint Motion remained pending.
[5] Section 3.401 provides, "A person is not liable on an instrument unless the person ... signed the instrument...." Tex. Bus. & Com. Code Ann. § 3.401(a) (Vernon 2002).
[6] The relevant portion of section 26.01 states:
(a) A promise or agreement described in Subsection (b) of this section is not enforceable unless the promise or agreement, or a memorandum of it, is
(1) in writing; and
(2) signed by the person to be charged with the promise or agreement or by someone lawfully authorized to sign for him.
(b) Subsection (a) of this section applies to:
(1) a promise by an executor or administrator to answer out of his own estate for any debt or damage due from his testator or intestate; [and]
(2) a promise by one person to answer for the debt, default, or miscarriage of another person....
TEX. BUS. & COM.CODE ANN. § 26.01 (Vernon 2002).
[7] This claim is properly brought against Lawrence and Olson in their capacities as coexecutors. See Tex. Prob.Code Ann. § 147.
[8] FCLT does not specify in which capacity it alleges the defendants acted. Because this claim focuses on the use of trust assets, however, we will presume the claim is directed to Olson and Lawrence as individuals and James Bracher and Bracher-Noyes in their capacities as co-trustees of the Family Trust.
[9] At Louise's death, Lawrence and Olson each received the assets in their respective trusts outright, while the Family Trust remained intact, with Bracher-Noyes and James Bracher eventually named as co-trustees. FCLT claims that Bracher-Noyes, James Bracher, and David Bracher have each received disbursements from the Family Trust.
[10] The UFTA provides at least four different grounds for finding a transfer to be fraudulent. See Tex. Bus. & Com.Code Ann. §§ 24.005(a)(1), 24.005(a)(2), 24.006(a), & 24.006(b) (Vernon 2002). Although FCLT refers to both sections 24.005 and 24.006 in its petition, it cites only section 24.006 in response to the various summary judgment motions. Furthermore, FCLT conceded during oral argument that it was not asserting an actual intent to defraud, a required element for a claim arising under section 24.005(a)(1). We therefore presume that FCLT's fraudulent transfer claim is limited to the grounds set forth in section 24.006.
Section 24.006 provides:
(a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.
(b) A transfer made by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made if the transfer was made to an insider for an antecedent debt, the debtor was insolvent at that time, and the insider had reasonable cause to believe that the debtor was insolvent.
Id. § 24.006.
[11] This includes any alleged "transfer" consisting of the refusal to pay FCLT's debt claim.
[12] It is well-settled that the estate of a decedent is not a legal entity and may not sue or be sued as such. Price v. Estate of Anderson, 522 S.W.2d 690, 691 (Tex.1975). However, a judgment involving a decedent's estate may still be valid if the estate's personal representative "had notice of and participated sufficiently in the case to make the judgment binding against the representative." Bernstein v. Portland Sav. & Loan Ass'n, 850 S.W.2d 694, 700 (Tex.App.-Corpus Christi 1993, writ denied); see also Embrey v. Royal Ins. Co. of Am., 22 S.W.3d 414, 415 n. 2 (Tex.2000). Lawrence and Olson, the co-executors of Louise's estate, both appeared and participated in this case in their capacities as executors of the estate. We therefore treat FCLT's fourth point of error as requesting judgment against Lawrence and Olson as personal representatives of the estate.
[13] In its motion for rehearing, FCLT urges us to follow decisions from three other jurisdictions holding that even after the settlor's death, a creditor may reach trust assets that the settlor/beneficiary could have used to pay the debt during his or her lifetime. See In re Estate of Nagel, 580 N.W.2d 810, 812 (Iowa 1998); State St. Bank & Trust Co. v. Reiser, 7 Mass.App.Ct. 633, 389 N.E.2d 768, 771 (1979); In re Estate of Kovalyshyn, 136 N.J.Super. 40, 343 A.2d 852, 859 (Hudson County Ct.1975); Restatement (Second) of Trusts § 156(1) (1959). But see Schofield v. Cleveland Trust Co., 135 Ohio St. 328, 21 N.E.2d 119, 122-23 (1939) (interpreting an Ohio statute on spendthrift trusts and concluding that a creditor's right to the settlor's interest in a trust terminates on the settlor's death). Because this is an issue of first impression in Texas, and it has not been fully briefed, either in the trial court or in this court, we express no opinion whether, as a matter of law, section 112.035(d) of the Property Code applies after the settlor's death.
[14] FCLT argues for the first time on rehearing that it is entitled to a judgment that all trust assets are subject to FCLT's debt because it conclusively established that the transfer of assets into the trusts was a fraudulent transfer under Tex. Bus. & Com.Code Ann. § 24.006(a). An issue raised for the first time in a motion for rehearing is too late to be considered. See Lee v. Lee, 47 S.W.3d 767, 799 (Tex.App.-Houston [14th Dist.] 2001, pet. denied). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2764843/ | Order entered December 23, 2014
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-14-01453-CR
JIMMY CHARLES JOHNSON, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 292nd Judicial District Court
Dallas County, Texas
Trial Court Cause No. F95-72894-HV
ORDER
The Court DENIES appellant’s December 18, 2014 pro se “amended motion for
rehearing.” The Court denied appellant’s motion for rehearing on December 15, 2014 without
changing its opinion or judgment. Appellant is not entitled to a second motion for rehearing.
The Court DENIES appellant’s December 22, 2014 “amended motion for leave to file for
a new trial rule 21.9(a)-(d).”
We DIRECT the Clerk to send a copy of this order, by first-class mail, to Jimmy Charles
Johnson, TDCJ No. 727145, Clements Unit, 9601 Spur 591, Amarillo, Texas 79107-9606
/s/ DAVID L. BRIDGES
JUSTICE | 01-03-2023 | 12-25-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/811004/ | United States Court of Appeals
For the Eighth Circuit
___________________________
No. 12-1684
___________________________
United States of America
lllllllllllllllllllll Plaintiff - Appellee
v.
Blas Acusta Marquez
lllllllllllllllllllll Defendant - Appellant
____________
Appeal from United States District Court
for the Eastern District of Arkansas - Little Rock
____________
Submitted: September 27, 2012
Filed: October 30, 2012
[Unpublished]
____________
Before WOLLMAN, MELLOY, and SHEPHERD, Circuit Judges.
____________
PER CURIAM.
Blas Acusta Marquez appeals the district court’s1 judgment entered after a jury
found him guilty of possessing cocaine with intent to distribute, in violation of 21
1
The Honorable Brian S. Miller, Chief Judge, United States District Court for
the Eastern District of Arkansas.
U.S.C. § 841(a)(1). The district court sentenced him to 120 months in prison and 5
years of supervised release. Marquez’s counsel has filed a brief under Anders v.
California, 386 U.S. 738 (1967), arguing that the evidence was insufficient to support
the conviction.
We hold that the evidence was sufficient. See United States v. Birdine, 515
F.3d 842, 844 (8th Cir. 2008) (this court reviews sufficiency of evidence in light most
favorable to government, resolving evidentiary conflicts in government’s favor and
accepting all reasonable inferences that support jury’s verdict). A state trooper
testified that when he stopped the truck Marquez was driving for a traffic violation,
Marquez was nervous and gave inconsistent answers to questions about his records.
After Marquez consented to a search, the trooper discovered 17.5 kilograms of
cocaine behind a panel in the truck cab, above the bed in the sleeper berth. A DEA
special agent testified that in his experience a drug dealer would not leave such a
quantity with someone who does not know he has it, and that Marquez gave
inconsistent explanations about the $4,400 found in his pocket and additional deposit
receipts. See United States v. Parker, 587 F.3d 871, 881 (8th Cir. 2009) (for
possession with intent to distribute drugs, government must prove defendant
knowingly possessed and intended to distribute drugs; possession may be
constructive if defendant has knowledge of object and intent and ability to control it;
knowledge can be established by defendant’s control and dominion over vehicle or
by large quantity of drugs); United States v. Serrano-Lopez, 366 F.3d 628, 635 (8th
Cir. 2004) (even if defendant did not own drugs, it is unlikely owner would place a
large quantity of drugs with person who does not know it is there; large quantity can
indicate both intent to distribute and ability to control drugs for constructive
possession).
After reviewing the record independently under Penson v. Ohio, 488 U.S. 75
(1988), we have found no nonfrivolous issues for appeal. Accordingly, the judgment
is affirmed. We also grant counsel leave to withdraw, conditioned on counsel
-2-
advising the appellant as to the procedure for filing a petition for writ of certiorari,
and deny Marquez’s motion for new appellate counsel.
_________________________
-3- | 01-03-2023 | 10-30-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/1667742/ | 562 So.2d 1267 (1990)
CITY OF JACKSON
v.
Henry L. BALL and Lavon C. Ball.
No. 07-CA-59497.
Supreme Court of Mississippi.
May 16, 1990.
Matthew M. Moore, Jackson, for appellant.
Michael V. Ward, Thomas Y. Page, Upshaw Williams Biggers Page & Kruger, Jackson, for appellees.
Before HAWKINS, P.J., and PRATHER and ROBERTSON, JJ.
ROBERTSON, Justice, for the Court.
I.
Today's appellant presses a problem of the law of users of dangerous products and their duties to the public. A city water department chlorinating a new water line unwittingly released a burst of chlorine gas that struck a contractor's worker and injured him. The trial court imposed an additional duty to warn via jury instructions, but because the worker's supervisor well knew of the dangers of chlorine gas, the City had no further duty to warn. In this context, we may only reverse.
*1268 II.
A.
Henry L. Ball is an adult resident citizen of Florence, Mississippi. At the time in question, Ball was employed by Kay Engineering as an apprentice plumber and had been so employed for approximately two years or more. Ball was the plaintiff below and is the appellee here. At the time of trial, Henry L. Ball was 35 years of age.
The City of Jackson is a municipal corporation organized and existing under the laws of this state. The City of Jackson was the defendant below and is the appellant here.
In December of 1981, Holiday Inn Southwest engaged the services of Kay Engineering to install a fire line and a domestic water line connecting its facilities with the water main in the City's right-of-way located on Highway 80 West in Jackson, Mississippi. By December 9, Kay Engineering had completed the new line. Kay then called the City of Jackson Water Maintenance Department to sterilize the new line, a service the City provides and performs by injecting chlorine gas into water-filled lines and then flushing the lines with more water.
At the time in question, the City had four men on the job. The crew flushed the new line with water for approximately fifteen minutes and then injected chlorine gas. Richard Aldridge, the City's crew foreman, stood near the fire hydrant at the west end line and began to get a free flow of water. Theodore Adams, another city employee, stood at the hydrant on the east end of the line. Kay Engineering's supervisor, Barry S. Stingley, informed the City's crew supervisor, apparently Aldridge, that the line was half empty and that it should be full of water before the chlorine gas was injected.
Shortly before the City began chlorination, Plaintiff Ball and three other Kay Engineering employees arrived. They were standing aside a pickup truck near the fire hydrant Adams stood by. Chlorine gas suddenly burst from the hydrant, apparently because of an air pocket of chlorine in the line. Adams tried to close the valve but inhaled some of the chlorine gas and started gagging. Unable to shut the valve, Adams hollered to Aldridge to let him know what had happened and then told Ball and the three other Kay Engineering employees. Jack Fields, a Kay Engineering plumber, saw the chlorine gas and told Ball and the others to run.
Up to this point, Ball had been unaware of his position of peril. Ball had had no experience with chlorine gas, did not know what it looked like, nor what its dangers were.
Water began to flow from the hydrant and was entering the truck. Plaintiff Ball attempted to move the truck but was overtaken by the chlorine gas and inhaled an unknown quantity of the gas. Ball's eyes started burning, his chest hurting, and he began to cough and gasp for breath. An ambulance took Ball to the Hinds General Hospital where he was treated for fluid on his lungs.
Dr. M.D. Hardy explained the first set of pulmonary function studies performed on Mr. Ball on December 10, 1981, one day after his exposure. The studies found that Ball's forced vital capacity was only 70% of predicted and his total lung capacity was only 76% of predicted. Dr. Hardy said this was important with respect to the fact that there was abnormal lung function. Also, on December 20, 1981, arterial blood gases were drawn on room air without supplemental oxygen. Incident to his care and treatment, Ball incurred doctor bills, hospital bills, and other related charges.
Ball was off work for several days and had to take medication for "two or three months". He continues to experience shortness of breath. Prior to the accident, Ball engaged regularly in athletic activities such as basketball and jogging but has had to discontinue these.
B.
On August 25, 1982, Henry L. Ball commenced this civil action by filing his complaint in the Circuit Court of the First Judicial District of Hinds County, Mississippi, naming the City of Jackson as defendant. Ball sued in tort and charged the *1269 City with negligent handling of chlorine gas while sterilizing the new line and failure to warn of the dangers incident thereto. The case languished on the docket but ultimately the Circuit Court called it for trial, and on July 11, 1988, a jury found for Ball and against the City in the sum of $11,515.57. The Court entered judgment upon the verdict.
The City promptly moved for judgment notwithstanding the verdict or, in the alternative, for a new trial. On August 3, 1988, the Circuit Court denied these motions. This appeal has followed.
III.
The City of Jackson first urges that the Circuit Court erred when it denied the City's motion for judgment notwithstanding the verdict. See Rule 50(b), Miss.R. Civ.P. When an appellant presents such a point, our scope of review is as limited as it is familiar. This Court must
consider the evidence in the light most favorable to the appellee, giving that party the benefit of all [reasonable] favorable inferences that may be drawn from the evidence. If the facts so considered point so overwhelmingly in favor of the appellant that reasonable men could not have arrived at a contrary verdict, [we are] required to reverse and render. On the other hand, if there is substantial evidence in support of the verdict, that is, evidence of such quality and weight that reasonable and fair-minded jurors in the exercise of impartial judgment might have reached different conclusions, affirmance is required.
McMillan v. King, 557 So.2d 519, 522 (Miss. 1990); see also Guerdon Industries, Inc. v. Gentry, 531 So.2d 1202, 1205 (Miss. 1988); Stubblefield v. Jesco, Inc., 464 So.2d 47, 54 (Miss. 1984); Paymaster Oil Mill Co. v. Mitchell, 319 So.2d 652, 657 (Miss. 1975), (sometimes hereinafter "the Paymaster Rule").
This standard before us, we turn to the primary rules regulating the conduct of parties such as the City of Jackson. We begin with the premise that chlorine gas is dangerous to persons who encounter it. City Water Department supervisor Richard Aldridge well acknowledged that he knew this. The fact is a matter of common knowledge without Aldridge's admission. See Erbrich Product Co., Inc. v. Wills, 509 N.E.2d 850, 854-56 (Ind. App. 1987); Kajiya v. Department of Water Supply, 2 Haw. App. 221, 629 P.2d 635, 639 (1981). Our law obliged the City to act with reasonable care in the use of chlorine gas. Cf. Garcia v. Coast Electric Power Association, 493 So.2d 380, 382 (Miss. 1986).
The record is replete with opinion evidence that, when sterilizing a line, a party should have the line filled with water before injecting the chlorine. This is to prevent formation of an air pocket and, indeed, to avoid what appears to have happened in this case. The City argues in its brief that "no one is sure exactly why chlorine gas escaped from the water line," and while this seems so, it is quite possible, if not likely, that an air pocket existed in the line and allowed the gas to accumulate and that, when the city employees put more water in the line, this air pocket was forced out the hydrant at the east end near where Ball was standing. The City knew of the air pocket phenomenon and what to do to avoid creating one.
Having in mind the Paymaster rule, we cannot say on this evidence that no reasonable juror could have found that the City employees were negligent at the time and on the occasion in question. Causation and (the fact of some) damage being essentially conceded, we may only hold that the Circuit Court had no authority to set aside the verdict. That Court acted correctly when it denied the City's motion for judgment notwithstanding the verdict.
IV.
The City next argues that the Circuit Court erred when it imposed upon the City through its employees a duty to warn Ball of the dangers of chlorine. The Court imposed this duty in the form of Instruction P-D which was given the jury in the following language:
The Court instructs the jury that if you find from a preponderance of the credible *1270 evidence in this case that the City of Jackson through its employees were negligent on the occasion complained of by failing to warn Henry Ball that a dangerous chemical, chlorine, would be used in his immediate vicinity and this failure to warn caused or contributed to the injuries and damages sustained by Henry Ball, if any, then your verdict should be for the plaintiffs.
Essentially, the City's argument is that Kay Engineering's supervisor, Barry S. Stingley, knew the City was chlorinating the line and was well aware of the properties and hazards incident to exposure to chlorine gas and that these facts relieved the City of any further duty to warn. The City is correct.
Our controlling legal principles are embedded in an established line of cases. See, e.g., Buford v. Jitney Jungle Stores of America, Inc., 388 So.2d 146, 148-50 (Miss. 1980); Downs v. Corder, 377 So.2d 603, 605-06 (Miss. 1979); Mississippi Chemical Corporation v. Rogers, 368 So.2d 220, 222 (Miss. 1979); Spruill v. Yazoo Valley Oil Mill, Inc., 317 So.2d 410, 413 (Miss. 1975); Jackson Ready-Mix Concrete v. Sexton, 235 So.2d 267, 269-72 (Miss. 1970); cf. Hathorn v. Hailey, 487 So.2d 1342 (Miss. 1986). We accept without hesitation Ball's argument that the City had a duty to warn of the dangers incident to exposure to chlorine gas. This duty flows from the more general duties our law imposes upon owners or occupiers of premises to warn of latent dangers or defects, and like duties upon users of dangerous instrumentalities and products.
The rule we glean from the cases is that the dangerous product user need give no further warning after the contractor, here Kay Engineering, has actual knowledge of the danger. Mississippi Chemical Corp. v. Rogers, 368 So.2d at 222 ("knowledge of danger by an independent contractor relieves the owner from the duty of warning the independent contractor or his employees"); Buford v. Jitney Jungle Stores of America, Inc., 388 So.2d at 149 (same). The sense of the suggestion is that, once the contractor knows of the danger, the City's failure to warn may not be said the proximate cause of contractor's worker's injury.
In today's circumstance, the City's duty required that it give the warning to the contractor's supervisor, and not necessarily each of contractor's workers. As a practical matter, the supervisor knows who his workers are, where they are, and has responsibilities for their work and safety. On the other hand, the City has no ready access to this information, nor control over the workers. Hence, the rule of Mississippi Chemical and Buford that notice to the contractor pretermits recovery by the contractor "or his employees."
Hobart v. Sohio Petroleum Co., 255 F. Supp. 972 (N.D.Miss. 1966), aff'd 376 F.2d 1011 (5th Cir.1967) reads Mississippi law on the point and says:
Discharge of the duty to warn may involve a constructive element, by giving the warning to the superiors in employment of the person to whom the duty is owed. Similarly, knowledge of the hazard on the part of the superiors may be reasonably assumed to have been communicated to the employees. See 1 Shearman & Redfield Negligence § 26 p. 66.
Hobart, 255 F. Supp. at 975; see also Sprankle v. Bower Ammonia and Chemical Co., 824 F.2d 409, 412 (5th Cir.1987); Gordon v. Niagara Mach. & Tool Works, 574 F.2d 1182, 1184 & app. (5th Cir.1978).
Applying all of this to our facts, we recall that Ball was not personally aware of his position of peril on the morning of December 9, 1981. On the other hand, the City Water Department supervisor Richard Aldridge knew well the dangers of chlorine, and there is no suggestion in this record that he advised Stingley or anyone else with Kay Engineering of those dangers.
We focus then upon Stingley's independent knowledge. Stingley knew how to sterilize water lines and had been given special training therein. He acknowledged he was aware that the City Water Department was going to chlorinate the new line Kay Engineering had installed. While on *1271 the scene, Stingley discussed the matter with unnamed city representatives, but apparently including Aldridge, and
I informed them that the water line was not full and I asked them, I said, "Shouldn't the line be full of water before the chlorination gas is put in?"
Stingley then explained the reason why the line should be full of water and that he understood the air pocket phenomenon and the danger it posed.
Stingley at no point states expressly his awareness of the specific dangers posed by exposure to chlorine gas, but he knew of the danger in general and of the hazard in particular. Of this there is no doubt. In the end, Stingley deferred to Aldridge and the City employees, stating
So I figured if he knew what he was doing there was no need in me standing there trying to tell him something.
Slanting the facts as required by the Paymaster Rule respecting our scope of review, we may only find Stingley aware of the dangerous circumstances on the morning of December 9, 1981. Nothing in the record suggests the contrary. Under the primary rules of obligation emanating from Mississippi Chemical and the other cases cited, his awareness was adequate to acquit the City of Jackson of any failure to warn Kay Engineering's employees. Knowledge on the part of Kay Engineering's supervisor was sufficient unto the day.
Anderson v. Hensley-Schmidt, Inc., 530 So.2d 181 (Miss. 1988) is not to the contrary. Anderson held a worker not chargeable with the negligence of his supervisor who directed erection of a utility pole before a high voltage line was covered. There is no question of Kay Engineering's duty regarding Ball's safety while on the job, a duty enforceable without regard to Stingley's negligence under the Mississippi Workers' Compensation Act. Miss. Code Ann. § 71-3-7 (1972). The City does not contend Stingley's negligence in failing to warn Ball of the dangers is imputable to Ball such that Ball's recovery should be reduced. Because we credit the City's view that on these facts it had no further duty, we never reach the Anderson question.
The Circuit Court erred when it submitted instruction P-D to the jury.
We have considered whether this error requires reversal. The Court submitted the case to the jury on two theories: negligent chlorination and failure to warn. The record is such that we may only speculate which the jury credited. Because nothing before us allows that we exclude the failure to warn theory as the explanation for the verdict, we must reverse.
V.
The City of Jackson assigns two further errors, neither of which possesses merit and neither of which requires discussion.
REVERSED AND REMANDED.
ROY NOBLE LEE, C.J., HAWKINS and DAN M. LEE, P.JJ., and PRATHER, SULLIVAN, ANDERSON, PITTMAN and BLASS, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/810904/ | FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT October 26, 2012
Elisabeth A. Shumaker
Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 12-3221
(D.C. No. 2:12-CR-20083-KHV-JPO-4)
JUSTIN CHERIF PICKEL, (D. Kan.)
Defendant-Appellant.
ORDER AND JUDGMENT*
Before BRISCOE, Chief Judge, MURPHY and HARTZ, Circuit Judges.
Justin Cherif Pickel appeals one of the conditions of his pre-trial release
imposed by the district court under the Bail Reform Act, namely, that he avoid all
contact with Maria Garza, a potential witness. We have jurisdiction under 28 U.S.C.
§ 1291 and 18 U.S.C. § 3145(c), and we affirm.
*
This panel has determined that oral argument would not materially assist the
determination of this appeal. See Fed. R. App. P. 34(a)(2); 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.
Mr. Pickel is charged with multiple drug-related counts, including conspiracy
to possess with intent to distribute and to distribute five kilograms or more of a
mixture and substance containing cocaine and 1,000 kilograms of marijuana;
maintaining drug-involved premises; and possession with intent to distribute
marijuana. He was arrested in California, where he was released pending trial with
conditions. The government sought review of the release order after the matter was
transferred to the District of Kansas. The government initially sought detention, but
ultimately sought only different conditions of release.
At the detention hearing, see 18 U.S.C. § 3142(f), held August 14, 2012, the
government sought as one of the conditions of release that Mr. Pickel have no contact
with any co-defendant or witness. See 18 U.S.C. § 3142(c)(1)(B)(v) (providing that a
court may include as a condition of release that the defendant “avoid all contact with
. . . a potential witness who may testify concerning the offense”). The government
asked that Mr. Pickel specifically be required to avoid all contact with his long-term
girlfriend, Maria Garza. The government explained that Ms. Garza was a potential
witness because she was in the car with Mr. Pickel when it was stopped and found to
contain 40 pounds of marijuana.
Mr. Pickel objected, arguing it would be an unjustified hardship to avoid
contact with Ms. Garza because, he asserted, she is his common-law wife and the
mother of his young child. The district court rejected this objection, and his release
order included the government’s requested condition that Mr. Pickel “avoid all
-2-
contact, directly or indirectly, with any person who is or may be a . . . witness in the
investigation or prosecution, including Maria Garza and all co-defendants.” Aplt.
App. at 9. 1
On appeal, Mr. Pickel argues that the condition he not contact Ms. Garza is not
rationally related to any compelling government purpose. He argues that the
government’s claim that Ms. Garza might testify is “shallow” because of potential
marital privilege claims and the likelihood she would assert her Fifth Amendment
right not to incriminate herself. He also asserts that in one of his co-defendant’s
proceedings, the same district court judge permitted contact with a co-defendant’s
spouse, limited to communications about their child. After briefing, we remanded the
matter to the district court with instructions to supplement its order with a statement
of reasons, as required by Fed. R. App. 9(a)(1) (requiring a district court to “state in
writing, or orally on the record, the reasons for an order regarding the release or
detention of a defendant in a criminal case”).
In its supplemental order, the district court stated the reasons for its finding
that the no-contact condition as to all potential witnesses, including Ms. Garza,
together with the other conditions, are necessary and the least restrictive means to
reasonably assure Mr. Pickel’s appearance and the safety of other persons and the
community. See 18 U.S.C. §§ 3142(b) and 3142(c). First, it noted the significant
1
In addition, the district court ordered Mr. Pickel to post a bond for his release,
submit to testing for prohibited substances, and participate in substance abuse therapy
if directed to do so.
-3-
nature of Mr. Pickel’s charged drug conspiracy offenses, which allege a conspiracy
among numerous people involving large quantities of cocaine and marijuana. It
noted that Mr. Pickel faces a maximum sentence of life imprisonment if he is found
guilty on all charges.
Second, the court found that the no-contact order was necessary to assure the
safety of the community because the potential intimidation of, and collusion with,
witnesses, would subvert the judicial process. Third, given Mr. Pickel’s possible life
sentence, it noted the statutory presumption that there is no condition or combination
of conditions that will reasonably assure his appearance as required and the safety of
the community. See 18 U.S.C. § 3142(e).
The district court rejected Mr. Pickel’s argument that the no-contact-with-
witnesses condition should not apply to Ms. Garza. It found that Mr. Pickel failed to
demonstrate that Ms. Garza was his common-law wife because he did not present any
evidence that he and Ms. Garza ever agreed to be married or to hold themselves out
as husband and wife. See Anguiano v. Larry’s Electrical Contracting L.L.C., 241
P.3d 175, 178 (Kan. App. 2010) (holding that under Kansas law, there are three
elements required to establish a common-law marriage: (1) capacity of the parties to
marry; (2) a present marriage agreement between the parties; and (3) the parties
holding themselves out to the public as being husband and wife.). Further, it noted
that the pretrial services report stated the couple had a “falling out”; that Ms. Garza
had moved out of their home; that Ms. Garza had represented to law enforcement
-4-
officers that her relationship with Mr. Pickel was over; and Mr. Pickel had not
included Ms. Garza as a suggested third party custodian, nor did he express a
preference to live near her. Based on this evidence, the court found that Mr. Pickel
failed to demonstrate that it would be a hardship to have no contact with Ms. Garza.
The Bail Reform Act generally provides that, pending trial, a criminal
defendant must be released “on personal recognizance” or “upon execution of an
unsecured appearance bond in an amount specified by the court,” 18 U.S.C.
§ 3142(b). If, however, the district court determines such release “will not
reasonably assure the appearance of” the defendant “or will endanger the safety of
any other person or the community,” the court can condition the release on the
satisfaction of one or more of the conditions listed in § 3142(c)(1).
Generally, a bail appeal presents questions of fact and mixed questions of law
and fact. United States v. Cisneros, 328 F.3d 610, 613 (10th Cir.2003). “We apply
de novo review to mixed questions of law and fact concerning the detention or
release decision, but we accept the district court’s findings of historical fact which
support that decision unless they are clearly erroneous.” Id. Based upon our
independent review of the court’s findings and the record, we conclude that the
district court properly considered the requisite factors for determining the conditions
of relief, see 18 U.S.C. § 3142(g); that its factual findings are not clearly erroneous;
and it did not err in ordering that, as one of those conditions, Mr. Pickel have no
contact with Ms. Garza.
-5-
The district court’s order is AFFIRMED.
Entered for the Court
Per Curiam
-6- | 01-03-2023 | 10-26-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/1837073/ | 80 So.2d 167 (1955)
William ARRINGTON, Plaintiff-Appellee-Appellant,
v.
HEARIN TANK LINES, Inc., et al., Defendant-Appellant.
No. 8295.
Court of Appeal of Louisiana, Second Circuit.
April 14, 1955.
*168 Dale, Richardson & Dale, Vidalia, plaintiff-appellee-appellant. Durrett & Hardin, Wallace A. Hunter, Baton Rouge, for Hearin Tank Lines, Inc.
Blanchard, Goldstein, Walker & O'Quin, Thomas A. Harrell, Shreveport, for Interstate Pipe Line Co.
*169 GLADNEY, Judge.
This suit was brought by William Arrington against Hearin Tank Lines, Inc., Interstate Pipeline Company, and Humble Oil and Refining Company, alleging defendants negligently permitted crude oil to escape, become ignited, and cause the destruction of an automobile and wearing apparel belonging to plaintiff. Proceedings against Humble Oil and Refining Company were agreeably dismissed when it disclosed it had no interest in the oil facilities involved. From a judgment in favor of plaintiff for $600 against Hearin Tank Lines, Inc. (hereinafter referred to as Hearin) and rejecting all demands against Interstate Oil Pipeline Company (hereinafter referred to as Interstate), Arrington and Hearin have appealed.
Declaring he does not know the exact cause of the leakage of the crude oil and the subsequent ignition, and that said information is known or should be known by the defendants, plaintiff invokes the doctrine of res ipsa loquitur. The petition alleges that the activities and operations of storing and removing the oil were conducted solely by the defendants and were exclusively under their control and supervision, and that in this instance, the operations were not conducted properly and defendants were guilty of actionable negligence in causing the resulting damage.
Interstate attacked the sufficiency of the petition through exceptions of vagueness and no cause or right of action. It was argued the pleading should have specifically set out the activities performed by its employees and should aver the manner in which the employees were guilty of negligence. Reliance is placed upon Fidelity Union Casualty Company v. Romero, 1929, 10 La.App. 796, 122 So. 288, and Loprestie v. Roy Motors, 1939, 191 La. 239, 185 So. 11, to the effect a general allegation of negligence is merely the pleader's own conclusion of law. The argument on both exceptions is directed to the same end and is answered by the ruling on a similar exception in Lykiardopoulo v. New Orleans & C. R. Light and Power Company, 127 La. 309, 312, 1910, 53 So. 575, 576, wherein the Supreme Court said:
"Ordinarily, where only the ultimate facts are alleged, and particulars are called for, the court should require the pleader to give the particulars intended to be relied upon; but cases readily suggest themselves which ought to be an exception to that rule * * *. In cases where the plaintiff cannot be expected to have any information as to the causes of the accident, whereas the defendant, on the contrary, must be assumed to be fully informed on the subject, and where the accident is of the kind which ordinarily do not occur when due care has been exercised, the rule of evidence is that the accident speaks for itselfres ipsa loquitur that is to say, that a presumption of negligence arises from the fact itself of the accident. In such cases, the plaintiff not only need not allege the particular acts of omission or commission from which the accident has resulted, but need not even prove them. The accident itself makes out a prima facie case, and the burden is on defendant to show absence of negligence."
This court recently had occasion to observe in Hamiter v. Duncan, 1955, 78 So.2d 80, 82:
"`Res ipsa loquitur' is not a rule of pleading or of substantive law, but is a rule of evidence, the applicability of which is to be determined at conclusion of trial.
"Specific pleading of doctrine of res ipsa loquitur is not required in cases where facts themselves invoke its application."
The decision in Fidelity Union Casualty Company v. Romero, supra, does not involve the doctrine of res ipsa loquitur, and hence is inapposite. The holding in Loprestie v. Roy Motors, is adverse to exceptor's contention as the Supreme Court therein rejects the argument so advanced as being contrary to the Lykiardopoulo decision *170 and other cited authorities. Our conclusion is that exceptor's position is untenable.
An additional contention is advanced by Interstate and by Hearin, who also filed an exception of no cause or right of action. The argument challenges plaintiff's failure to allege the exclusive management and control was in a single defendant and where there is such divided responsibility the doctrine of res ipsa loquitur is inapplicable. Cited in support of this doctrine are the cases of A. & J. Inc. v. Southern Cities Distributing Company, 1932, 173 La. 1051, 139 So. 477, 478, and Dorman v. T. Smith & Son, Inc., 1953, 223 La. 29, 64 So.2d 833, 838. The rule so stated by the court in the last mentioned case is:
"`The plaintiff, to some extent, relies upon the doctrine of res ipsa loquitur (the things speaks for itself). This is a rule of evidence peculiar to the law of a limited class of negligence cases; but where, as stated, the defendant has no control over the premises, or where there is a divided responsibility and the damage may have resulted from a cause over which the defendant had no control, all of the authorities hold, or at least the great weight of authority is, that the rule cannot be successfully invoked."
In each of the cases cited there was but one party defendant and the court rulings may be distinguished from the instant case for the reasons given in the above quotation from Dorman v. T. Smith & Son, Inc. We are not referred to any authority, nor do we know of any, which denies application of the doctrine of res ipsa loquitur where the operations producing the damage complained of were activities and operations conducted solely by several defendants. One can conceive of joint operations which could cast more than one defendant as a tort feasor. In Watkins v. Gulf Refining Company, 1944, 206 La. 942, 20 So.2d 273, 275, the Supreme Court declared:
"The defendant in a damage suit coming under the doctrine of res ipsa loquitur must show that he did not do anything that he should not have done, that he left undone nothing he should have done and that he neglected no legal duty owed to the plaintiff. Vargas v. Blue Seal Bottling Works, 12 La.App. 652, 126 So. 707; Horrell v. Gulf & Valley Cotton Oil Company, 15 La.App. 603, 131 So. 709."
In Beck v. United States Fidelity and Guaranty Company, La.App.1954, 76 So.2d 120, 121, 122, plaintiff sought to impose liability upon two defendants and invoked res ipsa loquitur. This court commented:
"It is interesting to note that both defendants concede plaintiff's right to recovery but each points an accusing finger at the other as being the party guilty of negligence. As a result we are here confronted not with the necessity of determining plaintiff's right to recovery but, rather, with a determination of liability on the part of one or both of defendants * * *."
The principle expressed in Dorman v. T. Smith & Son, Inc., and quoted above deals with instances where there is a divided responsibility and the damage may have resulted from a cause over which the defendant had no control. The presumption of negligence arising from the mere happening of the accident does not attach, therefore, to one who from reference to plaintiff's petition or the evidence adduced upon trial, is not shown to be in control of the operations which produced the injury. This is especially true where there is but one defendant. But it does not follow there cannot be more than one defendant who may be required to rebut an inference of negligence which may be the proximate cause of the damage. Nor does it deny the accountability of joint tort feasors. Where the operations complained of were solely within the control of several defendants each is held to the responsibility of going forward with the evidence according to the formula provided in Watkins v. Gulf Refining Company as stated above. The argument supporting the exceptions of no cause or right of action is *171 not fatal to the petition and was properly overruled by the trial court.
Passing to the merits of the case we observe there is no substantial controversy as to the relevant evidence resorted to for the fixation of blame, if any, upon Hearin or Interstate, or both. Our findings of the material facts are the same as determined by the judge a quo and we adopt his recitation thereof, with but slight revision:
Interstate Oil Pipeline Company owns a crude oil tank battery used to store crude oil transported by its pipeline from an oil field for Esso Standard Oil Company, the owner of the oil. Hearin Tank Lines, Inc. transports this oil by motor truck with tank trailer from this storage battery to Lake St. John in Concordia Parish, La., for Esso Standard Oil Company. Hearin and Interstate have no contractual relationship, each being employed by Esso Standard individually and not jointly.
The storage facility consists of two storage tanks with an unloading line leading from the tanks to the place where the tank trucks are filled or loaded near the tanks; there is an out flow valve built into the base of the tank which valve is connected with the unloading line. This loading line is also equipped with a valve located where the truck that hose is coupled for loading the truck tank.
The valve built into the base of the tank is so constructed that when it is closed and sealed, it can be opened only by breaking the seal, removing the handle and inverting the handle and replacing the same in its proper place. The tanks are enclosed with a wire, and entrance to the enclosed tanks is through a gate. The valve on the line leading from the tanks to the trucks is not equipped with a handle, but the handle from the valve at the base of the tanks may be used to open and close this valve or a wrench may be used to open and close the same.
The operation in filling and emptying these storage tanks appears to be substantially as follows: When the storage tank is being filled by the pipe line, the valve at the base of the tank is closed and sealed. After the tank is full, Interstate makes the necessary gauges and tests, breaks the seal on the outlet valve at the base of the tank, removes the handle, inverts the same and replaces it in its proper place, and notifies Hearin that the oil is ready to be moved; Hearin moves in with his tank truck and couples the hose on the truck to the loading line, and then opens the valve at the base of the tank. The driver then returns to the loading line valve near his truck and opens that valve to permit the oil to flow or be pumped into his truck tank and when his truck is loaded, the driver closes the load line valve, removes the handle and drops it on the ground near the valve, uncouples from the loading line and drives out. The driver does not close the outlet valve at the base of the tank until the tank has been emptied. The next truck moves in, couples the hose on his truck to the load line, opens the load line valve until his truck is full and then closes the load line valve, uncouples and moves out. This operation continues until the tank has been emptied. The driver of the truck that completes the emptying of the storage tank then closes the valve at the base of the tank, inverts the handle and after placing in its proper place, affixes a metal tape seal that has been left at the valve by Interstate.
On the morning of July 18, 1953, at about six o'clock a fire was started when a tank truck belonging to the Hearin Tank Lines, Inc., drove into the area near the storage tanks where a considerable amount of crude oil had escaped from the tanks and covered a goodly portion of the area around the tanks and loading ground and the oil was apparently ignited from the sparks or heat from the exhaust pipe of the tank truck. The escaped oil was discovered shortly before the fire and it was foundto be coming from the loading line where it was found that the valve was partly open with the handle connected to the valve, and a small stream of oil was flowing out covering the ground in the vicinity. The driver testified that he had driven into and over the oil covered ground before he recognized that it was oil on the ground.
*172 The fire destroyed a nearby tenant house and its contents, including some personal effects and an automobile belonging to plaintiff. The tank truck belonging to the Hearin Tank Lines, Inc., a defendant herein, was also destroyed.
Before this court the contention of Interstate is that plaintiff's damages were due solely to the negligence of Hearin in failing to turn off the valve at the storage battery, in addition to the valve at the unloading faucet; in that its driver drove a defective truck into the crude oil which had escaped onto the highway; and in failing to take precautions to prevent the crude oil from escaping after its employee left the storage battery on the afternoon of July 17, 1953. Hearin answers the charges of Interstate by pointing out that Riggs left the premises of Interstate at approximately five o'clock P.M., July 17, 1953; that it did not become dark for several hours thereafter and because several persons lived in the immediate vicinity of the unloading faucet it is probable that had Riggs not properly closed the faucet it would have been noticed by someone. Our attention is called to the fact that William Arrington and his wife testified they neither saw nor smelled oil in the area when they left Sonny Johnson's home at about eleven o'clock on the night of the 17th. It is argued the evidence shows none of Hearin's employees was on the subject premises after five o'clock P.M. of the 17th and until Riggs returned for his first load of oil on the morning of July 18th. From these facts Hearin argues that it had absolutely no control over the premises between the hours so stated. It would impose liability upon Interstate for negligence in placing the unloading faucet in an unfenced area accessible to trespassers and cattle; in permitting children to play in the general area of the storage battery and unloading faucet; for not having put locks on the outlet valves, and in having a defective valve at the unloading faucet.
Two acts produced the destructive fire and these were the leakage of the oil which covered the ground and its ignition by the Hearin truck. Manifestly, each of these causes or both was a contributing and proximate cause of the incident. Interstate had nothing to do with Riggs' action in driving the truck into the oil. Obviously, such act was an independent and intervening cause which contributed to plaintiff's loss. It is difficult to understand why Riggs failed (as he so testified) to recognize the crude oil into which he drove his truck. Certainly with his experience he knew the danger of such an act. The facts, therefore, indicate beyond doubt Hearin was solely responsible for igniting the oil.
The evidence adduced convincingly shows that after Interstate had signified one of its tanks was ready for unloading by breaking the seal by the gauger, and the inversion of the wrench, no employee of the Interstate had any further connection with the transfer of the oil to the transport tank. All succeeding acts were the sole responsibility of the employee of Hearin who was required to open the gauge at the base of the tank, remove the handle or wrench therefrom, and come back to the truck and use the same handle for the purpose of opening the faucet which turned the oil into the hose which ran from the faucet to the tank on the truck. The custody and responsibility of the handle or wrench used for opening the valves and the control of the valves were the complete responsibility of the Hearin employee until he had emptied the tank, returned the handle to the valve at the base of the tank, and closed and placed thereon the seal. It is conceded Interstate was the owner of the surface lease and was the warehouseman of the oil owned by Standard Esso, nonetheless the full and entire custody and control of the operations affecting the oil were the responsibility of Hearin during the period oil was being taken from the tank. We are, therefore, of the opinion that Hearin was properly cast in the judgment from which it has appealed.
The charges made by Hearin against Interstate in the several respects set forth above are not substantiated. Any negligence which might be inferred from failure of Interstate to fence in its unloading *173 faucet and prevent it being accessible to trespassers and cattle is too remote to constitute proximate cause. The same ruling applies to the charge of failure to place looks on the valves and to take other safety precautions to prevent the escape of crude oil from the unloading faucet. The evidence does not support Hearin's other charge of negligence, that of having a defective valve at the unloading faucet.
Plaintiff appealed from the judgment insofar as it dismissed his action against Interstate, and argues the latter should be cast under the provisions of Articles 667, 668 and 2317 of the LSA-Civil Code. Articles 667 and 668 have to do with the regulation of servitudes imposed by law, where by the use of his property a proprietor deprives his neighbor of the enjoyment of his, or causes damage to him. They are not applicable to occurrences of an unusual nature directly occasioned by human error. Article 2317 fixes responsibility not only for damages caused by persons but for the things we have in our custody. This article must be construed in connection with Articles 2318-2322 dealing with specific persons and things. Adams v. Golson, 1937, 187 La. 363, 174 So. 876. If this argument is sound in the instant case, notwithstanding our findings as above set forth, Interstate could be held liable only because of the ownership of the oil and tank facilities. Mere lawful ownership alone is not sufficient to create liability. It is the negligent use of the property which requires the owner to respond in damages. Plaintiff's damages occurred when the tank unloading operations were entirely in the custody and control of another, Hearin. Consequently, Article 2317 cannot be considered as authority for assessing Interstate with responsibility.
In conclusion, we resolve the judgment from which appealed correctly cast Hearin for the damages assessed and properly absolved Interstate from liability for actionable negligence. We have also considered carefully plaintiff's request that the award be increased from $600 to $700, but we find no error in the finding of the trial judge as to the value of the property lost. In the fixation of damages considerable discretion is permitted.
For the foregoing reasons the judgment from which appealed is affirmed, all costs, including costs of this appeal to be taxed against Hearin Tank Lines, Inc. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3098677/ | COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-12-00564-CR
Reginald Dorsey § From the 211th District Court
§ of Denton County (F-2011-1456-C)
v. § September 26, 2013
§ Opinion by Justice Dauphinot
The State of Texas § (nfp)
JUDGMENT
This court has considered the record on appeal in this case and holds that
there was no error in the trial court’s judgment. It is ordered that the judgment of
the trial court is affirmed.
SECOND DISTRICT COURT OF APPEALS
By _________________________________
Justice Lee Ann Dauphinot | 01-03-2023 | 10-16-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1516718/ | 916 F. Supp. 1233 (1996)
UNITED STATES, Plaintiff,
v.
John William KEGEL, a/k/a John William Taft, Defendant.
No. 95-300-CR-T-21(E).
United States District Court, M.D. Florida, Tampa Division.
February 13, 1996.
*1234 Sharon Lever, Federal Public Defender's Office, Middle District of Florida, Tampa, FL, for defendant.
Wanda Heard, U.S. Attorney's Office, Middle District of Florida, Tampa, FL, for U.S.
ORDER
McCOUN, United States Magistrate Judge.
THIS MATTER is before the court on Defendant John William Kegel's Motion to Dismiss Information, (Doc. 13). By this motion, Defendant seeks to dismiss his Criminal Information (Doc. 1), on grounds that the Child Support Recovery Act of 1992, 18 U.S.C. § 228, (hereinafter, "CSRA"),[1] is unconstitutional. Specifically, Defendant argues that the statute violates Tenth Amendment principles of comity and federalism.[2] As a second ground, the Defendant argues that the statute is an unconstitutional exercise *1235 of congressional power under the Commerce Clause. The Government has filed a response in opposition, (Doc. 14).
I.
Defendant John William Kegel is charged by Information that, between May 10, 1984 through September 20, 1995, he intentionally and willfully failed to pay past due child support as required by court order of the Circuit Court of Pasco County, Florida. The Information further alleges that the Defendant resides in a state other than Florida, has owed past due child support in excess of one year and owes an amount in excess of $5,000.
II.
Defendant argues two grounds for striking down the CSRA. First, CSRA is in contravention to the tenets and principles of the Tenth Amendment of the Constitution in that it violates notions of federalism and comity. Second, the statute was unconstitutionally enacted in violation of the Commerce Clause because the activity proscribed has no substantial affect on interstate commerce. For reasons discussed below, the court rejects both arguments.
A.
Pursuant to the principles of the Tenth Amendment, the Defendant argues that CSRA offends notions of federalism and comity, specifically because it regulates criminal activity and matters of domestic relations. While case law cited by counsel has an initial appeal, it is ultimately unpersuasive. The federal courts have traditionally refrained from exercising authority over matters broadly described as "domestic relations." See Barber v. Barber, 62 U.S. (21 How.) 582, 584, 16 L. Ed. 226 (1858) ("We disclaim altogether any jurisdiction in the courts of the United States upon the subject of divorce, or for the allowance of alimony. . . ."). See generally Simms v. Simms, 175 U.S. 162, 20 S. Ct. 58, 44 L. Ed. 115 (1898). Likewise, in criminal matters, "`the States possess primary authority for defining and enforcing the criminal law.'" United States v. Lopez, ___ U.S. ___, ___ n. 3, 115 S. Ct. 1624, 1631 n. 3, 131 L. Ed. 2d 626 (1995) (citations omitted).
However, in the instance of the so-called domestic relations exception, the exception is neither a blanket exception nor all encompassing. For example, enforcing a decree involving alimony or child support is outside the scope of the exception. See Ankenbrandt v. Richards, 504 U.S. 689, 702, 112 S. Ct. 2206, 2214, 119 L. Ed. 2d 468 (1992)[3]; Barber, 62 U.S. (21 How.) at 602. Enforcement, according to the Court, does not bring into play issues of comity and federalism because the court does not have to "enter the habitations and ... the chambers and nurseries of private families, and inquire into and pronounce upon the morals and habits and affections or antipathies of the members of every household." Barber, 62 U.S. (21 How.) at 602. In fact, Ankenbrandt makes it clear that enforcement is different. "[T]he domestic relations exception encompasses only cases involving the issuance of a divorce, alimony, or child custody decree...." Ankenbrandt, 504 U.S. at 704, 112 S.Ct. at 2215 (emphasis added). In this court's view, the imposition of criminal penalties for failure to pay child support is analogous to enforcement actions over which the federal courts have long accepted jurisdiction.
CSRA, also, does not violate these same Tenth Amendment notions of federalism and comity simply because it is a federally enacted criminal statute. "Congress ... can criminalize conduct outlawed by states without violating the Tenth Amendment." United States v. Sage, 906 F. Supp. 84, 92 (D.Conn.1995). See United States v. Bishop, 66 F.3d 569, 578 (3d Cir.), cert. denied, ___ U.S. ___, 116 S. Ct. 681, 133 L. Ed. 2d 529 (1995)). Although States usually are the primary enactors and enforcers of criminal law, they have not cornered the market. They do *1236 not have the sole authority in this matter. See United States v. Enmons, 410 U.S. 396, 411, 93 S. Ct. 1007, 1015, 35 L. Ed. 2d 379 (1973) (acknowledging that Congress has the power to enter upon the criminal jurisdiction of the States where it clearly evidences such intent); Screws v. United States, 325 U.S. 91, 109, 65 S. Ct. 1031, 1039, 89 L. Ed. 1495 (1945) (plurality opinion) ("Under our federal system the administration of criminal justice rests with the States except as Congress, acting within the scope of [its] delegated powers, has created offenses against the United States."). In fact, Congress has enacted many criminal statutes where there are State statutes punishing similar conduct. The relevant inquiry, therefore, is not whether the States primarily regulate a particular activity, but whether the federal statute was enacted pursuant to Congress' constitutional authority. If it does, the Tenth Amendment is not violated. As discussed below, CSRA meets this test.
B.
The CSRA does not exceed Congress' power to regulate commerce among the States. While recognizing that several courts have found the statute in violation of the Commerce Clause,[4] upon close analysis there is a rational link between commerce and the harm proscribed by this statute. The nexus is sufficient to support Congress' authority to enact this statute and to support the Government's prosecution of this Defendant under the statute.
In United States v. Lopez, ___ U.S. ___, ___-___, 115 S. Ct. 1624, 1628-30, 131 L. Ed. 2d 626 (1995), the court, for the first time since 1937, struck down a federal statute found to be in violation of the Commerce Clause. The case is instructive of this court's analysis.
In Lopez, the defendant was charged with and convicted under the Gun-Free School Zone Act of 1990, which prohibits the knowing possession of a firearm within a school zone. 18 U.S.C. § 922(q). On appeal, the defendant successfully challenged Congress' authority to enact the statute. The Act was struck down by the Court on the grounds that was indeed unconstitutionally enacted because by its terms "[it had] nothing to do with `commerce' or any sort of economic enterprise, however broadly one might define those terms." Lopez, ___ U.S. at ___- ___, 115 S.Ct. at 1630-31.
Since Lopez, a flurry of cases have been filed in federal court similarly challenging CSRA.[5] Although the jurisdictions considering the issue have reached diverse results, this court finds that the CSRA survives the challenge.
The Commerce Clause states that Congress shall have the power:
To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;
U.S. Const. art. I, § 8, cl. 3. Since the watershed case of NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 57 S. Ct. 615, 81 L. Ed. 893 (1937), this clause has been interpreted to mean that Congress has powers to regulate three categories of activity. See Lopez, ___ U.S. at ___-___, 115 S.Ct. at 1628-30. Congress may regulate:
[T]he use of the channels of interstate commerce[;] the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities[; and] those activities having a substantial relation to interstate commerce ... i.e., those activities that substantially affect interstate commerce.
Lopez, ___ U.S. at ___-___, 115 S.Ct. at 1629-30 (internal citations omitted).
*1237 Although Defendant and the Government do not agree on which category the court should base its determination of the issue, this court finds that CSRA survives the Commerce Clause challenge both because the Act represents a legitimate attempt by Congress to regulate the use of the channels of interstate commerce, as that phrase is construed, and because the activity at issue substantially affects interstate commerce.
In the first instance, "[t]he authority of Congress to keep the channels of interstate commerce free from immoral and injurious uses has been frequently sustained and is no longer open to question." Lopez, ___ U.S. at ___, 115 S.Ct. at 1629 (citations omitted). Clearly the use of interstate travel to avoid payment of child support obligations presents Congress with a compelling reason to regulate such conduct. The legislative history of the CSRA supports such a conclusion.
Representatives were presented with numerous stories of "instance[s] where spouses, ... [who] did not want to pay [child support], went to another State, waited just until the legal process was able to catch up with [them], and then went to another State and started the procedure all over again." 138 Cong.Rec. H7325 (1992). A report from the General Accounting Office included findings that one-third of child support cases involved parents living in different states, thus necessitating interstate transfers of the funds and significant intercourse between persons of different states. Of that one-third, fifty-seven percent of the custodial parents received their support payments through channels of interstate commerce occasionally, seldom or never. H.R.Rep. No. 771, 102d Cong., 2d Sess. 6 (1992). Evidence also supported that this failure to pay was markedly intentional and that movement over state lines significantly increased the chances of successfully avoiding these payments. Id.
The court recognizes that the statute's sweep is considerably broader and proscribes conduct even where there is no evidence of flight to avoid the child support obligation. However, the "innocent" relocation to a different jurisdiction is no less an injurious use of the channels of interstate commerce than the intentional flight to avoid payment of child support obligations where it is accompanied by the non-payment of support obligations. Even the lawful use of interstate commerce may nonetheless result in injurious or immoral results. Because the channels of interstate commerce are necessarily used in every circumstance where this statute is applied, the court finds the statute supportable under the first category.
Because the obligor has travelled in interstate commerce, he enjoys the substantial, albeit indirect, benefit that residing in another state affords him in avoiding his obligations. While this approach may push the theoretical limits of Congressional authority to regulate the channels of interstate commerce, this court does not believe it is beyond the authority of Congress where the channels are "used" to bring about an immoral and injurious result.
It is sufficient to reiterate the well-settled principle that Congress may impose relevant conditions and requirements on those who use the channels of interstate commerce in order that those channels will not become the means of promoting or spreading evil whether physical, moral or economic nature.
United States v. Orito, 413 U.S. 139, 144, 93 S. Ct. 2674, 2678, 37 L. Ed. 2d 513 (1973).
With regard to the third category of activity which Congress may regulate, Lopez establishes, as the test, whether there is a rational basis for concluding that the regulated activity "substantially" affects interstate commerce. Lopez, ___ U.S. at ___- ___, 115 S.Ct. at 1629-30. Purely intrastate activities which so affect interstate commerce may be regulated. Thus, assuming, in arguendo, that the willful non-payment of past due child support is purely intrastate activity (an argument rejected above), there must be established a significant nexus with interstate commerce.[6] "[I]ntrastate activities that *1238 `have such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect that commerce from burdens and obstructions'" are subject to regulation by Congress. Lopez, ___ U.S. at ___, 115 S.Ct. at 1628 (quoting NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 37, 57 S. Ct. 615, 624, 81 L. Ed. 893 (1937)). In this court's view, even if the willful non-payment of child support is viewed as an intrastate activity, its consequences so affect interstate commerce as to allow for federal regulations.
The extent of Congress' authority to regulate intrastate activity is best illustrated in Wickard v. Filburn, 317 U.S. 111, 63 S. Ct. 82, 87 L. Ed. 122 (1942).
Wickard involved a Commerce Clause challenge to the Agriculture Adjustment Act of 1941. Roscoe Filburn owned a small farm in Ohio upon which he raised a small quantity of winter wheat to sell and for personal use on the farm. Because he exceeded his acreage allotment and yield, he was subjected to a penalty by the Secretary of Agriculture. He raised a Commerce Clause challenge to the Act because, by its terms, it extended to production "not intended in any part for commerce but wholly for consumption on the farm." Id. at 118, 63 S.Ct. at 86. The Court rejected the challenge finding that the Act was intended to increase the market price of wheat by limiting production and further finding that while Filburn's impact on the price of wheat was insignificant and indirect, the impact by him and all others similarly situated was significant and thus, subject to federal regulation.
Thus, even a seemingly personal and relatively insignificant activity may, in the context of broader considerations, provide the necessary nexus under the Commerce Clause. Wickard also illustrates that Congress' authority under the Commerce Clause may extend to non-commercial activity by a private actor if it is of the sort capable of repetition to a decree which substantially affects interstate commerce. See also Cheffer v. Reno, 55 F.3d 1517, 1521 n. 6 (11th Cir.1995) ("[T]he Court often finds valid under the Commerce Clause statutes which penalize behavior substantially affecting interstate commerce without regard to the actor's commercial or private status.").
Congress' analysis that the willful nonpayment of past due child support substantially affects interstate commerce is borne out by a reading of the congressional findings.[7] In this court's analysis as well, there is ultimately a substantial impact upon the intercourse of the national economy and, therefore, upon interstate commerce in the collective activity of willful non-payment of child support.
Most child support payments owed by the non-custodial parent residing in a different state require the transfer of monies through the channels of interstate commerce. Whether by use of the mail, interstate transportation or through electronic transfer of funds, interstate commerce is significantly involved. The failure to pay child support likewise creates economic intercourse impacting interstate commerce. Efforts at collecting such debts or locating the non-custodial parent so that collection may be facilitated spark the use of all forms of interstate channels of communications and travel. Accepting Congress' statistical findings as accurate, the collective economic impact of such intercourse is substantial to a degree allowing federal regulation.
The willful non-payment of past due child support creates (not results in) a substantial obstruction to and drain upon the national economy that is no less an impact on interstate commerce than the collective affect of the home grown wheat in Wickard. And, if it is appropriate for Congress to regulate individual activity to assure that the market price of wheat will remain high, it is no less *1239 appropriate that Congress regulate individuals to assure that the standard of living of the custodial parent and the child are not devastated, to the end that interstate commerce, in its broadest sense, is substantially impacted.[8]
Given the nature of the activity at issue and its direct economic impact, this analysis is not the type of "cost of crime" or "national productivity" analysis rejected by the court in Lopez. See United States v. Parker, 911 F. Supp. 830, 833-34 (E.D.Pa.1995). Billions of dollars are wrongfully withheld from custodial parents and children and thus from interstate commerce by the activity here sought to be regulated. While the impact of the activity may not be tied to any one specific form of commerce, it may reasonably be tied to all forms of interstate commerce transacted by the everyday affairs of citizens. In the court's view, this type obstruction of the intercourse between states is real, substantial and subject to federal regulation under category three.
III.
For the foregoing reasons, this court finds the CSRA constitutional. The Defendant's Motion to Dismiss Information, (Doc. 13), is DENIED.
Done and Ordered.
NOTES
[1] In pertinent part, § 228 states,
Whoever willfully fails to pay a past due support obligation with respect to a child who resides in another State shall be punished as provided in subsection (b).
18 U.S.C. § 228(a).
The term "past due support obligation" is defined as:
[A]ny amount ... determined under a court order or an order of an administrative process pursuant to the law of a State to be due from a person for the support and maintenance of a child or of a child and the parent with whom the child is living; and ... that has remained unpaid for a period longer than one year, or is greater than $5,000....
18 U.S.C. § 228(c).
[2] The Tenth Amendment provides:
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
U.S. Const.Amend. X.
[3] Ankenbrandt makes the point that the domestic relations exception to diversity jurisdiction is based not on constitutional grounds, but on a long-standing construction of the diversity statute. Ankenbrandt, 504 U.S. at 700-01, 112 S.Ct. at 2213-14. There is no constitutional basis driving this analysis.
[4] United States v. Parker, 911 F. Supp. 830 (E.D.Pa.1995); United States v. Bailey, 902 F. Supp. 727 (W.D.Tex.1995); United States v. Mussari, 894 F. Supp. 1360 (D.Ariz.1995); United States v. Schroeder, 894 F. Supp. 360 (D.Ariz. 1995) (decided the same day as Mussari).
[5] United States v. Parker, 911 F. Supp. 830 (E.D.Pa.1995); United States v. Bailey, 902 F. Supp. 727 (W.D.Tex.1995); United States v. Sage, 906 F. Supp. 84 (D.Conn.1995); United States v. Hopper, 899 F. Supp. 389 (S.D.Ind. 1995); United States v. Mussari, 894 F. Supp. 1360 (D.Ariz.1995); United States v. Schroeder, 894 F. Supp. 360 (D.Ariz.1995) (decided the same day as Mussari); United States v. Hampshire, 892 F. Supp. 1327 (D.Kan.1995).
[6] A statute may satisfy this requirement by the inclusion of a jurisdictional element within its language which will "ensure, through case by case inquiry, that the [activity] in question affects interstate commerce." Lopez, ___ U.S. at ___, 115 S.Ct. at 1631. Such a jurisdictional element was clearly intended by Congress to be a part of CSRA, although it is somewhat vaguely stated. This provision alone may well be sufficient for upholding the statute. Because this motion argues that the activity at issue does not substantially affect interstate commerce, the court will address the matter further.
[7] See Lopez, ___ U.S. at ___-___, 115 S.Ct. at 1631-32.
[8] The Defendant argues that the social and moral considerations inherent in the obligor's failure to pay child support should form no basis in the court's conclusion. While such considerations alone do not empower Congress to act, the fact that Congress has recognized the injurious and immoral nature of the activity and is expressly legislating against the same is no basis to conclude the statute is unconstitutional. See, Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241, 257, 85 S. Ct. 348, 357-58, 13 L. Ed. 2d 258 (1964). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2901798/ | COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
DOLORES G. BACA,
Appellant,
v.
GILBERT SANCHEZ AND EDIE
RUBALCABA,
Appellees.
§
§
§
§
§
§
No. 08-04-00226-CV
Appeal from the
346th District Court
of El Paso County, Texas
(TC# 2002-3010)
O P I N I O N
This is an appeal from the trial court’s decision dismissing this lawsuit for failure to
state a cause of action upon which relief may be granted. For the reasons stated herein, we
affirm the trial court’s order.
I. FACTUAL AND PROCEDURAL BACKGROUND
Appellant Baca was a candidate seeking election to the office of District Clerk of El
Paso during an election held in 2002. Appellee Edie Rubalcaba was the incumbent District
Clerk who did not seek re-election. Appellee Gilbert Sanchez was the successful candidate
for the position and currently is serving as the El Paso District Clerk. On August 1, 2002,
Appellant Baca, after being defeated in the election, filed suit against Edie Rubalcaba and
Gilbert Sanchez, alleging various violations of the Election Code and conspiracy to violate
the Election Code, resulting in damages to include actual, exemplary, and nominal damages.
Sanchez filed special exceptions to the petition which outlined various defects to the
petition, including that the original petition had referenced various sections of the Election
Code which did not exist and that several of the sections cited were not relevant to the
complaints propounded by Baca. On January 8, 2003, the trial court entered an order
granting Sanchez’s special exceptions and ordering Baca to replead within thirty days. Baca
filed both an Amended Original Petition and a Corrected First Amended Original Petition.
Sanchez and Rubalcaba filed responsive pleadings that included special exceptions and
motions to dismiss. The record does not reflect whether a final hearing was held on the
motions to dismiss or special exceptions but an order was entered on the 27th of September
ordering the Plaintiff to replead her cause of action by the 17th day of October, 2003. Baca
filed her Third Amended Original Petition on October 21, 2003. Baca’s Third Amended
Original Petition alleged violations of penal provisions of the Election Code, violation of the
RICO Statute,
various acts of fraud, conspiracy, and torts. The parties filed a series of
pleadings and memoranda of law which culminated in the trial court’s entry of an order on
April 13, 2004 dismissing the case for failure to state a cause of action upon which relief can
be granted.
Baca’s complaints against Rubalcaba and Sanchez emanate from a letter mailed by
Edie Rubalcaba reflecting her support of Sanchez’s candidacy which Baca contends violated
various provisions of the Election Code, to her detriment. Baca’s complaints stem from the
fact that Rubalcaba’s letters included the County Seal of the County of El Paso, and
referenced Rubalcaba’s position as the then El Paso District Clerk.
Baca appeals asserting one issue. For the reasons stated below, we agree with the trial
court’s determination and affirm the trial court’s dismissal of the case.
II. ISSUE ON APPEAL
Appellant presents one issue on appeal which challenges the trial court’s dismissal of
her lawsuit for failure to state a cause of action. Appellant does not complain of specific
findings of the trial court but rather presents a general complaint that merely asserts that she
should be entitled to a trial by jury. We note that the trial court does not articulate the basis
for dismissal of the case but merely states that the case is “dismissed for failure to state a
cause of action upon which relief can be granted.” Appellant requested that findings of fact
and conclusions of law be filed by the trial court and filed a notice of past due findings of
fact and conclusions of law. Appellant did not file requested or proposed findings of fact.
No findings of fact or conclusions of law were filed by the trial court.
III. DISCUSSION
We note that this case presents itself in the unusual procedural posture as a dismissal
based solely on the pleadings as presented to the trial court. In order to determine whether
the pleadings as filed failed to support a cause of action, we must address whether the
procedural hurdles were overcome justifying dismissal. We have previously held that before
a motion to dismiss for failure to state a cause of action can be granted, the movant must first
file a special exception, giving the plaintiff the opportunity to cure any pleading defect.
Hunter v. Johnson, 25 S.W.3d 247, 249 (Tex.App.--El Paso 2000, no pet.). The rule
requiring a defendant to file a special exception before seeking dismissal for failure to state
a cause of action also applies where, as in this case, a defendant seeks dismissal for failure
to state a cause of action by filing a motion to dismiss. Id. at 249-50; see Centennial
Insurance Co. v. Commercial Union Insurance Co., 803 S.W.2d 479, 483
(Tex.App.--Houston [14th Dist.] 1991, no writ) (stating: “Only after special exceptions have
been sustained and a party has been given an opportunity to amend its pleadings may a case
be dismissed for failure to state a cause of action. . . . When there is no action by the trial
court sustaining special exceptions, an order granting a dismissal for failure to state a cause
of action must be reversed.”); Moseley v. Hernandez, 797 S.W.2d 240, 242
(Tex.App.--Corpus Christi 1990, no writ) (“A special exception [as opposed to a motion to
dismiss] is the appropriate vehicle for urging that the plaintiff has failed to plead a cause of
action (see Tex. R. Civ. P. 90, 91), and the pleader must be given, as a matter of right, an
opportunity to amend the pleading.”). Here, Appellees filed special exceptions and a motion
to dismiss for failure to state a cause of action, Appellant was provided an opportunity to
amend her pleadings and filed amended pleadings at least twice before the trial court ruled
on the motion to dismiss.
We also recognize, however, that special exceptions are not required when a party
pleads himself or herself out of court. Hunter, 25 S.W.3d at 250. Baca’s complaints focus
on a letter that was mailed by Rubalcaba and which endorsed Sanchez’s candidacy for El
Paso District Clerk. She is complaining that the letter violates sections 255.001, 255.004,
and 255.005 of the Texas Election Code and asserts that violation of those sections has
created a cause of action for damages in her favor. We disagree. Without determining
whether the action complained of violates the provisions of those sections, we note that each
does not create a cause of action in favor of an individual for violation of the section.
To
the contrary, each indicates that a violation of the section is a Class A misdemeanor
providing for criminal penalties under Texas state law.
In her Third Amended Original Petition, Appellant argues, without pleading any
factual basis whatsoever, that the actions of Rubalcaba and Sanchez were a violation of the
Federal Racketeer Influenced and Corrupt Organizations Act, the “RICO” statute.
Her other
complaints assert that the purported mailing constituted a violation of Texas Election Code
provisions and constituted a tort creating civil damages for the violation of the penal
provisions of the Election Code and that the defendants owed plaintiff a duty to comply with
the Election Code, the failure to do so was a breach of that duty and the violation resulted in
damages. Most of her petition consists of complaints related to the assumptions which could
be drawn from the contents of the mailing and the majority of her brief argues that this Court
should recognize a civil cause of action of violation of the criminal penalty provisions of the
Election Code. We have found no cases in support of her contention. We do not agree that
violation of sections 255.004 and 255.005, if such violation occurred, creates a private cause
of action in favor of Appellant.
Appellant’s petition contends that the Appellees owed a duty to Appellant to abide by
the Election Code, that Appellees “breached their duty to plaintiff. The breach was the
proximate cause of plaintiffs [sic] injuries and harm.” She also contends that the Appellees
had a statutory duty which was violated and, therefore, created a basis for her negligence per
se claim. The minimal pleadings filed do not support a cause of action for negligent
violation of the Election Code. Not a single fact is pleaded in support of the broad
conclusory statements. Further, Appellant minimally briefed this issue and cites to only a
few cases which address civil liability of a defendant incidental to the specific criminal
conduct of a third party. None of the cases cited deal with the type of actions discussed here.
Rather, all address the traditional liability of a defendant created by the inaction or actions
of the defendant which resulted in physical harm to the plaintiff.
Even assuming that
Appellant’s contention that Rublacaba’s letter did violate a duty to her, she did not plead a
single fact that supports a finding of any damages. Her implied speculation, which we note
was not even specifically pleaded, that the letter affected the outcome of the election, is not
supported by any proof and cannot create a cause of action.
Although special exceptions are generally considered to be the means by which an
adverse party may force clarification of vague pleadings, they may also be used to determine
whether the plaintiff has pleaded a cause of action permitted by law. See Tex. R. Civ. P. 91;
Trevino v. Ortega, 969 S.W.2d 950, 951 (Tex. 1998) (special exceptions used to determine
no cause of action for spoliation of evidence); Friesenhahn v. Ryan, 960 S.W.2d 656, 658
(Tex. 1998); San Benito Bank & Trust Co. v. Landair Travels, 31 S.W.3d 312, 317
(Tex.App.--Corpus Christi 2000, no pet.); Holt v. Reproductive Servs., Inc., 946 S.W.2d 602,
607 (Tex.App.--Corpus Christi 1997, writ denied). The court must allow an opportunity to
amend; however, if a party refuses to amend, or the amended pleading fails to state a cause
of action, the case may be dismissed. Friesenhahn, 960 S.W.2d at 658; San Benito Bank &
Trust Co., 31 S.W.3d at 317. The appellate court reviews such a ruling de novo, taking all
allegations, facts, and inferences in the pleadings as true and viewing them in a light most
favorable to the pleader. Perry v. S.N., 973 S.W.2d 301, 303 (Tex. 1998); San Benito Bank
& Trust Co., 31 S.W.3d at 317; Hall v. Stephenson, 919 S.W.2d 454, 467 (Tex.App.--Fort
Worth 1996, writ denied); Detenbeck v. Koester, 886 S.W.2d 477, 479 (Tex.App.--Houston
[1st Dist.] 1994, writ withdrawn). The question becomes whether, even assuming plaintiff
can prove all the allegations contained in her petition, a cause of action is recognized under
Texas law. San Benito Bank & Trust Co., 31 S.W.3d at 317. We hold that she cannot and
overrule her sole issue on review.
Having overruled Appellant’s sole issue on review, we affirm the judgment of the trial
court.
RICHARD BARAJAS, Chief Justice
August 4, 2005
Before Barajas, C.J., McClure, and Chew, JJ. | 01-03-2023 | 09-09-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2529739/ | 956 N.E.2d 20 (2011)
353 Ill. Dec. 500
Jose "Joe" RIVERA, Petitioner-Appellant,
v.
THE CITY OF CHICAGO ELECTORAL BOARD, Langdon D. Neal, Chairman, Richard A. Cowen, Commissioner, Marisel A. Hernandez, Commissioner, Timothy J. Raddatz, and Gerald J. Holst, Jr., Respondents-Appellees.
No. 1-11-0283.
Appellate Court of Illinois, First District, Fifth Division.
July 29, 2011.
*22 Andrew Finko, Attorney at Law, Chicago (Andrew Finko), for Appellant.
James M. Scanlon & Associates, Chicago (James M. Scanlon, Joan T. Agnew), for Appellee City of Chicago Electoral Board.
Thomas A. Jaconetty, Attorney at Law, Chicago (Thomas A. Jaconetty), for Appellees Raddatz and Holst.
OPINION
Presiding Justice FITZGERALD SMITH delivered the judgment of the court, with opinion.
¶ 1 Following the declaration of the invalidity of his candidacy, petitioner-appellant Jose "Joe" Rivera (petitioner) moved for an expedited briefing schedule and decision related to the general municipal election for alderman of the 45th Ward of the City of Chicago to be held on February 22, 2011. His motion was denied as a practical matter due to insufficient time to address and resolve his appeal before the scheduled election. The cause has since been briefed for appeal by petitioner, as well as by respondents-appellees the City of Chicago Electoral Board (Board); Langdon D. Neal, chairman, Richard A. Cowen, commissioner, and Marisel A. Hernandez, commissioner (collectively, members); and Timothy J. Raddatz and Gerald J. Holst, Jr. (individually, or objectors). Upon review, we issue the instant order affirming the decision of the trial court and dismissing petitioner's appeal.
¶ 2 BACKGROUND
¶ 3 Petitioner filed nomination papers to become a candidate in said election. Raddatz and Holst filed objections to the validity of petitioner's candidacy and the cause proceeded before a hearing officer in December 2010 pursuant to an order from *23 the Board. During this hearing, in addition to the matter at hand (the validity of his candidacy), petitioner filed multiple motions to strike. In them, he complained, in part, that the hearing officer initially defaulted objectors for failure to appear but then vacated that default when they eventually appeared following a delay, and that objectors were improperly represented by a nonattorney at the hearing (i.e., a clerk for their attorney of record). After considering these motions, the hearing officer orally denied them, concluding that the delay in appearance was understandable due to special circumstances, and that the nonattorney had not provided any legal services but only obtained the briefing schedule on the motions. The hearing officer then took the case under advisement and, on December 22, 2010, submitted a recommendation to the Board that the objections be sustained, that petitioner's candidacy be declared invalid, and that petitioner's name not be printed on the election ballot.
¶ 4 On January 7, 2011, the Board met to review the hearing officer's recommendations. Counsel for petitioner, as well as counsel for objectors, were present and argued at this meeting. At the conclusion of the argument, the Board verbally stated that it would affirm the hearing officer's recommendation. Later, on this same day, the Board issued its written decision, officially adopting the hearing officer's recommendation and sustaining the objections to petitioner's candidacy. It is unclear from the record which, if any, of the parties or their representatives were present at the time the Board issued its written decision.[1] On this same day, the Board sent a copy of its written decision by mail in a sealed envelope with postage prepaid to petitioner's counsel of record. In the decision, immediately after the signatures of the Board members who comprised the panel involved, it is stated:
"NOTICE: Pursuant to Section 10-10.1 of the Election Code (10 ILCS 5/10-10.1) a party aggrieved of this decision and seeking judicial review of this decision must file a petition for judicial review with the Clerk of the Circuit Court of Cook County within 5 days after service of the decision of the Electoral Board." (Emphasis in original.)
¶ 5 Petitioner admits, for the record, that he, via his counsel, received the Board's written decision on either January 10 or 11, 2011. On January 12, 2011, petitioner filed a petition for judicial review with the clerk of the circuit court of Cook County, arguing that the Board's decision should be reversed and attaching a copy of that decision. In his "Notice of Filing" accompanying the petition, petitioner stated that he served his petition upon the parties involved by "placing same into the U.S. Postal Service mail receptacle in Chicago, Illinois at or before 5:00 pm on January 11, 2011." In his "Service List," petitioner listed the Board and its three members and stated that each was served "c/o: James Scanlon, General Counsel, 69 W. Washington St., 8th Floor, Chicago, Illinois 60602"; petitioner also listed objectors and stated that each was served "c/o: Thomas A. Jaconetty, Esq., Attorney for Objectors, 33 North La Salle Street, Suite 3300, Chicago, Illinois 60602."
¶ 6 Also on January 12, 2011, petitioner filed a "Notice of Emergency Motion" to set a hearing date on his petition for January 14, 2011. In an order, the trial court instructed the Board and its members to *24 file their motion to dismiss on January 14, 2011, and told petitioner to submit his response via email to the court on January 17, 2011 (a court holiday), and file it on January 18, 2011. The court then set a hearing date for January 18, 2011, at 2 p.m.
¶ 7 In their motion to dismiss, the Board and its members argued that petitioner failed to effectuate proper service of his petition as required by section 10-10.1 of the Illinois Election Code (Code) (10 ILCS 5/10-10.1 (West 2010)), because he served their attorney and not them personally, and, thus, that the trial court lacked jurisdiction to hear the petition. Objectors, too, filed a motion to dismiss for lack of subject matter jurisdiction.
¶ 8 On January 18, 2011, at 1:55 p.m. (immediately preceding the hearing), in addition to filing his response to the Board's motion to dismiss, petitioner filed a "Supplemental Certificate of Service and Corrected Notice of Filing-Corrected Certificate of Service." In this filing, petitioner "corrected" the date when he notified the parties that he filed his petition for judicial review with the court, stating it was January 12, 2011 and not January 11, 2011, as he originally claimed. He also included a "corrected" certificate of service, stating the he served the parties listed in his "Service List" by "certified mail-return receipt requested," as well as by "hand delivering copies of same" to them before 5 p.m. on January 12, 2011. Attached to this was a "Service List," identical to the original one petitioner filed with his petition, listing the Board and its members as served "c/o: James Scanlon" and objectors as served "c/o: Thomas A. Jaconetty, Esq." Petitioner further filed, at the same time, a "Supplemental Certificate of Service," certifying that he served objectors, each individually, with a copy of his petition by certified mail-return receipt requested on January 14, 2011.
¶ 9 Arguments were then heard before the trial court. At their conclusion, the court entered an order on January 18, 2011 granting both the Board's and objectors' motions to dismiss for the "reasons stated in open court, including improper service on the Board and [o]bjectors." Ultimately, the court held that it "lack[ed] subject-matter jurisdiction" over petitioner's cause.
¶ 10 Later that day, at 4:20 p.m., petitioner filed with the court a document titled "Section 10-10.1 Proof of Service." In it, petitioner stated that he served a copy of his petition "upon all Respondents by CERTIFIED MAIL-RETURN RECEIPT REQUESTED" on January 18, 2011. (Emphasis in original.) However, the only "Respondents" he indicated were the Board and its members, not objectors. Petitioner listed the address for each as "69 W. Washington Street," and for the first time did not serve them "c/o: James Scanlon." Attached to this document were photocopies of four certified mail receipts, one for the Board and one for each member, all dated January 18, 2011.
¶ 11 Then, on January 24, 2011, petitioner filed another document titled "Section 10-10.1 Proof of Service" with the court. In this document, petitioner stated that he served a copy of his petition "upon all Respondents" by certified mail-return receipt requested "a third time, on January 18, 2011." Petitioner attached the return receipt cards for the Board, the three members and objector Raddatz; he did not list objector Holst nor did he include any receipt card from him.
¶ 12 On January 26, 2011, petitioner filed his Notice of Appeal with our court.
*25 ¶ 13 ANALYSIS
¶ 14 On appeal, petitioner makes several contentions. First, he claims that sections 10-10 and 10-10.1 of the Code are unconstitutional because their short time frames deprive aggrieved parties of meaningful judicial review and violate equal protection. He then asserts that he in fact timely filed his petition and complied with the service requirements of the Code. Finally, he urges that, if we were to find that the trial court did, indeed, have subject matter jurisdiction over his cause, we should also reverse on the merits to find that the Board's decision here was improper. We disagree with all his contentions.
¶ 15 We must begin by noting that petitioner's cause is technically moot. The existence of an actual case or controversy is essential to our appellate jurisdiction. See In re Andrea F., 208 Ill.2d 148, 156, 280 Ill.Dec. 531, 802 N.E.2d 782 (2003); Richardson v. Rock Island County Officers Electoral Board, 179 Ill.2d 252, 256, 227 Ill.Dec. 940, 688 N.E.2d 633 (1997) (the function of our court is to decide controverted issues). Thus, a court of review will not generally decide cases that are moot. See Andrea F., 208 Ill.2d at 156, 280 Ill.Dec. 531, 802 N.E.2d 782. A case is moot when it presents no actual controversy or when the legal issue involved has ceased to exist. See Andrea F., 208 Ill.2d at 156, 280 Ill.Dec. 531, 802 N.E.2d 782; Richardson, 179 Ill.2d at 256, 227 Ill.Dec. 940, 688 N.E.2d 633. The test to determine mootness is whether the issue involved in the trial court no longer exists because intervening events have rendered it impossible for the reviewing court to grant effectual relief to the complainant. See Andrea F., 208 Ill.2d at 156, 280 Ill.Dec. 531, 802 N.E.2d 782; Richardson, 179 Ill.2d at 256, 227 Ill.Dec. 940, 688 N.E.2d 633; see also Nelson v. Qualkinbush, 389 Ill.App.3d 79, 84, 329 Ill.Dec. 809, 907 N.E.2d 400 (2009) (discussing judicial review of election matter). Where the issue before the court is moot, the pending appeal is generally dismissed. See Andrea F., 208 Ill.2d at 156, 280 Ill.Dec. 531, 802 N.E.2d 782; Nelson, 389 Ill.App.3d at 84, 329 Ill.Dec. 809, 907 N.E.2d 400; see also Richardson, 179 Ill.2d at 256, 227 Ill.Dec. 940, 688 N.E.2d 633.
¶ 16 In the instant cause, the relief petitioner seeks is to have his name placed on the ballot as a candidate for office of alderman of the 45th Ward for the municipal general election to be held on February 22, 2011. However, that election has passed. So, too, then, has the issue that was involved in the trial court; it has ceased to exist. Due to this intervening event, it is simply impossible for us to grant the relief petitioner requests. As such, and without the existence of an actual controversy, the instant cause is technically moot. See, e.g., Richardson, 179 Ill.2d at 256, 227 Ill.Dec. 940, 688 N.E.2d 633 (appeal in election case asserting constitutional vagueness of statute dismissed as moot where, in part, election had already passed).
¶ 17 However, notwithstanding these general mootness rules, a reviewing court may address an otherwise moot issue pursuant to one of several exceptions: the public-interest exception, the capable-of-repetition exception, or the collateral-consequences exception. See In re Alfred H.H., 233 Ill.2d 345, 355-62, 331 Ill.Dec. 1, 910 N.E.2d 74 (2009). Regarding the public-interest exception, which is particularly applicable to election cases, mootness will be excused if there is a substantially public nature to the question involved, there is a need for an authoritative determination that will help guide our public officers, and there is a likelihood that the question will recur. See Cinkus v. Village of Stickney *26 Municipal Officers Electoral Board, 228 Ill.2d 200, 208, 319 Ill.Dec. 887, 886 N.E.2d 1011 (2008).
¶ 18 We find that the instant cause meets the public-interest exception to the mootness rules. Clearly, it involves questions of election law, "which inherently is a matter of public concern." Cinkus, 228 Ill.2d at 208, 319 Ill.Dec. 887, 886 N.E.2d 1011. And, the issue is likely to recur in future municipal elections. The sections of the Code in questionparticularly, section 10-10.1involve the most basic tenets of the specific legal procedure that must be followed to obtain review from the Board: the time allowed in which to file a petition for judicial review and the steps required to effectuate service. Therefore, an authoritative determination on these issues is desirable to guide public officers. Accordingly, we decline to dismiss the instant appeal as moot. See, e.g., Cinkus, 228 Ill.2d at 208, 319 Ill.Dec. 887, 886 N.E.2d 1011 (wherein reviewing court, pursuant to public-interest exception, chose to address election case that was otherwise technically moot because time for election had already come and gone).
¶ 19 Turning to the issues before us, then, we note that all the parties agree as to the appropriate standard of review which we must employ. As noted earlier, petitioner appeals the trial court's grant of the Board's and objectors' motions to dismiss for lack of subject matter jurisdiction. An appeal from the grant of a motion to dismiss is reviewed de novo. See DeLuna v. Burciaga, 223 Ill.2d 49, 59, 306 Ill.Dec. 136, 857 N.E.2d 229 (2006) (motion to dismiss based on defect is reviewed de novo); accord Krauss v. Board of Election Commissioners, 287 Ill.App.3d 981, 984, 224 Ill.Dec. 199, 681 N.E.2d 514 (1997). More specifically, whether a court has subject matter jurisdiction over issues resulting from a petitioner's alleged failure to comply with the Code is a question of law that, likewise, requires de novo review. See Nelson, 389 Ill.App.3d at 83, 329 Ill.Dec. 809, 907 N.E.2d 400. And, petitioner here asks us to interpret section 10-10.1 of the Codeagain, requiring de novo review. See Cinkus, 228 Ill.2d at 210, 319 Ill.Dec. 887, 886 N.E.2d 1011 (interpretation of meaning of statutory language mandates independent review by court).
¶ 20 Illinois courts do not have general jurisdiction over election cases, but may only review them pursuant to statute, namely, sections 10-10 and 10-10.1 of the Code. See Nelson, 389 Ill.App.3d at 86, 329 Ill.Dec. 809, 907 N.E.2d 400; Hough v. Will County Board of Elections, 338 Ill.App.3d 1092, 1094, 273 Ill.Dec. 621, 789 N.E.2d 795 (2003); Bill v. Education Officers Electoral Board of Community Consolidated School District No. 181, 299 Ill.App.3d 548, 551, 233 Ill.Dec. 619, 701 N.E.2d 262 (1998) (citing Allord v. Municipal Officers Electoral Board, 288 Ill.App.3d 897, 900, 224 Ill.Dec. 564, 682 N.E.2d 125 (1997)). Accordingly, the requirements mandated upon the parties as provided in these sections are jurisdictional requirements that must be followed. See Nelson, 389 Ill.App.3d at 86, 329 Ill.Dec. 809, 907 N.E.2d 400; Hough, 338 Ill.App.3d at 1094, 273 Ill.Dec. 621, 789 N.E.2d 795. "The `[f]ailure of a party to comply with any of the * * * requirements when appealing [a Board] decision invites dismissal via section 2-619 (735 ILCS 5/2-619 [(West 2010) of the Illinois Code of Civil Procedure]), for lack of subject matter jurisdiction.'" Hough, 338 Ill.App.3d at 1094, 273 Ill.Dec. 621, 789 N.E.2d 795 (quoting Bill, 299 Ill.App.3d at 551-52, 233 Ill.Dec. 619, 701 N.E.2d 262); accord Nelson, 389 Ill.App.3d at 86-87, 329 Ill.Dec. 809, 907 N.E.2d 400. Therefore, a motion to dismiss must be granted "if strict compliance with section 10-10.1 [of the Code] *27 is not demonstrated in the record." Nelson, 389 Ill.App.3d at 87, 329 Ill.Dec. 809, 907 N.E.2d 400 ("the rule of strict compliance with the * * * Code to establish subject matter jurisdiction is abundantly clear"); Rita v. Mayden, 364 Ill.App.3d 913, 917, 301 Ill.Dec. 568, 847 N.E.2d 578 (2006) (Illinois courts have no jurisdiction over election cases in which party seeking review of Board's decision did not strictly comply with Code procedure).
¶ 21 Sections 10-10 and 10-10.1 of the Code were amended in July 2010. Section 10-10, which deals with what the Board must do upon a determination regarding the validity of a petitioner's candidacy, states, in pertinent part:
"The [Board] must state its findings in writing and must state in writing which objections, if any, it has sustained. A copy of the decision shall be served upon the parties to the proceedings in open proceedings before the [Board]. If a party does not appear for receipt of the decision, the decision shall be deemed to have been served on the absent party on the date when a copy of the decision is personally delivered or on the date when a copy of the decision is deposited in the United States mail, in a sealed envelope or package, with postage prepaid, addressed to each party affected by the decision or to such party's attorney of record, if any, at the address on record for such person in the files of the [Board]." (Emphasis added.) 10 ILCS 5/10-10 (West 2010).
Section 10-10.1 allows a potential candidate, such as petitioner here, who was aggrieved by a decision of the Board and removed or prohibited from having his name placed on a ballot to secure judicial review of that decision. That section states, in pertinent part:
"The party seeking judicial review must file a petition with the clerk of the court and must serve a copy of the petition upon the [Board] and other parties to the proceeding by registered or certified mail within 5 days after service of the decision of the [Board] as provided in Section 10-10. The petition shall contain a brief statement of the reasons why the decision of the [B]oard should be reversed. The petitioner shall file proof of service with the clerk of the court." (Emphasis added.) 10 ILCS 5/10-10.1 (West 2010).
¶ 22 Clearly, then, the Code mandates that, once the Board serves its written decision upon the parties either orally at a hearing (if they are present), by personal delivery or by depositing it in the mail, a petitioner must satisfy "four explicit prerequisites to subject matter jurisdiction" and obtain judicial review of that decision. Nelson, 389 Ill.App.3d at 86, 329 Ill.Dec. 809, 907 N.E.2d 400. Specifically, he must (1) file his challenging petition with the clerk of the court within five days after the Board's service of its decision; (2) serve copies of the petition on the Board and the other parties to the proceedings by registered or certified mail within five days after the Board's service of its decision; (3) state in that petition why the Board's decision should be reversed; and (4) file proof of service with the clerk of the court. See 10 ILCS 5/10-10, 10-10.1 (West 2010); see, e.g., Nelson, 389 Ill.App.3d at 86, 329 Ill.Dec. 809, 907 N.E.2d 400; accord Hough, 338 Ill.App.3d at 1094, 273 Ill.Dec. 621, 789 N.E.2d 795 (noting that these four elements were the same under the preamended version of Code; only time factor was changed, narrowing a petitioner's time for filing and service from 10 days to 5 days); Bill, 299 Ill.App.3d at 551, 233 Ill.Dec. 619, 701 N.E.2d 262 (these are "four distinct requirements that must be complied with in order to properly confer jurisdiction upon" our courts).
*28 ¶ 23 There is no dispute in the instant cause that petitioner satisfied the first, third and fourth requirements of section 10-10.1. That is, the record demonstrates that he filed his petition for judicial review of the Board's decision with the clerk of the court within five days after the Board's service was complete, he stated in that petition the reasons why he believed the Board's decision should be reversed to allow his name to appear on the ballot, and he filed proof of service with the clerk of the court. The issue in this cause focuses instead on the second requirement of service, pursuant to which petitioner was required to serve copies of the petition on the Board and the other parties to the proceedings by registered or certified mail within five days after the Board's service of its decision upon him. To properly obtain review of his cause, then, and in accordance with the well-established rules of strict compliance with the Code, petitioner must have strictly followed the service requirement of section 10-10.1, which prescribes who must be served, how they must be served and when they must be served with his petition for judicial review.
¶ 24 First, with respect to who must be served, section 10-10.1 requires a petitioner to serve a copy of his petition upon those who are indispensable parties to his cause, namely, "upon the [Board] and other parties to the proceeding[s]." 10 ILCS 5/10-10.1 (West 2010); see Allord, 288 Ill.App.3d at 902, 224 Ill.Dec. 564, 682 N.E.2d 125 (service must occur upon all "necessary parties"). Clearly, from the statutory language, this includes the Board itself, as the entity that issued the decision which the petitioner seeks to challenge. See 10 ILCS 5/10-10.1 (West 2010); Nelson, 389 Ill.App.3d at 87, 329 Ill.Dec. 809, 907 N.E.2d 400 ("[t]here can be no doubt that section 10-10.1 requires service of the Board"); Allord, 288 Ill.App.3d at 901-02, 224 Ill.Dec. 564, 682 N.E.2d 125; Russ v. Hoffman, 288 Ill.App.3d 281, 284, 224 Ill.Dec. 204, 681 N.E.2d 519 (1997) (failure to serve board with petition deprives courts of subject matter jurisdiction to review petition). However, this also includes those individual Board members who participated in the decision, as they were the ones who actually reached the decision of the Board. See Nelson, 389 Ill.App.3d at 87, 329 Ill.Dec. 809, 907 N.E.2d 400 ("it follows that the Code requires that service must be effected on both the Board as the entity making the decision and its members who voted on the decision" (emphasis in original)); Bill, 299 Ill.App.3d at 552-53, 233 Ill.Dec. 619, 701 N.E.2d 262 (individual members of board are necessary parties who must be served under section 10-10.1, since they render the decision that determines the rights and liabilities of the parties involved in this administrative adjudication; failure to serve them results in loss of subject matter jurisdiction upon courts); accord Russ, 288 Ill.App.3d at 284, 224 Ill.Dec. 204, 681 N.E.2d 519 (service must be made upon individual board members, as they are necessary parties). And, the petitioner must also serve the objectors to his candidacy, as they, too, are indispensable parties to the litigation. See Hough, 338 Ill.App.3d at 1094, 273 Ill.Dec. 621, 789 N.E.2d 795 (those who contest candidacy comprise "other parties to the proceedings" and must be promptly served under section 10-10.1).[2]
¶ 25 Next, regarding how these necessary parties must be served, section 10-10.1 mandates that petitioner must serve a copy of his petition upon them "by registered *29 or certified mail." 10 ILCS 5/10-10.1 (West 2010). Moreover, this service must be done personally. See Hough, 338 Ill.App.3d at 1094, 273 Ill.Dec. 621, 789 N.E.2d 795. Specifically, our courts have made explicitly clear that a petitioner's service on the attorneys who represent the necessary parties involved is wholly impermissible; it is simply "not sufficient for purposes of meeting the requirements of the Code" and will result in the dismissal of the cause for lack of jurisdiction. Nelson, 389 Ill.App.3d at 87, 329 Ill.Dec. 809, 907 N.E.2d 400 (service on attorney for board did not satisfy service requirements of section 10-10.1 and, thus, dismissal of cause was proper as courts were deprived of subject matter jurisdiction); accord Hough, 338 Ill.App.3d at 1094, 273 Ill.Dec. 621, 789 N.E.2d 795 (the petitioner's service on the objectors' attorney and not on the objectors themselves did not comply with statutory requirement and resulted in dismissal of appeal); Allord, 288 Ill.App.3d at 902, 224 Ill.Dec. 564, 682 N.E.2d 125 (that candidates' attorney was served, rather than candidates personally, "is without significance" and review of appeal was precluded).
¶ 26 Finally, in addition to who and how, section 10-10.1 prescribes when the petitioner must serve the necessary parties. The section clearly states that this must be done "within 5 days after service of the decision of the [Board] as provided in Section 10-10." 10 ILCS 5/10-10.1 (West 2010). Thus, once the Board has served the petitioner with its written hearing decision declaring his candidacy invalid via section 10-10, namely, by either giving it to him in the open proceedings that led to the decision or, if he is not present, by personally delivering it to him or depositing a copy of it in the mail addressed to him or his attorney of record (see 10 ILCS 5/10-10 (West 2010)), the burden falls upon the petitioner to serve the necessary parties with his petition for judicial review within five days from that date and in accordance with the remaining requirements of section 10-10.1. See 10 ILCS 5/10-10.1 (West 2010).
¶ 27 Again, we must emphasize that the requirements imposed by the Code upon a petitioner seeking review of a Board's decision, particularly regarding filing and service as dictated in section 10-10.1, are jurisdictional and must be strictly followed or else no court may review his petition due to a lack of subject matter jurisdiction. See Nelson, 389 Ill.App.3d at 86-87, 329 Ill.Dec. 809, 907 N.E.2d 400; Hough, 338 Ill.App.3d at 1094, 273 Ill.Dec. 621, 789 N.E.2d 795; Bill, 299 Ill.App.3d at 551-52, 233 Ill.Dec. 619, 701 N.E.2d 262; Rita, 364 Ill.App.3d at 917, 301 Ill.Dec. 568, 847 N.E.2d 578.
¶ 28 In the instant cause, the record reveals that the Board met on January 7, 2011 to review and consider the hearing officer's recommended decision that petitioner's name not be printed on the ballot. Both petitioner and objectors were present and argued before the Board at this hearing. Petitioner admits that, at the conclusion of this hearing, the Board gave a verbal decision in the matterit announced during the open proceedings that it would be affirming the hearing officer's recommendation that petitioner's candidacy be declared invalid. What can be gleaned next from the record is that the Board adjourned so it could transcribe its decision in the matter in writing, as required by section 10-10 of the Code. See 10 ILCS 5/10-10 (West 2010) ("[t]he [Board] must state its findings in writing"). When the Board reconvened later on this same day to issue that written decision officially declaring petitioner's candidacy invalid, it was unclear which, if any, of the parties or their representatives were present to receive it. Therefore, *30 with some or all of the parties absent from this portion of the open proceedings, the Board chose, as per its authority under section 10-10, to serve petitioner with a copy of its decision by depositing it in the mail addressed to his counsel of record. See 10 ILCS 5/10-10 (West 2010) ("[i]f a party does not appear for receipt of the decision, the decision shall be deemed to have been served on the absent party * * * on the date when a copy of the decision is deposited in the United States mail * * * addressed to each party * * * or to such party's attorney of record"). The Board mailed its written decision to petitioner's attorney on the same date it concluded the hearing. Accordingly, the record clearly establishes that petitioner was served with the Board's decision on this dateJanuary 7, 2011.
¶ 29 Petitioner admits in his brief on appeal that his attorney received the Board's written decision in the mail on either January 10 or 11, 2011. Written at the end of the decision, following the Board members' signatures, was the following reminder to petitioner:
"NOTICE: Pursuant to Section 10-10.1 of the Election Code (10 ILCS 5/10-10.1) a party aggrieved of this decision and seeking judicial review of this decision must file a petition for judicial review with the Clerk of the Circuit Court of Cook County within 5 days after service of the decision of the Electoral Board." (Emphasis in original.)
¶ 30 According, under the time provision of section 10-10.1, petitioner had five days from January 7, 2011 to file his petition for judicial review with the clerk of the court and to serve all necessary parties with it. Indeed, the record reveals that petitioner timely filed his petition. On January 12, 2011, petitioner filed it with the clerk of the court, arguing why the Board's decision should be reversed. See 10 ILCS 5/10-10.1 (West 2010) (petitioner must state reasons for reversal). To his petition, he attached a copy of the Board's decisionclearly showing the date he was served (January 7, 2011) and the timeliness of his filing (January 12, 2011). In addition, and also as required by section 10-10.1, petitioner filed proof of service with the clerk of the court. See 10 ILCS 5/10-10.1 (West 2010).
¶ 31 However, in his proof of service, petitioner stated that he served his petition upon the parties involved by "placing same into the U.S. Postal Service mail receptacle in Chicago, Illinois at or before 5:00 pm on January 11, 2011." In his service list, regarding the "parties involved," petitioner separately listed the Board and its three members, but stated under each that he served them "c/o: James Scanlon, General Counsel, 69 W. Washington St., 8th Floor, Chicago, EL 60602." He then listed objectors Raddatz and Hoist together and stated that he served them "c/o: Thomas A. Jaconetty, Esq., Attorney for Objectors, 33 North La Salle Street, Suite 3300, Chicago, Illinois 60602."
¶ 32 From our review of the record, it is obvious that, while petitioner timely filed his petition for judicial review and even complied with three of the four mandatory requirements for such review under section 10-10.1 of the Code (i.e., timely filing, stating reasons for reversal, and filing proof of service with the court), he did not comply with the service requirement.
¶ 33 As we discussed at length above, to obtain review of his petition, a petitioner must serve the proper parties within the proper time and in the proper manner dictated by section 10-10.1. Petitioner here named all the necessary parties to this litigation: the Board, its individual members and both objectors. And, *31 he stated that he mailed his petition to them by January 11, 2010, within the five-day service time frame set by section 10-10.1. Yet, he failed to properly effectuate service in two critical, and mandatory, ways. First, petitioner stated only that he placed a copy of his petition "into [a] U.S. Postal Service mail receptacle" in order to serve the parties. However, section 10-10.1 requires that petitioner send the parties a copy of his petition "by registered or certified mail." Clearly, then, petitioner did not properly serve the Board, its members or objectors when he failed to do this. Second, petitioner also missed the mark by failing to serve the parties personally. Again, petitioner's service list shows that he served "James Scanlon, General Counsel"the attorney for the Board and its membersrather than these parties individually. Likewise, he served Thomas Jaconetty, "Attorney for Objectors," rather than Raddatz and Hoist themselves. Petitioner served these indispensable parties "care of" their attorneys at the addresses of their attorneys' offices; nowhere in his service list did petitioner list the personal (or even business) addresses of any of the parties. As we noted earlier, in the context of election cases, service to a party's attorney, rather than to a party personally, is entirely improper under the Code and directly violates section 10-10.1. See Nelson, 389 Ill.App.3d at 87, 329 Ill.Dec. 809, 907 N.E.2d 400; Hough, 338 Ill.App.3d at 1094, 273 Ill.Dec. 621, 789 N.E.2d 795; Allord, 288 Ill.App.3d at 902, 224 Ill.Dec. 564, 682 N.E.2d 125.
¶ 34 In an effort to, perhaps, clarify his actions, petitioner filed multiple documents on January 18, 2011, immediately before, as well as after, the trial court's hearing of his matter. However, none of these save his claim. Before the hearing, he filed a document entitled "Supplemental Certificate of Service and Corrected Notice of Filing-Corrected Certificate of Service." In it, he stated that he mailed his petition to the parties on January 12, 2011, not January 11, 2011 as he stated originally in his proof of service when he filed his petition with the court. This, technically, is irrelevantas we have noted, the five-day time period for service under section 10-10.1 elapsed on January 12, 2011; so, whether petitioner mailed his petition on January 11 or one day later, he was still within the proper time limit. Next, petitioner included a "corrected" certificate of service, stating that he served the parties by "certified mail-return receipt requested." However, the service list he attached to this was identical to the original one he filed with his petition, listing that he served the Board and its members "c/o: James Scanlon, General Counsel" and objectors "c/o: Thomas Jaconetty, Esq., Attorney for Objectors." Again, service to a necessary party's attorney in an election case does not equate to proper service of the necessary party itself under section 10-10.1. And, immediately before his hearing, petitioner filed a "Supplemental Certificate of Service," stating that he served objectors, each individually, with a copy of his petition by certified mail-return receipt requested "on January 14, 2011." While in this document, petitioner finally states he served objectors not via their attorney but, rather, personally at their own addresses, and that he did so by certified mail-return receipt requested, he clearly did not do so by January 12, 2011, within the five-day time limit prescribed by section 10-10.1; moreover, he did not mention any such similar service upon the Board or its members.
¶ 35 After the trial court had found it lacked subject matter jurisdiction due to petitioner's improper service upon the parties, petitioner continued to file more documents in his effort to effectuate proper service. However, just as those he filed *32 before his hearing, none of these even remotely indicate that he complied with the service requirements of section 10-10.1. His first posthearing document was entitled "Section 10-10.1 Proof of Service." In this, he stated that he served a copy of his petition upon all the parties by certified mail-return receipt requested "on January 18, 2011" (the day of the hearing), and attached photocopies of four certified mail receipts all dated January 18, 2011. For the first time, the service list indicated that petitioner served the Board and each member individually, and not "in care of" their attorney. However, again, petitioner was outside the five-day time limit for service when he did this. Petitioner's second, and last, posthearing filing came on January 24, 2011, several days after the trial court's decision. Identically entitled "Section 10-10.1 Proof of Service," he stated that he served a copy of his petition "upon all Respondents" by certified mail-return receipt requested "a third time, on January 18, 2011." This time, while he attached return receipt cards for the Board, the members and objector Raddatz, he did not attach a card for objector Holst or even named him as having been served. Again, then, petitioner failed to complete proper service upon all the necessary parties via certified mail within the five-day time frame of section 10-10.1.
¶ 36 Accordingly, precisely due to petitioner's failure to comply with the strict service requirements of the Code regarding time and method of service, the trial court did not have subject matter jurisdiction over his petition for judicial review and, likewise, we do not have similar jurisdiction to entertain his appeal.
¶ 37 Petitioner presents a wide array of claims on appeal which he believes entitles the merits of his cause to be reviewed. We find that none of these, however, can effectuate this in light of the rules we have discussed and the record before us.
¶ 38 Petitioner's first and main argument is that the time for filing his petition for judicial review did not begin to run on January 7, 2011, the date the Board deposited its written decision in the mail, but, rather, on the date he received it, which he states was January 10 or 11, 2011. Pursuant to this claim, petitioner asserts that his five-day window to file and serve his petition under section 10-10.1 did not expire, then, until January 18, 2011, when the trial court reopened following a weekend and a Monday holiday. Thus, he claims that his additional prehearing and posthearing filings regarding service should save his petition for review. He also blasts the Board as being "delinquent" for failing to provide proof of service of its decision and for failing to "adhere to its custom and practice of serving documents by fax or e-mail delivery."
¶ 39 Petitioner's argument is wholly unsupported by any case law or legal precedent. Indeed, he presents us with none. To the contrary, sections 10-10 and 10-10.1 are plain, ordinary and unambiguous. If a party is not present at the open proceedings when the Board issues its written decision, the Board is permitted, within its statutory purview, to either personally deliver its decision or mail that decision to the party or his attorney of record. Under section 10-10, if the Board chooses to mail its decision, "the decision shall be deemed to have been served * * * on the date when" the Board deposits a copy of it "in the United States mail, in a sealed envelope or package, with postage prepaid." 10 ILCS 5/10-10 (West 2010). And, under section 10-10.1, it is "within 5 days after service of the decision" by the Board in which petitioner must file his petition for judicial review and properly serve it upon the necessary parties. 10 *33 ILCS 5/10-10.1 (West 2010). Thus, the time frame and the requirements upon the Board prescribed by the Code are unmistakably clear; time began to run on the day the Board mailed its decision (January 7, 2011), not on the day petitioner received it, and there is no requirement upon the Board to file any sort of proof of service with respect to this mailing or to perfect service by any means other than depositing it in the mail, such as by fax or e-mail. See, e.g., Land v. Board of Education of the City of Chicago, 202 Ill.2d 414, 421-22, 269 Ill.Dec. 452, 781 N.E.2d 249 (2002) (where the statutory language is plain, ordinary and unambiguous, we are bound to enforce the law as written and may not resort to other tools of statutory construction).
¶ 40 Next, petitioner claims that he "substantially" complied with the service requirements of section 10-10.1 by serving the parties' attorneys by January 12, 2011, within the five-day statutory time limit. He further attempts to distinguish several cases which we have highlighted herein. Again, petitioner's claim cannot stand. We have already discussed at length that strict compliance with the Code is required; this rule has been repeatedly tested and is now well established. See Nelson, 389 Ill.App.3d at 86-87, 329 Ill.Dec. 809, 907 N.E.2d 400; Hough, 338 Ill.App.3d at 1094, 273 Ill.Dec. 621, 789 N.E.2d 795; Bill, 299 Ill.App.3d at 551-52, 233 Ill.Dec. 619, 701 N.E.2d 262; Rita, 364 Ill.App.3d at 917, 301 Ill.Dec. 568, 847 N.E.2d 578. The burden was entirely on petitioner to meet every mandate of the Code in order to secure review of his petition. See Bill, 299 Ill.App.3d at 553, 233 Ill.Dec. 619, 701 N.E.2d 262 ("[A]ppellants are well advised to serve and notify all * * * necessary parties in order to perfect their appeal. Failure to exercise abundant caution in this matter compels the termination of an appellant's case even before it has begun. Such is the unfortunate consequence" of this failure to strictly comply with the Code.). One of these requirements is the personal, individual service of all necessary partiesnot their attorneys. See Nelson, 389 Ill.App.3d at 87, 329 Ill.Dec. 809, 907 N.E.2d 400; Hough, 338 Ill.App.3d at 1094, 273 Ill.Dec. 621, 789 N.E.2d 795; Allord, 288 Ill.App.3d at 902, 224 Ill.Dec. 564, 682 N.E.2d 125. Thus, that petitioner may have served the attorneys for the Board, its members and objectors with his petition by January 12, 2011 is, at best, wholly irrelevant and, at worst, wholly impermissible. The undeniable fact remains that he failed to timely serve these parties personally.
¶ 41 Petitioner's last argument is that section 10-10.1 of the Code is unconstitutional because the five-day time period to file and serve a petition for judicial review of a Board's decision is too short. He further insists that the section violates due process and equal protection, and cites the Administrative Review Law (735 ILCS 5/3-103 (West 2010)) and Chin v. Department of Public Aid, 78 Ill.App.3d 1137, 34 Ill.Dec. 460, 398 N.E.2d 135 (1979), while advocating for the imposition of a longer statutory time period.
¶ 42 This argument is invalid for several reasons. First, petitioner has no standing to challenge the constitutionality of the filing portion of section 10-10.1. A party has standing to challenge the constitutionality of a statute only when he has suffered under it. See In re Veronica C., 239 Ill.2d 134, 150, 346 Ill.Dec. 1, 940 N.E.2d 1 (2010) (party lacked standing to challenge constitutionality of statute because she was not adversely affected by its operation); accord Cwik v. Giannoulias, 237 Ill.2d 409, 423, 341 Ill.Dec. 476, 930 N.E.2d 990 (2010) (party has standing to *34 challenge constitutionality of statute only when it negatively impacts his own rights). Here, the record establishes that petitioner timely filed his petition for judicial review under section 10-10.1, when he did so with the court on January 12, 2011. Moreover, as we have discussed, his petition was not only timely filed, but also properly included, as per the statute's mandate, a brief statement of the reasons why the Board's decision should be reversed and proof of service filed with the court. Clearly, petitioner strictly complied with this portion of section 10-10.1 and was not aggrieved by it in any way.
¶ 43 We consider that petitioner might have standing to challenge the service portion of section 10-10.1. It was his errors in relationship to this portion that divested the court of subject matter jurisdiction. However, his assertions that the Administrative Review Law should control this portion of the Code to afford more time for service and his reliance on Chin are completely misplaced.
¶ 44 We begin by reiterating the guiding principles of our laws regarding statutory interpretation. A statute is presumed constitutional, and courts must construe a statute so as to uphold its constitutionality when it is reasonably possible to do so. See Irwin Industrial Tool Co. v. Department of Revenue, 238 Ill.2d 332, 340, 345 Ill.Dec. 20, 938 N.E.2d 459 (2010). The party challenging the statute bears the burden of clearly proving its invalidity and establishing a constitutional violation. See Irwin Industrial, 238 Ill.2d at 340, 345 Ill.Dec. 20, 938 N.E.2d 459.
¶ 45 Arguments similar to petitioner's that the Administrative Review Law should somehow control the provisions of the Code have already been addressed by our courts. Essentially, petitioner here argues that, since the Administrative Review Law allows 35 days for aggrieved parties to file their petitions for judicial review (see 735 ILCS 5/3-103 (West 2010)), the Code must follow suit in order to protect against due process and equal protection violations. However, our courts have specifically examined the possible application of the Administrative Review Law to the Code and concluded that in only one instance does it apply: with respect to section 10-10.1 of the Code, where a party is aggrieved by a Board decision regarding section 18-120 of the Property Tax Code (35 ILCS 200/18-120 (West 2010)). See Bill, 299 Ill.App.3d at 554-55, 233 Ill.Dec. 619, 701 N.E.2d 262; see, e.g., Nelson, 389 Ill.App.3d at 88, 329 Ill.Dec. 809, 907 N.E.2d 400. Only then does the Code refer the party to the time and procedures prescribed by the Administrative Review Law. See Bill, 299 Ill.App.3d at 554-55, 233 Ill.Dec. 619, 701 N.E.2d 262. Specifically, "[i]n examining section 10-10.1 of the Code, there exists no similar express language indicating that the Administrative Review Law should apply." Bill, 299 Ill.App.3d at 554, 233 Ill.Dec. 619, 701 N.E.2d 262. To the contrary, our courts have consistently held that "the Administrative Review Law will not dictate what procedural requirements must be followed in order to appeal a decision rendered by the [Board]." Bill, 299 Ill.App.3d at 555, 233 Ill.Dec. 619, 701 N.E.2d 262; accord Nelson, 389 Ill.App.3d at 88, 329 Ill.Dec. 809, 907 N.E.2d 400 (the Administrative Review Law "`has no direct bearing upon the clearly drawn procedural mechanisms that must be followed when a[ Board] decision is appealed under [section 10-10.1].' [Bill, 299 Ill.App.3d at 556, 233 Ill.Dec. 619, 701 N.E.2d 262]").
¶ 46 Finally, Chin does not support petitioner's arguments. Petitioner states that Chin stands for the proposition that "at least seven days after actual delivery of an administrative agency decision, or nine *35 days after mail delivery," are necessary for an aggrieved party to effectuate his rights. This is totally incorrect, and Chin is entirely distinguishable from the instant cause. First, Chin involved the application of provisions of the Public Aid Code and the Administrative Review Law; nowhere was the Code involved. See Chin, 78 Ill.App.3d at 1139, 34 Ill.Dec. 460, 398 N.E.2d 135. Moreover, Chin actually supports our findings, rather than petitioner's, regarding when service is effectuated. That is, the Chin court reviewed an administrative decision which terminated a doctor's participation in a medical assistance program. One of the issues raised before the court was when the 35-day time period for filing a complaint under the Administrative Review Law, which was the applicable statute, began to run. The Chin court noted that section 4 of the then-current version of the Administrative Review Law stated that "a decision shall be deemed to have been served either when personally delivered or when deposited in the United States mail, in a sealed envelope or package, with postage prepaid, addressed to the party affected thereby at his last known residence or place of business." (Internal quotation marks omitted.) Chin, 78 Ill.App.3d at 1139, 34 Ill.Dec. 460, 398 N.E.2d 135. The Chin court ultimately determined that this plain and unambiguous statutory language made clear that the time period began to run when the decision was deposited in the mail and not, as the plaintiff insisted, when he received the decision. See Chin, 78 Ill.App.3d at 1139-40, 34 Ill.Dec. 460, 398 N.E.2d 135 (citing with approval this same conclusion as found in Thompson v. Illinois Civil Service Comm'n, 63 Ill.App.3d 153, 19 Ill.Dec. 783, 379 N.E.2d 655 (1978)). Finally, the Chin court also address the plaintiff's insistence that his constitutional rights were violated by such a reading of the service requirement. It concluded that his argument failed. Examining other cases holding that shorter time periods for filing (for example, seven and nine days) were constitutionally valid, the Chin court found the 35-day period constitutional as well, and concluded that as long as the party seeking review receives notice within the statutory time period, that period should be upheld. See Chin, 78 Ill.App.3d at 1140-41, 34 Ill.Dec. 460, 398 N.E.2d 135.
¶ 47 Thus, it is apparent that, not only did Chin not involve the Code, but it also presents itself as inherently contradictory to petitioner's arguments here. The applicable language regarding service in Chin is almost identical to the language regarding service in section 10-10.1 of the Code, which predominates this cause. Just as the Chin court found from this language that service begins to run on the date a decision is placed in the mail and not from when it is received, we, too, find that service here began to run on the date when the Board placed its decision in the mail on January 7, 2011, and not from when petitioner received it on January 10 or 11, 2011. And, any allegation that his constitutional rights are somehow violated by this interpretation is meritless. Petitioner received notice of the Board's decision, he had time to file and serve his petition for judicial review within the statutory five-day time period of section 10-10.1, and he timely filed it and (attempted to) served it. He simply did not carry through his burden by completing proper service in the manner prescribed by section 10-10.1 within the time period as well, which required certified mail and service upon the necessary parties individually.
¶ 48 Ultimately, petitioner's failures in strictly following the service requirements *36 of section 10-10.1 of the Code divested the trial court of subject matter jurisdiction to consider his petition for judicial review of the Board's decision to invalidate his candidacy and bar his name from appearing on the ballot. As the trial court did not have jurisdiction over the matter, we, too, lack jurisdiction to review the merits of his appeal.[3] Therefore, we hold that the trial court properly granted the Board's and objectors' motions to dismiss petitioner's cause, and we must dismiss the instant appeal.
¶ 49 CONCLUSION
¶ 50 Accordingly, for all the foregoing reasons, we affirm the order of the trial court and dismiss the instant appeal.
¶ 51 Order affirmed; appeal dismissed.
Justices HOWSE and QUINN concurred in the judgment and opinion.
NOTES
[1] Pursuant to the parties' discussion of this point in their briefs, there is a clear indication that one, more or all of them were absent at the time the Board reconvened on this day to issue its written decision.
[2] Another necessary party required to be served would be the candidate himself, were, for example, an objector seeking judicial review of a board decision. See Allord, 288 Ill.App.3d at 902-03, 224 Ill.Dec. 564, 682 N.E.2d 125.
[3] Accordingly, we do not consider petitioner's substantive claims, namely, that the hearing officer improperly vacated its default order when objectors initially failed to appear before him, and that the presence of objectors' counsel's nonattorney clerical legal assistant before the hearing officer violated certain rules concerning the unauthorized practice of law. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3348686/ | [EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.]MEMORANDUM OF DECISION ONMOTION FOR DEFICIENCY JUDGMENT
CT Page 5490
After having obtained a judgment of strict foreclosure, the plaintiff moved for a deficiency judgment. At a deficiency judgment hearing, the court must determine the fair market value of the property on the date of vesting of title in the plaintiff. In this case title vested in the plaintiff on November 2, 1993. The amount of the debt was $493,859.44.
At the hearing the plaintiff's appraiser testified that in his opinion the fair market value of the property as of November 2, 1993 was $185,000. On the other hand, defendant Joseph P. Kennedy, one of the owners of the property (who has had a great deal of real estate experience and who is also an appraiser) testified that the plaintiff's figures were too low. In his opinion the fair market value of the property was $300,000. After hearing all the evidence, the court finds the defendant Kennedy's testimony to be more credible. Accordingly, the court finds the fair market value on the property as of November 2, 1993 to be $300,000. Accordingly, the deficiency is $193,859.44.
The plaintiff is claiming interest on the debt from September 20, 1993, but the court finds the plaintiff is not entitled to it. Mr. Presutti, a majority owner of the property testified that in the spring and summer of 1990 all of his loans in other banks were called. Thus he was effectively broke. He went to the plaintiff bank and told the people in charge to take the property back. The property was offered to the bank several times after that, but the bank did not accept the offer. Under the circumstances of this case the court believes it to be inequitable to require the defendant to pay interest. Citicorp Mortgage, Inc. v. Upton,42 Conn. Sup. 302 (1992).
The plaintiff seeks additional attorney's fees in the amount of $2,000. The sum of $10,200 has already been awarded. The court finds an additional amount of $1,000 would be fair.
The plaintiff seeks an additional appraisal fee of $2,300. An appraisal fee of $650 has already been awarded. An additional appraisal fee of $650 would be fair and is hereby awarded. Costs in the amount of $1,864.30 (including the additional $650 appraisal fee) appear to be fair. CT Page 5491
Accordingly, judgment may enter for the plaintiff as follows:
Deficiency Judgment $193,859.44
Attorney's fees (Original award $10,200 Additional award 1,000) 11,200.00
Costs (Including additional appraisal fee $1,214.30 650.00 1,864.30
$206,923.74
Allen, State Trial Referee | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/2552726/ | 16 A.3d 633 (2011)
STATE
v.
SMITH.
No. 10-033.
Supreme Court of Vermont.
January 27, 2011.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1750469/ | 650 So. 2d 1347 (1995)
Brenda TATE
v.
SOUTHERN JITNEY JUNGLE COMPANY.
No. 92-CA-0370.
Supreme Court of Mississippi.
January 19, 1995.
Rehearing Denied March 23, 1995.
Angela Miller, Miller & Miller, McComb, for appellant.
F. Hall Bailey, Wise Carter Child & Caraway, Jackson, for appellee.
En banc.
BANKS, Justice, for the Court:
This premises liability case is on appeal from Pike County Circuit Court where the trial court granted a directed verdict in favor of Jitney. The court found that the counter in the deli upon which Tate injured her knee was open and obvious and that Jitney was entitled to a judgment as a matter of law. We have concluded that the condition here in question may be found to be unreasonably dangerous and, if so, the fact that it is readily observable, or "open and obvious," is but a fact to be considered by the jury in assessing *1348 damages under our comparative fault doctrine. We reverse and remand for further proceedings.
I.
On March 26, 1990, Brenda Tate (Tate), her husband, O.C., and daughter, Sabrina, visited the deli at the Southern Jitney Jungle (Jitney) store in McComb for lunch. While in the deli, Tate bumped her knee on the corner of a metal raised strip which ran horizontally at knee level around the deli counter. Brenda Tate filed a complaint against Jitney, alleging that the defendant had actual knowledge that the position of the strip was dangerous to persons passing. Tate alleged, in the alternative, that even if the defendant lacked actual knowledge of the defective condition of the counter, the condition had existed for so long a time prior to the happening of the accident to plaintiff, that defendant, in the exercise of due care, could and should have had such knowledge and notice.
Jitney filed its answer denying that it was negligent; however, it admitted that on or about March 26, 1990, the plaintiff reportedly struck her knee on the counter of the deli while she was in Jitney. Jitney asserted affirmatively that (1) if Tate injured her knee, she was guilty of negligence in failing to keep a proper lookout and failing to exercise reasonable care for her own safety; and (2) Tate's negligence was the sole proximate, or at least a contributing, cause of the accident in question.
As her first witness in her case in chief, Tate testified that on the day of the accident, March 26, 1990, she entered the store with her husband, O.C. Tate, and daughter, Sabrina Tate, to eat lunch at the deli. She and her family often visited the store to either eat or buy groceries. As Tate made her selection and proceeded to the cash register, she remembered that she had forgotten to get iced tea. Just as she turned around the corner to get the tea, she bumped her right knee on the sharp edge of the metal strip.
Immediately after the accident, Tate informed the cashier and deli manager, Kenneth Jennings, that she injured herself on the edge of the counter. Tate testified that Jennings instructed her to report the incident and showed her where to go, and said, "You need to report it because I have told them before that this spot needs to be fixed because someone else have (sic) gotten hurt here." Tate reported the accident to Kim Norman, the customer service representative, who placed an ice pack on Tate's leg and called the store manager. Tate stated that she declined the store manager's offer to go to the emergency room.
Tate testified that later that day, upon returning to work, the pain became unbearable and she decided to have the knee checked at Southwest Mississippi Regional Medical Center emergency room. She received a shot for pain, a temporary cast, and a prescription for pain and was told to see her family doctor for follow-up treatment. Tate's family doctor, Dr. Alva Dillon, referred her to Dr. Richard Conn, an orthopedist, who later performed surgery on her knee.
Tate testified that after the injury, her knee would give away without warning and on one occasion in February 1991, she fell and fractured her left ankle. In addition to not being able to continue working and contributing to the family income, she was not able to perform her usual housework and to drive the car as often as she had prior to the injury, and she experienced weight gain.
On cross-examination, Tate testified that she had visited Jitney numerous times before, had eaten at the deli many times, and had never hit her knee. In addition, she stated that nothing obscured her view of the deli counter as she walked through the line. However, Tate testified that there was nothing in place to warn her of the dangerous corner of the strip around the counter nor was there anything to indicate that the corner was capable of causing serious injury.
Tate's husband, O.C. Tate, testified that after the accident he noticed that the deli corner had a sharp pointed edge on it where his wife hit her knee. O.C. testified that there was nothing hiding or concealing the *1349 corner of the deli counter on the day of the accident.
Tate called Kenneth Jennings, deli manager, as an adverse witness, who testified that the deli counter had not changed during the three and one-half year period prior to Tate's accident. He stated that he recalled that prior to the accident in question, one other person bumped her knee, but that person kept on going and did not report it. Jennings noted that the one previous incident at the deli should be compared to the number of times customers bump into or knock down displays throughout the store, which happens about once or twice a week.
Tate also called Kim Norman, as an adverse witness, who testified that on the day of the accident, "Someone said that [Tate] had hit her knee and I wound up over there, I usually do the reports, and I just filled out the report saying that she had bumped her knee on the deli counter. I got some ice and we put it on her knee, and that's basically all I remember." She stated she sent the report to Warren Magee, Jitney's loss prevention man.
After Norman's testimony, the plaintiff rested and the defendant moved for a directed verdict. In granting the directed verdict, the court stated:
In Kroger [Inc. v. Ware, 512 So. 2d 1281 (Miss. 1987)], the Court held that a business invitee that a business entity owes an invitee or visitor the duty to exercise ordinary care keeping the premises in a reasonably safe condition or warning of dangerous conditions not readily apparent, which the owner or occupant knows of or should know of in the exercise of reasonable care. Now, here we have no condition that was dangerous, or there was no no condition that was inherently dangerous or it appears that the counter and the corner of the counter was open and obvious and could be observed and on at least twenty different occasions this Plaintiff had seen the counter, and had gone by without being injured, and there the Court in Kroger v. Ware held there is no liability for injuries where the condition is not dangerous, or where the condition is or should be known or obvious to the invitee. In this case in that case Mrs. Ware, in this case Mrs. Tate. In that case Mrs. Ware encountered a condition which was permanent in place, known and obvious, a factual setting bearing no resemblance to cases in which the Court had found a jury question to exist, and they held that there must be some evidence of negligence given a jury before it can determine that a defendant is guilty of negligence, and here there was none, and in that case all nine justices concurred, and in the McGovern v. Scarborough [566 So. 2d 1225 (Miss. 1990)] case this case is cited as one of the two principle cases upon which Judge Boggan relied when he directed a verdict in favor of the business owner. I must admit that I was, I also thought that if you got hurt in a store you ought to be able to sue and let the jury decide whether something was dangerous or whether it was inherently dangerous and so forth, but in Kroger v. Ware the Supreme Court decided I was wrong; well I try not to make the same mistake twice, ... I'm going to sustain the motion for a directed verdict.
In the court's final judgment filed March 19, 1992, a directed verdict was granted for Jitney and the case was dismissed with prejudice. This appeal followed.
II.
This Court has determined that where a motion for a directed verdict is made at the close of the plaintiff's case-in-chief, the trial court should look "solely to the testimony on behalf of the opposing party; if such testimony, along with all reasonable inferences which can be drawn therefrom, could support a verdict for the party, the case should not be taken from the jury." Biloxi Regional Medical Center v. David, 555 So. 2d 53, 57 (Miss. 1989) (quoting Hall v. Mississippi Chemical Express, Inc., 528 So. 2d 796, 798 (Miss. 1988)). The motion should be denied unless the plaintiff's evidence is so lacking that reasonable jurors would be unable to *1350 reach a verdict in favor of that party. Wilner v. Mississippi Export Railroad Co., 546 So. 2d 678, 681 (Miss. 1989). On review, this Court must consider the evidence in that same light. Guerdon Industries, Inc. v. Gentry, 531 So. 2d 1202, 1205 (Miss. 1988).
Tate contends that since the defective corner of the counter was not known or open and obvious, Jitney had a duty to warn her of the hidden or concealed perils of which it knew or should have known in the exercise of reasonable care. Tate argues that since there was testimony that another customer bumped her knee on the counter, Jitney knew or should have known of the dangerous condition of the counter. Tate relies on Bell v. City of Bay St. Louis, 467 So. 2d 657 (Miss. 1985), to support the proposition that whether or not the sharp edges of the counter were an unreasonably dangerous condition is a jury question.
In Bell, the plaintiff slipped and fell on grass and debris left on a city sidewalk by city maintenance personnel and broke her legs. The city denied that the debris was left on the sidewalk. Bell, 467 So.2d at 659. At trial, the court granted the city's request for a jury instruction that advised the jury that contributory negligence on the plaintiff's part would bar recovery, even if the city was found to have been negligent. Id. The Court held that under Mississippi's comparative negligence statute, contributory negligence diminishes but does not bar a plaintiff's recovery. Bell, 467 So.2d at 664. In reaching its decision, the Court explained that "[w]here a defendant negligently creates an unreasonably unsafe condition in an area where the plaintiff has every right to be, that defendant may not escape liability by arguing that the condition was open and obvious." Id. at 664. Moreover, "conditions are either open and obvious or not open and obvious. Common sense and experience negates an either/or categorization of such conditions. Just how open and obvious a condition may have been is a question for the jury, in all except the clearest cases." Id. (citing Lancaster v. City of Clarksdale, 339 So. 2d 1359, 1360 (Miss. 1976); Wilson v. Kirkwood, 221 So. 2d 79, 81 (Miss. 1969)).
In response, Jitney argues that in a situation as in the instant case, where the condition encountered by Tate was permanent, in place, known and obvious, there is no factual basis supporting a negligence claim that is proper for resolution by a jury. Jitney asserts that since Tate had previously visited the Jitney deli at least twenty times, she should have exercised better care for her own safety.
Jitney asserts that there are numerous other cases to support its proposition that the state of the law in Mississippi is such that an invitee cannot recover where there is a permanent, open and obvious object. See e.g. Mercy Regional Medical Center v. Doiron, 348 So. 2d 243 (Miss. 1977) (steps without handrail); Stanley v. Morgan & Lindsey, Inc., 203 So. 2d 473 (Miss. 1967) (sidewalk seven and one-half inches above parking lot); City of Greenville v. Laury, 172 Miss. 118, 159 So. 121 (1935) (crevice in street approximately one to three inches wide and eighteen inches to two feet deep). In each of these cases, this Court found that the object or condition causing the harm was not of such a character as to make the premises unsafe for use by persons exercising reasonable care for their own safety. "[W]here the invitee knows or should know of an apparent danger, no warning is required." Wilson v. Allday, 487 So. 2d 793, 795 (Miss. 1986); Stanley v. Morgan & Lindsey, Inc., 203 So. 2d 473 (Miss. 1967). The invitee is required to use that degree of care and prudence that a person of normal intelligence would exercise under the same or similar circumstances. General Tire & Rubber Co. v. Darnell, 221 So. 2d 104, 107 (Miss. 1969).
More specifically, Jitney contends that a trilogy of past open and obvious decisions rendered by the Court requires the Court to sustain the trial court's grant of a directed verdict against Tate. McGovern v. Scarborough, 566 So. 2d 1225 (Miss. 1990); Kroger, Inc. v. Ware, 512 So. 2d 1281 (Miss. 1987); Bell v. City of Bay St. Louis, 467 So. 2d 657 (Miss. 1985).
In McGovern v. Scarborough, 566 So. 2d 1225 (Miss. 1990), this Court affirmed a directed *1351 verdict in favor of a store owner after the customer tripped on the store's threshold and received injuries. The evidence revealed that the store owner had previously replaced the door's threshold, which had the effect of raising the threshold three quarters of an inch. In reaching its decision, this Court noted that a case should never be taken from a jury "if, from the facts favorable to the party adversely affected together with all reasonable inferences therefrom, it can be said that a rational jury could find in his favor." Id. at 1228. However, the Court determined that the evidence was not sufficient to support a finding that the doorway in question constituted a dangerous condition. The Court reasoned that
A person entering the building from the sidewalk through this door was obliged to step up two to three inches in any event. By any stretch of the imagination can it be said that the entrance to this building was not reasonably safe? And, it is impossible to envision this doorway as creating a danger of some kind, in some way different from thousands of like doorways. Moreover, it was open and obvious.
Id. at 1228. (emphasis in original).
In Kroger, a store customer who tripped and fell in the parking lot of a Kroger store, testified that she was aware of the curb, but fell when her trailing foot failed to clear the curb, which was approximately six inches high and six inches wide. Kroger, 512 So.2d at 1282. The jury returned a verdict in favor of the plaintiff and Kroger appealed. This Court reversed and rendered finding that the plaintiff failed to show any negligence other than her own. Id. The Court reasoned that "Ware encountered a condition, which was permanent, in place, known, and obvious a factual setting bearing no resemblance to cases in which we have found a jury question to exist." Id.
The trial court, relying on Kroger and McGovern, supra, found that the counter upon which Tate injured her knee was open and obvious and granted a directed verdict for the defendant. In Tharp v. Bunge Corp., 641 So. 2d 20 (Miss. 1994), however, we recognized that the open and obvious doctrine is not a complete defense to negligent actions in premise liability cases where the condition complained of is unreasonably dangerous.
This case can be distinguished from Kroger, McGovern, and other cases which Jitney relies on. Those cases involved dangers which are usual and which customers normally expect to encounter on the business premises, such as thresholds, curbs and steps. Here there is a claimed physical defect on the defendant's premises condition which may be found to be unusual and unreasonably dangerous, notwithstanding the fact that it might have been observable.
The deli counter, as evidenced by the photographs, has sharp, pointed, and/or jagged edges. The edge in question is under the counter, at knee level and out of the normal line of sight from which one is generally expected to observe or expect as he or she exercises normal care for his or her safety. It does not appear to be a condition that one would normally encounter. Leaving aside the question whether on these facts the condition could be deemed "open and obvious" as a matter of law, there is, at a minimum, a jury question of Jitney failing to maintain the premises in a reasonably safe condition. The trial court erred, therefore, in granting a directed verdict. Tharp, 641 So.2d at 27.
III.
For the foregoing reasons the judgment is reversed and this matter is remanded to the trial court for further proceedings.
REVERSED AND REMANDED.
SULLIVAN, PITTMAN, and McRAE, JJ., concur.
DAN M. LEE, P.J. concurs in result only.
SMITH, J., dissents with separate written opinion joined by HAWKINS, C.J., and PRATHER, P.J., and JAMES L. ROBERTS, Jr., J.
*1352 SMITH, Justice, dissenting:
This Court should never have decided Tharp v. Bunge Corp., 641 So. 2d 20 (Miss. 1994) in the manner that it did. That decision somewhat curtailed a long standing, clearly defined defense which property owners could rely upon if they kept their premises in a reasonably safe condition and when made aware of a dangerous condition not readily apparent to an invitee, were required to promptly warn invitees of such condition. Caruso v. Picayune Pizza Hut, Inc., 598 So. 2d 770, 773 (Miss. 1992). Jerry Lee's Grocery, Inc. v. Thompson, 528 So. 2d 293 (Miss. 1988), J.C. Penney Co. v. Sumrall, 318 So. 2d 829, 832 (Miss. 1975), McGovern v. Scarborough, 566 So. 2d 1225 (Miss. 1990), Kroger, Inc. v. Ware, 512 So. 2d 1281 (Miss. 1987), Stanley v. Morgan & Lindsey, Inc., 203 So. 2d 473 (Miss. 1967).
The majority claims that this case can be distinguished from Kroger, McGovern, and other cases which Jitney Jungle relies upon. In an attempt to distinguish this case from those cited above, the majority writes that those cases involved dangers which are usual and which customers normally expect to encounter on the business premises, such as thresholds, curbs and steps. Then the majority tells us that the claimed physical defect on Jitney's premises may be found to be "unusual and unreasonably dangerous, notwithstanding the fact that it might have been observable."
Herein lies the danger in the complete abolishment of the open and obvious danger as a defense as was done by this Court in Tharp. Admittedly, an argument could be made that the facts in Tharp indicated that the tarpaulin which had been installed for a long period of time, could possibly constitute a permanent hazard to an invitee, even though the hazard was obvious and the invitee had encountered the condition on numerous prior occasions. However, there was nothing unfair about the open and obvious rule. We should have continued to allow the rule on a case by case basis. The facts of some cases would justify imposing the defense while others would not. Sometimes the facts would support absolutely no negligence whatsoever by a property owner, hence summary judgment would be proper. However, on other occasions, a jury issue on disputed evidence would be established, thus the issue of negligence would properly be allowed for the jury to determine. Tharp should simply have been made fact specific to that case alone.
Contrary to the majority, I see no difference in this case than McGovern, Kroger, and Stanley. In Kroger, the customer tripped on a curb and fell. The customer had frequently visited the store, was aware of the curb, but fell when her trailing foot failed to clear the curb. The jury returned a verdict for the plaintiff and Kroger appealed to this Court. This Court stated:
This action represents such a clear case, where Ware not only was aware of the curb, but also stepped over it with one foot before she fell. Cf. [First Nat. Bank of Vicksburg v.] Cutrer, 214 So.2d [465] at 466 [(Miss. 1968)] (slip and fall, when ascending "concrete riser" to enter a bank: no liability), Stanley v. Morgan & Lindsey, Inc., 203 So. 2d 473, 477 (Miss. 1967) (slip and fall, when descending a sidewalk curb, painted yellow: no liability). Indeed, Ware encountered a condition, which was permanent, in place, known, and obvious a factual setting bearing no resemblance to cases in which we have found a jury question to exist. Wilson [v. Allday], 487 So.2d [793] at 798 [(Miss. 1986)] (unseen pothole), Bell v. City of Bay St. Louis, 467 So. 2d 657, 664 (Miss. 1985) (grass and debris), Cook v. Chow, 223 So. 2d 521, 522 (Miss. 1969) (fresh pork sausage).
In J.C. Penney Co. v. Sumrall, 318 So. 2d 829, 832 (Miss. 1975), the Court stated, "[T]here must be some evidence of negligence given a jury before it can determine that a defendant is guilty of negligence." Here, there was none.
512 So.2d at 1282.
Kroger involved the same circuit judge presiding over this case. The trial judge *1353 noted such and stated he had been reversed by this Court for allowing the issue of negligence to go to the jury in Kroger. In sustaining the motion for a directed verdict in favor of Jitney, the trial judge vowed ... "I'm not going to make that mistake again." Little did he suspect that this Court would reverse its precedential position on this issue.
In the case sub judice, the proof showed Tate bumped her knee on a railing located knee level on the deli counter at the Jitney store. Tate was a regular customer having visited the same lunch counter on some twenty prior occasions. She had already walked around the counter moments before making a return trip around the counter whereupon she bumped her knee. As in Kroger, the knee she bumped was her trailing knee, not the leading knee. Tate also admitted there was nothing obstructing her view of this counter. In Mercy Regional Medical Center v. Doiron, 348 So. 2d 243 (Miss. 1977), a case involving the question of whether the hospital should have provided a handrail for people using steps, this Court concluded that the absence of a handrail did not constitute negligence. This Court held:
Any defect, therefore, was not in the step but in the stepping. No negligence may be predicated upon the construction or maintenance of the step in question.
Id. at 244 quoting Supreme Instruments Corp. v. Lehr, 190 Miss. 600, 627, 1 So. 2d 242, 245 (1941).
The object in question in this case, the deli counter, according to the majority, was an unusual and unreasonably dangerous condition. In fact it is a very usual and normal counter that a customer or invitee would observe in all grocery stores, practically every business in America, most private homes, and easily found on the fourth floor of the Carroll Gartin Justice Building housing this very Court.
There is absolutely no proof in the case sub judice that the deli counter was unreasonably dangerous to Tate or any other customers exercising reasonable care for their own safety. As in Mercy, the defect, if any, was not in the deli counter, but rather in Tate's manner of stepping in not exercising reasonable care by looking out for her own safety. To hold otherwise is to place upon business owners as well as private homeowners a requirement that necessitates their maintaining a premises, environment and surroundings which must guarantee at all times under all conditions, the absolute safety of all individuals on these premises, thereby making the owners insurers of the safety of all invitees. I should hope that this Court would pay strict attention to our previous long standing precedent caselaw, make a prompt about face from Tharp, and return promptly to our former common sense and logical approach to this issue.
For all of the foregoing reasons, I would affirm the directed verdict in favor of Jitney Jungle. I respectfully dissent.
HAWKINS, C.J., and PRATHER, P.J., and JAMES L. ROBERTS, Jr., J., join this opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1102630/ | 364 So. 2d 630 (1978)
Lehard MOORE, Plaintiff-Appellant,
v.
GOODYEAR TIRE AND RUBBER COMPANY, Defendant-Appellee.
No. 13653.
Court of Appeal of Louisiana, Second Circuit.
October 30, 1978.
*631 Bethard & Davis by James G. Bethard, Coushatta, for plaintiff-appellant.
Brittain & Williams by Joe Payne Williams, Natchitoches, for defendant-appellee.
Before BOLIN, HALL and JONES, JJ.
HALL, Judge.
Lehard Moore, plaintiff, appeals from a judgment rejecting his demand for the value of a television set and sewing machine and for the return of $810, all of which were allegedly taken from his house trailer without his consent by employees of the Goodyear Tire and Rubber Company, defendant. Moore also appeals the rejection of his demand for attorney's fees under the Louisiana Unfair Trade Practices Law. Answering, Goodyear complains of the rejection of its claim for the unpaid purchase price of the goods taken. We find that the seizure was wrongful and the attorney's fees deserved, and reverse the trial court judgment on these two issues. We affirm the trial court's judgment rejecting Moore's claim for $810 and rejecting Goodyear's claim for $807 owed on open account.
Moore apparently purchased the television set and sewing machine from Goodyear on an installment plan. After Moore had fallen behind in his payments, Goodyear made several unsuccessful attempts to contact Moore concerning the problem. The trial court adopted Goodyear's version of the repossession. Goodyear sent two employees to Moore's home to settle the account. When they found he was not at home they went next door to the home of Clora Moore, his sister-in-law. They testified she told them that Moore was out of the country but the house was open and they could enter and take the merchandise. One of the employees entered the house trailer and found the sewing machine just inside the back door and the television set in the living room. They took the merchandise and returned to the store.
The trial judge, in his reasons for judgment stated that "[W]hile the law does not favor the actions taken by Mr. LaCaze [defendant's employee] in entering the home of another person without permission, nevertheless the permission of Clora Moore wipes out any wrongdoing." Goodyear argues that this statement shows the trial court found as a fact Clora Moore had authority of Lehard Moore to turn the goods over to *632 Goodyear. There is no evidence anywhere in the record to indicate Moore had ever given Clora Moore authority to allow the repossession of the goods.
It is well settled that when goods are repossessed without judicial process the consent of the owner must be shown by the seizing creditor in order to avoid legal liability. Grandeson v. International Harvester Credit Corp., 223 La. 504, 66 So. 2d 317 (1953); Samaniego v. Horseless Carriage, Inc., 350 So. 2d 193 (La.App. 2d Cir. 1977), writ refused 352 So. 2d 240 (1977); Lee v. Lewis, 339 So. 2d 513 (La.App. 2d Cir. 1976). In Grandeson, the taking of community property with only the wife's permission was held to be a wrongful seizure. Certainly, a sister-in-law without authority cannot give consent to the repossession of Moore's goods. Thus, we find the trial court to be in error and hold that this repossession was a wrongful seizure.
Moore claimed he had $810 hidden in the sewing machine which was hidden in a bedroom closet under a pile of clothes. Moore introduced testimony as to the source of the eight $100 bills. Moore's brother testified that Moore had eight $100 bills about two months before the repossession. Goodyear's employees testified they found the sewing machine just inside the back door which was open. They also testified that a search of the sewing machine after being notified by Moore of the hidden money revealed nothing. There was also evidence that several people had access to Moore's house trailer. The trial judge frankly did not "believe that there was eight hundred dollars in that sewing machine, nor two rolls of dimes." This finding turns upon the credibility of the witnesses and the trial judge's finding is amply supported by the record. We, therefore, affirm this portion of the judgment.
Goodyear contends the trial court's rejection of its reconventional demand for recovery on open account was erroneous. There is no evidence in the record of what goods were bought, what payments were made, or what amount was owed on the account. The only reference to the open account is a casual admission by Moore, made in another context on cross-examination, that he still owed $807 on the sewing machine and television set when they were picked up. This figure bears no relationship to the original purchase price of the sewing machine and television set and the monthly payments Moore made on them. We agree with the trial judge's finding that the reconventional demand was not proved and affirm his rejection of it.
The measure of actual damage for the wrongful repossession of a movable is the value of the property taken. However, the creditor is entitled to an offset, but no deficiency judgment for the unpaid purchase price. Samaniego v. Horseless Carriage, Inc., supra; Lee v. Lewis, supra. Goodyear failed to prove the amount Moore owed on the purchase price of the television set and sewing machine. Thus, they are not entitled to an offset. Their employee valued the television set at $125 and the sewing machine at $100. We award Moore $225 in special damages, being the actual value of the property wrongfully seized. Although there is some evidence that the plaintiff had to relocate his house trailer because of this incident, there is virtually no evidence in the record of his being embarrassed or humiliated by the illegal taking of the property. We, therefore, award the plaintiff $250 for his general damages.
Moore also claims attorney's fees under LSA-R.S. 51:1405(A) and 1409(A), the Louisiana Unfair Trade Practices and Consumer Protection Law.
LSA-R.S. 51:1405(A) provides:
"Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful."
LSA-R.S. 51:1409(A) provides:
"Any person who suffers any ascertainable loss of money or movable property, corporeal or incorporeal, as a result of the use or employment by another person of an unfair or deceptive method, act or practice declared unlawful by R.S. 51:1405, may bring an action individually *633 but not in a representative capacity to recover actual damages. If the court finds the unfair or deceptive method, act or practice was knowingly used, after being put on notice by the director or attorney general, the court shall award three times the actual damages sustained. In the event that damages are awarded under this Section, the court shall award to the person bringing such action reasonable attorney's fees and costs. Upon a finding by the court that an action under this section was groundless and brought in bad faith or for purposes of harassment, the court may award to the defendant reasonable attorney's fees and costs."
Moore argues that the actions of Goodyear in this case constituted an unfair act or practice in the conduct of trade or commerce, declared unlawful by § 1405(A) and that plaintiff under § 1409(A) is entitled to bring an action individually and to recover actual damages and reasonable attorney's fees and costs. Goodyear contends that the type of activity it conducted in this case is not an unfair trade act or practice as contemplated by the act and that attorney's fees are allowable only where treble damages are awarded for unfair practices knowingly used after notice by the director or attorney general, which was not the situation here.
In discussing this relatively new statute adopted in 1972 the court in Guste v. Demars, 330 So. 2d 123 (La.App. 1st Cir. 1976) stated:
"The substantive prohibition of the Unfair Trade Practices and Consumer Protection Law is broad and does not specify particular violations. La.R.S. 51:1405(A) declares that:
'Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are declared unlawful.'
The language of this section tracks closely that of the Federal statute, 15 U.S.C. Section 45(a). Because of the variety of possible unfair and deceptive practices, the Federal statute was intentionally broadly written, leaving the determination of individual violations to the Commission and the courts. Our legislature has expressed a similar intention in patterning our law so closely on the Federal statute. Therefore, we may and should consider interpretations of the Federal courts and of the Commission relative to such similar statutes to adjudge the scope and application of our own statute. State, through Dept. of Highways v. Baddock, 170 So. 2d 5 (La.App. 1st Cir. 1964)."
While the substantive prohibition of the Louisiana statute and federal act is almost identical, the regulatory and administrative schemes are quite different. The federal act establishes a comprehensive regulatory scheme to be administered by the Federal Trade Commission. The federal act does not provide for a private action. Holloway v. Bristol-Myers Corporation, 158 U.S.App.D.C. 207, 485 F.2d 986 (1973); Carlson v. Coca Cola Company, 483 F.2d 279 (9th Cir. 1973). The Louisiana statute while creating the "Governor's Consumer Protection Agency" and investing the attorney general with certain enforcement powers, establishes a private right of action for any person who suffers any ascertainable loss of money or movable property as a result of the use or employment by another person of an unfair or deceptive method, act or practice declared unlawful by the statute.
Because of the absence of private actions under the federal act and the concern of the federal scheme for matters of broad public interest, there does not appear to be reported federal decisions involving actions similar to those involved in this case. In determining whether a practice is unfair under the federal act, a rule, based on Federal Trade Commission criteria, has been established that a practice is unfair when it offends established public policy and when the practice is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers. F.T.C. v. Sperry and Hutchinson Company, 405 U.S. 233, 92 S. Ct. 898, 31 L. Ed. 2d 170 (1972); Spiegel, Inc. v. F. T. C, 540 F.2d 287 (7th Cir. 1976). In Spiegel, the court found certain collection *634 practices of a mail order house in filing lawsuits against mail order credit customers under the Illinois long-arm statute in Chicago in a court distant from the consumer's residence to be an unfair practice.
The collection actions of Goodyear in entering Moore's home and taking possession of his property which had been sold on terms of credit, without Moore's knowledge and consent, amounts to an unfair trade act or practice under the Louisiana statute, applying common meanings to the words of the statute. Applying the federal criteria, the defendant's actions offended established public policy, constituted actions which have long been recognized in Louisiana as unlawful and as entitling the injured party to damages, were oppressive and unscrupulous, and caused substantial and actual injury to a consumer. Moore has a right of action under the Louisiana Trade Practices and Consumer Protection Act to recover his actual damages.
LSA-R.S. 51:1409(A) requires that in the event damages are awarded under that section, whether actual damages which do not require prior notice, or treble damages after notice by the director or attorney general, that the court shall award reasonable attorney's fees and costs. Moore is entitled under the statute to reasonable attorney's fees, which we fix at the sum of $500.
For the reasons assigned, the judgment of the district court is reversed and set aside and there is judgment in favor of plaintiff, Lehard Moore, against defendant, Goodyear Tire and Rubber Company, in the sum of $475 with legal interest thereon from date of judicial demand until paid and for $500 as attorney's fees. All costs of these proceedings, including the cost of appeal, are assessed to defendant.
Reversed and rendered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1633341/ | 552 So.2d 1248 (1989)
Carlo J. BONURA and Ann M. Bonura
v.
UNITED BANKERS LIFE INSURANCE COMPANY and Hill Country Life Insurance Company.
No. 88 CA 1423.
Court of Appeal of Louisiana, First Circuit.
November 14, 1989.
Writ Denied February 2, 1990.
*1249 Sumpter B. Davis, III, Jeff C. Calmes, Baton Rouge, for plaintiffs-appellees Carlo J. Bonura and Ann M. Bonura.
Charles W. Nelson, Jr., New Orleans, for defendant-appellant Texas Receiver of United Bankers Life Ins. Co.
Before CARTER, SAVOIE and ALFORD, JJ.
CARTER, Judge.
This case arose from a claim for benefits under a policy of health and accident insurance.
FACTS
On November 21, 1980, United Bankers Life Insurance Company (United Bankers) issued a policy of health and accident insurance covering Carlo J. and Ann M. Bonura.[1] The policy provided benefits for specific dread diseases, including cancer, in the amount of $100,000.00. On March 8, 1982, Ann Bonura was diagnosed as having infiltrating ductal carcinoma of the left breast. Thereafter, the Bonuras made periodic claims upon United Bankers for the costs of the treatment received by Ann Bonura. United Bankers denied coverage on the basis that the cancer was a preexisting condition and that the claims were for outpatient treatment, neither of which were covered by the policy.
In October of 1982, United Bankers was placed in receivership in Texas. By order dated April 12, 1983, Hill Country Life Insurance Company (Hill Country) assumed certain obligations of United Bankers. Thereafter, the Bonuras made claims for benefits upon Hill Country, which were denied.
On March 19, 1984, the Bonuras filed suit for damages against United Bankers and Hill Country.[2] Thereafter, the Bonuras added, as defendants, Anthony G. Harris, temporary receiver for United Bankers, and Life, Accident, Health, and Hospital Service Insurance Guaranty Association (IGA), an entity created by the Texas Insurance Code. Harris filed a declinatory exception pleading the objection of lack of *1250 jurisdiction over the subject matter. IGA filed peremptory and declinatory exceptions pleading the objections of no cause of action and lack of personal and subject matter jurisdiction, respectively.
The trial court denied the exceptions, finding that the claims against Harris and IGA were subject to the jurisdiction of the Louisiana courts. Harris and IGA applied to this court for writs of certiorari, which were granted, to consider whether Louisiana had jurisdiction over a Texas statutory entity and a Texas receiver in a claim by Louisiana residents against a foreign insurer placed in receivership in Texas. In Bonura v. United Bankers Life Insurance Company, 509 So.2d 8 (La.App. 1st Cir. 1987), writ denied, 512 So.2d 462 (La. 1987), this court determined that Louisiana had subject matter jurisdiction of the controversy, but that Louisiana did not have in personam jurisdiction over IGA. This court noted that Harris failed to except to Louisiana's in personam jurisdiction, thereby waiving any such objection. Accordingly, IGA was dismissed from the suit.
The matter proceeded to trial against United Bankers and Harris. Prior to trial, however, Carlo J. and Ann M. Bonura died. Donna Bonura Lensing, representative of the succession of the Bonuras, was substituted as party plaintiff. After trial, the trial court rendered judgment in favor of Donna Bonura Lensing and against United Bankers and Harris for $92,361.76 in medical benefits, $184,723.52 in penalties, and $25,000.00 in attorney's fees, together with legal interest from date of judicial demand[3] and all costs.
From this adverse judgment, United Bankers and Harris appeal, assigning the following errors:
1. The Trial Court erred in assuming jurisdiction of the subject matter of this suit.
2. The Trial Court erred in refusing to give full faith and credit to the judgment of the Texas court.
3. The Trial Court erred in refusing to honor the judgment of the Texas Court as a manner of comity.
4. The Trial Court erred in holding that the plaintiff's claims were covered by the policy.
5. The Trial Court erred in awarding penalties and attorney's fees.
6. The attorneys' fees awarded by the Trial Court were excessive.
ASSIGNMENTS OF ERROR NOS. 1, 2, & 3
(Jurisdiction)
In these assignments of error United Bankers and Harris contend that Louisiana courts lack jurisdiction over this matter under the provisions of the Uniform Insurers Liquidation Acts, LSA-R.S. 22:757, et seq. United Bankers and Harris reason that LSA-R.S. 22:760 B requires Louisiana residents to assert their claims in the proceedings of the domiciliary state of the foreign insurer when no receivership proceedings have been initiated in Louisiana. United Bankers and Harris also contend that, in Texas state court proceedings, the receiver was given exclusive jurisdiction over the assets of United Bankers and an injunction was issued, enjoining all persons from asserting any claim against United Bankers or Harris except in the receivership proceedings. United Bankers and Harris reason that the trial court erred in not giving full faith and credit to the Texas court judgment pursuant to the full faith and credit clause of the constitution or under the doctrine of comity.
As noted earlier, prior to trial, this court addressed the issue of subject matter jurisdiction *1251 in Bonura v. United Bankers Life Insurance Company, supra. When this court considers questions in advance of trial by granting a pretrial application for supervisory writs (rather than deferring judgment until an appeal), the determination does not absolutely preclude a different decision on appeal, at which time the issues may have been more clearly framed by the evidence adduced at trial. Nevertheless, judicial efficiency demands that this court accord great deference to its pretrial decisions, unless it is apparent, in light of the subsequent trial record, that the determination was clearly wrong. See State v. Humphrey, 412 So.2d 507 (La. 1981).
In Bonura v. United Bankers Life Insurance Company, supra, this court stated:
Section 760, entitled "Claims against foreign insurers," provides as follows:
A. In a delinquency proceeding in a reciprocal state against an insurer domiciled in that state, claimants, against such insurer, who reside within this state may file claims either with the ancillary receiver, if any, appointed in this state, or with the domiciliary receiver. All such claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceeding.
B. Controverted claims belonging to claimants residing in this state may either (1) be proved in the domiciliary state as provided by the law of that state, or (2) if ancillary proceedings have been commenced in this state, be proved in those proceedings. In the event that any such claimant elects to prove his claim in this state, he shall file his claim with the ancillary receiver in the manner provided by the law of this state for the proving of claims against insurers domiciled in this state, and he shall give notice in writing to the receiver in the domiciliary state, either by registered mail or by personal service at least forty days prior to the date set for hearing. The notice shall contain a concise statement of the amount of the claim, the facts on which the claim is based, and the priorities asserted, if any. If the domiciliary receiver, within thirty days after the giving of such notice, shall give notice in writing to the ancillary receiver and to the claimant, either by registered mail or by personal service, of his intention to contest such claim, he shall be entitled to appear or to be represented in any proceeding in this state involving the adjudication of the claim. The final allowance of the claim by the courts of this state shall be accepted as conclusive as to its amount, and shall also be accepted as conclusive as to its priority, if any, against special deposits or other security located within this state.
[Emphasis added.]
We find Section 760 to be inapplicable here. This section does not stand alone in our statutes, but is one of the seven sections of Title 22 which comprise the Uniform Insurers Liquidation Law. As stated in Section 763, this law "shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states that enact it." [Emphasis added.] Each section contains one or more times the phrase "reciprocal state," which is defined in Section 757(7) as "any state other than this state in which in substance and effect the provisions of this law are in force, including the provisions requiring that the insurance commissioner or equivalent insurance supervisory official be the receiver of a delinquent insurer." As shown by the Table of Jurisdictions immediately following Section 757 in which the Act has been adopted, Texas is not a reciprocal state. Therefore, the provisions of the Uniform Insurers Liquidation Law, and specifically Section 760, cannot be applicable in this instance. See Martin v. General American Casualty Company, 226 La. 481, 76 So.2d 537 (1954).
However, two other sections of the Insurance Code do apply to this situation. La.R.S. 22:629 provides that no insurance contract delivered or issued for delivery *1252 in this state which covers Louisiana residents may contain any provision which deprives the courts of this state of jurisdiction of action against the insurer. The jurisprudence construing and applying this statute is both consistent and too voluminous to require citation. Together, the statute and cases announce the unequivocal policy of this state that no foreign insurer may enjoy the benefits of a source of business in this state without being prepared to answer any claims based on that business by a Louisiana resident in the Louisiana courts. This policy comports with due process requirements and the insurer suffers no undue hardship thereby. We find no sufficient reason to abrogate that policy here.
Moreover, La.R.S. 22:1021 and 1022 require that all foreign insurers deposit $20,000.00 in cash or U.S. bonds in a bank or savings and loan association within the state, for the purpose of payment of claims based upon policies on the life, person, or property of any Louisiana citizen. It necessarily follows that for these deposits to be utilized in the manner intended, our courts must have jurisdiction over the claims presented to determine claimants' entitlement to these funds. (footnotes omitted) [509 So.2d 10-11].
After carefully reviewing the pertinent facts and applicable jurisprudence, we cannot say that our pretrial determination that Louisiana had subject matter jurisdiction of the instant controversy was clearly wrong.
Additionally, full faith and credit and the doctrine of comity requires that Louisiana recognize the Texas court judgment, unless by doing so we would violate the positive law or public policy of our own state. See Succession of Fisher, 235 La. 263, 103 So.2d 276 (1958); Succession of Goss, 304 So.2d 704 (La.App. 3rd Cir.1974), writ denied, 309 So.2d 339 (La.1975), cert. denied, 423 U.S. 869, 96 S.Ct. 133, 46 L.Ed.2d 99 (1975).
In the instant case, our positive law, as well as public policy, favors this state's refusal to recognize the Texas court's judgment requiring that the instant claim be litigated in Texas. As noted earlier, the law and public policy of Louisiana states that no foreign insurer may enjoy the benefits of issuing or delivering policies in this state without being subject to suit in this state. Clearly, the trial judge did not err in refusing to give full faith and credit to the Texas court judgment.
ASSIGNMENT OF ERROR NO. 4
(Policy Exclusions)
United Bankers and Harris contend that the medical expenses incurred by the Bonuras were not covered by the insurance policy. United Bankers and Harris reason that Ann Bonura was treated for a preexisting condition, which was specifically excluded, and, as such, any medical expenses incurred for the treatment of said condition are not covered by the policy. United Bankers and Harris further reason that if a disease manifests itself before the effective date of the policy in such a manner as would cause an ordinarily prudent person to seek diagnosis, care, or treatment, then the disease is said to have begun before issuance of the policy, citing Dear v. Blue Cross of Louisiana, 511 So.2d 73 (La.App. 3rd Cir.1987), Moncrief v. Blue Cross-Blue Shield of Arkansas, 472 So.2d 299 (La. App. 3rd Cir.1985), and Smith v. Republic National Life Insurance Company, 335 So.2d 739 (La.App. 2nd Cir.1976), writ refused, 338 So.2d 706 (La.1976).
Their reliance on these cases, however, is clearly misplaced. In Moncrief v. Blue Cross-Blue Shield of Arkansas, supra, the insurance policy specifically defined a condition or disease which existed prior to the effective date of the policy as "one which caused symptoms or other manifestations prior to such effective date in such a manner as would cause an ordinarily prudent person to seek diagnosis, care, or treatment." In Moncrief, by plaintiff's own admission, the symptoms of her subsequently diagnosed condition manifested themselves three to five months prior to the effective date of the insurance policy in such a manner as would cause an ordinarily prudent person to seek diagnosis, care, *1253 or treatment. Plaintiff's condition preexisted the effective date of the policy, and the policy exclusion was upheld.
Likewise, in Dear v. Blue Cross of Louisiana, supra, the language of the insurance policy specifically excluded coverage for "any ailment, disease, or physical condition, the symptoms of which, or the presence of any ailment, disease, or physical condition ... whether or not producing symptom, exhibited themselves before the Member's Original Effective Date regardless of whether the diagnosis, the condition or the disease has been established." Because the plaintiff manifested symptoms prior to the effective date of the policy, under the language of the policy, plaintiff's condition was excluded.
In Smith v. Republic National Life Insurance Company, supra, the plaintiff had suffered from medical problems and had undergone surgery for these problems prior to the effective date of the policy. However, the surgery had not completely resolved plaintiff's ailment, and she had been advised, prior to the effective date of the policy, to undergo additional surgery. The policy covered sickness or disease "which first manifests itself while this policy is in force." Because the medical evidence showed that plaintiff's condition manifested itself prior to her application for insurance, no coverage was afforded under the policy.
In the instant case, the United Bankers' policy covered expenses incurred as a result of "sickness, illness or disease contracted and beginning while ... [the] policy is in force." The policy also contained the following specific exclusions, exceptions, and limitations:
2. Subject to the (b) portion of the Time Limit on Certain Defenses provisions of this policy, pulmonary disease, heart disease, disease of the generative organs, cancer, hernia, high or low blood pressure, arteriosclerosis, aneurysms, varicosities, anemia, colitis, leukemia, nephritis, cholecystitis, prostatitis, cirrhosis, cystitis, disease of the stomach or any sickness which results in a surgical operation shall be covered only if contracted and commencing after this policy has been in force for not less than fifty-nine days from its Effective Date.
Portion (b) of the "Time Limit on Certain Defenses" provisions of the policy provided:
(b) No claim for loss incurred after two (2) years from the date of issue of this Policy shall be reduced or denied on the grounds that a disease or physical condition not excluded from coverage by name or specific description effective on the date of loss had existed prior to the effective date of coverage of this Policy.
In the instant case, the effective date of the policy was November 21, 1980. Ann Bonura's medical history revealed that she first sought medical attention on March 4, 1982. At that time she reported that she had had an inverted nipple for the past two years. Approximately one year before she sought medical attention, Ann Bonura developed a lesion in the upper, outer quadrant of her left breast. Thereafter, she developed a mass in her left breast.
Dr. Joseph Nasca, general practitioner and surgeon, examined Ann Bonura on March 4, 1982. Dr. Nasca's examination revealed a suspected carcinoma of the left breast, which was confirmed by a biopsy on March 8, 1982. Dr. Nasca, however, testified that he did not know when Ann Bonura's cancer began. Although Dr. Nasca acknowledged that an inverted nipple is sometimes a symptom of cancer, he testified that many women without carcinomas have inverted nipples. Dr. Nasca testified that Ann Bonura's carcinoma of the left breast was first diagnosed on March 4, 1982. He opined, however, that it would be pure speculation to estimate when the carcinoma may have begun.
Dr. Nasca testified that chest x-rays and blood tests performed in November, 1981, were negative for any carcinoma. Dr. Nasca opined that if the carcinoma had existed at that time, the test results and x-rays should have revealed such, especially since the same tests performed in March of 1982 were positive for carcinoma. Dr. Nasca also acknowledged that Ann Bonura's carcinoma was an aggressive one, which could *1254 have developed between November of 1981 and March of 1982.
The courts impose a strict burden on the insurer to prove by a preponderance of evidence that an exclusionary clause is applicable and, in the case of a health policy, that the alleged preexisting condition did in fact predate the effective date of the policy. Cheramie v. Board of Trustees, State Employees Group Benefit Program, 482 So.2d 742 (La.App. 1st Cir.1985), writ denied, 486 So.2d 734 (La.1986); Casey v. Proprietors Life Assurance Company, 470 So.2d 339 (La.App. 5th Cir.1985); Estate of Borer v. Louisiana Health Service & Indemnity Company, 431 So.2d 49 (La. App. 1st Cir.1983). See Lapeyrouse v. Pilot Life Insurance Company, 369 So.2d 1128 (La.App. 1st Cir.1979). The evidence must be "certain and decisive, leaving no room for speculation or assumption." McCord v. Time Insurance Company, 521 So.2d 558 (La.App. 1st Cir.1988); Dorsey v. Board of Trustees, State Employees Group Benefits Program, 482 So.2d 735 (La.App. 1st Cir.1985), writs denied, 486 So.2d 735, 736 (La.1986). Further, the factual findings of the trial court will not be disturbed on review absent manifest error.
After reviewing the entire record under the appropriate standard, we find that the trial court did not err in finding that United Bankers and Harris failed to establish the applicability of the policy exclusion for a preexisting condition.
ASSIGNMENTS OF ERROR NOS. 5 & 6
(Statutory Penalties)
United Bankers and Harris contend that the trial court erred in awarding penalties and attorney's fees. United Bankers and Harris reason that the refusal to pay the medical benefits was reasonable in light of the medical reports furnished by Ann Bonura's physician, indicating that she had an inverted nipple for two years before she received treatment. Additionally, United Bankers and Harris contend that the award of attorney's fees was excessive.
LSA-R.S. 22:657 provides that claims arising under health and accident insurance contracts must be paid within thirty days of the date of receiving proof of claim unless "just and reasonable grounds, such as would put a reasonable and prudent business man on his guard, exist." Failure to comply subjects the insurer to a penalty of double the benefits due under the policy plus attorney's fees "to be determined by the court."
The statutory language is clear and unambiguous. Whenever a claim is properly presented under a health and accident contract, it must be paid within 30 days, unless just and reasonable grounds exist, such as would put a reasonable and prudent businessman on his guard that the claim is unjust. Lopez v. Blue Cross of Louisiana, 397 So.2d 1343 (La.1981); Cheramie v. Board of Trustees, State Employees Group Benefit Program, supra; Casey v. Proprietors Life Assurance Company, supra. What constitutes just and reasonable grounds for failing to pay has been held to be a question of fact to be determined from the circumstances of the case in question. Landry v. Louisiana Hospital Service, Inc., 449 So.2d 584 (La.App. 1st Cir.1984).
Where an insurer's interpretation of its policy is reasonable and not contrary to any existing jurisprudence, the denial of a claim is not arbitrary so as to require the imposition of penalties, and the insurer has a right to a judicial determination of the issues. While a court may disagree with the interpretation the insurer places upon its policy, its actions in refusing to pay should not necessarily subject it to the penalty provisions of the statute. Landry v. Louisiana Hospital Service, Inc., supra. However, when an insurer chooses to resist liability based on a supposed defense, which a reasonable investigation would have proved to be without merit, it will be liable for statutory penalties. Cheramie v. Board of Trustees, State Employees Group Benefit Program, supra; Lapeyrouse v. Pilot Life Insurance Company, supra; Matthews v. Coastal States Life Insurance Company, 291 So.2d 475 (La. App. 3rd Cir.1974).
*1255 Applying these rules to the instant case, we find that the trial court did not err in finding that United Bankers' and Harris' failure to pay the claim was without just and reasonable grounds. United Bankers and Harris did not investigate whether the carcinoma existed prior to the effective date of the policy. United Bankers or Harris did not ascertain, through consultations with Dr. Nasca or any other means, if Ann Bonura's carcinoma existed prior to the effective date of the policy; each merely relied on Ann Bonura's medical history revealing possible symptoms of cancer. As such, we find that the trial court properly determined that United Bankers and Harris did not act reasonably in refusing to pay the Bonuras' claim.
As to the amount of the award of attorney's fees, LSA-R.S. 22:657(A) states that the amount is to be determined by the court. While the amount of the attorney's fees is within the discretion of the court, factors to consider include the amount involved, the skill of the attorney, and the amount of work necessarily undertaken by the attorney. Cheramie v. Board of Trustees, State Employees Group Benefits Program, supra; Naquin v. Air Engineered Systems & Services, Inc., 463 So.2d 992 (La.App. 3rd Cir.1985), writ denied, 465 So.2d 735 (La.1985); Dowden v. Commonwealth Life Insurance Company, 407 So.2d 1355 (La.App. 3rd Cir.1981).
After reviewing the record, and in accordance with the foregoing factors, we conclude that an award of $25,000.00 is not excessive.
CONCLUSION
For the above reasons, the trial court judgment is affirmed in all respects. United Bankers and Harris are cast for all costs.
AFFIRMED.
NOTES
[1] It is undisputed that, at all times pertinent hereto, the premiums were paid in full, and the policy was in full force and effect.
[2] By order dated August 6, 1984, the Bonuras voluntarily dismissed Hill Country, specifically reserving all rights against the remaining defendants.
[3] In the petition, the Bonuras only requested interest from the date of judicial demand. Under LSA-C.C.P. art. 1921, the court shall award interest in the judgment as prayed for or as provided by law. Generally, interest on insurance contracts commences to run from due date. However, in Landry v. Louisiana Hospital Service, Inc., 449 So.2d 584 (La.App. 1st Cir. 1984), this court noted that for certain types of claims, a court may only award legal interest in the judgment as it is prayed for. See also Larry L. Johnson v. Southern University and Department of State Civil Service, 551 So.2d 1348 (La. App. 1st Cir.1988); Toth v. Ensco Environmental Services, Inc., 546 So.2d 188 (La.App. 1st Cir. 1989); Sharp v. Daigre, 545 So.2d 1063 (La.App. 1st Cir.1989). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/8326581/ | Agnes, Peter W., J.
1. The defendant, Carlos Rios, is charged by indictment with the murder of Christopher Olivencia on March 8, 2007. He has filed a pretrial motion to suppress statements he made to Florida police and Massachusetts police on March 14-15, 2007.
2. Findings of fact The record before the court consists of the audio recordings of the two police interviews (exhibits 2 and 3), a signed Miranda waiver form dated March 15, 2007 (exhibit 1), a written report from the Orange County Sheriffs Department to the Worcester Police (exhibit 4), a transcript of the recorded interview between the defendant and the Worcester Police on March 15, 2007 (exhibit 5), Worcester Police “Master Card” detail for the defendant (exhibit 6), and a compilation of Worcester Police Department reports relating to the defendant (exhibit 7). Based on this evidence, I make the following findings of fact. The defendant, Carlos Rios, surrendered himself to the Orange County Sheriffs Department at approximately 9:00 p.m. on March 14, 2007. He told the police he believed there was a warrant for his arrest for the crime of attempted murder. The defendant was placed in custody. The Florida police, Detective Susan Hempsfield and Detective Mark Hussey, verified that there was an arrest warrant outstanding for the defendant, but that it was for the crime of Murder alleged to have been committed in Worcester, Mass, on March 8, 2007. The Florida detectives also contacted the Worcester Police and were briefed on the status of the investigation. The defendant was brought to an interview room. He was not handcuffed. He was told the interview was being recorded. He was informed of his Miranda rights. At one point he indicated he did not understand the Miranda rights. He also remarked that he was unable to afford an attorney and questioned how it was that he could have an attorney. After his rights were read to him, the defendant asked the police “what does that Miranda warning do.” The Miranda rights were read again to the defendant. Thereafter, the defendant signed a Miranda waiver form.
3. The defendant was asked about his drug and alcohol use. He admitted to being a regular marijuana smoker, but said he had not been drinking for several weeks. He told the Florida police he turned himself in because he knew the police were looking for him. He indicated he got to Florida by stealing three cars arid that he walked seven miles to the Sheriffs Office. He told the police he had little memory of the trip to Florida. He said he had been “throwing up” for the past three days over the death of his aunt. He said he had not eaten in eight days. The police did offer him food and candy. He reported he was feeling sick. The defendant provided some biographical details including the fact that he had two young children and a girlfriend who was their mother. At first he denied any knowledge of the victim, but then indicated that the victim had stabbed him three times. Soon after the interview began, the defendant began to cry and at times was sobbing. He also said he was scared of the victim’s family, that they had harmed his girlfriend and would *640kill him. The defendant said, in a sobbing voice, he wanted to hang himself.
4. The police questioned the defendant’s account of recent events and indicated that they had information from an unidentified eyewitness who was with the defendant that on March 8, 2007 the defendant was in a vehicle which pulled up to 33 Mount Vernon Street in Worcester. The victim was standing in the vicinity. The defendant rushed out of the vehicle and stabbed the victim to death and returned to the car which left the scene. The police also indicated they had corroborating information from his girlfriend. The defendant denied stabbing the victim. The police suggested that it would be a “big deal" to the court if the defendant said it was self-defense. In reply to the defendant’s statement, as he was crying, that if he told the police what happened he would be killed, the police indicated that if the defendant said it was an accident or self-defense, it would be understandable. The police again stated that they had information that it was an unprovoked stabbing. The defendant continued to sob, but admitted he did it and said it was self-defense. According to the defendant, the victim pulled out a knife and the defendant grabbed it and stabbed the victim. Most of the police questions were of the leading variety and most of the defendant’s answers were short with little elaboration. The defendant repeated his statement about wanting to kill himself.
5. At some point during this recorded interview, the police told the defendant that Erika, his girlfriend, told them his story was a lie, and that the defendant had a motive to kill the victim because the victim had fathered one of the defendant’s children with Erika while the defendant was in jail. The police also identified the defendant’s companion at the time of the stabbing who the police said told them he saw the defendant stab the victim. The police indicated that the defendant was facing a charge of murder in the first degree, and “this is your opportunity to tell the truth.” When the defendant claimed he could not recall what had happened, the police added that if the defendant stuck to his story he would be placed in the general population of the jail back in Massachusetts and the police would not be able to protect him from the victim’s friends and family. When the defendant remarked rhetorically he was dead either way whether he lied or told the truth, the police suggested a third alternative—that he describe the stabbing as an accident or self-defense. Shortly thereafter, the defendant described the event as a stabbing in self-defense. The defendant said he could not recall the details of how he arrived in Florida from Massachusetts. The police then asked him if there was anything else he wished to add to the tape “because this may be your only opportunity.”
6. The following day, the defendant was interviewed again by Worcester Police detective Daniel Rosario and the Florida detectives who had interviewed him the day ■
before. When asked if he recalled his Miranda warnings, the defendant replied, in what appears to be a slurred voice, that “they gave me two pills.” The police indicated that they would make inquiry later about the medication given to the defendant, but continue with the interview. Without repeating the Miranda warnings, Detective Rosario inquires about the stabbing asking the defendant “what happened?” Most of the talking is done by the police. The defendant states, in reply to Detective Hempfield’s question about the origin of the knife, that it came from the victim’s hand. Early in the interview the defendant begins to cry and sob again as he did during the interview the day before. About five minutes into the interview, the police summarize the Miranda warnings, and then add “this is really going to help you.”
7. At some point during this interview, the defendant gives an account of the stabbing similar to his self-defense account of the day before with the additional fact that he picked up his “wife” after the event. When he repeated that he had driven himself to Florida, Detective Rosario interjected that the police suspect that uncle Jesus drove the defendant to Florida, that the uncle is facing serious criminal charges that could involve imprisonment for seven years, and that the defendant “could take the heat off his family,” including his uncle, his girlfriend and his mother, by telling the truth. Again, most of the conversation is from the police. The defendant expressed fear that he would be killed in jail. The police add that apart from the safety of his family, the defendant should be aware that his buddy was beaten up. Thereafter, the defendant, speaking with what appears to be slurred speech, stated that he was trying to answer the questions but “the medication is working.” Shortly thereafter, the defendant states “I don’t want to speak no more.” However, the interview continues without regard for this assertion of the right to remain silent.
8. Discussion. First Interview. There is no dispute that the defendant was subjected to custodial police interrogation by the Florida detectives on March 14, 2007. The first question presented for this court’s review is whether the defendant “voluntarily, knowingly and intelligently waive[d] his Miranda rights.” Commonwealth v. Jackson, 377 Mass. 319, 325 (1979), quoting Miranda v. Arizona, 384 U.S. 436, 444 (1966). He maintains that the Commonwealth did not meet its “heavy burden” of proving a knowing and voluntary waiver. Id. [A]s a matter of Massachusetts practice, the Commonwealth must prove a knowing and intelligent waiver beyond a reasonable doubt." Commonwealth v. Day, 387 Mass. 140, 145 (1982).1 On the basis of the record before me, it cannot be said that the Commonwealth met that burden. The tape recording of the first interview indicates that the defendant was confused about the right to counsel, and, in particular, about the idea that an attorney would be provided for him without cost if he could not afford an attorney. Although the defendant signed a written *641waiver form, this is not conclusive. Factors that are relevant on this question are (1) the defendant’s educational level (he said it was 10th grade), (2) his physical condition (he said he had not eaten in a week and had been throwing up for three days), and (3) his emotional and psychological condition (he was overcome with fear that he and his family would be killed, he cried and sobbed throughout most of the interview, and said at two different points in the interview he wanted to kill himself). When a person expresses the intention to kill himself in circumstances such as these in which there is a context which explains why the defendant may have such thoughts, the police must be extremely cautious. Although there is no per se rule that a person with a mental illness or who is mentally retarded cannot make a valid waiver of Miranda or a voluntary statement; see, e.g., Commonwealth v. McGowan, 458 Mass. 461, 472 (2010) (mildly retarded defendant); Commonwealth v. Hilton, 443 Mass. 597, 606-07 (2005) (mentally ill defendant); the law requires the exclusion of statements when mental health problems cause a person to be indifferent to his own self-protection. See Commonwealth v. Vasquez, 387 Mass. 96, 100 & n.8 (1982). While the Supreme Judicial Court has observed that “distress, even profound distress does not necessarily mean that a defendant is incapable of withholding any information he conveys,” Commonwealth v. Stroyny, 435 Mass. 635, 646-47 (2002), this case presents an extreme example. The interview reflects that the defendant knew his girlfriend had already been physically beaten. The defendant left no doubt that he believed his death at the hands of persons associated with the victim’s family was inevitable. In this case, the record before me depicts a defendant who was so upset and so overcome with fear that he and his family would be killed by the friends and family of the victim that he was unable to make a rational choice about whether or not to answer the questions put by the police. The weight of the defendant’s fear of retaliation against him and his family is comparable to the effect of the televised news broadcast on the defendant in Commonwealth v. Murphy, 442 Mass. 485, 494 n.11 (2004). Certainly, when one considers the veiy heavy burden of proof resting on the Commonwealth,2 there is some doubt about the validity of the defendant’s waiver. That doubt must be resolved in the defendant’s favor. The court would have been reassured and might have reached a different result if the interview was conducted on the basis of open-ended questions put to the defendant by the police followed by narrative answers by the defendant. Instead, the questions by the police were mostly leading, and at critical moments consisted of efforts to minimize the crime and suggestions that it was advantageous for the defendant to speak. Moreover, the police actually suggested accident or self-defense to the defendant who up to that point had either denied his involvement or said he could not remember the details.
9. Massachusetts law also requires that the Commonwealth prove voluntariness by a standard of proof beyond a reasonable doubt. See Commonwealth v. Tavares, 385 Mass. 140, 145, 149-53 (1982). There was no physical coercion employed by the Florida police. Although the use of the technique of minimization (suggestions that the crime was understandable or that the defendant is less culpable than some may think) creates risks that the statements made by the defendant may not be voluntary, and should be avoided, it is not forbidden. See Commonwealth v. Gaboriault, 439 Mass. 84, 88-89 (2003). However, the same factors discussed above, in paragraph 8, that preclude a finding by a standard of proof beyond a reasonable doubt that the defendant waived his Miranda rights, preclude a determination that the defendant’s statement to the Florida police was voluntary. See note 2, supra.
10. Second interview. The second interview is even more problematic than the first interview. The police did not begin by restating the Miranda warnings. The police do not have to re-advise the defendant of his Miranda warnings and secure a new waiver in every case before questioning him a second or subsequent time. See, e.g., Commonwealth v. Martinez, 458 Mass. 684, 691-93 (2011). However, a second day interview is an interview after a significant lapse of time and should be preceded by a new set of warnings and another waiver. Not only did the police fail to re-advise the defendant at the outset of his Miranda rights, but they did not determine what medication he had been given after he told the police he had taken two pills despite the fact that even the audio tape reveals signs of the defendant’s impairment (slurring of his speech). In addition, the Worcester police informed the defendant that speaking to them was going to help him. At a minimum such a statement diminishes the defendant’s right to remain silent. However, more fundamentally, it is a false statement calculated to induce the defendant to abandon his constitutional rights. See Commonwealth v. DiGiambattista, 442 Mass. 423, 432-33 (2004). How can it be said that a waiver of Miranda rights, which can be asserted at any time during a custodial interrogation, remains valid when the police inform the defendant that cooperation with them and speaking to them will help his case? In addition to this regrettable mistake, when the defendant finally stated that he no longer wantéd to talk, the police made no inquiry (although it was not an ambiguous statement), but simply kept interrogating the defendant. The right to remain silent exists from the beginning to the end of the interview. See Commonwealth v. Bradshaw, 385 Mass. 244, 265 (1982). Once the right to remain silent is invoked, all questioning must cease until the defendant freely and voluntarily chooses to initiate questioning. See Oregon v. Bradshaw, 462 Mass. 1039, 1044 (1983); Michigan v. Mosley, 423 U.S. 96, 103-04 (1975); Commonwealth v. Lopes, 455 Mass. 147, 163 & n.15 (2009). In view of the actions by the police, the defendant’s medicated condition which caused him to slur his speech, his emotional condition (crying and sobbing because of fear he and his family would be killed), and the nature *642of the police questioning (again, mostly leading questioning in which answers were suggested to the defendant), I am unable to say, by the standard of proof beyond a reasonable doubt, that the second interview was conducted on the basis of a valid waiver of his Miranda rights or that it was voluntary.
ORDER
In more than twenty-one years of service as a trial judge in both the District and Superior Courts, I have had occasion to conduct hundreds of hearings on motions to suppress statements based on allegations that there was a violation of Miranda or that the statement was not voluntary. In recent years, largely as a result of Commonwealth v. DiGiambattista, 442 Mass. 423 (2004), both trial and appellate judges commonly receive in evidence as an exhibit a video- or audio-recording of the actual custodial interrogation in a case as opposed to hearing witnesses give accounts of what happened and what was said. After viewing perhaps forty recorded custodial interrogations since DiGiambattista, I am persuaded that police departments, with input from prosecutors and others, should give consideration to recognizing a specialty designation for conducting custodial interrogations. The officers and detectives who conduct custodial interrogations face significant challenges in terms of the need to understand a complex body of state and federal law, and the use of appropriate interrogation methods. There are some important guideposts in the law. Purposeful use of deception about the existence of evidence, minimization of the gravity of the crime under investigation, and incorrect statements about the law are all techniques that should not be used. Beyond this, it is time for the law enforcement community to take into account developments in social science research about the impact of certain types of interrogation methods on persons who are likely to be more susceptible to persuasion and whose interrogations may need to be conducted differently than the interrogations of others,3 and to reach out to other interested parties, as it did to address shortcoming with eyewitness identification procedures, to consider best practices in the area of custodial interrogations and incorporate these into the day-to-day work of police officers and detectives. The issue is not whether the police should attempt to obtain confessions. Rather, the issue is given the extraordinary weight assigned to confessions by juries, and the commitment our system has to present juries with reliable evidence, the approach to questioning persons who are in a custodial setting should be based on guidelines that are designed to promote, if not ensure, reliability. For example, in this case, most of the questions put to the defendant were leading, and many were argumentative. Very few of the questions were open-ended. In addition, when a person makes statements about killing himself in the midst of an emotionally charged interrogation, and later when it is known that he has been medicated as a result of that condition, is it appropriate to simply continue with the interrogation or should there be guidelines that provide police officers and detectives with alternatives?
For the above reasons, the defendant’s motion to suppress the first and second statements made to Florida police detectives and both Massachusetts and Florida police detectives on March 14 and March 15, 2007 is ALLOWED.
The parties have not addressed the question of whether Massachusetts law or Florida law should be applied to this issue. Since it appears that the Florida police questioned the defendant to assist the Massachusetts police and for the specific reason of gathering evidence to be used in a Massachusetts prosecution, it seems clear that Massachusetts law is applicable.
Nhe jury instruction used to express proof beyond a reasonable doubt is instructive. Perhaps the best synopsis of the concept of proof beyond a reasonable doubt is “a subjective state of near certainty.” Commonwealth v. Pinkney, 419 Mass. 341, 347 (1995).
See Saul M. Kassin, Steven A. Drizin, Thomas Grisso, Gisli H. Gudjonsson, Richard A. Leo, & Allison D. Redlich, Police-Induced Confessions: Risk Factors and Recommendations, published online July 15, 2009 as a “scientific review paper” of the American Psychology-Law Society/Division 41 of the American Psychological Association. See also William C. Thompson, An American Psychology-Law Society Scientific Review Paper on Police Interrogation and Confession, 34 Law and Human Behavior 1 (2010). Professor Thompson observes that although the organization usually addresses the legal community and the public on the basis of the views of individual members, there are times when the organization deems it important to speak as an organization. “By authorizing and endorsing Scientific Review papers, the Society makes known the consensus views of its members and lends its authority to the conclusions reached.” Id. The above paper is only the second time in 42 years that the Society has commissioned such a paper. | 01-03-2023 | 10-17-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/1933791/ | 348 So.2d 243 (1977)
MERCY REGIONAL MEDICAL CENTER
v.
Camille C. DOIRON.
No. 49210.
Supreme Court of Mississippi.
July 6, 1977.
Rehearing Denied August 3, 1977.
Ramsey, Bodron, Thames & Robinson, Lee Davis Thames, Vicksburg, for appellant.
Teller, Biedenharn & Rogers, Landman Teller, Jr., Vicksburg, for appellee.
Before INZER, P.J., and SUGG and LEE, JJ.
SUGG, Justice, for the Court.
This is a negligence case from the Circuit Court of Warren County. Mrs. Camille C. Doiron was awarded $25,000 damages as a result of injuries sustained when she fell on a stairway situated on the property of defendant, Mercy Regional Medical Center. The question presented in this case is: Did the Hospital's failure to provide a handrail on steps to a parking lot constitute a breach of its duty to use ordinary care in keeping its premises in a reasonably safe condition?
Plaintiff enrolled in the School of Nursing at Mercy Regional Medical Center in August, 1972. During orientation the hospital officials explained to the students that they would be required to park in the lower parking lot located across the street from the Hospital down a grassy hill. Concrete steps lead from the lower parking lot up the hill to the street adjacent to the Hospital. There are thirty steps, four feet wide, with gutters on both sides leading from the lower parking lot to the street. The steps were constructed of concrete with a five and one-half inch riser and a twelve inch tread. No complaint is made about the width of the tread, or the height of the riser, but the negligence charged is that the defendant failed to provide a handrail to be used by persons ascending and descending the steps.
On the afternoon of December 13, 1972 plaintiff, accompanied by a fellow student, was descending the steps leading to the lower parking area. Approximately halfway down the steps plaintiff lost her balance for no apparent reason, unsuccessfully attempted to grab for something to enable her to regain her balance, and fell to the ground on the right side of the steps. There was no debris on the steps, the steps were not wet or slippery and the condition of the steps did not cause her to lose her balance. Her sole charge of negligence was the absence of a handrail on the steps. She *244 testified that had there been a handrail she would not have fallen.
Defendant requested a peremptory instruction which was refused and, following the verdict of the jury, filed a motion for a judgment notwithstanding the verdict. In Paymaster Oil Mill Co. v. Mitchell, 319 So.2d 652 (Miss. 1975) we held that the evidence considered on a request for a judgment n.o.v. embraces the testimony on behalf of plaintiff as well as that of the defendant, there being no difference between that considered for a peremptory instruction and a judgment n.o.v. because the latter is entertained only to correct the court's error in refusing a requested peremptory instruction.
We further stated in Paymaster that the jury resolves conflicts of fact while the court resolves issues of law arising from non-conflicting facts. There was no conflict in the evidence so the issue of negligence was for the court.
City of Greenville v. Laury, 172 Miss. 118, 159 So. 121 (1935) was cited with approval in Supreme Instruments Corp. v. Lehr, 190 Miss. 600, 199 So. 294, Sugg. of Error Sustained, 1 So.2d 242 (1941). In Laury, we held:
In an action at law based on negligence, the question of negligence vel non is for the determination of the jury, unless the doing of the act which caused the injury complained of is not in dispute or conclusively appears from the evidence, and no inference except that of negligence or of no negligence can be justly drawn therefrom, in which event the question is for the determination of the trial judge. Whitney v. Cook, 53 Miss. 551; McCaughn v. Young, 85 Miss. 277, 37 So. 839; Farmer v. Cumberland Telephone & Telegraph Co., 86 Miss. 55, 38 So. 755. (172 Miss. at 122; 159 So. at 122).
In Supreme Instruments, supra, we held:
Requisite care remains always that degree of care commensurate with appreciable danger appraised in terms of ordinary prudence and interpreted in the light of the attendant circumstances. Application of this principle leads to results which give play to such varying factors as time, place, and purpose. Although the expression and the basis of the rule remain fixed, its flexibility permits accommodation to each particular case. The area of factual doubt within which juries should be allowed to function is circumscribed within a circle of which care is the axis and reasonableness the radius. Within this area reasonableness is to be adjudged by reasonable men, and their right to differ is commensurate with their duty to consult. Beyond this limit lies the field of substantive law. Here are found those issues as to which reasonable men should not be in disagreement. It is here that `the court is not called upon to decide the issue of fact one way or the other, but it is called upon to decide whether there is an issue of fact under the law to go to the jury.' City of Hazlehurst v. Matthews, 180 Miss. 42, 176 So. 384, 385. As was said by Cardozo, J., in People v. Galbo, 218 N.Y. 283, 112 N.E. 1041, 1045, 2 A.L.R. 1220, `insufficient evidence is ... no evidence.' Absence of a handrail under the circumstances cannot be held to be negligence, much less a contributing proximate cause of the injury. Any defect, therefore, was not in the step but in the stepping. No negligence may be predicated upon the construction or maintenance of the step in question. (Emphasis Supplied) (190 Miss. at 627, 1 So.2d at 245).
In Supreme Instruments, the case was first affirmed by this Court which divided three three on the question of affirmance. On suggestion of error the case was reversed and judgment rendered for the appellant who was the defendant in the trial court. In a dissenting opinion when the case was originally before the court, Justice Griffith stated:
Inasmuch, then, as all the facts respecting the condition of the steps were undisputed and every feature of common *245 knowledge or common experience which the jury could apply belonged also to the judge, what was there to submit to the jury as regards the condition of the steps, except to allow them to alter or amend the law of the land under the guise of a finding of facts? We have repeatedly said, as for instance in Dow v. Town of D'Lo, 169 Miss. 240, 247, 152 So. 474, 475, that "it is not permissible, by the device and under the guise of a finding of facts by a jury, that the law of the land shall be altered or amended." (Emphasis Supplied) (190 Miss. at 620, 199 So. at 298).
When the Court reversed its original holding, the principle expressed by Judge Griffith in his dissent was adopted by the Court in different language.
The duty of care owed by the defendant to the plaintiff is well established in our jurisprudence. In Stanley v. Morgan & Lindsey, Inc., 203 So.2d 473 (Miss. 1967) we stated:
The plaintiff bases her claim against the defendants upon the theory that since the plaintiff was a customer of the defendant, Morgan & Lindsey, it was the duty of the operator of the business to exercise reasonable or ordinary care to keep the store premises in a reasonably safe condition for the use of its business invitees. There can be no doubt that this is the general rule throughout the United States (65 C.J.S. Negligence § 63(130) (1966), and it is also the rule in this state. Gulfport Winn-Dixie, Inc. v. Taylor, 246 Miss. 332, 149 So.2d 485 (1963); Wallace v. J.C. Penney Co., 236 Miss. 367, 109 So.2d 876 (1959); Daniels v. Morgan & Lindsey, Inc., 198 So.2d 579 (Miss. 1967).
.....
The rule is set out in 38 Am.Jur. Negligence § 96 (1941), at 754-56, as follows:
`The rule is that an owner or occupant of lands or buildings, who directly or impliedly invites others to enter for some purpose or interest or advantage to him, owes to such persons a duty to use ordinary care to have his premises in a reasonably safe condition for use in a manner consistent with the purpose of invitation, or at least not to lead them into a dangerous trap or to expose them to an unreasonable risk, but to give them adequate and timely notice and warning of latent or concealed perils which are known to him but not to them. Summarily stated, to the extent of the invitation given, a property owner owes to an invitee the duty of prevision, preparation, and lookout. An owner in occupation of the premises violates his duty to an invitee when he negligently allows conditions to exist on the property which imperil the safety of persons upon the premises. For such violation, he is responsible in damages to the injured person, provided, of course, due care was exercised by that person.'
On the other hand, it is also a general rule that:
`A customer in a store is bound to take ordinary or reasonable care for his own safety. Upon entering a store, a customer is required to use in the interest of his own safety that degree of care and prudence which a person of ordinary intelligence and prudence would exercise under the same or similar circumstances. He must make a reasonable use of his own faculties to observe and avoid dangers upon the premises.'
38 Am.Jur. Negligence § 199 (1941) at 879. (203 So.2d 475-476).
In this case the defendant owed the plaintiff the duty of exercising reasonable or ordinary care to keep its premises in a reasonably safe condition for the use of plaintiff who was an invitee. The question then may be simply put, did the defendant exercise reasonable care to keep its premises in a reasonably safe condition? It is true that a handrail may have afforded the *246 plaintiff a means of regaining her equilibrium when she accidentally stumbled while descending the steps. It is also true that if a fellow employee had been stationed there to catch her the injury might have been avoided, but we are not dealing here with the question of making premises absolutely safe but with an alleged failure to exercise reasonable care to maintain the premises in a reasonably safe condition.
Most, if not all of us, use steps almost daily. Certainly any reasonable person recognizes the necessity of maintaining his balance when ascending or descending a stairway. Absent an unknown or concealed defect in a stairway, if it is otherwise reasonably safe, no negligence exists. In Supreme Instruments, we stated:
`The court is not ignorant of common devices and common dangers, and no admission or expert opinion can establish liability where common knowledge shows that there was no danger so substantial that a reasonable man in the position of the defendant would have anticipated injury and guarded against it.' See also Haddon v. Snellenburg, 293 Pa. 333, 143 A. 8; Toscani v. Quackenbush Co., 112 N.J.L. 173, 170 A. 212; Stark v. Franklin Simon & Co., 237 App.Div. 42, 260 N.Y.S. 691; Dickson v. Emporium Mercantile Co., 193 Minn. 629, 259 N.W. 375; Boyle v. Preketes, 262 Mich. 629, 247 N.W. 763, 765. In the last named case the Court said: `It has long since been recognized that falling downstairs, where the mishap was not imputed to unknown or concealed defects, belongs to that class of ordinary accidents which ought to be imputed to the carelessness or misfortune of the sufferer.' (Emphasis Supplied) (190 Miss. at 626, 1 So.2d at 244).
In this case the steps were built on the ground which sloped gradually down from the street to the lower parking lot and did not constitute a hazard to one using due care when using them. This case does not fall within the rule that, where facts are undisputed, but reasonable minds may draw different inferences as to negligence therefrom, solution of the issue of negligence should be left to the jury. We are of the opinion that plaintiff's injury belongs to that class of ordinary accidents which are properly imputed to the carelessness or the misfortune of the one injured.
The peremptory instruction requested by the defendant should have been given.
REVERSED AND RENDERED.
GILLESPIE, C.J., PATTERSON and INZER, P. JJ., and SMITH, ROBERTSON, WALKER, BROOM and LEE, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1529271/ | 886 S.W.2d 414 (1994)
STAR HOUSTON, INC. d/b/a Star Motor Cars, Appellant,
v.
Steve SHEVACK, Appellee.
No. 01-93-00440-CV.
Court of Appeals of Texas, Houston (1st Dist.).
September 8, 1994.
Rehearing Overruled September 29, 1994.
*416 Josh M. Harrison, Woodlands, for appellant.
William J. Robertson, Houston, for appellees.
Before MIRABAL, COHEN and HUTSON-DUNN, JJ.
OPINION
MIRABAL, Justice.
Steve Shevack sued Star Houston, Inc. d/b/a Star Motor Cars (Star), alleging breach of contract, common-law fraud, and violation of the Texas Deceptive Trade Practices Act (DTPA), TEX.BUS. & COM.CODE ANN. §§ 17.41-17.63 (Vernon 1987 and Supp.1993), in connection with repair work Star performed on Shevack's automobile. Star counterclaimed for breach of contract, and also sought attorneys' fees and costs from Shevack under section 17.50(b) of the DTPA, asserting that his DTPA action was groundless and was brought in bad faith or for harassment. The trial court entered judgment, on a jury verdict, that Shevack recover from Star $4,776.47 in actual damages, $15,000 in exemplary damages, and $10,000 in attorneys' fees, as well as pre- and post-judgment interest, and additional attorneys' fees in the event of appellate proceedings; and that Star take nothing on its counterclaim. Star appeals, raising 17 points of error. We reform the judgment, and affirm.
One evening in 1989, Shevack was driving in his 1982 Mercedes 380SEL automobile on the Southwest Freeway in Houston, when his engine suddenly went completely dead. He and his companions pushed the car to a nearby gas station on the service road, and Shevack had it towed to a repair shop. The next morning, that shop told Shevack it appeared there was a serious problem with his car's timing chain; he told them not to do anything to the car, and called the factory representative at Mercedes North America (Mercedes). Shevack relayed the repair shop's assessment, and answered other questions asked of him. Mercedes told Shevack that if the trouble was indeed a timing chain problem, then Mercedes would pay half the bill. At Mercedes' suggestion, Shevack had the car towed to Star. Star took approximately 10 days to inspect Shevack's car, and communicated the results to Shevack in the following letter:
August 10, 1989
. . . .
Dear Mr. Shevack,
. . . .
The estimation on the repair of your 1982 380 SEL is as follows:
PARTS $ 9,619.66 (incl. tax)
LABOR 3,020.00
__________
TOTAL ESTIMATE $12,639.66
Please keep in mind this is just an estimate. As per our telephone conversation, Mercedes-Benz has agreed to pay 50% of the entire bill.
If you will simply sign the authorization at the bottom of the page and return to me as soon as possible, we can begin the repairs.
Sincerely,
STAR MOTOR CARS
/s/ Ken Clements
Ken Clements
Service Advisor
KC/cs
I AUTHORIZE STAR MOTOR CARS TO PERFORM REPAIRS TO MY CAR AS PER THE ESTIMATION.
/s/ Steve Shevack
Steve Shevack
*417 After Shevack signed the letter and returned it to Star, Star began the repair work on his car. Five or six weeks later, Ken Clements called Shevack and told him the car would be ready the next day. When Shevack was given the bill, Mike Martini, Star's service manager, told Shevack that there were certain items on the bill that Mercedes would not pay for because they were normal wear and tear items, and that Star was charging those items one hundred percent to Shevack. The total bill was $12,433. To get his car back, Shevack paid, under protest, $7,596.30 of that amount. This suit followed.
In its points of error one, two, three, and nine, Star complains of a number of the trial court's actions.[1] Star has waived one of those complaints,[2] and the remainder all rest on Star's assertion that there was no evidence to support the jury's answer to Shevack's jury question number two, that Star had committed a fraud which was a proximate cause of damages to Shevack.
In reviewing legal insufficiency or "no evidence" points, the reviewing court considers only the evidence and inferences that, when viewed in their most favorable light, tend to support the finding, and disregards all evidence and inferences to the contrary. Davis v. City of San Antonio, 752 S.W.2d 518, 522 (Tex.1988); Stafford v. Stafford, 726 S.W.2d 14, 16 (Tex.1987); Alm v. Aluminum Co. of America, 717 S.W.2d 588, 593 (Tex.1986); King v. Bauer, 688 S.W.2d 845, 846 (Tex.1985). If there is more than a scintilla[3] of evidence to support the finding, the "no evidence" point must be overruled and the finding upheld. Sherman v. First Nat'l Bank, 760 S.W.2d 240, 242 (Tex.1988).
The elements of actionable fraud in Texas are (1) that a material representation was made; (2) that it was false; (3) that, when the speaker made it, he knew it was false or made it recklessly without any knowledge of its truth and as a positive assertion; (4) that he made it with the intention that it should be acted upon by the party; (5) that the party acted in reliance upon it; and (6) that the party thereby suffered injury. Trenholm v. Ratcliff, 646 S.W.2d 927, 930 (Tex.1983). The jury was so charged.
Shevack testified that Star represented to him that Mercedes would pay 50 percent of the entire bill for work Star did on his car. Clements' letter was admitted into evidence; the letter, and Shevack's signature on it, tend to show, respectively, Star's intention to induce Shevack to act upon that representation by giving Star a signed, written authorization to proceed with the repairs, and that Shevack did rely on that representation. Clements testified that at the time he wrote the letter, he knew that Mercedes was not going to pay for parts and labor that were not related to the timing chain. Clements also testified that Star performed certain additional repairs, not related to the timing chain and not considered in its August 10 letter, that Star decided were "needed," without getting prior permission from Shevack. Shevack testified that he paid more than half of the entire bill.
There was evidence of each element of fraud; that evidence was legally sufficient to support the jury's answer to jury question number two. We overrule points of error one, two, three, and nine.
*418 In its points of error four, five, six, and eight, Star complains of the trial court's instruction, over Star's objection, that the jury consider mental anguish suffered by Steve Shevack, if any, as an element of Shevack's damages (along with the difference between the dollar amount Shevack was charged for the car repairs and the amount as represented or contracted for). Star raises other complaints in these points as well.[4] All of these points rest on the assertion that there was no evidence that Shevack suffered any mental anguish. In its point of error seven, Star asserts the trial court erred in admitting, over Star's objection, evidence offered by Shevack in support of his mental anguish claim.
Shevack first testified summarily that the problems with Star had caused him mental anguish, and elaborated as follows:
At the time I took the car in to be serviced, I had gone through some very bad times. I didn't want to bring it up.... I had been diagnosed with pancreatic Counsel, I only have a few more months to goI had gone through a severe financial problem and I had lost my business. My credit was already terrible. I had several judgments.
Counsel for Star objected at that point, that this testimony was irrelevant and unduly prejudicial. After the objection was overruled, Shevack continued:
I had lost my business and lost my house. Several banks were suing me. I had a tremendous amount of medical bills, unpaid medical bills; and then this happened at a time when I was just, you know, just another thing that was just hitting me. And it was nothing I could do. I had to borrow money from my sister to make repairs on the car. There was just no other place I could go and it was just a tremendous hardship at this particular time.
I thought the car would be ready in a week or so. I had to go rent a car and spend another $1700 for five weeks because they couldn't get the car out on time which was another expense I certainly didn't need.
It was just adding insult to injury at this particular time.
Finally, Shevack also testified that the problem with Star had induced him to consult a doctor about his mental anguish.
Just as with any physical injuries he causes another, a tortfeasor whose actions cause another to suffer mental anguish or emotional distress takes his plaintiff as he finds him. Coates v. Whittington, 758 S.W.2d 749, 752-53 (Tex.1988). Regardless of any special susceptibility on the injured party's part, that party is entitled to recover for the mental distress he proves the incident caused him, conditioned as he was at the time of the incident. Id. Shevack's testimony concerning his state of mind in his particular situation at the time of his contact with Star was relevant to his allegations of mental anguish.
In Texas, a party may recover damages for mental anguish without having suffered any physical injury. St. Elizabeth Hosp. v. Garrard, 730 S.W.2d 649, 654 (Tex. 1987); Cronin v. Bacon, 837 S.W.2d 265, 269 (Tex.App.Fort Worth 1992, writ denied). However, to recover damages for mental anguish, one must show more than mere worry, anxiety, vexation, embarrassment, or anger. Phar-Mor, Inc. v. Chavira, 853 S.W.2d 710, 712 (Tex.App.Houston [1st Dist.] 1993, writ denied); Elliott v. Dow, 818 S.W.2d 222, 225 (Tex.App.Houston [14th Dist.] 1991, no writ). Mental anguish is defined as a high degree of mental suffering, beyond disappointment, anger, resentment, or embarrassment, although it may include all of these. Phar-Mor, 853 S.W.2d at 712; Cronin, 837 S.W.2d at 269. The proof must show such painful emotions as grief, severe disappointment, indignation, wounded pride, shame, despair, or public humiliation. Phar-Mor, 853 S.W.2d at 712; Cronin, 837 S.W.2d at 269. Jurors are best suited to determine whether *419 and to what extent the defendant's conduct caused compensable mental anguish by referring to their own experience. St. Elizabeth Hosp., 730 S.W.2d at 654.
The only evidence relevant to Shevack's allegations of mental anguish was Shevack's testimony, and the facts surrounding the repair work on Shevack's automobile. Star cites Elliott, Cronin, and other cases, in support of its contention that the evidence was legally insufficient.
In Elliott, had been injured in a motorcycle accident. The Fourteenth Court held that the evidence was factually sufficient to support a jury finding of zero damages for mental anguish, where Elliott had testified simply that following the accident, he was "upset" and "worried about the future."[5] The Elliott case is of little assistance in determining whether the proof in this case was legally insufficient to support a jury finding Shevack was entitled to recover damages for mental anguish. As for Cronin, there the plaintiff, Bacon, testified only that he was angry "as angry as I have ever been." Clearly, that testimony, standing alone, showed no more than "mere worry, anxiety, vexation, embarrassment or anger."
Star's remaining cases are Town East Ford Sales, Inc. v. Gray, 730 S.W.2d 796 (Tex.App.Dallas 1987, no writ) and Roberts v. U.S. Home Corp., 694 S.W.2d 129 (Tex. App.San Antonio 1985, no writ). In Roberts, the only evidence offered about mental anguish was Roberts' testimony that when U.S. Home rejected his loan application he was "mad," "embarrassed," and "felt like scum" because of the credit troubles he subsequently experienced with other prospective lenders; the San Antonio court held that evidence legally insufficient to support a recovery. 694 S.W.2d at 136. As in Cronin, that testimony showed anger, embarrassment, or vexation, but no more. In addition, in Roberts, as in Elliott, there were also causation problems.[6] And finally, in Town East, the Dallas Court of Appeals held that there was no evidence of mental anguish, where Gray testified only that he "had been anguished and felt a continuing strain" from his dispute with Town East. 730 S.W.2d at 803.
In Phar-Mor, this court sustained a "no evidence" challenge to a jury finding that "the defendant's invasion of the plaintiffs' privacy proximately caused mental anguish to plaintiffs." Phar-Mor involved a five-minute entry into the plaintiffs' home by two Phar-Mor employees, at the invitation of and in the presence of the plaintiffs' adult son (also a Phar-Mor employee), who lived with the plaintiffs at the home. The plaintiffs were not at home at the time, and the neighbors were not aware of the visit. During the visit, six video tapes were taken from the plaintiffs' home. This court held there was no evidence the plaintiff husband suffered any damages, and the plaintiff wife's minimal discomfort from the incident did not rise to the level of mental anguish.
In contrast to the plaintiffs in Phar-Mor, Elliott, Cronin, Town East and Roberts, Shevack was a particularly vulnerable plaintiff. At the time of his troubles with Star, he had been diagnosed with a life-threatening pancreatic condition; he testified at trial he had only a few more months to live. Shevack had been recently successful in banking and real estate. However, at the time he took his car to be serviced at Star, he had lost his business and his house; several banks were suing him; he had several judgments against him; and he had a tremendous amount of unpaid medical bills. At this time of financial and medical distress, Star kept Shevack's car for about one and one-half months, when Shevack had thought the car would be ready in a week or so; as a result, *420 Shevack had to pay $1700 for a rental car. And then, when the car was finally ready, Shevack found he was overcharged by about $1300. He did not have any money to pay this extra $3000 in expenseshe had to borrow the money from his sister. The fact that a person is placed in a position to have to seek assistance from a relative, at a time when he is faced with a short life expectancy, could be the source of emotional stress and mental anguish in the eyes of some people. Shevack testified directly that he suffered mental anguish and had consulted doctors about his mental anguish. The judge observed Shevack testify, and concluded the evidence presented more than a mere surmise or suspicion about whether Shevack had suffered such painful emotions as despair, wounded pride, or indignation as a result of Star's actions. The judge decided to let the jury decide.
The sufficiency of evidence to support a finding of mental anguish has been at issue in several other cases. Although none is precisely on all fours with the instant case, we find each instructive.
Tidelands Auto. Club v. Walters, 699 S.W.2d 939 (Tex.App.Beaumont 1985, writ ref'd n.r.e.), was a suit for intentional infliction of emotional distress. Mr. Walters' wife had been killed in an automobile accident, and he filed a claim to collect life insurance proceeds from Tidelands. The jury found that, before giving Mr. Walters a copy, Tidelands had altered a letter it received from a justice of the peace. The letter relayed the opinion of the regional crime laboratory that Mrs. Walters had not been intoxicated at the time of the accident; the jury found Tidelands had changed it to say, instead, that she had been intoxicated. 699 S.W.2d at 940. On appeal, Tidelands did not challenge that finding, but did contest the legal and factual sufficiency of the evidence that Mr. Walters suffered severe emotional distress as a result of the assertion in the altered letter. 699 S.W.2d at 941. Like Shevack, Mr. Walters was, at the time of the alleged tort, already distressed over events for which the defendant was not responsible; Walters' daughter testified that, because he was already upset over Mrs. Walters' death, she delayed telling him about the letter. She and he both testified about his severe emotional reaction when he learned of it: the letter "upset" him so much that he closed himself up alone in a room for several days and did not want to see or talk to anyone; it kept him from sleeping at night; it preoccupied him and kept him from concentrating; and made him ill, disoriented and angry. They both also testified that Mr. Waltersagain, like Shevackhad felt bad enough that he had seen a doctor about that distress; Mr. Walters said that he hadn't really wanted to do so, but it "`seemed to me I had to do something.'" The court held that evidence was both legally and factually sufficient to support the jury's finding that Mr. Walters had suffered severe emotional distress. 699 S.W.2d at 945.
Shevack's description of his emotional reaction to Star's acts was not as long or as detailed or vivid as the description of the plaintiff's reaction in Tidelands. However, the plaintiff's and other witnesses' demeanor, the emotion evident in their testimony, and the "gut feeling" they project to the jurors is one kind of proof of mental anguish that may be presented in a case, as well as evidence of what has taken place in a plaintiff's life as a result of a defendant's actions. State Farm Mut. Auto Ins. Co. v. Zubiate, 808 S.W.2d 590, 599-601 (Tex.App.El Paso 1991, writ denied).
For instance, Automobile Ins. Co. of Hartford v. Davila, 805 S.W.2d 897 (Tex.App. Corpus Christi 1991, writ denied), was an action for wrongful denial of insurance benefits following a fire in the upstairs portion of the Davilas' home. Despite a lack of any direct evidence of the Davilas' emotional states, such as testimony from either of them about outrage, anger, or other emotional pain or distress that the insurer's conduct provoked, the court held that there was legally and factually sufficient evidence that the insurer had caused them mental anguish. The court reasoned that the jury was entitled to infer that the Davilas suffered emotional distress from "the unrepaired condition of their home, their shortage of clothes and furniture," their living conditions, and testimony concerning friction between them after the *421 fire, which "indicated that [they] were emotional people who overreacted to stress[.]" 805 S.W.2d at 907. And in Zubiate itself, also involving an alleged wrongful denial of an insurance claim, the plaintiffs testified at some length about both their emotional reaction to the insurer's treatment of their claim, as well as the progression of the events themselves; the latter testimony weighed heavily in the court's conclusion that the evidence was sufficient to support the jury's award of $165,000 for mental anguish:
In light of the facts and circumstances that were related to the jury during the trial by the Zubiates, it is apparent that the Zubiates satisfied the requirement that they must demonstrate more than mere worry, anxiety, vexation, embarrassment or anger. The jury did not have to base its decision solely on the witnesses' testimony and demeanor. The jury could also consider all the evidence as to what had taken place in the Zubiates' life as a result of the claim denial.
808 S.W.2d at 590.
Again, none of the foregoing cases is precisely on all fours with the instant case, and we do not consider any one or more of them dispositive of our decision here. There is no certain standard by which personal injury damages can be measured; each case must stand on its own facts and circumstances. However, we consider this case to be distinct from Phar-Mor, Elliott, Cronin, Town East, Roberts, and similar cases,[7] and more closely akin to Tidelands, Zubiate, and Davila. We hold that, in this instance, the evidence presented was legally sufficient to support the submission of a jury question on mental anguish damages. Further, we hold there was more than a scintilla of evidence (more than mere surmise or suspicion) to support the jury's finding of mental anguish and the award of mental anguish damages. Moreover, the evidence offered by Shevack was not unduly prejudicial; on the contrary, it was in the mainstream of the kind of evidence offered in similar cases, and had neither unusually low probative value nor unusually high potential for prejudicial effect.
We overrule points of error four through eight.
In point of error 11, Star contends that the trial court erred in awarding damages for breach of contract, fraud, and/or violations of the DTPA, because Star's August 10, 1989, letter was a mere estimate of the cost of repairs. We understand Star to assert that that letter was neither a contract to repair Shevack's car for a fixed price of $12,639.66, nor a sufficiently definite statement about the cost of repairs that it could, if false, constitute an actionable misrepresentation of the cost of repairs. Shevack's claim for damages, however, was not founded upon any variance between the $12,639.66 figure and the actual cost of repairing his automobile, but rather, upon Star's unqualified, positive assertion in the letter that "Mercedes-Benz has agreed to pay 50% of the entire bill." That assertion was actionable.
We overrule point of error 11.
Points of error 13 and 14 raise complaints about the trial court's final judgment that were subsequently mooted when the errors assigned were corrected in a judgment nunc pro tunc. We overrule points of error 13 and 14.
In point of error 15, Star complains that the trial court erred in allowing Shevack to testify regarding the maintenance of his vehicle, since Shevack never produced his service records and owner's manual in response to Star's discovery requests. No authority is cited in support of point of error 15. The point is therefore waived. Tex. R.App.P. 74(f). In any event, whether Shevack had properly maintained his vehicle prior to the timing chain failure is not relevant to any of his claims against Star; those claims do not concern the timing chain failure, but rather, a subsequent eventStar's misrepresentationthat could not have been caused by, and had nothing to do with, any failure on Shevack's part to maintain his *422 vehicle properly. Error, if any, in allowing Shevack to testify to the matter was not reasonably calculated to cause an improper judgment in this case. Tex.R.App.P. 81(b)(1).
We overrule point of error 15.
In point of error 16, Star contends that the trial court erred in overruling its objection that Shevack's testimony concerning unrelated lawsuits against him was irrelevant, and in denying Star's motion for mistrial.
Shevack testified that at the time of his dealings with Star, he had several banks suing him and had judgments against him for a debt on bank stocks that he was unable to pay at that time. This testimony, like his earlier testimony described above in connection with point of error seven, was probative of Shevack's condition at the time, and was relevant to his allegations of mental anguish. The trial court did not err in overruling Star's objection.[8]
Shevack testified that Star's trial counsel, Mr. Harrison, had obtained one of the earlier judgments against Shevack, for a client. On cross-examination, Shevack referred to that fact when he said to Star's counsel, "I think what you did is as sleazy as you can get." The trial court sustained Star's objection to the non-responsive answer and denied Star's motion for mistrial. The trial court then sua sponte instructed the jury not to consider Shevack's remark for any purpose. In the absence of some contrary indication, we must presume that the jury obeyed that instruction. Walker v. Texas Employers' Ins. Ass'n, 155 Tex. 617, 291 S.W.2d 298, 300 (1956). Star has not argued that any circumstance apparent in the record rebuts that presumption, and, independently, we find none.
We overrule point of error 16.
In point of error 10, Star asserts that the trial court erred in awarding both attorneys' fees and exemplary damages in the judgment, over its double recovery objection, raised in its motion to disregard jury findings and in its motion for new trial. In point of error 17, Star complains about the award of appellate attorneys' fees.
Shevack sued Star for breach of contract, common-law fraud, and violation of the DTPA. Neither Shevack's cause of action for breach of contract nor his cause of action for common-law fraud entitled Shevack to obtain both a recovery of attorneys' fees and a separate award of exemplary damages.[9] Additionally, in this instance Shevack's DTPA cause of action will not support a recovery for both attorneys' fees and exemplary damages because, in answer to question five, the jurors refused to find that Star had "knowingly" engaged in any of the deceptive trade practices they found in response to previous questions. See Tex.Bus. & Com.Code Ann. § 17.50(b)(1) (Vernon Supp. 1994); see also Jeep Eagle Sales v. Mack Massey Motors, 814 S.W.2d 167, 175 (Tex. App.El Paso 1991, writ denied) (showing that defendant acted "knowingly" required for jury to assess punitive damages under DTPA).
A party who seeks redress under two or more theories of recovery for a single wrong must elect, before the judgment is rendered, under which remedy he wishes the court to enter judgment. American Baler Co. v. SRS Sys., Inc., 748 S.W.2d 243, 246 (Tex.App.Houston [1st Dist.] 1988, writ denied); Thate v. Texas & Pacific Ry. Co., 595 S.W.2d 591, 595 (Tex.Civ.App.Dallas 1980, writ dism'd). Where a prevailing party fails to make that election, the trial court should utilize the findings affording the greater recovery and render judgment accordingly. *423 Birchffield v. Texarkana Memorial Hosp., 747 S.W.2d 361, 367 (Tex.1987); American Baler Co., 748 S.W.2d at 246. Where the trial court fails to do so, the appellate court will reform the trial court's judgment to effect such an election. Stevenson v. Koutzarov, 795 S.W.2d 313, 322 (Tex.App.Houston [1st Dist.] 1990, writ denied); American Baler Co., 748 S.W.2d at 246, 250.
The jury found, and the trial court awarded, exemplary damages of $15,000. The jury found, and the trial court awarded, reasonable attorneys' fees in the following amounts: $10,000 through trial and judgment; $5,000 in the event of an appeal to the court of appeals; $2,500 in the event of the filing of an application for writ of error to the Texas Supreme Court; and $2,500 if the application for writ of error is granted by the Texas Supreme Court.
The award of appellate attorneys fees to Shevack is necessarily conditional on Shevack's success on appeal.[10]Sipco Serv. Marine v. Wyatt Field Serv. Co., 857 S.W.2d 602, 607-608 (Tex.App.Houston [1st Dist.] 1993, no writ.). Because the unconditional exemplary damage award of $15,000 is larger than the unconditional award of $10,000 in attorneys' fees through the date of judgment, we conclude the cause of action awarding the greater recovery is the common-law fraud cause of action under which Shevack is entitled to $4,776.47 in actual damages and $15,000 in exemplary damages. Because, under the common-law fraud cause of action, attorneys' fees are not recoverable separately from exemplary damages, we sustain Star's points of error 10 and 17. In light of our sustaining these points, it is unnecessary for us to consider point of error 12, and we decline to do so.
We reform the judgment to delete any award for attorneys' fees, and we affirm the judgment in all other respects.
O'CONNOR, J., requested a vote to determine if the case should be heard en banc, pursuant to Tex.R.App.P. 79(d), (e) and Tex.R.App.P. 90(e).
OLIVER-PARROTT, C.J., and DUGGAN, COHEN, DUNN and MIRABAL, JJ., voted against en banc consideration.
ANDELL, J., did not participate.
O'CONNOR, J., dissented from the denial of en banc consideration and filed an opinion in which WILSON and HEDGES, JJ., join.
O'CONNOR, Justice, dissenting.
I dissent from this Court's denial of a motion for en banc hearing of points of error four, five, six, and eight, regarding mental anguish damages. I do not believe there is any evidence that Steve Shevack suffered mental anguish damages.
The panel's statement of the evidence on damages is correct. I reproduce the same testimony to make a distinction between Shevack's testimony about his mental anguish caused by the tort (italicized) from Shevack's testimony about his condition immediately before the tort (non-italicized). On direct examination Shevack testified as follows:
Q: Is there any other damages that you have sustained as a result of this?
A: Yes.
Q: What are those?
A: Mental anguish.
Q: And what mental anguish have you suffered?
A: At the time I took the car in to be serviced, I had gone through some very bad times. I didn't want to bring it up. I don't know why counsel did.
I had been diagnosed with pancreatic Counsel, I only have a few more months to goI had gone through a severe financial problem and I had lost my business. My *424 credit was already terrible. I had several judgments.
[Objection by defense lawyerStar did not cause any of this, and it is irrelevant and unduly prejudicial to Star. Court overruled objection.]
* * * * * *
Q: Continue, Mr. Shevack.
A: I had lost my business and lost my house. Several banks were suing me. I had a tremendous amount of medical bills, unpaid medical bills; and then this happened at a time when I was just, you know, just another thing that was just hitting me. And it was nothing I could do. I had to borrow money from my sister to make repairs on the car. There was just no other place I could go and it was just a tremendous hardship at this particular time.
I thought the car would be ready in a week or so. I had to go rent a car and spend another $1700 for five weeks because they couldn't get the car out on time which was another expense I certainly didn't need.
It was just adding insult to injury at this particular time.
Q: Now, have you consulted any doctors regarding your mental anguish?
A: Yes.
[Objections and court's ruling]
Q: Who did you consult:
A: My doctor at M.D. Anderson.
Q: And did you consult him about this particular problem?
[Objections and court's ruling]
Court: And you may answer the question.
A: Yes.
(Emphasis added.)
This is all the evidence offered on the issue of Shevack's mental anguish damages. There is nothing else in the record about it.
As the panel states, a tortfeasor takes a plaintiff as he finds him. Coates v. Whittington, 758 S.W.2d 749, 752-53 (Tex.1988). The panel's point is that Shevack was a particularly vulnerable plaintiff. Even in such a case, the plaintiff is entitled to recover only for the mental distress he proves was caused by the incident, not for his condition as it existed before the tort. To recover damages for mental anguish, Shevack was required to show more than mere worry, anxiety, vexation, embarrassment, or anger. See Phar-Mor, Inc. v. Chavira, 853 S.W.2d 710, 712 (Tex.App.Houston [1st Dist.] 1993, writ denied). Shevack was required to prove painful emotions, such as grief, severe disappointment, indignation, wounded pride, shame, despair, or public humiliation. Id. at 712.
The portion of Shevack's testimony that is not italicized does not address Shevack's mental anguish caused by the tort. It only addresses his condition at the time of the tort. The portion of Shevack's testimony that is italicized is the only evidence about mental anguish caused by the tort. There is no testimony in this record about Shevack's state of mind after the incident on which this suit is based.
The panel analyzes a number of cases (dwelling more on the tort than the emotional damages) and decides that the quality of Shevack's testimony on mental anguish damages is at least as good as that in Phar-Mor, Inc., 853 S.W.2d at 712; State Farm Mut. Auto Ins. Co. v. Zubiate, 808 S.W.2d 590, 599-601 (Tex.App.El Paso 1991, writ denied), Automobile Ins. Co. of Hartford v. Davila, 805 S.W.2d 897, 907 (Tex.App.Corpus Christi 1991, writ denied), and Tidelands Auto. Club v. Walters, 699 S.W.2d 939, 945 (Tex.App.Beaumont 1985, writ ref'd n.r.e.).
Of the cases cited by the panel, the only one that supports its opinion is Davila. In Davila, the Corpus Christi Court of Appeals held that even though neither of the plaintiff's testified about their emotional condition, the jury was entitled to infer the plaintiffs suffered emotional distress from the unrepaired condition of their home, their shortage of clothes and furniture, their living conditions, and testimony concerning friction between them after the fire, which indicated that they were emotional people who overreacted to stress. 805 S.W.2d at 907-8. I respectfully disagree with the Davila opinion. I do not think a court may infer emotional damages from the injury itself.
*425 Although the panel cites Phar-Mor, that opinion does not support the panel's opinion. In Phar-Mor, this Court reversed mental anguish damages because we found no evidence to support them. In that case, Mrs. Chavira's husband testified his wife had headaches, was nervous, and could not sleep. Mrs. Chavira testified that "it had been rough on" her. She said she was nervous and upset. We said that Mrs. Chavira suffered only minimal discomfort from the incident; nothing that would rise to the level of grief, severe disappointment, indignation, wounded pride, shame, despair, or public humiliation. 853 S.W.2d at 713. In this case, even through Shevack was a more vulnerable plaintiff, Shevack's proof was not as strong as that offered by the plaintiff in Phar-Mor, which we rejected as insufficient.
In the other opinions on which the panel relies, the plaintiffs offered far more testimony on emotional damages than did Shevack. See Tidelands Auto. Club, 699 S.W.2d at 945 (plaintiff testified he was so upset he closed himself up alone in a room for several days and did not want to see or talk to anyone; he could not sleep; he was preoccupied by the false report and could not concentrate; and became ill, disoriented and angry); State Farm Mut. Auto Ins. Co., 808 S.W.2d at 599-601 (plaintiffs testified at length about their emotional reaction to the insurer's treatment of their claims).
The panel distinguishes four other cases, unsuccessfully, I think. In those cases, the courts held that a plaintiff seeking mental anguish damages had to prove more than Shevack offered in this case. See Cronin v. Bacon, 837 S.W.2d 265, 269 (Tex.App.Fort Worth 1992, writ denied) (plaintiff testified he was angry, which was not enough for mental anguish damages); Elliott v. Dow, 818 S.W.2d 222, 224-25 (Tex.App.Houston [14th Dist.] 1991, no writ) (plaintiff testified he was upset and worried about the future, which was not enough for mental anguish damages); Town East Ford Sales, Inc. v. Gray, 730 S.W.2d 796, 803 (Tex.App.Dallas 1987, no writ) (plaintiff testified he was anguished and felt a continuing strain, which was not enough for mental anguish damages); Roberts v. U.S. Home Corp., 694 S.W.2d 129, 136 (Tex.App.San Antonio 1985, no writ) (plaintiff testified he was mad, embarrassed, and "felt like scum," which was not enough for mental anguish damages); North Star Dodge Sales, Inc. v. Luna, 653 S.W.2d 892, 897 (Tex.App.San Antonio 1983), aff'd in part and rev'd in part, 667 S.W.2d 115 (Tex.1984) (plaintiff admitted she was nervous, anxious, frustrated, depressed, and angry, which was not enough for mental anguish damages).
Based on this Court's opinion in Phar-Mor, as well as the analysis in Cronin, Elliott, Town East Ford Sales, Inc., Roberts, and North Star Dodge Sales, Inc., I would sustain points of error four, five, six, and eight.
WILSON and HEDGES, JJ., join this dissent.
NOTES
[1] Star asserts that the trial court erred (a) in denying Star's motion for instructed or directed verdict at the close of Shevack's evidence, (b) in overruling Star's no evidence objection to the submission of Shevack's jury question on fraud, in denying, (c) Star's motion to disregard the jury's answer to the fraud question, (d) Star's motion for judgment notwithstanding the verdict, and (e) Star's motion for new trial. Each of these rulings adequately presented Star's "no evidence" complaint to the trial court, for purposes of preserving it for appeal. See Steves Sash & Door Co. v. Ceco Corp., 751 S.W.2d 473, 477 (Tex.1988) (enumerating these five ways to preserve a no evidence complaint). Star also asserts that the trial court erred (f) in awarding exemplary damages against Star in the judgment.
[2] By presenting its own evidence after denial of its motion for instructed or directed verdict, Star waived its complaint about that ruling. See Bryan v. Dockery, 788 S.W.2d 447, 449 (Tex. App.Houston [1st Dist.] 1990, no writ).
[3] A "scintilla" of evidence does no more than create a mere surmise or suspicion of its existence. Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex.1983).
[4] Star also asserts that the trial court erred in denying (a) Star's motion to disregard the jury's answer to that jury question (number six), (b) Star's motion for judgment notwithstanding the verdict, and (c) Star's motion for new trial. Star also asserts that the trial court erred (d) in awarding damages for mental anguish against Star in the judgment. The amount of mental anguish damages was approximately $3500.00.
[5] Too, Elliott testified that he had been in a motorcycle accident some 22 years before the one involving Dow, and another one afterward; he could not distinguish what part of the back pain that caused him to worry was caused by the most recent accident, and what part was caused by Dow. Concerning the prior accident, the court held the jury was entitled to conclude that Elliott had become somewhat accustomed to back pain, and that continued or aggravated pain following the accident with Dow did not cause Elliott mental distress sufficient to support a recovery.
[6] Roberts offered no proof that any act of U.S. Home had induced anyone else to deny him credit. 694 S.W.2d at 136, 135.
[7] E.g., North Star Dodge Sales, Inc. v. Luna, 653 S.W.2d 892 (Tex.App.San Antonio 1983), aff'd in part and rev'd in part, 667 S.W.2d 115 (Tex. 1984), where, unlike here, the plaintiff was asked on cross-examination, "We have worry, anger, nervousness, anxiety, frustration. What else, or does that cover it?" and replied, "I guess that is about it."
[8] On appeal, Star also contends that the trial court should have excluded this same evidence under Tex.R.Civ.Evid. 403, on the grounds that, though relevant, it was unduly prejudicial to Star. Star did not object on that basis in the trial court. This complaint presents nothing for review; objections made on appeal that do not conform to those made at trial are waived. Texaco, Inc. v. Pennzoil Co., 729 S.W.2d 768, 819 (Tex.App.Houston [1st Dist.] 1987, writ ref'd n.r.e.), cert. dism'd, 485 U.S. 994, 108 S. Ct. 1305, 99 L. Ed. 2d 686 (1988); TEX.R.APP. P.52(a).
[9] See Texas Nat'l Bank v. Karnes, 717 S.W.2d 901, 903 (Tex.1986) (exemplary damages not recoverable for breach of contract, absent an independent tort); Kilgore Fed. Sav. and Loan Ass'n v. Donnelly, 624 S.W.2d 933, 938 (Tex.App.1981) (in fraud cases, attorneys' fees are not recoverable separately from exemplary damages).
[10] Further, the entitlement to attorneys' fees on appeallike the entitlement to attorneys' fees through trialdepends on whether attorneys' fees are an element of the damages recoverable under the applicable theory of recovery. Attorneys' fees are recoverable: (1) when a statute authorizes recovery of attorneys' fees for a particular type of action or proceeding, O'Connell v. Hitt, 730 S.W.2d 16, 17-18 (Tex.App.Corpus Christi 1987, no writ); (2) when a contract between the parties authorizes the recovery of attorneys' fees, id.; and (3) when attorneys' fees are recoverable under equitable principles, Baja Energy, Inc. v. Ball, 669 S.W.2d 836, 838 (Tex. App.Eastland 1984, no writ). See also 1A Dorsaneo, Texas Litigation Guide § 22.01 (1994). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1674188/ | 835 S.W.2d 190 (1992)
WESTECH ENGINEERING, INC., Appellant,
v.
CLEARWATER CONSTRUCTORS, INC., A DIVISION OF PHELPS, INC., Appellee.
No. 3-90-127-CV.
Court of Appeals of Texas, Austin.
July 1, 1992.
*194 William Knolle, Hearne, Knolle, LeWallen, Livingston & Holcomb, Austin, for appellant.
Brian S. Greig, Mary S. Canfield, Fulbright & Jaworski, Austin, for appellee.
Before POWERS, JONES and B.A. SMITH, JJ.
B.A. SMITH, Justice.
This case involves a construction contract. In twenty-three points of error, the sub-contractor, WesTech Engineering, Inc. (WesTech), has challenged the trial court's determination that it entered into and subsequently breached an agreement with the general contractor, Clearwater Constructors, Inc. (Clearwater) to provide wastewater-treatment equipment. In sixteen points of error, WesTech attacks the legal or factual sufficiency of the evidence supporting the trial court's judgment that WesTech pay damages to Clearwater for breach of contract; in the remaining seven points of error, WesTech attacks particular conclusions of law underlying the judgment. Clearwater, in turn, has brought two crosspoints complaining of the trial court's denial of consequential damages and certain expenses. We will affirm the judgment of the trial court as modified.
THE CONTROVERSY This appeal arises from WesTech and Clearwater's business dealings during 1987 and 1988. In the summer of 1987, the City of Austin undertook to expand and improve its Walnut Creek Wastewater Treatment Facility. Early in the process, the City retained the engineering firm of Camp, Dressar & McKee (CDM) to prepare the plans and specifications for the project. The City then solicited bids from general contractors, one of which was Clearwater Constructors.
WesTech was aware of the Walnut Creek Facility expansion and made bids to prospective general contractors, including Clearwater, in an attempt to secure a portion of the project. In these bids, WesTech offered to supply particular water-treatment equipment called for in the plant expansion. *195 Specifically, WesTech sought to supply (1) two final clarifier mechanisms ("clarifiers"), and (2) a dissolved air flotation sludge thickening system ("DAF"). On June 30,1987, Clearwater received a bid from WesTech on these two items and used WesTech's figures when formulating its own bid to the City.
In August 1987, the City chose Clearwater as the general contractor for the plant expansion project. In a letter of intent dated September 15th, notifying Wes-Tech that it had been selected to supply the clarifiers and the DAF, Clearwater indicated that it would forward to WesTech a purchase agreement "in the very near future." WesTech received an unsigned agreement from Clearwater in mid-December.
A WesTech representative signed the purchase agreement but attached a letter to Clearwater indicating that the agreement contained terms that differed from WesTech's initial proposal. In its letter dated December 16, 1987, WesTech expressed its intent that the terms of its original proposal be "made a part of the [purchase] order." In its findings of fact, the trial court found that Clearwater subsequently signed the purchase agreement and dated it December 18, 1987. In separate findings, the trial court referred to this purchase agreement as "the contract" between the parties.
Initially, relations between WesTech and Clearwater proceeded normally. WesTech submitted to Clearwater specific data concerning both the clarifiers and the DAF. Problems arose, however, when the project engineering firm, CDM, determined that WesTech's clarifier equipment would not meet the particular specifications set out in the City's contract. The parties conducted a number of meetings to resolve these problems. For its part, WesTech supplied additional data on its proposed equipment, which Clearwater and CDM re-evaluated. Nevertheless, CDM decided that the Wes-Tech equipment would not comply with the City's contract requirements.
Ultimately CDM concluded that the central-drive gears to be used in WesTech's clarifiers did not meet the durability requirements set out in the City's plans and specifications. Clearwater notified Wes-Tech of its decision to seek an alternate source for the clarifiers and informed Wes-Tech that it would be liable for Clearwater's increased procurement costs, if any.
In March 1988, WesTech supplied Clearwater with its DAF equipment submittal. Later that month, CDM engineers rejected WesTech's DAF submittal on the grounds that WesTech lacked the DAF installation experience called for in the City contract. Clearwater again notified WesTech of the rejection and informed WesTech it would be accountable for any increased costs in procuring DAF equipment from an alternate source. Eventually Clearwater obtained the clarifiers and the DAF from other companies, but at a cost greater than that contracted for with WesTech.
In March 1990, Clearwater filed suit against WesTech for breach of contract, hoping to recover its increased costs for the equipment. After a trial before the court, Clearwater was awarded $123,495 in "cover" costs resulting from WesTech's breach, plus prejudgment interest and attorney's fees. WesTech now appeals the trial court's judgment.
STANDARDS OF REVIEW
At WesTech's request, the trial court filed findings of fact and conclusions of law in support of its judgment; some eightynine findings of fact and twenty-seven conclusions of law are contained in the record. In addition, the record contains a statement of facts from the proceedings.
Findings of Fact
We attach to findings of fact the same weight that we attach to a jury's verdict upon jury questions. City of Clute v. City of Lake Jackson, 559 S.W.2d 391, 395 (Tex.Civ.App.1977, writ ref'd n.r.e.). Findings of fact are reviewable for legal and factual sufficiency of the evidence by the same standards used to review jury findings. Okon v. Levy, 612 S.W.2d 938, 941 (Tex.Civ.App.1981, writ ref'd n.r.e.) (citing *196 Hall v. Villarreal Dev. Corp., 522 S.W.2d 195 (Tex.1975)).
An appellant who challenges the legal sufficiency of the evidence supporting an issue upon which it did not have the burden of proof must demonstrate that there is no evidence to support the adverse finding. Raw Hide Oil & Gas, Inc. v. Maxus Exploration Co., 766 S.W.2d 264, 275 (Tex.App.1988, writ denied). In reviewing a no-evidence point, we consider only the evidence supporting the finding and we disregard all evidence to the contrary. Best v. Ryan Auto Group, Inc., 786 S.W.2d 670, 671 (Tex.1990). If there is any evidence supporting the finding, we must overrule the point and uphold the finding.
When challenging the factual sufficiency of the evidence supporting an adverse finding upon which it did not carry the burden of proof, an appellant must demonstrate that there is insufficient evidence to support the adverse finding. Maxus Exploration Co., 766 S.W.2d at 275-76. We will consider and weigh all the evidence in support of and contrary to the finding. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex.1989). The contested finding will be upheld unless we find that (1) the evidence is too weak to support the finding, or (2) the finding is so against the overwhelming weight of the evidence as to be manifestly unjust. Garza v. Alviar, 395 S.W.2d 821, 823 (Tex. 1965). We will not substitute our judgment for that of the trier of fact merely because we reach a different fact conclusion. Otis Elevator Co. v. Joseph, 749 S.W.2d 920, 923 (Tex.App. 1988, no writ).
On those issues on which an appellant has the burden of proof, it must prevail on a no-evidence challenge and then must demonstrate on appeal that the evidence conclusively establishes the issue in its favor as a matter of law. Holley v. Watts, 629 S.W.2d 694, 696 (Tex.1982). Only when the contrary proposition is established conclusively by the evidence will we sustain the point of error. Meyerland Community Improvement Ass'n v. Temple, 700 S.W.2d 263, 267 (Tex.App.1985, writ ref'd n.r.e.).
Conclusions of Law
The trial court's conclusions of law are always reviewable. Middleton v. Kawasaki Steel Corp., 687 S.W.2d 42, 44 (Tex.App.1985, writ ref'd n.r.e.).[1] Conclusions of law will be upheld on appeal if the judgment can be sustained on any legal theory supported by the evidence. Simpson v. Simpson, 727 S.W.2d 662, 664 (Tex.App.1987, no writ). Incorrect conclusions of law will not require reversal, however, if the controlling findings of facts will support a correct legal theory. Valencia v. Garza, 765 S.W.2d 893, 898 (Tex.App. 1989, no writ). Moreover, conclusions of law may not be reversed unless they are erroneous as a matter of law. Mercer, 715 S.W.2d at 697.
DISCUSSION
Preservation of Error
Before discussing the substantive issues of this case, we address Clearwater's contention that WesTech has not preserved error. Clearwater argues that WesTech failed to preserve error in two respects. First, WesTech failed to present to the trial court any request, objection or motion complaining of the issues WesTech has raised on appeal as required by Tex. Rule of Appellate Procedure 52. See Tex. R.App.P.Ann. 52 (Pamph.1992). Although Rule 52 was amended to allow factualinsufficiency points challenging a finding of fact in a bench trial to be raised for the first time on appeal, Clearwater argues that the amendment came after WesTech's time to perfect its appeal had expired. Second, Clearwater asserts that under the former rule WesTech failed to follow the procedures for preserving a no-evidence point.
*197 We disagree with Clearwater's interpretation of Rule 52. As WesTech points out in its reply brief, challenges to a finding of fact's legal and factual sufficiency can be made for the first time by properly raising them as points of error. Kissman v. Bendix Home Sys., Inc., 587 S.W.2d 675, 678 (Tex.1979); Bluebonnet Express, Inc. v. Employers Ins., 651 S.W.2d 345 (Tex.App. 1983, writ ref'd n.r.e.). As the explanation following Rule 52 indicates, the purpose of the amendment is "to clarify appellate requisites from nonjury trials." Tex.R.App. P.Ann. 52 cmt. (Pamph.1992) (emphasis added). We agree with WesTech that the amendment to the rule does not change prior case law as much as it clarifies that law, and we conclude that WesTech has properly preserved error for appeal. Applicability of Uniform Commercial Code
In general, the Uniform Commercial Code (UCC), Tex.Bus. & Com.Code Ann. §§ 1.101-11.108 (1968, 1991 & Supp. 1992),[2] applies to the sale of goods. § 2.102 (1968). Where a contract contains a mix of sales and services, the UCC applies if the sale of goods is the dominant factor or "essence" of the transaction. Freeman v. Shannon Constr., Inc., 560 S.W.2d 732, 738 (Tex.Civ.App. 1977, writ ref'd n.r.e.). Although WesTech's original proposal of June 30, 1987, included some service trips for inspection, startup, instruction of plant personnel, and observation, the contract was predominantly for the supply of equipment. The later communications from WesTech specifically noted that most service items would be in addition to the contract price. Accordingly, the UCC applies to this transaction. See Custom Controls Co. v. Ranger Ins., 652 S.W.2d 449, 452 (Tex.App.1983, no writ) (custom manufactured wellhead control panels are "goods" for purposes of UCC); see also Mace Indust. v. Paddock Pool Equip. Co., 288 S.C. 65, 339 S.E.2d 527, 529 (Ct.App.1986) (applying UCC to sale of wastewater treatment equipment).
Contract Formation
In its first two points of error, WesTech challenges the legal and factual sufficiency of the evidence to support:
[ ] A Finding of fact no. 15: "On or about October 12, 1987, Clearwater sent WesTech a Purchase Agreement (the "Contract") to document the parties' agreement"; and
[ ] Related findings of fact nos. 16, 17, 25, 28, 41, 42 and 44, regarding specific dates and terms of the contract.
We note that WesTech does not deny that the parties had an agreement; rather, the dispute centers on which document or documents supply the terms of their agreement. We understand WesTech's argument to be that the evidence adduced not only fails to support finding of fact no. 15, but also dictates a contrary finding. We disagree.
This exchange of documents between the parties gives rise to a classic battle of the forms. See § 2.207; see also James J. White and Robert S. Summers, Uniform Commercial Code, § 1-3, at 28-49 (3rd ed. 1988) (analyzing applicability of Uniform Commercial Code § 2-207 to agreements reached through battles-of-the-forms). We begin by reviewing the exchanges and documents involved in the formation of this commercial agreement:
Date Transaction
06/30/87 WesTech sends Clearwater original bid proposal to supply clarifiers and
DAF. Clearwater uses WesTech's figures in submitting its bid to City.
08/21/87 Clearwater selected as general contractor.
09/15/87 Clearwater sends WesTech a letter of intent to contract.
10/12/87 Clearwater sends unsigned purchase agreement to WesTech containing
new terms and different terms.
*198
12/16/87 WesTech signs purchase agreement and returns it to Clearwater, objecting
to certain terms and requiring that its bid proposal be incorporated
into the agreement.
12/18/87 Effective date of Clearwater's signing purchase agreement.
02/12/88 Clearwater mails signed purchase agreement to WesTech.
WesTech's original proposal to Clearwater dated June 30th contained four sections: (1) a four-page list detailing the equipment WesTech proposed to furnish for the project; (2) a boiler-plate form entitled "General Terms and Conditions;" (3) an additional preprinted list of conditions entitled "specifications-escalation;" and (4) a boiler-plate warranty.
Clearwater used WesTech's figures in submitting its bid to the City; it sent Wes-Tech a letter of intent to contract on September 15th. On October 12th, Clearwater forwarded to WesTech Clearwater's unsigned printed form entitled "Standard Purchase Agreement (Order)," which contained typed-in details particular to this transaction. WesTech signed and returned the purchase agreement, along with a three-page letter from Russ Wright, Wes-Tech's group leader for the project, asking that WesTech's original bid proposal be incorporated into the purchase agreement and outlining several "items of difference." A Clearwater representative placed the purchase agreement and attached letter in his desk drawer for nearly two months. After the problems with the clarifiers arose, Clearwater finally sent the signed agreement to WesTech on February 12, 1988, agreeing to the suggested price increase but ignoring all other comments in Wright's letter.
In finding of fact no. 15, the court found that Clearwater sent WesTech a purchase agreement (the "contract") on October 12, 1987, to document the parties' agreement. WesTech argues that the unsigned purchase agreement of October 12, 1987, cannot be the contract because it contained terms that conflicted with the original bid proposal. Further, WesTech insists that it signed the purchase agreement on the express condition that the terms of WesTech's original bid be made a part of the agreement. Clearwater replies that the evidence supports the trial court's finding that the purchase agreement Clearwater sent to WesTech does document the parties' agreement. Clearwater notes that the trial court did not state that the purchase agreement embodied the exclusive terms of the contract, but merely found that it documented the parties' agreement.
One policy goal of the UCC is to liberalize the formation of contracts so that the parties' intentions are not frustrated by the difficulties of fitting a transaction into the traditional common-law model of offer and acceptance. See §§ 2.204, 2.206, and cmts.; Caroline N. Brown, Restoring Peace in the Battle of the Forms: A Framework for Making Uniform Commercial Code Section 2-207 Work, 69 N.C.L.Rev. 893, 899 (1991). To that end the UCC directs that "an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances." § 2.206(a)(1).
It is clear that Clearwater accepted WesTech's offer to supply wastewater equipment for the expansion of the Walnut Creek facility, either by use of WesTech's figures in submitting its bid to the City, by giving notice of its intent to contract with WesTech, or by sending its purchase agreement to WesTech. It does not matter that the purchase agreement contained additional or different terms:
(a) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional *199 on assent to the additional or different terms.
§ 2.207(a). There is nothing in the purchase agreement that expressly required WesTech to assent to its additional or different terms. We therefore treat Clearwater as having accepted WesTech's offer and turn to the provisions of § 2.207(b) to determine whether the terms of the purchase agreement became a part of the parties' agreement:
(b) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:
(1) the offer expressly limits acceptance to the terms of the offer;
(2) they materially alter it: or
(3) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
§ 2.207(b).
We begin with the statutory assumption that in this commercial transaction Clearwater's additional terms became part of the contract unless WesTech's bid proposal expressly limited the term of acceptance, the additional terms materially altered the parties' agreement, or WesTech objected within a reasonable time. Wes-Tech's bid proposal did not expressly limit acceptance to its precise terms and nothing in the purchase agreement could be said to materially alter the parties' agreement.[3]See § 2.207 cmts 4 and 5.
This transaction does not involve the sending of conflicting printed forms with no other communications. WesTech signed and returned Clearwater's purchase agreement, and indicated its agreement in Russ Wright's letter of December 16, 1987:
Thank you for your purchase order on the above referenced project. I apologize for the lateness of my formal response. We appreciate the opportunity of doing business with you and know that you will be pleased with our equipment. Enclosed are the signed copies of your order....
The next paragraph of Wright's letter sets forth WesTech's objections to certain additional and different terms contained in Clearwater's purchase agreement:
In reviewing your purchase order, there are a few items which need further clarification. We quoted this equipment through our sales representative based on our proposal number 87314. This shall be made a part of the order. Any items of difference are addressed below.
(Emphasis added). There follows a list of differences relating to pricing, submittals, shipment, terms of payment, specifications, items of service not included in the contract, and some miscellaneous provisions.
We understand WesTech to argue that by incorporating its original bid proposal in the parties' agreement it effectively "knocked out" all additional or different terms contained in Clearwater's purchase agreement. To adopt this argument we would have to ignore § 2.207(b) and Wright's letter, which we decline to do. Rather, we believe Wright's letter, and WesTech's signing of the purchase agreement, amounted to an acceptance of all of the terms of the purchase agreement except those items of difference specifically noted in Wright's letter.
Section 2.207 generally applies to agreements in which at least one party's printed form plays a role. Brown, supra, at 899-901. This section furthers the Code's goal of promoting the formation of contracts by adding a presumption that the printed form will not always be read. "The obvious utility of preprinted forms rests in part upon their customary use without being read by either party.... The customary failure to read forms is the very reality *200 intentionally accommodated by section 2-207." Id. at 938.
Knowing that when both parties use printed forms, the offer and acceptance are likely to contain conflicting terms, the drafters of section 2.207(b) offer a mechanism for ascertaining the parties' intentions in a commercial context:
The drafters apparently believed that if the time and money spent in the drafting of preprinted forms for use in modern commerce were not to be wasted, the forms' preprinted terms must be given some effect. But they seem to have recognized as well that it is pure fantasy to construct a theory of effectiveness based on the presumption that the forms will be read. It might be so, but the likelihood is very small. Consequently, the significance of a simple exchange of forms (or an exchange of forms coupled with performance) must be determined in large part by rather mechanical rules derived from the drafters' presumption of what the parties expected based on their reading only the filled-in terms."
Id. at 904. (Emphasis in original).
In ascertaining the parties' intentions, the "filled-in" terms are to be given more weight than preprinted terms. "Not being part of the preprinted verbiage, the filled-in terms reflect not only a high degree of importance attached to them by the offeree, but also the term's particular applicability to the specific agreement." Id. at 912. Wright's letter represented important "filled-in" terms particular to this agreement. We conclude that the specific terms of the typewritten letter should prevail over the general printed terms of the original bid proposal. The request that the bid proposal be incorporated into the agreement did not nullify Wright's acceptance of the terms of the purchase agreement, subject only to the items of difference specified in his letter. We would hold that Wright's letter must also be considered part of the parties' agreement, but because we do not read the trial court's finding of fact to establish the purchase agreement as the exclusive documentation of the parties' agreement, we find sufficient evidence in the record to defeat both the no-evidence and the sufficiency-of-the-evidence challenges to finding of fact no. 15. We overrule point of error one.
There is evidence in the record sufficient to defeat the no-evidence challenge to findings of fact nos. 16, 17, 25, 28, 41, 42 and 44. We find conflicting evidence in the record regarding the dates on which Clearwater actually signed the purchase agreement and the dates for WesTech's submittals and delivery of the equipment. However, credibility choices are left to the trial court. Great American Ins. Co. v. Murray, 437 S.W.2d 264, 266 (Tex. 1969). Further, we cannot say that these findings are so against the overwhelming weight of the evidence as to be manifestly unjust, and we therefore overrule the sufficiency of the evidence challenges to findings of fact nos. 16, 17, 41, 42, and 44.
To support our conclusion that findings of fact nos. 25 and 28 find sufficient support in the evidence, we return to our previous discussion of how section 2.207(b) treats the terms of Clearwater's purchase agreement in this transaction. These two findings of fact both look to the purchase agreement (1) to hold WesTech liable for providing clarifiers and a DAF that meet the specifications set forth in the contract between Clearwater and the City, and (2) to hold WesTech liable for Clearwater's inability to perform timely under its contract with the City if Clearwater's failure is attributable to WesTech's failure to perform.
WesTech relies on the following provision in its bid proposal to ask us to overturn this finding of fact:
PARTIES TO CONTRACT: WesTech Engineering Inc. is not a party to or bound by the terms of any contract between WesTech's customer and any other party. WesTech's undertaking are limited to those defined in the contract between WesTech and its direct customers.
Clearwater relies on the following provisions in its purchase agreement to sustain the court's findings: *201 [Preprinted] THE VENDOR [WesTech] AGREES TO FURNISH, SUPPLY AND DELIVER THE GOODS AND/OR SEVICES DESCRIBED BELOW IN COPLETE ACCORDANCE WITH THE GOVERNING CONTRACT DOUMENTS, INCLUDING ANY ADDEDA OR AMENDMENTS THERETO, FOR THE VENDEE'S [Clearwater's] USE AND/OR INCORPORATION IN THE ABOVE CAPTIONED PROJECT, TO WIT:
[Typed] "Furnish a complete job of all final clarifier equipment and dissolved air flotation sludge thickening system equipment as required by the plans and specifications, including Addenda numbers 1, 2, 3, and 4."
[Preprinted] STANDARDS CONDTIONS. IN ADDITION TO THE FORGOING PROVISIONS THE PARTIES HERETO ALSO AGREE AS FOLLOWS: [Typed] 13. In general, and subject only to the provisions hereof, the vendor shall be bound to the vendee by the same terms and conditions by which the vendee is bound to the owner....
[Typed] 14. Vendor acknowledges that he has familiarized himself with all of the conditions of the locality, project, plans and specifications and any other factor or circumstance which may affect his performance under this agreement, and nothing in this agreement shall obligate or render the vendee liable for additional payment to the vendor on account of his misunderstanding or failure to familiarize himself with such factors and conditions.
To decipher the parties' intentions from the conflicting terms, we give more weight to the "filled-in" terms than to the preprinted terms. We conclude that when Wes-Tech signed the purchase agreement it consented to Clearwater's "filled-in" terms unless Wright specifically excepted to them in his letter. Wright addressed specifications twice in his letter. Discussing submittals, he said, "We are waiting for a complete set of plans and specifications that should be on the way to us, as we have discovered that we need more complete information to properly complete the submittal." Discussing specifications, he said, "WesTech quoted standard equipment for this project, with modifications to match the specifications. Minor deviations may be taken during the submittal process which make the equipment equal to or superior to that specified." Neither of these statements can be reasonably interpreted as putting Clearwater on notice that WesTech did not consider itself obligated to supply equipment that met the specifications of the contract documents or otherwise bound to Clearwater on the same terms and conditions by which Clearwater was bound to the City. We then conclude that the evidence supporting findings of fact nos. 25 and 28, interpreted in light of section 2.207(b), defeats a no-evidence challenge and is not so weak that it fails to support the findings. We overrule point of error two.
Condition Precedent
In its third point of error WesTech raises no-evidence and insufficient-evidence challenges to finding of fact no. 84: "All conditions precedent to Westech's right and liability to perform under the contract were met." WesTech contends that CDM's approval of its design submittal was a condition precedent to WesTech's performance. We disagree.
Conditions precedent are generally disfavored in Texas:
In construing a contract, forfeiture by finding a condition precedent is to be avoided when another reasonable reading of the contract is possible.... When the intent of the parties is doubtful or when a condition would impose an absurd or impossible result, the agreement will be interpreted as creating a covenant rather than a condition....
Criswell v. European Crossroads S. Ctr., 792 S.W.2d 945, 948 (Tex.1990) (citations omitted). The evidence supports the trial court's finding that WesTech unconditionally promised to supply wastewater equipment that met the specifications of the project documents. The project engineer's approval was not a condition precedent to WesTech's performance; rather, WesTech *202 breached its covenant to supply DAF equipment and clarifiers that met the contract specifications. The evidence in the record defeats both a legal- and factual-sufficiency challenge. We overrule WesTech's third point of error. We likewise overrule related points of error nineteen and twenty challenging the court's findings that Wes-Tech's bid offered to supply equipment that would meet the plans and specifications in Clearwater's contract with the City.
Impossibility of Performance
The Uniform Commercial Code provides that a party to a contract may be excused from performance because of an unforeseen supervening circumstance not within the contemplation of the parties at the time of contracting. § 2.615, Cmt. 1. At trial, WesTech unsuccessfully argued that it was excused from complying with the contract due to impossibility of performance. In point of error eight, Wes-Tech challenges, as against the great weight and preponderance of the evidence, finding of fact no. 85 that WesTech is not excused from liability because of impossibility of performance. Point of error ten challenges as erroneous the court's conclusion of law no. 21 that WesTech is not excused for impossibility of performance, arguing that this conclusion is based upon findings that are against the great weight and preponderance of the evidence. Again, we disagree.
WesTech contends that it should be excused from performance because it could not anticipate that CDM would interpret the contract specifications so strictly. Comments 4 and 8 to § 2.615 illustrate why WesTech does not escape from its contractual obligations under these circumstances. Comment 4 gives several examples of events that may excuse performance, such as a severe shortage of raw materials or supplies due to war, embargo, crop failure or unforeseen shutdown of major sources of supply. The standard contractual arrangement of submitting specifications to a project engineer is not contemplated as an impossibility. Further, comment 8 notes that the impossibility exception does not apply when the contingency in question is "sufficiently foreshadowed at the time of contracting." WesTech knew from the beginning that its clarifier and DAF submittals were subject to approval by the project engineer. We therefore conclude that finding of fact no. 85 is not against the great weight and preponderance of the evidence and overrule the eighth point of error. We likewise find conclusion of law no. 21 to be supported by findings of fact that have evidentiary support in the record and overrule point of error ten.
Challenges to the Project Engineer's Decisions Supporting Breach
Having rejected WesTech's arguments that the engineer's approval was a condition precedent to WesTech's performance, and that performance was an impossibility for WesTech, we next consider all points of error challenging the project engineer's disapproval of WesTech's submittals. These challenged findings of fact are essential to support the court's conclusion that WesTech breached its covenant to supply wastewater equipment that met the project specifications. Because the project engineer's decision as to approval or disapproval of submittals is final, and because there is sufficient evidence in the record of CDM's disapproval of WesTech, we reject all of WesTech's challenges to the findings of fact and conclusions of law upholding CDM's decision that the WesTech equipment was not "equal" to the standards specified in the contract documents.
WesTech had pledged to supply its standard equipment with minor deviations to "make the equipment equal to or superior to that specified" (Wright's letter dated December 16, 1987). Specifically, WesTech complains that CDM applied the "or equal" provision too strictly in disqualifying its clarifiers. Where a contract specifies that a project engineer shall be the final arbitrator on disputed issues, the engineer's decision is final and conclusive unless she is guilty of fraud, misconduct or gross mistake:
When parties to a building contract agree to submit questions which may arise thereunder to the decision of the engineer, his decision is final and conclusive; *203 unless in making it he is guilty of fraud, misconduct, or such gross mistake as would imply bad faith or failure to exercise an honest judgment....
City of San Antonio v. McKenzie Constr. Co., 136 Tex. 315, 150 S.W.2d 989, 996 (1941); Austin Bridge Co. v. State, 550 S.W.2d 135, 137 (Tex.Civ.App. 1977, writ ref. n.r.e.); Plantation Foods, Inc. v. R.J. Reagan Company, Inc., 520 S.W.2d 432, 434 (Tex.Civ.App.1975, writ ref'd n.r.e.). Even if WesTech may have anticipated a more lenient application of project standards by CDM's engineer, the engineer's decision to reject WesTech's equipment as nonconforming cannot be challenged simply because another engineer might have arrived at a different decision:
[Her] decision cannot be set aside ... simply by proving that some other engineer would have acted differently or given a different decision ... [or] simply on a conflict of evidence as to what [s]he ought to have decided. This must be true, because any other rule would simply leave the matter open for a court or jury to substitute its judgment and discretion for the judgment and discretion of the engineer.
McKenzie Constr. Co., 150 S.W.2d at 996.
WesTech does not allege, nor does the record reveal, any fraud, misconduct, or gross mistake implying bad faith on CDM's part. The evidence supports and does not preponderate against the findings of fact upholding the decisions of the project engineer. And we find no errors in the complained-of conclusions of law that WesTech breached its agreement by not supplying equipment that satisfied the project specifications as CDM interpreted and applied those specifications.
We overrule the ninth point of error that there is no evidence or insufficient evidence to support finding of fact no. 68 that Wes-Tech's proposed gears did not meet project specifications. For the same reason we overrule the fifteenth and sixteenth points of error challenging the evidence to support findings of fact nos. 37 and 39 that the project engineer properly investigated and properly rejected WesTech's experience involving DAF's.
We overrule point of error thirteen challenging as against the great weight and preponderance of the evidence finding of fact no. 66 that the project engineer acted reasonably and prudently in reviewing WesTech's performance under the contract. Under existing case law, which affords almost total deference to the project engineer in such instances, the evidence supports the court's finding that the engineer's actions were prudent and reasonable.
In point of error fourteen, WesTech challenges finding of fact no. 35 that Clearwater did not unreasonably delay its efforts to have WesTech approved by the project engineer. The evidence in the record supports the finding that Clearwater's efforts to secure WesTech's approval were reasonable, and we cannot say that this finding is so clearly against the great weight and preponderance of the evidence as to constitute a manifest injustice. We overrule point of error fourteen.
Similarly, we find evidence in the record supporting the court's finding that Clearwater was not arbitrary or unreasonable in failing to obtain all the details of the engineer's decision to reject the Wes-Tech clarifiers and did not wrongfully terminate WesTech's opportunity to supply the clarifiers. WesTech was charged with meeting all of the specifications; failure of its equipment to meet even one specification warrants rejection. Further, the rejection of the WesTech clarifiers came after numerous resubmittals and working conferences had been conducted with the goal of obtaining equipment approval. We cannot say that this finding is so contrary to the overwhelming weight of the evidence as to be clearly wrong. We therefore overrule point of error eleven.
We also overrule point of error twelve, challenging the court's finding that WesTech refused to submit other final clarifier equipment in a timely manner. The expansion project was predicated on a particular timetable; the evidence was that the rejection of the initial clarifier submittals, *204 as well as of the resubmittals, delayed this timetable. Evidence exists in the record to support this finding; thus WesTech's noevidence challenge fails. And after considering all the evidence, we cannot say that this evidence, standing alone, is too weak to support the finding or that this finding is manifestly wrong or unjust.
Finally, WesTech brings a sufficiency challenge to finding of fact no. 78, that WesTech breached its contract by failing to supply equipment under the contract's terms and conditions. Having determined that WesTech promised to meet the project specifications in the contract documents, and having overruled all challenges to the decisions of the project engineer, we find sufficient evidence to support the court's finding of WesTech's breach and to rebuff a no-evidence challenge. Further, we cannot say that this evidence is too weak to support this finding or that the finding is so against the overwhelming weight of the evidence as to be manifestly unjust. We overrule the fourth and seventh points of error. We likewise overrule points of error nos. five, six, and twenty-two, finding no error in the trial court's conclusion of law no. 3 that WesTech breached its contract with Clearwater by failing to supply clarifiers and DAF equipment that met contract specifications.
Promissory Estoppel
In point of error twenty-one, Wes-Tech argues that the trial court erred in alternatively imposing liability under the doctrine of promissory estoppel. We believe that under the terms of the UCC a contract was formed between WesTech and Clearwater, and we have upheld the trial court's conclusion of law no. 1 to that effect. However, we find no error in the trial court's alternative theory of liability under the doctrine of promissory estoppel. There is testimony from Russ Wright that WesTech understood that Clearwater was seeking bids that would comply with the City's plans and specifications for expansion of the Walnut Creek facility. Two witnesses for Clearwater testified that Clearwater relied on WesTech's bid in formulating and submitting its bid to the City. Clearwater provided further testimony that it relied upon the provision that WesTech's equipment would be equal to project specifications. We find no error in the court's conclusion of law no. 4 and overrule point of error twenty-one.
Mitigation of Damages
In points of error seventeen and eighteen, WesTech contends that Clearwater failed to mitigate its damages by not requesting a change order from the City. It argues that Clearwater could have avoided all its extra costs in purchasing the equipment from other suppliers by insisting upon a change order to the City contract. WesTech relies on the following language in the City contract, which provides that
[i]f the Engineer/Architect requires a change of any proposed Subcontractor... previously accepted by them, the Contract amount shall be increased or decreased by the difference in cost occasioned by such change and the appropriate change order shall be issued....
WesTech's reliance on this language is unpersuasive. First, the provision allows for a change order only if the Engineer/Architect has "previously accepted" the subcontractor. CDM never accepted WesTech's clarifiers or DAF equipment. Second, Mr. Rajandra Bhattarai, a City of Austin engineer, testified that the City would not have granted a change order where a proposed subcontractor is removed for failure to perform. The logic of WesTech's position is unpersuasive in the context of commercialconstruction contracts. Any increased costs resulting from the default of a subcontractor should be absorbed by the general contractor, not the owner. We do not interpret the language relied on by Wes-Tech to force the City to pay for the increased costs when a subcontractor defaults.
The testimony supports the trial court's finding of fact no. 83 that Clearwater mitigated its damages, and we reject Wes-Tech's challenge to the evidence supporting this finding. We reject as well WesTech's complaint that the trial court improperly *205 concluded that Clearwater mitigated its damages. Points of error seventeen and eighteen are overruled.
Attorney's Fees
In its final point of error, Wes-Tech complains of the trial court's award of attorney's fees on appeal without conditioning the award on Clearwater's success on appeal. Clearwater attempts to rely on the parties' stipulation as to the amount of attorney's fees, which did not condition that amount on the success of an appeal. We agree with WesTech that any award of attorney's fees on appeal must be conditioned on the receiving party's success. Smith v. Smith, 757 S.W.2d 422, 426 (Tex. Ap.1988, writ denied); Siegler v. Williams, 658 S.W.2d 236, 241 (Tex.App. 1983, no writ). We sustain appellant's twenty-third point of error that an unconditional award of attorney's fees is erroneous as a matter of law. This error does not require reversal, however. Rather, we modify the trial court's judgment to condition the award of attorney's fees on appeal to Clearwater's success on appeal. See CPS Int'l. v. Harris & Westmoreland, 784 S.W.2d 538, 544 (Tex.App.1990, no writ).
Cross-Points
Clearwater asserts two cross-points of error complaining of the trial court's failure to grant Clearwater consequential damages and certain expenses related to the prosecution of its claim.
In its first cross-point, Clearwater contends that because of WesTech's breach, Clearwater was forced to schedule a construction crane for an additional two months. Crane rental expenses and related insurance, operator labor, fuel oil and maintenance and extended overhead expenses amounted to $60,095.
Damages may be recovered when "loss is the natural, probable, and foreseeable consequence of the defendant's conduct." Mead v. Johnson Group, Inc., 615 S.W.2d 685, 687 (Tex.1981) (citing Hadley v. Baxendale, 9 Exch. 341, 354 (1854)). Further, speculative or remote damages may not be recovered. A.B.F. Freight Sys. v. Austrian Import, 798 S.W.2d 606, 615 (Tex.App.1990, writ denied); Roberts v. U.S. Home Corp., 694 S.W.2d 129, 135 (Tex.App. 1985, no writ).
Three witnesses for Clearwater testified as to damages: Rick Minks, Clearwater's superintendent; Steve Carrico, comptroller at Phelps, Inc., Clearwater's corporate parent; and Lance Johnson, area manager for Clearwater. Minks testified that in his opinion, although the crane and crew did not sit idle, there was a loss of efficiency in moving the equipment around to make use of it. However, he was unable to give any specific examples of the crane's idleness or of increased overhead costs directly attributable to WesTech's failure to supply the clarifiers. Further, there were no notations in project logs indicating inefficiencies or improper use of the cranes. Carrico gave detailed testimony on the rental and insurance expenses for two months of crane rental. Johnson also gave evidence, but could not present any specific examples of consequential damages.
We find Minks's testimony the most persuasive. Clearwater probably did incur increased costs due to a loss of efficiency in the use of its crews. As his testimony shows, orderly scheduling of construction crews is essential for efficient utilization. Having recognized this, however, none of Clearwater's witnesses were able to tie specific additional expenses to WesTech's breach of contract. Therefore, the trial court correctly denied consequential damages. To award damages based on the evidence provided would be to speculate on their amount. We overrule appellee's first cross-point.
Clearwater's second point of error is that it is entitled to recover $7,269 in expenses related to the prosecution of its claim. Section nine of the purchase agreement provides in part:
In any determination of damages directly attributed to failure or deficiency in the performance of the vendor, it is agreed that vendee shall recover all damages it may sustain, as well as all costs and attorney fees which may arise from the *206 enforcement of any suit for damages under this agreement.
(Emphasis added).
WesTech relies on language in the General Terms and Conditions of its original bid proposal stating, "WesTech shall not be liable for any contingent, incidental or consequential damages for any reason whatever." We note, however, that Wright's letter of December 16, 1987, did not object to consequential damages as an item of difference. We therefore hold that the terms of the purchase agreement, not WesTech's General Terms and Conditions, control the determination of this issue.
We are not persuaded, however, that the purchase-agreement provisions encompass the costs Clearwater is seeking to recover. "Costs" generally do not include costs billed to the client as part of the attorney's fee for services provided. Rather, costs usually refer to "[fjees and charges required by law to be paid to the courts or some of their officers, the amount of which is fixed by statute or the court's rules; e.g. filing and service fees." Black's Law Dictionary, p. 312 (5th ed. 1979). We find no error in the court's decision to deny appellee's requested litigation expenses which do not comport with the traditional definition of costs. We overrule the second cross-point.
CONCLUSION
We sustain appellant's twenty-third point complaining of the trial court's unconditional award of attorney's fees and modify the judgment to reflect an award of such fees only upon success on appeal. As modified, we affirm the judgment of the district court.
POWERS, J., did not participate.
NOTES
[1] In addition, when the appellate record contains specific findings of fact and conclusions of law as well as a statement of facts, the reviewing court may review the legal conclusions drawn from those facts in order to determine their correctness. Mercer v. Bludworth, 715 S.W.2d 693, 697 (Tex.App. 1986, writ ref'd n.r.e.); see also 4 Roy W. McDonald, Texas Civil Practice in District and County Courts, § 16.10, at 35 (Frank W. Elliott ed., rev. ed. 1991).
[2] Unless otherwise noted, all statutory cites are to this Act.
[3] "Assuming that the transaction is between merchants and that there is nothing communicated by the offeror triggering (2)(a) or (2)(c), the offeree's additional terms ordinarily should become part of the contract. The offeree's burden under this analysis is a light one indeed: all that the offeree must do in such a case to negate `material alteration' is to establish that the term is common enough in the industry or in transactions between the two parties to negate the possibility of the offeror's surprise...." Brown, supra, at 936. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1737151/ | 236 S.W.2d 635 (1951)
TEXAS STATE HIGHWAY DEPARTMENT
v.
FILLMON.
No. 2840.
Court of Civil Appeals of Texas, Eastland.
February 9, 1951.
Rehearing Denied March 2, 1951.
*636 William S. Lott, Asst. Atty. Gen., of Texas, for appellant.
Brooks, Duke, Templeton & Brooks, Abilene, for appellee.
COLLINGS, Justice.
This is a Workmen's Compensation case brought by appellee, Ava Fillmon, against appellant, Texas State Highway Department, claiming compensation on account of the death of her husband as a result of an injury alleged to have been sustained by him while working for appellant. It was alleged that E. L. Fillmon, the deceased, had been directed as an employee of appellant, to work in a gravel pit near Abilene, Taylor County, Texas, and to remove large stones from an excavation and clean up the premises in general; that while engaged in removing said stones from said pit, deceased, on account of exertion and the high temperature, suffered a heat stroke on September 5, 1947, which caused his death. Appellee filed her claim with the Industrial Accident Board on or about August 29, 1949, long after the six months period within which the Statutes provide such claims shall be filed, but contended that good cause existed for her failure to sooner file same. The Board notified appellee that the claim had been set for hearing on Tuesday, November 1, 1949. Thereafter, on November 17th, the Board entered its order and ruling dismissing the claim for the stated reason that appellee "failed to establish * * * that claim was filed within six months as provided by law or that good cause existed for delay in filing to the date it was filed. Therefore, the Board is without jurisdiction and claim is dismissed from the docket of said cases of the Board without further action." On appeal to the District Court, the case was tried before the court without a jury and judgment was rendered for appellee. Texas State Highway Department has brought this appeal.
Appellant's first point complains that "the court erred in overruling defendant's plea in abatement and plea to the jurisdiction in that the trial court did not have jurisdiction to pass on any question other than good cause." Appellant contends that the order of the Board dismissing the claim for the reason stated was not a final award of the claim as contemplated by Section 5, art. 8307, Vernon's Annotated Civil Statutes of Texas, from which an appeal could be prosecuted. Appellant concedes that the *637 ruling of the Board is final and appealable on the issue of the Board's jurisdiction to hear the claim but urges that the jurisdiction of the District Court on appeal was limited to a determination of the issue of good cause, and that the court did not have jurisdiction to determine the merits of the claim for compensation. We cannot agree with this contention. The question of whether a claimant has good cause for delay in filing a claim, if that issue is in the case, is a fact issue to be decided by the Board in making its award or final ruling the same as any other issue of fact. Coffey v. Management Company of Texas, Tex. Civ.App., 121 S.W.2d 377.
The Board, after having set a time for hearing the claim, found as a fact, that appellee "failed to establish by proof that claim was filed within six months as provided by law or that good cause existed for delay * * *." Based upon this finding the Board "dismissed" the claim from its docket. The effect of this ruling by the Board was to deny appellee compensation. In our opinion, the order was a final ruling on appellee's claim as contemplated by the Statute and was appealable. Verrett v. Texas Employers' Ins. Ass'n, Tex.Civ.App., 223 S.W.2d 33; Southern Casualty Co. v. Todd, Tex.Com.App., 29 S.W.2d 973; Munmon v. Traders & General Ins. Co., Tex.Civ.App., 170 S.W.2d 262.
The trial in the District Court was de novo and that court had the power to determine every issue involved whether presented to or acted on by the Board or not. Texas Employers' Ins. Ass'n v. Bradshaw, Tex.Civ.App., 27 S.W.2d 314.
The husband of appellee Ava Fillmon, died on September 5, 1947. Appellee's claim was filed with the Industrial Accident Board on or about August 29, 1949, long after the expiration of the six months period provided for by the Statute. In appellant's second and third points it is contended that appellee failed, as a matter of law, to establish good cause for her failure to file claim within the time required by the Statute and that the court erred in holding that good cause had been shown.
The test of a showing of good cause for delay in filing a claim beyond the statutory period is the standard of conduct of an ordinarily prudent person. The question is one of fact to be determined by the trial court or jury whose decision will not be disturbed unless the evidence is such that reasonable minds could reach no other conclusion than that good cause was not shown. Hawkins v. Safety Casualty Co., 146 Tex. 381, 207 S.W.2d 370; Watson v. Texas Indemnity Ins. Co., 147 Tex. 40, 210 S.W.2d 989; LaCour v. Continental Casualty Co., Tex.Civ.App., 163 S.W.2d 676; Martin v. Travelers' Ins. Co., Tex.Civ. App., 196 S.W.2d 544; Texas Indemnity Insurance Co. v. Cook, Tex.Civ.App., 87 S.W.2d 830 (Writ Ref.).
Several witnesses testified that they knew Ava Fillmon and had opportunity to see and observe her during the period between the death of her husband and the filing of her claim before the Board. They all stated that during this period, Mrs. Fillmon was sick mentally and physically. They expressed the opinion that she was not able to exercise the same prudence as an ordinarily normal person, and that during all of such period was mentally and physically incapable of properly seeing after her business affairs. Mrs. Davis, a sister of appellee, testified that she or another sister stayed with appellee "most every day and every other night" during that time because she was not able to be left alone; that "she wasn't physically or mentally able to be left alone;" that "she was not rational any of the time, I don't think, * * * and did not ever appear to be normal and able to carry on business." During a portion of the time appellee was in Arizona but Mrs. Davis testified that from her letters it did not appear that she was any better while there.
Dr. Adams and Dr. Prichard had both visited and treated Mrs. Fillmon during portions of the period in question and both testified that they found her to be extremely nervous, despondent and almost incoherent; that it was hard for her to follow one line of thought. Dr. Adams testified that in his opinion she was not capable, during *638 the time she was his patient, of transacting her business affairs in the manner of an ordinarily prudent person. Mrs. Fillmon had been a patient of Dr. Adams for a period of about a year beginning March 25, 1948, and of Dr. Prichard from about the middle of March, 1949, until the time of the trial of this cause. Dr. Prichard testified that her condition of incapacity extended from the time he began to see her professionally until during August, 1949. In our opinion, the evidence was ample to support the finding of the court that good cause was shown for appellee's delay in filing her claim until August 29, 1949. Texas Employers' Ins. Ass'n v. Beckman, Tex. Civ.App., 207 S.W.2d 183 (NRE); Watson v. Texas Indemnity Ins. Co., supra.
Appellant contends in its fourth point that there was no evidence as a matter of law, to support the finding and judgment of the court that deceased, E. L. Fillmon, died as a result of heat stroke. The following is a brief summary of the evidence bearing upon the question:
On September 5, 1949, E. L. Fillmon was working for appellant in a gravel pit near Abilene. He was working in the pit alone. Appellant's other employees were driving trucks and came to the pit only to re-load and carry the gravel away. Deceased had been instructed to, and was, removing rocks from the pit which were considered too large to be used in the construction work and did his work at a time when the trucks were not in the pit. The rocks varied in size from a man's fist to the size of a man's head, some of the largest weighing as much as fifteen pounds. They were being thrown out of the way so that they would not be loaded on the trucks and used on the road. We cannot agree with appellant's contention that there was no evidence that deceased actually engaged in any type of work on the morning of his death. The witness Mangum testified that he "was just throwing small rock out of the pit * * * I would say there was not a boulder larger than that hat in the pit * * *."
The gravel pit in which E. L. Fillmon was working was located on a small knoll or rolling place. It was about 200 feet long by 75 feet wide and was 3 or 4 feet deep. It was open at both ends and one side was about half open. Deceased had complained of "hurting" to fellow employees the day before and two days before the day of his death. At about 11 o'clock a. m. on September 5th, the day of his death, Fillmon stated to a fellow employee who had come to the pit to load his truck, that he, Fillmon, "had another one of those spells" and then lay down under a small mesquite tree. At 11:45 o'clock a. m. when the trucks came back to the pit to re-load, Fillmon was found dead, still lying under the mesquite tree in approximately the same position as when last seen at 11:00 o'clock.
The fact that there was evidence to the effect that deceased was afflicted with or suffering from other trouble is not controlling. Texas Indemnity Ins. Co. v. Warner, Tex.Civ.App., 159 S.W.2d 173 (WRM); Armour & Co. v. Tomlin, Tex. Com.App., 60 S.W.2d 204.
The evidence indicated that the temperature between 11:00 and 11:30 o'clock on the day in question was about 90 to 92 degrees and that a breeze of about 10 to 12 miles an hour was blowing. Mr. C. E. Sitchler, of the U. S. Weather Bureau, testified that the temperature above mentioned "would not be representative of a pit; no grass or anything on it. The air itself is heated by objects on the earth and if the area was confined the air in the pit would be hotter than the air on the surrounding terrain."
Two doctors were called by appellee to testify concerning the cause of E. L. Fillmon's death. The testimony of one of the doctors will not be considered in determining the sufficiency of the evidence to support the judgment for the reason that his testimony indicates that his opinion was based upon hearsay testimony to the effect that there "was not any breeze," in the pit on the day in question. Opinion testimony must be based upon proved facts and not upon hearsay testimony. All of the witnesses who testified indicated that a breeze was blowing at the pit on the day of Fillmon's death, which is in direct conflict with one of the facts upon which the doctor admittedly based his opinion. Opinion *639 testimony, under such circumstances, cannot be considered for the purpose of upholding a judgment or finding of a trial court even though not objected to upon the trial. Henry v. Phillips, 105 Tex. 459, 151 S.W. 533.
Dr. Tull also testified as to the cause of Fillmon's death and the following are excerpts from his testimony:
"Q. Doctor, assuming that Mr. Fillmon, on September the fourth, 1947, was visited by his sister-in-law for a couple of hours and made no complaints about feeling any ill effects of any kind; and said at that time he was working in a gravel pit where it was extremely hot; and then assuming that the next day he went out where the temperature was around ninety and worked in that gravel pit and they found him on the bank or side of the gravel pit dead, about eleven o'clock in the morning; assuming those facts to be true; and then assuming the facts that you found in your autopsy, what connection, in your opinion was the work that he was doing, if any, in exposure to the sun, in those circumstances, would have with his death? A. I would think it would be the cause of it."
* * * * * *
"Q. State whether or not in your opinion picking up and casting to one side rocks as big as a baseball up to those that would weigh ten or fifteen pounds, in your opinion would cause the heart to race and cause a man to exert himself? A. It sure would.
"Q. Could that exertion reach the point where it could cause the coronary occlusion which you found in this case? A. It could.
"Q. And assuming that a man who engaged in that the morning of the fifth of September 1947, before his death, sometime between eleven o'clock in the morning and eleven forty-five in the morning, in your opinion would the lifting of the rocks and the exertion out there in the sun be the producing cause of his death? A. I would say `Yes.'"
On cross examination:
"Q. Doctor, is it likely that a native person of West Texas either doing very light work or none at all that's above ground or maybe a little below ground, in a wide, long open pit, is he likely to suffer from heat exhaustion? A. A lot would depend on his condition too, as to whether he over eaten; whether he had gotten out of the breeze; whether he was not sweating properly; whether he didn't have enough salt and a lot of things would have to be considered. In other words, one man might have heat exhaustion with a temperature of eighty and another might go to 125 and not have it.
"Q. Well, those that do have it, is there generally something else that's wrong with them? A. No.
"Q. Are they generally normal people? A. They just over exert themselves. They just keep going when they get too hot and they don't stop and they go right ahead and have it."
* * * * * *
"Q. Doctor, didn't you testify that you couldn't tell that heat was the cause of it? A. I said the cause of the heat was from the history. I said from the actual standpoint of the autopsy you couldn't.
"Q. You couldn't say? A. That's right.
"Q. You could not tell from the autopsy? A. Coronary occlusion was what caused it. As to the other, the heat, was from the history. I said that."
* * * * * *
"Q. And what, in your opinion, was the cause of the clot and of his death? A. I think over exertion and heat."
The evidence showed that deceased during the morning of his death, had been working in the gravel pit removing stones from the size of a man's fist to the size of a man's head, and some weighing as much as 15 pounds; that the temperature was around 90 degrees. Dr. Tull testified that these facts, together with the facts found at the autopsy, led him to the conclusion or opinion that the cause of Fillmon's death was over exertion and heat. In our opinion, the evidence was sufficient to support the finding and judgment of the court that E. L. Fillmon died as a result of a heat stroke.
*640 It is true, as contended by appellant, that appellee had the burden of establishing that deceased was subjected to conditions in the course of his employment which were a greater hazard than which applied to the general public. Where the evidence shows that deceased was working in a gravel pit in a temperature of around 90 degrees, we do not feel that it can be said as a matter of law, that he was not subjected to a more hazardous condition than applied to the public generally. Hebert v. New Amsterdam Casualty Co., Tex. Com.App., 1 S.W.2d 608; American General Ins. Co. v. Webster, Tex.Civ.App., 118 S.W.2d 1082 (Writ Dis.); Guthrie v. Texas Employers' Ins. Ass'n, 146 Tex. 89, 203 S.W.2d 775.
Appellants further urge that Dr. Tull's expressed opinion that the cause of Fillmon's death was "over exertion and heat" is based on hearsay and is, therefore, not available in support of the judgment. The first question of that portion of Dr. Tull's testimony hereinabove set out contains the evidence complained of. One of the assumptions which the doctor was asked to make in answering the question was that Mr. Fillmon, on the night before his death, told his sister-in-law that "he was working in a gravel pit where it was extremely hot." There is no question but that testimony as to what deceased told his sister-in-law is hearsay evidence. It is apparent, however, that such hearsay statement to the effect that the weather was extremely hot did not, and could not, refer to the temperature on the day of his death because the statement was made the night before. It may be noted that the question then proceeded to assume that "the next day he went out where the temperature was around 90 degrees and worked in that gravel pit and they found him on the bank or side of that gravel pit dead * * *." It is undisputed that the temperature at about 11 o'clock on the day in question was around 90 degrees and in our opinion, the testimony of the employee of the weather bureau in Abilene would support an assumption that the temperature in the gravel pit was in excess of 90 degrees. If an assumption based upon hearsay testimony does not conflict with the undisputed testimony of disinterested witnesses on the matter under consideration, it is apparent that no damage is done by its presence in the record. If such evidence is undisputed as to the existence of a fact, that fact may be assumed for the purpose of a hypothetical question even though hearsay testimony indicates the same fact.
The language "extremely hot" is indefinite and ordinarily expresses the sensation of the individual rather than an accurate or even approximate measure of the degree of temperature. Although such language might indicate a temperature well in excess of 90 degrees, it cannot, with assurance, be said to be in conflict with a statement that the temperature was "around 90 degrees." This is particularly true when the indefinite term "extremely hot" is used and then immediately followed by the specific statement or assumption that the temperature was "around 90 degrees in that gravel pit where they found him * * * dead." There can be no question but that the assumption which the doctor was asked to make was that the temperature was "around 90 degrees." This assumption was supported by the undisputed evidence of a disinterested witness. The fact that such hearsay testimony was included in the hypothetical question was improper but no objection was made and in our opinion, it was, under the circumstances, harmless.
The judgment of the trial court is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1796349/ | 550 So. 2d 843 (1989)
Ann B. SARGENT, Plaintiff-Appellee,
v.
LOUISIANA HEALTH SERVICE & INDEMNITY CO., d/b/a Blue Cross Blue Shield of Louisiana, Defendant-Appellant.
No. 21034-CW.
Court of Appeal of Louisiana, Second Circuit.
September 27, 1989.
*844 Gerald Martin Johnson, Shreveport, for defendant-appellant.
John Marion Robinson, Springhill, for plaintiff-appellee.
Before FRED W. JONES, LINDSAY and HIGHTOWER, JJ.
HIGHTOWER, Judge.
On application of defendant, Louisiana Health Service and Indemnity Co., d/b/a Blue Cross/Blue Shield of Louisiana, a supervisory writ was granted herein to review the denial of a motion for summary judgment. The trial court held that, contrary to defendant's contentions, the suit was timely filed and dismissal was inappropriate. We reverse.
FACTS
During a period of hospitalization at Humana Hospital Springhill from January 7, 1986 through January 17, 1986, plaintiff, Mrs. Ann Sargent, allegedly incurred hospital expenses of $4,541.62 and doctor fees of $330. In answers to interrogatories, she stated that, while helping her son clean his office and place of business, she picked up a vacuum cleaner and immediately felt pain in her shoulder and back. Medical services were subsequently rendered to her by the hospital and the Doctor's Clinic of Springhill. Blue Cross had issued a non-group hospital, surgical-medical and major medical insurancy policy to plaintiff. In January and March of 1986, defendant paid $267 of the doctor bill. It refused, however, to pay the hospital bill and the remaining balance of the doctor bill, leaving $4,604.62 owing.
As required by the policy, plaintiff gave defendant written notice of her claim within 90 days of treatment, the hospital having *845 filed on her behalf on January 21, 1986. Blue Cross maintained that its policy did not provide for services which were covered by worker's compensation laws or services rendered as a result of an occupational disease or injury.
Plaintiff filed her petition on January 25, 1988, demanding all of the medical expenses, together with statutory penalties and attorney's fees as provided under LSA-R.S. 22:657 for arbitrary failure to pay a claim. Defendant's motion for summary judgment sought dismissal of the suit on the basis that it was not filed, as required by the policy, either within fifteen months following treatment or within one year of written notice of the claim, whichever was longer.
At a hearing on the motion, plaintiff orally argued that the applicable prescriptive period was ten years, as set forth by LSA-C.C. Art. 3499. The motion was taken under advisement and later denied, without written or oral reasons, by minute entry on October 14, 1988. Judgment to the same effect was subsequently signed by the trial court. Defendants then filed a notice of intention to apply for supervisory writs, which were granted by this court for purposes of reviewing the decision below.
DISCUSSION
A motion for summary judgment should be granted only if the pleadings, depositions, answers to interrogatories, admissions on file, together with affidavits, if any, show that there is no genuine issue as to material fact, and that mover is entitled to judgment as a matter of law. LSA-C. C.P. Art. 966; State, Through Department of Highways v. City of Pineville, 403 So. 2d 49 (La.1981); Barron v. Scaife, 535 So. 2d 830 (La.App.2d Cir.1988); Ebarb v. Erwin, 530 So. 2d 1166 (La.App.2d Cir.1988); Swindle v. Haughton Wood Company, Inc., 458 So. 2d 992 (La.App.2d Cir.1984); Jones v. Prudential Insurance Co. of America, 415 So. 2d 223 (La.App.2d Cir.1982).
The burden of proof in a motion for summary judgment is on the mover to establish that there is no genuine issue of material fact. That burden is great. Only when reasonable minds must inevitably concur is a summary judgment warranted and any doubt should be resolved in favor of a trial on the merits. Sanders v. Hercules Sheet Metal, Inc., 385 So. 2d 772 (La. 1980); Barron v. Scaife, supra; Ebarb v. Erwin, supra; Swindle v. Haughton Wood Company, Inc., supra; Jones v. Prudential Insurance Co. of America, supra.
In the present case, the pertinent policy provisions regarding the time limits for bringing suit are found in Article XIV, the general provisions section, of the policy in the record. Subpart H of that article states
Written notice of claim for Health Care benefits must be given to the Plan within 90 days of treatment; however, if it is not reasonably possible to give notice of claim in that period, notice should be given as soon as reasonably possible and Health Care benefits will not be reduced. No legal action will be brought against the Plan after 15 months after treatment or after one year from the receipt of written notice of claim, whichever time is longer. If the time period for giving notice of claim, furnishing proof of loss, or bringing any action on the Contract is less than that permitted by the laws of the state, district or territory in which the Member resides at the time the Contract is issued, this limitation is extended to comply with those laws.
An insurance policy is a contract between the insured and insurer and as such has the effect of law between the parties. Barron v. Scaife, supra; Stacey v. Petty, 362 So. 2d 810 (La.App. 3rd Cir. 1978). An insurer may limit its liability just as individuals may. Barron v. Scaife, supra; Lopez v. Blue Cross of Louisiana, 386 So. 2d 697 (La.App. 3rd Cir.1980), writ denied, 393 So. 2d 741 (La.1980), modified on appeal on other grounds, 397 So. 2d 1343 (La.1981). A clear and unambiguous provision in an insurance contract which limits liability must be given effect. Barron v. Scaife, supra; Superior Steel, Inc. v. Bituminous Casualty Corp., 415 So. 2d 354 (La.App. 1st Cir.1982).
*846 Further, insurers may, by unambiguous and clearly noticeable provisions, limit liability and impose such reasonable conditions as they may wish upon the obligations they assume by contract, absent conflict with a statute or public policy. Oceanonics, Inc. v. Petroleum Distributing Co., 292 So. 2d 190 (La. 1974); Barron v. Scaife, supra; Johnson v. Jackson, 504 So. 2d 88 (La.App. 2d Cir.1987), writ denied, 506 So. 2d 1230 (La.1987).
Under the provisions of LSA-R.S. 22:213, health and accident policies have certain required provisions. Each policy shall contain in substance either the provisions set forth in § 22:213 or, at the option of the insurer, provisions which in the opinion of the Commissioner of Insurance are not less favorable to the policyholder. Similarly, policy provisions cannot be disapproved by the Commissioner on the ground of being more favorable to the insured than those provided by § 22:213. LSA-R.S. 22:211(C).
With regard to legal action, § 22:213 requires policy provisions stating that no action shall be brought to recover on the policy prior to the expiration of 60 days after proof of loss has been filed in accordance with the the policy, and that no such action shall be brought after the expiration of one year following the time allowed for filing proofs of loss. Thus, the provisions of the Blue Cross policy are more accomodating to the policyholder than those required by § 22:213. The present policy also expressly provides that, if its time period for filing suit is shorter than that permitted by law, then the limitation is extended to agree with the minimum period permitted by the law.
Of course, when a policy affords a longer period for filing suit than is required by statute, the policy governs as being more favorable to the insured. See 18A, Couch, Insurance, § 75:61 (2d ed. 1983). Between Mrs. Sargent and Blue Cross, then, the insurance policy has the effect of law as it is clear and unambiguous and is not in conflict with statute or public policy. It sets forth the prescriptive provisions that control the present case.
There is no dispute that, on January 21, 1986, plaintiff timely presented her notice of claim. Under the terms of the policy, she had fifteen months after treatment or one year after the proof of loss was filed, whichever was longer, to file suit. Thus, although the latest date for timely instituting an action was April 17, 1987, plaintiff's suit was not actually filed until January 25, 1988. Nonetheless, at the hearing on the motion for summary judgment, plaintiff maintained her case was controlled by LSA-C.C. Art. 3499, which reads as follows:
Unless otherwise provided by legislation, a personal action is subject to a liberative prescription of ten years.
Because plaintiff has not filed a brief, we assume for purposes of this appeal that she continues to assert the same argument. It is, however, unconvincing. When two statutes are in conflict, the statute which is more specifically directed to the matter at issue must prevail as an exception to the more general statute. Smith v. Cajun Insulation, Inc., 392 So. 2d 398 (La.1980); Esteve v. Allstate Ins. Co., 351 So. 2d 117 (La.1977). The general ten year prescription of LSA-C.C. Art. 3499, as that article indicates, applies only in the absence of any other statutory mandate. By the provisions of LSA-R.S. 22:213, a more specific statute, the legislature has limited the prescriptive period for suits filed under insurance policies such as the one presented here.
Additionally, the case of King v. Pan American Life Insurance, 324 So. 2d 535 (La.App. 1st Cir.1975), writ denied, 328 So. 2d 166 (La.1976), is illustrative. There, the insurance policy provided for proof of claim within 90 days, or even later upon a showing that it was done as soon as reasonably possible. To bring legal action, the policy provided a period of two years following expiration of the time for filing a proof of claim. The insured had furnished proof of loss timely, but suit was not filed until more than two years after the period for proofs of claim. The First Circuit found that the suit had prescribed under the insurance policy.
*847 In like manner, inasmuch as suit in our present case was filed more than fifteen months after treatment, i.e., after the longest time period set forth in the policy for such action, plaintiff's right to file suit had prescribed. Concerning that point, the record demonstrates that Blue Cross succeeded in its burden of showing that no genuine issue of material fact existed.[1] We therefore reverse the judgment of the trial court, and grant the motion for summary judgment in favor of the defendant. The action is dismissed at plaintiff's cost.
REVERSED.
NOTES
[1] We also take notice of the provisions of LSA-C.C. Art. 3464, which state that prescription is interrupted when one acknowledges the right of the person against whom he has commenced to prescribe. The making of payments on an obligation can be an acknowledgment sufficient to interrupt prescription. Wegman v. Central Transmission, Inc., 499 So. 2d 436 (La.App.2d Cir.1986), writ denied, 503 So. 2d 478 (La.1987). As earlier stated, in January and March of 1986, Blue Cross made payments totalling $267 for physician services. Nevertheless, even assuming that these interrupted prescription, because under LSA-C.C. Art. 3466 the prescriptive period would begin to run anew from the last day of interruption in March 1986, plaintiff's action still would have prescribed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1838215/ | 546 So. 2d 1317 (1989)
Charlotte KRUEGER, Plaintiff-Appellee,
v.
Billy TABOR, Defendant, and
James Odiorne, Appellant.
No. 88-328.
Court of Appeal of Louisiana, Third Circuit.
June 28, 1989.
*1318 Thomas & Dunahoe, Gerard Thomas, Robert Thomas, Natchitoches, for plaintiff-appellee.
Harrington & Harrington, Rodney Harrington, Natchitoches, Hailey, McNamara, Michael P. Mentz, Metairie, for defendant/appellant.
Campbell, Campbell & Johnson, Mark O. Foster, Minden, Henry H. Bernard, Baton Rouge, Cook, Yancey, King & Galloway, Brian Homza, Shreveport, Fish, Montgomery & Robinson, Roy Fish, Minden, for defendants-appellees.
Before GUIDRY, FORET and DOUCET, JJ.
DOUCET, Judge.
The above numbered and entitled appeal was consolidated with five other appeals entitled KRUEGER V. TABOR, 546 So. 2d 1325 (La.App. 3rd Cir.1989); CURTIS V. TABOR, 546 So. 2d 1324 (La.App. 3rd Cir. 1989): CURTIS V. INSURED LLOYD'S, 546 So. 2d 1325 (La.App. 3rd Cir.1989); CURTIS V. TABOR, 546 So. 2d 1324 (La. App. 3rd Cir.1989); and CURTIS V. INSURED LLOYD'S, 546 So. 2d 1324 (La. App. 3rd Cir.1989). We decide all issues presented in all appeals in this opinion but render separate decrees in the companion appeals.
The accident giving rise to these appeals occurred on February 18, 1986. Charlotte L. Krueger, plaintiff-appellee, was driving a 1972 Chevrolet Caprice automobile occupied by her two minor daughters, Misty Lane Krueger and Tracy Lynn Krueger. The Krueger vehicle was traveling eastward on Louisiana Highway 6, approximately 150 feet south of the intersection of Petty Road in Sabine Parish, Louisiana. The Krueger vehicle stopped behind a line of automobiles which were stopped in the eastbound lane so as to permit the lead vehicle to make a left hand turn. Thereafter, a wrecker-type vehicle driven by defendant, Billy J. Tabor, was traveling in an easterly direction on Highway 6 and was unable to stop due to brake failure. As the Tabor vehicle tried to avoid hitting the Krueger vehicle by crossing the center line, the Tabor vehicle struck the Krueger vehicle and ultimately struck a truck driven by James H. Curtis, which was traveling in a westerly direction on Highway 6. Curtis, Krueger and Krueger's two minor children were allegedly injured in the accident.
Krueger instituted suit to recover for the personal injuries which she and her two minor children allegedly sustained as a result of the accident. Made defendants were Tabor and his insurer, Texas Fire and Casualty Company (Texas Fire). Before suit was filed, Texas Fire was placed into temporary receivership and James T. Odiorne, duly qualified liquidator for the Texas State Board of Insurance, was appointed permanent receiver of Texas Fire in the proceeding entitled "The State of Texas v. Texas Fire and Casualty Company, Dallas, Texas," No. 396, 246 of the Fifty-third Judicial District Court for Travis County, Texas. Odiorne was never made a defendant by Krueger.
Curtis instituted suit against Tabor for the personal injuries which he allegedly sustained as a result of the accident. Curtis instituted a separate suit against Insured Lloyd's of Dallas, Texas, (Insured Lloyd's) his uninsured/underinsured motorist carrier.
The aforementioned three suits were consolidated at trial.
Louisiana Farm Bureau Casualty Insurance Company (Farm Bureau), Krueger's insurer, intervened in the suits and named Odiorne and Tabor as defendants-in-intervention.
Insured Lloyd's, Curtis' insurer, also intervened in the suits and named Odiorne as a defendant-in-intervention.
*1319 Tabor filed a third party demand against Odiorne as receiver for Texas Fire, and also against his insurance agent, Phares and Lites. However, Tabor did not obtain service on Phares and Lites, and an exception of improper service was filed on behalf of Phares and Lites on February 23, 1987. Since the trial on the main demand was set for March 18, 1987, and proper service was still not obtained on Phares and Lites, the trial judge severed the third party demand filed by Tabor against Phares and Lites.
Tabor obtained proper service on Phares and Lites after the trial on the main demand was held. Phares and Lites timely answered Tabor's third party demand and in the same pleading, instituted a third party demand against Tri-State Underwriters, Inc. (Tri-State), seeking indemnification and/or contribution from Tri-State. Tri-State filed a "Motion for Rule" asking that the third party demand of Phares and Lites against it be dismissed. The trial court granted Tri-State's motion.
After a trial was held on the merits of the consolidated suits, the trial judge ruled that the negligence of Tabor was the sole, proximate cause of the accident and the resulting injuries and damages. The court entered judgment against Tabor and Odiorne and in favor of all the plaintiffs.
Damages were awarded as follows: $15,000.00 in favor of Charlotte L. Krueger for general damages; $5,634.95 in favor of Ronald C. Krueger for the medical expenses of Charlotte Kureger ($4,223.00) and her lost wages ($1,411.26); $500.00 and $300.00 in favor of Misty L. Krueger and Tracy L. Krueger, respectively, for general damages; $14,909.00 to Louisiana Farm Bureau Casualty Insurance Company, intervenor, and as the uninsured motorist insurer of Charlotte L. Krueger to be paid from the judgment rendered in favor of Charlotte L. and Ronald C. Krueger; $11,034.95 in favor of James H. Curtis for medical expenses ($2,957.51), lost wages ($3,077.44), and general damages $5,000.00); and $6,750.00 in favor of Insured Lloyd's, intervenor and as the uninsured motorist insurer of James H. Curtis.
It is from this judgment that Odiorne appeals. Phares and Lites appeals from the judgment of the lower court dismissing its third party demand against Tri-State.
ODIORNE APPEAL
On appeal, Odiorne specifies two assignments of error, the first being that the judgment in favor of plaintiffs-appellees (Krueger and Curtis) should be set aside as null and void. Odiorne supports this assertion by pointing to the fact that neither Krueger nor Curtis ever named Odiorne as a defendant in their respective petitions. Odiorne also directs our attention to the fact that neither plaintiff ever served Odiorne. We agree with Odiorne's assertion.
As previously stated, judgment was rendered in favor of Krueger and Curtis and against Odiorne. Odiorne was appointed the permanent receiver of Texas Fire and despite being a separate legal entity apart from Texas Fire, neither of the plaintiffs at any time amended their respective petitions to name Odiorne as a defendant. Additionally, neither plaintiff ever served Odiorne.
It is well established in our jurisprudence that a valid judgment cannot be rendered unless the court has jurisdiction over the party cast in judgment based on service of process. Succession of Griffith, 415 So. 2d 670 (La.App. 4th Cir.1982). Additionally, a judgment rendered against a party who is not named as a defendant is absolutely void. Tracy v. Dufrene, 240 La. 232, 121 So. 2d 843 (1960), on remand, 146 So. 2d 678 (La.App. 4th Cir.1962); Kling v. Collins, 407 So. 2d 478 (La.App. 1st Cir. 1981); Luneau v. Hanover Ins. Co., 478 So. 2d 752 (La.App. 3rd Cir.1985). Because Odiorne was not served by either plaintiff and because he was not named as a defendant in plaintiffs' respective petitions, plaintiffs are not entitled to judgment against Odiorne. Thus, the judgment rendered by the trial court in favor of plaintiffs and against Odiorne, must be set aside and reversed.
We are aware of the fact that Odiorne was named a defendant-in-intervention by *1320 intervenors, State Farm and Insured Lloyd's, and that he was named a defendant by Tabor in Tabor's third party demand against him. Appellees urge that by virtue of these acts, Odiorne was brought in as a defendant with respect to the main demands. We reject appellee's assertion. In order for plaintiffs to have obtained a valid judgment, plaintiffs were required to name Odiorne as a defendant in the principal action. See Guilbeau v. Roger, 443 So. 2d 773 (La.App. 3rd Cir.1983), writ denied, 446 So. 2d 1224 (La.1984); Hobbs v. Fireman's Fund American Ins. Co., 339 So. 2d 28 (La.App. 3rd Cir.1976), writs refused, 341 So. 2d 896 (La.1977); Deblieux v. P.S. & Sons Painting, Inc., 405 So. 2d 600 (La.App. 3rd Cir.1981). Because they failed to do so, the judgment rendered in favor of plaintiffs and against Odiorne is invalid.
In Odiorne's second assignment of error, he urges that "The trial court does not have jurisdiction over the subject matter of the plaintiffs' suit and the intervenors have failed to state a cause of action and/or do not have a right of action against James T. Odiorne, receiver of Texas Fire and Casualty Company."
Essentially, what Odiorne is arguing is that the judgment rendered by the trial court against him and in favor of the intervenors was improper since the court lacked subject matter jurisdiction over the action. Specifically, Odiorne asserts that a party must bring any action naming the receiver as a defendant in the Fifty-third Judicial District Court of Travis County, Texas, and that the Texas court has exclusive venue to hear and determine all actions or proceedings against Texas Fire exclusively because it is the court where the receivership proceedings have been instituted. In support of this proposition, Odiorne cites the restraining order issued by the court in Texas prohibiting the commencement or prosecution of any action against Texas Fire or its assets in any forum other than the court where the receivership proceeding had been ordered and article 21.28 of the Texas Insurance Code. We reject this assertion.
At the outset, it is important to note that the State of Texas has not adopted the Uniform Insurers Liquidation Act (La.R.S. 22:757-22:763). This act requires that when no receivership proceedings have been initiated in Louisiana, residents of Louisiana must assert their claims in the proceedings of the domiciliary state of the foreign insurer. Because Texas is not a reciprocal state, the provisions of the act cannot be applicable in this instance. See Martin v. General American Casualty Co., 226 La. 481, 76 So. 2d 537 (1954).
However, La.R.S. 22:629 is applicable in the instant situation. La.R.S. 22:629[1] provides that no insurance contract delivered or issued for delivery in this state which covers Louisiana residents may contain any provision which deprives the courts of this state of jurisdiction of action against the insurer. This statute, as it relates to subject matter jurisdiction was discussed in the case of Bonura v. United Bankers Life Insurance Company, 509 So. 2d 8 (La.App. 1st Cir.1987), writ denied, 512 So. 2d 462 (La.1987).
*1321 In Bonura, supra, Anthony G. Harris had been appointed temporary receiver in Texas for Bankers Life Insurance Company and filed an exception in the Louisiana Court with respect to subject matter jurisdiction. The Texas Life Accident and Hospital Services Insurance Guaranty Association also filed peremptory and declinatory exceptions with respect to personal and subject matter jurisdiction. The First Circuit held:
La.R.S. 22:629 provides that no insurance contract delivered or issued for delivery in this state which covers Louisiana residents may contain any provision which deprives the courts of this state of jurisdiction of action against the insurer. The jurisprudence construing and applying this statute is both consistent and too voluminous to require citation. Together, the statute and cases announce the unequivocal policy of this state that no foreign insurer may enjoy the benefits of a source of business in this state without being prepared to answer any claims based on that business by a Louisiana resident in the Louisiana courts. This policy comports with due process requirements and the insurer suffers no undue hardship thereby. We find no sufficient reason to abrogate that policy here.
We find Bonura, supra, and La.R.S. 22:629, to be determinative of the resolution of this issue. For this reason, we hold that the trial judge did not err in finding subject matter jurisdiction in this matter. Accordingly, Odiorne's second assignment of error is without merit.
PHARES AND LITES APPEAL
As previously stated, original defendant, Tabor, filed a third party demand against his insurance agent, Phares and Lites, contending that Phares and Lites was negligent in failing to procure liability insurance through a solvent company. However, Tabor did not obtain service on Phares and Lites, and an exception of improper service was filed on behalf of Phares and Lites on February 23, 1987. Since the trial on the main demand was set for March 18, 1987, and proper service was still not obtained on Phares and Lites, the trial judge severed the third party demand filed by Tabor against Phares and Lites.
Tabor obtained proper service on Phares and Lites after the trial on the main demand was held. Phares and Lites timely answered Tabor's third party demand and in the same pleading, instituted a third party demand against Tri-State Underwriters, Inc. (Tri-State), seeking indemnification and/or contribution from Tri-State. Tri-State filed a "Motion for Rule" asking that the third party demand of Phares and Lites against it be dismissed. The trial court did not give written reasons for its judgment but simply stated that the third party demand of Phares and Lites was dismissed "for reasons set forth in mover's [Tri-State's] supporting brief, which is hereby adopted by the court as its written reasons."
On appeal, Phares and Lites urges that the "Judgment in favor of the third party defendant/appellee, Tri-State Underwriters, Inc., dismissing the third party demand of Phares and Lites, Inc. should be set aside as null and void since the third party demand was timely and properly filed along with the original answer." We agree.
Tri-State's brief which was adopted by the trial court contains only four arguments:
(1) "A third party demand can only be filed if it will not retard the progress of the principal action."
(2) "An incidental demand is a demand incidental to a principal demand, and consequently there can be no incidental demand when there is no longer any principal demand of which it is an incident."
(3) "To construe articles 1031 and 1033 as to permit the filing of a third party demand after a principal cause of action had been tried and adjudicated would deprive the third party defendant *1322 of property other than by due process of law, in violation of Article I, Section 2, of the Louisiana Constitution of 1974, in that the quantum of its obligation, if any, would have been established in a proceeding in which it had no opportunity to be heard."
(4) "The third party demand against appearer should be dismissed as having not been timely filed."
Tri-State makes the argument that the filing of the third party demand by Phares and Lites should not have been allowed since it would retard the progress of the original demand. We reject this argument.
The trial court severed the third party demand that Tabor filed against Phares and Lites and the original demand went to trial on March 18, 1987. Thus, it is clear that Phares and Lites' third party demand against Tri-State could not retard the progress of the original demand. If, for purposes of Tri-State's argument, Tabor's third party demand against Phares and Lites is considered the "original demand" since it was severed from the suit filed by original plaintiffs against original defendants, it is equally clear that Phares and Lites' third party demand against Tri-State would not have retarded the progress of the demand of Tabor against Phares and Lites since no trial has yet been held on the third party demand filed by Tabor against Phares and Lites and since the third party demand of Phares and Lites against Tri-State was filed along with the original answer filed by Phares and Lites, hence, no leave of court was necessary. La. C.C.P. art. 1033.
Tri-State's second argument is based on the fact that the claims of Krueger and Curtis have already gone to trial on the main demand. Tri-State argues "An incidental demand is a demand incidental to a principal demand and consequently there can be no incidental demand when there is no longer any principal demand of which it is an incident."
Tri-State cites no jurisprudence or authority for this argument. Tri-State's argument assumes that there is only one principal demand. This is incorrect. Clearly, the claims of Krueger v. Tabor and Curtis v. Tabor can be severed and tried separate and apart from the claims of Tabor v. Phares and Lites. La. C.C.P. art. 1038[2]; Herb's Machine Shop, Inc. v. John Mecom Co., 426 So. 2d 762 (La.App. 3rd Cir.1983), writs denied, 430 So. 2d 98 (La. 1983). Thus, we reject this argument.
In Tri-State's third argument, it contends that allowing the third party demand to proceed against it would deprive it of property other than by due process of law, in that the quantum of its obligation, if any, would have been established in a proceeding in which it had no opportunity to be heard. We reject this argument.
While the third party demand which involves responsibility between Tabor and Phares and Lites has been relegated to a separate proceeding, the quantum is not being fixed in a separate proceeding, it is in the same proceeding. La. C.C.P. art. 1038.
In Tri-State's fourth argument, it argues that the third party demand filed by Phares and Lites was not timely filed. An incidental demand may be filed without leave of court at any time up to and including the time the answer to the principal demand is filed. La. C.C.P. art. 1033. The third party demand of Phares and Lites against Tri-State was filed along with the original answer filed by Phares and Lites. Thus, the third party demand was timely filed. Tri-State's argument is without merit.
In light of the foregoing, we find that the trial court erred when it dismissed the *1323 third party claim of Phares and Lites against Tri-State.
For the foregoing reasons, the judgment of the trial court in the Phares and Lites matter is reversed insofar as it dismisses Phares and Lites' third party demand against Tri-State. The judgment of the trial court in the consolidated suits is amended insofar as it grants plaintiffs in the principal demand judgment against Odiorne and is now recast to read as follows:
IT IS ORDERED, ADJUDGED AND DECREED that there be judgment herein in favor of the plaintiff CHARLOTTE LEGGETT KRUEGER and against the defendant BILLY J. TABOR for the sum of $15,000.00, together with legal interest thereon from the date of judicial demand until paid.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that there be judgment herein in favor of RONALD C. KRUEGER and against the defendant, BILLY J. TABOR, for the sum of $5,634.95, together with legal interest from date of judicial demand until paid.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that RONALD C. KRUEGER, in the capacity as Administrator of the estates of his minor children, is awarded judgment for the benefit of the minor, Misty Lane Krueger, in the amount of $500.00, and for the benefit of the minor, Tracy Lynn Krueger, in the amount of $300.00, against the defendant, BILLY J. TABOR, together with legal interest thereon from date of judicial demand until paid.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the intervention of Louisiana Farm Bureau Casualty Insurance Company be recognized as having a right to be paid from the judgment herein rendered in favor of CHARLOTTE L. KRUEGER and RONALD C. KRUEGER, individually, and as Administrator of the estate of his minor children, the sum of $14,909.00, together with legal interest from date of judicial demand until paid.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the judgment in favor of CHARLOTTE L. KRUEGER in the amount of $15,000.00 shall, to the extent that said judgment exceeds the sum of $10,000.00, be entitled to payment by preference and priority over the sum of $10,000.00 of the amount of the Judgment of Intervention on behalf of Louisiana Farm Bureau Casualty Insurance Company.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the judgment in favor of RONALD L. KRUEGER in the sum of $5,634.95 to the extent that the said judgment exceeds the sum of $4,109.00 shall be entitled to and shall be paid by preference and priority over the Judgment of Intervention of Louisiana Farm Bureau Casualty Insurance Company.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that there be judgment herein in favor of the plaintiff, JAMES H. CURTIS, and against the defendant, BILLY J. TABOR, for the sum of $11,034.95, 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 intervenor, INSURED LLOYD'S, and against the defendants, BILLY J. TABOR and JAMES T. ODIORNE in his capacity as receiver for the Texas Fire & Casualty Company, in solido, for the sum of $6,750.00, together with legal interest thereon from date of judicial demand until paid.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the judgment herein rendered in favor of JAMES H. CURTIS shall have preference over and shall be paid by privilege and priority over the judgment of intervenor, INSURED LLOYDS, except the said JAMES H. CURTIS shall have no claim for any payments which may be due or which may be paid under the property damage provisions of the policy of liability insurance issued by *1324 Texas Fire & Casualty Company to BILLY J. TABOR.
IT IS FINALLY ORDERED, ADJUDGED AND DECREED that all costs of the trial court be assessed two-thirds (2/3) to BILLY J. TABOR and one-third (1/3) to JAMES T. ODIORNE.
The costs of this appeal are assessed as follows: One-third (1/3) to TRI-STATE, one-third (1/3) to the KRUEGERS, and one-third (1/3) to CURTIS.
REVERSED IN PART, AMENDED IN PART, AND AS AMENDED, AFFIRMED.
NOTES
[1] La.R.S. 22:629 provides, in pertinent part, as follows:
"A. No insurance contract delivered or issued for delivery in this state and covering subjects located, resident, or to be performed in this state or any group health and accident policy insuring a resident of this state, regardless of where made or delivered shall contain any condition, stipulation, or agreement:
(1) Requiring it to be construed according to the laws of any other state or country except as necessary to meet the requirements of the motor vehicle financial responsibility laws of such other state or country;
(2) Depriving the courts of this state of the jurisdiction of action against the insurer, or
(3) Limiting right of action against the insurer to a period of less than twelve months next after the inception of the loss when the claim arises under any insurance classified and defined in R.S. 22:6(10), (11), (12), and (13), or to a period of less than one year from the time when the cause of action accrues in connection with all other insurance unless otherwise specifically provided in this Code.
[2] La.C.C.P. art. 1038 provides:
The court may order the separate trial of the principal and incidental actions, either on exceptions or on the merits; and after adjudicating the action first tried, shall retain jurisdiction for the adjudication of the other.
When the principal and incidental actions are tried separately, the court may render and sign separate judgments thereon. When in the interests of justice, the court may withhold the signing of the judgment on the action first tried until the signing of the judgment on the other. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1845686/ | 83 B.R. 729 (1987)
In re CONFECTIONS BY SANDRA, INC., Debtor.
Appeal of KATZ, HOYT SEIGEL & KAPOR.
BAP No. CC 87-1378 MoJV, Bankruptcy No. LA 80-13464 CA.
United States Bankruptcy Appellate Panel of the Ninth Circuit.
Argued and Submitted September 17, 1987.
Decided November 2, 1987.
*730 Benjamin S. Seigel, Katz, Hoyt, Seigel & Kapor, Los Angeles, Cal., for appellant.
No brief filed for appellee.
Before MOOREMAN, JONES and VOLINN, Bankruptcy Judges.
OPINION
MOOREMAN, Bankruptcy Judge:
By this appeal the appellant seeks to set aside the trial court's order which limited the appellant's allowance of fees and costs to $8,694.88. The appeal stems from an order which was contrary to a previously entered order authorizing the employment of the appellant for the specific purpose of pursuing a certain claim on behalf of the Trustee. The previously entered order had set the appellant's compensation at "the greater of either fees computed upon the then normal and specified hourly rates charged, or on a contingency fee basis."
FACTS
In November of 1980, the debtor's business premises suffered damage from a fire which had occurred in an adjacent building. One month later, the debtor filed a Chapter 11 petition and retained the appellant to institute an adversary action for recovery of damages sustained by reason of the fire. However, due to the lack of funds to finance a plan of reorganization, the case was converted to Chapter 7 in October 1981. A Chapter 7 Trustee was appointed and the only assets of the estate, besides the subject claim, totaled approximately $1,600. The debtor was without funds to pay the appellant to proceed with the case. However, the appellant agreed to prosecute the action upon the terms that it would be compensated by the greater of fees based upon its hourly rates charged, or, fees based upon a percentage of the recovery.
Apparently, there was a likelihood that no recovery would be obtained and no other bankruptcy attorney in the community could be obtained by the Trustee to take the case. The Trustee applied to the Bankruptcy Court for authority to employ the appellant as Special Counsel upon specific terms and conditions.
On May 10, 1982, Judge Moriarty entered an Order authorizing the employment of the appellant "on the terms and conditions set forth in the Application to represent him in the matters mentioned in the Application." E.R. at 15. The Trustee's Application provided for the following payment terms:
[s]aid attorneys shall be reimbursed as follows: The greater of their normal hourly rate of $150.00 per hour for partners and $100.00 per hour for associates, plus costs and expenses, or 25% of any recovery received prior to trial and 33 1/3% of any recovery received within 30 days from the date first set for trial or thereafter, plus all costs and expenses to be paid by Trustee. Said fees shall be contingent upon the recovery in this lawsuit and should there be no recovery in the subject lawsuit, said attorney's fees shall be on a pro rata basis with all other administrative claims.
E.R. at 17. The appellant also states that it agreed to waive its unsecured claim for $38,974.64 then due for services rendered to the debtor and to the debtor-in-possession.
The appellant then proceeded to prosecute the action. The appellant claims that many aspects of the case were very difficult and "bitterly opposed by the defendants" and certain rulings in the underlying case were appealed. The appellant also states that all motions and appeals were decided in favor of the debtor.
In December 1984, the case was settled, with court approval, for $50,000.00. The appellant eventually filed an application for an order authorizing the Trustee to pay the *731 appellant a total of $23,629.42 ($22,035.00 for fees of 205.5 hours and $1,594.42 for expenses). This amount represents the calculated hourly rate set forth in the appellant's application for fees submitted to the trial court. The amount the appellant would have received on the straight contingency basis was $16,666.67 (33 1/3% of the recovery) plus costs of $1,594.42.
However, the Bankruptcy Court authorized the payment of only $8,694.88 to the appellant.[1] The appellant then brought a motion for reconsideration of the allowance and for a rehearing of its application fees. The Bankruptcy Court denied the motion and stated in its Order:
[a]t the hearing on February 23, 1987, I stated to those interested parties present that they should know that the Chapter 7 bankruptcy case was administered for the benefit of those that were not administrative creditors, namely, general unsecured creditors. Allowances were made accordingly.
E.R. at 54. The appellant filed a timely Notice of Appeal.[2] Because of the nature of the appeal, there are no opposing Briefs and the facts are substantiated by the record.
ISSUE
Whether the trial court abused its discretion by allowing only $8,694.88 in attorney's fees and costs to the debtor's attorney.
DISCUSSION
The appellant contends, that because the Bankruptcy Judge had specifically authorized the employment and terms and conditions of compensation, it was an abuse of discretion to award fees differing from the fees so fixed without a specific finding of "unanticipated developments" as set forth in Section 328(a) of the Bankruptcy Code. Section 328(a) provides as follows:
The trustee, or a committee appointed under section 1102 of this title, with the court's approval, may employ or authorize the employment of a professional person under section 327 or 1103 of this title, as the case may be, on any reasonable terms and conditions of employment, including on a retainer, on an hourly basis, or on a contingent fee basis. Notwithstanding such terms and conditions, the court may allow compensation different from the compensation provided under such terms and conditions after the conclusion of such employment, if such terms and conditions prove to have been improvident in light of developments unanticipated at the time of the fixing of such terms and conditions.
11 U.S.C. § 328(a) (1982). This section "anticipates that the terms of the fee arrangement will be established prior to the rendition of professional services." In re Benassi, 72 B.R. 44, 47 (D.Minn.1987) (emphasis added). The only limitation is the language which permits the court to award fees at variance with the terms of its prior order when they "prove to have been improvident in light of developments unanticipated" at the time the approval was given. Id.
In the instant case, the trial court did not make any specific finding that the originally approved fee arrangement was "improvident in light of developments unanticipated." Further, it does not appear from the record that any such unanticipated developments existed or were known. At the time the fee arrangement was approved by the Bankruptcy Judge, the estate had virtually no assets other than the claim pursued by the appellant. There were no indications as to the value of the claim. Indeed, the parties involved were satisfied with the results obtained considering the difficulty of proving the claim since many of the records had been destroyed or lost in the fire. R.T. at 1-2. Thus, there appears to *732 be no basis for modifying the approved fee arrangement on the basis of unanticipated developments.
The trial court's adjustment of the prior order was based upon principles of conservation of the estate and economy of administration in order to obtain relief for creditors. In the trial court's order denying the appellant's motion for reconsideration the court stated, "the Chapter 7 bankruptcy case was administered for the benefit of those that were not administrative creditors, namely general unsecured creditors. Allowances were made accordingly." E.R. at 54. However, the notion of economy of administration was changed by the enactment of Sections 328 and 330. E.g. In re Nucorp Energy, Inc., 764 F.2d 655, 657 (9th Cir.1985) (citing H.R.Rep. No. 595, 95th Cong. 1st Sess. 330 (1977), reprinted in 1978 U.S.Code Cong. & Ad.News 5787, 5963, 6386); In re Powerline Oil Co., 71 B.R. 767, 770 (9th Cir. BAP 1986); Boston and Maine Corp. v. Sheehan, Phinney, Bass & Green, 778 F.2d 890, 895 (1st Cir. 1985). The basis for abandoning the old notions of economy in the area of fixing fees was that it discouraged qualified practitioners from entering the bankruptcy practice. Id. Thus, the estates were "ill-served" by less qualified specialists.
The record supports the conclusion that, absent the approved fee arrangement, this case presented a substantial reimbursement risk to counsel. The evidence before the appointing Judge was that the Trustee could get no other attorney in the community to take the case and that the case involved difficult obstacles because many of the debtor's records had been destroyed or lost in the fire. Also, it is undisputed that all parties were satisfied with the results obtained from the court approved settlement. Without the approved fee arrangement, it is doubtful that the appellant would have agreed to take the case.
The appellant argues that the Bankruptcy Court did not have discretion to modify the previously approved fee arrangement without the specific finding of some unanticipated development as set forth in the specific language of the statute. In the case of In re Benassi, 72 B.R. at 47, the United States District Court of Minnesota reversed the bankruptcy court's modification of a previously approved contingency fee arrangement. The court stated, "`[t]o deny the fee now because it exceeds time charges and looks high in hindsight would penalize counsel for a job well done and would tell counsel and all other attorneys that they should think twice before again working for' persons or businesses in bankruptcy proceedings." Id. at 49 (citing Boston and Maine Corp., supra 778 F.2d at 895) (emphasis in original).
The appellant also argues that the bankruptcy court should have granted the fees calculated on an hourly basis pursuant to the fee arrangement, in that this amount was higher than the percentage fee. At a minimum, the appellant is entitled to the contingency fee amount in that it was clearly an established amount. In re Benassi, 72 B.R. at 49; see also In re Warrior Drilling & Engineering Co., 18 B.R. 684, 693 (N.D.Ala.1981). The only limitation was the risk of not prevailing on the claim.
Under the percentage fee calculation the appellant would in no event receive more than the 33 1/3% of the recovery. Thus, the limit was established by the order. There is no evidence that the trial court's prior approval of this contingency fee arrangement was conditional in any respect. Further, there is no evidence that the contingent fee terms proved to have been improvident by reason of subsequent developments not capable of being anticipated at the time of the May 10, 1982 order fixing the appellant's compensation.
As to the hourly rate calculation, the only terms set in the May 10th order were with regard to the appellant's hourly rate charged. Indeed it was possible that the appellant's hourly rate calculation would be more than the amount eventually recovered. Thus, it is implicit in the May 10th order that the hourly rate calculation would have to be based on a reasonable time when viewed in light of the amount recovered.
*733 Although the hourly rate was fixed by the May 10th order approving the fee arrangement, the hours expended in pursuing the claim were not fixed. Thus, under the hourly rate approach, the trial court would have discretion to review the appellant's fee schedules to determine if the hours expended were reasonable under the circumstances. This discretion did not extend to the modification of the fixed percentage fee arrangement on the basis of conservation of the estate or economy of administration.
CONCLUSION
The term "unanticipated developments" in Section 328(a) is subject to a broad interpretation. Under that section, the bankruptcy court has substantial discretion in altering fee agreements when the circumstances warrant. In the instant case, however, the record provides no evidence of any developments that justified alteration of the fee arrangement involved. Conservation of the estate appears to have been the sole reason for altering the agreement. At the time the fee arrangement was approved, it was clear that the estate had limited assets and the Trustee could not have obtained any other attorney to pursue the claim, absent some type of arrangement approved under Section 328(a). Also, there was a likelihood that no recovery would be had on the claim. The only "subsequent development" was the settlement of the claim. The settlement of the claim was clearly anticipated in the May 10th order.
Because the percentage fee arrangement was established and fixed, at the very least the appellant is entitled to that amount ($16,667.67 plus costs of $1,594.42). Since the approved fee arrangement provided for the greater of the percentage fee, or, the appellant's normal hourly rate, and the hours expended were not established or fixed, that matter should be subject to the trial court's review as to reasonableness.
Accordingly, the trial court's denial of the motion for reconsideration is REVERSED and REMANDED for a determination as to whether the hours expended by the appellant were reasonable under the circumstances. Once determined, the greater amount should then be paid to the appellant pursuant to the earlier court's approved fee arrangement.
NOTES
[1] The authorization for payment of fees was brought before Judge Ashland. The $8,694.88 authorized for payment was calculated by reducing all attorney's fees and accountant's fees by approximately 63%, thereby allowing for more funds to be provided the unsecured creditors of the estate. Appellant's Brief at pg. 14 nt. 4.
[2] The $50,000 is being held by the Trustee and thus the appeal is not moot. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1097524/ | 483 So. 2d 479 (1986)
Michael E. BURRELL, Appellant,
v.
STATE of Florida, Appellee.
No. 86-141.
District Court of Appeal of Florida, Second District.
February 12, 1986.
HALL, Judge.
Michael E. Burrell appeals the summary denial of his motion for postconviction relief. Burrell entered a plea to an attempted burglary which appears to have been committed in March, 1983. The trial court suspended a three-year sentence and placed Burrell on probation. In 1984 Burrell was again before the court; this time for violation of probation. He elected to be sentenced under the guidelines, which called for a presumptive sentence of twelve to thirty months or community control. The court initially entertained the idea of imposing the three-year sentence that earlier had been suspended but, upon considering evidence presented in mitigation, instead imposed a sentence of two years in prison, followed by six months' community control and two years' probation. If not a negotiated sentence, this unusual disposition was accepted without objection when it was imposed. A pro se appeal, which did not challenge the sentence, followed. Then Burrell filed his motion for postconviction relief.
*480 We do not agree with Burrell that the existing sentence violates Villery v. Florida Parole & Probation Commission, 396 So. 2d 1107 (Fla. 1981). The Villery decision was an attempt to reconcile two separate pieces of legislation. Section 948.01(4), Florida Statutes (1979), permitted the imposition of jail or prison terms as a condition of probation. Such split sentences had been approved by the supreme court in State v. Jones, 327 So. 2d 18 (Fla. 1976). However, in Villery the court partially receded from Jones in light of section 947.16(1), Florida Statutes (1979), which conferred parole eligibility upon anyone serving a sentence of one year or more. Since probation, technically, is not a sentence, McGowan v. State, 362 So. 2d 335 (Fla. 3d DCA 1978), a trial judge could avoid the likelihood of a defendant qualifying for early parole release by imposing a prison term as a condition of probation, thereby removing the offender from the ambit of section 947.16(1) and "negat[ing] the parole policy of this state." Villery, 396 So.2d at 1111. The supreme court rejected the suggestion of the Parole Commission that split sentences could be "construe[d] ... as a sentence for the limited purpose of eligibility for parole... . Such a construction would create a legal and administrative morass which we do not believe was the legislative intent in adopting the split sentence alternative as part of the probation authority for trial judges." Id. Relying in part upon our decision in Olcott v. State, 378 So. 2d 303 (Fla. 2d DCA 1979), Villery established a 364-day limit on the amount of prison time that could be included in a split sentence.
With the guidelines, however, came the abolition of parole. § 921.001(8), Fla. Stat. (1983). The problem addressed by Villery, the jurisdictional problems created by the simultaneous service of two different forms of supervision, ceased to be relevant. Burrell cannot now rely on Villery because he affirmatively elected to be sentenced under the guidelines. "Because there are no parole considerations under the guidelines, and because of the legislative intent, as expressed by the adoption of Rule 3.701(d)(12), see Section 921.001(4)(b), Florida Statutes (1983), to allow split sentences such as those forbidden in Villery, we hold that Villery objections are no longer available to persons sentenced under the guidelines." Norman v. State, 468 So. 2d 1063, 1064 (Fla. 1st DCA 1985).[1]
This case also presents the question whether community control and probation may be imposed in tandem. The First District, in Williams v. State, 464 So. 2d 1218 (Fla. 1st DCA 1985), held that community control and probation are alternative forms of disposition and may not be "stacked" as was done in the instant case. The court reasoned that community control was intended to afford an alternative to both probation and incarceration and that a disposition involving both community control and *481 probation would be manifestly contrary to the legislative intent as to the proper purpose and application of alternative dispositions. We do not agree with the decision in Williams. Instead, we feel that community control, though an individualized program with the offender restricted within the community, essentially functions as a more restrictive form of probation. Like probation, it is supervised by the Department of Probation and Parole. A violation is subject to the same sort of disposition as a violation of probation. We feel that in this instance community control represents an intermediate step, between total incarceration and freedom on the streets, in the chain of rehabilitation of the offender. We therefore find no error in the trial judge's sentence and affirm.
GRIMES, A.C.J., and SCHOONOVER, J., concur.
NOTES
[1] During the same session that produced the sentencing guidelines, the legislature also reinstated true split sentences. § 921.187(7), Fla. Stat. (1983). Although Burrell's offense predates the effective date of this statute, we do not perceive this case as involving an impermissible ex post facto application of section 921.187(7) and thus barred by article 1, § 10, United States Constitution, and article 1, § 10, Florida Constitution. "[T]wo critical elements must be present for a criminal or penal law to be ex post facto: it must be retrospective, that is, it must apply to events occurring before its enactment, and it must disadvantage the offender affected by it." Weaver v. Graham, 450 U.S. 24, 29, 101 S. Ct. 960, 964, 67 L. Ed. 2d 17, 23 (1981). A law which makes an ameliorating change in an offender's circumstances is not ex post facto. Dobbert v. Florida, 432 U.S. 282, 97 S. Ct. 2290, 53 L. Ed. 2d 344, reh'g denied, 434 U.S. 882, 98 S. Ct. 246, 54 L. Ed. 2d 166 (1977). Specifically included within the guidelines is the provision that defendants, even probation violators, whose crimes occurred before the effective date may nevertheless elect guideline treatment. See, e.g., State v. Boyett, 467 So. 2d 997 (Fla. 1985). Presumably, these persons would not request guideline treatment and thereby forego parole eligibility, unless they perceived it would be to their advantage to do so.
We have previously held that "loss of the parole privilege ... is not occasioned by an independent act of the state which alone exposes the defendant to an otherwise impermissible ex post facto law." Hayward v. State, 467 So. 2d 462, 464 (Fla. 2d DCA), petition for review denied, 476 So. 2d 674 (Fla. 1985). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1097522/ | 483 So. 2d 1339 (1986)
Cynthia Gail WILSON, Deceased, Dependents of: David Wilson
v.
SERVICE BROADCASTERS, INC. (WDAM) & Insurance Company of North America.
No. 55409.
Supreme Court of Mississippi.
February 19, 1986.
*1340 Wayne Easterling, Easterling & Varnado, Hattiesburg, for appellants.
Thomas C. Gerity, Watkins & Eager, Jackson, for appellees.
Before PATTERSON, C.J., and HAWKINS and PRATHER, JJ.
PRATHER, Justice, for the Court:
The primary issues of this appeal are the applicability of the "going and coming" rule and the constitutionality of the prior, unamended version of Miss. Code Ann. § 71-3-25. David B. Wilson, husband of the deceased Cynthia Gail Wilson, and Joseph Laird Wilson, minor son of the deceased, perfect this workmen's compensation appeal from the Circuit Court of Jones County.
I.
This case evolved from the death of Cynthia Gail Wilson, a reporter for WDAM Television in the Laurel/Hattiesburg area. Mrs. Wilson began working for WDAM between 1975 and 1976 as a full-time news reporter. During her tenure as a full-time reporter Cynthia earned a monthly salary of $1,000, plus $50 a month car allowance and sometimes $30 to $40 overtime. Additionally, $55 was paid by WDAM toward health insurance, Mrs. Wilson had use of a gasoline credit card, and she participated in the company pension plan.
In 1979, Mrs. Wilson became pregnant. She and her employer agreed that when the baby came she would take a two-month maternity leave before returning to work full-time. In mid-March, 1980, complications *1341 arose. At that time, Joseph Laird Wilson was born approximately nine weeks prematurely. Medical complications with Joseph required Mrs. Wilson's constant care and assistance and she was unable to return to work as planned.
In May, 1980, Mrs. Wilson resigned her employment with WDAM stating that she could not expect the station to hold her job open indefinitely. The bookkeeping department settled accounts with Mrs. Wilson by sending her a check for some earned vacation, less some insurance premiums. Also, the company managing the WDAM pension fund was notified to close out her account. Bob Ford, the news director, then hired another reporter to fill Mrs. Wilson's position.
In January, 1981, Cynthia Wilson returned to work on a part-time basis. A special position was created for her in order that her schedule be flexible. She worked on stories assigned to her by Bob Ford and she was authorized to establish and develop her own stories. In this part-time capacity, Mrs. Wilson was paid $7 per hour, the interpolated amount of her past salary of $1,000 per month. She received, however, no car allowance. No premiums were paid on her behalf for health insurance and she did not participate in the company pension fund. Her average weekly salary while working part-time was $52.50.
On Thursday, March 19, 1981, Mrs. Wilson talked on the telephone with Bob Ford and agreed to go to the station to edit a newspaper report to be aired on the Friday evening news. She also made arrangements with her aunt to baby-sit while she went to the station.
The next day, Friday, March 20, 1981, Mrs. Wilson was killed en route to the television station. One of the tires on the car she was driving sustained a blow-out causing Mrs. Wilson to veer into opposing traffic and crash head-on with another vehicle.
The claimants, the widower and the infant son of Mrs. Wilson, commenced this action in September of 1981. The case was first heard before an administrative judge and then before the full Mississippi Workmen's Compensation Commission. The case was next appealed to the Circuit Court of the First Judicial District of Jones County.
The case, now before this Court, raises the following legal issues:
(1) Did the death of Mrs. Wilson arise out of and in the course and scope of her employment with WDAM?
(2) Was the average weekly wage of Mrs. Wilson correctly computed?
(3) Did the circuit court and the Worker's Compensation Commission err in requiring appellants to prove dependency?
(4) Did the circuit court err in denying appellants funeral expenses and death benefits?
(5) Did the circuit court err in failing to require appellees to pay penalties and interest?
II.
Did the death of Mrs. Wilson arise out of and in the course and scope of her employment with WDAM?
As a general rule, hazards encountered by an employee going to or returning from his regular place of work, off the employer's premises, are not incident to employment, do not arise therefrom, and are not compensable. Stepney v. Ingalls Shipbuilding Division, Litton Systems, Inc., 416 So. 2d 963 (Miss. 1982); Aetna Finance Co. v. Bourgoin, 252 Miss. 852, 174 So. 2d 495 (1965); Wallace v. Copiah County Lumber Co., 223 Miss. 90, 77 So. 2d 316 (1955). An employee who claims an exception to the general rule must prove that he comes within one of the exceptions. Aetna Finance Company, 252 Miss. at 858, 174 So.2d at 497.
A partial list of exceptions to the general rule includes "(1) where the employer furnishes the means of transportation, or remunerates the employee; or (2) where the employee performs some duty in *1342 connection with his employment at home... ." Dr. Pepper Bottling Co. v. Chandler, 224 Miss. 256, 260, 79 So. 2d 825, 826 (1955).
Bob Ford testified that many times reporters for WDAM write their stories at home, meet the camera crew at the location for filming, and only then make a trip to the station to edit the video tape. Mr. Ford testified that reporters spend only 20 percent of their time at the station and many times reporters would not even arrive at the station until 3:00 p.m.
It can easily be seen that it would be a waste of time for a reporter to drive to the station, write a story, drive back into town to film the story, and then drive back out to the station to edit the video tape.
Commenting on the convenience of the reporter's doing work at home Mr. Ford testified, "[T]he station is located far removed from either of our primary towns. So as a practical matter, all of the reporters do a certain amount of their work from their home." In Larson, The Law of Workmen's Compensation §§ 18.32 (1985), Professor Larson addresses the situation under analysis as follows:
When reliance is placed upon the status of the home as a place of employment generally, instead of or in addition to the existence of a specific work assignment at the end of the particular homeward trip, three principal indicia may be looked for: the quantity and regularity of work performed at home; the continuing presence of work equipment at home; and special circumstances of the particular employment that make it necessary and not merely personally convenient to work at home.
.....
If work is done at home for the employee's convenience, the going and coming trip is not a business trip within the dual purpose rule, since serving the employee's own convenience in selecting an off-premises place in which to do the work is a personal and not a business purpose.
The time not wasted by Mrs. Wilson in a needless drive to and from the station would seem to inure to the benefit of both the station and the reporter. Therefore, the Court finds the work done by Mrs. Wilson at her home was for the mutual convenience of Mrs. Wilson and her employer.
The administrative judge found from the testimony of David Wilson and Mrs. Jean Freeman that Cynthia Wilson had worked on a story at home on the morning of her death. That finding was affirmed by the full Commission and by the Circuit Court of Jones County. Based partially on that finding, all three forums agreed that Mrs. Wilson's death arose out of and in the scope of her employment with WDAM.
This Court affirms those decisions. In so holding, the Court finds that under the facts of this case the death of Mrs. Wilson should be compensated as an exception to the going and coming rule.
III.
Was the average weekly wage of Mrs. Wilson correctly computed?
The record reflects that Mrs. Wilson worked full-time for WDAM until she had to leave to deliver her baby prematurely. The record also reflects that the complications arising from the birth prevented her from returning to work on a full-time basis as she had planned. Last, the record reflects that her superior, Bob Ford, was pleased with her work but had not spoken with her about resuming a full-time position with the station.
The factual circumstances surrounding this question make it difficult to answer. Appellants contend it was likely Mrs. Wilson would have begun working full-time again had she not been killed. Because she expected to begin working full-time again, appellants contend the average weekly wage of Mrs. Wilson should be computed by comparing similarly situated workers; that is, reporters working full-time for WDAM.
*1343 To the contrary, the appellees emphasize that full-time employment had never been discussed, Mrs. Wilson's old job had already been filled, and that Bob Ford believed Mrs. Wilson desired a flexible, part-time position. Furthermore, appellees argue that speculation in the present case should not be allowed.
The statutory method for determining average weekly wage is found in Miss. Code Ann. § 71-3-31 (1972). Careful analysis of that statute reveals it contemplates three situations:
(1) When the injured employee has been working during the period of 52 weeks immediately preceding his injury;
(2) When the worker's employment has extended less than 52 weeks but the results of the statutory computation are "just and fair;"
(3) When by reason of shortness of time of employment it is impractical to use the statutory formula, at which time attention is focused to the earnings of those employed at the same or similar work.
The question in the present case is whether Mrs. Wilson's employment falls under category 2 or category 3. The administrative judge, the Workmen's Compensation Commission, and the Jones County Circuit Court all chose category 2 and computed Mrs. Wilson's average weekly wage based on her part-time work schedule. Appellants contend category 2 does not produce a "just and fair" result.
What factors should this Court consider in determining whether the statutory method is "just and fair?" Professor Larson suggests, "The answer is plain: Does it produce an honest approximation of claimant's probable future earning capacity?" Larson, supra § 60.11(d) at 10-557.
What was Mrs. Wilson's probable future earnings capacity? The record reflects that Mrs. Wilson had originally intended to return to work full-time after her child was born. However, complications arose requiring Mrs. Wilson to stay at home. After her initial plans were thwarted, she and Bob Ford did not discuss her returning to work full-time. The Court finds that Mrs. Wilson's average weekly wage should be computed on her pay as a part-time employee. A determination that Mrs. Wilson would have resumed full-time employment, based on the facts in the record, would be much too speculative.
IV.
Did the Circuit Court and the Worker's Compensation commission err in requiring appellants to prove dependency?
Prior to 1984[1], Miss. Code Ann. § 71-3-25, describing death benefits, differentiated in several respects between a "widow" and a "widower." For example, a widow received an immediate lump sum payment of $250, whereas a widower did not. Also, a widow was statutorily presumed to be wholly dependent on her deceased husband, whereas a widower was required to prove his dependency.
The United States Supreme Court held a similar Missouri statute unconstitutional in Wengler v. Druggist Mutual Ins. Co., 446 U.S. 142, 100 S. Ct. 1540, 64 L. Ed. 2d 107 (1980). In Wengler the Court found that the Missouri Workmen's Compensation laws which denied a widower benefits on his wife's work-related death unless he either was mentally or physically incapacitated *1344 or proved dependence on his wife's earnings, while granting widows death benefits without their having to prove dependence, violated the Fourteenth Amendment's equal protection clause.
In the present case the administrative judge, relying on Wengler, found that since § 73-3-25 presumed a widow to be wholly dependent then a widower should likewise be presumed wholly dependent. He then awarded the spouse of the decedent a lump sum death benefit payment of $250. The full Commission, by a divided vote, reversed that holding and held that the clear wording of the statute should be followed pending contrary direction by the Mississippi Supreme Court.
The Court today follows Wengler v. Druggist Mutual Ins. Co., 446 U.S. 142, 100 S. Ct. 1540, 64 L. Ed. 2d 107 (1980) and declares those portions of § 71-3-25 which differentiated between widows and widowers unconstitutional. Having done so, the Court holds that the spouse of the decedent be allowed to collect a lump sum death benefit of $250.
The appellants also assign as error and argue that the circuit court erred in failing to award them reasonable funeral expenses, not to exceed $1,000, as provided by Miss. Code Ann. § 71-3-25. This Court notes that the order of the full Commission did award "reasonable funeral expenses not to exceed $1,000 exclusive of other burial insurance or benefits." The circuit court did not disturb that portion of the award in its February 16, 1983 judgment.
V.
Did the circuit court err in failing to require appellees to pay penalties and interest?
Miss. Code Ann. § 71-3-37(5) (1972) provides:
If any installment of compensation payable without an award is not paid within fourteen (14) days after it becomes due, as provided in subdivision (2) of this section, there shall be added to such unpaid installment an amount equal to ten per centum (10%) thereof, which shall be paid at the same time as, but in addition to, such installment unless notice is filed under subdivision (4) of this section, or unless such non-payment is excused by the commission after a showing by the employer that owing to conditions over which he had no control such installment could not be paid within the period prescribed for the payment.
"The commission has no discretion in the application of [Miss. Code Ann. § 71-3-37] and must impose the penalty unless the same is controverted by the carrier or employer or is excused by the commission." Goasa and Son v. Goasa, 208 So. 2d 575, 580 (Miss. 1968). Furthermore, "the law is clear that imposition of the penalty is mandatory and is not excused by the fact that the employer may have disputed liability in good faith." South Central Bell Telephone Co. v. Aden, 474 So. 2d 584, 593 (Miss. 1985); O'Neil v. Multi-Purpose Mfg. Co., 243 Miss. 775, 140 So. 2d 860 (1962); Dunn, Mississippi Workmen's Compensation § 279, 350-351 (3rd ed. 1982).
In the present case both the administrative judge and the full Commission awarded the appellants penalties and interest in accordance with § 71-3-37(5). However, the Jones County Circuit Court reversed those awards stating, "Lastly, the Court is of the opinion that the Commission's award of interest and penalties was improper for the reason that under the decision of New & Hughes Drilling Co. v. Smith, 219 So. 2d 657, 661 (Miss 1969), such claim was waived."
Although the better practice might have been for the appellees to have asked for penalties and interest before their first hearing, the Court finds that the imposition of the statutory penalties was mandatory and that the appellants' petition was not so "untimely" as to bring this case under the rule of New and Hughes Drilling Co. v. Smith.
VI.
This Court concludes that the death of Mrs. Wilson is compensable and that the appellants are entitled to the following:
*1345 1. A lump sum death benefit of $250.
2. Funeral expenses not to exceed $1,000 exclusive of other burial insurance and benefits.
3. Weekly death benefits in accordance with Miss. Code Ann. § 71-3-25 (Supp. 1985) based on an average weekly wage of $52.50. Furthermore, the aggregate weekly benefits to both dependents should not be less than $25.00. Miss. Code Ann. § 71-3-13 (Supp. 1985); Truck Trailer Sales & Service Co. v. Moore, 244 Miss. 317, 141 So. 2d 541 (1962).
4. Statutory penalties and interest.
AFFIRMED IN PART; REVERSED IN PART.
PATTERSON, C.J., WALKER and ROY NOBLE LEE, P.JJ., and HAWKINS, DAN M. LEE, ROBERTSON, SULLIVAN and ANDERSON, JJ., concur.
NOTES
[1] In 1984, Miss. Code Ann. § 71-3-25 was amended by Chapter 499, § 2 of the General Laws to read:
If the injury causes death, the compensation shall be known as a death benefit and shall be payable in the amount and to or for the benefit of the persons following:
(a) An immediate lump sum payment of two hundred fifty dollars ($250.00) to the surviving spouse, in addition to other compensation benefits.
.....
(g) All questions of dependency shall be determined as of the time of the injury. A surviving spouse, child or children shall be presumed to be wholly dependent. All other dependents shall be considered on the basis of total or partial dependence as the facts may warrant. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2294152/ | 925 F. Supp. 1174 (1996)
STATE FARM FIRE & CASUALTY CO.
v.
Clifford WOODS.
No. 1:95-CV-260.
United States District Court, E.D. Texas, Beaumont Division.
May 9, 1996.
*1175 Clint Wayne Lewis, Lewis & Henry, Beaumont, TX, for State Farm Fire & Casualty Company.
John H. Seale, Seale Stover Coffield & Bisbey, Jasper, TX, for Clifford Woods.
MEMORANDUM RE: PLAINTIFF'S MARCH 1, 1996 MOTION FOR SUMMARY JUDGMENT AND APRIL 16, 1996 FIRST AMENDED MOTION FOR SUMMARY JUDGMENT
HINES, United States Magistrate Judge.
I. Background
This declaratory judgment action was filed by State Farm Fire & Casualty Company ("State Farm") for declaration of nonliability *1176 on a homeowner's insurance policy issued to defendant Clifford Woods ("Woods") covering a dwelling in Jasper County, Texas. The parties have consented to conduct all proceedings in this civil action before the undersigned United States Magistrate Judge pursuant to 28 U.S.C. § 636.
On the evening of December 29, 1994, both the dwelling and a second, nearby structure on the same grounds, which housed defendant's office,[1] were completely destroyed by fire. Plaintiff asserts that the fire was the result of arson.
Defendant filed a counterclaim alleging breach of contract, breach of the duty of good faith and fair dealing, violation of the Texas Deceptive Trade Practices-Consumer Protection Act (DTPA), and violation of Texas Insurance Code article 21.21. In connection with the breach of the duty of good faith and fair dealing counterclaim, Woods' pleading alleges State Farm failed to make a reasonable investigation and denied Woods' claim despite the fact that it had no concrete evidence that Woods was involved in the fire in any way. The DTPA and Insurance code claims are premised on the same "no reasonable basis for denial" theory.[2]
Pending before the court are plaintiff's March 1, 1996 "Motion for Summary Judgment on the Issues of Good Faith and Fair Dealing as Alleged in Defendant's First Amended Counterclaim" and plaintiff's April 16, 1996 "First Amended Motion for Summary Judgment on the Issues of Plaintiff's Entitlement to Extra-Contractual Damages Alleged in Defendant's First Amended Counterclaim." These motions seek pretrial disposition of defendant's good faith and fair dealing, DTPA, and Texas Insurance Code counterclaims.
II. Duty of Good Faith and Fair Dealing
The Texas Supreme Court recognizes a cause of action for breach of the duty of good faith and fair dealing in connection with denial of payment of benefits on an insurance policy. Arnold v. National County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex.1987). Public policy supports allowing such a cause of action to exist due to the unequal bargaining power between a typical insurance company and a typical insured. Id. The insurer has "exclusive control over the evaluation, processing, and denial of claims." Id. Without this common law bad faith remedy, "unscrupulous insurers would be able to take advantage of their insureds' misfortunes in bargaining for settlement or in resolving claims by arbitrarily deny[ing] coverage and delay[ing] payment of a claim with no more penalty than interest on the amount owed." Union Bankers Ins. Co. v. Shelton, 889 S.W.2d 278, 283 (Tex.1994) (citing Arnold v. National County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex.1987)) (alterations in original).
However, a claim alleging breach of the duty of good faith and fair dealing is a cause of action sounding in tort and is distinct from a breach of contract action stemming from the same denial or delay of insurance benefits. The duty arises not from the terms of the insurance contract but from an obligation the law imposes as a result of the special relationship. Viles v. Security Nat'l Ins. Co., 788 S.W.2d 566, 567 (Tex.1990). "A claim for breach of the duty of good faith and fair dealing is separate from any claim for breach of the underlying insurance contract, and the threshold of bad faith is reached only when the breach of contract is accompanied by an independent tort." Shelton, 889 S.W.2d at 283 (citations omitted).
*1177 To prevail in a bad faith claim, "an insured claiming bad faith must prove that the insurer had no reasonable basis for denying ... payment of the claim, and that it knew or should have known that fact." Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 18 (Tex.1994) (citing Aranda v. Ins. Co. of N. Am., 748 S.W.2d 210, 213 (Tex.1988); Arnold, 725 S.W.2d at 167); see also Republic Ins. Co. v. Stoker, 903 S.W.2d 338, 340 (Tex. 1995); Lyons v. Millers Casualty Ins. Co., 866 S.W.2d 597, 600 (Tex.1993); St. Paul Guardian Ins. Co. v. Luker, 801 S.W.2d 614, 620 (Tex.App. Texarkana 1990).
Unlike a breach of contract claim, the issue in a bad faith claim is not whether the insured in fact set the fire; rather it is whether the insurer possessed knowledge at the time of the policy denial which amounted to a reasonable basis for its belief that the insured played a role in the fire or that some other disqualifying provision of the policy had been triggered. State Farm Lloyds, Inc. v. Polasek, 847 S.W.2d 279, 286-87 (Ct. App. San Antonio 1992); St. Paul Lloyd's Ins. Co. v. Huang, 808 S.W.2d 524, 526 (Tex. App. Houston [14th Dist.] 1991). Thus, in evaluating a bad faith claim, the court should take care not to view evidence relating to the tort issue of lack of reasonable basis for denial or delay in payment of a claim as wholly congruous with the evidence on the contract issue of coverage. Lyons, 866 S.W.2d at 600. Rather, the court should focus on the specific facts and evidence before the insurer at the time of its denial of benefits to determine whether they could create at least a genuine difference of opinion over the duty to pay benefits. See, e.g., Estrada v. State Farm Mut. Auto. Ins. Co., 897 F. Supp. 321 (W.D.Tex.1995); Packer v. Travelers Indemnity Co., 881 S.W.2d 172 (Tex.App. Houston [1st Dist.] 1994).
Neither the existence of a bona fide dispute about an insurer's liability nor a mistake by the insurer about the factual basis for its denial will alone give rise to a cause of action for bad faith. Moriel, 879 S.W.2d at 17-18. If there is a bona fide controversy over factual prerequisite to coverage under the policy, then no bad faith cause of action exists. National Union Fire Ins. Co. v. Hudson Energy Co., 780 S.W.2d 417, 426 (Tex.App. Texarkana 1989), aff'd, 811 S.W.2d 552 (Tex.1991). Stated another way, as long as the insurer's basis for denial was reasonable, even though it may eventually be determined by the factfinder to be erroneous, the insurer will not liable for the tort of bad faith. Lyons, 866 S.W.2d at 600. A carrier retains the right to deny invalid or questionable claims without subjecting itself to tort liability for an erroneous denial of a claim. State Farm Lloyds, Inc., 847 S.W.2d at 283; Lyons, 866 S.W.2d at 600.
The first prong of the bad faith test simply requires "an objective determination of whether a reasonable insurer under similar circumstances would have delayed or denied the claimant's benefits." Aranda, 748 S.W.2d at 213. Said one commentator:
If the insurer introduces competent and probative evidence from which reasonable persons could conclude the claim is not valid, then the logical conclusion is that a reasonable basis existed to deny the claim. Such evidence of a bona fide dispute establishes a reasonable basis for the denial of the claim and defeats the first element of plaintiff's claim for bad faith as a matter of law.
The existence of a factual dispute regarding the validity of a claim does not entitle the insured to submit the issue of reasonableness of the basis for denial to the jury in a bad faith case.[3]
In short, "the bad faith cause of action requires much more demanding proof than the suit on the insurance policy." State Farm Lloyds, Inc., 847 S.W.2d at 283. "If the factfinder could simply disagree with the insurer's assessment of such evidence in the bad faith action, the insurer would be held liable in tort for its erroneous denial of the claim. The supreme court in Aranda assured us that this would not happen." State Farm Lloyds, Inc., 847 S.W.2d at 286.
*1178 Finally, although evidence of liability on the insurance contract should not be given undue weight in the bad faith determination, such evidence may, however, in some circumstances support a finding that an insurer lacked any reasonable basis for denying a claim if it can be shown the insurer unreasonably disregarded evidence of coverage. Lyons, 866 S.W.2d at 601. Other indications that an insurer lacked a reasonable basis for a denial of coverage include "evidence of knowledge by [insurer] that ... experts' reports were not objectively prepared, evidence of knowledge by [insurer] that the experts' methodology was faulty, evidence that [insurer] knew its statement of [insured's] financial obligations was inaccurate, or evidence that [insurer] simply failed to engage in any investigation whatsoever before denying the claim." Id.; see also State Farm General Ins. Co. v. Nguyen, No. 1:95-CV-369, 1996 WL 192089, at *5 (E.D.Tex. Mar. 25, 1996).
III. Summary Judgment Standards
State Farm moves for summary judgment against Woods on Woods' bad faith counterclaim, as well as on the DTPA and Insurance Code counterclaims, by pointing to portions of the record which it believes demonstrate the nonexistence of a genuine issue of material fact on those claims. State Farm claims there is a wholesale absence of proof on a crucial element of these counterclaims namely, that State Farm did not possess a reasonable basis for denying the claim.
Upon State Farm's successfully meeting its initial summary judgement burden of demonstrating that there is an absence of proof tending to show it lacked a reasonable basis for denying the claim, the burden shifts to nonmovant to come forward with competent summary judgment proof showing the existence of a genuine fact issue. Matsushita Elec. Indus. v. Zenith Radio, 475 U.S. 574, 585, 106 S. Ct. 1348, 1355, 89 L. Ed. 2d 538 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994). "This burden is not satisfied with `some metaphysical doubt as to the material facts,' Matsushita, 475 U.S. at 586, 106 S. Ct. at 1356, by `conclusory allegations,' Lujan [v. National Wildlife Fed'n, 497 U.S. 871, 871-73, 110 S. Ct. 3177, 3180, 111 L. Ed. 2d 695 (1990) ], by `unsubstantiated assertions,' Hopper v. Frank, 16 F.3d 92 (5th Cir.1994), or by only a `scintilla' of evidence, Davis v. Chevron U.S.A., Inc., 14 F.3d 1082 (5th Cir.1994)." Little, 37 F.3d at 1075.
IV. Analysis of Bad Faith Claim
Accompanying the original motion for summary judgment is the affidavit of Brent Sandlin, the claims specialist for State Farm who investigated Woods' claim for benefits. The affiant concludes Woods possessed a financial motivation to burn his property. Mr. Woods, who earned approximately $14,350 in his position as justice of the peace, was defeated in his reelection bid shortly before the fire. Woods was also divorced shortly before the fire and was planning on selling his residence and constructing a new home on a rural forty-four-acre tract he had just purchased. Woods sought an appraisal of his dwelling prior to the fire; the $73,000 appraisal was significantly lower than the $150,000 figure at which Woods had previously solicited offers. A $14,000 payment was coming due in June of 1995 on the 44-acre tract. Also, as part of the divorce settlement, Woods was required to pay his wife $14,000 and was required to assume the balance on a $15,000 loan with a local bank.
Defendant filed a short response to the initial motion for summary judgment on March 14, 1995, but has not, despite the passage of the response period, filed any response to the first amended motion for summary judgment. None of this financial evidence was disputed in defendant's response to the motion for summary judgment.
Mr. Sandlin's affidavit also includes various elements of circumstantial evidence suggesting involvement by defendant in the planning of the fire. Immediately prior to the fire, Woods removed a single-shot twelve-gauge shotgun, the first shotgun Woods ever owned, from his home and placed it in an abandoned school bus stored on the back of his property. A model 97 Winchester twelve-gauge shotgun, a gift to defendant from his father, was also removed and placed in the abandoned bus. A family Bible was removed from the home and placed in the bus. An "aladdin lamp" was removed from *1179 the home and delivered to defendant's son. An antique sewing machine and a porch swing were delivered to defendant's daughter-in-law. The facts concerning removal of this property are not challenged in defendant's response. It is also alleged that several valuable electric tools could not be located after the fire.
Attached as an exhibit to the affidavit is a report of K. Britt McManus, a fire cause and origin analyst with Loss and Research Analysis, a firm retained by State Farm to investigate the fire scene. Mr. McManus' report concludes that the fire was incendiary in nature. An interview with the first eyewitness on the scene of the fire revealed that both the residence and the detached office structure were burning simultaneously. A trial-like ring of fire circled the front porch of the office structure. Moreover, a six-gallon fuel container was found by the State Fire Marshal's office in the living room area of the dwelling. Woods later stated that the container had been stored in a boat located in the rear of the dwelling and that the container was full prior to the fire. Four fire debris samples were collected, but tests came back negative for the presence of accelerants.
Woods asserts he was on a hunting trip in Mississippi at the time of the fire. A friend was keeping an eye on the premises and taking care of Woods' pets. This individual said in a statement that he had last fed the animals and been to the property the morning of the fire. This statement was contradicted by the friend's wife, who said that the animals were not fed until late afternoon or early evening on the day of the fire.
Woods claims that he received several threatening phone calls prior to the fire. On one occasion Woods stated he heard a rumor that a certain incarcerated individual made arrangements to burn his property.
Further, defendant's response includes a conclusory affidavit from his attorney. In it, the attorney states, "I ... am personally familiar with the process by which insurance companies investigate, adjust, settle and litigate fire insurance claims. I have reviewed the affidavits, exhibits and evidence relied upon by State Farm in support of its motion for summary judgment filed in this case, and such evidence fails to establish any reasonable basis for the denial of Clifford Woods' claim, and State Farm should have known it had no reasonable basis for its actions." However, this affidavit is of little, if any, significance in the summary judgment analysis. "Unsupported allegations or affidavits setting forth `ultimate or conclusory facts and conclusions of law' are insufficient to either support or defeat a motion for summary judgment." Galindo v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir.1985) (citing 10A CHARLES A. WRIGHT, ARTHUR R. MILLER, MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE § 2738 (1983)).
Because arson is usually conceived and executed in secrecy, circumstantial evidence may be utilized by an insurer to prove this policy defense. Luker, 801 S.W.2d at 622. Circumstantial evidence is similarly relevant in resolving a claim of bad faith. Id.; State Farm Lloyds, Inc., 847 S.W.2d at 287. Although an insured may present some evidence of noninvolvement in a fire, if ample circumstantial evidence of involvement exists, the bad faith issue may be resolved as a matter of law in favor of the insurer. "Th[e] determination to deny [a] claim is not to be based on the insurer's success or failure in court on liability for the claim. The denial may be erroneous and still be in good faith if it is based upon the information which was available to the insurer at the time of the denial and which supported the denial of the claim. When there is a bona fide controversy [of coverage], the insurer has a right to have its day in court and let the jury determine each witness's truthfulness." Luker, 801 S.W.2d at 621-22. "[I]f the circumstantial evidence before the insurer reasonably suggests that the insured may have committed arson, there is no bad faith cause of action, even though the jury would easily have resolved the issue in the insured's favor." State Farm Lloyds, Inc., 847 S.W.2d at 287.
While defendant has presented some evidence in opposition to the motions for summary judgment, plaintiff insurer has met its summary judgment burden of demonstrating that there does not exist a genuine issue on *1180 the question of whether it lacked a reasonable basis for denying the claim. State Farm was in possession of evidence strongly suggesting that the fire was intentional.[4] Even more compelling, however, are the suggestions that defendant was himself involved in the fire specifically, the removal of several objects of personal property from the dwelling immediately prior to the fire.[5] Finally, plaintiff possessed evidence suggesting that plaintiff may have been experiencing financial difficulties at the time of the fire, although a comprehensive financial profile is not developed in the record before the court.[6] The court finds that the evidence before the insurer at the time the claim was denied was, in the aggregate, sufficient to amount to a reasonable basis for denial of the claim by the insurer. Because defendant has not demonstrated, for example, that plaintiff knowingly based its decision to deny the claim on information that was gathered by biased experts or through faulty methodology, there does not exist a genuine issue of fact on the question of whether plaintiff lacked a reasonable basis for denying the claim. Because such is an essential element of defendant's bad faith counterclaim, plaintiff's motion for summary judgment will be granted on that counterclaim.
V. Other Extra-Contractual Claims
When an insured joins claims under the DTPA and the Texas Insurance Code with a bad faith claim and those DTPA and Insurance Code claims are based on the same theory which underlies the bad faith claim namely, denial of policy benefits without a reasonable basis then those DTPA and Insurance Code claims must fail if the bad faith claim fails. Emmert v. Progressive County Mut. Ins. Co., 882 S.W.2d 32, 36 (Tex.App. Tyler 1994); State Farm Lloyds, Inc., 847 S.W.2d at 282 n. 2; see Maryland Ins. Co. v. Head Indus. Coatings & Servs., Inc., 906 S.W.2d 218, 226 n. 6, 226-27 (Tex. App. Texarkana 1995). As noted above, see supra note 2, defendant's DTPA and Insurance Code claims will require the same analysis as the bad faith claim. Therefore, plaintiff's motion for summary will be granted on the DTPA and Insurance Code claims as well.
VI. Conclusion
Plaintiff's motions for summary judgment on defendant's bad faith, DTPA, and Insurance Code counterclaims are granted. An order will be entered separately.
NOTES
[1] The office structure was separately insured with a nonparty carrier. Defendant's application for benefits under that policy was approved.
[2] The counterclaim reads, in pertinent part:
Counter-defendant further failed and refused to evaluate the information and surrounding facts, choosing instead to hide behind the palpably incorrect assumptions and conclusions of its agents, employees and consultants. In order to justify its claim denial, counter-defendant wrongfully accused counter-plaintiff of arson and fraud. Counter-defendant persisted in its denial of counter-plaintiff's claim and its unfounded accusations even though a person of ordinary prudence and care would have done otherwise.
Defendant's First Amended Counterclaim at 4.
[3] David Lloyd (Trey) Harlin III, Comment, Is Common Law Bad Faith Dead in Texas, or Simply Getting a Second Breath? The History of Bad faith in Texas, 2 TEX. WESLEYAN L.REV. 173, 189 (1995).
[4] For example, State Farm possessed the report and conclusions of Mr. McManus at the time of denial. The insurer also knew that a gas can had been found in the dwelling.
[5] Plaintiff also points to the fact that office furniture belonging to Jasper County and files concerning defendant's position as justice of the peace were removed from the office shortly before the fire. As defendant explains in his response, however, this is easily explained by the fact that these items were removed toward the end of Woods' tenure as justice of the peace.
[6] For example, while plaintiff's motion suggests that defendant's salary as a justice of the peace was fairly modest, there is no indication of the level of income defendant derived from ancillary activities. A similarly incomplete picture is painted by the assertion that plaintiff was required to assume the "balance" of a $15,000 loan from a local bank, as that balance is not specified. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1947376/ | 968 F. Supp. 944 (1997)
KEANE DEALER SERVICES, INC., Plaintiff,
v.
William R. HARTS and Smith Barney, Inc., Defendants.
William R. HARTS and Smith Barney, Inc., Third-Party Plaintiffs,
v.
Kevin R. KEANE, Third-Party Defendant.
No. 95 Civ. 9664(HB).
United States District Court, S.D. New York.
July 1, 1997.
*945 Marc A. Pergament Weinberg, Kaley, Gross & Pergament, L.L.P., Garden City, NY, for Keane Dealer Services Inc.
Mark A. Belnick, Paul Weiss Rifkind Wharton & Garrison, New York City, for William R. Harts.
Peter J. Shatzkin, Shatzkin & Furman, L.L.P., Forest Hills, NY, Judith R. Cohen, Squadron, Ellenoff, Plesent, & Sheinfeld, LLP, New York City, for Kevin Keane.
OPINION AND ORDER
BAER, District Judge.
Defendants and third-party plaintiffs Smith Barney, Inc. and William Harts ("defendants") move for summary judgment (1) dismissing plaintiff's complaint and (2) granting them the relief they seek in their counterclaim and third party complaint a declaration that they have not infringed plaintiff and/or third party defendant's copyright. For the reasons discussed below, the motion is GRANTED.
BACKGROUND
Plaintiff Keane Dealer Services, Inc. ("KDSI") brought this action alleging copyright infringement by defendants. Defendants counterclaimed against plaintiff and filed a third-party complaint against plaintiff's *946 principal, Kevin Keane.[1] Keane and defendant Harts worked together at Shearson Lehman Brothers ("Lehman"), not a party to this action, and together developed a software program known as SLBX. The program, an automated trading system, traded a proprietary account of Lehman's against incoming retail order flow. The details are unimportant except that the program was only valuable so long as a retail order flow existed.
In March 1993 defendant Smith Barney entered into an Asset Purchase Agreement with Lehman, which included purchasing all of Lehman's retail branches and retail order flow. The Agreement also included the OMS system, which processed Lehman's retail order flow and contained the SLBX interface that fed the relevant data regarding retail orders to SLBX. The transaction closed in July 1993 and the retail order flow was transferred to Smith Barney as of September 3, 1993.
Following the sale, Keane and Harts talked to Smith Barney about working there, as their sole role at Lehman had been development and operation of SLBX and after the closing their role disappeared. Harts accepted an offer of employment from Smith Barney. Keane declined. Instead, he sought but failed to become a consultant at Smith Barney. He left Lehman and formed KDSI. When he left, it was made clear that he had no proprietary rights in SLBX, but that he was entitled to market the underlying concepts which he had brought with him to Lehman.
It is undisputed that, following the sale, people from Smith Barney called Lehman's counsel to ask how SLBX complied with securities regulations and that Lehman readily answered any questions concerning SLBX. Accordingly, Lehman's counsel, Richard Chase, testified at his deposition that "shortly after" Smith Barney began using SLBX, i.e., in September 1993, he became aware of Smith Barney's use of the program when one of Smith Barney's attorney's called him with questions about the system. Chase Depo. at 66; Chase Aff. ¶ 6. Chase also testified, and his testimony is undisputed, that Lehman chose to take no action against Smith Barney with respect to its use of SLBX. "The conclusion that was reached was that we would not object to Smith Barney's use of the system." Chase Depo. at 76. He went on to testify that after the closing
there were ... a number of issues pending between the two firms with respect to the Shearson asset sale.... [M]y sense that there was, again, either a tacit or explicit quid pro quo that our not objecting to the use of the SLBX system would be helpful in other aspects of the relationship between the two firms.
Chase Depo. at 85. See also Deposition of Donald L. Crooks at 32 ("There were a lot of things going on between Smith Barney and Lehman.... [W]e just ... disregarded [their use of SLBX] because of these other things."). While Chase used the term "quid pro quo", he failed to identify any specific consideration that Lehman received.
In late 1994, Keane approached Lehman with an offer to buy all rights to SLBX, allegedly because he had an unnamed Canadian firm interested in the program. The parties executed an agreement, dated July 12, 1995, granting Keane all rights in the program in exchange for royalties of 10% of any gross revenue from Keane's use of the program. Notably, there are two changes between the original draft agreement (written by Keane) and the final agreement. First, Keane's version granted him rights "retroactively" to September 4, 1993 (the day after Smith Barney received the retail flow), while the final agreement merely makes the transfer effective September 4, 1994, without use of the word "retroactively". More importantly, Keane's draft contains a representation that Lehman has not granted any third parties any rights to SLBX, while the final agreement contains no such representation. There was apparently no negotiation between the parties with regard to these changes.
After signing the agreement, Keane requested the source code for the program *947 from Lehman, who could not locate it. He was told to ask Smith Barney for it, but did not. KDSI then registered a copyright in the program, and instituted this action against Smith Barney and Harts for copyright infringement. Defendants counterclaimed against KDSI and impleaded Keane as a third-party defendant seeking a declaration of no infringement. Oral argument was held Wednesday, June 18, 1997 and I reserved decision.
DISCUSSION
I. Implied License
Defendants assert that they are entitled to summary judgment because they were given an implied, non-exclusive license to use the software by Lehman, and that Lehman's grant of its rights to KDSI could not negate this license. A license is a defense to a claim of copyright infringement. Oddo v. Ries, 743 F.2d 630, 634 n. 6 (9th Cir.1984). While exclusive licenses must be in writing,
a nonexclusive license may be granted orally, or may even be implied from conduct.... In fact consent given in the form of mere permission or lack of objection is also equivalent to a nonexclusive license and is not required to be in writing.
I.A.E., Inc. v. Shaver, 74 F.3d 768, 775 (7th Cir.1996). Defendants argue that Lehman's knowledge of, and acquiescence in, their use of the software constituted an implied license to use it. Plaintiffs have not presented any evidence to counter the testimony by Chase that Lehman knew that Smith Barney was using the software. This knowledge, they contend, coupled with Lehman's silence in the face of Smith Barney's use of the program, constitutes an implied license to use SLBX. I agree. Summary judgment is thus appropriate with regard to use of the program up until the time of the institution of this action.
An implied license is revocable, however, where no consideration has been given for the license. Avtec Sys., Inc. v. Peiffer, 21 F.3d 568, 574 n. 12 (4th Cir.1994); Johnson v. Jones, 885 F. Supp. 1008, 1013 n. 6 (E.D.Mi.1995). While defendants argue persuasively that Lehman did not object to Smith Barney's use because it concluded to concentrate on other open items between the two, there is no evidence that Lehman even mentioned having given tacit permission to use the software during its negotiations with Smith Barney. At the very least, this raises a question of fact as to whether consideration was given by Smith Barney. If no consideration was given, the license was revocable, and the institution of this lawsuit would constitute revocation. Peer Int'l Corp. v. Luna Records, 887 F. Supp. 560, 566 (S.D.N.Y.1995) (commencement of infringement action "should have resolved any doubts" regarding plaintiff's intent to terminate license). Summary judgment on the basis of an implied license is therefore inappropriate with respect to use of the software after the institution of this lawsuit.
II. Estoppel
Defendants contend that as to the use after suit plaintiffs are equitably estopped from bringing any infringement action. In the context of a copyright action the holder's rights may be destroyed if the defendant shows that:
the party to be estopped had knowledge of defendant's infringing conduct, and either intended that his own conduct be relied upon or acted so that the party asserting the estoppel has a right to believe it was so intended. Additionally, the defendant must be ignorant of the true facts and must rely on plaintiff's conduct to his detriment.
Lottie Joplin Thomas Trust v. Crown Publishers, Inc., 456 F. Supp. 531, 535 (S.D.N.Y. 1977), aff'd, 592 F.2d 651 (2d Cir.1978). Here, there is undisputed evidence that Lehman (in whose shoes plaintiffs stand) knew of defendant's use of the software. Lehman's silence in the face of this knowledge coupled with its willingness to assist Smith Barney when the latter had questions regarding the software constitutes conduct on which Smith Barney was entitled to rely. As to detrimental reliance on the part of defendants, they introduced undisputed evidence that had they known they were violating a copyright they could have easily negotiated a license agreement with Lehman or created a program *948 of their own. While plaintiffs argue that such an assertion is speculation, they provide no evidence to the contrary. In light of Lehman's virtual gifting of the rights to the program to Keane and Lehman's acquiescence in Smith Barney's use of the program and desire to resolve any open items between the two entities, the sworn affidavit that asserts a license could easily have been negotiated is not speculative and constitutes a sufficient factual basis for granting summary judgment.
Finally, plaintiffs cite Peer International, supra, for the proposition that any claim of detrimental reliance ended when this lawsuit was filed. 887 F. Supp. at 567. Peer International is factually distinguishable because the defendants in that case were on notice that their license to use the copyrighted material may be terminated. No such circumstance exists here. Furthermore, a general rule, such as that proposed by plaintiffs, that detrimental reliance ends when a lawsuit is filed would obviate estoppel as an equitable defense.
Estoppel is a drastic remedy and must be utilized sparingly. Clearly, a successful application of this remedy requires the party asserting estoppel to use due care and not fail to inquire as to its rights where that would be the prudent course of conduct. Here, however, there was nothing to indicate to defendants that they were unauthorized to use the software. To the contrary, the evidence clearly supports defendants' reasonable assumption that they were entitled to use SLBX and that they relied on that assumption to their detriment.
CONCLUSION
For the reasons discussed above, defendants' motion is GRANTED, the complaint is DISMISSED and defendants' use of the SLBX program is declared to be non-infringing.
SO ORDERED.
NOTES
[1] For convenience's sake, KDSI and Keane will be referred to collectively as plaintiffs in this opinion, although Keane is technically a third-party defendant. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1942372/ | 309 So. 2d 863 (1975)
MISSISSIPPI POWER COMPANY
v.
Mrs. Sue BROOKS et al.
No. 47895.
Supreme Court of Mississippi.
February 24, 1975.
Rehearing Denied April 7, 1975.
*864 Eaton, Cottrell, Galloway & Lang, Ben H. Stone, Gulfport, for appellant.
Cumbest & Cumbest, John L. Hunter, Pascagoula, for appellee.
Before RODGERS, SMITH and SUGG, JJ.
SUGG, Justice, for the Court:
This is an appeal from a judgment rendered by the Circuit Court of George County against Mississippi Power Company in the amount of $500,000.
Mrs. Sue Brooks and her four children filed an action against Mississippi Power Company (MPC), five of its employees and one employee of Foster Wheeler Corporation (FWC) for the wrongful death of Billie Brooks, the husband and father of plaintiffs. Liberty Mutual Insurance Company, the Workmen's Compensation carrier for FWC, intervened in the suit for recovery of $2,766 paid by it to the plaintiffs as beneficiaries of Brooks and for all additional sums it might pay such beneficiaries to the date of final judgment. It further prayed that it be given credit for any additional sums recovered by plaintiffs, less reasonable costs of collection, thereby relieving it from further responsibility to the plaintiffs for benefits under the Mississippi Workmen's Compensation law to the full amount of any recovery related to the death of Brooks.
When plaintiffs rested, the court directed a verdict for three of the individual defendants and after all testimony was completed, granted a peremptory instruction for the three remaining individual defendants. The case was submitted to the jury as to the remaining defendant, MPC.
Plaintiffs alleged in their declaration that the place where Brooks died was under the primary control of MPC and that MPC failed to furnish Brooks a safe place to work and failed to warn him of the danger existing there. The declaration also charged that MPC undertook to institute a safety program, but failed to provide a program that adequately protected employees from hazards on the construction site, and that Brooks met his death because of, "either the non-feasance or mis-feasance of the defendant, Mississippi Power Company... ."
MPC denied any negligence on its part, denied it failed to furnish a safe place to work, denied it had control of the boiler area where Brooks' body was found and alleged that FWC had exclusive control of the area. MPC also denied any duty to inspect for safety and denied that it assumed any duty to make inspections.
MPC contracted with FWC to design and construct a boiler to be used in generating unit No. 5 at Plant Jack Watson in Harrison County, Mississippi. The boiler was to be built within the structural steel framework previously erected by MPC. FWC was an independent contractor which agreed to design, construct and install a boiler with full and complete control over the mode and method of the work. FWC was to furnish all materials and labor, make the boiler safe for progress inspections, furnish its own electric power from a delivery point on the ground outside the boiler unit and make full tests of the boiler before its acceptance by MPC. FWC was the only contractor involved in the construction of the boiler and designed and built the entire boiler as a self-contained unit. At the time of the death of Brooks, the boiler had not been tested by FWC and control thereof had not been assumed by MPC.
Billie Brooks was not an employee of MPC but was employed by FWC as a boiler *865 maker. On July 25, 1972, Brooks and a fellow employee, Gary Redd, were working on a part of the boiler located beneath the hoppers. At noon Redd left to eat lunch, but Brooks remained behind. When Redd returned from lunch, he found Brooks' tools, lunch box and thermos bottle where the two had been working that morning, but Brooks was not there. Soon after lunch a search for Brooks was begun, and his body was located at the bottom of a vertical air duct about 4:30 that afternoon.
On the east side of the boiler, there was located a primary gas flue consisting of a vertical and a horizontal duct. The ducts were rectangular in shape and measured four feet by eight feet. The vertical duct was about 50 feet long with a metal damper at the bottom about 35 feet above ground level. The vertical duct extended upward from the damper with the top being 80 to 85 feet above ground level. The body of Brooks was found in the vertical duct lying on the damper, and since the duct was enclosed, it was necessary to cut a hole in the side of the duct through which his body was removed. About 45 feet above the damper, a horizontal duct connected the vertical duct to the hopper area and a large flue adjacent to the hoppers. The horizontal duct was 4 feet wide, eight feet tall and approximately 20 feet long. There were expansion joints on each end of the horizontal duct where it joined the vertical flue and the hopper area. In the hopper area there were five hoppers joined together with each hopper tapering to a small hole at the bottom. The bottom part of each hopper resembled an inverted pyramid. At the point in the hoppers where they began to taper, iron beams about six inches wide, called "walk beams," were installed which extended from one side of the hopper to the other side.
All of the area in the horizontal duct, the vertical duct, the hoppers and flue adjacent thereto was completely enclosed with the exception of two small access holes, one on the side of the hopper near the top and one on the side of the large flue adjoining the hoppers. Both access holes were located on the sides of the hoppers and large flue where the horizontal duct connected with the hoppers. One of the access holes provided permanent access while the other was temporary.
Entry into the horizontal duct from the place where Redd left Brooks at noon could be accomplished only through the access holes previously mentioned. The access hole located near the top of the hoppers was about 2 feet square. In order to enter the horizontal duct through this access hole, one would be required to go up to elevation 105 by means of a stairway or ladder and cross a scaffold to the access hole. Upon entering the access hole, one would then descend a slanting ladder on the interior of the hopper wall to the "walk beam" and walk across the hopper on the beam about 14 feet to the big flue, thence into the horizontal duct.
In order to enter the other access hole, one would descend to a lower level, cross the structural area, ascend to the access hole and enter the large flue. The horizontal duct could then be entered by walking across the bottom of the large flue to the edge of the hopper area.
Brooks could have fallen into the vertical duct only after entering the horizontal duct through one of the two access holes, traversing the length thereof and then stepping over the expansion joints located at both ends of the horizontal duct. Regardless of which access hole he crawled through, once entry had been made, he was inside the flue assembly which was wholly designed and constructed by his employer, FWC. MPC, the employer of the independent contractor, did not design, construct or furnish any part of the boiler or its components. MPC, the owner, furnished to the independent contractor, FWC, only the premises on which the generating plant was being constructed and the structural steel framework within which the boiler and its components were to be installed. *866 There was no allegation or evidence that either the premises or the structural steel framework were unsafe or contributed to the death of Brooks.
The liability of MPC must be determined by its duty to the employees of its independent contractor, FWC. The general rule is that the employer of an independent contractor has no vicarious liability for the torts of the independent contractor or for the torts of the independent contractor's employees in the performance of the contract. In Smith v. Jones, 220 So. 2d 829 (Miss. 1969) we held that the negligence of an independent contractor could not be imputed to an owner. We also held that the owner was not liable for injuries sustained by an employee of an independent contractor caused by the negligence of such independent contractor.
However, the owner is liable for his own negligence. This was clearly enunciated in the case of Ingalls Shipbuilding Corporation v. McDougald, 228 So. 2d 365 (Miss. 1969) where the Court discussed the obligation of a prime contractor to furnish the employees of a subcontractor a reasonably safe place to work. Ingalls did not involve a contract between an owner of property and an independent contractor but dealt with a contract between a prime contractor and an independent contractor who was a subcontractor; however, the principles set forth apply to a contract between an owner and an independent contractor. In Ingalls we stated:
Ordinarily a prime contractor is not liable for the torts of an independent contractor or of the latter's servants committed in the performance of the contracted work. This is based on the theory that the contractee does not possess the power of controlling the person employed as to the details of the work. However, one who employs an independent contractor is nevertheless answerable for his own negligence. So an employer owes a duty to an independent contractor and the latter's employees to turn over to them a reasonably safe place to work or to give warning of danger. W. Prosser, The Law of Torts § 80 at 546 (3d ed. 1964); 41 Am.Jur.2d, Independent Contractors §§ 24, 25, 27 (1968); Annot., 31 A.L.R. 2d 1375 (1953); 57 C.J.S. Master and Servant § 603 (1948); see generally, Whatley v. Delta Brokerage & Warehouse Co., 248 Miss. 416, 159 So. 2d 634 (1964); May v. Vardaman Mfg. Co., 244 Miss. 261, 142 So. 2d 18 (1962).
Moreover, this duty to use reasonable care to furnish the employees of a subcontractor a reasonably safe place to work includes that of furnishing light when necessary to make the place where the work is being done reasonably safe. Greenleaf v. Puget Sound Bridge & Dredging Co., 58 Wash.2d 647, 364 P.2d 796 (1961); Crawford v. Duluth Missabe & Iron Range Co., 220 Minn. 225, 230, 19 N.W.2d 384, 388 (1945); Prickett v. Sulzberger & Sons Co., 57 Okl. 567, 157 P. 356 (1916); Burns v. Northern Iowa Brick & Tile Co., 152 Iowa 61, 130 N.W. 1083 (1911); Annot., 44 A.L.R. 932 (1926). (228 So.2d at 367).
It has been noted that there was no allegation or evidence in this case that the premises furnished by MPC were unsafe for use by the employees of the independent contractor. The hazardous condition charged was that of an unlighted and unbarricaded duct which was a part of the boiler system constructed solely by FWC, the independent contractor. Some of the facts in this case bear a strong resemblance to Smith, supra, in that MPC contracted for a completed job with FWC and exercised absolutely no control over the details of the work or the acts of the employees of FWC. We hold that MPC was not guilty of negligence for failing to furnish the employees of the independent contractor a safe place to work or to warn of any hazards because the place where Brooks was killed was created by, and brought into existence, by the very nature of the work itself. Since this was done by *867 Brooks' employer, an independent contractor who had full control over the mode and manner of constructing the boiler and its components, MPC had no duty to make the structure actually built by such independent contractor safe for the independent contractor or its employees and had no corresponding duty to warn of any hazard in connection therewith.
It is also contended that MPC gratuitously assumed the duty to make safety inspections of the work to be performed by the independent contractor. There is no evidence which shows that MPC assumed the duty of making safety inspections of the work of FWC, its independent contractor; therefore, the assertion that MPC gratuitously assumed the duty must fail. In view of the fact that MPC was not shown to be guilty of any negligence, the peremptory instruction requested by it should have been granted.
Reversed and rendered.
RODGERS, P.J., and PATTERSON, SMITH, ROBERTSON and WALKER, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1715796/ | 663 So. 2d 379 (1995)
Aaron TAYLOR, Jr., Plaintiff-Appellant,
v.
OAKBOURNE COUNTRY CLUB and Michael Byrne, Defendants-Appellees.
No. 95-388.
Court of Appeal of Louisiana, Third Circuit.
October 4, 1995.
*380 Akilah Mawusi Ali, for Aaron Taylor Jr.
Ian A. MacDonald, for Oakbourne Country Club, et al.
*381 Before SAUNDERS, SULLIVAN and KNIGHT[*], JJ.
SULLIVAN, Judge.
This is an age discrimination case. Plaintiff, Aaron Taylor, Jr., appeals from a summary judgment rendered in favor of defendants, Oakbourne Country Club and its general manager, Michael Byrne. The trial court granted summary judgment dismissing Taylor's suit on the basis that he failed to establish a prima facie case of age discrimination under the Louisiana Age Discrimination in Employment Act (ADEA), La.R.S. 23:971 et seq. Plaintiff contends that, under the circumstances, summary judgment was improper. For the following reasons, we reverse and remand the case to the trial court.
PROCEDURAL BACKGROUND
Taylor originally pursued this cause of action as a pendent state law claim in a federal district court action in which he sought damages arising from allegedly unlawful race and age discrimination in employment. His claims were brought under the following statutes: 42 U.S.C. §§ 1981, 1982, 1983, 1985, 1986, La.R.S. 23:971 et seq. and La.R.S. 23:1006 et seq. According to Taylor's petition, his claims under 42 U.S.C. §§ 1982, 1983, 1985, 1986 and La.R.S. 23:1006 et seq. were dismissed by the federal district court pursuant to defendants' motion on June 25, 1992. Thereafter, defendants filed a motion for summary judgment in federal court seeking dismissal of Taylor's 42 U.S.C. § 1981 claim; the federal district court rendered summary judgment in favor of defendants on May 3, 1993. By amended judgment dated May 5, 1993, the federal district court ordered Taylor to file his remaining state law claim in state district court within thirty (30) days.
Taylor then filed the present age discrimination action in state court. After the parties exchanged interrogatories and the answers thereto, defendants filed the present motion for summary judgment on August 2, 1994.
FACTS
The following dissertation of facts is derived from the allegations of Taylor's petition, his answers to defendants' interrogatories, the portions of his deposition pertinent to this age discrimination claim, defendants' answer to the petition, and defendants' answers to Taylor's interrogatories. Taylor's deposition was taken on June 23, 1992 during the pendency of Taylor's federal court action.
Taylor began working for Oakbourne in 1958 as a full time bartender. After tending bar for seven (7) or eight (8) years, he was promoted to the position of captain of the wait staff. Four (4) or five (5) years later, he was promoted once again to maitre d'. He held this position for six (6) or seven (7) years until he was promoted to assistant manager of Oakbourne. He served in this position for approximately fourteen (14) years.
As assistant manager, Taylor's duties included the managing of banquets and receptions, employee supervision and hiring and firing. He was also responsible for supervision of the locker room area. However, he stated in his deposition that this task was handled primarily by the head locker room attendant. Taylor was subordinate to and answered to the Oakbourne general manager who had authority over the entire country club.
In October 1990, Oakbourne's general manager, Bob Boyd, resigned. The country club replaced Boyd with defendant Byrne on January 8, 1991. In the interim period, Taylor assumed some of the general manager's duties in addition to his assistant manager duties.
The parties presented differing accounts of the nature of and grounds for Taylor's separation from employment with Oakbourne. The circumstances surrounding the departure are also disputed.
Taylor's Version
Taylor alleged that, at some time during February 1991, approximately six (6) weeks *382 after Byrne took over as general manager, Byrne called him into his office and informed him that he made "a lot of money." Taylor stated that Byrne told him that he would either be demoted or terminated from his employment. At the time, Taylor was earning $39,000.00 per year. Additionally, Oakbourne contributed $2,000.00 per year to his Individual Retirement Account (IRA). Taylor claimed to have left this meeting without commenting or asking Byrne for reasons for his demotion or dismissal.
Approximately one week later, Byrne called Taylor into his office again and offered him the job of running the bar and grill at a salary of $700.00 every two weeks. He was not told why he was being demoted. In response, Taylor informed Byrne that he was incapable of performing the job offered because of medical problems involving poor circulation in his legs. He asserted that the chronic circulation problem was caused by his long work hours at Oakbourne over the thirty-three (33) years of his employment.
Taylor decided against accepting the bartender position, but he requested that the Oakbourne board of directors delay its action until he reached the age for which he qualified for social security early retirement. In response, Byrne informed Taylor that the Oakbourne board of directors was working on a retirement or severance plan for him. Taylor then changed his offer and asked Byrne for a severance package of one year's salary and for Oakbourne's IRA contributions to continue until he reached age 62.
According to Taylor, the board of directors rejected his severance proposal. Instead, he was given three (3) months severance pay on February 20, 1991. This was his last day of work.
On the date of cessation of his employment with Oakbourne, Taylor was 55 years old. He alleged that Oakbourne hired Kim Tyler, age 35, to replace him.
Taylor filed answers to defendants' interrogatories on September 17, 1993. In his responses, Taylor asserted that three personsformer Oakbourne general manager Bob Boyd, Lillie Clark, and W.O. Toce were aware of Oakbourne's alleged acts of discrimination against him. He also stated that, in bringing this action, he sought back pay and benefits retroactive to February 20, 1991. He declined to produce documentary evidence of the alleged discrimination because he "has not had an adequate opportunity to conduct his discovery which would include certain documents in the possession of the defendant." He requested his right to reserve his response to this request for production.
Defendants' Version
In their answer, Oakbourne and Byrne generally denied the allegations of Taylor's petition. Defendants specifically denied that Taylor was terminated from his employment or that he was discriminated against on any unlawful basis. An "Employee Separation Notice," which was signed by Byrne on February 20, 1991, is included in the record. It indicates that Taylor voluntarily left his employment with Oakbourne.
Defendants filed this motion for summary judgment on the basis that, accepting Taylor's testimony as true, a rational trier of fact would not find in his favor. Taylor opposed the motion for summary judgment and filed a memorandum to that effect on October 24, 1994. Defendants' memorandum in support of summary judgment was filed four (4) days later.
From defendants' memorandum in support of summary judgment, which is not considered to be a pleading or other documentary evidence capable of supporting summary judgment, it is clear that their motion is based on the assertion that, accepting Taylor's deposition testimony as true, he is unable to establish a prima facie case of age discrimination. Therein, defendants assert that Taylor requested early retirement and then voluntarily resigned due to medical reasons associated with his legs. Also, they contend that, after he resigned, his assistant manager position was eliminated and his former duties were spread amongst several remaining employees.
Defendants, in memorandum, also contend that at the time of Taylor's resignation, Oakbourne was experiencing financial difficulties caused by a large decrease in membership. To reduce the impact of the lost *383 membership revenue, Oakbourne enacted several "belt tightening" measures, including the discontinuance of employee health insurance.
In support of their motion for summary judgment, defendants filed as exhibits Taylor's petition, the entire Taylor deposition and excerpts therefrom, defendants' answers to Taylor's interrogatories, and Taylor's answers to defendants' interrogatories. In defendants' answers to Taylor's interrogatories, they represent that, in order to terminate or demote a department head, the general manager must recommend such action to the personnel committee. The committee then either recommends approval or rejection of the move to the board of directors, which makes a final determination. According to the defendants, the general manager needs board approval before terminating or demoting a department head.
Also in response to interrogatories, defendants challenge Taylor's version of the circumstances surrounding his departure. They assert that, on January 17, 1991, Byrne discussed Taylor's work performance deficiencies with him. Taylor was told to improve or face reassignment or release from employment. On January 18, 1991, Taylor asked Byrne to let him know when he should resign. The next day, according to defendants, Taylor told Byrne of his leg problems and of his desire for one year's salary as severance pay. On January 22, 1991, Byrne presented Taylor's resignation to the personnel committee, which approved it with a three (3) month's pay severance package. The next day, Byrne asked Taylor to stay until February 19, 1991. On January 31, 1991, Byrne offered Taylor the head bartender position. Taylor accepted, but, the next day, he declined and advised Byrne of his resignation effective February 19, 1991. On that date, the board of directors was advised of Taylor's resignation and it approved of the personnel committee's severance pay proposal.
The trial court conducted a hearing on the motion for summary judgment on October 31, 1994. The trial court took the matter under advisement and on November 10, 1994, rendered reasons for judgment granting defendants' motion. The trial judge reasoned that plaintiff failed "to produce any evidence to substantiate that he was involuntarily terminated or that he was replaced by a person outside the protected age group." This failure to establish two (2) of the four (4) elements of prima facie age discrimination case warranted summary judgment.
As to the involuntary termination issue, the court concluded that Byrne himself had no authority without board approval to terminate or demote Taylor. The plaintiff's failure to present any evidence that the board considered or authorized his demotion or termination was considered fatal to his claim.
On the replacement issue, the trial court stated that Taylor's allegation that he was replaced by a 35 year old person was "misplaced." The trial judge explained that the assistant manager position "was eliminated due to corporate downsizing" and the duties thereof were transferred to other department heads. He also determined that the alleged replacement, Kim Tyler, was hired as a bar manager.
The trial judge signed a judgment dismissing Taylor's suit on November 22, 1994. From this judgment, Taylor appeals.
LAW
The Louisiana ADEA provides the basis of Taylor's suit in La.R.S. 23:972(A)(1), which provides:
A. It is unlawful for an employer to:
(1) Fail or refuse to hire, or to discharge, any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment because of such individual's age.
The Louisiana ADEA is modeled after and identical to the Federal ADEA, which is codified at 29 U.S.C. §§ 621-634.
Burden of Proof on the Merits
Because there exists little Louisiana case law interpreting the provisions of Louisiana ADEA, it is permissible to look to the case law interpreting the Federal Act for guidance. Lege v. N.F. McCall Crews, Inc., 625 So. 2d 185 (La.App. 3 Cir.), writ denied, *384 627 So. 2d 638 (La.1993). In that case, this court looked to federal jurisprudence to determine that the plaintiff in an ADEA suit must first prove a prima facie case. The plaintiff must show that:
(1) he was in the protected age group between the ages of forty and seventy,
(2) his employment with the defendant was involuntarily terminated,
(3) he was qualified to perform the job that he was employed to perform, and
(4) he was replaced by a person outside the protected age group comprising individuals between the ages of forty and seventy.
Id. at 187, citing Belanger v. Keydril Co., 596 F. Supp. 823 (E.D.La.1984). Unlike the present case, however, Lege involved an appeal from a full trial on the merits after a jury verdict in favor of the employer.
The four (4) pronged burden of prima facie production emanates from the case of McDonnell Douglas Corporation v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973). This initial prima facie stage is but one of three steps in the evidentiary process designed to "progressively ... sharpen the inquiry into the elusive factual question of intentional discrimination." Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 255 n. 8, 101 S. Ct. 1089, 1094 n. 8, 67 L. Ed. 2d 207 (1981). If the plaintiff-employee succeeds in presenting a prima facie case, a rebuttable presumption of intentional discrimination is established. To do so, he "need only make a very minimal showing ... that he was in the protected class, that he was qualified for the job in question, and that employees outside the protected class were more favorably treated." Thornbrough v. Columbus and Greenville Railroad Company, 760 F.2d 633, 639 (5th Cir.1985).
Once the employee establishes a prima facie case, the burden of production shifts to the employer to "rebut the presumption of intentional discrimination ... [by] articulat[ing] some legitimate nondiscriminatory reason" why the plaintiff was rejected or someone else was preferred; otherwise, the factfinder is required to find for the plaintiff." Id.
If the employer successfully rebuts the presumption of intentional discrimination, the burden of production "shifts back to the plaintiff, albeit at `a new level of specificity,' to prove that the reasons articulated by the employer are not true reasons but only pretexts." Id., quoting United States Postal Service Board of Governors v. Aikens, 460 U.S. 711, 714-15, 103 S. Ct. 1478, 1481-82, 75 L. Ed. 2d 403 (1983).
Summary Judgment
In both Federal and Louisiana law, summary judgment is reviewed de novo by applying the same standard as the trial court to determine if summary judgment is appropriate. Smith v. Our Lady of the Lake Hospital, 93-2512 (La. 7/5/94); 639 So. 2d 730. The standard, as provided in La.Code Civ.P. art. 966(B), is as follows:
The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact, and that mover is entitled to judgment as a matter of law.
See also Fed.R.Civ.P. 56(c).
In Smith, 93-2512 at pp. 26-30, 639 So.2d at 750-52, the Supreme Court of Louisiana comprehensively reviewed the jurisprudential rules applicable to summary judgments. We quote from the portion of the Smith analysis which is specifically germane to this case:
A fact is "material" when its existence or nonexistence may be essential to plaintiff's cause of actions under the applicable theory of recovery. Penalber v. Blount, 550 So. 2d 577, 583 (La.1989). "[F]acts are material if they potentially insure or preclude recovery, affect a litigant's ultimate success, or determine the outcome of the legal dispute." South Louisiana Bank v. Williams, 591 So. 2d 375, 377 (La.App. 3d Cir.1991), writs denied, 596 So. 2d 211 (La. 1992). Simply put, a "material" fact is one that would matter on the trial on the merits. Any doubt as to a dispute regarding a material issue of fact must be resolved against granting the motion and in favor of *385 a trial on the merits. Sassone v. Elder, 626 So. 2d 345, 352 (La.1993); Industrial Sand and Abrasives, Inc. v. Louisville and Nashville Railroad Co., 427 So. 2d 1152, 1153-54 (La.1983) (collecting cases); McCoy v. Physicians & Surgeons Hospital, Inc., 452 So. 2d 308, 310 (La.App. 2d Cir.), writ denied, 457 So. 2d 1194 (La.1984) (noting that "[s]ummary judgment may not be used as a substitute for trial").
* * * * * *
Procedurally, the court's first task on a motion for summary judgment is determining whether the moving party's supporting documentspleadings, depositions, answers to interrogatories, admissions and affidavitsare sufficient to resolve all material factual issues. LSA-C.C.P. Art. 966(B); Sanders v. Hercules Sheet Metal, Inc., 385 So. 2d 772, 775 (La.1980). "To satisfy this burden, the mover must meet a strict standard of showing that it is quite clear as to what is the truth and that there has been excluded any real doubt as to the existence of a genuine issue of material fact." Industrial Sand and Abrasives, Inc. v. Louisville and Nashville Railroad Co., 427 So. 2d 1152, 1154 (La.1983). In making this determination, the mover's supporting documents must be closely scrutinized and the non-mover's indulgently treated. Vermilion Corp. v. Vaughn, 397 So. 2d 490, 493 (La.1981). Since the moving party bears the burden of proving the lack of a material issue of fact, inferences to be drawn from the underlying facts before the court must be viewed in light most favorable to the non-moving party. Schroeder v. Board of Supervisors of Louisiana State University, 591 So. 2d 342, 345 (La.1991); Vermilion, 397 So.2d at 493; Pace, 484 So.2d at 773.
If the court determines that the moving party has met this onerous burden, the burden shifts to the non-moving party to present evidence demonstrating that material factual issues remain. Sanders, supra. LSA-C.C.P. Art. 967 outlines the non-moving party's burden of production as follows:
When a motion for summary judgment is made and supported ... an adverse party may not rest on the mere allegations or denials of his pleadings, but his response, by affidavits or as otherwise provided above, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be rendered against him.
Smith, 93-2512 at pp. 28-29, 639 So.2d at 751-752.
The Thornbrough case discussed above is dispositive of the issue presented for our resolution. It is also factually and procedurally similar to the present case. In Thornbrough, the plaintiff, age 56, alleged he was discharged by his employer because of his age. Because of chronic financial losses, the employer embarked on a plan to cut these losses through a reduction in its work force. Thornbrough's position was eliminated after his discharge and its duties were divided among three (3) younger remaining employees, at least one of whom was outside the protected age class. As in the present case, the district court in Thornbrough granted the employer's motion for summary judgment on the ADEA claim on the ground that Thornbrough failed to establish a prima facie case.
The United States Fifth Circuit Court of Appeals reversed the summary judgment because, on review, it found that Thornbrough raised a genuine issue of material fact. In so doing, the court relied on the principle that summary judgment is generally "an inappropriate tool for resolving claims of employment discrimination, which involve nebulous questions of motivation and intent ... determinations regarding motivation and intent depend on complicated inferences from the evidence and are therefore peculiarly within the province of the factfinder." Thornbrough, 760 F.2d at 640-641. The court also reasoned as follows:
Although the district court speaks of Thornbrough not having met his "burden" of "presenting" a prima facie case, we assume that the district court meant that Thornbrough did not raise a genuine issue of material fact as to the existence of a prima facie case. To make out a prima facie case, the plaintiff must prove the necessary elements "by a preponderance *386 of the evidence." Burdine, 450 U.S. at 253, 101 S.Ct. at 1094. Even if the plaintiff has not succeeded in meeting this burden of proof, if he has raised a genuine issue of material fact, he should survive summary judgment. Fed.R.Civ.P. 56(c); accord Locke v. Commercial Union Ins., 676 F.2d 205, 208 (6th Cir.1982) (Jones, J., dissenting) ("It is th[e] existence of a genuine issue of material fact, not the existence or nonexistence of a prima facie case, which makes the instant grant of summary judgment improper.").
* * * * * *
[T]here is no inherent relationship between the failure to establish a prima facie case and summary judgment. The failure to establish a prima facie case means merely that the plaintiff has failed to establish facts sufficient to create a legally mandatory, rebuttable presumption. It means that the factfinder is not required to find in the plaintiff's favor; it does not mean that the factfinder is not permitted to find in the plaintiff's favor. A fact may be material for purposes of defeating a motion for summary judgment and yet fail to create a rebuttable presumption.
Id. at 641 n. 8, 9. See also Lindsey v. Prive Corporation, 987 F.2d 324 (5th Cir.1993) and Amburgey v. Corhart Refractories Corporation, Inc., 936 F.2d 805 (5th Cir.1991).
The situation presented in the case sub judice is strikingly similar to the Thornbrough case. Taylor claims he was involuntarily terminated when he was given a choice of demotion to bartender (which he contends he was physically incapable of performing) or dismissal. Oakbourne and Byrne dispute Taylor's version of events and claim he voluntarily resigned due to health reasons. Additionally, Taylor argues that he was replaced by the 35 year old Kim Tyler. Oakbourne and Byrne counter that Taylor's position was eliminated and Tyler was hired as head bartender.
The above noted disputed facts are material in nature since the resolution thereof will determine whether Taylor establishes a prima facie case. Their existence or nonexistence are essential to Taylor's cause of action under the ADEA. The trial court erred in making the factual determinations that Taylor voluntarily resigned and was not replaced by someone outside the protected age class. By concluding that Taylor was not involuntarily terminated and that he was not replaced by Tyler, the trial court erred in deciding the merits of genuine material factual issues. Such determinations are the province of the factfinder in a trial on the merits.
DECREE
For the foregoing reasons, the summary judgment rendered in favor of defendants, Oakbourne Country Club and Michael Byrne, and against plaintiff, Aaron Taylor, is reversed. This case is remanded to the trial court for further proceedings in accordance with this opinion.
Costs of this appeal are assessed to defendants, Oakbourne Country Club and Michael Byrne.
REVERSED AND REMANDED.
NOTES
[*] Judge William N. Knight of the Thirty-first Judicial District 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/1715985/ | 663 So. 2d 92 (1995)
Andrew D. HARRIS, Jr., Plaintiff-Respondent,
v.
HOME SAVINGS AND LOAN ASSOCIATION, Defendant-Applicant.
No. W95-223.
Court of Appeal of Louisiana, Third Circuit.
July 27, 1995.
Writ Denied November 17, 1995.
*93 Michael A. Harris, Breaux Bridge, for Andrew D. Harris, Jr.
Samuel Robert Aucoin, Lafayette, for Home Sav. and Loan Ass'n.
Before: THIBODEAUX, SAUNDERS and PETERS, JJ.
PER CURIAM.
Andrew P. Harris, Jr., plaintiff-respondent, asserted a delictual claim under the Age Discrimination in Employment Act, La. R.S. 23:971 et seq., and alleged that Home Savings and Loan Association, defendant-applicant, impermissibly discharged him on the basis of age.
Home Savings and Loan Association filed an application for a supervisory writ after its exception of prescription was denied by the trial court. After apparently acknowledging that prescription began to run from the date Mr. Harris received notice that he was being replaced by a younger individual, the trial judge reasoned that respondent's cause of action remained viable because of a lack of "adequate notice."
We affirm the result reached by the trial court but for different reasons than that relied upon by the trial judge.
I.
ISSUE
The specific issue we address is when does the prescriptive period begin to run for a cause of action based on an alleged impermissible termination under the Age Discrimination in Employment Act, La.R.S. 23:971 et seq.
*94 For the following reasons, we hold that the prescriptive period for an alleged improper termination under the Age Discrimination in Employment Act begins from the date of termination and not from the date of notification. The injury is sustained when the termination occurs.
II.
FACTS
Andrew Harris, after working for more than thirty-six years for Home Savings and Loan Association, was given notice in October, 1992 that he was to be replaced, approximately three years prior to his projected retirement age of sixty-five. After the October, 1992 notification, Mr. Harris was offered two choices. The first choice was a staff position with Home Savings at a reduced salary of $2,500.00 per month until he reached age sixty-five on December 17, 1996. Alternatively, Mr. Harris could remain at his present salary of $49,500.00 per year for one year through December 31, 1993. Mr. Harris chose the second option. Other than losing his usual annual bonus of one month's salary, the second option was no different than the salary he earned the year before he signed an "employment contract."
The employment contract signed by Mr. Harris was apparently executed in December, 1992. Essentially, the contract continued Mr. Harris' employment from December 9, 1992, until December 31, 1993. Mr. Harris continued in his position as Chief Lending Officer until May or June of 1993, at which time he was demoted to branch manager. Mr. Harris continued working as the branch manager until his termination on December 31, 1993.
Mr. Harris brought an action against Home Savings in March, 1994. Home Savings raised the peremptory exception of prescription on the basis that the one year prescriptive period began to run as early as October, 1992 when Mr. Harris received notice of his termination. Mr. Harris argued that no action was taken by Home Savings to remove him from his position until May, 1993. Mr. Harris further contends that the Home Savings Board could have stepped in and decided to continue his employment with Home Savings prior to that time. He argues that until his actual retirement, there was no definitive decision to terminate his employment. He further contends that the proper prescription date would be May, 1994. The trial judge denied Home Savings' exception of prescription finding that it did not give Mr. Harris adequate notice of his termination.
III.
LAW AND DISCUSSION
A cause of action based on age discrimination is subject to the one year prescriptive period in La.Civ.Code art. 3492.
The elements of a delictual cause of action are: fault, causation, and damages. Gresham v. Davenport, 537 So. 2d 1144 (La. 1989). Fault is analyzed under four factors which comprise the concept of duty-risk: cause-in-fact, duty, breach and damage. Miller v. Everett, 576 So. 2d 1162 (La.App. 3 Cir.1991). The fourth factor is the focus of this opinion.
La.Civ.Code art. 3492 states:
Delictual actions are subject to a liberative prescription of one year. This prescription commences to run from the day injury or damage is sustained.
With the exception of his annual bonus, Mr. Harris did not suffer any damages for his release from employment until he was terminated from his position with Home Savings. Therefore, he did not have a cause of action for his allegedly unlawful termination based on age until that occurrence. Prescription for this injury began on December 31, 1993 and was completed upon the passage of one year from the day Harris acquired, or should have acquired, knowledge of that damage. See Bustamento v. Tucker, 607 So. 2d 532, 539 n. 8 (La.1992); Jordan v. Employee Transfer Corp., 509 So. 2d 420 (La.1987). Had Mr. Harris filed his lawsuit when he was informed in October, 1992 of his employer's decision to discontinue his employment, an essential element of his claim under Louisiana law, i.e., damages, would have been lacking.
*95 Louisiana's Age Discrimination in Employment Act is substantively similar to the federal Age Discrimination in Employment Act of 1967, 29 U.S.C. §§ 621 et seq. A successful claimant has to prove that he or she was discharged and that age was "a determinative influence on the outcome." Hazen Paper Co. v. Biggins, ___ U.S. ___, ___, 113 S. Ct. 1701, 1706, 123 L. Ed. 2d 338 (1993); Lege v. N.F. McCall Crews, Inc., 625 So. 2d 185 (La.App. 3 Cir.), writ denied, 627 So. 2d 638 (La.1993). Mr. Harris would have been, in our opinion, premature in filing a state claim before December 31, 1993, the date of his discharge. Until his actual separation from employment, Mr. Harris was only able to demonstrate an intent to discharge. The allegedly illegal act which is the basis for damages and the underlying cause of action in Louisiana is the termination itself, not the intent to terminate.
Home Savings and Loan places much reliance on Jay v. International Salt Co., 868 F.2d 179 (5 Cir.1989). Jay held that the one year prescriptive period under La.R.S. 23:971 et seq., is triggered by notification of an employee's termination of employment. Jay relied on Williams v. Conoco, Inc., 860 F.2d 1306 (5 Cir.1988) which, in part, premised its decision on Delaware State College v. Ricks, 449 U.S. 250, 101 S. Ct. 498, 66 L. Ed. 2d 431 (1980). Ricks involved a claim of national origin discrimination under two federal antidiscrimination statutes, 42 U.S.C. § 1981 and 42 U.S.C. §§ 2000e et seq., based on a denial of tenure. Mr. Ricks initially argued that the denial of tenure was the discriminatory act. Later, he expanded his claim to allege a discriminatory discharge, but did not specifically identify the discriminatory acts which continued to, or occurred at, the time of actual termination. The time limitation, according to Mr. Ricks, began to run from the time his one year "terminal" contract expired at the end of the following academic year. The Supreme Court rejected this position and held that his claims were untimely. The "unlawful employment practice" occurred when tenure was denied and this decision was communicated to Mr. Ricks. The termination of Mr. Ricks was a consequence of the denial of tenure. Indeed, had he been granted tenure, his employment would have continued.
In this case, there is nothing which precipitated Mr. Harris's termination other than the alleged acts based on age discrimination. His termination was not the effect of the replacement notice communicated to him in October, 1992 as the termination of the plaintiff in Ricks was the effect of the denial of tenure. Once tenure was denied in Ricks, the damage was done. The intent to terminate Mr. Harris as evidenced by the October, 1992 notice could easily have been annulled before his actual termination.
It is true that "mere continuity of employment, without more, is insufficient to prolong the life of a cause of action for employment discrimination." Delaware State College v. Ricks at 257, 101 S.Ct. at 504. In our view, that language, so heavily relied on by Home Savings and Loan Association, is inapplicable to Mr. Harris's claim. His cause of action had not arisen during his continued employment at Home Savings. There was simply nothing to prolong.
We are mindful that Winbush v. Normal Life of Louisiana, Inc., 599 So. 2d 489 (La. App. 3 Cir.1992) reached a different result. Winbush concluded that a cause of action under Louisiana's antidiscrimination statute begins to run from the date of notification. Winbush also relied on Williams v. Conoco and was erroneously decided. We refuse to follow it. The better, more rational, and fairer rule of law is the one articulated in this opinion.
An employee like Mr. Harris is placed in an uncomfortable dilemma if he is forced to initiate legal proceedings while still employed. Such a situation would only serve to precipitate employer-employee disharmony, distrust, and would be disruptive of the workforce. Overall, an environment not conducive to productivity and civility would unfortunately be fostered by the lingering threat of a lawsuit.
Furthermore, a claimant's cause of action may very well be undermined, if not completely thwarted, by a wily employer who misleads the claimant into believing that ameliorative measures may be taken within a *96 year of notification to prevent a termination and then does nothing to annul the decision to terminate.
For the foregoing reasons, the judgment of the trial court is affirmed. The application for a supervisory writ filed by Home Savings and Loan Association is denied.
WRIT DENIED. JUDGMENT OF TRIAL COURT AFFIRMED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1767104/ | 633 So. 2d 263 (1993)
Donna PERAULT[1],
v.
TIME INSURANCE COMPANY.
No. 92 CA 2115.
Court of Appeal of Louisiana, First Circuit.
November 24, 1993.
Writ Denied February 11, 1994.
*264 Arthur Cobb, Baton Rouge, for plaintiff-appellant Donna Perault.
Edwin W. Fleshman, Baton Rouge, for defendant-appellant Time Ins. Co.
Before WATKINS, SHORTESS and FOGG, JJ.
SHORTESS, Judge.
Donna Perreault (plaintiff) filed this lawsuit against Time Insurance Company (defendant) to recover benefits under her health insurance policy for treatment of a thyroid condition. The trial court awarded plaintiff $11,470.20 in medical costs and denied attorney fees and penalties. Defendant appealed the award and plaintiff appealed the denial of fees and penalties.
A. Facts
Plaintiff went to see Dr. Robert P. St. Amant in April 1987 for a routine gynecological examination. St. Amant found a small nodule on her thyroid. The parties do not dispute that St. Amant informed plaintiff the nodule existed. His records and testimony show he recommended a thyroid scan with uptake to further diagnose the significance of the lump. St. Amant's records from the visit also show plaintiff told him she was not sure whether her insurance at that time would pay for the procedure. St. Amant did not recall and his records do not reflect further discussion of the lump. Seven months later, in November 1987, plaintiff saw Dr. J. Walden at the L.S.U. Infirmary, complaining of fatigue, weakness, and headaches. His examination did not show anything abnormal.
In August 1988, plaintiff bought health insurance from defendant. Prior to obtaining the policy, she was required by defendant to fill out an application for insurance containing questions relating to prior medical treatment and her past and present health. Two questions on the application are pertinent to this case:
Within the last 10 years, has any person to be insured:
15. Had any diagnosis, or treatment of:
....
*265 g) Diabetes, high or low blood sugar or any disorder of the thyroid gland, breast or other glandular disorder?
....
i) Cancer, tumor, cyst or growth of any kind; including breast or skin disorders?
Plaintiff answered "no" to both of these questions.
In March 1989, plaintiff saw St. Amant again for a routine gynecological exam. In the regular course of the exam, he palpated her thyroid and found the nodule had grown. He made the appointment for a scan with uptake to test the lump further and referred her to a surgeon. In April 1989, plaintiff's thyroid was removed after the lump was diagnosed as malignant.
The trial court found plaintiff answered the questions on the application to the best of her knowledge. In oral reasons, the trial court found the pre-existing condition definition in the policy was ambiguous and the defendant failed to carry its burden of establishing the ultimate condition was a pre-existing condition.
B. Disclosure
St. Amant clearly informed plaintiff she had a nodule on her thyroid in 1987. It is conceivable that plaintiff did not consider herself "diagnosed" with a thyroid or glandular "disorder." Follow-up was left entirely to her own discretion, and the record shows little discussion at the time of the 1987 routine exam. She had not experienced any symptoms which indicated she was not perfectly healthy. St. Amant confirmed in his deposition that plaintiff exhibited no symptoms which indicated her thyroid was not functioning normally. Plaintiff also saw Walden at the L.S.U. Infirmary in November 1987, six months later. The blood workup and his examination showed nothing out of the ordinary. The trial court was not clearly wrong finding plaintiff properly answered question 15(g) "No." Nothing in the record indicates the nodule was diagnosed as a thyroid or glandular disorder and treatment was left entirely up to plaintiff's discretion.
Question 15(i), however, asks whether the person to be insured has been diagnosed or treated for any cyst or growth of any kind. Plaintiff was informed in 1987 the nodule existed. Her choice not to seek treatment or more information, for whatever reason, does not negate the fact that St. Amant found the nodule and informed her of its existence. Plaintiff was diagnosed with a growth by St. Amant in 1987, which would have required her to answer "yes" to this question and provide an explanation that no further evaluation was performed. She was also free to provide further explanation of the diagnosis, which may have included the later visit to the infirmary. Plaintiff clearly made a false statement in her application for insurance. She was diagnosed with a growth in 1987, and she failed to disclose this fact in her application.
C. Louisiana Revised Statute 22:619
Plaintiff argues that for the insurance company to avoid coverage, the company must carry the burden of proving a false statement was made with intent to deceive, as required by Louisiana Revised Statute 22:619 (1993), which provides:
A. Except as provided in Subsection B of this Section and R.S. 22:692, and R.S. 22:692.1, no oral or written misrepresentation or warranty made in the negotiation of an insurance contract, by the insured or in his behalf, shall be deemed material or defeat or void the contract or prevent it attaching, unless the misrepresentation or warranty is made with the intent to deceive.
B. In any application for life or health and accident insurance made in writing by the insured, all statements therein made by the insured shall, in the absence of fraud, be deemed representations and not warranties. The falsity of any such statement shall not bar the right to recovery under the contract unless such false statement was made with actual intent to deceive or unless it materially affected either the acceptance of the risk or the hazard assumed by the insurer.
The statute provides that a false statement bars recovery only if the insurer proves it is made with the intent to deceive or if it materially affects the risk. The jurisprudence *266 interpreting this statute places the burden of proof upon the insurer. This court has recognized that even though the statutory language is "or," Louisiana jurisprudence requires proof of both factors. Ragan v. Pilgrim Life Ins. Co. of America, 461 So. 2d 618 (La.App. 1st Cir.1984), writ denied, 464 So. 2d 315 (La.1985); Antill v. Time Ins. Co., 460 So. 2d 677 (La.App. 1st Cir.1984). The supreme court has sanctioned this approach. Coleman v. Occidental Life Ins. Co. of N.C., 418 So. 2d 645 (La.1982); Benton Casing Service, Inc. v. Avemco Ins. Co., 379 So. 2d 225 (La.1979).
The difficulty of proving intent to deceive is recognized by the courts; thus the courts look to the surrounding circumstances indicating the insured's knowledge of the falsity of the representation made in the application and his recognition of the materiality of his misrepresentations, or to circumstances which create a reasonable assumption that the insured recognized the materiality. Jamshidi v. Shelter Mutual Ins. Co., 471 So. 2d 1141, 1143 (La.App. 3d Cir.1985); Davis v. State Farm Mut. Auto. Ins. Co., 415 So. 2d 501 (La.App. 1st Cir.1982).
The trial court found defendant did not carry its burden of proving these elements such that plaintiff's false statement met the legal standard required by Revised Statute 22:619 and its interpreting jurisprudence to void coverage. We agree.
Anti-technical statutes such as Revised Statute 22:619 have been enacted to preclude an insurer from denying coverage by use of complex policy provisions concerning facts the untutored insured would find relevant to his coverage. Benton Casing Service, Inc., 379 So.2d at 227.
The trial court, based on the entire record and all of the circumstances, could not find an intent to deceive. The trial court was not clearly wrong. St. Amant told plaintiff she had a growth during the initial visit, but all follow-up was left up to plaintiff. Discussion of the lump and its possible significance was minimal. Given her admitted family history of breast cancer, plaintiff was not likely to ignore the information had she thought it was of any significance. The examination she received seven months later at the infirmary turned up nothing unusual. Walden did not even feel the same nodule St. Amant found earlier. The record supports the finding that plaintiff had no intent to deceive.
Furthermore, if there are two permissible views of the evidence, the fact finder's choice between them cannot be manifestly erroneous or clearly wrong. Stobart v. State, 617 So. 2d 880, 883 (La.1993).
D. The Pre-Existing Condition Language
An insurance policy is a contract, and the rules governing the interpretation of written agreements apply to insurance contracts. Hemel v. State Farm Mutual Automobile Ins. Co., 211 La. 95, 29 So. 2d 483 (1947); Thibodeaux v. Doe, 602 So. 2d 1076 (La.App. 1st Cir.), writ denied, 605 So. 2d 1377 (La.1992). An insurance contract is the law between the parties, and every provision therein must be construed as written. Insurers may limit their liability, so long as the limitations are not in conflict with statutory provisions or public policy and so long as the limitations are unambiguous and easily understandable. Benton Casing Service, Inc., 379 So.2d at 227; Thibodeaux, 602 So.2d at 1078.
The pre-existing condition defense, unlike the misrepresentation defense, is a question of contract interpretation. Estate of Borer v. Louisiana Health Service & Indem. Co., 398 So. 2d 1124 (La.1981).
The language in this contract reads:
PRE-EXISTING CONDITIONS: A Pre-existing Condition as used in this policy is a condition not fully disclosed on the application for insurance:
1) for which the Covered Person received medical treatment or advice from a physician within the 2 year period immediately preceding that Covered Person's Effective Date of Coverage; or
2) which manifested itself, or which produced symptoms within the 2 year period immediately preceding that Covered Person's Effective Date of Coverage, which would cause an ordinarily prudent person to seek diagnosis or treatment.
*267 Pre-existing conditions will be covered after the Covered Person has been insured for 2 years, if the condition is not specifically excluded from coverage.
The trial court found this language ambiguous. We do not find this language ambiguous. Insurance policies are construed as a whole, using the plain, ordinary, and popular sense of the language. Central Louisiana Electric Co. v. Westinghouse Elec. Co., 579 So. 2d 981 (La.1991); Pareti v. Sentry Indem. Co., 536 So. 2d 417 (La.1988). Courts are not to strain to find ambiguity in insurance contracts. Watts v. Aetna Cas. & Sur. Co., 574 So. 2d 364 (La. App. 1st Cir.), writ denied, 568 So. 2d 1089 (La.1990).
The insurer clearly has a right to defend on the basis that coverage is excluded by the terms of the policy without regard to whether plaintiff misrepresented information. However, the plain terms of this policy say "a condition not fully disclosed on the application for insurance." Thus, the clause makes disclosure on the application a condition for excluding coverage on the basis of a pre-existing condition. The terms of the contract, therefore, require the court to interpret this provision in light of the statutory and jurisprudential requirements contained in Revised Statute 22:619. As discussed above, the trial court found no intent to deceive, as required by Revised Statute 22:619. We will not disturb that finding.
E. The Retroactive Exclusionary Rider
Defendant finally asserts error in the trial court's determination that the retroactive exclusionary rider signed by plaintiff was invalid. Plaintiff signed an exclusionary rider for thyroid conditions to be applied retroactively to the date the policy was issued. The rider, which plaintiff received after her claims for the thyroid operation had been submitted, was sent to her by the insurance company with a letter offering to refund all paid premiums and cancel the policy if she chose not to sign. Plaintiff stated at trial she signed the rider to maintain her health insurance, but never intended to give up her prior claims. The trial court found execution of the rider was tantamount to a compromise, which was invalid for lack of cause.
Plaintiff's desire to maintain her health insurance policy with defendant is sufficient cause to support applying the rider to future claims. La.Civ.Code arts. 1966-1970. However, we agree with the trial court that the rider cannot be given retroactive effect.
Persons, by contract of transaction or compromise, may settle any difference they may have that is the subject of a lawsuit or that could result in litigation. La. Civ.Code arts. 3071, 3073, 3083; Daigle v. Clemco Industries, 613 So. 2d 619 (La.1993). A compromise agreement requires no other cause or consideration than an adjustment of differences and avoidance of litigation. Dornier v. Live Oak Arabians, Inc., 602 So. 2d 743 (La.App. 1st Cir.), writ denied, 608 So. 2d 177 (La.1992).
Plaintiff already had incurred substantial expenses for the thyroid operation. She had a valid dispute with defendants over payment of those claims. Plaintiff received the benefit of maintaining her health policy in exchange for her agreement to exclude any future claims related to her thyroid. Defendant would receive the benefit of plaintiff releasing the medical claims, but plaintiff would not receive any corresponding benefit. Defendant's offer to refund all of the money plaintiff had paid was insufficient to support release of her claims. She stated at trial she felt compelled to maintain the policy because she had just incurred significant medical bills due to an unexpected condition and did not want to be without insurance. While this desire may have been sufficient cause for agreeing to relinquish coverage for any future thyroid-related claims, it was insufficient cause to support compromise of approximately $13,000.00 in already submitted claims.
Furthermore, the record supports plaintiff's testimony that she did not intend to compromise the claims she already submitted, even though she was aware defendant intended to apply the rider retroactively. A compromise is valid only if there is a meeting of the minds between the parties as to exactly what they intended when the compromise was reached. Tarver v. Oliver H. *268 Van Horn Co., 591 So. 2d 1366 (La.App. 4th Cir.1991), writ denied, 594 So. 2d 891 (La. 1992). A compromise must be by mutual consent and must be reduced to writing and be unambiguous. Flowers v. U.S. Fidelity & Guar. Co., 367 So. 2d 107 (La.App. 4th Cir.), aff'd in part, amended, and remanded on other grounds, 381 So. 2d 378 (La.1979). The exclusionary rider and accompanying letter were not sufficiently clear to exclude the claims over which plaintiff and defendant had a dispute.
F. Proof of Damages
Defendant's final assignment is that the trial court committed error by awarding plaintiff damages when she failed to prove the amount of her medical bills and the amount paid by her other insurer. Plaintiff claims her medical costs totaled $13,470.20.[2]
Plaintiff at trial argued defendant possessed plaintiff's medical bills, which were submitted when the claims were made, and that defendant could put the bills in evidence to verify the amount. Defendant stated at trial that a total of $10,549.75 in bills had been received, not $13,000.00. The record does not contain the bills or any other proof of damages. We take defendant's statement at trial as a judicial confession that plaintiff had $10,549.75 in bills.[3] There is no evidence in the record that another health plan made any payments and the deductible on her policy was $1,000.00. The policy requires plaintiff to pay 20% of the first $5,000.00; therefore, we deduct a total of $2,000.00 from plaintiff's bills of $10,549.75, which results in a judgment of $8,549.75.
G. Attorney Fees and Penalties
The trial court found defendant was not arbitrary and capricious in denying plaintiff's claim. The record supports the trial judge's finding.
H. Conclusion
Accordingly, based on the foregoing reasons, the decision of the trial court casting defendant with damages is affirmed as amended. Plaintiff is awarded $8,549.75, together with legal interest thereon from date of judicial demand until paid. Defendant is cast with all costs of this appeal.
AMENDED AND AS AMENDED AFFIRMED.
NOTES
[1] Plaintiff's last name is incorrectly spelled in the caption and throughout the record. The correct spelling appears to be "Perreault," as shown on her application for insurance and on an affidavit in the record, both signed by her.
[2] The trial judge apparently deducted the $1,000.00 deductible from the $13,470.20, and then of the remainder, calculated the rate of payment as being 80% of the first $5,000.00 and 100% of the remainder according to the policy. This calculation produces $11,470.20, and shows why the trial judge deducted a total of $2,000.00.
[3] A judicial confession is a declaration made by a party in a judicial proceeding. That confession constitutes full proof against the party who made it. La.Civ.Code art. 1853. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1823895/ | 145 B.R. 651 (1992)
In re DIVIDEND DEVELOPMENT CORPORATION, a California corporation, Debtor.
Bankruptcy No. SA 92-11812 JR.
United States Bankruptcy Court, C.D. California.
September 23, 1992.
*652 Jeffrey L. Kandel, Levene & Eisenberg, Los Angeles, Cal., for debtor.
David Gould, McDermott, Will & Emery, Los Angeles, Cal., for creditors' committee.
MEMORANDUM OPINION
JOHN E. RYAN, Bankruptcy Judge.
Dividend Development Corporation ("Debtor") filed applications seeking to employ insolvency counsel and special real estate counsel (the "Applications"). Debtor's employment agreements with both counsel included the payment of substantial retainers designated as earned-on-receipt (the "Retainers"). The United States Trustee ("Trustee") objected to the characterization of the Retainers as earned-on-receipt. My order approving the Applications (the "Order") instructed both counsel to place the Retainers into separate client trust accounts.
Counsel jointly filed a motion requesting clarification or modification of the Order to reflect either treatment of the Retainers as earned-on-receipt, or to approve a draw-down of the Retainers pursuant to Trustee Guideline No. 7. After a hearing on July 23, 1992, I approved use of the Trustee Guideline No. 7 procedure and took the matter of the Retainers as earned-on-receipt under submission.
JURISDICTION
The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334(a) (the *653 district courts shall have original and exclusive jurisdiction of all cases under Title 11), 28 U.S.C. § 157(a) (authoring the district courts to refer all Title 11 cases and proceedings to the bankruptcy judges for the district), and General Order No. 266, dated October 9, 1984 (referring all Title 11 cases and proceedings to the bankruptcy judges for the Central District of California). This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A).
STATEMENT OF FACTS
Debtor filed a voluntary petition under chapter 11 of the Bankruptcy Code (the "Code") on February 20, 1992. Debtor filed the Applications to employ Levene & Eisenberg as general insolvency counsel and Weil, Gotshal & Manges as special real estate restructure counsel (collectively, "Counsel"). The Applications indicate that Counsel received retainers of $205,286.22 and $95,000.00, respectively. The Applications further provide that the Retainers are earned-on-receipt for legal services to be rendered in connection with the case. Counsel state that they will credit any incurred fees and costs against the Retainers, and will seek additional compensation upon exhaustion of the Retainers as permitted under the Code.
Trustee objected to the Retainers' designation as earned-on-receipt because insufficient information in the Applications justified that characterization.
I approved the Applications and required that Counsel place the Retainers into segregated client trust accounts.
At the hearing on Counsel's Motion for Modification or Clarification of the Order, Counsel sought to characterize the Retainers as earned-on-receipt. Counsel argued that their promises to perform certain services for Debtor and to represent Debtor through the end of the case, notwithstanding any inability on Debtor's part to pay Counsel's fees, constituted sufficient consideration to justify the treatment of the Retainers as earned-on-receipt. Counsel further argued that this characterization results in the Retainers immediately becoming Counsel's funds, without ever becoming part of the bankruptcy estate under § 541.[1] I modified the Order to allow Counsel to draw-down on the Retainers pursuant to Trustee Guideline No. 7.[2]
DISCUSSION
At issue here is whether the Code allows Counsel to receive earned-on-receipt retainers for services to be rendered to Debtor, and, if so, what standards govern these retainers. Counsel argue that the Code allows earned-on-receipt retainers if such treatment is permissible under state law, and that earned-on-receipt retainers are allowed under California law. Additionally, Counsel argue that a prohibition against earned-on-receipt retainers unfairly discriminates against debtor's counsel, contrary to Congressional intent.
Counsel present the following rationale to establish that the Code permits earned-on-receipt retainers: (1) the Code allows earned-on-receipt retainers if such arrangements *654 are permissible under state law; (2) the bankruptcy estate's interest in earned-on-receipt retainers is determined by state law; and (3) the Code's procedural mechanisms that protect the estate from unreasonably large pre-petition professional fees implicitly contemplate the allowance of earned-on-receipt retainers.
Counsel assert that California Code of Civil Procedure § 1021[3] makes earned-on-receipt retainers permissible under California law, and that the only limitation on a compensation agreement is that it not be illegal or unconscionable.[4]
Counsel rely solely on Butner v. United States, 440 U.S. 48, 99 S. Ct. 914, 59 L. Ed. 2d 136 (1979), to support their assertion that state law determines the bankruptcy estate's interest in an earned-on-receipt retainer. Butner sought to determine whether a bankruptcy trustee or a mortgagee was entitled to collect rents during the bankruptcy. Id. at 50, 99 S.Ct. at 915. The Third and Seventh Circuits had adopted a federal rule of equity that granted a mortgagee a secured interest in rents even if state law would not recognize such an interest. Id. at 53, 99 S.Ct. at 917. In reversing the Third and Seventh Circuits, the Court reasoned that,
[t]he constitutional authority of Congress to establish "uniform Laws on the subject of Bankruptcies throughout the United States" would clearly encompass a federal statute defining the mortgagee's interest in the rents and profits earned by property in a bankrupt estate. But Congress has not chosen to exercise its power to fashion any such rule.
Id. at 54, 99 S.Ct. at 917 (footnote omitted).
The Court noted that while Congress has "generally left the determination of property rights in the assets of a bankrupt's estate to state law", Congress has also included provisions to invalidate certain interests. Id. I agree with Counsel that, absent a contrary provision in the Code, state law governs their right to receive the Retainers as earned-on-receipt.
Counsel then argue that because the employment agreements with Debtor expressly provide that the Retainers are earned-on-receipt, the Retainers passed to Counsel pre-petition, and Counsel have absolute ownership of the Retainers.
While I agree with Counsel that earned-on-receipt retainers are permissible under California law, state law alone does not determine whether Debtor's estate retains an interest in the Retainers. In fact, § 328(a)[5] specifically mandates that the bankruptcy judge review the reasonableness of any fee arrangement between a debtor and its counsel as a condition of counsel's employment under § 327. Section 328 makes the reasonableness of a claimed earned-on-receipt retainer a question of federal law, rather than state law. Accordingly, under federal bankruptcy law, this court must determine the reasonableness of the Retainers and Counsel's right to retain them.
Counsel next argue that the procedural safeguards of the Code mandate that any review of the reasonableness of the Retainers be delayed until after services have been rendered to Debtor. Counsel *655 reason that: (1) § 329(a)[6] only requires disclosure of the amount of any pre-petition retainer; (2) § 329(b)[7] requires disgorgement only if the fee is unreasonable; and (3) a § 328(a) review as to the reasonableness of Counsel's services cannot be made until after the services have been rendered.[8]
I disagree. Section 328 conditions the employment of counsel under § 327 upon court approval of the reasonableness of that employment. Therefore, a determination as to the reasonableness of a pre-petition agreement at the outset of the case is a necessary condition to employment under § 327. Further, the authorization in § 328(a) to modify fees "after conclusion of employment, if such terms and conditions prove to have been improvident in light of developments not capable of being anticipated at the time of the fixing of such terms and conditions", clearly anticipates that the court will make a determination as to the reasonableness of a fee arrangement at the beginning of a case.
Thus, two issues remain: (1) whether the Retainers can be properly characterized as earned-on-receipt; and (2) if so, whether the Retainers are reasonable.
The court in In re C & P Auto Transport, Inc., 94 B.R. 682 (Bankr. E.D.Cal.1988), described an earned-on-receipt retainer as follows:
Strictly speaking:
A retaining fee is a preliminary fee given to an attorney or counsel to insure and secure his future services, an induce him to act for the client. It is intended to remunerate counsel for being deprived, by being retained by one party, of the opportunity of rendering services to the other and of receiving pay from him; and the payment of such fee, in the absence of an express understanding to the contrary, is neither made nor received in payment of the services contemplated. Its payment has no relation to the obligation of the client to pay his attorney for the services which he has retained him to perform.
Id. at 687 (citations omitted).
Traditionally, an earned-on-receipt retainer was given in exchange for counsel's commitment to represent a client. It was not to secure payment of fees for counsel's services.[9] Here, the Retainers are for legal *656 services to be rendered in connection with the case. Counsel have stated that they will credit any incurred fees and costs against the Retainers, and will seek additional compensation as permitted under the Code upon exhaustion of the Retainers. Thus, because the primary function of the Retainers is to secure payment for services to be rendered, the Retainers are not properly characterized as earned-on-receipt.
Further, even if the Retainers were truly earned-on-receipt, Counsel have failed to establish that the Retainers, treated as earned-on-receipt, are reasonable. "The burden to establish that the proposed terms and conditions of professional employment in a bankruptcy case are reasonable is on the moving party." In re NBI, Inc., 129 B.R. 212, 219 (Bankr.D.Colo.1991).
In NBI, Inc., counsel sought to have retainers of $200,000.00 and $463,447.25 treated as earned-on-receipt. Id. at 216. The court, while viewing the retainers as earned-on-receipt, nonetheless found that they were excessive. Id. at 220. The court found that, "[i]nclusion of the term `retainer' in Section 328(a) of the Bankruptcy Code does not by definition qualify all retainer arrangements as reasonable. The Court, in its discretion, must make this determination." Id. at 222 (citations omitted).
The court relied on the policy and practice of the bankruptcy courts in the district "to require retainers applicable to fees and costs for post-petition representation to be held in a trust account, and drawn against only pursuant to appropriate court order." Id. at 220 (citation omitted).
Judge Cordova concluded that "[a]n `earned retainer', whatever its amount, is inherently unreasonable in the context of Section 328(a). The concept of an `earned retainer' is simply an anomaly in a Chapter 11 case." Id. at 222. The court reasoned that earned-on-receipt retainers: (1) "impermissibly circumvent the explicit and implicit requirements of the Bankruptcy Code and Rules . . . [that compensation to professionals shall be] only for actual and necessary legal services . . . after such services have been provided"; (2) "effectively nullify the protections afforded the estate and its creditors by the Code and Rules"; and (3) "usurp the Court's authority under the Code and the Rules." Id. at 222-23. "[Earned-on-receipt retainers] purport to substitute the discretion of counsel and debtor for that of the Court. The administrative convenience urged by counsel as justification for allowing `earned retainers' without prior fee applications does not absolve the Court of its statutory obligations." Id. at 223 (citations omitted).
Additionally, the court noted that the consideration[10] counsel gave in exchange for the retainer "appears to be no more than ethically and legally required of any attorney who agrees to represent a client in litigation, particularly a debtor in bankruptcy." Id. at 224.
While I do not agree with Judge Cordova's conclusion that earned-on-receipt retainers are per se impermissible under § 328(a), I do agree that the burden is upon counsel to establish that the treatment of a requested retainer as earned-on-receipt is reasonable.
Since an earned-on-receipt retainer is primarily to compensate for counsel's agreement to represent a client, Counsel would have to establish the reasonable value of their commitment to provide legal services to Debtor. Traditionally, the value of an attorney's commitment to take a client's case is set by the marketplace. If the retainer is unreasonable, the client goes elsewhere. In a reorganization proceeding, however, the debtor is usually in a desperate condition and the normal protections of *657 the marketplace do not govern. Accordingly, the bankruptcy court must determine the reasonableness of the requested earned-on-receipt retainer.
In order to establish the reasonableness of an earned-on-receipt retainer, a debtor must quantify the value to the estate of having the selected attorney represent the estate to the exclusion of other attorneys who might otherwise represent the estate without an earned-on-receipt retainer. While not exhaustive, some factors that might support the reasonableness of the earned-on-receipt retainer include: (1) whether counsel has particular expertise in the debtor's industry; (2) whether counsel had to forbear other employment to take the debtor's case; and (3) whether the debtor's case will place extraordinary demands upon counsel.
Here, Counsel has failed to quantify the value of their commitment to represent the estate. Counsel's promise to perform services and to represent Debtor through the end of the case are insufficient to establish the reasonableness of the Retainers as earned-on-receipt.
In summary, the Bankruptcy Code does not preclude a debtor's counsel from receiving an earned-on-receipt retainer if such an arrangement is permissible under state law. However, an earned-on-receipt retainer otherwise allowable under state law is subject to the bankruptcy court's review for reasonableness. To justify the reasonableness of an earned-on-receipt retainer, an attorney must quantify the value to the estate of having that particular counsel represent the estate.
Since the Retainers do not qualify as earned-on-receipt, the Retainers are approved as advances against fees and should be placed in a trust account to be drawn against in compliance with Trustee Guideline No. 7. Even if the Retainers were properly characterized under state law as earned-on-receipt, treatment of the Retainers as earned-on-receipt under federal law is unreasonable.
Separate findings of fact and conclusions of law with respect to this ruling are unnecessary. This memorandum opinion shall constitute my findings of fact and conclusions of law.
ORDER FOR CONTINUED COMPLIANCE WITH UNITED STATES TRUSTEE GUIDELINE NO. 7
In accordance with the findings of fact and conclusions of law set forth in my memorandum opinion of this date, it is
ORDERED that the retainers should remain in a trust account to be drawn against in compliance with Trustee Guideline No. 7.
NOTES
[1] Section 541(a)(1) provides in part that the "estate is comprised of . . . all legal or equitable interests of the debtor in property as of the commencement of the case."
[2] Trustee Guideline No. 7 states in pertinent part:
10. Professionals who have, prior to the filing of the Petition, received advances against future fees must segregate the amount of any such advances against fees which have not yet been earned as of the filing of the Petition. The U.S. Trustee will not object to a procedure allowing draws upon the segregated account upon the filing with the Bankruptcy Court and service of monthly "face-sheet" fee applications pursuant to this Guideline and Guideline No. 18. Such monthly applications shall contain all of the information described in Paragraphs 2 through 5, inclusive, above. Notice of such applications shall be served upon the United States Trustee, those parties who have requested special notice and the Official Committee of Unsecured Creditors. If no Official Committee of Unsecured Creditors has been appointed, the notice shall be served upon the United States Trustee, those parties who have requested special notice, and the 20 largest unsecured creditors. The notice shall explicitly state that the fees and costs will be withdrawn from the trust account in the amount requested without further notice or hearing, unless an objection and request for hearing is filed with the Clerk of the Court and served upon the applicant(s) within 10 days after service of the notice. If no objection is timely filed and served, the professional may withdraw the requested compensation without further notice, hearing or order.
[3] California Code of Civil Procedure § 1021 provides:
Except as attorney's fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties. . . .
[4] Cal.Rules of Prof.Conduct, rule 4-200.
[5] Section 328 states:
(a) The trustee, or a committee appointed under section 1102 of this title, with the court's approval, may employ or authorize the employment of a professional person under section 327 or 1103 of this title, as the case may be, on any reasonable terms and conditions of employment, including on a retainer, on an hourly basis, or on a contingent fee basis. Notwithstanding such terms and conditions, the court may allow compensation different from the compensation provided under such terms and conditions after the conclusion of such employment, if such terms and conditions prove to have been improvident in light of developments not capable of being anticipated at the time of the fixing of such terms and conditions.
[6] Section 329 provides:
(a) Any attorney representing a debtor in a case under this title, or in connection with such a case, whether or not such attorney applies for compensation under this title, shall file with the court a statement of the compensation paid or agreed to be paid, if such payment or agreement was made after one year before the date of the filing of the petition, for services rendered or to be rendered in contemplation of or in connection with the case by such attorney, and the source of such compensation.
[7] Section 329 provides:
(b) If such compensation exceeds the reasonable value of any such services, the court may cancel any such agreement, or order the return of any such payment, to the extent excessive, to
(1) the estate if the property transferred
(A) would have been property of the estate; or
(B) was to be paid by or on behalf of the debtor under a plan under chapter 11, 12, or 13 of this title; or
(2) the entity that made such payment.
[8] See In re Reimers, 972 F.2d 1127, 1128 (9th Cir.1992) (stating that when the bankruptcy court has approved the terms of a professional's compensation, the court should award compensation consistent with those approved terms, unless the court subsequently finds that such approval was "improvident" in light of unforeseeable developments).
[9] See In re Montgomery Drilling Co., 121 B.R. 32, 38 (Bankr.E.D.Cal.1990) (a retainer agreement is a security retainer where debtor reasonably expected that the applicant would perform and render future services in the case); C & P Auto Transport, 94 B.R. at 692 (retainer paid in consideration of future services is an "advance deposit on account of anticipated fees for future services" and should be deposited in a separate trust account); In re Hathaway Ranch Partnership, 116 B.R. 208, 216 (Bankr.C.D.Cal.1990) (a retainer that compensates counsel not only for agreeing to represent debtor but also for providing the first $50,000 of services was not a true earned-on-receipt retainer).
[10] The debtor's counsel had represented that "the firm is irrevocably committed to continue its representation of [debtor] even is [sic] such additional sums are unavailable on an interim basis." NBI, Inc., 129 B.R. at 216. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3098388/ | NO. 07-12-0350-CR
IN THE COURT OF APPEALS
FOR THE SEVENTH DISTRICT OF TEXAS
AT AMARILLO
PANEL D
AUGUST 8, 2012
______________________________
TERRY ALLEN REECE,
Appellant
v.
THE STATE OF TEXAS,
Appellee
_________________________________
FROM THE 69th DISTRICT COURT OF MOORE COUNTY;
NO. 4419; HON. RON ENNS, PRESIDING
_______________________________
Order of Dismissal
_______________________________
Before QUINN, C.J., and CAMPBELL and PIRTLE, JJ.
Terry Allen Reece, appellant, attempts to appeal from his conviction for obstruction or retaliation. The trial court pronounced sentence and signed the judgment in August of 2011. Appellant did not file his notice of appeal until August 3, 2012. We dismiss for want of jurisdiction.
To be timely, a notice of appeal must be filed within thirty days after the sentence is imposed or suspended in open court or within ninety days after that date if a motion for new trial is filed. Tex. R. App. P. 26.2(a). Therefore, the deadline for perfecting an appeal here lapsed in September of 2011.
A timely filed notice of appeal is essential to invoke our appellate jurisdiction. Olivo v. State, 918 S.W.2d 519, 522 (Tex. Crim. App. 1996). If it is untimely, we can take no action other than to dismiss the proceeding. Id. at 523. Appellant's notice being untimely filed, we have no jurisdiction over the matter and dismiss the appeal.
Accordingly, appellant's appeal is dismissed.
Per Curiam
Do not publish. | 01-03-2023 | 10-16-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1517352/ | 933 S.W.2d 591 (1996)
TRANSAMERICAN NATURAL GAS CORPORATION and TransTexas Gas Corporation, Appellants,
v.
H.S. FINKELSTEIN, Appellee.
No. 04-95-00365-CV.
Court of Appeals of Texas, San Antonio.
August 14, 1996.
Opinion on Denial of Rehearing October 9, 1996.
Rehearing Overruled October 9, 1996.
*593 David M. Gunn, Rothenberg & Gunn, Bellaire, C.M. Zaffirini, Zaffirini, Castillo & Pellegrin, Laredo, Jeff Wentworth, San Antonio, Fred Wahrlich, TransTexas Gas Corporation, Houston, Roy R. Barrera, Jr., Nicholas & Barrera, P.C., San Antonio, for appellants.
Elizabeth N. Miller, Steve Selby, Bob Bullock, Martin L. Allday, Scott, Douglass, Luton & McConnico, L.L.P., Austin, Frank Douglass, Scott, Douglass, Luton & McConnico, L.L.P., Dallas, Morgan L. Copeland, Scott, Douglass, Luton & McConnico, L.L.P., Houston, Arturo A. Figueroa, Jr., Timothy E. Gehl, Law Offices of Arturo A. Figueroa, Zapata, Robert J. Hearon, Jr., Graves, Dougherty, Hearon & Moody, Austin, Gregory Luna, Luna & Luna, San Antonio, Michael B. Silva, amicus curiae, Paul F. Simpson, Silva & Simpson, L.L.P., Houston, John S. Lowe, amicus curiae, George W. Hutchison, Southern Methodist University School of Law, Dallas, James N. Castleberry, Jr., amicus curiae, San Antonio, Edwin P. Horner, amicus curiae, Waco, Everard A. Marseglia, Jr., amicus curiae, Burns, Wooley & Marseglia, L.L.P., Houston, for appellee.
Before CHAPA, C.J., and RICKHOFF, LOPEZ, STONE, HARDBERGER, GREEN and DUNCAN, JJ., en banc.
OPINION ON APPELLANTS' MOTION FOR REHEARING EN BANC
CHAPA, Chief Justice.
This appeal questions whether a royalty owner is entitled to share in the settlement proceeds arising from the breach of a take-or-pay oil and gas contract when some of the gas not taken is sold on the spot market. The appellants, TransAmerican Natural Gas Corporation and TransTexas Gas Corporation (collectively, TransAmerican), filed a motion for rehearing and motion for rehearing en banc after this court issued its panel opinion of April 3, 1996. We grant TransAmerican's motion for rehearing en banc and deny its motion for rehearing as moot. Furthermore, we withdraw our earlier opinion and substitute this opinion in its place. Although we adopt the panel's holding regarding TransAmerican's affirmative defenses, we reject its discussion of TransAmerican's marketing duty. We reverse and render because a royalty owner is not entitled to settlement proceeds from a take-or-pay contract absent lease language to that effect.
Summary of Facts
In 1974, John R. Stanley, owner of TransAmerican and its predecessors, assigned Hub Finkelstein, an independent oil producer, an overriding royalty interest *594 "equivalent to 1/16 of the net revenue interest" from all mineral rights Finkelstein secured for TransAmerican.[1] In addition, Finkelstein was required to sell his gas to TransAmerican under a gas purchase agreement. A year later, Finkelstein arranged for TransAmerican and El Paso Natural Gas (El Paso) to enter into a farmout agreement for the La Perla Ranch in Zapata County, Texas.[2] However, Finkelstein was not a party to this contract between TransAmerican and El Paso. As a result of his prior agreement with TransAmerican, Finkelstein earned a 1/16th overriding royalty interest in the La Perla Ranch, subject to El Paso's preferential right to purchase.
In 1981, El Paso exercised its preferential purchase right to purchase. It entered into a long-term gas purchase agreement with TransAmerican, but once again Finkelstein was not a party to the contract. Under this gas purchase contract, TransAmerican dedicated its entire interest in the La Perla Ranch to El Paso. In exchange, El Paso agreed to take or, if it did not take, pay for 80 percent of the La Perla production for a fifteen-year term. El Paso also received a five-year make-up or recoupment right, which entitled it to later take "gas which it paid for but did not receive" at the delivery price minus the take-or-pay payment.[3]
In 1983, as a result of sharply declining gas prices, El Paso filed a declaratory judgment action seeking to avoid the take-or-pay provision of its gas purchase contract with TransAmerican. TransAmerican counterclaimed for underpayment of gas and for breach of the take-or-pay provision. During that litigation, TransAmerican continued to sell gas on the spot market for less than the price El Paso had agreed to pay.
Also in 1983, TransAmerican filed Chapter 11 bankruptcy, and Finkelstein filed an adversary claim for, among other things, unpaid royalties and breach of his gas purchase agreement with TransAmerican. Finkelstein's claims were settled in 1987. The settlement (1) confirmed Finkelstein's 1/16th overriding royalty in the La Perla Ranch; (2) paid Finkelstein for accrued underpaid and unpaid royalties, a portion of which was to come from the still pending litigation with El Paso; and (3) conveyed to Finkelstein an additional 1½ percent overriding royalty in the La Perla field equivalent to "net revenue interest of .015."
In 1990, after the trial court rendered a $603 million judgment against El Paso, TransAmerican settled its dispute with El Paso for cash and property valued at $360 million. As part of the settlement, the parties terminated their prior agreements, including the 1975 farmout and 1981 gas purchase contract. As a result, El Paso's make-up right was terminated. El Paso conveyed its interest in the La Perla Ranch to TransAmerican, which, in turn, released its claims and those of its "assigns." Although Finkelstein was not a party to the TransAmerican/El Paso contract nor did he participate in their settlement agreement, the settlement terminated his interest in the La Perla Ranch. See Medallion Oil Co. v. TransAmerican Natural Gas Corp. (In re GHR Energy Corp.), 972 F.2d 96, 99-100 (5th Cir. 1992), cert. denied, 507 U.S. 1042, 113 S.Ct. 1879, 123 L.Ed.2d 497 (1993) (explaining that Finkelstein's overriding royalty was "washed out" by the termination of TransAmerican's lease).
Although TransAmerican paid Finkelstein royalty on the gas it produced and sold on the spot market during its litigation with El *595 Paso, it refused to pay Finkelstein any part of the El Paso settlement. Finkelstein sued TransAmerican to recover royalty on the amount paid by El Paso to settle TransAmerican's "repudiation claim" for gas that TransAmerican produced and sold between October 1, 1987 through December 31, 1989; that is, the date Finkelstein began receiving royalty from TransAmerican under their 1987 settlement agreement and the last date on which Finkelstein owned a royalty interest in the La Perla Ranch. These "repudiation damages" represented the difference between the price under El Paso's gas purchase agreement and the lower spot market price.
The trial court submitted the case to the jury on Finkelstein's theories that TransAmerican breached its duty to reasonably market and was unjustly enriched. The jury returned a verdict in Finkelstein's favor on both theories, and the trial court rendered judgment for $8,247,021 in actual damages and $4,458,158 in attorney's fees. TransAmerican appealed; and, in four points of error, challenges the legal and factual basis of Finkelstein's recovery.
TransAmerican's Affirmative Defenses
In its third point of error, TransAmerican argues that Finkelstein's claim is barred by the accord and satisfaction reflected in the 1987 settlement agreement and by res judicata. Because these arguments, if successful, would be dispositive of this appeal, we consider them first.
1. Accord and Satisfaction
In points of error 3-A and 3-B, TransAmerican argues that, as a matter of law, Finkelstein's claim is barred by accord and satisfaction. Alternatively, TransAmerican argues that the jury's contrary finding is against the great weight and preponderance of the evidence. We review TransAmerican's sufficiency complaints under the well-established rules for measuring the legal and factual sufficiency of the evidence. See Robert W. Calvert, "No Evidence" and "Insufficient Evidence" Points of Error, 38 Tex. L. Rev. 361, 362-68 (1960). While accord and satisfaction is a question of law reviewed de novo, the parties here disagree over the factual interpretation of the 1987 settlement agreement.
The affirmative defense of accord and satisfaction "rests upon a new contract, express or implied, in which the parties agree to the discharge of the existing obligation by means of the lesser payment tendered and accepted." Jenkins v. Henry C. Beck Co., 449 S.W.2d 454, 455 (Tex.1969). To prove that a particular agreement rises to the level of an accord and satisfaction, "[t]he evidence must establish an assent of the parties to an agreement that the amount paid by the debtor to the creditor was in full satisfaction of the entire claim." Id.
TransAmerican's evidence includes the following sentence taken from the 1987 settlement agreement:
Another $367,000 is due under Adversary Proceeding No. 85-0946-H2-5 if the Debtors prevail in their suit against El Paso Natural Gas for gas sold and delivered, and shall be paid to [Finkelstein] upon receipt by the Debtors of satisfaction of such an award from El Paso.
Lifting this sentence out of contextand disregarding the phrase "sold and delivered" lends some credence to TransAmerican's accord and satisfaction argument.
However, when read in context, the sentence refers to Finkelstein's claims for royalties accrued and unpaid prior to April 1987; the agreement did not purport to settle Finkelstein's claim to royalties accrued during the period at issue here, i.e., October 1, 1987 through December 31, 1989. See Finkelstein v. TransAmerican Natural Gas Corp. (In re TransAmerican Natural Gas Corp.), 127 B.R. 800, 803 (S.D.Tex.1991) (describing TransAmerican's "contention" as "erroneous. The $367,000 was for gas previously produced from La Perla and for which royalties were owing. The 1987 settlement did not involve royalties to future production.").[4]
*596 The only evidence that supports any accord and satisfaction argument came from Craig Shephard, TransAmerican's former president and chief operating officer. Shephard testified that Finkelstein settled his claim in this litigation when he accepted the additional 1½ percent overriding royalty in the 1987 settlement agreement and released his claims against TransAmerican. Finkelstein, on the other hand, testified that he received the additional 1½ percent overriding royalty to settle his claim arising out of TransAmerican's rejection of his gas purchase agreement, and nothing in the 1987 settlement agreement was intended to settle his claim to a royalty interest in TransAmerican's repudiation damages.
The jury found that Finkelstein did not "accept the benefits of the Settlement of April 23, 1987, in satisfaction of all claims he would have arising out of the controversy between El Paso and TransAmerican." The jury's answer is supported by the evidence and the unambiguous terms of the agreement. Thus, we overrule TransAmerican's points of error 3-A and 3-B.
2. Res Judicata
TransAmerican asserts under points of error 3-C and 3-D that Finkelstein's claim is barred by res judicata, specifically section 1141 of the Bankruptcy Code. According to TransAmerican, section 1141 bars "all issues that could have been raised in connection with ... confirmation" of a plan of reorganization. Finkelstein counters that his claim is not barred because it arose after the date TransAmerican's reorganization plan was confirmed.
The res judicata effect of a judgment rendered by a federal court is governed by federal res judicata law. See Eagle Properties, Ltd. v. Scharbauer, 807 S.W.2d 714, 718 (Tex.1990). For confirmation of bankruptcy plans, the federal law of res judicata is contained in section 1141 of the Bankruptcy Code, which provides that "the confirmation of a plan ... discharges the debtor from any debt that arose before the date of such confirmation." 11 U.S.C.A. § 1141(d)(1)(A) (West 1993) (emphasis added).
The bankruptcy court confirmed TransAmerican's plan of reorganization on September 4, 1987. In re TransAmerican Natural Gas Corp., 127 B.R. at 802. Finkelstein's claim in this litigation arose out of gas produced and sold between October 1, 1987 and December 31, 1989 and settlement monies paid to TransAmerican in early 1990. We agree with the conclusion of the federal district court that Finkelstein's claim arose after the date of confirmation and is not, therefore, barred by section 1141. See id. at 803. We overrule TransAmerican's points of error 3-C and 3-D.
Breach of the Marketing Duty
In points of error 2-A and 2-B, TransAmerican maintains that, as a matter of law and the weight of the evidence, the trial court erred in rendering judgment against TransAmerican on the jury's finding that TransAmerican breached its duty to reasonably market Finkelstein's gas "because an overriding royalty interest owner is not entitled to share in the proceeds from a take-or-pay settlement."
Regarding the relevant law, the parties agree that actual production triggers the duty to reasonably market, which itself is subdivided into the twin duties of marketing production with due diligence and obtaining the best price reasonably possible. Cabot Corp. v. Brown, 754 S.W.2d 104, 106 (Tex. 1987). "Production" means the actual extraction of the mineral from the soil. See Rogers v. Osborn, 152 Tex. 540, 261 S.W.2d 311, 312 (1953). The standard of care is that of a reasonably prudent operator under the same or similar circumstances. Amoco Prod. Co. v. Alexander, 622 S.W.2d 563, 568 (Tex. 1981).
Regarding the facts, the parties agree that TransAmerican recovered damages for El Paso's breach of the take-or-pay contract. They also agree that, between October 1, 1987 and December 31, 1989, TransAmerican *597 actually produced and sold on the spot market 84 billion cubic feet of gas from the La Perla Ranch. Finkelstein contends that, given these facts, TransAmerican received two prices for the produced gas: (1) the spot market price; and (2) when it settled with El Paso, the difference between the El Paso contract price and the spot market price. Finkelstein admits receiving royalty on the first and claims his entitlement to receive royalty on the second.
In Bruni I, we answered negatively the question of "whether a standard royalty clause applies to settlement of a take-or-pay provision." Killam Oil Co. v. Bruni, 806 S.W.2d 264, 266-68 (Tex.App.San Antonio 1991, writ denied). Finkelstein attempts to distinguish this controlling authority on the basis of production and his royalty clause.
In Bruni I, the Bruni Mineral Trust entered into an oil and gas lease with Killam and Hurd which provided that royalties be paid on production. In pertinent part, the royalty clause stated:
The royalties to be paid by lessee [Killam and Hurd] are: ... (b) on gas, including casinghead gas and all gaseous substances, produced from said land and sold or used off the premises or in the manufacture of gasoline or other product therefrom, the market value at the mouth of the well of one-eighth of the gas so sold or used provided that on gas sold at the wells the royalty shall be one-eighth of the amount realized from such.
Killam Oil Co. v. Bruni, 806 S.W.2d 264, 266 (Tex.App.San Antonio 1991, writ denied) (emphasis in original).
After entering this lease, Killam and Hurd contracted to sell gas to United Texas Transmission Company (United) under a separate take-or-pay agreement with a five-year make-up right. Id. at 265. Killam sued United when it failed to take or pay, but Killam later settled. Id. Hurd settled without suit. Id. The Trust then sued Killam and Hurd for a share of the settlement proceeds on the basis of a constructive sale under its royalty clause as well as on theories of breach of the duty to market, breach of the duty of good faith and fair dealing, conversion, fraud, unjust enrichment, and equitable reformation. Id.
In construing the Trust's royalty claim, we focused on the lease's requirement that gas be "produced" and "sold," i.e., severed from the soil. Id. at 267. By this language, "the Trust unambiguously limited its right to royalty payments only from gas actually extracted from the land." Id. at 268. We concluded that take-or-pay "payments are made when gas is not produced, and as such, bear no royalty." Id. (emphasis in original). This holding was recently approved by the Texas Supreme Court when it described the take-or-pay payment as compensation "for the exclusive dedication of reserves for a fixed period of time." The Lenape Resources Corp. v. Tennessee Gas Pipeline Co., 925 S.W.2d 565, 570 (Tex.1996) (citing Bruni I).
As we said in Bruni I, the royalties to which a lessor is entitled must be determined from the provisions of the oil and gas lease. 806 S.W.2d at 266 (citing Texas Oil & Gas Corp. v. Vela, 429 S.W.2d 866, 870 (Tex.1968)). When reading the lease, we give terms their plain, ordinary, and generally accepted meaning and will enforce the unambiguous document as written. Heritage Resources, Inc. v. NationsBank, 39 Tex. Sup. Ct. J. 537, 538-39, ___ S.W.2d ___, ___ ___, 1996 WL 200362 (April 25, 1996).
The 1974 agreement between TransAmerican and Finkelstein provided for "an overriding royalty interest equivalent to 1/16 of the net revenue interest acquired by" TransAmerican. The settlement agreement between TransAmerican and Finkelstein included an additional interest:
[TransAmerican] hereby agree[s] to assign and convey to H.S. Finkelstein an overriding royalty interest of one and one-half percent (1½%) of all oil, gas, other hydrocarbons, and all other minerals, whether similar or dissimilar, and including, without being limited to, salt, sulphur, coal, lignite and uranium, produced and saved from or attributed to the interests owned by [TransAmerican] ... in and to all (i) gas leases, oil and gas leases, oil, gas and mineral leases ..., (ii) development agreements, joint development agreements, farmout agreements, farmin *598 agreements, contracts to lease, net revenue interest agreements, and, without exception, all other agreements which have as their purpose or will involve or be concerned with the exploration, drilling and/or production of oil, gas and/or other minerals ... and (iii) all other interests in land, including, but not limited to, fee mineral interests, royalty interests, overriding royalty interests, net profits interests, production payments and other similar interests in production of oil, gas and/or other minerals....
(Emphasis added).
Like the lease in Bruni I, Finkelstein's lease is tied to production.[5] By this language, Finkelstein unambiguously limited his right to royalty payments from gas actually extracted from the land. See Bruni I, 806 S.W.2d at 268. Additionally, without production, TransAmerican's duty to reasonably market was not triggered. See Cabot Corp., 754 S.W.2d at 106. Given the particular recitations of this lease for various types of interest, none of which mention take-or-pay contracts, we cannot read the clause "net revenue interest" as including take-or-pay settlements which, by their very nature, are not payments for gas produced. See Danciger Oil & Ref. Co. v. Powell, 137 Tex. 484, 154 S.W.2d 632, 635 (1941) (advising courts not to read into the lease additional provisions). Finkelstein, like the Bruni Trust, could have (but did not) specifically include a provision that allowed for royalty to be paid upon proceeds received from settlements arising from the breach of take-or-pay gas contracts.[6] Finkelstein enjoyed a position to do exactly that by virtue of his experience in the oil and gas industry and his involvement in the TransAmerican/El Paso negotiations.
Finkelstein maintains that Bruni I is distinguishable because it did not involve gas production where the purchaser lost its right to recoup gas but nonetheless "paid" for the gas sold to third parties through "repudiation" damages. This issue was raised in Bruni I, where the Trust argued that United's settlement "might have included underpayment for gas sold on the spot market," 806 S.W.2d at 267, but we declined to address "the Trust's contention as to what the proceeds might have represented." Id. at 268.[7] The underpayment was irrelevant to our analysis because the gas contract was independent of the lease. See id. at 267 (citing Exxon Corp. v. Middleton, 613 S.W.2d 240, 245 (Tex.1981)).
The lessee's royalty obligations are determined from lease agreements executed prior to and wholly independent of gas purchase contracts. Middleton, 613 S.W.2d at 245. The royalties are fixed and unaffected by the gas contracts. Id. Furthermore, in basic contract terms, there is no privity between the lessor and the purchaser who contracts with the lessee. See id. (holding that market value for royalty purposes must be calculated without reference to the gas contract). As demonstrated by Bruni I, the royalty is typically based on production.
Under the lessee's separate gas purchase agreement, the purchaser satisfies a take-or-pay provision by either purchasing a specified quantity of gas or paying the producer for the right to purchase that quantity of gas in the future. The Lenape Resources Corp., 925 S.W.2d at 570. "Because of this alternative performance, the pay option under a take-or-pay contract is not a payment for the sale of gas. Rather, it is a payment for the exclusive dedication of reserves for a fixed period of time." Id. (citations omitted); see also Bruce M. Kramer, Royalty Obligations Under the Gun-The Effect of Take-or-Pay Clauses on Duty to Make Royalty Payments, 39 INST. ON OIL & *599 GAS L. & TAX'N § 5.02 (1988) (detailing several purposes). Thus, the pay option is "made when gas is not produced, and as such, bear[s] no royalty." Bruni I, 806 S.W.2d at 268; see also Mandell v. Hamman Oil & Ref. Co., 822 S.W.2d 153, 164-65 (Tex. App.Houston [1st Dist.] 1991, writ denied).
Finkelstein refers to language in Bruni II where we noted "cogent arguments concerning the royalty owner's interest in take-or-pay settlement funds, especially when, as here, the settlement terminates the purchaser's recoupment rights." Hurd Enterprises, Ltd. v. Bruni, 828 S.W.2d 101, 107-08 n. 8 (Tex.App.San Antonio 1992, writ denied) (where recoupment issue not raised). Our footnote acknowledged that arguments favoring recovery of royalty were based on "[t]he legal issue [of] whether the non-recoupable take-or-pay payment is compensation for past and/or future gas production, or whether it represents payment for the producer having the gas available but not producing it, i.e., storing the gas for the purchaser's benefit." 828 S.W.2d at 108 n. 8. This legal issue has been resolved by Lenape's explanation that take-or-pay payments represent compensation for producing and storing gas, not the mere "pre-payment" of gas suggested by Finkelstein. 925 S.W.2d at 571-72. For this reason, the dicta in Bruni II is not controlling.
For the same reason, the royalty owner, who does not "shoulder the ... risks of exploration, production, and development," should not share in the take-or-pay payment. Diamond Shamrock Exploration Co. v. Hodel, 853 F.2d 1159, 1167 (5th Cir.1988); see also Bruni II, 828 S.W.2d at 110 (describing risks of lessor and lessee). Thus, Finkelstein cannot share in the right to the settlement proceeds without accepting corresponding duties.[8]
At the heart of Finkelstein's argument is his mischaracterization of the El Paso settlement as including both "take-or-pay damages" for gas "that was not produced" (of which he disclaims any interest) and "repudiation damages" for "the entire El Paso contract" (of which he claims an interest in that portion representing gas produced and sold on the spot market). El Paso's lump-sum settlement did not make this distinction, although the underlying case was tried to both the court and the jury, resulting in awards of $67 million and $536 million, respectively.
The former figure represents El Paso's payment for years in which it took less gas than the 80 percent of production required by the contract (1985 and 1986), and the latter figure represents El Paso's payment for years in which it took no gas at all (1987 through 1996). This conclusion is supported by jury question number 2, in which the jury found that El Paso breached its contract with TransAmerican "as a whole" by failing to make the prepayment due on January 10, 1987. Question number 6 asked the jury to calculate damages based on the difference between the contract price and the market price, which was defined as the price of gas when the contract was breached. In contrast, the trial court's findings of fact demonstrate that "take-or-pay damages" were based "on a deficiency." One amicus curiae suggested that the distinction was one of convenience because past production was readily ascertainable while future production was uncertain.[9] In short, a breach is a breach. Both awards represent nonproductiongas not taken or paid for under the gas purchase agreement.
In this case, gas was produced and sold to third parties. El Paso did not take the gas; instead, it was required to pay TransAmerican for the dedication of the reserves. The El Paso settlement represents compromise of a dedication claim that existed independently of a lease, as did the settlement in Bruni I, even if TransAmerican allowed El Paso a "credit" for gas TransAmerican sold on the spot market. If TransAmerican's settlement with El Paso increased the price for gas produced, Finkelstein would receive two royalties on the same gas, a right to which he was not entitled under the terms of his lease. *600 Therefore, the TransAmerican/El Paso settlement does not "have the effect of increasing the price paid for gas that was taken." See Bruni I, 806 S.W.2d at 268.
Take or pay is not a benefit which flows from the marketing covenant of a lease. See Mandell, 822 S.W.2d at 165. We therefore hold, as a matter of law, that TransAmerican was required to obtain for Finkelstein benefits related to the sale of gas that was produced and sold on the spot market gas which, by definition, was not included in El Paso's take-or-pay settlement. We hold that TransAmerican was not required to share the proceeds of its take-or-pay settlement with Finkelstein. By these holdings, we reaffirm our decision in Bruni I and clarify that a royalty owner, absent specific lease language, is not entitled to take-or-pay settlement proceeds, whether or not gas is sold to third parties on the spot market.
Because we find no breach of the duty to reasonably market, we sustain TransAmerican's points of error 2-A and 2-B. We therefore find it unnecessary to address its complaints embodied in points of error 2-C and 2-D that legally and factually insufficient evidence supports the damage award for breach of the marketing duty.
Unjust Enrichment
In points of error 1-A and 1-B, TransAmerican argues that the trial court erred in rendering judgment against TransAmerican on the jury's finding that TransAmerican was unjustly enriched "because there is no unfairness in holding Finkelstein to his bargain," that is, the lease agreement.
Unjust enrichment characterizes the result of failing to make restitution for benefits received under circumstances giving rise to an implied or quasi-contract. Allen v. Berrey, 645 S.W.2d 550, 553 (Tex.App.San Antonio 1982, writ ref'd n.r.e.). There can be no recovery "if the same subject is covered by an express contract." Lone Star Steel Co. v. Scott, 759 S.W.2d 144, 154 (Tex.App. Texarkana 1988, writ denied); see also Angelo Broadcasting, Inc. v. Satellite Music Network, Inc., 836 S.W.2d 726, 731 (Tex.App. Dallas 1992, writ denied); Allen, 645 S.W.2d at 553. We believe this result is particularly appropriate when sophisticated parties, like Finkelstein and TransAmerican, bargain for express contracts. See Mandell, 822 S.W.2d at 160.
We hold that, when Finkelstein entered into his lease with TransAmerican, he agreed to its express terms, and we hold that he was bound by his bargain. Recovery on an equitable theory would, as a matter of law, be inconsistent. See Allen, 645 S.W.2d at 555.
We sustain TransAmerican's points of error 1-A and 1-B. Accordingly, we decline to address points of error 1-C and 1-D regarding the sufficiency of the evidence supporting the damage award for unjust enrichment.
Attorney's Fees
Because we sustain portions of TransAmerican's first and second points of error, the fourth point of error concerning Finkelstein's recovery of attorney's fees is necessarily sustained as well. See Angelo Broadcasting, 836 S.W.2d at 736; Bruni II, 828 S.W.2d at 112.
Conclusion
We reverse the trial court's judgment and render judgment that Finkelstein take nothing from his claim against TransAmerican.
DUNCAN, J., dissents, joined by RICKHOFF and GREEN, JJ.
DUNCAN, Justice, dissenting.
Because the majority opinion refuses to confront the facts, and incorrectly resolves the issues, presented in this appeal, we dissent. We would affirm the trial court's judgment, as set forth in the original panel opinion, which we now append as our dissent.
APPENDIXPANEL OPINION
In Bruni I this court held that a royalty owner is not entitled to "royalties on the settlement proceeds arising from the take-or-pay provision" in a gas purchase contract. Killam Oil Co. v. Bruni, 806 S.W.2d 264, 268 (Tex.App.San Antonio 1991, writ denied). Appellants, TransAmerican Natural Gas Corporation and TransTexas Gas Corporation *601 (collectively, TransAmerican), ask that we extend Bruni I to settlement proceeds covering repudiation damages based in part upon the royalty owner's gas and attributable to a period in which gas was actually produced and sold on the spot market. For the reasons discussed below, we decline TransAmerican's request and affirm the judgment.
FACTS
The trial testimony and parties' written agreements, viewed in the light most favorable to the jury's verdict, tell the following story.
Hub Finkelstein, a successful independent oil producer in Texas, was approached in late 1972 or early 1973 by John R. Stanley, a Massachusetts businessman involved in refining and marketing oil and gas under the name of Good Hope Refineries. At the time, Stanley did not own any oil or gas interests. He wanted to invest $10 million in oil and gas drilling and operations, however, and asked Finkelstein to help him put together suitable properties. Finkelstein agreed to call if he found the kind of investment opportunity Stanley desired.
1973 Oral Agreement
In mid-1973, Finkelstein found what Stanley was looking forthe Lobo Trend, the largest undeveloped natural gas deposit discovered in Texas (and perhaps the United States) in the previous twenty years. At Stanley's request, Finkelstein flew to New Orleans for a meeting. The two men made a handshake deal at the New Orleans airport in exchange for a 25% net interest in each well drilled, Finkelstein would obtain leases in Webb and Zapata Counties in Good Hope's name, determine where the wells were to be drilled, and, since only Finkelstein was licensed as an operator in Texas, permit the wells and contract for drilling. Stanley would put up the needed monies.
1974 Agreement
Despite Finkelstein's repeated requests, Stanley failed to reduce their handshake deal to writing. Nonetheless, in accordance with their 1973 Oral Agreement, Finkelstein worked to obtain leases for Good Hope, and he shared his geological data and knowledge with Stanley. By early 1974 Finkelstein had put together more than 100,000 acres of leases. Finally, on January 24, 1974, a written agreement was signed. The 1974 Agreement did not, however, reflect the oral 75/25 partnership arrangement. Instead, in exchange for a right of first refusal on all interests found by Finkelstein in Webb and Zapata Counties, Stanley agreed "that whenever he accept[ed] a trade submitted to him by Finkelstein..., he [would] assign to Finkelstein an overriding royalty interest equivalent to 1/16 of the net revenue interest acquired by Stanley...."
Stanley took every deal Finkelstein offered him. Still Stanley failed to comply with his promise in the 1974 Agreement to assign the required royalty interests to Finkelstein "promptly after Stanley's interest [was] acquired." To settle their dispute, the two men supplemented the 1974 Agreement. By this time, however, Stanley no longer needed Finkelstein because Good Hope had already acquired Finkelstein's geological data, as well as his engineers and lease brokers. As a result, while Finkelstein received an "overriding royalty interest in the oil, gas and other minerals produced, saved and marketed from the lands covered by and described in [certain leases]," the supplement to the 1974 Agreement restricted Finkelstein's royalty interests to a geographic area smaller than Webb and Zapata Counties and required him to sell his gas to Good Hope under a gas purchase agreement.
1975 Farmout Agreement
Attached as an exhibit to the 1974 Agreement was a list of the deals Finkelstein had offered to Stanley but which had not closed. Included on this list were deals covering the minerals underlying the 20,000-acre La Perla Ranch, which Finkelstein was actively working to acquire from El Paso Natural Gas.[1]*602 These efforts reached fruition on March 18, 1975 when El Paso and Good Hope entered into a farmout agreement. In exchange for transferring its mineral interests to Good Hope, El Paso received, among other consideration, a preferential right to purchase. As a result of the 1975 Farmout Agreement and his previous agreements with Stanley, Finkelstein owned a 1/16th overriding royalty interest in Good Hope's net revenue interest in the La Perla Ranch minerals, subject to El Paso's preferential purchase right.
Good Hope's "Halloween" Bankruptcy
Stanley failed to make the assignments required by the 1974 Agreement and supplement. Accordingly, when Good Hope filed for bankruptcy on October 31, 1975, Finkelstein was forced to file and later settle an adversary claim for the assignments he had not received. In 1980 Good Hope emerged from bankruptcy as GHR Energy.
EPNG Gas Purchase Agreement
In February 1981, El Paso exercised its preferential right to purchase the gas underlying La Perla Ranch and entered into a long-term gas purchase agreement with GHR. Under the EPNG Gas Purchase Agreement, GHR dedicated its entire interest in the La Perla Ranch gas, including Finkelstein's royalty interest, to El Paso. In exchange, El Paso agreed that it would take or, if it did not take, pay for 80% of the La Perla production for a fifteen-year term. With respect to gas paid for but not taken, El Paso received a five-year make-up right.
GHR 1983 Bankruptcy
In January 1983, GHR again sought the protection of the bankruptcy court. And, once again, to hold Stanley to his previous agreements, Finkelstein was forced to file adversary claims. These adversary claims could be roughly grouped into four categories: (1) Finkelstein's claim to a royalty interest in the La Perla Ranch minerals, which GHR was denying; (2) underpayment and nonpayment of accrued royalties; (3) a $103 million claim arising out of GHR's rejection of its gas purchase agreement with Finkelstein; and (4) the failure to make all of the assignments required by the 1974 Agreement and supplement. Sometime during its second bankruptcy, GHR became known as TransAmerican, and it will be referred to by that name henceforth.
El Paso Litigation
During the pendency of TransAmerican's bankruptcy, El Paso filed a declaratory judgment action seeking to avoid the take-or-pay provision in the EPNG Gas Purchase Agreement. TransAmerican counterclaimed for various breaches of contract. One of the breaches alleged was El Paso's underpayment for gas produced and delivered to El Paso before 1985 (the Pre-1985 Withheld claim). Another, more monetarily significant breach was El Paso's breach of the take-or-pay provision.
In a 1986 partial summary judgment, the trial court ruled that El Paso was bound by the take-or-provision; and, by August 1987, TransAmerican had amended its petition to allege that El Paso had repudiated the EPNG Gas Purchase Agreement in January 1987. Accordingly, the two largest elements of damages TransAmerican sought were (1) take-or-pay damages for breaches of the take-or-pay provision for the years 1985 and 1986 and (2) repudiation damages for the remainder of the contract term, that is, 1987 through 1996. TransAmerican's claimed repudiation damages included damages for Finkelstein's gas. Trial on the take-or-pay damages was set for a bench trial on September 1, 1987; trial of the repudiation claim was set for a jury trial on September 18, 1987.
1987 Settlement Agreement
On April 23, 1987, Finkelstein's adversary claims in TransAmerican's bankruptcy proceeding were settled. The 1987 Settlement Agreement provided:
(1) Stanley and TransAmerican confirmed Finkelstein's "overriding royalty interest equal to one-sixteenth (1/16th) of the net revenue interest earned, acquired or otherwise received, and to be earned, acquired or otherwise received *603 by" TransAmerican under the 1975 Farmout Agreement.
(2) TransAmerican agreed to pay Finkelstein accrued and unpaid overriding royalties of $2,611,762, a sum comprised of the following amounts and related to the following claims: (a) "$74,000, which includes payments accruing on production from March and April of 1987"; (b) $367,000, which was "due under Adversary Proceeding No. 85-0946-H2-5 if [TransAmerican] prevail[s] in [its] suit against El Paso Natural Gas for gas sold and delivered," payment of which was contingent upon TransAmerican prevailing on this claim in the El Paso Litigation; and (c) $2,170,762, representing the balance of the accrued but unpaid royalties, payment of which was to be made in installments over a three-year period.
(3) Finkelstein received an additional 1½% overriding royalty interest equal to a.015 "net revenue interest" in TransAmerican's lease interests in and certain agreements relating to the La Perla Ranch minerals.
(4) Finkelstein received the other assignments of overriding royalty interests due him under the parties' agreements.
The 1987 Settlement Agreement further provided that "[a]ll amounts due to [Finkelstein] after the date of this agreement shall be paid in the ordinary course." Finally, the agreement specifically provided that "[i]t is expressly agreed by [TransAmerican and Finkelstein] that the Assignment of Overriding Royalty Interest attached hereto shall not reduce, diminish or impair in any way the Prior Overriding Royalty Interests or the overriding royalty interests assigned and conveyed to [Finkelstein] pursuant to the Assignments of Overriding Royalty Interests...."
Judgment and Settlement in the El Paso Litigation
In August 1987, Finkelstein sought to intervene in the El Paso Litigation. TransAmerican objected to Finkelstein's intervention, however, and the trial court struck Finkelstein's plea. At the time, TransAmerican assured Finkelstein that it would protect his interests.
In September 1987, the trial court ruled that TransAmerican's take-or-pay damages for the years 1985 and 1986 were approximately $67 million. Thereafter, the jury found that TransAmerican's repudiation damages for the remainder of the contract term were approximately $536 million. The jury's finding for repudiation damages corresponded exactly with the calculations of TransAmerican's expert, Dr. Leitzinger, and represented the present value of the difference between the EPNG Gas Purchase Agreement price and the February 1987 spot market price for TransAmerican and Finkelstein's anticipated production. TransAmerican's damages for El Paso's other breaches, including the Pre-1985 Withheld claim, totaled over $5 million. The trial court rendered judgment in accordance with its findings, as well as those of the jury, for $621,127,599.50, together with attorney's fees, postjudgment interest, and costs.
Shortly after judgment in the El Paso Litigation, the U.S. Supreme Court handed down its decision in Federal Energy Regulatory Commission v. Martin Exploration Management Co., 486 U.S. 204, 108 S.Ct. 1765, 100 L.Ed.2d 238 (1988). The parties and the trial court interpreted Martin as affecting the maximum lawful price TransAmerican could charge El Paso for certain gas; as a result, TransAmerican agreed to a remittitur of $140,800,215.76. This remittitur, which was specifically allocated by TransAmerican to the various elements of its damages, reduced TransAmerican's take-or-pay damages, together with prejudgment interest, to $64,324,467.84; TransAmerican's repudiation damages were reduced to $412,451,582. After the remittitur, the judgment rendered against El Paso totaled $480,309,341.34, together with attorney's fees, costs, and postjudgment interest.
Not surprisingly, El Paso appealed. Concerned about its chances, however, El Paso also approached Stanley to settle the case. After brief negotiations, a settlement agreement was reached. Under the El Paso Settlement, which was effective January 1, 1990: *604 (1) the EPNG Gas Purchase Agreement, the 1975 Farmout Agreement, and all other agreements between El Paso and TransAmerican were canceled; (2) El Paso paid TransAmerican $302 million in cash; and (3) El Paso conveyed to TransAmerican its entire interest in the La Perla Ranch minerals, which TransAmerican valued on its books at $58 million. In exchange TransAmerican released not only its own claims but also the claims of its "assigns." In this manner, the El Paso Settlement "washed out" or terminated Finkelstein's interest in the La Perla Ranch minerals. See Medallion Oil Co. v. TransAmerican Natural Gas Corp. (In re GHR Energy Corp.), 972 F.2d 96 (5th Cir. 1992), cert. denied, 507 U.S. 1042, 113 S.Ct. 1879, 123 L.Ed.2d 497 (1993).
Finkelstein v. TransAmerican
After TransAmerican refused to pay Finkelstein any part of the El Paso Settlement, Finkelstein sued TransAmerican for unjust enrichment and breach of its duty to reasonably market. Finkelstein sought to recover his royalty interest on the amount paid by El Paso to settle TransAmerican's repudiation claim and allocable to his overriding royalty interest for the period October 1, 1987 through December 31, 1989.[2] In light of this court's decision in Bruni I, Finkelstein has expressly and repeatedly disclaimed any interest in TransAmerican's take-or-pay damages. TransAmerican, on the other hand, has consistently maintained that Bruni I precludes any recovery by Finkelstein under any theory.
The trial court rejected TransAmerican's arguments and submitted the case to the jury on Finkelstein's marketing and unjust enrichment theories. The jury returned a verdict in Finkelstein's favor on both theories, and the trial court rendered judgment on the jury's verdict. TransAmerican appealed.
TRANSAMERICAN'S AFFIRMATIVE DEFENSES
In its third point of error, TransAmerican argues that Finkelstein's claim is barred by the accord and satisfaction reflected in the 1987 Settlement Agreement and by res judicata. Since these arguments, if successful, would be dispositive of this appeal, we consider them first.
Accord and Satisfaction
In Points of Error 3-A and 3-B, TransAmerican argues that, as a matter of law and the undisputed facts, Finkelstein's claim is barred by accord and satisfaction. Alternatively, TransAmerican argues that the jury's contrary finding is against the great weight and preponderance of the evidence. We review TransAmerican's sufficiency complaints here and elsewhere in this opinion under the well-established rules for measuring the legal and factual sufficiency of the evidence. See Robert W. Calvert, "No Evidence" and "Insufficient Evidence" Points of Error, 38 Texas L. Rev. 361, 362-68 (1960).[3]
The affirmative defense of accord and satisfaction "rests upon a new contract, express or implied, in which the parties agree to the discharge of the existing obligation by means of the lesser payment tendered and accepted." Jenkins v. Henry C. Beck Co., 449 S.W.2d 454, 455 (Tex.1969). To prove that a particular agreement rises to the level of an accord and satisfaction, "the evidence must establish an assent of the parties to an agreement that the amount paid by the debtor to the creditor was in full satisfaction of the entire claim." Id. The evidence in this case falls far short of establishing such an agreement and, in fact, establishes the contrary.
*605 TransAmerican's claim preclusion arguments rest upon the following sentence in the 1987 Settlement Agreement:
Another $367,000 is due under Adversary Proceeding No. 85-0946-H2-5 if the Debtors prevail in their suit against El Paso Natural Gas for gas sold and delivered, and shall be paid to [Finkelstein] upon receipt by the Debtors of satisfaction of such an award from El Paso.
Plucking this sentence out of contextand disregarding the phrase "sold and delivered"lends at least some credence to TransAmerican's accord and satisfaction argument. However, when read in context, the plain and unambiguous terms of the 1987 Settlement Agreement establish that the monetary aspects of the agreement settled only Finkelstein's claims for royalties that accrued and were unpaid prior to April 1987; they did not purport to settle Finkelstein's claim to royalties that accrued during the period here at issue, i.e., October 1, 1987 through December 31, 1989. As further explained by Finkelstein and his expert witness, Donato Ramos, the $367,000 paid to settle Adversary Proceeding No. 85-0946-H2-5 reflected the settlement of Finkelstein's claim against TransAmerican for his royalty share of the Pre-1985 Withheld claim asserted by TransAmerican against El Paso. See Finkelstein v. TransAmerican Natural Gas Corp. (In re TransAmerican Natural Gas Corp.), 127 B.R. 800, 803 (S.D.Tex.1991) (TransAmerican's "contention" is "erroneous. The $367,000 was for gas previously produced from La Perla and for which royalties were owing. The 1987 settlement did not involve royalties to future production.").[4]
The only evidence that supports any accord and satisfaction argument came from Craig Shephard, TransAmerican's former President and Chief Operating Officer. Shephard testified that Finkelstein settled his claim in this litigation when he accepted the additional 1½% overriding royalty in the 1987 Settlement Agreement and released his claims against TransAmerican. Finkelstein, on the other hand, testified that he received the additional 1½% overriding royalty to settle his claim arising out of TransAmerican's rejection of his gas purchase agreement, and nothing in the 1987 Settlement Agreement was intended to settle his claim to a royalty interest in TransAmerican's repudiation damages. In light of this conflicting testimony, the trial court erred on the side of caution and submitted this issue to the jury. The jury found that Finkelstein did not "accept the benefits of the Settlement of April 23, 1987, in satisfaction of all claims he would have arising out of the controversy between El Paso and TransAmerican." The jury's answer is amply supported by the unambiguous terms of the 1987 Settlement Agreement and the evidence. TransAmerican's Points of Error 3-A and 3-B are therefore overruled.
Res Judicata and 11 U.S.C. § 1141
TransAmerican next argues under Points of Error 3-C and 3-D that Finkelstein's claim is barred by res judicata, specifically section 1141 of the Bankruptcy Code. According to TransAmerican, section 1141 bars "all issues that could have been raised in connection with ... confirmation" of a plan of reorganization. Finkelstein counters that his claim is not barred because it arose after the date TransAmerican's reorganization plan was confirmed.
The res judicata effect of a judgment rendered by a federal court is governed by federal res judicata law. E.g., Eagle Properties, Ltd. v. Scharbauer, 807 S.W.2d 714, 718 (Tex.1990). For bankruptcy plan confirmations, the federal law of res judicata is contained in section 1141 of the Bankruptcy Code. Section 1141(d)(1)(A) provides in pertinent part that "the confirmation of a plan... discharges the debtor from any debt that arose before the date of such confirmation." 11 U.S.C. § 1141(d)(1)(A) (West 1993).
*606 The bankruptcy court confirmed TransAmerican's plan of reorganization on September 4, 1987. In re TransAmerican Natural Gas Corp., 127 B.R. at 802. Finkelstein's claim in this litigation arose out of gas produced and sold between October 1, 1987 and December 31, 1989 and settlement monies paid to TransAmerican in early 1990. We therefore agree with the conclusion of the federal district court that Finkelstein's claim arose after the date of confirmation and is not, therefore, barred by section 1141. See id. at 803. TransAmerican's Points of Error 3-C and 3-D are overruled.
BREACH OF DUTY TO MARKET
In Points of Error 2-A and 2-B, TransAmerican argues that, as a matter of law and the weight of the evidence, the trial court erred in rendering judgment against TransAmerican on the jury's finding that TransAmerican breached its duty to reasonably market Finkelstein's gas "because an overriding royalty interest owner is not entitled to share in the proceeds from a take-or-pay settlement." Because these points of error are dispositive of the liability aspect of this appeal, we consider them next.
To explain the nature of the parties' disagreement, we believe it is instructive to first detail the extent to which the parties agree on the relevant law and the material facts. First, as to the relevant law, the parties agree that actual production triggers a duty to reasonably market. Cabot Corp. v. Brown, 754 S.W.2d 104, 106 (Tex.1987). The parties also agree that the duty to reasonably market includes a duty to "obtain the best price reasonably possible." Id. Finally, TransAmerican's former President and Chief Operating Officer, Craig Shephard, agreed that one aspect of TransAmerican's duty to obtain the best price required it to compute Finkelstein's overriding royalty on the sale proceeds actually received by TransAmerican; TransAmerican could not sell Finkelstein's gas for $3 and compute his royalty on $2. If TransAmerican breached this aspect of its duty to market, Shephard conceded that Finkelstein would be entitled to sue and collect the withheld portion.[5]
The material facts are likewise undisputed. TransAmerican's repudiation damages in the El Paso Litigation were based upon anticipated production from the date of repudiation through the expiration of the EPNG Gas Purchase Agreement in 1996, and this anticipated production included Finkelstein's gas. It is also undisputed that, between October 1, 1987 and December 31, 1989, TransAmerican actually produced and sold to third parties, at the spot market price, 84 billion cubic feet of gas from the La Perla Ranch.
The point at which the parties diverge is whether repudiation damages, when based upon anticipated production that includes the royalty owner's gas, increase the price paid for gas actually produced and sold on the spot market during the period of repudiation and, if so, whether Finkelstein is entitled to a royalty on the increase. TransAmerican argues that Bruni I is dispositive of both issues and precludes Finkelstein's claim. Finkelstein, on the other hand, argues that Bruni I is distinguishable. To resolve this disagreement, *607 we must first consider the extent of the holding in Bruni I.
Bruni I
The facts in Bruni I are relatively straightforward. The Bruni Mineral Trust entered into an oil and gas lease with Killam and Hurd, who entered into a take-or-pay gas purchase agreement with United Texas Transmission Company. Bruni I, 806 S.W.2d at 265. United Texas breached its take-or-pay obligation, and Killam sued. Id. Killam's suit was settled for $4 million. Id. Hurd, without filing a lawsuit, settled his take-or-pay claim against United Texas for $2.8 million. Id. The Trust sued Killam and Hurd for a share of the settlement proceeds on theories of breach of the duty to market, breach of the duty of good faith and fair dealing, conversion, fraud, royalty, unjust enrichment, and equitable reformation. Id. Faced with competing motions for summary judgment, the trial court granted the Trust's motion on, and severed, its royalty claim, thus enabling an appeal. See id. at 265-266, 266 n. 2.
This court reversed, holding "as a matter of law, that the Trust is not entitled to royalties on the settlement proceeds arising from the take-or-pay provision of the contract between Killam, Hurd, and [United Texas]." Id. at 268. The basis for this holding was Exxon Corp. v. Middleton, 613 S.W.2d 240, 244 (Tex.1981), which defined "production" as "actual physical extraction of the mineral from the land." The court reasoned that the Trust's "lease entitled the Trust to royalty payments on gas actually produced." Id. at 267 (emphasis in original). Accordingly, since take-or-pay "payments are made when gas is not produced," they "bear no royalty." Id. at 268 (emphasis in original).
The court observed that the Trust's suit was not based on gas sold by Killam and Hurd on the spot market. Id. at 267. It would appear, therefore, that this court's holding in Bruni I is limited to a royalty owner's suit for take-or-pay payments based upon non-production. In this respect, however, the opinion appears to be at odds with itself because the court also recognized that "[t]he Trust contends the settlement payments received by Killam and Hurd from [United Texas] might have included underpayment for gas sold on the spot market." Id. That is precisely Finkelstein's argument in this case; he seeks to recover for what he views as TransAmerican's underpayment for gas produced and sold on the spot market in light of the El Paso Settlement.
To resolve the apparent conflict in Bruni I, we read the opinion as a whole, and in light of the court's later opinion in Bruni II, which indicates that the nonrecoupable payment argument was not presented in Bruni I. See Hurd Enterprises, Ltd. v. Bruni, 828 S.W.2d 101, 107-08 n. 8 (Tex.App.San Antonio 1992, writ denied) (recognizing "cogent arguments concerning the royalty owner's interest in take-or-pay settlement funds, especially when, as here, the settlement terminates the purchaser's recoupment rights" but noting that "[t]he recoupment issue ... was not submitted in the case before us").[6] Considering these factors, we agree with TransAmerican that "[p]roduction is key"; Bruni I "turn[s] on ... production." We therefore hold that Bruni I does not control in this case, in which the fact of production is undisputed and the nonrecoupable payment argument is squarely presented.[7]
*608 Royalty on Repudiation Damages
Finkelstein distinguishes Bruni I and the rule of law upon which it rests by the nature of the damages soughtwhile the Bruni Mineral Trust sought a share of historical take-or-pay damages for which there was no production, Finkelstein seeks a share of TransAmerican's repudiation damages attributable to a period in which there was actual production. In its reply brief, TransAmerican argues that this is a distinction without a difference because it rests upon the fortuitous fact of whether the seller files suit each year for the take-or-pay damages arising out of the breach of the take-or-pay provision the preceding year or, alternatively, sues for accrued take-or-pay damages and anticipatory repudiation of the take-or-pay contract. In either case, TransAmerican argues, the damages are take-or-pay damages, in which the royalty owner may not share under Bruni I.
We agree with TransAmerican that the amount of take-or-pay damages and repudiation damages will vary depending upon the date of repudiation. If, for instance, El Paso had not repudiated the EPNG Gas Purchase Agreement until 1990, TransAmerican's take-or-pay damages would have been greater, while its repudiation damages would have been less, than they in fact were. We disagree, however, that the distinction is immaterial. We believe instead that it is TransAmerican's argument that rests upon a flawed premise, i.e., there is no material distinction between take-or-pay and repudiation, and recoupable and nonrecoupable, payments.
As explained by Finkelstein's damages expert, Ricardo Garza, there is a significant factual distinction between take-or-pay and repudiation damagestake-or-pay damages are based solely upon the contract price, while repudiation damages are based upon the difference between the contract price and the spot market price. This factual difference highlights what we believe is the critical legal distinction between take-or-pay and repudiation damages.
When a buyer breaches its take-or-pay obligation and compensates for its breach with take-or-pay damages, the gas remains committed to the contract and stays in the ground. Bruni I, 806 S.W.2d at 268. A royalty interest dependent upon production is therefore not owed at the time the take-or-pay payment is made. See id. Rather, royalty is owed when the buyer actually takes the gas pursuant to its contractual make up right, and its account is credited with the corresponding amount of the take-or-pay damages. See id.[8] But if the buyer repudiates the contract, and the seller mitigates its damages by producing and selling gas to third parties at the spot market price, the gas is gone. If royalty is not owed on the seller's repudiation damages, the royalty owner will never recover royalty on the price effectively received for the gas produced and sold on the spot market during the period of repudiation. Repudiation damages are thus in the nature of a nonrecoupable "buyout." Therefore, if a royalty owner is to receive a royalty on the full price effectively paid for the gas produced and sold during the repudiation period, the royalty must be calculated *609 not only on the spot market price but also to some extent on the repudiation damages. Cf. Klein v. Jones, 980 F.2d 521, 531-32 (8th Cir.1992), appeal after remand sub nom. Klein v. Arkoma Prod. Co., 73 F.3d 779, 787-88 (8th Cir.1996) (applying Arkansas law); Frey v. Amoco Prod. Co., 603 So.2d 166, 179 (La.1992); see also ERNEST E. SMITH & JACQUELINE LANGE WEAVER, 1 TEXAS LAW OF OIL AND GAS § 4.6(E)(6)(b), at 215-1 to 215-4 (1995) (noting that several commentators distinguish settlements from routine take-or-pay payments); Jerome C. Muys et al., Report of the Committee on Public Lands, 15 Energy L.J. 219, 230 (1994) (describing tentative conclusions of Minerals Management Service regarding portions of gas contract settlements payable as royalty); Kirk J. Bily, Comment, Royalty on Take-or-Pay Payments and Related Consideration Accruing to Producers, 27 HOUS. L. REV. 105, 132-35 (1990) (claiming that lost royalty is unfair and urging courts to distinguish nonrecoupable settlements from take-or-pay payments).
We recognize that the federal courts disagree on whether nonrecoupable settlements are "gross proceeds" such that they bear royalty under federal regulations. Compare Independent Petroleum Ass'n v. Babbitt, Civ. A. Nos. 93-2544(RCL) & 94-2123(RCL), 1995 WL 431305, slip op. at *9-11 (D.D.C. June 14, 1995) with In re Century Offshore Mgt. Corp., 185 B.R. 734, 740 (E.D.Ky.1995). In the circumstances presented, however, we believe that, once El Paso's make-up right was terminated by cancellation of the EPNG Gas Purchase Agreement, the settlement proceeds relating to TransAmerican's repudiation damages "had the practical effect of increasing the price paid for gas actually produced." Ernest E. Smith, Royalty Issues: Take-or-Pay Claims and Division Orders, 24 Tulsa L.J. 509, 518 (1989). This is particularly true in this case since Finkelstein's gas was included in TransAmerican's repudiation damages. "To give that amount to [TransAmerican] would let [it] benefit from a quantity of gas for which [it] was an agent." Ernest E. Smith, Relationship Between Co-Owners in Marketing Natural Gas, 1987 INST. ON NATURAL GAS MKTG. 11-8 (Rocky Mountain Mineral Law Foundation).
For the reasons discussed above, we believe TransAmerican effectively received two prices for the gas produced and sold during the period October 1, 1987 and December 31, 1989, but it paid Finkelstein royalty on only one of these prices. First, TransAmerican received the spot market price for the gas actually produced during this time period. As to this price, Finkelstein received his royalty interest. Second, in its settlement with El Paso, TransAmerican received some portion of the difference between the contract price and the spot market price on the gas it anticipated it would produce during this same time period. But as to this price, TransAmerican did not pay Finkelstein royalty. Accordingly, we agree with Finkelstein that "[t]his action amounts to TransAmerican obtaining the best price for its gas, but not obtaining the best price for Finkelstein's gas." We therefore hold that the applicable law and evidence supports the jury's finding that TransAmerican breached its duty to reasonably market Finkelstein's gas by obtaining a better price for its gas than it obtained for Finkelstein's. See Bruce M. Kramer, Royalty Obligations Under the GunThe Effect of Take-or-Pay Clauses on the Duty to Make Royalty Payments, 39 INST. ON OIL & GAS L. & TAX'N § 5.06, at 5-30 to 5-33 (1988); John S. Lowe, Current Lease and Royalty Problems in the Gas Industry, 23 TULSA L.J. 547, 563 (1988) (both relying upon Amoco Production Co. v. First Baptist Church of Pyote, 579 S.W.2d 280 (Tex.Civ. App.-El Paso 1979), writ ref'd n.r.e. per curiam, 611 S.W.2d 610 (Tex.1980)).
Contrary to TransAmerican's "settled jurisprudence" and policy arguments, our holding resolves an issue not previously decided by this court; it effectuates the terms of the parties' agreements, which provide for royalties on TransAmerican's "net revenue interest"; it gives meaning to TransAmerican's duties to obtain the best price and pay royalty on the price actually obtained; and it is consistent with our decision in Bruni I and in line with dicta in Bruni II, as well as the views expressed by several courts and commentators regarding nonrecoupable take-or-pay *610 settlements. Accordingly, we overrule TransAmerican's Points of Error 2-A and 2-B.
Damages
In Points of Error 2-C and 2-D, TransAmerican complains that the jury's damages finding is not supported by legally and factually sufficient evidence. In its argument, however, TransAmerican does no more than suggest that Finkelstein's damages are difficult to ascertain because, as Stanley asserted at trial, the El Paso Settlement was comprehensive, and TransAmerican did not allocate any part of the settlement proceeds to any particular element of damages.
"A party who breaks his contract cannot escape liability merely because it is impossible to state or prove a perfect measure of damages." Southwest Battery Corp. v. Owen, 131 Tex. 423, 115 S.W.2d 1097, 1099 (1938). Rather, courts distinguish between uncertainty as to the fact of damages, which may preclude recovery, and uncertainty as to the amount of damages, which "will not defeat recovery." Id. When the fact of damages is clear, the plaintiff is required to prove his damages with only "reasonable certainty." E.g., Bildon Farms, Inc. v. Ward County Water Improvement Dist., 415 S.W.2d 890, 897 (Tex.1967). This rule of "reasonable certainty" is particularly applicable when it is the wrongdoer's conduct that precludes "precise computation of the extent of the injury." Kestenbaum v. Falstaff Brewing Corp., 514 F.2d 690, 698 (5th Cir. 1975), cert. denied, 424 U.S. 943, 96 S.Ct. 1412, 47 L.Ed.2d 349 (1976); cf. Humble Oil & Ref. Co. v. West, 508 S.W.2d 812, 818 (Tex.1974) (under confusion of goods theory, party responsible for commingling goods bears burden of establishing aliquot shares with reasonable certainty).
Finkelstein's damages expert, Ricardo Garza, summarized his method of calculating Finkelstein's damages in his written report:
The total value received by [TransAmerican] in January 1990 from El Paso consisted of the following: (1) the value of the El Paso mineral interest was assumed to be equal to $58.0 million; and (2) the additional cash settlement received by El Paso was assumed to be equal to $302.0 million. The following allocation method was used:
Full credit was given to the damages attributable to causes other than repudiation or breach of the 1981 Gas Purchase Agreement, i.e., $67,857,759 of the total damages of $480,309,341 were first charged to the total funds received at settlement, $360.0 million. The remainder was then proportionately allocated in accordance with the judgement [sic] after remittitur attributable to repudiation or breach of the 1981 Gas Purchase Agreement.
The portion attributable to Finkelstein's [overriding royalty interests] for the period 10/1/87 through 12/31/89 of the value received by [TransAmerican] on 1/30/90 under the assumption described above is $8,247,021 as shown in Column (17) of Page 1 of 3 and Page 2 of 3 of Table 3.[9]
In computing Finkelstein's damages, Garza thus credited TransAmerican with 100% of the take-or-pay damages reflected in the post-remittitur judgment against El Paso, and he used exactly the same method of allocation that Dr. Leitzinger used to calculate TransAmerican's repudiation damages. TransAmerican cross-examined Garza, but it did not introduce any controverting damages evidence.
Under these circumstances, we hold that Finkelstein proved his damages with reasonable certainty, and the evidence is legally and factually sufficient to support the jury's damage finding. We therefore overrule TransAmerican's Points of Error 2-C and 2-D.
UNJUST ENRICHMENT AND ATTORNEY'S FEES
In Points of Error 1-A through 1-D, TransAmerican argues that the judgment cannot be supported by Finkelstein's unjust enrichment theory. In Points of Error 4-A and 4-B, TransAmerican argues that Finkelstein cannot recover attorney's fees for unjust enrichment and cannot, in any event, recover attorney's fees absent an underlying *611 recovery. Because we have held that Finkelstein is entitled to recover for TransAmerican's breach of its contractual duty to reasonably market, these points of error are not dispositive of TransAmerican's appeal, and we do not address them. See Tex.R.App. P. 90(a).
CONCLUSION
TransAmerican effectively received two prices for the La Perla Ranch gas it produced and sold on the spot market between October 1, 1987 and December 31, 1989, but it paid Finkelstein his overriding royalty only on the spot market price. This failure is a breach of TransAmerican's duty to reasonably market Finkelstein's gas. Because Finkelstein proved his damages arising out of this breach with reasonable certainty, the judgment in his favor is affirmed.
OPINION ON DENIAL OF MOTION FOR REHEARING
RICKHOFF, Justice.
While one could uncover authority for the majority's en banc decision (or indeed almost any result in this complex case), the majority's decision is a most tortured climb over true equity, the express language of the lease, the trial court's faultless rulings and submissions, the admissible evidence and the jury's verdict. Then, at the summit, other courts' reliance on and praise for the original panel's decision comes into view. See, e.g. Williamson v. Elf Aquitaine, Inc., 925 F.Supp. 1163, 1169-70 (N.D.Miss.1996); Neel v. HECI Exploration Co., 1996 WL 426066, at * 8-9 (Tex.App.-Austin July 31, 1996, n.w.h.).
Perhaps most notable among these subsequent developments is Williamson v. Elf Aquitaine, Inc. In that case, the pipeline settled with the producer/lessee for a single lump sum payment of $6,578,000.00 in exchange for the lessee's agreement to waive any past claims and to decrease the sales price for any future gas purchases. 925 F.Supp. at 1166. In addition, the pipeline's make-up rights were eliminated. Id. In reliance on the original panel opinion in the instant case, the court held that "a court's finding that nonrecoupable settlements are indeed royalty-bearing, based on the fact that production has occurred, is consistent with the Texas court's literal interpretations of the lease language." Id.
Interestingly, although Chief Judge Senter noted in his opinion in Williamson that the issue was a matter of first impression in Mississippi, he praised the analysis of the original panel decision in the instant case and acknowledged that the Mississippi Supreme Court's general policy of adopting Texas law in cases involving previously unaddressed oil and gas issues would be followed. Id. at 1167, 1169-70. Evidently, our en banc reversal will distort and disturb the equities in this area of the law beyond this one case and beyond our borders.
In Finkelstein's Motion for Rehearing, he states, simply, that either the language of the lease permits him to recover the royalties, or if the language does not so permit, the issue was properly submitted to the jury under the unjust enrichment theory. Without reason, the majority wrests the case from the jury and renders its own judgment. That judgment should be reheard and reconsidered in light of the approval voiced for the original panel opinion in subsequent cases. See, e.g. Williamson v. Elf Aquitaine, Inc., 925 F.Supp. at 1169-70; Neel v. HECI Exploration Co., 1996 WL 426066, at *8-9.
NOTES
[1] An overriding royalty is an interest carved out of, and constituting a part of, the working interest created by an oil and gas lease. Gruss v. Cummins, 329 S.W.2d 496, 501 (Tex.Civ.App. El Paso 1959, writ ref'd r.n.e.).
[2] In a farmout agreement, the owner of the lease assigns the lease or some portion of it to another operator who is willing to drill the tract. Mengden v. Peninsula Prod. Co., 544 S.W.2d 643, 645 n. 1 (Tex.1976) (quoting WILLIAMS AND MEYERS, OIL AND GAS LAW, MANUAL OF TERMS 167 (1971)).
[3] When gas is made up, there is no double payment. Randy King, Note, Royalty Owner Claims to Take-or-Pay Payments Under the Implied Covenant to Market and the Duty of Good Faith and Fair Dealing, 33 S. TEX. L. REV. 801, 826 (1992). The lessor receives royalty on the total funds received by the producer (except for the time-value of the take-or-pay payments). Id.
[4] Citing Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336, 352-53, 96 S.Ct. 584, 594, 46 L.Ed.2d 542, 555 (1976), and Missouri Pac. R.R. v. Brown, 862 S.W.2d 636, 639 (Tex.App.Tyler 1993, writ denied), TransAmerican argues that the federal district court's remand order does not preclude its accord and satisfaction argument because the order is neither final nor appealable. We do not decide this issue because the evidence in this case establishes the factual inaccuracy of TransAmerican's position.
[5] Even given the broad "net interest" language, this production requirement is consistent with the requirement that royalty be calculated after production, whether based on "market value" or "amount realized." See Exxon Corp. v. Middleton, 613 S.W.2d 240, 243 (Tex.1981).
[6] For examples of such provisions, see John S. Lowe, Defining the Royalty Obligation, 49 S.M.U. L. REV. 223, 238 n. 98 (1996).
[7] Commentators have also described Bruni I as a proceeds dispute. See, e.g., Michael Pearson & Richard D. Watt, To Share or Not to Share: Royalty Obligations Arising out of Take-or-Pay or Similar Gas Contract Litigation, 42 INST. ON OIL & GAS L. & TAX'N §§ 14.03[2][d], 14.03[3][b][ii] (1991).
[8] As TransAmerican aptly queried, "For if prices had gone up instead of down, would Finkelstein want to share in our losses?"
[9] On rehearing, we received amicus curiae briefs from James N. Castleberry, Jr., Edwin P. Horner, John S. Lowe, and Texas Mid-Continent Oil & Gas Association.
[1] El Paso owned 56.25% of the minerals underlying 17,000 acres, and 50% of the minerals underlying the remaining 3,000 acres, of the La Perla Ranch.
[2] October 1, 1987 was the date on which TransAmerican again began paying royalty to Finkelstein "in the ordinary course" under the 1987 Settlement Agreement. December 31, 1989 was the last day Finkelstein owned a royalty interest in the La Perla Ranch minerals.
[3] We recognize TransAmerican's attempt to characterize the accord and satisfaction issue as a question of law, which would be reviewed de novo. See TransAmerican's Opening Brief at 36 ("[T]he parties do not appear to be in any meaningful disagreement over the underlying facts. The only disagreement is over the law."). But the parties' briefs and the nature of the question conclusively establish that the parties' disagreement in this respect is over the interpretation of the 1987 Settlement Agreement, not a disagreement over the law of accord and satisfaction.
[4] Citing Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336, 352-53, 96 S.Ct. 584, 594, 46 L.Ed.2d 542, 555 (1976), and Missouri Pac. R.R. v. Brown, 862 S.W.2d 636, 639 (Tex.App.Tyler 1993, writ denied), TransAmerican argues that the federal district court's remand order does not preclude its accord and satisfaction argument because the order is neither final nor appealable. We do not decide this issue because the evidence in this case establishes the factual inaccuracy of TransAmerican's position.
[5] In this respect, it should be remembered that the 1974 Agreement, as well as the 1987 Settlement Agreement, provided that Finkelstein's overriding royalty interests were fractional parts of TransAmerican's "net revenue interest." The terms of the additional 1½% overriding royalty Finkelstein received in the 1987 Settlement Agreement went even further; Finkelstein received a royalty interest not only in the gas "produced and saved from or attributed to" TransAmerican's interests but also on "all (i) gas leases, oil and gas leases, oil, gas and mineral leases ..., (ii) development agreements, joint development agreements, farmout agreements, farmin agreements, contracts to lease, net revenue interest agreements, and, without exception, all other agreements which have as their purpose or will involve or be concerned with the exploration, drilling and/or production of oil, gas and/or other minerals ... and (iii) all other interests in land, including, but not limited to, fee mineral interests, royalty interests, overriding royalty interests, net profits interests, production payments and other similar interests in production of oil, gas and/or other minerals...." The terms of these royalty instruments govern TransAmerican's duty to reasonably market. See Amoco Prod. Co. v. First Baptist Church of Pyote, 579 S.W.2d 280 (Tex.Civ.App.El Paso 1979), writ ref'd n.r.e. per curiam, 611 S.W.2d 610 (Tex.1980) (distinguishing "market value" and "proceeds" royalty provisions).
[6] In light of the importance of this issue, we have also reviewed the briefs in Bruni I. In our view, while the issue of nonrecoupable payments was raised in the Trust's brief, it was eclipsed by Killam and the amici's forceful arguments in reply, including that the trial court's summary judgment ruling was based upon a pure take-or-pay payment, divorced from any production. Indeed, the thrust of Killam and the amici's briefs was the recoupable nature of pure take-or-pay payments. As stated in TransAmerican's amicus brief in Bruni I: "Royalty owners are not hurt by a take-or-pay settlement. They still own the gas and will receive their royalty when that gas is eventually produced and soldjust as provided in the lease agreement." We therefore adhere to the court's statement in Bruni II that the recoupment issue was not raised in the Bruni cases.
[7] We also do not believe the other cases relied upon by TransAmerican are dispositive. In Middleton, the issue was whether a sale that was in the field but not on the leased premises was a sale "off premises" such that royalty was to be calculated on the market value of the gas, rather than the amount realized. Middleton, 613 S.W.2d at 242. The issue in Monsanto Co. v. Tyrrell, 537 S.W.2d 135, 136 (Tex.Civ.App. Houston [14th Dist.] 1976, writ ref'd n.r.e.), was whether an advance payment for future production was "recovery from production." The court held that it was not because, at the time the payment was made, there had been no actual production. Id. at 137; see also Mandell v. Hamman Oil & Ref. Co., 822 S.W.2d 153, 165 (Tex. App.Houston [1st Dist.] 1991, writ denied) ("A take or pay payment that comes before gas is actually produced and taken cannot be a payment for the sale of gas."). In this case, on the other hand, it is undisputed that the payment came after actual production and sale on the spot market, and that actual production represented some part of the anticipated production upon which the payment was based.
[8] TransAmerican correctly notes that Bruni I followed the majority rule that a royalty owner is not entitled to a royalty on take-or-pay damages until the gas is actually taken. See, e.g., Diamond Shamrock Exploration Co. v. Hodel, 853 F.2d 1159, 1166-67 (5th Cir.1988) (applying federal law); Mandell, 822 S.W.2d at 165; State v. Pennzoil Co., 752 P.2d 975, 979-80 (Wyo.1988); but see Frey v. Amoco Prod. Co., 603 So.2d 166, 180-81 (La.1992) (under Louisiana law, and in light of royalty provision there at issue, royalty due on both recoupable and nonrecoupable take-or-pay payments).
[9] Words in all capitals changed to upper and lower case for ease of reading. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1427037/ | 685 P.2d 42 (1984)
ACTION ADS, INC., a Wyoming Corporation; Robert Shriner, and Ernestine Shriner, Appellants (Plaintiffs),
v.
GREAT AMERICAN INSURANCE COMPANY, Appellee (Defendant).
No. 84-18.
Supreme Court of Wyoming.
August 8, 1984.
E. James Burke of Hanes, Gage & Burke, P.C., Cheyenne, for appellants.
Dennis M. Hand of Hand, Hand & Hand, P.C., Casper, for appellee.
Before ROONEY, C.J., and THOMAS, ROSE, BROWN and CARDINE, JJ.
ROSE, Justice.
This appeal concerns the coverage afforded by the general-liability insurance provision of a "Business Protector Policy" issued by appellee Great American Insurance Company to appellant Action Ads, Inc. *43 The district court determined that coverage did not extend to the insured's liability arising from breach of contract and awarded summary judgment in favor of the insurance company.
We will affirm.
FACTS
Appellant, Action Ads, and one of its salesmen, Kenneth Judes, entered into an employment contract which required appellant to provide a medical insurance program for Judes. Action Ads failed to furnish any insurance coverage. When Judes sustained serious injuries in a gas explosion in a mobile home, he brought suit against his employer for damages resulting from breach of the obligation to obtain insurance under the employment contract. Judes' favorable judgment in the district court was reversed by this court on the ground that the agreement to provide medical insurance was not sufficiently definite and certain to constitute an enforceable contract. Action Ads, Inc. v. Judes, Wyo., 671 P.2d 309 (1983).
Shortly after receiving Judes' complaint, Action Ads notified its liability insurer, appellee Great American Insurance Company, and requested that Great American defend the action and pay any resulting judgment in favor of Judes. Action Ads relied on the coverage clause of the comprehensive general-liability insurance issued by Great American as part of its "Business Protector Policy":
"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, even if any of the allegations of the suit are groundless, false or fraudulent * * *." (Emphasis added.)
The policy defines "occurrence" as
"* * * an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured."
Great American refused to defend Action Ads, maintaining that the liability policy did not cover damages arising from breach of contract.
Action Ads, its president and its vice-president initiated this action against Great American prior to this court's decision in Action Ads, Inc. v. Judes, supra. After our reversal of the judgment against appellants in that suit, they continued to maintain their claim against Great American for attorney's fees, injury to business reputation, mental anguish and suffering of the corporate officers, and punitive damages.
Both parties filed motions for summary judgment. The district court granted Great American's motion, ruling that the comprehensive general-liability policy extended to liability imposed by law for torts and not to damages for breach of contract. The trial court held that Great American had no duty to defend the suit brought by Action Ads' former employee, since
"* * * [t]he liability of Action Ads was `because of' a breach of contract despite the fact that the amount of damages would necessarily be determined by medical expenses related to a bodily injury."
Appellants ask us to review the single issue that determined this case before the trial court: Whether the liability policy encompassed Action Ads' potential liability for failure to provide medical insurance under the terms of its employment contract with Judes. Appellants take the position that the language in the coverage provision is sufficiently broad to include an insured's liability arising from breach of contract.
SCOPE OF LIABILITY COVERAGE
Courts universally have interpreted liability-coverage provisions, identical to that found in appellants' policy, as referring to *44 liability sounding in tort, not in contract. International Surplus Lines Ins. Co. v. Devonshire Coverage Corp., 93 Cal. App.3d 601, 155 Cal. Rptr. 870 (1979), is a representative case. There Devonshire, a general-insurance agent, had issued a $500,000 fire-insurance policy on a clubhouse. Under a separate contract with the insured, Devonshire had agreed either to obtain additional insurance or to indemnify the insured for damages in excess of $500,000. Devonshire failed to obtain the extra insurance. The clubhouse burned, and the insured obtained a judgment against Devonshire for more than $800,000. Devonshire sought to hold its liability-insurance carrier responsible for that judgment. In ruling for the insurer, the California Court of Appeals interpreted a comprehensive-liability provision, identical to the coverage provision in the present case, as extending to liability based only on tort claims:
"The phrase `legally obligated to pay as damages' as used in the * * * [liability] policy, is synonymous with `damages for a liability imposed by law.' That latter phrase has been uniformly interpreted as referring to a liability arising ex delicto as distinguished from ex contractu. (Ritchie v. Anchor Casualty Co.[, 135 Cal. App.2d 245, 286 P.2d 1000 [(1955)].]) The theory that Devonshire assumed a liability * * * for which * * * [its liability insurer] provided coverage cannot be sustained by the terms of the policy or applicable law." 155 Cal. Rptr. at 875.
The Supreme Court of Alaska considered a factual situation similar to the case at bar in Continental Insurance Company v. Bussell, Alas., 498 P.2d 706 (1972). In that case, an employer agreed in a union contract to purchase life insurance for his employees who traveled in aircraft in the course of business. The employer purchased a liability-insurance policy, but failed to acquire the promised life insurance. When an employee perished in an airplane crash, the estate sued for the $25,000 "death benefit" under the union contract. The employer filed a third-party claim against Continental Insurance Company, his liability insurance carrier. The Alaska Supreme Court held that Continental Insurance Company had no obligation to defend the employer or to pay the $25,000 death benefit. In interpreting the standard comprehensive general-liability clause with which we are concerned, as well as a contractual-liability provision not pertinent here, the court said:
"Neither of the coverage portions in issue applies to damages arising from an insured's breach of a contractual duty. There is no language in any section of the policy which even tangentially alludes to coverage protecting against breaches of contract." 498 P.2d at 710.
Other cases reaching the same conclusion include Olympic, Inc. v. Providence Washington Insurance Company of Alaska, Alas., 648 P.2d 1008 (1982); Kisle v. St. Paul Fire and Marine Insurance Company, 262 Or. 1, 495 P.2d 1198 (1972); Boiler Brick and Refractory Co. v. Maryland Casualty Co., 210 Va. 50, 168 S.E.2d 100, 102 (1969).
Rowland H. Long in his treatise, The Law of Liability Insurance, summarized the uniform judicial interpretations of standard liability-coverage provisions found in current and earlier policies:
"The promise in the insuring provision of the earlier liability insurance policies is to pay all sums by reason of liability `imposed upon the insured by law for damages.' In more recent editions of the policy, the promise is to pay all sums `which the insured shall become legally obligated to pay as damages.' Damages `imposed by law' and damages which a person is `legally obligated' to pay express the same thought. The law imposes upon the insured a liability to pay damages for bodily injuries or damage to property caused by his carelessness and arising out of the ownership, maintenance, care, custody, or use of property. This is the liability upon which the insurer agrees `to pay on behalf of the insured all sums which the insured shall become legally obligated to pay.' This provision limits the insurer's obligation. `Liability imposed by law for damages' or damages which the insured becomes `legally obligated' *45 to pay exclude the concept of liability which the insured may have voluntarily assumed * * *." 1 Long, Law of Liability Insurance, § 1.10, p. 1-25.
See also 7A Appleman, Insurance Law and Practice (Berdal ed.), § 4493, pp. 55-56 (1979).
Appellants assert that such a narrow reading of the liability-coverage clause cannot be reconciled with the expansive protection contemplated by the policy titles "Business Protector Policy" and "Comprehensive General Liability Insurance." The coverage clause, not the policy titles, controls, however, and these admittedly broad labels cannot override the express provisions of the coverage paragraph so as to protect the insured against all possible risks. Fresno Economy Import Used Cars, Inc. v. United States Fidelity & Guaranty Company, Inc., 76 Cal. App.3d 272, 142 Cal. Rptr. 681, 686 (1977).
We conclude that the coverage clause at issue in the present case encompasses liability which the law imposes on all insureds for their tortious conduct and not on the liability which a particular insured may choose to assume pursuant to contract. Action Ads' potential liability in this case stemmed not from its own negligent behavior, but from a contractual obligation. Therefore, Great American had no duty under the comprehensive general-liability insurance policy to defend Action Ads.
The summary judgment is affirmed.
ROONEY, Chief Justice, specially concurring.
I concur with that said in the majority opinion, but I understand one of appellants' arguments to be that notwithstanding the fact that the contract does not cover contract liability, it does include a duty to defend a breach of contract claim. In support thereof, appellants point to the policy language which recites:
"* * * the company shall have the * * * duty to defend any suit * * * even if any of the allegations of the suit are groundless, false or fraudulent. * * *"
However, the rest of the quoted provision provides in part that the "duty to defend any suit" is one "seeking damages on account of such bodily injury or property damage." Accordingly, even the duty to defend is limited to tort actions. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1580609/ | 919 F.Supp. 244 (1996)
MIKE LOEHR & COMPANY, INC. d/b/a Landmark Foods, Plaintiff,
v.
WAL-MART STORES, INC., Defendant.
No. 2:93-CV-166.
United States District Court, E.D. Texas, Marshall Division.
March 8, 1996.
*245 Galen Watje, Peggy Rose of The Watje Firm, Ltd, Bloomington, MN, Jack Baldwin of Baldwin and Baldwin, Marshall, TX, for Plaintiff.
Ed Merritt, Darren K. Coleman of Harbour, Kenley, Boyland, Smith & Harris, Longview, TX, for Defendant.
MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
SCHELL, Chief Judge.
This matter is before the court on defendant Wal-Mart Stores, Inc.'s ("Wal-Mart") Motion for Summary Judgment filed on September 19, 1995. Plaintiff Mike Loehr & Company, Inc. d/b/a Landmark Foods ("Landmark") filed a response on October 3, 1995. Wal-Mart subsequently filed a reply, captioned "Supplemental Motion for Summary Judgment and Brief in Support," on October 5, 1995. Landmark filed its "Response to Wal-Mart's Supplemental Motion for Summary Judgment" on October 17, 1995. Based on a review of the parties' submissions in this case, portions of the record in the Arkansas litigation, and the applicable case law, the court is of the opinion that Wal-Mart's Motion for Summary Judgment should be GRANTED IN PART AND DENIED IN PART.
FACTUAL BACKGROUND
A review of the materials on file in this case reveals the following sequence of events that forms the basis of this action as well as a previous suit in Arkansas. The details and relevance of the Arkansas suit will be explained below.
A. Apples in Arkansas
In 1991, Landmark was retained by Bowman Apple Products, Inc. ("Bowman") to assist Bowman in selling its apple juice to Wal-Mart.[1] As its commission, Landmark was to receive a specified percentage of the sales receipts for the juice that Wal-Mart purchased from Bowman.[2] Landmark succeeded in arranging a meeting between Wal-Mart *246 purchasing agents and Bowman personnel at Wal-Mart headquarters in Bentonville, Arkansas, in October of 1991, to discuss the sale of Bowman apple juice to Wal-Mart.[3] Before the negotiations commenced, however, Wal-Mart personnel excluded Landmark's representatives from the meeting.[4] Nevertheless, Wal-Mart and Bowman struck a deal for the purchase of Bowman apple juice during this meeting.[5] Over the course of what appears to be a continuing relationship between Bowman and Wal-Mart, Bowman has refused to pay Landmark any commission on its sales of apple juice to Wal-Mart.[6] Further, in a letter dated March 6, 1992, Bowman terminated its brokerage agreement with Landmark.[7]
B. Litigation in Arkansas
The dispute over Landmark's claim to commissions from Bowman's sale of apple juice to Wal-Mart soon found its way into federal court in Arkansas.[8] Following trial on both breach of contract and quantum meruit theories, the jury returned a general verdict on November 12, 1993, that awarded Landmark five hundred thousand dollars ($500,000).[9] The verdict did not specify which theory that the jury relied upon in awarding damages against Bowman. The court entered judgment on the verdict on November 15, 1993.[10] On appeal, the judgment was affirmed by the United States Court of Appeals for the Eighth Circuit on December 29, 1994.[11] Bowman fully satisfied the Arkansas judgment, along with applicable post-judgment interest, and had its bond and letter of credit released by the Arkansas trial court on January 17, 1995.[12]
C. Litigation in Texas
During the pendency of the Arkansas case, Landmark filed a complaint against Wal-Mart in the Marshall Division of the United States District Court for the Eastern District of Texas on October 6, 1993.[13] Landmark's *247 complaint alleged causes of action against Wal-Mart for (1) tortious interference with the contractual relationship between Landmark and Bowman; (2) tortious interference with the prospective economic advantage that Landmark's relationship with Bowman afforded; and (3) violations of the Racketeer Influenced and Corrupt Organizations Act[14] ("RICO") allegedly committed with regard to scholarship donations required as part of the agreement between Wal-Mart and Bowman. On June 28, 1994, Wal-Mart moved for summary judgment on all of Landmark's claims. Judge Steger, on November 18, 1994, granted Wal-Mart's motion in part and denied it in part.[15] Specifically, Judge Steger granted Wal-Mart summary judgment on Landmark's RICO claims, finding that Landmark had (1) failed to establish standing to pursue the RICO claims and (2) failed to present evidence of a pattern of RICO violations.[16] Judge Steger's order of November 18, 1995, left Landmark with only its tortious interference claims remaining.
D. The Motion for Summary Judgment Presently Before the Court
On September 19, 1995, Wal-Mart again moved for summary judgment on Landmark's tortious interference claims.[17] Wal-Mart contends, among other things, that Bowman's satisfaction of the judgment in the Arkansas litigation made Landmark whole for the damages it suffered as a result of the loss of its commissions.[18] As a result, Landmark is precluded from taking "another bite at the apple" in a subsequent action against Wal-Mart.
ANALYSIS
It appears that Landmark has split its adversaries to try to secure a double recovery for the damages it suffered at the hands of Bowman and Wal-Mart. Although a number of legal doctrines would operate to prevent Landmark's pursuit of additional damages against Wal-Mart, the court is of the opinion that application of the Texas single satisfaction rule will dispose of this motion.
The leading Texas case on the single satisfaction rule is Bradshaw v. Baylor University.[19] According to Bradshaw,
[i]t is a rule of general [acceptance] that an injured party is entitled to but one satisfaction for the injuries sustained by him. That rule is in no sense modified by the circumstance that more than one wrongdoer contributed to bring about his injuries. There being but one injury, there can, in justice, be but one satisfaction for that injury.[20]
In 1991, the Texas Supreme Court further clarified the function of this rule in Stewart Title Guar. Co. v. Sterling.[21] "The one satisfaction rule applies to prevent a plaintiff from obtaining more than one recovery for the same injury. Appellate courts have applied the one satisfaction rule when the defendants commit the same act as well as when defendants commit technically differing acts which result in a single injury."[22]
Turning now to the case at hand, the Arkansas jury has determined that the amount of the loss caused to Landmark as a result of Bowman's breach was five hundred thousand dollars ($500,000).[23] Whether *248 Landmark's damages were caused solely by Bowman's breach, or by Wal-Mart's causing Bowman's breach, the total loss to Landmark caused by the breach constitutes a single injury, namely the loss of commissions.[24] According to Texas law, "[t]he basic measure of actual damages for tortious interference with contract is the same as the measure of damages for breach of the contract interfered with, to put the plaintiff in the same economic position he would have been in had the contract interfered with been actually performed."[25] Recovery of the judgment entered pursuant to the Arkansas jury verdict placed Landmark in the same position as if its contract had never been breached.[26]
The Arkansas jury, in an action in which Landmark chose to pursue recovery solely against Bowman, determined that Landmark's damages totaled $500,000. Bowman paid Landmark this sum and was released on January 17, 1995.[27] Thus, Landmark was made whole through its recovery of its damages from Bowman, and the "single satisfaction rule" prohibits a double recovery for its single injury.[28]
Interestingly, this case's unique fact pattern appears as an illustration to a comment following RESTATEMENT (SECOND) OF JUDGMENTS § 50 (1982). Specifically, comment d states that
[t]he rule that payment of a loss, in whole or in part, by one of several obligors reduces the amount that may be obtained from other obligors also applies when the amount of the loss has been adjudicated. The adjudication of the amount of the loss also has the effect of establishing the limit of the injured party's entitlement to redress, whoever the obligor may be. This is because the determination of the amount of the loss resulting from actual litigation of the issue of damages results in the injured person's being precluded from relitigating the damages question. Therefore, when a judgment is based on actual litigation of the measure of a loss, and the judgment is thereafter paid in full, the injured party has no enforcible claim against any other obligor who is responsible for the same loss.[29]
Illustration 3 follows this comment to demonstrate the practical effect of the rule described in the text. The fact pattern tracks the facts alleged in this lawsuit perfectly.
A breaks a contract with B as a result of the acts of C. Following a trial in which the issue of damages was litigated, B obtains judgment against A for $1,000 and is paid that amount by A. Under applicable law, the measure of damages for the losses recoverable from a person inducing breach of contract is the same as that in determining the damages recoverable from the person breaking the contract. B has no claim against C.[30]
According to this analysis, Landmark has no claim against Wal-Mart for tortious interference with contract.
*249 CONCLUSION
For the reasons stated above, Wal-Mart's Motion for Summary Judgment is GRANTED as to Landmark's tortious interference with contract claim and DENIED as to Landmark's tortious interference with prospective business advantage claim.
NOTES
[1] See Def.'s Mot. for Summ.J. at 1; Pl.'s Resp. to Def.'s Mot. for Summ.J. at 1; Pl.'s Arkansas Compl. ¶¶ 31, 32 (Def.'s Ex. C-1); Pl.'s Arkansas Statement of the Case at 2-4 (Def.'s Ex. C-2); Pl.'s Arkansas Trial Br. at 5, ¶ 13 at 8 (Def.'s Ex. C-3); Pl.'s Arkansas Br. in Supp. of Pl.'s Mot. to Amend J. at 2 (Def.'s Ex. C-6); Pl.'s Arkansas Reply to Def.'s Resp. at 1 (Def.'s Ex. C-7); Dep. of Michael D. Loehr at 192, 215, 221-22, 228 & Ex. 16 (Def.'s Ex. C-8); Pl.'s Initial Disclosure No. 3 at 7 (Def.'s Ex. B); Arkansas Trial Tr. at 176 (Def.'s Ex. C-9).
[2] See Pl.'s Arkansas Compl. ¶¶ 11, 21, 31, 32, 40, 42 (Def.'s Ex. C-1); Pl.'s Arkansas Statement of the Case at 2-5 (Def.'s Ex. C-2); Pl.'s Arkansas Trial Br. at 5, ¶¶ 10-13 at 8, ¶ 27 at 11, 14 (Def.'s Ex. C-3); Pl.'s Arkansas Br. in Supp. of Pl.'s Mot. to Amend J. at 2, 4 (Def.'s Ex. C-6); Dep. of Michael D. Loehr at 192, 215, 222, 228 & Ex. 16 (Def.'s Ex. C-8); Pl.'s Initial Disclosure No. 3 at 7 (Def.'s Ex. B).
[3] See Pl.'s Resp. to Def.'s Mot. for Summ.J. at 1; Pl.'s Arkansas Compl. ¶ 24 (Def.'s Ex. C-1); Pl.'s Arkansas Statement of the Case at 3 (Def.'s Ex. C-2); Pl.'s Arkansas Trial Br. ¶ 33 at 12 (Def.'s Ex. C-3).
[4] See Pl.'s Resp. to Def.'s Mot. for Summ.J. at 1; Pl.'s Arkansas Statement of the Case at 3 (Def.'s Ex. C-2); Pl.'s Arkansas Trial Br. ¶¶ 34-35 at 12 (Def.'s Ex. C-3); Dep. of Michael D. Loehr at 212 (Def.'s Ex. C-8); Pl.'s Initial Disclosure No. 1 at 1-2 (Def.'s Ex. B).
[5] See Pl.'s Resp. to Def.'s Mot. for Summ.J. at 1-2; Pl.'s Arkansas Compl. ¶¶ 36, 41 (Def.'s Ex. C-1); Pl.'s Arkansas Statement of the Case at 3-4 (Def.'s Ex. C-2); Pl.'s Arkansas Trial Br. at 5, ¶ 36 at 12, ¶¶ 41 & 44 at 13, 14 (Def.'s Ex. C-3); Dep. of Michael D. Loehr at 192, 213, 215 (Def.'s Ex. C-8); Pl.'s Initial Disclosure No. 1 at 3 (Def.'s Ex. B).
[6] See Pl.'s Resp. to Def.'s Mot. for Summ.J. at 2; Pl.'s Arkansas Compl. ¶¶ 28, 32, 42 (Def.'s Ex. C-1); Pl.'s Arkansas Statement of the Case at 3 (Def.'s Ex. C-2); Pl.'s Arkansas Trial Br. at 5, ¶¶ 42-43 at 13, 14, 26, 27 (Def.'s Ex. C-3); Pl.'s Arkansas Br. in Supp. of Pl.'s Mot. to Amend J. at 2, 4 (Def.'s Ex. C-6); Pl.'s Arkansas Reply to Def.'s Resp. at 3 (Def.'s Ex. C-7); Dep. of Michael D. Loehr at 211, 215, 222, 228 (Def.'s Ex. C-8); Arkansas Trial Tr. at 176 (Def.'s Ex. C-9).
[7] Letter from Bud Warren, Bowman National Sales Manager, to Mark McKinney, Landmark Foods 1 (Mar. 6, 1992) (Loehr Dep. Ex. 16) (Def.'s Ex. C-8).
[8] The case proceeded before the Honorable Jimm Larry Hendren in the United States District Court for the Western District of Arkansas Fayetteville Division. The case was styled Loehr v. Bowman Apple Products, Inc., Case No. 92-5063. It is important to note that Wal-Mart was not a party to this litigation.
[9] Arkansas Verdict in Case No. 92-5063. (Def.'s Ex. C-4).
[10] Arkansas Judgment in Case No. 92-5063. (Def.'s Ex. C-5).
[11] Eighth Circuit Judgment in Appeal No. 94-1357/1615WAF (Pl.'s Ex. A3).
[12] Arkansas Order Granting Bowman's Motion to Release Bond and Letter of Credit in Case No. 92-5063 (Def.'s Ex. A).
[13] The case originally was assigned to the Honorable Sam B. Hall. Following Judge Hall's death, the case was reassigned to the Honorable William M. Steger in Tyler on January 31, 1994. Judge Steger transferred the case to the Honorable David J. Folsom in Texarkana on April 17, 1995. Judge Folsom recused himself from the case on December 15, 1995, and the case was reassigned to Judge Steger on December 19, 1995. Judge Steger recused himself from the case on December 20, 1995. By order of January 26, 1996, this court retained this case for resolution.
[14] 18 U.S.C. § 1961 et seq.
[15] Order Granting in Part and Denying in Part Wal-Mart's Motion for Summary Judgment in Case No. 2: 93-CV-166 (Pl.'s Ex. A2).
[16] Id. at ___.
[17] This court intends to resolve Landmark's claim for tortious interference with prospective business advantage by way of a sua sponte Rule 12(b)(6) motion. Accordingly, Wal-Mart's Motion for Summary Judgment will be DENIED as it relates to Landmark's claim for tortious interference with prospective business advantage.
[18] Def.'s Mot. for Summ.J. at 1, 7-8.
[19] 126 Tex. 99, 84 S.W.2d 703 (Tex.Comm'n App.1935, opinion adopted), overruled on other grounds, Duncan v. Cessna Aircraft Co., 665 S.W.2d 414 (Tex.1984).
[20] Id. 84 S.W.2d at 705.
[21] 822 S.W.2d 1 (Tex.1991).
[22] Id. at 7.
[23] Arkansas Verdict in Case No. 92-5063 (Def.'s Ex. C-4).
[24] See Marcus, Stowell & Beye Gov't Secs., Inc. v. Jefferson Inv. Corp., 797 F.2d 227, 233 (5th Cir. 1986); Stewart Title, 822 S.W.2d at 7-8.
[25] American Nat'l Petroleum Co. v. Transcontinental Gas Pipe Line Corp., 798 S.W.2d 274, 278 (Tex.1990) (citing Capital Title Co., Inc. v. Donaldson, 739 S.W.2d 384 (Tex.App. Houston [1st Dist.] 1987, no writ); Prowse v. Whitehurst, 313 S.W.2d 126, 130-31 (Tex.Civ.App. San Antonio 1957, writ ref'd n.r.e.)). This court declines Landmark's invitation to decide this case based on a theory of damages that Landmark believes will be adopted by Texas in the future. Expansion and development of Texas law is not the role of this court. This case will be decided according to the current state of Texas jurisprudence.
[26] See American Nat'l Petroleum Co., 798 S.W.2d at 278.
[27] Arkansas Order Granting Bowman's Motion to Release Bond and Letter of Credit in Case No. 92-5063 (Def.'s Ex. A).
[28] Landmark's complaint in this case does not specifically pray for punitive damages. Although Landmark might have recovered punitive damages from Wal-Mart had Wal-Mart been included as a party to the Arkansas lawsuit, Landmark chose to pursue its satisfaction from Bowman. As such, Landmark no longer possesses a claim against Wal-Mart that would support an award of punitive damages. See Twin City Fire Ins. Co. v. Davis, 904 S.W.2d 663, 665 (Tex.1995).
[29] RESTATEMENT (SECOND) OF JUDGMENTS § 50 cmt. d (1982).
[30] Id. § 50 cmt. d, illus. 3. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1648756/ | 251 Miss. 855 (1965)
171 So.2d 860
MISSISSIPPI STATE HIGHWAY COMMISSION
v.
ENGELL
No. 43332.
Supreme Court of Mississippi.
February 15, 1965.
Dunn & Singley, Meridian; Martin R. McLendon, Asst. Atty. Gen., Jackson, for appellant.
*857 Williamson, Pigford & Hendricks, Meridian, for appellee.
INZER, J.
This suit was brought by appellee, P.F. Engell, in the Circuit Court of Lauderdale County, against Mississippi State Highway Commission and Cobb Brothers Construction Company. Appellee sought to recover for damage to his property alleged to have resulted by virtue of the fact that appellant, Mississippi State Highway Commission, had acquired for public use two tracts of land adjacent to his property and in the use thereof his property had been damaged. Appellee alleged that appellant acquired the land for the purpose of removing therefrom sand and clay to be used as topping material for a highway then under construction, and that Cobb *858 Brothers Construction Company contracted with appellant to remove the sand and clay; that as a direct and proximate result of this acquisition for public use his property had been damaged. Appellee based his right to recover for such damage on section 17 of article 3 of the Constitution of 1890.
The appellant and Cobb Brothers Construction Company answered and denied that they were liable for the alleged damage to appellee's property. The cause proceeded to trial before a jury, and at the conclusion of appellee's case the trial court sustained a motion on behalf of Cobb Brothers Construction Company for a peremptory instruction. There was no appeal from this decision, and Cobb Brothers Construction Company is no longer a party to this litigation. The trial court overruled a similar motion on behalf of the appellant, and submitted the issues to the jury.
The jury returned a verdict in favor of appellee, and assessed his damages at $8,000. A judgment was entered accordingly. From this judgment, Mississippi State Highway Commission has appealed to this Court.
There is very little dispute about the material facts in this case. The proof shows that appellee is the owner of 160 acres of land located in Sections 18 and 19 of Township 7 North, Range 7 East of the lands of Lauderdale County. Upon this land is his home, where he has lived for many years. Prior to 1958 he had constructed two lakes upon his property. One lake covers an area of about six acres and the other an area of about fourteen acres. He also had three minnow ponds located near his lakes. The lakes were well stocked with fish, he kept them fertilized and the banks clean, and had built a road to the lakes and partly around them, and had built a bridge across one of the lakes. Appellee derived income from his lakes by allowing the public to fish therein for a fee and had established a good business. He also grew minnows for sale to his fishing *859 customers and to other people, and derived income from this activity. These lakes were fed by flowing springs and remained clear at all times. The balance of his land was used to grow timber. The use being made of the land by appellee was the highest and best use to which the land was susceptible.
Appellee's land is bounded on the north in part by a sand and clay road known as the Engell Road. This road is maintained by the county and is a narrow dirt road. On the north side of the road the land is owned by Banes. On the east side of appellee's property there is another road known as the Tipton-Russell Road, which at the time of this controversy was a gravel road maintained by the county. The land on the east side of this road is owned by Nichols.
In 1958 appellant acquired the right to remove from three acres of the Banes land sand and clay to be used as topping material for a highway being constructed by appellant. Later appellant acquired the right to use ten-and-a-half acres of the Nichols land for the same purpose.
The proof in this case shows that prior to the time appellant acquired this property the water falling thereon percolated into the soil and very little ever ran off the land. Although the Banes and Nichols property was of a much higher elevation than appellee's lakes, there was no erosion that damaged his property.
After appellant acquired the Banes' land, they had the three acres cleared, removed the top soil and piled it and other materials that were on the land in a large pile near the Engell road. After this work was done, appellant left the land in this condition about a year before removing the sand and clay. The water falling on the land no longer percolated into the soil, but ran off the land at an accelerated speed and carried with it sand, dirt, mud, clay and debris down onto the property of appellee.
*860 Appellant used the same method relative to the ten acres it acquired from Nichols, except that it cleared and removed the surface only about two months before appellant began to remove the topping material. The proof shows that after this property was cleared the water ran off of it in a much larger volume and at a greater rate of speed than it had theretofore done, and carried with it sand, clay, mud and debris down onto the property of appellee. This continued throughout the time that appellant was using the property.
The proof in this case shows that this sand, clay, dirt, mud and debris washed down onto appellee's property and into the small lake and the minnow ponds. The lake was partly filled with this material, and it became so muddy that the fish in the lake died. The minnow ponds were damaged to the extent they were no longer useful. The water in the large lake became muddy, and some of the fish in it died. Public fishing in the lakes ceased. At the time of the trial of this case the small lake was muddy, and the proof showed that it had been since appellant began its activities. The large lake was not as muddy, but it has not been as clear as it was prior to the work being done.
(Hn 1) Appellant does not dispute that appellee's property has been damaged, but contends that under the law it is not liable for any damages that appellee may have suffered. Appellant also contends that part of the damage resulted from the activity of Lauderdale County in rebuilding the Tipton-Russell Road. This work was done at the same time appellant was removing the topping material. The engineer employed by appellant, who was in charge of this operation, testified that in his opinion the sand, clay, mud, dirt and debris that washed off of the property being used by appellant went down onto the property of appellee and into his lakes. There can be no question from the evidence in this case of the fact that appellee's property was damaged *861 by the taking and using of the Banes and Nichols property for public use.
Regardless of this fact, appellant contends that it is not liable for the damage. Appellant contends that grade and rainfall were the real causes of the damage; that it had the right to acquire the property for public use, and that it employed the only method by which the topping material could be excavated and removed. It claimed that appellee's damage was the natural and inevitable result of the lawful right of appellant. Appellant relies upon the cases of Filtrol Corp. v. Hughes, 199 Miss. 10, 23 So.2d 891 (1945), and American Sand and Gravel Co. v. Rushing, 183 Miss. 496, 184 So. 60 (1938). We have examined these cases in the light of the facts in this case, and are of the opinion that these cases are not controlling. The legal basis upon which appellee relies for recovery for his damage is section 17 of article 3 of the Constitution of 1890. This Court, speaking through Justice Wood, said in the case of Vicksburg v. Herman 72 Miss. 211 (1895), in regard to the effect of this section, that:
To have inserted the words "or damaged" in the new constitution, to cover cases already perfectly provided for in the old constitution, would have been utterly meaningless. The citizen must now be held, under this new provision of our fundamental law, to be entitled to due compensation for, not the taking, only, of his property for public use, but for all damages to his property that may result from works for public use. He is now secured in his property, and his use and enjoyment of his property. The burdens formerly borne by the citizen, resulting from damage done his property by a diminution or destruction of his right to use and enjoy his own, were designed by this new constitutional rule to be placed upon those by whose action the diminution or destruction was wrought. 72 Miss. at 215. *862 We have further construed this section in numerous cases since that time, and the citation of all the cases would serve no useful purpose. Beaver Dam Drainage Dist. v. McClain, 241 Miss. 865, 133 So.2d 615 (1961); State Highway Commission v. Mason, 192 Miss. 576, 40 So.2d 345 (1941); Kwong v. Mississippi Levee Comm'rs., 164 Miss. 250, 144 So. 693 (1932); Thompson v. Winona, 96 Miss. 591, 51 So. 129 (1910); Richardson v. Mississippi Levee Comm'rs., 77 Miss. 518, 26 So. 963 (1899).
Appellee in no way takes issue with the right of appellant to acquire and use the land for the purpose for which it was used, but contends that his property was damaged as a direct and proximate result of a public use by appellant. With this contention we are in agreement. We do not find that grade and rainfall were the real culprits in this case. Grade and rainfall existed long before the acquisition and use by appellant, and no damage had resulted to appellee's property as a result thereof. Appellant does not contend that it did anything to try to prevent the sand, clay, dirt, mud and debris washing down upon appellee's property to his damage. We are convinced from the facts in this case that the jury was justified in finding that appellant was liable for the damage, and that finding is affirmed.
(Hn 2) There is only one assignment of error in this case in which we find any merit. Appellant assigns as error the granting to appellee the following instruction:
The Court instructs the jury that the plaintiff is not required to prove his damages, if any, to a mathematical certainty, or with exactness in dollars and cents; but it is for the jury to take into consideration all the testimony introduced in evidence under the supervision of this Court touching the extent, kind and character of the injuries and damages, if any, sustained by this plaintiff, that is, to the property or property rights of this plaintiff and from such testimony *863 fix the amount of damages, if any, according to the best judgment of the jury, which should be based upon and controlled by the preponderance of the evidence in this case.
This instruction was the only one to the jury on the measure of damages. The only other instruction that touched on damages was an instruction on behalf of the appellant that the jury could not hold appellant liable for any damage which may have resulted from the rebuilding of the road by Lauderdale County. This was a proper instruction, but it furnished no guide to the jury as to the measure of damage. We said in Alabama Great Southern R.R. v. Broach, 238 Miss. 618, 119 So.2d 923 (1960), in regard to an identical instruction that:
This instruction failed to furnish the jury with any guide pertaining to the well established rules on measurement of damages in surface water cases. 56 Am. Jur., Waters, Sec. 87; Newton Coca-Cola Bottling Company v. Murphrey, 212 Miss. 823, 55 So.2d 845 (1951); 93 C.J.S., Waters, Sec. 127(h), pp. 833-834; see also Southland Co. v. Aaron, 221 Miss. 59, 72 So.2d 161, 49 A.L.R. 2d 243 (1954); City of Oxford v. Spears, 228 Miss. 433, 87 So.2d 914 (1956). As was said in Meridian City Lines v. Baker, 206 Miss. 58, 83, 39 So.2d 541 (1949), "by this instruction the jury was left to grope in the darkness without any light to guide them ..." It does not furnish the jury with a proper basis for extent of damages, or any criterion, guide, rule, method or standard. The "blue sky" is the limit insofar as this instruction is concerned. 238 Miss. at 622-3.
This case was followed in Broadhead v. Gatlin, 243 Miss. 386, 137 So.2d 909 (1962), in which a similar instruction was condemned. We are of the opinion that the granting of this instruction by the trial court was error and for this reason this case must be reversed for a new trial on the issue of damages.
*864 For the reasons stated, the judgment is affirmed as to liability, and reversed on the question of damages, and remanded for a new trial on the issue of damages only.
Affirmed as to liability; reversed and remanded for a new trial on the issue of damages only.
Lee, C.J., and Ethridge, Rodgers and Patterson, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1650768/ | 39 Mich. App. 252 (1972)
197 N.W.2d 521
PEOPLE
v.
DAVENPORT
Docket No. 10718.
Michigan Court of Appeals.
Decided March 22, 1972.
Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, William L. Cahalan, Prosecuting Attorney, Dominick R. Carnovale, Chief, Appellate Department, and Patricia J. Boyle, Assistant Prosecuting Attorney, for the people.
Carl Ziemba, for defendant on appeal.
*254 Before: LEVIN, P.J., and HOLBROOK and BRONSON, JJ.
LEVIN, P.J.
Rosby Davenport, the defendant-appellant, and Lillie Green were convicted of possession of narcotics.[1] Davenport was sentenced to serve a term of four to ten years in prison. Green was placed on probation. Davenport appeals.
The jurors were instructed that they could convict Davenport of possessing a narcotic drug if they found that he was in possession of either .26 grams of heroin or 7.3 grams of marijuana which were discovered and seized by the police during a search of the house where Davenport and Green resided. We conclude that while there was sufficient evidence to support a verdict finding Davenport guilty of possessing the seized marijuana, the evidence was not sufficient to tie him to the heroin. Since the jury rendered a general verdict, we must reverse Davenport's conviction and remand for a new trial.[2]
At the trial, police officers testified that they knocked on the front door of the house. Davenport responded and peered at the officers through a window but did not answer the door. An officer announced that they had a search warrant and demanded entrance. The officers then observed Davenport rush past the door and up a stairway carrying a small box. They broke in the door and several officers rushed up the stairs.
A detective testified that he observed Davenport and Green tossing objects into a toilet in the bathroom at the head of the stairs. The detective retrieved from the flushing toilet three envelopes and a *255 bit of loose plant-like material later identified as marijuana.
In the meantime other officers searched the house. In the basement, at the bottom of a barrel of soiled clothes, they discovered a bag. In the bag they found narcotics paraphernalia and a number of bottles, including three small plastic bottles and a larger bottle made of brown glass. Two of the small plastic bottles were labeled with prescriptions for "Ardis Phillips", another resident of the house. One of the small plastic bottles was labeled with a prescription for "R. Davenport". The three plastic bottles contained pills of one kind or another but there is no evidence of the kinds of pills, and, presumably, they were not narcotics. There were 43 capsules in the brown bottle. Five of the capsules contained a white powdery substance which was identified as part heroin. The other 38 capsules did not contain heroin. Four persons, Davenport, Green, Phillips and Walter Brown, lived in the house.
Davenport and Green were charged with possession of the .26 grams of heroin contained in the five capsules and of the 7.3 grams of marijuana retrieved from the flushing toilet.[3]
At the trial, Davenport and Green denied being in the bathroom or throwing anything into the toilet, and also denied having any knowledge of the bag found in the basement or its contents.
The issue which divided us in People v Valot, 33 Mich App 49 (1971), need not be reconsidered in order to decide this case. In this case, in contrast with *256 Valot and People v Harper, 365 Mich 494 (1962), there is no evidence whatever tending to show that Davenport knew of the presence of the heroin found in the barrel in the basement.[4]
The evidence in this case regarding possession of the heroin is entirely circumstantial. The established rule is that where the people's case is based on circumstantial evidence the prosecution has the burden of proving "that there is no innocent theory possible which will, without violation of reason, accord with the facts". People v Millard, 53 Mich 63, 70 (1884); People v Spann, 3 Mich App 444, 454 (1966); People v Morrow, 21 Mich App 603, 606 (1970).[5] Davenport cannot be convicted on the theorem that someone must have been in possession of the heroin.
Davenport's residence in the house and the presence in the bag of a plastic bottle carrying a label bearing his name were the only evidence connecting him to the heroin found in the brown bottle.[6] Four persons lived in the house. It is not reasonable to infer from the fact that Davenport was one of the occupants that he rather than Phillips or Brown or Green[7] was the person who placed the capsules in *257 the brown bottle. In addition to the plastic bottle labeled with Davenport's name, there were two plastic bottles bearing the name of one of the other residents, Ardis Phillips. There was no evidence that the brown bottle, the bag, or the barrel belonged to Davenport. Clearly there were innocent theories unrebutted by any evidence which accord with the facts. It is as likely that Ardis Phillips or anyone else living in the house, who would have had equal access to the basement, was in possession of the heroin.
More than mere association must be shown to establish joint possession. "An additional independent factor linking the defendant with the narcotic must be shown." State v Faircloth, 181 Neb 333, 337; 148 NW2d 187, 190 (1967). Similarly, see United States v Bonds, 435 F2d 164 (CA 9, 1970); United States v Bethea, 143 US App DC 68, 71; 442 F2d 790, 793 (1971); Kirtley v State, 245 So 2d 282 (Fla App, 1971).
It has been said that in a criminal case "not only must each of the facts from which the inference is drawn be proved beyond any reasonable doubt, but the inference itself must be such as admits of no other rational conclusion". People v Sessions, 58 Mich 594, 606 (1886) (per SHERWOOD, J). Accord: Miller v State, 250 Ind 338; 236 NE2d 173 (1968): "An inference, to be valid, must be logical [citation omitted]. It must follow as an impelling certainty from the circumstantial evidence which mothers it, or it is not proper." Similarly, see State v Faircloth, supra.
Allowing a trier of fact to draw an inference in a criminal case only if the inference follows with "impelling certainty" enforces the requirement that, where the people's case is based on circumstantial *258 evidence, the prosecution must negate every reasonable theory consistent with the defendant's innocence of the crime charged.
In a number of cases the evidence has been found insufficient to link a defendant in nonexclusive possession of premises or an automobile to narcotics found on the premises or in the automobile. See Delgado v United States, 327 F2d 641, 642 (CA 9, 1964), where marijuana was found in a nightstand near the defendants' bed there was, said the Court, insufficient evidence "to support a finding, as to each defendant, that he or she had possession of the marijuana", and Guevara v United States, 242 F2d 745, 747 (CA 5, 1957), where marijuana was found on the floorboard of the defendant's automobile between the driver's seat, which was occupied by the defendant, and the passenger seat the Court said "for all that the present evidence shows, it is just as reasonable to believe that the cigarettes belonged to the passenger as to the appellant". Similarly, see People v Foster, 115 Cal App 2d 866; 253 P2d 50 (1953); Kirtley v State, supra; Evans v United States, 257 F2d 121, 128 (CA 9, 1958). See, also, People v Burrel, 253 Mich 321 (1931).
Although there was sufficient evidence to support the verdict convicting Davenport of possession of marijuana, his conviction must be reversed and a new trial ordered. Davenport and Green were charged with possession of both heroin and marijuana in a one-count information. The jurors were instructed that they could find the defendants guilty if they found that they were in possession of either marijuana or heroin. They rendered a general verdict of guilty and, thus, there is no way of knowing whether they did in fact find Davenport guilty of possession of marijuana or whether their verdict was *259 exclusively based on a finding that he was in possession of heroin.[8]
Reversed and remanded for a new trial.
All concurred.
NOTES
[1] MCLA 335.153; MSA 18.1123.
[2] Our disposition of this case makes it unnecessary to consider the other assignments of error. We express no opinion concerning these other issues.
[3] The police also discovered and seized three marijuana cigarette butts found in Green's bedroom. Davenport and Green were cohabiting regularly. However, each had a separate bedroom and none of his clothing or personal effects were found in her bedroom. The information did not charge either of them with possession of the marijuana cigarette butts. A motion by the prosecutor, made during the course of the trial, to amend the information to add a charge based on the cigarette butts was denied.
[4] In People v Cardenas, 21 Mich App 636, 638 (1970), there was evidence tending to show that the defendant knew precisely where the marijuana was located.
In People v Iaconis, 29 Mich App 443 (1971), the defendants were in close proximity to the heroin at the time the police entered and were all aware of the presence of the narcotics.
[5] 30 Am Jur 2d, Evidence, § 1125, pp 292, 296.
[6] Davenport denied that he placed the prescription bottle bearing his name in the bag and testified that the three pills in the bottle were not the medicine prescribed for him. The people did not attempt to rebut that testimony.
[7] Green testified that she did the laundry and that the laundry was kept in the barrel where the heroin was found. It may be reasonable to infer from this testimony that she was aware of the presence of the bag and of its contents, and from that knowledge to infer that she was in possession of the contents of the bag. Green has not appealed. Accordingly, there is no need to consider whether those are reasonable inferences or whether there was sufficient evidence to convict her of possession of heroin.
[8] See Stromberg v California, 283 US 359, 370; 51 S Ct 532, 536; 75 L Ed 1117, 1123 (1931); Bachellar v Maryland, 397 US 564, 570; 90 S Ct 1312, 1315-1316; 25 L Ed 2d 570, 575-576 (1970); People v Purifoy, 34 Mich App 318, 321 (1971); United States v Meriwether, 440 F2d 753, 757 (CA 5, 1971); United States v Driscoll, 449 F2d 894, 898 (CA 1, 1971).
People v Taylor, 386 Mich 204 (1971), is distinguishable. There the defendant was convicted of three separate counts of perjury. Cf. United States v Driscoll, supra. The Michigan Supreme Court held that the reversal of Taylor's conviction of two counts did not require a retrial of the third count. In Taylor, in contrast with this case, there were separate findings of guilty on each of the three separate charges. It, thus, was clear that the jury had in fact convicted Taylor of the one charge of which he could lawfully be convicted. The issue in Taylor was whether the submission to the jury of the two counts of which he could not be convicted was prejudicial because it might have influenced the jury in finding him guilty of the count of which he could lawfully be convicted.
People v Ninehouse, 227 Mich 480 (1924), is also distinguishable. There the defendant was charged in a one-count information with the unlawful "transportation and possession" of one pint of whiskey. The Michigan Supreme Court held that since the statute did not make it a crime to take a drink out of someone else's bottle the trial judge erred in instructing the jury that Ninehouse must be convicted of possession on his own admission that he took a drink out of the bottle, but affirmed his conviction of transporting the bottle because he was the driver of the automobile and knew that he was carrying intoxicating liquor in his automobile, thereby constituting the offense of unlawful transportation of liquor. In Ninehouse, in contrast with this case, there was no factual dispute; Ninehouse admitted he was transporting liquor. There, thus, was not the same need as there is here for additional fact finding by the trier of fact to determine whether the defendant had in fact committed acts denied by him which establish his commission of the charged offense.
United States v Lee, 422 F2d 1049, 1052 (CA 5, 1970); McGriff v United States, 408 F2d 333 (CA 9, 1969), are also distinguishable as they concern situations where a defendant is charged with unlawfully dealing with the same property in several different ways. Here, in contrast, with those cases, the charge is that Davenport dealt unlawfully in two different items of property; there was no evidence at all connecting him to one of the items, thereby distinguishing this case from Lee, where the defendants admitted signing the statement, and McGriff, where the evidence established that the defendant was involved with the stolen property. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1720972/ | 239 Miss. 64 (1960)
121 So.2d 118
IRBY, et ux.
v.
CITIZENS NATIONAL BANK OF MERIDIAN.
No. 41403.
Supreme Court of Mississippi.
May 30, 1960.
deQuincy V. Sutton, Meridian, for appellants.
J.V. Gipson, Wilbourn, Wilbourn & Lord, Meridian, for appellee.
*66 ETHRIDGE, J.
This suit was brought in the Circuit Court of Lauderdale County, by the bank against appellants on a promissory note in the sum of $18,323.93, dated October 5, 1956. After trial, the court directed a verdict and judgment for the plaintiff for $24,123.78, including interest and attorney's fees. The principal issue pertains to the sufficiency of a counterclaim attempting to charge malicious interference with the business relations of another.
Appellants contend the note was not admitted in evidence, but the record does not support that assertion. At the beginning of plaintiff's case, its lawyer offered the note in evidence as Exhibit 1. The court overruled defendants' objection. A fair interpretation of the context of that part of the trial reflects that the note was admitted into evidence as plaintiff's Exhibit 1. The reporter's transcript shows the note was so marked. Moreover, defendants' counsel at various points in the interrogation of witnesses referred to this note as Exhibit 1. Defendants admitted they signed the instrument, and had paid nothing on it. They did not show a failure of consideration. With the note in evidence, and appellants' admission of its execution, their defense, if any, in this action for judgment on the note necessarily would have to be related to matters raised principally by counterclaim, concerning which subsequent reference will be made.
(Hn 1) Appellants argue there was no evidence to support that part of the judgment in the amount of $3,002.39 as an attorney's fee. A member in good standing of the Lauderdale County bar testified in some detail as to the recognized and accepted minimum fee schedule in that county, with reference to a collection fee and a suit fee. This evidence was undisputed, and the circuit judge, who no doubt was equally familiar with accepted professional practice in that county, found that the stated *67 amount represented a reasonable attorney's fee. Hence there is no merit in this contention.
There was a considerable amount of pleading. Defendants filed a counterclaim, which sought damages from the bank because of an alleged wrongful interference with certain business contracts which Irby, a pipeline contractor, had made in Louisiana. It was charged that the bank had advised a Shreveport bank that Irby was in poor financial condition. As a result that bank required Irby to pay it a loan made to Irby, and he was thereby deprived of his working capital and had to abandon his Louisiana construction contracts. The counterclaim alleged other collateral damages resulting from this communication by the cross-defendant with the Louisiana bank, and sought substantial damages. The cross-defendant demurred to the counterclaim, the demurrer was sustained and the counterclaim dismissed. There was no error in this action, for two reasons.
(Hn 2) Malicious interference with business relations of another is an actionable tort. 30 Am. Jur., Interference, Secs. 43-53. 30 Am. Jur., Ibid., Sec. 55 concisely outlines the essentials which one asking such recovery must allege and prove: "In an action for damages for procuring breach of a contract, the plaintiff must allege and prove the essential elements of the wrong. It is essential both to aver and prove the defendant's knowledge of the contract in question. Such knowledge is not pleaded sufficiently by a mere allegation that he maliciously prevented performance of the contract. A prima facie case of wrongful interference with a contract is made out if it is alleged (1) that the acts were intentional and wilful; (2) that they were calculated to cause damage to the plaintiffs in their lawful business; (3) that they were done with the unlawful purpose of causing damage and loss, without right or justifiable cause on the part of the defendant (which constitutes malice); and (4) that actual damage and loss resulted."
*68 (Hn 3) The counterclaim wholly failed to comply with those requirements. It did not allege that the act of the bank was intentionally calculated to damage Irby, it was done with the unlawful purpose of causing damage without right or justifiable cause on the part of the bank, the Shreveport bank would not otherwise have called its loan, and the construction contracts would otherwise have been performed. Globe & Rutgers Fire Ins. Co. v. Firemen's Fund Ins. Co., 97 Miss. 148, 52 So. 454 (1910); Wesley v. Native Lbr. Co., 97 Miss. 814, 53 So. 346 (1910); Bailey v. Richards, 236 Miss. 523, 111 So.2d 402 (1959); 86 C.J.S., Torts, Sec. 43. Nor does the counterclaim charge any cause of action founded upon fraud or breach of trust. See Gardner v. State, 235 Miss. 119, 108 So.2d 592 (1959); 37 C.J.S., Fraud, Sec. 3.
(Hn 4) Moreover, under Miss. Code 1942, Sec. 1483.5, the counterclaim must arise out of or be connected with "the situation, occasion, transaction or contract or subject matter upon which the plaintiff's action is based." The tort attempted to be alleged by appellants in their counterclaim does not comply with this requirement of the statute, having no causal or factual relation to the promissory note, which was executed over a year after the acts alleged in the counterclaim. City of Oxford v. Spears, 228 Miss. 433, 440, 87 So.2d 914 (1956); see Daniel, The Mississippi Counterclaim Statute, 25 Miss. L.J. 252 (1954); Coastal Produce Assn. v. Wilson, 193 S.C. 339, 8 S.E.2d 505 (1940); Exchange Bank of Meggette v. Bennett, 193 S.C. 320, 8 S.E.2d 515 (1940); Hancammon v. Carr, 229 N.C. 52, 47 S.E.2d 614 (1948).
The action of the trial court in sustaining plaintiff's motion to strike certain portions of defendants' answer was not error. Although averments of the answer are in many places ambiguous, the defenses of duress, lack of consideration, and breach of parol collateral contract were preseved to defendants. They offered no evidence to support them.
Affirmed.
*69 McGehee, C.J., and Hall, Lee, Kyle and Gillespie, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1812295/ | 616 F.Supp. 742 (1985)
Arlene NORDGREN, Plaintiff,
v.
Jerome HAFTER, Chairman, Mississippi Board of Bar Admissions and the Mississippi Bar of Bar Admissions: David R. Smith, William Joel Blass, Bennie Turner, Grady F. Tollison, Jr., T.J. Lowe, Jr., William S. Moore, W.D. Brown, Jr., Catherine Baber, Defendants.
Civ. A. No. E84-0130(L).
United States District Court, S.D. Mississippi, E.D.
August 27, 1985.
*743 *744 Arlene Nordgren, pro se.
Stephen J. Kirchmayer, John T. Kitchens, Asst. Attys. Gen., Jackson, Miss., for defendants.
MEMORANDUM OPINION
TOM S. LEE, District Judge.
This action is brought by the plaintiff, Arlene Nordgren, pro se, against Jerome Hafter, Chairman of the Mississippi Board of Bar Admissions,[1] the individual members of the Board and Catherine Baber, Executive Secretary of the Board,[2] pursuant to 42 U.S.C. § 1983 and 28 U.S.C. § 1343. Plaintiff's suit is based upon her being denied the opportunity to take the Mississippi Bar examination because of her failure to possess a law degree from a law school approved or accredited by the Section on Legal Education of the American Bar Association. (ABA). The plaintiff asserts that she is qualified to sit for the bar exam and alleges that the denial of her application by the Board and the requirement of ABA accreditation give rise to a variety of constitutional claims and a violation of the Sherman Antitrust Act. She has further alleged that the defendants, in denying her application, have committed certain torts including trespass to chattel, conversion, misrepresentation and fraud. Currently pending before the court are defendant's motion to dismiss or, in the alternative, for summary judgment and plaintiff's application for review, motion for summary judgment/declaratory judgment and motion for declaratory judgment.
The plaintiff, a legal resident of the State of California, currently resides in Meridian, Mississippi with her husband, a United States Naval Officer stationed at the Meridian Naval Air Station. She holds a bachelor's degree from the University of Southern California and is a graduate of National University School of Law, a non-ABA-accredited law school.[3] The defendants include members and an employee of the Mississippi Board of Bar Admissions. The Board of Bar Admissions was created by the legislature and is composed of nine individuals appointed by the Justices of the Supreme Court of Mississippi. Miss.Code Ann. § 73-3-2(3) (Supp.1984). While the power to admit persons to practice law in the State of Mississippi is vested exclusively *745 in the State Supreme Court, Miss.Code Ann. § 73-3-2(1), the Board has the authority to promulgate rules necessary for the administration of its duties subject to the approval of the Chief Justice of the State Supreme Court. Miss.Code Ann. § 73-3-2(3). The primary function of the Board is to inquire into the qualifications, legal training and character and fitness of those persons seeking to practice law in Mississippi, and then either certify or not certify such individuals as meeting the qualifications for admission to practice law as set out in Miss.Code Ann. § 73-3-2.
On July 19, 1983, plaintiff sent an application along with check for the required $325.00 application fee to the Board of Bar Admissions. Mississippi, like many other states, requires that applicants be graduates of a law school provisionally or fully approved by the ABA. Miss.Code Ann. § 73-3-2(2)(a). Because the plaintiff's application revealed that she had not graduated from an ABA-accredited law school, it was not docketed and her check was not deposited in the state treasury. In January 1984, plaintiff was informed that her application had not been processed and that her check had been returned to her. She never received the actual check but later did receive a photocopy of the check which showed it to be torn in several places, presumably by someone working in the office of the Board of Bar Admissions. In a letter dated February 7, 1984, from defendant Hafter to plaintiff's attorney, J.L. Pritchard, Hafter stated that if plaintiff desired to proceed further with her application, she would have to send to the Board's office a new application fee together with any additional material to be considered. He further advised that if she decided to proceed, her application fee would be deposited and would not be refundable. On February 13, 1984, in accordance with Hafter's letter, the plaintiff sent a second check to the Board, in effect asking that her application be considered. On February 27, 1984, after polling the members of the Board, Hafter, as Chairman of the Mississippi Board of Bar Admissions, entered an order denying the plaintiff's application and stating:
The Board finds that applicant has not submitted satisfactory evidence of compliance with the qualifications for admission and in particular that applicant does not satisfy the requirements of Miss. Code 1972 § 73-3-2(2) in that applicant has not completed a general course of study in a law school which is provisionally or fully approved in the section on legal education on admission to the American Bar Association.
On September 10, 1984, plaintiff filed suit challenging the Board's action in denying her application and the general constitutionality of the ABA-accreditation requirement. Her complaint requests that she be granted the "diploma privilege"[4] or, in the alternative, that she be allowed to take the bar exam under the court's supervision. She also asks that the court hold that graduates from non-ABA-accredited law schools which maintain a six-year integrated pre-law and law curriculum are eligible to take the Mississippi bar exam. Plaintiff further requests this court to rule that the 1983 amendment to Miss.Code Ann. § 73-3-2 is unconstitutional. She lastly asks that she be given a proper forum to adjudicate what she has termed violations of the ABA Canons of Ethics.
JURISDICTION
The plaintiff, in her brief in opposition to the defendant's motion, states that this court has jurisdiction to hear this matter pursuant to District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983). Because almost every court considering cases involving bar admissions or disciplinary proceedings *746 decided since Feldman has found it necessary to examine closely a plaintiff's allegations and the court's subject matter jurisdiction in light of that decision, this court will also consider the jurisdiction question. Thomas v. Kadish, 748 F.2d 276 (5th Cir.1984); Razatos v. Colorado Supreme Court, 746 F.2d 1429 (10th Cir. 1984); Lowrie v. Goldenhersh, 716 F.2d 401 (7th Cir.1983); Wood v. Orange County, 715 F.2d 1543 (11th Cir.1983); Howell v. State Bar of Texas, 710 F.2d 1075 (5th Cir.1983); Rogers v. Supreme Court of Virginia, 590 F.Supp. 102 (E.D.Va.1984); Solomon v. Emanuelson, 586 F.Supp. 280 (D.Conn.1984); Rosenfeld v. Clark, 586 F.Supp. 1332 (D.Vt.1984); Levanti v. Tippen, 585 F.Supp. 499 (S.D.Cal.1984); Zimmerman v. Grievance Committee, 585 F.Supp. 29 (N.D.N.Y.1983); Mattas v. Supreme Court of Pennsylvania, 576 F.Supp. 1178 (W.D.Pa.1983).
In Feldman, two applicants for admission to the District of Columbia Bar, Feldman and Hickey, petitioned the District of Columbia Circuit Court of Appeals seeking waivers of the bar admission rule requiring graduation from a law school approved by the ABA. The court denied their petitions and they each filed suit in the United States District Court for the District of Columbia challenging the denials of their waiver petitions and the constitutionality of the bar admission rule. The district court dismissed both complaints for lack of subject matter jurisdiction, holding the waiver proceedings to be judicial in nature and, in regard to Feldman's case, stating that if it were to "assume jurisdiction ... of this law suit, it would find itself in the unsupportable position of reviewing an order of a jurisdiction's highest court." 460 U.S. at 470, 103 S.Ct. at 1308.[5] On appeal the United States Court of Appeals for the District of Columbia Circuit reversed and remanded, holding that the waiver proceedings were not judicial acts and that consideration of the constitutional claims by the district court was not foreclosed.[6]
The Supreme Court vacated and remanded the cases for further proceedings, holding that district courts have jurisdiction over general constitutional challenges to state bar rules promulgated by state courts in non-judicial proceedings. The Court also held that the waiver proceedings in the District of Columbia Court of Appeals were judicial in nature and that the district court would not have jurisdiction to review a decision of a state court in such a proceeding even if the plaintiff alleges that the state court's action was unconstitutional. The Court, citing Doe v. Pringle, 550 F.2d 596 (10th Cir.1976), and emphasizing the distinction between general challenges to state bar admission rules and claims that a state court has unlawfully denied a particular applicant admission, quoted the following from that opinion:
The United States District Court, in denying [the plaintiff] relief, declared that there is a subtle but fundamental distinction between two types of claims which a frustrated bar applicant might bring to federal court: The first is a constitutional challenge to the state's general rules and regulations governing admission; the second is a claim, based on constitutional or other grounds, that the state has unlawfully denied a particular applicant admission. The Court held that while federal courts do exercise jurisdiction over many constitutional claims which attack the state's power to license attorneys involving challenges to either the rule-making authority or the administration of the rules, ... such is not true where review of a state court's adjudication of a particular application is sought. The Court ruled that the latter claim may be heard, if at all, exclusively *747 by the Supreme Court of the United States. Id., at 597 (emphasis in original).
460 U.S. at 485, 103 S.Ct. at 1316.
The Supreme Court, applying this standard to the plaintiffs' complaints, found that plaintiffs had alleged both types of claims and that the district court had no jurisdiction over the allegations regarding the specific action taken on the plaintiffs' waiver petitions before the District of Columbia Court of Appeals. Specifically, the plaintiffs had alleged that the Court of Appeals acted arbitrarily and capriciously in denying their petitions for waiver and unreasonably and discriminatorily in denying their petitions in view of its former policy of granting waivers to graduates of other unaccredited law schools. The Court found these allegations to be "inextricably intertwined," 460 U.S. at 486, 103 S.Ct. at 1317, with the decisions to deny plaintiffs' petitions and that, because they would require the district court to review a decision of the highest court of a jurisdiction, the district court did not have jurisdiction over those elements of the complaints. The Court, however, found that the remaining allegations involved a general attack on the constitutionality of the rule and to that extent the district court did have subject matter jurisdiction.
While plaintiff's complaint in this case is at times difficult to interpret, the court, giving the complaint its most liberal construction, concludes that plaintiff has raised both types of claims discussed in Feldman. In Counts I, II(a) and II(b) A. of the complaint, plaintiff alleges that defendants acted arbitrarily, capriciously and unreasonably in denying her the right to take the bar exam, that they deprived her of this right without due process, and that they deprived her of her rights while acting under color of state law. As in Feldman, the complaint also presents general constitutional challenges which this court has jurisdiction to consider. The plaintiff requests not only specific relief with regard to her application and right to take the bar exam but also general declaratory relief holding the statute in question unconstitutional and declaring graduates from non-ABA-approved law schools eligible to take the Mississippi bar exam. See Brown v. Board of Bar Examiners of Nevada, 623 F.2d 605 (9th Cir.1980) (court examined plaintiff's prayer for relief in attempting to characterize nature of plaintiff's claims). The court having determined that the complaint includes challenges concerning the specific denial of plaintiff's application, it therefore becomes necessary to consider whether that denial was judicial in nature and the plaintiff's allegations concerning the denial beyond this court's jurisdiction.
In this case, unlike in Feldman, the decision to deny plaintiff's application to take the bar exam was made by a state board, the Board of Bar Admissions, and not by a court. A similar situation confronted the Fifth Circuit Court of Appeals in Thomas v. Kadish, 748 F.2d 276 (5th Cir.1984). In that case, the plaintiff filed suit in federal district court challenging the action of the Texas Board of Law Examiners in denying his application based on his alleged emotional and mental unfitness. The Fifth Circuit noted that the Board was appointed by the State Supreme Court, acted under its direction and administered rules, procedures and standards for admissions as provided by the court. Thus, the court found that, in denying the plaintiff's application, the Board was exercising authority on behalf of the court. The Fifth Circuit stated that "the function of the present Board of Law Examiners `may be analogized to the function of a special master' in taking actions of an `essentially judicial nature.'" 748 F.2d at 282, quoting Middlesex County Ethics Committee v. Garden State Bar Association, 457 U.S. 423, 434 n. 13, 102 S.Ct. 2515, 2522 n. 13, 73 L.Ed.2d 116 (1982). Thomas had not mounted a general attack on the constitutionality of any rule of the Texas Bar Admission, and, based upon the holding of the Supreme Court in Feldman, the Fifth Circuit affirmed the dismissal by the district court for lack of subject matter jurisdiction.
The Mississippi Board of Bar Admissions is similar in structure to the Texas *748 Board of Law Examiners discussed above. As stated previously, the Board of Bar Admissions is comprised of nine individuals appointed by the Justices of the State Supreme Court. It was created by the legislature and has the authority to promulgate rules subject to the approval of the Chief Justice of the Supreme Court. As in Texas, the exclusive power to admit individuals to the practice of law in the State of Mississippi is vested in the State Supreme Court. Miss.Code Ann. § 73-3-2(1). The Board in this case, in an order dated February 27, 1984, formally denied the plaintiff's application for admission based upon her failure to meet the statutory qualification requiring graduation from an ABA-approved law school. It is clear that, just as in Thomas v. Kadish, the Board's action in denying the plaintiff's application is essentially judicial in nature. See also Richardson v. McFadden, 563 F.2d 1130, 1132 (4th Cir. 1977) (Hall, J., concurring), cert. denied 435 U.S. 968, 98 S.Ct. 1606, 56 L.Ed.2d 59 (1978); Woodward v. Virginia Board of Bar Examiners, 454 F.Supp. 4, 6 (E.D.Va. 1978), aff'd 598 F.2d 1345 (4th Cir.1979); Powell v. Nigro, 601 F.Supp. 144 (D.D.C. 1985). The court therefore concludes that with respect to plaintiff's claims regarding the action of the Board of Bar Admissions on plaintiff's application, this court lacks subject matter jurisdiction. However, just as in Feldman, this court does have subject matter jurisdiction to consider the general constitutional challenges to the state statute and the bar admission rule requiring an applicant to be a graduate of an ABA approved law school.
IMMUNITY
In her complaint in this cause, plaintiff requests an award of money damages pursuant to 42 U.S.C. § 1983 for violation of her constitutional rights. Pendent state law causes of action are also alleged; namely, trespass to chattel, conversion, misrepresentation and fraud. Defendants' answer and motion for summary judgment raise as an affirmative defense the state's immunity from suit guaranteed under the Eleventh Amendment. Pennhurst State School & Hospital v. Halderman, 465 U.S. 89, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984); Cory v. White, 457 U.S. 85, 91, 102 S.Ct. 2325, 2329, 72 L.Ed.2d 694 (1982); Edelman v. Jordan, 415 U.S. 651, 666, 94 S.Ct. 1347, 1357, 39 L.Ed.2d 662 (1974); Hawaii v. Gordon, 373 U.S. 57, 58, 83 S.Ct. 1052, 1053, 10 L.Ed.2d 191 (1963) (per curiam); Ford Motor Co. v. Department of Treasury, 323 U.S. 459, 464, 65 S.Ct. 347, 350, 89 L.Ed.2d 389 (1945). The State correctly reasons, pursuant to the authorities cited above, that when relief sought nominally against an officer of the state would operate in fact against the sovereign in that any such retroactive relief would be paid from the state treasury, the Eleventh Amendment bars recovery. Hawaii v. Gordon, 373 U.S. at 58, 83 S.Ct. at 1052; Edelman v. Jordan, 415 U.S. at 667, 94 S.Ct. at 1357; Karpovs v. State of Miss., 663 F.2d 640 (5th Cir.1981). The bar extends as well to pendent state law claims which request retroactive relief. Pennhurst State School & Hosp. v. Halderman, 465 U.S. at ___, 104 S.Ct. at 911, 79 L.Ed.2d at 82. However, by "Motion to Amend Pleadings" filed with this court on January 3, 1985, plaintiff deleted her prayer for $11,000 in money damages. Although this pro se plaintiff did not file an amended complaint with this court, by logical inference the voluntary dismissal of her money damage claims also worked a dismissal of her pendent state law causes of action. Under Pennhurst, such tort damages would not be recoverable against the state regardless of whether plaintiff intended to drop her state law claims. Thus, in its present posture this cause presents a claim for injunctive and declaratory relief against state officials charged with executing the mandates of an allegedly unconstitutional statute.
A critical exception to the Eleventh Amendment immunity of a state arises when a plaintiff seeks to enjoin a state official from enforcing an allegedly unconstitutional state law. Under the well-established principle of Ex parte Young, 209 U.S. 123, 160, 28 S.Ct. 441, 454, 52 L.Ed. *749 714 (1908), a state official enforcing an unconstitutional state law is "stripped of his official or representative character and subjected to the consequences of his official conduct." The theory underlying Ex parte Young, is that since the state law is unconstitutional and therefore "void", the Eleventh Amendment does not "impart to [the officer] any immunity from responsibility to the supreme authority of the United States." Id. A federal court may award injunctive relief against such offending state official so long as the relief is prospective in nature, but may not award retroactive relief in the form of money damages. Edelman v. Jordan, 415 U.S. 651, 667, 94 S.Ct. 1347, 1357, 39 L.Ed.2d 662 (1974); Sessions v. Rusk State Hospital, 648 F.2d 1066 (5th Cir.1981); Karpovs v. State of Mississippi, 663 F.2d 640 (5th Cir.1981). Declaratory relief is likewise available against a state official without implicating Eleventh Amendment immunity. Gay Student Services v. Texas A & M University, 612 F.2d 160 (5th Cir.1980), reh. denied 620 F.2d 300, cert. denied 449 U.S. 1034, 101 S.Ct. 608, 66 L.Ed.2d 495.
The Mississippi Board of Bar Admissions clearly qualifies as an arm of the state for Eleventh Amendment purposes. O'Connor v. State of Nevada, 686 F.2d 749 (9th Cir.1982), cert. denied 459 U.S. 1071, 103 S.Ct. 491, 74 L.Ed.2d 633. However, because the instant case presents only claims for prospective injunctive and declaratory relief against individual state officials, the defense of Eleventh Amendment immunity is unavailable. A suit challenging the constitutionality of a state official's action, which is the gravamen of plaintiff's action in its present posture, is not a suit against the state for Eleventh Amendment purposes. Pennhurst State School & Hosp. v. Halderman, 465 U.S. at ___, 104 S.Ct. at 911, 79 L.Ed.2d at 82. Therefore, plaintiff's present action is not barred by the Eleventh Amendment.
VOID FOR VAGUENESS
Plaintiff makes repeated allegations that the provisions relating to qualifications of bar applicants in Rule V of the Rules Governing Admission to the Mississippi State Bar are unconstitutionally vague. In her pleadings, plaintiff contends that she was qualified under the version of Rule V that was sent to her in July 1983 when she made application to take the bar examination. She further alleges that the "only way to give reasonable meaning to the requirements of the statute" is to read the individual substantive paragraphs of the rule as establishing separate requirements which, upon satisfaction of one or the other, qualifies the applicant to take the examination. Because Rule V does not expressly state that each of its separate requirements must be individually fulfilled before an applicant is qualified, and because plaintiff qualified under one of the substantive paragraphs but was still rejected, plaintiff avers that the entire rule is "void for vagueness."
Rule V reads in pertinent part:
An application for admission to the bar by examination may be filed by an individual who:
A. is 21 years of age
B. has received a bachelors degree from an accredited college or university or has received credit for the requirements of the first (3) years of college work from a college or university offering an integrated six-year prelaw and law course, and has completed his law course at a college or university offering such an integrated six-year course. However, an applicant who has already begun the general course of study of law as of November 1, 1979, either in a law school or under the supervision of a Mississippi lawyer shall submit proof that he has successfully completed two (2) full years of college work.
C. has successfully completed, or prior to taking the examination will complete, a general course of study of law in a law school which is provisionally or fully approved by the section on Legal Education and Admission to the Bar of the American Bar Association. Before being permitted to sit for an examination, an applicant *750 must file with the board a diploma or certificate from such school evidencing the satisfactory completion of such course. However, an applicant who, as of November 1, 1981, is or was previously enrolled in a law school in active existence in Mississippi for more than ten (10) years prior to the date of application shall be eligible for examination for admission; provided that such an applicant must graduate prior to November 1, 1984.
Plaintiff received a bachelor's degree from the University of Southern California. After teaching in the California school system for a number of years, she entered the National University School of Law. National has never received ABA accreditation. Plaintiff received her degree from National in June 1981. It appears that National had an integrated program as defined in Rule V(1)(B) at the time plaintiff graduated. Thus, plaintiff claims that she was qualified to take the Mississippi bar examination in February 1984 by the apparent exception to the ABA-accreditation requirement contained in Rule V(1)(B). To the extent she was misled in placing sole reliance on Rule V(1)(B), plaintiff claims the entire rule is "void for vagueness."
Defendants assert that Rule V(1)(B) is an undergraduate requirement which must be read in conjunction with the ABA accreditation requirement of Rule V(1)(C). Rule V(1)(B), it is contended, merely provides more than one option for an applicant to satisfy the requirement of an undergraduate degree and cannot be read separately from Rule V(1)(C) to provide an express exception to the requirement of a degree from an ABA-accredited law school. Furthermore, defendants state that any vagueness or uncertainty contained in Rule V is made clear by reference to the statutory requirements set out in Miss.Code Ann. § 73-3-2 (Supp.1984) (amended 1983), which reads in pertinent part:
(2) Qualifications. Each applicant for admission to the bar, in order to be eligible for examination for admission, shall be at least twenty-one (21) years of age, of good moral character, and shall present to the board of bar admissions satisfactory evidence:
(a) That he has successfully completed the general course of study of law in a law school which is provisionally or fully approved by the section on legal education and admission to the American Bar Association, and that such applicant has received a diploma or certificate from such school evidencing the satisfactory completion of such course. However, an applicant who, as of November 1, 1981, is or was previously enrolled in a law school in active existence in Mississippi for more than ten (10) years prior to the date of application shall be eligible for examination for admission; provided that such an applicant must graduate prior to November 1, 1984;
(b) That he has notified the board of bar admissions in writing of an intention to pursue a general course of study of law under the supervision of a Mississippi lawyer prior to July 1, 1979, and in fact began study prior to July 1, 1979, and who completes the required course of study prior to November 1, 1984...; or
(c) That in addition to complying with either of the above requirements, he has received a bachelor's degree from an accredited college or university or that he has received credit for the requirements of the first three (3) years of college work from a college or university offering an integrated six-year prelaw and law course, and has completed his law course at a college or university offering such a six-year course. However, applicants who have already begun the general course of study of law as of November 1, 1979, either in a law school or under the supervision of a Mississippi lawyer shall submit proof he has successfully completed two (2) full years of college work. (emphasis added).
Plaintiff erroneously claims that the language "in addition to complying with either of the above requirements" was added in the 1983 amendment to Miss.Code Ann. *751 § 73-3-2. In point of fact, that language was part of the original legislation approved by the Mississippi Legislature on April 16, 1979. See Mississippi Laws, 1979, ch. 486 §§ 1-8; re-enacted and amended, Laws, 1983, ch. 457, § 1 eff. from and after July 1, 1983. The 1983 amendment to Miss.Code Ann. § 73-3-2 only deleted the Mississippi residency requirement for bar applicants.[7] The remaining sections of § 73-3-2, specifically § 73-3-2(2)(c) relating to graduates from six-year integrated programs, were unaltered by the 1983 amendment.
Plaintiff's vagueness claims must fail. As a general proposition, the void-for-vagueness doctrine demands that a statute define with sufficient definiteness the particular conduct proscribed, or in this case required, so that an ordinary person of common intelligence can understand what is required of him and in a manner that does not encourage arbitrary and discriminatory enforcement. Kolender v. Lawson, 461 U.S. 352, 357, 103 S.Ct. 1855, 1858, 75 L.Ed.2d 903, 909 (1983); Village of Hoffman Estates v. Flipside, 455 U.S. 489, 102 S.Ct. 1186, 71 L.Ed.2d 362 (1982); Grayned v. City of Rockford, 408 U.S. 104, 92 S.Ct. 2294, 33 L.Ed.2d 222 (1972); Papachristou v. City of Jacksonville, 405 U.S. 156, 92 S.Ct. 839, 31 L.Ed.2d 110 (1972). The more important aspect of the vagueness doctrine is not actual notice but the requirement that the statute provide minimal guidelines to govern conduct sufficient to avoid vesting complete discretion in the entity enforcing the statute. Kolender, 461 U.S. at 357, 103 S.Ct. at 1858, 75 L.Ed.2d at 909, Smith v. Goguen, 415 U.S. 566, 574, 94 S.Ct. 1242, 1247, 39 L.Ed.2d 605 (1974).
In a facial vagueness challenge against a statute regulating a business or economic activity, the burden of proof is on the complainant to "demonstrate that the law is impermissibly vague in all of its applications." Village of Hoffman Estates, 455 U.S. at 497, 102 S.Ct. at 1193. An individual may not make a facial challenge for vagueness on grounds that the statute requires him to conform his conduct to an "imprecise but comprehensible normative standard." Coates v. City of Cincinnati, 402 U.S. 611, 614, 91 S.Ct. 1686, 1688, 29 L.Ed.2d 214 (1971); Ferguson v. Estelle, 718 F.2d 730, 735 (5th Cir.1983). Rather, a vagueness challenge is "appropriate only when no standard of conduct is specified at all, or when the statute impermissibly delegates basic policy matters to officials charged with enforcement for resolution on an ad hoc and subjective basis, with attendant dangers of arbitrary and discriminatory application." Ferguson, 718 F.2d at 735; Grayned, 408 U.S. at 108-09, 92 S.Ct. at 2298-99; Shamloo v. Mississippi State Board of Trustees, Etc., 620 F.2d 516, 523 (5th Cir.1980); Hirschkop v. Snead, 594 F.2d 356, 371 (4th Cir.1979).
"The most important factor affecting the clarity that the Constitution demands of a law is whether it threatens to inhibit the exercise of constitutionally protected rights. If, for example, the law interferes with the right of free speech or of association, a more stringent vagueness test should apply." Village of Hoffman Estates, 455 U.S. at 499, 102 S.Ct. at 1193; Grayned, 408 U.S. at 109, 92 S.Ct. at 2299. Thus, economic and business regulations are subject to a less stringent vagueness test because the subject matter of such regulations is more narrow, and to prevail on vagueness grounds there must be a showing that the statute is vague in all its applications. Village of Hoffman Estates, 455 U.S. at 497, 102 S.Ct. at 1192; Tobacco Accessories, Etc. v. Treen, 681 F.2d 378, 382 (5th Cir.1982).
*752 It is unnecessary for the court to specifically define the nature of the regulation at issue here since it is clear that the statute and rule meet the requirements of fair warning and just enforcement. The statute, Miss.Code Ann. § 73-3-2, states in precise terms the requirements which must be met by an applicant. Prominent among these requirements is that the applicant present evidence of having received a degree from an ABA-accredited law school. This provision has been a part of the statute since its enactment in 1979, as has the clarifying language at the beginning of § 73-3-2(2)(c) offering alternatives for meeting the undergraduate degree requirement "in addition to complying with" (emphasis added) the requirement of a degree from an ABA-accredited law school. Moreover, the statutory guidelines vest no discretion in the Board of Bar Admissions in enforcing the ABA-accreditation requirement. The statute does not offer the Board an opportunity to enforce its requirements on a subjective basis, and this court finds that the statute was sufficiently clear to offer applicants fair notice of its various requirements at least as early as 1980, some three years before plaintiff made application.
Rule V of the Rules Governing Admission to the Mississippi State Bar presents a more difficult vagueness question. Plaintiff alleges that she relied on Rule V(1)(B) in making application to take the Mississippi bar exam and that she had no notice of the statute. The clarifying "in addition to" language of the statute is not found in Rule V. Also, Rule V changes the placement of the statutory provisions to present the applicant with a confusing arrangement of the various requirements. Nothing in the version of Rule V sent to the plaintiff in 1983 specifically indicates that each of the separate requirements must be met by an applicant. However, while this court agrees with plaintiff that Rule V in its present form is somewhat confusing, such imprecision is not a sufficient ground for declaring the entire Rule unconstitutionally vague. Plaintiff cannot show that the Rule is "impermissibly vague in all of its applications." Village of Hoffman Estates, 455 U.S. at 497, 102 S.Ct. at 1193. Read in isolation, as plaintiff asserts it should be "to give reasonable meaning to the requirements of the statute," Rule V(1)(B) would seem to require only a bachelor's degree from an accredited college or a degree from a college or university offering a six-year integrated course to qualify an applicant for the bar exam. The requirement of a law degree of any sort would be merely an alternative to qualification if the separate and independent effect urged by plaintiff is conferred on Rule V(1)(B). Such construction of the Rule V requirements is illogical. This court cannot agree with plaintiff that Rule V(1)(C), which states the requirement of a degree from an ABA-accredited law school, is mere surplusage if the applicant can qualify under Rule V(1)(B).
Plaintiff lastly alleges that the facial vagueness of Rule V inhibits the exercise of her constitutionally protected freedom of association. The particular association from which plaintiff is barred through the operation of Rule V is only generally averred, but it thematically relates to her choice of law schools. Plaintiff asserts that "freedom to associate with a non ABA law school pursuant to a legal education and freedom of ideas are basic fundamental First Amendment rights." (Plaintiff's reply brief at 6). This court does not consider such associations to be inhibited by the requirements of Rule V or § 73-3-2; nor does it deem such associations to fall within the particular protection provided by the Supreme Court in its leading freedom-of-association cases. NAACP v. Button, 371 U.S. 415, 83 S.Ct. 328, 9 L.Ed.2d 405 (1963); Law Students Research Council v. Wadmond, 401 U.S. 154, 91 S.Ct. 720, 27 L.Ed.2d 749 (1971). The resolution of this issue basically turns on whether the ABA-accreditation requirement serves a legitimate state interest, which will be discussed infra. For vagueness purposes, this court finds that the ABA-accreditation requirement of Rule V and § 73-3-2 does not *753 inhibit plaintiff's exercise of the constitutionally protected freedom of association.
Rule V and § 73-3-2 do not pose the dangers of improper notice or arbitrary and discriminatory enforcement that would require this court to declare that the guidelines for qualification of applicants are void for vagueness. Agreeing with plaintiff that Rule V is imprecise is not enough to void the rule and the statute. Since the statute, with its clearer enunciation of the requirements, was extant in its present form save the residency requirement when plaintiff made application in July 1983, and since the ABA-accreditation requirement vests no discretion in the defendants as to its enforcement, this court is compelled to conclude that Rule V is not unconstitutionally vague.
EQUAL PROTECTION
Plaintiff raises a myriad of equal protection claims in her various pleadings. Fairly summarized, these claims include: the Board of Bar Examiners maintains a pattern and practice of invidious racial discrimination by enforcing the qualification requirements of Rule V and Miss.Code Ann. § 73-3-2, which discriminatory practices were applied to plaintiff (a white female of the Jewish faith) because she attended a non-ABA-accredited law school which supports racial integration; the requirement of a degree from an ABA-accredited law school has a disproportionate impact on black applicants, thereby limiting the access of Mississippi blacks to the courts; the denial of plaintiff's application was arbitrary, capricious and unreasonable; the provisions of Rule V and Miss.Code Ann. § 73-3-2 relating to the qualifications of "preceptors" and graduates of the Mississippi College School of Law (formerly the Jackson School of Law) prior to the date on which that school received accreditation violate the Equal Protection Clause of the Fourteenth Amendment in that one class of applicants is favored over another; the statutory guidelines discriminate against non-ABA-accredited law school graduates; limiting qualified applicants to those with degrees from ABA-accredited law schools deprives plaintiff of a "fundamental right to livelihood"; and less restrictive means are available to the state in pursuing its interests.
At the outset, the question before this court is what "burden of justification the [challenged] classification ... must meet." Zablocki v. Redhail, 434 U.S. 374, 384, 98 S.Ct. 673, 680, 54 L.Ed.2d 618 (1978), quoting Memorial Hospital v. Maricopa County, 415 U.S. 250, 94 S.Ct. 1076, 39 L.Ed.2d 306 (1974); Pappanastos v. Bank of Trustees, Etc., 615 F.2d 219, 220 (5th Cir.1980). In order to be entitled to the "strict scrutiny" standard of judicial review, plaintiff must show that the challenged classification "trammels fundamental personal rights or is drawn upon inherently suspect distinctions such as race, religion or alienage ..." New Orleans v. Dukes, 427 U.S. 297, 303, 96 S.Ct. 2513, 2516, 49 L.Ed.2d 511 (1976); Massachusetts Board of Retirement v. Murgia, 427 U.S. 307, 96 S.Ct. 2562, 49 L.Ed.2d 520 (1976). Plaintiff is not a member of any suspect class as such has been defined by the United States Supreme Court. See San Antonio Independent School District v. Rodriguez, 411 U.S. 1, 93 S.Ct. 1278, 36 L.Ed.2d 16 (1973).[8] Nor is the right to practice law a "fundamental right" upon which the state may not infringe absent a compelling justification. Potter v. New Jersey Supreme Court, 403 F.Supp. 1036, aff'd 546 F.2d 418 (3rd Cir.1975); see also Pappanastos v. Board of Trustees, 615 F.2d at 221 (admission to graduate course of law study in taxation is not "basic civil right of man," thus limiting admission to only those with degrees from ABA-accredited law *754 schools is constitutional, quoting Skinner v. Oklahoma, 316 U.S. 535, 541, 62 S.Ct. 1110, 1113, 86 L.Ed.2d 1655 (1942)). Therefore, the proper standard of judicial review of this allegedly unequal government action is the rational-connection test. Califano v. Aznavorian, 439 U.S. 170, 99 S.Ct. 471, 58 L.Ed.2d 435 (1978).
Under the rational-connection analysis, the challenged unequal treatment is justified if the state can prove that such treatment was rationally connected to a legitimate state interest. New York City Transit Authority v. Beazer, 440 U.S. 568, 99 S.Ct. 1355, 59 L.Ed.2d 587 (1979). Where the unequal treatment is the product of legislation, as is the case here, federal courts "presume the constitutionality of the statutory discriminations and require only that the classification challenged be rationally related to a legitimate state interest." Nolan v. Ramsey, 597 F.2d at 579, quoting New Orleans v. Dukes, 427 U.S. at 303, 96 S.Ct. at 2517. There is no requirement that the state interest behind the classification be precisely enunciated by the Legislature, nor is the Legislature under a constitutional duty to choose the best means to further the legitimate state interest. New Orleans v. Dukes, 427 U.S. at 303, 96 S.Ct. at 2517; New York City Transit Authority v. Beazer, 440 U.S. at 592, 99 S.Ct. at 1369; Nolan v. Ramsey, 597 F.2d at 579.
A long line of cases from various jurisdictions have upheld the ABA-accreditation requirement as not violative of equal protection. Such requirement comports with the state's legitimate interest in controlling and regulating the licensing of attorneys who practice within its boundaries. As was stated in the important case of Goldfarb v. Virginia State Bar, 421 U.S. 773, 792, 95 S.Ct. 2004, 2016, 44 L.Ed.2d 572 (1975),
We recognize that the States have a compelling interest in the practice of professions within their boundaries, and that as part of their power to protect the public health, safety, and other valid interests they have broad power to establish standards for licensing practioners and regulating the practice of professions.
In Hackin v. Lockwood, 361 F.2d 499 (9th Cir.1966), cert. denied, 389 U.S. 143, 88 S.Ct. 325, 19 L.Ed.2d 347 (1967), plaintiff made a direct equal protection attack on the ABA-accreditation requirement of the State Bar of Arizona. The Ninth Circuit affirmed the district court's grant of defendant's motion to dismiss, stating,
[W]hatever the various states, in their respective wisdom, may require before allowing the taking of bar examination so long as they are applicable to every citizen alike, it should be of no concern to the federal courts ... We conclude that the fundamental question here is whether Rule IV, Section 6 of the Rules Pertaining to Admission of Applicants to the State Bar of Arizona is `arbitrary, capricious and unreasonable.' We conclude an educational requirement of graduation from an accredited law school is not.
361 F.2d at 504. See also, Santos v. Alaska Bar Association, 618 F.2d 575 (9th Cir. 1980); Lombardi v. Tauro, 470 F.2d 798 (1st Cir.1972), cert. denied 412 U.S. 919, 93 S.Ct. 2734, 37 L.Ed.2d 145 (1973); Kadans v. Collins, 441 F.2d 657 (9th Cir.1971), cert. denied 404 U.S. 1007, 92 S.Ct. 672, 30 L.Ed.2d 656 (1972); Moore v. Supreme Court of South Carolina, 447 F.Supp. 527 (D.S.C.1977), aff'd 577 F.2d 735 (4th Cir. 1978), cert. denied 439 U.S. 984, 99 S.Ct. 574, 58 L.Ed.2d 655 (1979); Ostroff v. The New Jersey Supreme Court, 415 F.Supp. 326 (D.N.J.1976); Harris v. Louisiana State Supreme Court, 334 F.Supp. 1289 (E.D.La.1971).
In LaBossiere v. Florida Board of Bar Examiners, 279 So.2d 288 (Fla.1973), the Florida Supreme Court clearly enunciated the rationale underlying the ABA-accreditation requirement:
We were persuaded to follow the American Bar Association standards relating to accreditation of law schools because we sought to provide an objective method of determining the quality of the educational environment of prospective attorneys. This was deemed especially necessary because *755 of the rapid growth in the number of educational institutions awarding law degrees. We wished to be certain that each of these many law schools provided applicants with a quality legal education, but we were unequipped to make such a determination because of financial limitations and the press of judicial business.
279 So.2d at 289. See also Rosenthal v. State Bar Examining Committee, 116 Conn. 409, 165 A. 211 (1933); In re Eisenson, 272 So.2d 486 (Fla.1972); In re Application of Bryan M. Hansen to write the Minnesota Bar Examination, 275 N.W.2d 790 (Minn.1978); In re Batten, 83 Nev. 265, 428 P.2d 195 (1967); In re Lorring, 75 Nev. 330, 340 P.2d 589 (1959); Henington v. State Board of Bar Examiners, 60 N.M. 393, 291 P.2d 1108 (1956); Application of Schatz, 80 Wash.2d 604, 497 P.2d 153 (1972).
This court concludes, therefore, that the statutory requirement that applicants for the Mississippi bar examination present evidence of having received a degree from an ABA-accredited law school is not arbitrary, capricious and unreasonable. The requirement is substantially related to the interest of the state in ensuring the quality of the legal training of prospective lawyers attempting to practice within its boundaries. Because reliance on the ABA standards of accreditation is a reasonable and nondiscriminatory means of advancing such state interest, the statutory requirement lacks the indicia of arbitrariness and capriciousness which would inhere if the requirement applied only to nonresidents of Mississippi, or if the requirement were not absolute in nature. Likewise, the "unequal treatment" or the "classification" between ABA-accredited law school graduates and non-ABA-accredited law school graduates is justified under the rational-connection test as such serves the interest of the state in arriving at an objective measure of the quality of legal training of its prospective lawyers.
Plaintiff also challenges on equal protection grounds the exceptions provided in Miss.Code Ann. § 73-3-2 for three classes of individuals: (1) those who, as of November 1, 1981, were enrolled in a law school which had been in active existence in the State of Mississippi for more than ten years, provided that such individuals must have graduated before November 1, 1984; (2) those who, before July 1, 1979, began and so notified the Board in writing that they were pursuing a general course of the study of law under the supervision of a Mississippi attorney and who completed such course of study prior to November 1, 1984; (3) those who were enrolled at the University of Mississippi School of Law on November 1, 1981, graduated before November, 1984 and were afforded diploma privileges as authorized by Miss.Code Ann. § 73-3-33. Plaintiff alleges that these excepted classifications constitute an arbitrary, capricious and unreasonable determination on the part of the Legislature which has no rational connection to any legitimate state interest.
This court disagrees. The Legislature could reasonably have relied on its own knowledge, combined with that of the Board of Bar Admissions and the Supreme Court, in determining the quality of the legal education offered by the Mississippi College School of Law, formerly the Jackson School of Law. The Mississippi College School of Law was the one non-ABA accredited law school in the state at the time the statute, § 73-3-2, was promulgated. The practice of the Board of Bar Admissions prior to the statute's enactment in 1979 was to allow graduates of the Mississippi College School of Law to sit for the bar examination upon graduation. Prior practice also allowed "preceptors," those who studied the law under a licensed Mississippi attorney, to sit for the examination. The Legislature could also have reasonably relied on its knowledge of the Mississippi attorneys offering guidance to "preceptors" studying under them. The significant fact is, however, that the three exceptions provided in § 73-3-2 were self-terminating as of November 1, 1984. The statute was intended to be transitional in nature, and the Legislature could, in its discretion *756 and free from constitutional attack, allow individuals who were enrolled or planned to immediately enroll in any of these programs to finish their studies and be permitted to sit for the bar examination or be admitted to the bar under conditions as previously provided. It is noteworthy that the three exceptions were not limited to Mississippi residents and that the requirement of graduation from an ABA-accredited law school applies with equal force to all applicants from and after November 1, 1984.
The constitutionality of the diploma privilege has been directly addressed by the federal courts in Mississippi. Shenfield v. Prather, 387 F.Supp. 676 (N.D.Miss.1974). In Shenfield, Judge William C. Keady, relying on the rigid curriculum and the Mississippi-law orientation of the University of Mississippi School of Law, concluded that the state's Legislature had a reasonable basis for exempting University of Mississippi law graduates from taking the bar examination. Id. at 688. See also Huffman v. Montana Supreme Court, 372 F.Supp. 1175 (D.Mont.1974).
In sum, the Equal Protection Clause of the Fourteenth Amendment does not mandate that the Board of Bar Admissions adopt a standardless set of guidelines for determining applicant qualifications simply because such guidelines, in operation, discriminate against those who do not comply. The requirement that applicants must be graduates of an ABA-accredited law school is rationally related to the state's legitimate interest in ensuring that applicants to the bar have uniform quality legal education. Thus, plaintiff's equal protection claims must also fail.
DUE PROCESS
Plaintiff asserts denial of her right to due process guaranteed by the Fifth and Fourteenth Amendments because the denial of her application was predicated upon the ABA-accreditation requirement. Such claim has been addressed by a number of courts and found to be groundless. See Leis v. Flynt, 439 U.S. 438, 99 S.Ct. 698, 58 L.Ed.2d 717 (1979); Moore v. Supreme Court of South Carolina, 447 F.Supp. 527 (D.S.C.1977), aff'd 577 F.2d 735 (4th Cir. 1978), cert. denied 439 U.S. 984, 99 S.Ct. 574, 58 L.Ed.2d 655 (1979); Ostroff v. New Jersey Supreme Court, 415 F.Supp. 326 (D.N.J.1976); Potter v. New Jersey Supreme Court, 403 F.Supp. 1036 (D.N.J. 1975); aff'd 546 F.2d 418 (3rd Cir.1976). Plaintiff alleges a deprivation of her liberty interests but does not contend that the denial of her application has implicated a liberty interest by the stigmatizing effect of failing the bar admission qualifications. Nolan v. Ramsey, 597 F.2d at 580. Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972); Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972). This case is thus distinguishable from those due process cases in which "an individual is singled out and denied the right to pursue a profession based upon personal characteristics". Nolan v. Ramsey, 597 F.2d at 580. Willner v. Committee on Character, 373 U.S. 96, 83 S.Ct. 1175, 10 L.Ed.2d 224 (1963); Schware v. Board of Bar Examiners, 353 U.S. 232, 77 S.Ct. 752, 1 L.Ed.2d 796 (1957). Plaintiff also cannot prevail on her assertion that she had a cognizable property interest in pursuing her chosen profession which was violated by the ABA-accreditation requirement. Such requirement is only a condition precedent to pursuing the practice of law in Mississippi. Furthermore, as the determination to require bar applicants to present evidence of graduation from an ABA-accredited law school was made by the Legislature and was not directed at the competency of plaintiff or any other particular individuals, plaintiff cannot assert a valid property interest. Nolan v. Ramsey, 597 F.2d at 580; Bi-Metallic Investment Co. v. State Board of Equalization, 239 U.S. 441, 36 S.Ct. 141, 60 L.Ed. 372 (1915). Lastly, federal courts have long since abandoned the practice of scrutinizing the wisdom of state laws regulating business conditions under the substantive due process analysis. Williamson v. Lee Optical Co., 348 U.S. 483, 75 S.Ct. 461, 99 L.Ed. 563 (1954). The qualification *757 requirements of the Mississippi Board of Bar Admissions did not in any way violate plaintiff's due process rights.[9]
SHERMAN ANTITRUST ACT
Plaintiff contends that § 73-3-2 violates the Sherman Antitrust Act in that such statute limits the supply of lawyers in Mississippi and is a form of restraint of trade. (Complaint at 7). Specifically, plaintiff alleges that the ABA-accreditation requirement is a form of monopolistic practice proscribed by the Sherman Antitrust Act in that it is intended to limit the supply of lawyers within the state and is therefore a "restraint of trade" and anticompetitive in nature. Peripheral to these antitrust claims is plaintiff's contention that ABA accreditation provides an arbitrary measure of the competence of law school graduates applying to take the bar examination, and that the requirement creates a privileged class which excludes many competent and fit persons. In order to escape the precedential effect of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), plaintiff avers that "no state sovereignty is involved with the unauthorized amendment to the statute ... § 73-3-2 (Sept.1983)." This claim is patently inaccurate.
In Parker v. Brown, the Supreme Court enunciated the state law exemption from the operation of the Sherman Antitrust Act, stating:
We find nothing in the language of the Sherman Act or in its history which suggests that its purpose was to restrain a state or its officers or agents from activities directed by its legislature. In a dual system of government in which, under the Constitution, the states are sovereign, save only as Congress may constitutionally subtract from their authority, an unexpressed purpose to nullify a state's control over its officers and agents is not lightly to be attributed to Congress.
317 U.S. at 350-351, 63 S.Ct. at 313-314.
In a recent case, Hoover v. Ronwin, 466 U.S. 558, 104 S.Ct. 1989, 80 L.Ed.2d 590 (1984), the Supreme Court reiterated the Parker state law exemption and clarified the scope of the exemption as to legislative acts:
Thus, under the court's rationale in Parker, when a state legislature adopts legislation, its actions constitute those of the state ... and ipso facto are exempt from the operation of the antitrust laws.
104 S.Ct. at 1995.
The ABA-accreditation requirement was contained in the original language of § 73-3-2, enacted by the Mississippi Legislature in 1979. Mississippi Laws, 1979, ch. 486 §§ 1-8. The Rules Governing Admission to the Mississippi State Bar were derived from the statute and were adopted by the Mississippi Supreme Court. Vesting enforcement of the statutory requirements in the Mississippi Board of Bar Examiners is not an "unconstitutional transfer of public sovereignty to a private organization," Application of Schatz, 80 Wash.2d 604, 497 P.2d 153 (1972), sufficient to remove the statutory requirement from the state law exemption. The Board is not a "private organization" but an arm of the state empowered by the legislature to enforce the statutory requirements. Nor is the ABA-accreditation requirement used to "control competition" in violation of the Sherman Act. Chaney v. State Bar of California, 386 F.2d 962, 965 (9th Cir. 1972); Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975). Rather, the requirement is neutral on its face and was intended to serve the state's interest in regulating the quality of lawyers admitted to practice before the bar. The statutory requirement was mandated by the Mississippi Legislature and as such represents an act of the state in its *758 sovereign capacity. The Supreme Court and the Mississippi Board of Bar Admissions are engaged in activities directed by the Legislature. Such state actions are therefore exempt from operation of the antitrust laws under the well-recognized rule of Parker v. Brown and its progeny.
PRIVILEGES AND IMMUNITIES
Plaintiff's last substantive claim is that the ABA-accreditation requirement of § 73-3-2 and Rule V violates the Privileges and Immunities Clause of the United States Constitution, Art. 4 § 2. Plaintiff contends that she was qualified to take the bar examination in California following her graduation from the National University School of Law, but that her husband received military orders to report to the Meridian Naval Air Station. Plaintiff states that she has no intention of becoming a resident of Mississippi and that, at all times pertinent hereto, she remained a resident of California. The alleged violation is premised on the notion that the Privileges and Immunities Clause confers upon an individual who is qualified to take the bar examination in one state the right to take the bar examination in every other state. It is further alleged that since certain classes of individuals who attended the Mississippi law schools or studied under Mississippi attorneys were given special privileges exempting them from the ABA-accreditation requirements of the statute, such requirement constitutes a discriminatory residency requirement which must be shown to promote a compelling state interest. See Toomer v. Witsell, 334 U.S. 385, 68 S.Ct. 1156, 92 L.Ed. 1460 (1948); Shapiro v. Thompson, 394 U.S. 618, 89 S.Ct. 1322, 22 L.Ed.2d 600 (1969); Supreme Court of New Hampshire v. Piper, ___ U.S. ___, 105 S.Ct. 1272, 84 L.Ed.2d 205 (1985).
Two significant points are worthy of note at the outset: (1) the ABA-accreditation requirement is in no sense a residency requirement, and it presently applies with equal force to both residents and non-residents of Mississippi; (2) the classification here is between graduates of ABA-accredited and non-ABA-accredited law schools, and the fundamental right of interstate travel, Shapiro v. Thompson, 394 U.S. 618, 89 S.Ct. 1322, 22 L.Ed.2d 600 (1969), is not implicated in such classification. Moore v. Supreme Court of South Carolina, 447 F.Supp. at 530.
In Supreme Court of New Hampshire v. Piper, the United States Supreme Court addressed the rule of the New Hampshire Supreme Court limiting bar admission solely to state residents and found that the rule violated the Privileges and Immunities Clause. Central to such finding was the court's conclusion that "the right to practice law is protected by the Privileges and Immunities Clause" Id. ___ U.S. at ___, 105 S.Ct. at 1278, thus triggering a heightened standard of judicial scrutiny. After summarizing the state's several justifications for the residency requirement, the court stated, "we find that none of these reasons meets the test of `substantiality,' and that the means chosen do not bear the necessary relationship to the state's objectives." Id. However, with specific regard to the court's decision on the due process challenge to a state's admission requirements in Leis v. Flynt, 439 U.S. 438, 99 S.Ct. 698, 58 L.Ed.2d 717 (1979), the court in Piper made the following distinction:
Our conclusion that Rule 42 (of the New Hampshire Supreme Court) violates the Privileges and Immunities Clause is consistent with Leis v. Flynt, 439 U.S. 438 [99 S.Ct. 698, 58 L.Ed.2d 717] (1979). In Leis, we held that a lawyer could be denied, without the benefit of a hearing, permission to appear pro hac vice. We concluded that the states should be left free to `prescribe the qualifications for admission to practice and the standards of professional conduct for those lawyers who appear in its courts.' Id. at 442 [99 S.Ct. at 700]. Our holding in this case does not interfere with the ability of the states to regulate their bars. The nonresident who seeks to join a bar, unlike *759 the pro hac vice applicant, must have the same professional and personal qualifications required of resident lawyers.
___ U.S. at ___, 105 S.Ct. at 1278 n. 16.
The ABA-accreditation requirement provides a rational and relatively unrestricted means for ensuring the quality of a bar applicant's legal training. However, the court is of the opinion, based on the authorities cited above, that the Privileges and Immunities Clause is not implicated in the statutory requirement that bar applicants present evidence of a degree from an ABA-accredited law school. Equal treatment is accorded residents and nonresidents of Mississippi in the operation of § 73-3-2 and Rule V. Having concluded previously that the state was justified in providing limited and self-terminating exceptions to the statutory requirements for certain individuals who were in the process of qualifying for bar admission under prior practices exceptions which themselves did not discriminate between residents and nonresidents this court further concludes that the Privileges and Immunities Clause offers no constitutional protection for plaintiff in her attempt to void the ABA-accreditation requirement as to her application.
CONCLUSION
This court concludes that plaintiff has no constitutional right to sit for the Mississippi bar examination without complying with the educational requirements of § 73-3-2 and Rule V. The ABA-accredition requirement is rationally related to the state's legitimate interest in ensuring that each applicant for the bar has a uniform quality legal education. Accordingly, the court is of the opinion that there are no genuine issues of material fact in existence to support plaintiff's constitutional claims, and therefore defendant's motion for summary judgment should be granted. It is unnecessary to consider the various pending motions filed by plaintiff. A separate judgment will be entered pursuant to the local rules.
NOTES
[1] The Mississippi Board of Bar Admissions is sometimes hereinafter referred to as the "Board".
[2] Pursuant to a joint motion to dismiss and an agreed order of dismissal entered on February 8, 1985, thirty-one of the original thirty-three defendants were dismissed from this action by the court.
[3] Apparently, the plaintiff also attended Western State University College of Law in San Diego, California for three years but later transferred to and graduated from National University School of Law. Complaint at 3.
[4] The "diploma privilege" referred to by the plaintiff is provided for in Miss.Code Ann. § 73-3-2(4) (Supp.1984), which states that applicants presently or previously enrolled at the University of Mississippi School of Law as of November 1, 1981, shall be admitted to practice upon graduation and are not required to take and pass the bar exam provided that such applicants graduate prior to November 1, 1984.
[5] Under current provisions of federal law, the District of Columbia Court of Appeals corresponds to a state supreme court, and its judgments, like those of a state supreme court, are directly reviewable only by the United States Supreme Court.
[6] The cases of Feldman and Hickey were not consolidated but were considered in the same opinion by the United States Court of Appeals for the District of Columbia Circuit. Feldman v. Gardner, 661 F.2d 1295 (D.C.Cir.1981).
[7] Plaintiff makes a series of allegations intended to void the operation of § 73-3-2(2)(c) as to her application: that it was part of the 1983 amendment to the statute; that such amendment was "unauthorized"; that she had no notice of the "unauthorized" amendment when she made application in July 1983; that the amendment was added to clarify the "vague" requirements of Rule V, Rules Governing Admission to the Mississippi State Bar; and that the amended statute cannot be applied retroactively to her. Because it is clear that the 1983 amendment only deleted the residency requirement and the remaining provisions were unaltered, this court finds plaintiff's claims as to the amendment groundless.
[8] Plaintiff lacks standing to assert the "generalized grievances" of black Mississippians in having greater access to the Mississippi courts. Such grievances are shared in substantially equal measure by a large class of Mississippi citizens, black and white, and plaintiff may not arrogate to herself the legitimate legal interests of third parties and assert those interests as her own. Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 483, 102 S.Ct. 752, 764, 70 L.Ed.2d 700 (1982).
[9] Plaintiff's allegation that her right to "procedural due process" under the Fourteenth Amendment was violated because she had "no notice of the unauthorized amendment to ... § 73-3-2" in 1983 is wholly without merit. The statutory provisions pertinent to plaintiff's claim were in place as of 1979; thus plaintiff's claim of lack of notice is groundless. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1905553/ | 490 F.Supp. 304 (1980)
AMERICAN GUIDANCE FOUNDATION, INC., Plaintiff,
v.
UNITED STATES of America, Defendant.
Civ. A. No. 79-2061.
United States District Court, District of Columbia.
May 22, 1980.
*305 Lee T. Ellis, Jr., Washington, D. C., for plaintiff.
Patricia A. Scott, Dept. of Justice, Washington, D. C., for defendant.
MEMORANDUM AND ORDER
GESELL, District Judge.
Plaintiff, American Guidance Foundation, Inc. ("AGF"), a non-stock non-profit corporation operating in Philadelphia, seeks to be declared a "church" for tax purposes. After four years of administrative controversy, the Internal Revenue Service ("IRS") rejected AGF's request, leaving it classified as a private foundation, see 26 U.S.C. § 509(a) (1976), but not as a church, see 26 U.S.C. § 170(b)(1)(A)(i) (1976). Having exhausted its administrative remedies, plaintiff is properly before the Court. 26 U.S.C. § 7428(a)(1)(B) (1976). Thorough briefs were submitted by the parties, and the Court also has reviewed a substantial administrative record.
AGF was organized under Pennsylvania law by Robert Seyfried in 1972. Originally chartered as an educational organization, it successfully sought IRS exemption under section 501(c)(3) of the Internal Revenue Code. In late 1974, plaintiff "became a church" by unanimous consent of its directors, who then included Mr. Seyfried, his wife, his mother, his sister and his brother-in-law.[1] Throughout its existence, AGF has consisted of Mr. Seyfried and at most five members of his immediate family. Since August, 1977, the only members have been Seyfried, his wife and their minor child. Mr. and Mrs. Seyfried are the sole directors and officers. Mr. Seyfried, who graduated from Philadelphia College of the Bible in the 1950's and teaches in the Philadelphia school system, is presently plaintiff's one commissioned "Christian Worker." He "regularly ministers to the AGF congregation," through worship services conducted in the Seyfrieds' apartment.
In its 1974 Articles of Amendment, AGF identified its purposes as follows:
To be an independent church, as described by Section 170(b)(1)(A)(i) of the Internal Revenue Code of 1954, that, according to its insight, fosters verbally and/or non-verbally love of God everywhere with one's whole heart, soul, mind, and strength and love of one's neighbor as oneself (Mark 12:30, 31) according to the doctrines of the Holy Scriptures as found in the canonical books of the Old and New Testaments and as lawfully construed by its Board of Directors . . . .
AGF's code of doctrine and discipline is "contained in the Old and New Testaments." Record evidence as to the nature of plaintiff's tenets or creed is generalized and largely uninformative. Various AGF exhibits reveal an abiding interest in the quality of communications between people, their communication with God, and the nature of communication itself. Color television and videotape recordings are employed during worship services. The Christian Worker conducts conversational and silent prayer with AGF's congregation. AGF also *306 advertises in the Philadelphia Yellow Pages and has a recorded religious message on telephone tape. Although AGF describes itself as an independent church whose membership is not associated with any other denomination, it shares its place of worship, its telephone, its members and directors, its minister, and its conduct of services with Family Church, an organization that has not sought tax-exempt status.
It is well to begin by stating what is not at issue. The IRS concedes that plaintiff is a religious organization, qualifying for exemption under sections 501(c)(3) and 509(a) of the Code. The benefits accruing from such a determination are not in jeopardy. Difficult issues involving what constitutes sincere religious belief or practice, and how to avoid enforcing religious orthodoxy through the tax laws need not be faced. The narrower question presented here is whether this religious organization qualifies as a "church," as that term has been construed by the Service and the courts.
Although it is settled that Congress intended a more limited concept for "church" than for the previously identified "religious organization," Congress has offered virtually no guidance as to precisely what is meant. See De La Salle Institute v. United States, 195 F.Supp. 891, 897-901 (N.D.Cal. 1961); Chapman v. Commissioner of Internal Revenue, 48 T.C. 358, 361-63 (1967). Nor does a coherent definition emerge from reviewing the Service's rulings or regulations, or the limited instances of judicial treatment. One court concluded after thorough review of the relevant statutes and regulations that what is a "church" must be determined in light of general or traditional understandings of the term. De La Salle Institute v. United States, supra, 195 F.Supp. at 903. Such understandings are not easily achieved for at least two reasons. There is no bright line beyond which certain organized activities undertaken for religious purposes coalesce into a "church" structure. And the range of "church" structures extant in the United States is enormously diverse and confusing. See generally Whelan, `Church' in the Internal Revenue Code: The Definitional Problems, 45 Ford.L.Rev. 885 (1977).
Faced with the difficult task of determining whether or not religious organizations are in fact churches, the IRS has developed fourteen criteria which it applies on an ad hoc basis to individual organizations.[2] While some of these are relatively minor, others, e. g. the existence of an established congregation served by an organized ministry, the provision of regular religious services and religious education for the young, and the dissemination of a doctrinal code, are of central importance. The means by which an avowedly religious purpose is accomplished separates a "church" from other forms of religious enterprise. See Chapman v. Commissioner of Internal Revenue, supra, 48 T.C. at 367 (Tannenwald, J., concurring). At a minimum, a church includes a body of believers or communicants that assembles regularly in order to worship. Unless the organization is reasonably available to the public in its conduct of worship, its educational instruction, and its promulgation of doctrine, it cannot fulfill this associational role.
Plaintiff fails to satisfy the standard. Mr. Seyfried and his wife pray together *307 in the physical solitude of their home. They do not constitute a "congregation" within the ordinary meaning of the word. AGF has made no real effort to convert others or to extend its membership beyond the immediate Seyfried family. Its telephonic religious message hardly qualifies as dissemination of a creed or doctrine. Its "religious instruction" consists of a father preaching to his son. Its "organized ministry" is a single self-appointed clergyman. Its "conduct of religious worship" does not extend beyond the family dwelling, which is used primarily for non-religious purposes. Rather than ministering to a society of believers, plaintiff is engaged in a quintessentially private religious enterprise.
The sincerity of the Seyfrieds' own religious beliefs is unquestioned here. Although the record is far from clear in establishing a recognizable creed or formal discipline, the Court does not rely on such uncertainties. The Court also need not address the matter of AGF's dubiously independent status in view of its intimate relation to the Family Church. Instead, AGF fails to qualify under the threshold indicia of communal activity necessary for a "church."
It is not enough that a corporation believes and declares itself to be a church. Nor is it sufficient that the applicant prepares superficially responsive documentation for each of the established IRS criteria. To hold otherwise would encourage sham representations to the IRS and result in adverse tax consequences to the public at large. In this instance, AGF does not employ recognized, accessible channels of instruction and worship. There is little if any evidence that it seeks to reach or serve a congregation. Private religious beliefs, practiced in the solitude of a family living room, cannot transform a man's home into a church.
For the foregoing reasons, defendant's motion for summary judgment is granted and plaintiff's motion for summary judgment is denied. The case is dismissed.
SO ORDERED.
NOTES
[1] Different tax consequences flow from being classified a church, as opposed to a religious or educational organization that is a private foundation. Private foundations face more stringent limitations regarding inter alia permissible sources of income, required distributions of funds, and recordkeeping and reporting obligations. See generally 26 U.S.C. §§ 170; 507 509; 6033; 6056 (1976 & Supp. II 1978). Because this action seeks only relief in the form of a declaratory judgment, the Court cannot explore such differential consequences here.
[2] The criteria applied are as follows:
(1) a distinct legal existence
(2) a recognized creed and form of worship
(3) a definite and distinct ecclesiastical government
(4) a formal code of doctrine and discipline
(5) a distinct religious history
(6) a membership not associated with any other church or denomination
(7) an organization of ordained ministers
(8) ordained ministers selected after completing prescribed studies
(9) a literature of its own
(10) established places of worship
(11) regular congregations
(12) regular religious services
(13) Sunday schools for religious instruction of the young
(14) schools for the preparation of its ministers.
No single factor is controlling, although all fourteen may not be relevant to a given determination. See Speech of Jerome Kurtz, IRS Commissioner, at PLI Seventh Biennial Conference on Tax Planning, Jan. 9, 1978, reprinted in Fed. Taxes (P H) 54,820 (1978). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2359694/ | 241 P.3d 611 (2010)
2010-NMCERT-007
STATE
v.
MONTOYA.
No. 32,464.
Supreme Court of New Mexico.
July 13, 2010.
Denials of Certiorari. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1893525/ | 308 B.R. 398 (2004)
In re Joseph O. EDELMANN, Sr., Debtor.
No. 03-40504-659.
United States District Court, E.D. Missouri, Eastern Division.
April 12, 2004.
*399 Howard S. Smotkin, St. Louis, MO, for Trustee.
E. Rebecca Case, Saint Louis, MO, Chapter 7 Trustee.
Robert E. Eggmann, St. Louis, MO, for Debtor.
MEMORANDUM OPINION AND ORDER
KATHY ANN SURRATT-STATES, Bankruptcy Judge.
The matter before the Court is Trustee's Amended Objection to Property Claimed as Exempt (hereinafter "Objection") and Debtor's Response to Trustee's Objection to Property Claimed as Exempt. On June 6, 2003, the parties filed a Joint Stipulation of Facts and Exhibits. Also, on June 6, 2003, Debtor filed an Opposition Brief to Trustee's Amended Objection to Property Claimed as Exempt, and Trustee filed a Supporting Brief of the Trustee's Amended Objection to Property Claimed as Exempt. A hearing on the matter was held on June 9, 2003, at which counsel for Trustee and counsel for Debtor presented oral argument. The Court, having reviewed the pleadings and the file and having considered the arguments of counsel, makes the following FINDINGS OF FACT:
The Trustee in this case is E. Rebecca Case (hereinafter "Trustee"). Debtor Joseph O. Edelmann (hereinafter "Debtor") filed a Voluntary Petition for Relief under Chapter 7 of the United States Bankruptcy Code on January 14, 2003 ("Petition Date"). Debtor is married to Elizabeth J. Edelmann (hereinafter "Mrs. Edelmann") and has been in excess of 25 years. As of the Petition Date, Debtor was a beneficiary of the Joseph and Elizabeth Edelmann Family Trust dated March 10, 1997 (hereinafter the "Trust"). The Trust contains two assets: the home in which Debtor and Mrs. Edelmann reside, located at 9012 Pine Avenue, St. Louis, Missouri 63144 (hereinafter the "Real Estate") and several investment accounts at A.G. Edwards totaling $50,668.01 (hereinafter the "Investment *400 Account"). The Grantors under the Trust are Debtor and Mrs. Edelmann.
The Real Estate was owned by Mrs. Edelmann's parents prior to the acquisition of the Real Estate by the Trust. Mrs. Edelmann's siblings deeded the Real Estate to Mrs. Edelmann and at least one of the siblings deeded their share of the Real Estate jointly to Debtor and Mrs. Edelmann. Debtor paid no consideration for his interest in the Real Estate. On March 10, 1997, Debtor and Mrs. Edelmann executed a quit claim deed in favor of the Trust with respect to the Real Estate. As of the Petition Date, Debtor and Mrs. Edelmann held no joint debts other than their liability on the Deed of Trust secured by the Real Estate. The Real Estate constitutes the primary residence of Debtor and Mrs. Edelmann. Neither Debtor nor Mrs. Edelmann was insolvent at the time the Trust was created. Neither Debtor nor Mrs. Edelmann was insolvent at the time any assets were transferred to the Trust.
Trustee raises the following arguments against Debtor's claim of exemption pursuant to § 541(c)(2). First, Trustee argues that Debtor cannot claim a homestead exemption for the Real Property because Debtor has no ownership interest in the Real Property. Second, Trustee argues that the Real Property is not held as tenancy by the entirety because Debtor and Mrs. Edelmann severed the tenancy by the entirety when they conveyed it to themselves as co-trustees of the Trust. Last, Trustee argues that the Trust is not a spendthrift trust because Debtor and Mrs. Edelmann exercise an impermissible degree of control over the Trust assets. Debtor argues that the Trust is a valid spendthrift trust under Missouri law, and Debtor should be allowed to exempt the Real Estate and Investment Account pursuant to § 541(c)(2). At the hearing, the first and second arguments posed by Trustee were not addressed by Debtor and are not in dispute. Therefore, the primary issue before the Court is whether the Trust is a spendthrift trust. The Court addresses this issue below.
JURISDICTION
The Court has jurisdiction of this matter pursuant to 28 U.S.C. §§ 151, 157 and 1334 (2003), and Local Rule 81-9.01(B) of the United States District Court for the Eastern District of Missouri. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A) (2003). Venue is proper under 29 U.S.C. § 1409(a) (2003).
CONCLUSIONS OF LAW
"The commencement of a case under section 301 . . . creates an estate . . . [and][s]uch estate is comprised of . . . [a]ll interests of the debtor and the debtor's spouse in community property [at] the commencement of the case that is under the sole, equal, or joint management and control of the debtor." 11 U.S.C. § 541(a)(2) (2003). "[A]n interest of the debtor in property becomes property of the estate under subsection (a)(2) . . . unless [a] restriction on the transfer of the beneficial interest of the debtor in a trust . . . is enforceable under applicable nonbankruptcy law . . ." 11 U.S.C. § 541(c)(1), (2) (2004). Federal Courts may look to state and federal nonbankruptcy law to determine whether property is excludable under § 541(c)(2). Drewes v. Schonteich, 31 F.3d 674, 676 (8th Cir.1994). Therefore, the Court may determine what constitutes a spendthrift trust under Missouri law and other federal courts applying Missouri law.
Under Missouri law, a spendthrift trust prevents a settlor's creditors from satisfying a claim against trust assets before payment is made to the designated *401 beneficiary under the trust.[1] However, there are two exceptions to this general rule. First, a spendthrift trust is invalid "[w]here the conveyance of assets to the trust [is] intended to hinder, delay, or defraud creditors or purchasers, pursuant to section 428.020 . . ." Rev. Stat. Mo. § 456.080.3(1) (2003). There is no issue of fraud present under the facts, so the first exception does not apply.
However, under the second exception, a spendthrift trust is invalid
[t]o the extent of the settlor's beneficial interest in the trust assets, if at the time the trust was established or amended:
(a) The settlor was the sole beneficiary of either the income or principal of trust or retained the power to revoke or amend the trust; or
(b) The settlor was one of a class of beneficiaries and retained a right to receive a specific portion of the income or principal of the trust that was determinable solely from the provisions of the trust instrument . . .
Rev. Stat. Mo. § 456.080.3(2) (2003).
The Eighth Circuit addressed the validity of spendthrift trusts under Missouri law in In re Markmueller, 51 F.3d 775 (8th Cir.1995). In Markmueller, a debtor filed for bankruptcy protection but failed to disclose his interest in a trust. Id. at 776. Debtor filed an amendment with the Bankruptcy Court listing his interest in the trust four months later but claimed that the trust was excludable from his bankruptcy estate as an enforceable spendthrift trust. Id. The trustee filed a motion to compel debtor to turn over the trust property. Id. The trustee argued that the trust assets were property of the bankruptcy estate because the trust was not a valid spendthrift trust under Missouri law. Id. The Eighth Circuit held that a spendthrift trust is invalid if the settlor of the trust has the power to revoke the trust or exercises dominion or control over trust assets. Id. at 777.
In addition, Bankruptcy Courts in the Eastern District of Missouri have found spendthrift trusts invalid under Missouri law where: (1) the settlor of the trust is also the beneficiary of the trust; (2) the beneficiary has dominion or control over the trust; (3) the beneficiary may revoke the trust; or (4) the beneficiary has powers in the trust. In re Brown, 130 B.R. 304, 308 (Bankr.E.D.Mo.1991) (citing In re Davis, 125 B.R. 242, 245 (Bankr.W.D.Mo.1991)). Thus, the Court must determine whether these elements are present in this case.
The first issue is whether Debtor and Mrs. Edelmann (the "Edelmanns") are settlors and beneficiaries of the Trust in violation of Missouri law. A settlor is "[a] person who makes a settlement of property; [especially] one who sets up a trust." BLACK'S LAW DICTIONARY 1378 (7th ed.1999). A beneficiary is the person designated to receive the income of a trust estate. See BLACK'S LAW DICTIONARY 149 (7th ed.1999). The Edelmanns established the Trust and both parties transferred assets to the trust. The Trust instrument indicates that the proceeds generated by the Trust may be used by the Edelmanns as beneficiaries of the Trust.[2] Thus, the Edelmanns are *402 both settlors and beneficiaries of the Trust in violation of Missouri law.[3]
The second issue is whether the Edelmanns exercise dominion or control over the Trust in violation of Missouri law. Debtor argues that the Trust can be amended solely by the joint consent of Debtor and Mrs. Edelmann. It follows that since the Trust cannot be solely amended or changed by Debtor, Debtor has no meaningful control over the Trust. The Court disagrees with Debtor's assessment of the Trust. First, the Trust grants the Edelmanns sole power to amend, alter, or cancel the Trust.[4] As beneficiaries of the Trust, such broad powers to transform the purpose of the Trust up to and including cancellation of said Trust constitutes sufficient control over the Trust in violation of Missouri law.
If the Court follows Debtor's analysis, Debtor could avoid paying his creditors by shielding his interest in the Trust assets, cancel the Trust (with consent of Mrs. Edelmann) upon completion of his bankruptcy, and later receive his share of the corpus and proceeds of the Trust. Such events inure to the benefit of Debtor and to the detriment of his creditors. The potential abuses of spendthrift trusts is the reason the legislature enacted Rev. Stat. Mo. § 456.080.3 (2003). The Edelmanns are self settled beneficiaries exercising complete control over the Trust, so the self-settled nature of the Trust cannot be rehabilitated by its spendthrift provision. Therefore, the Court rejects the Debtor's argument.
The last issue is whether the Edelmanns may revoke the Trust in violation of Missouri law. Debtor argues that he has no unilateral right to revoke or amend the Trust.[5] The Court disagrees. As discussed above, the Edelmanns may revoke the Trust within their powers under the Trust Indenture. The mere fact that Debtor cannot solely revoke the Trust is irrelevant given the potential for abuse. Debtor further argues that ITEM SEVEN, Paragraph (E), contains a valid spendthrift provision, which shields the corpus and income from creditors of the Edelmanns or their children. This argument also fails since the Trust is self-settled in violation of Missouri law. The Court finds that three (3) of the four (4) elements discussed in Brown are present in this case. Consequently, the Court finds that the Trust is not a valid spendthrift trust under Missouri law. Therefore, Trustee's Objection must be sustained.
*403 It is accordingly ORDERED that Trustee's Amended Objection to Property Claimed as Exempt is SUSTAINED.
NOTES
[1] "The settlor may provide in the terms of the trust that the interest of a beneficiary may not be either voluntarily or involuntarily transferred before payment or delivery of the interest to the beneficiary by the trustee." Rev. Stat. Mo. § 456.080.2 (2003).
[2] "During the lifetimes of the Grantors, the Co-Trustees shall pay over to Grantors or use and apply the net income of the Trust Estate for the benefit of the Grantors, and the Co-Trustees may also . . . use and apply such portion or portions of the principal of the Trust Estate for the care, support, maintenance and comfort of the Grantors . . ." Exhibit A of Joint Stipulation of Facts and Exhibits, Indenture of Trust, ITEM TWO.
[3] These so called "self-settled" trusts have long been declared invalid under Missouri law. See Jamison v. Mississippi Valley Trust Co., 207 S.W. 788 (Mo.1918) (held that a settlor cannot settle property and provide conditions against that property being subject to the payment of his own debts, even if the settlor provides for a contingent remainder in third persons).
[4] "The Grantors Jointly or the surviving Grantor individually may, in his or her personal discretion, at any time during their respective lifetimes, revoke this Indenture in its entirety, thereby terminating the Trust, and receive as their, his or her own property all of the assets, both principal and income . . . [t]he Grantors . . . individually may amend, alter or modify this Indenture, or revoke any portion or portions . . . and may amend, alter or revoke any amendments . . ." Exhibit A of Joint Stipulation of Facts and Exhibits, Indenture of Trust, ITEM NINE, Paragraphs (A) and (B).
[5] Debtor's Memorandum in Opposition at 7. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1097528/ | 483 So. 2d 1351 (1986)
Jim ROSE
v.
MERCURY MARINE, A DIVISION OF BRUNSWICK CORP.
No. 55354.
Supreme Court of Mississippi.
February 19, 1986.
John L. Hunter, David O. McCormick, Cumbest, Cumbest & Hunter, Pascagoula, for appellant.
Joe R. Colingo, Bryant, Stennis & Colingo, Pascagoula, for appellee.
Before ROY NOBLE LEE, P.J., and SULLIVAN and ANDERSON, JJ.
ROY NOBLE LEE, Presiding Justice, for the Court:
The Circuit Court of Jackson County, Honorable Robert T. Mills, presiding, sustained a motion to dismiss the tort declaration (complaint) of Jim Rose against Mercury Marine, a Division of Brunswick Corporation, under the "second accident doctrine" or "second impact doctrine." Rose has appealed to this Court and assigns the following error in the trial below:
THE LOWER COURT ERRED IN DISMISSING THIS SUIT BASED ON THE ARCHAIC, OUT-DATED, OUT-MODED DOCTRINE COMMONLY REFERRED TO AS "SECOND ACCIDENT DOCTRINE," "SECOND IMPACT DOCTRINE," OR "CRASH WORTHINESS DOCTRINE."
The case of Toliver v. General Motors Corporation, 482 So. 2d 213, (1985), petition for rehearing denied February 12, 1986, is a second impact doctrine case and decided the issue of whether or not Toliver, who was injured in a collision between his Vega and another automobile, may assert a cause of action against the manufacturer of the Vega, because his injuries were proximately caused or enhanced by the alleged defective design or construction of the Vega automobile. In overruling Walton v. Chrysler Motor Corp., 229 So. 2d 568 (Miss. 1969), and cases following Walton, e.g., Odum v. Glover, 413 So. 2d 722 (Miss. 1982); Pattillo v. Cessna Aircraft Corp., 379 So. 2d 1225 (Miss. 1980); Jones v. Babst, 323 So. 2d 757 (Miss. 1975); Baker v. Ford Motor Co., 317 So. 2d 51 (Miss. 1975); General Motors Corp. v. Howard, 244 So. 2d 726 (Miss. 1971); and Ford Motor Co. v. Simpson, 233 So. 2d 797 (Miss. 1970); this Court has aligned itself with the majority of jurisdictions, supporting and upholding the second impact doctrine.
Toliver decides and controls the case sub judice.
On July 4, 1981, appellant and his family had beached their boat on the banks of the Tchoutacabouffa River. Appellant, wearing an orange life preserver was swimming in the river, when a 1973 Thunderbird formula model boat, powered by an outboard or stern drive motor and operated by John L. Jimerson, struck him. The manufacturer of the motor and the propellor was Mercury *1352 Marine, a Division of the Brunswick Corporation, the appellee.
Jimerson was pulling a water skier, when his son, who was also in the boat, yelled that they were about to hit someone. Immediately, Jimerson placed the motor in neutral. However, in that type motor, the propellor powering the boat continues to turn when in neutral. Appellant was hit by the boat and knocked under it, where he was then struck by the propellor and severely cut and injured.
Appellant filed suit against the appellee herein and joined Thunderbird Products Corporation, seller of the boat, and John L. Jimerson, individually. Subsequently, the claims against Thunderbird and Jimerson were settled.
The declaration charged acts of negligence against appellee, consisting of defective design of the motor and boat, and particularized such acts. Appellee filed a motion to dismiss for failure to state a claim upon which relief could be granted, based on the "second accident doctrine," and relied upon the law existing at that time in Mississippi. The lower court, following Walton v. Chrysler Motor Corp., supra, and its progeny, sustained the motion and dismissed the declaration.
In Toliver, supra, this Court said:
In a design case, just as in the case of a manufacturing defect, the plaintiff must show that the product was defective and that its defective condition made the product unreasonably dangerous to him. Comment g. to Section 402A defines defective condition as "a condition not contemplated by the ultimate consumer, which will be unreasonably dangerous to him." In the context of fuel tank design, obviously the plaintiff contemplated that the automobile which he purchased had a fuel tank affixed to it, which could become dangerous under some circumstances. Therefore, in order to make out his prima facie case, he must show that the placement of the tank on the car that injured him was defective: that it fell below the standard of automotive design contemplated by the user, and, thus, became unreasonably dangerous to him. See, e.g., Ford Motor Co. v. Matthews, 291 So. 2d 169 (Miss. 1974).
To prove his case, the plaintiff may introduce evidence of industry standards, to show deviation therefrom, or an alternative design, to show the feasibility thereof. The defendant may then offer evidence in rebuttal.
We hold, then, that Edward Toliver may bring his cause of action under a theory of strict liability, where he will be required to show that his automobile was in a defective condition, unreasonably dangerous to him, that the defect existed when General Motors sold his Vega, and that he was injured by that defect. We note that Toliver may also bring his action under a theory of negligence. As we held in State Stove, strict liability "does not preclude liability based upon the alternative ground of negligence of the seller, where such negligence can be proved." 189 So.2d at 118. We reiterated this view in Hamilton, 285 So. 2d 744. Under this theory, the usual defenses to a charge of negligence would apply.
In conclusion, we find that Edward Toliver has stated a cause of action upon which relief may be granted. We, therefore, reverse the trial court's dismissal under Rule 12(b)(6) and remand this case for a trial on the complaint.
Toliver, supra, at pp. 218 - 219.
Likewise, we reverse the trial court's dismissal of the declaration in the present case, and remand to the lower court for trial on the merits.
REVERSED AND REMANDED.
PATTERSON, C.J., and HAWKINS, DAN M. LEE, PRATHER, ROBERTSON, SULLIVAN and ANDERSON, JJ., concur.
WALKER, P.J., not participating. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1097527/ | 483 So. 2d 861 (1986)
Phillip WHITE and Yolanda Shines, Appellants,
v.
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, Appellee.
Nos. 85-625, 85-635.
District Court of Appeal of Florida, Fifth District.
February 27, 1986.
Jane E. Carey, Orlando, for appellant Phillip White.
Wanda Fishalow, Orlando, for appellant Yolanda Shines.
Douglas E. Whitney, Dist. Counsel, and Gerry L. Clark, Asst. Dist. Counsel, Dept. of Health and Rehabilitative Services, Orlando, for appellee.
PER CURIAM.
Appellants appeal the permanent termination of their parental rights. We reverse. *862 The lower court neglected to inform appellants of their right to obtain counsel during the dependency proceedings. The results of these proceedings were used as a basis for the lower court's adjudication of permanent termination. See In the Interest of A.T.P., 427 So. 2d 355 (Fla. 5th DCA 1983). For this reason, we reverse the order terminating parental rights.
REVERSED and REMANDED.
COBB, C.J., and UPCHURCH, J., concur.
COWART, J., concurs specially with opinion.
COWART, Judge, concurring specially:
This case considers the constitutional due process right to appointed counsel, the due process right to be advised as to the right to be represented by counsel of choice, and the statutory and rule rights to counsel of parents during the various stages of a dependency proceeding which results in a permanent termination of parental rights.
An (amended) dependency petition relating to Tl. and Ts. Shines, twenty-month old twins of Phillip White and Yolanda Shines, was filed on January 4, 1984. At a detention hearing on the same day, the juvenile judge entered an "order of adjudication" finding as a fact that "both parents admitted [that] all allegations of the amended petition are true" and set a date for a disposition hearing. The next day, on an ex parte motion of H.R.S., the court ordered both parents to undergo psychological examination. At the disposition hearing on February 16, 1984, H.R.S. filed a predispositional report and, based on it and the factfinding at the detention hearing, the court adjudicated the twins to be dependent,[1] placed them in the temporary custody of H.R.S., and ordered the parents to enter into a performance agreement. Neither the parents nor the children were present, or represented by counsel, at the February 16, 1984, disposition hearing and there is no record that they were notified of that hearing. On March 7, 1984, the parents entered into a performance agreement. The parents were present at a review hearing on August 14, 1984. At a second review hearing on November 27, 1984, the parents were first informed of their right to counsel. The parents immediately requested the assistance of counsel and counsel was appointed to represent them. On January 15, 1985, a petition for termination of parental rights was filed alleging that the children had been abused and neglected, that the parents had abandoned the children by failing to support and to regularly visit them while they were in the H.R.S. foster home, and that the parents had failed to substantially comply with the performance agreement. The petition for permanent termination specifically alleged that "both children were adjudicated to be dependent by reason of abuse and neglect February 16, 1984."
During the adjudicatory hearing on the petition to terminate parental rights, the trial court took judicial notice of the petition for dependency and the order of January 4, 1984, upon request of the H.R.S. attorney. The dialogue between counsel and the court is as follows:
MR. LYKKEBAK: Request the Court, with regards to the file before it, take judicial notice first of the petition for dependency, which was filed the first of the year, 1984. The case was assigned the number JU84-10. And then the order of adjudication, which was dated, I believe, January 4, 1984 ...
THE COURT: (Interposing) Yes, I'm looking at it, in which both parents admitted all allegations of the amended petition.
MR. LYKKEBAK: That's correct, Your Honor.
THE COURT: All right.
*863 MR. LYKKEBAK: A a predisposition report was then ordered, and it was filed February 15th, 1984. I'd request the Court take judicial notice of that.
THE COURT: All right. That motion granted also.
MR. LYKKEBAK. The dispositional hearing was conducted February 16, 1984, and I would request the Court take judicial notice of that order of disposition adjudicating the children to be dependent.
THE COURT: (Simultaneous Speech) That motion granted.
MR. LYKKEBAK: I believe that you can note on that order that the parents were not present. The persons present for the dispositional hearing were Jean Wilson and Sharon Graham for the Department and the Guardian Ad Litem. The parents were not there.
THE COURT: Let me interrupt there.
Ms. Fishalow, do you or Mr. Parkinson, either one, know why the parents weren't present at the order of disposition date, February 16, 1984?
MS. FISHALOW: They I seem to recall, they were not aware of this hearing or had forgotten about the hearing, Your Honor, but I would, at this time, since the Court is taking judicial notice that they weren't present, I'd question ...
THE COURT: (interposing) Well, I can't take judicial notice of that, but the directory reflects that they were not present, but ...
MS. FISHALOW: (Interposing) I would question the validity ...
THE COURT: (interposing) And they were not represented at that time, were they?
MS. FISHALOW: No, Your Honor, they were not represented and they weren't there. The child wasn't there.
THE COURT: (Simultaneous Speech) All right. Okay.
MS. FISHALOW: I'd I'd question the validity of the order of disposition.
THE COURT: Well, the order is valid. All right, go ahead. I'll grant the motion to take judicial notice of that order, Mr. Lykkebak.
* * * * * *
MR. LYKKEBAK: All right. Then, Your Honor, there is an August 1, 1984, judicial review social study report which we request the Court take notice of.
THE COURT: Dated July 31 and then filed August 1, is that right?
MR. LYKKEBAK: Right.
THE COURT: All right, motion granted.
As shown by the dialogue above, H.R.S. also offered into evidence (or had the court take notice of) various written H.R.S. reports and inter-office memos (including the predisposition report filed February 15, 1984, and the August 1, 1984 social study report mentioned in the above dialogue) reciting facts relevant and material to the issues in the permanent termination hearing. The parents' counsel's hearsay objections were overruled on the basis of a sentence in section 39.408(2), Florida Statutes (1983) (§ 39.408(3), Fla. Stat. (Supp. 1984)), that authorizes the court to review such reports in a dependency disposition hearing "even though not competent in an adjudicatory hearing." When, in the adjudicatory hearing on the permanent termination petition, the parents' counsel objected that the H.R.S. reports were not only hearsay but went "far beyond what they were intended for", the court replied, "yeah, but I've already received them in evidence. I'm going to consider them." Thereafter the court considered as proved the facts in the earlier dependency proceedings in the case, and in the H.R.S. written reports in evidence, including the disclosures the parents made at the court ordered psychological examination of the parents.
At the conclusion of the permanent commitment hearing the trial court noted that "neglect and abuse has already been determined by the dependency [order]" and the H.R.S. counsel agreed. The trial court then directed the H.R.S. attorney to prepare an order permanently terminating parental rights based on all grounds alleged, *864 viz: abuse, neglect, abandonment, and failure to perform the performance agreement. The parents appeal arguing that they should have had counsel at the earlier stages of the proceedings, and that the court erred in (1) considering hearsay at the adjudicatory hearing on the permanent commitment petitions, (2) in relying on the earlier adjudication of abuse and neglect in the dependency proceedings, and (3) in not ordering a current predispositional study.
In In the Interest of D.B., 385 So. 2d 83, 87, 91 (Fla. 1980), the supreme court stated, "[w]e find that a constitutional right to counsel necessarily arises where the proceedings can result in permanent loss of parental custody." "[C]ounsel will always be required where permanent termination of custody might result." (emphasis supplied)
Further, in In the Interest of D.B., 385 So.2d at 91, the Florida Supreme Court noted that:
certain due process requirements must be observed even though counsel is not constitutionally required. All parents must be given notice of a dependency hearing, advised that they have a right to be represented by counsel of their choice, and afforded a period of time to obtain counsel which is reasonable under the circumstances.
Section 39.406, Florida Statutes, applicable to dependency cases, provides:
Notwithstanding the filing of an answer or any pleading, the child or parent shall, prior to an adjudicatory hearing, be advised by the court of his right to counsel and should be given an opportunity to deny the allegations in the petition for dependency or to enter a plea to allegations in the petition before the court.
This court, citing section 39.406 and In the Interest of D.B., has also held that a parent is entitled to be advised of the right to be represented by privately retained counsel prior to an adjudicatory dependency hearing. In the Interest of A.T.P., 427 So. 2d 355, 357 (Fla. 5th DCA 1983).
In A.T.P., the mother and child appeared at a "detention hearing" (actually a summary adjudication hearing). Id. at 356. After reading the dependency petition to them, the assistant state attorney told the child that if there were anything untrue in the petition, she could deny it and an adjudicatory hearing would be set. The child admitted the petition's truth and the court set the matter for dispositional hearing. Id. at 357. This court held that the trial court's failure to give the child an opportunity to obtain counsel was reversible error. Id. (citing In the Interest of D.B., supra).
The facts in this case are similar to those in A.T.P. Here, as in A.T.P., the affected parties (the child in A.T.P. and both parents in this case) at a detention hearing, were asked about and admitted all allegations in the amended dependency petition. In neither case were the parties represented by counsel at the hearing in which the trial court found and adjudicated the vital facts upon which the dependency charges were based and in neither case did the record reveal that the trial court advised the parties of their right to obtain private counsel.
The record in the instant case reveals that the parents were not advised of their right to retain counsel until the trial court's third review of the case. Thus, under the holding of A.T.P., the lower court's failure to advise the parents, at the earlier stages of the dependency proceedings, of their right to retain private counsel was a violation of their due process rights.[2] Furthermore, in the later adjudicatory hearing in *865 the permanent commitment proceeding, the court took judicial notice of the parents' earlier uncounseled admissions of the allegations of the petition in the early dependency proceedings.
Part of the problem in "permanent commitment" cases is that the applicable statutes and rules make the procedure unclear as to any earlier "dependency" proceedings. Section 39.404, Florida Statutes, contemplates one petition for dependency. Section 39.403, Florida Statutes (1983), contemplates two stages in the proceeding: an adjudicatory hearing and a disposition hearing.[3] Under section 39.41(1)(f) a permanent commitment is but one of six authorized dispositions in a dependency proceeding, notwithstanding that section 39.41(1)(f), as well as section 409.168(3)(a)6.h, Florida Statutes (1983), and other statutes[4] and rules and case law, establish procedural and substantive prerequisites to a permanent termination of parental rights not required as to the other five dispositions authorized by section 39.41(1).
A common practice seems to be, as in this case and in A.T.P., supra, that the parents (or the child), who are without counsel, are called on to plead to the dependency petition at what is actually a detention hearing held under section 39.402(6)(a), Florida Statutes, and that if the facts alleged in the dependency petition are admitted, the adjudicatory hearing is treated as a mere formality and the proceeding moves on to a disposition hearing. However, often, as here, dependency disposition hearings and dependency disposition orders are not final hearings and final orders in the cause but adjudicate dependency, place temporary custody of the child with H.R.S., and order the parents to enter into a performance agreement which, when unperformed, leads directly to, and in combination with the adjudicated facts underlying the original dependency petition and order, is the basis for, a later petition for termination of parental rights. In this situation the petition for termination of parental rights is, and is treated as, but another stage or continuation of the original dependency proceeding rather than as the initiation of a new (permanent termination) proceeding to be procedurally subdivided again into an adjudicatory stage and a separate disposition stage at which parents' constitutional and due process rights to counsel are recognized. This merging of the original dependency proceeding with the later permanent commitment proceeding, and the merging of the adjudicatory and disposition stages of the permanent commitment proceeding, result in confusion and substantive legal errors.[5]
In this case the parents did not have counsel, and were not advised of their right to counsel when asked to plead to the truth *866 of the allegations in the dependency petition; their uncounseled action in effect waived the adjudicatory stage of the original dependency proceeding and directly resulted in a factual finding of neglect and abuse and the entry of a dispositional order requiring the parents to enter into a performance agreement. Their failure to perform that agreement, as well as the trial court's reliance on the prior uncounseled adjudication of neglect and abuse, were the bases for the order permanently terminating their parental rights in this case.
To be effective, counsel must be afforded at the earliest critical stage of any proceeding and certainly before one is required to answer to charges and allegations adverse to their legal interests in that proceeding.[6] Because a permanent loss of parental rights "can result" or "might result" (In the Interest of D.B., supra), from admitting acts of child neglect, child abuse or acts of non-support and non-communication (statutory abandonment under § 39.01(1), Fla. Stat.), a parent, before being called on to plead to a dependency petition alleging child abuse, neglect or abandonment, should be advised by counsel (1) of the consequences of a plea of consent to a dependency proceeding, see, e.g., Monteiro v. State, 477 So. 2d 45 (Fla. 3d DCA 1985), (2) of the right to a hearing, (3) of the effect of a dependency adjudication as to a subsequent permanent termination, and (4) of his or her rights at the time of entering into a performance agreement,[7] as well as at the permanent termination hearing. Every lawyer knows that a client needs an attorney before executing an agreement and that after executing an agreement an attorney's assistance is greatly reduced. There is no need to appoint counsel at the gallows' foot.
The situation is similar to that relating to counsel for a defendant charged with a misdemeanor. Under Argersinger v. Hamlin, 407 U.S. 25, 92 S. Ct. 2006, 32 L. Ed. 2d 530 (1972), if the accused is to receive even a very brief jail term he must have had, or to have knowingly waived, counsel at every critical stage of the proceeding. It is not absolutely necessary that the accused have, or waive counsel, but if he does not, he cannot be confined. Similarly, if dependency proceedings are to be part of a later proceeding resulting in permanent loss of parental custody, the parents should have, or knowingly waive, counsel. Conversely, if they do not have, or knowingly waive, counsel, those uncounseled proceedings should not be used as any part of the proceeding to permanently terminate parental rights.
Other errors resulted from the merger and commingling of the original dependency proceeding with the proceeding to permanently terminate parental rights in this case. There is a vital difference between the standard of proof in an initial adjudication of dependency and that in a permanent commitment proceeding. See In the Interest of L.T., 464 So. 2d 201 (Fla. 5th DCA 1985). In this case, that difference in the burden of proof was ignored and the judicial notice of the initial adjudication of dependency, which was based on the parents uncounseled judicial admissions, was taken as clear and convincing proof of abuse and neglect in the permanent commitment proceeding.
The fact that the permanent commitment hearing constituted a new adjudicatory and disposition hearing involves two further matters. First, the parents were entitled to having the court consider a new predisposition study under section 39.408(2), Fla. Stat. (1983) (§ 39.408(3), Fla. Stat. (Supp. 1984)) that should have related to the acts and circumstances current at the time of the permanent commitment hearing on March 14, 1985, rather than only the two-year old predisposition study that was filed with the court at the disposition hearing on the original dependency proceeding on February *867 16, 1983.[8] Secondly, since the hearing on the petition for permanent commitment was also a new adjudicatory hearing, the trial court erred in receiving into evidence the written H.R.S. reports which are admissible only at a separate disposition hearing under section 39.408(2), Fla. Stat. (1983) [§ 39.408(3), Fla. Stat. (Supp. 1984)]. This action violated the usual hearsay rule (see § 90.802, Fla. Stat.) and the specific dictates of section 39.41(1)(f)3., Fla. Stat. (1984), that findings of fact in permanent commitment proceedings must be based on evidence admissible under the rules of evidence.
In sum, the trial court erred in receiving into evidence, over a proper hearsay objection, H.R.S.'s written reports and considering them in connection with the adjudicatory hearing on the permanent commitment petition. The trial court also erred in the permanent commitment hearing in taking judicial notice of the adjudication of neglect and abuse in the earlier dependency hearing in which the parents were not represented by counsel nor advised, as required by statute and due process, of their right to counsel, and in which the standard of proof was less than in the permanent commitment proceeding. The trial court also erred in not considering a new predispositional study at the disposition stage of the permanent commitment hearing. As the parents' admissions as to the original dependency petition in this case resulted in an adjudication of their abuse and neglect (which are two grounds for permanent commitment) and resulted in placement of the twins in a foster home where lack of parental visitation resulted in a charge of abandonment (a third ground for permanent commitment) and resulted in a performance agreement (the failure to perform being a fourth ground for permanent commitment), the parents were entitled to counsel at every stage of the dependency proceeding including prior to being called on to plea to the charges of neglect and abuse in original dependency proceedings and before entry into the performance agreement[9] because both matters contributed and led directly to the permanent termination of parental rights in this case.
NOTES
[1] The father, a disabled unemployed boyfriend of the mother, kept the children while the mother (described psychiatrically as "a dull, concrete, simple individual of low-intelligence) attempted to work and make a living for the "family" of five. The dependency adjudication was based on some abuse of one twin by the father and neglect by both parents as shown by the fact that the twins were greatly undernourished.
[2] The rights of parents to counsel in dependency proceedings have been restated in Florida Rule of Juvenile Procedure 8.560, which provides:
(a) Duty of the Court.
(1) At each stage of the proceeding the court shall advise the parent, guardian or custodian of their right to have counsel present. The court shall appoint counsel to insolvent persons who are so entitled as provided by law. The court shall ascertain whether the right to counsel is understood and where appropriate, knowingly and intelligently waived. The court shall enter its findings in writing with respect to the appointment or waiver of counsel for insolvent parties as aforementioned.
(2) The court may appoint an attorney for the parent, guardian or custodian of a child, as provided by law.
(b) Waiver of Counsel.
(1) No waiver shall be accepted where it appears that the party is unable to make an intelligent and understanding choice because of his mental condition, age, education, experience, the nature or complexity of the case, or other factors.
(2) A waiver of counsel made in court shall be of record. A waiver made out of court shall be in writing with not less than two attesting witnesses, and shall be filed with the court. Said witnesses shall attest the voluntary execution thereof.
(3) If a waiver is accepted at any stage of the proceedings, the offer of assistance of counsel shall be renewed by the court at each subsequent stage of the proceedings at which the party appears without counsel.
[3] The 1984 amendment to section 39.408 contemplates three stages: an arraignment hearing; and adjudicatory hearing, and a disposition hearing.
[4] See, e.g., § 39.41(1)(f)3., Fla. Stat. (Supp. 1984), which specifies that in termination proceedings judicial findings must be "by clear and convincing evidence at a hearing applying the rules of evidence... ."
[5] Some of this problem may have been corrected by an amendment to the Florida Juvenile Rules of Procedure effective January 1, 1985 (Petition of The Florida Bar to amend the Florida Rules of Juvenile Procedure, 462 So. 2d 399 (Fla. 1984)). Under the 1985 rule amendment, Rule 8.510 treats the petition for permanent commitment as the initiation of a new and original proceeding, which, presumably, under the 1984 amendment to section 39.408, will be divided into three stages or hearings: arraignment, adjudication and disposition.
[6] This principle has frequently been applied in cases involving counsel in probation revocation proceedings. See Hicks v. State, 452 So. 2d 606 (Fla. 4th DCA 1984), expressly approved, 478 So. 2d 22 (Fla. 1985).
[7] The performance agreement in this case required the parents to earn a minimum of $618 per month. Had the parents been counseled when they executed the performance agreement, they might have reconsidered the reasonableness of such a requirement.
[8] A predisposition study as of March 14, 1985, would have disclosed that the twins, Tl. and Ts., were then in good health and that their mother was adequately caring for her older son Phillip Shines, age 5, and a new set of twins and was accordingly personally fit to care for Tl. and Ts. Here, as in T.S. v. H.R.S., 464 So. 2d 677 (Fla. 5th DCA 1985), the charge of abandonment was based on the failure of the mother to visit her children as scheduled at a district H.R.S. office, a problem that is entirely eliminated by the return of the custody of the children to the mother. The trial court expressed doubt that Yolanda Shines could financially care for her older son, the new set of twins, and the twins Tl. and Ts. As to this, see In the Interest of J.R.C. and L.R.C. Henderson v. H.R.S., 480 So. 2d 198 (Fla. 5th DCA 1986).
[9] Contra In the Interest of M.J.W., 453 So. 2d 914 (Fla. 1st DCA 1984). However, this point is moot if section 39.41(1)(f)(1)(d), Florida Statutes, which authorizes permanent severance of all parental rights for failure to substantially comply with a performance agreement, is unconstitutional as was held in In the Interest of R.W., C.A.W., M.I.W., C.P., M.E.P., and A.P. (Pollock v. H.R.S.), 481 So. 2d 548 (Fla. 5th DCA 1986). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1097525/ | 483 So. 2d 958 (1986)
The BOARD OF COMMISSIONERS OF the ORLEANS LEVEE DISTRICT
v.
The DEPARTMENT OF NATURAL RESOURCES of the State of Louisiana.
Nos. 85-CA-1448, 85-CD-1102 and 85-CD-1107.
Supreme Court of Louisiana.
February 24, 1986.
Rehearing Granted May 15, 1986.
*959 William J. Guste, Jr., Atty. Gen., Elizabeth Megginson, David C. Kimmel, Asst. Attys. Gen., for D.N.R.
William E. Wright, David P. Banowetz, Jr., Baldwin & Haspel, James Magee, New Orleans; David P. LaNasa, Dale B. Morrison, New Orleans, for defendant-intervenor.
Sam A. LeBlanc, Franklin Adkins, Adams & Reese, Richard Goins, New Orleans, for Board of Com'rs of Orleans Levee Dist.
Michael R. Fontham, Catherine N. Garvey, Paul L. Zimmering, Stone, Pigman, Walther, Wittmann & Hutchinson, New Orleans, for plaintiff-intervenor.
CALOGERO, Justice.
We review here a judgment of the Nineteenth Judicial District Court, Parish of East Baton Rouge, holding Act 233 of the 1984 Legislature unconstitutional. By that enactment, the Legislature attempted to return land known as the Bohemia Spillway to the owners or their successors from whom the property was acquired by Orleans Levee Board expropriation or threat of expropriation in the years 1924-1926.
Article VII, § 14(A) of the 1974 Louisiana Constitution prohibits the loaning, pledging or donating of "the funds, credit, property, or things of value of the state or of any political subdivision."[1] Article VII, *960 § 14(B), however, sets forth exceptions to this prohibition, designated "authorized uses".[2] On October 22, 1983, the voters of the state of Louisiana ratified an amendment to Article VII, § 14(B), adding an exception for:
(4) the return of property, including mineral rights, to a former owner from whom the property had previously been expropriated, or purchased under threat of expropriation, when the legislature by law declares that the public and necessary purpose which originally supported the expropriation has ceased to exist and orders the return of the property to the former owner under such terms and conditions as specified by the legislature.
The provisions of § 14(B)(4) are, of course, not self-operating, and a "donation" (or, as pertinent to property earlier expropriated, "the return of [such] property") under this amendment is permitted only when and if the Legislature by law (1) declares that the public and necessary purpose which originally supported the expropriation has ceased to exist, and (2) orders the return of the property to the former owner; (3) under such terms and conditions as specified by the Legislature.
By Act 233 of 1984 the Legislature implemented article VII, § 14(B) and sought to return land known as the Bohemia Spillway[3] to its former owners or the successors of its former owners from whom the property was acquired by expropriation or by purchase under threat of expropriation. 1984 La. Acts No. 233 provides:
Be it enacted by the Legislature of Louisiana:
Section 1. Pursuant to authority of Louisiana Constitution Article VII, Section 14(B), the Legislature of Louisiana hereby declares that the public and necessary purpose set forth in Act No. 99 of 1924, which may have originally supported the expropriation of property, or any right of ownership thereto, on the east bank of the Mississippi River in the parish of Plaquemines for the construction of a spillway, known as the Bohemia Spillway, has ceased to exist insofar as it ever may have affected the ownership of property, including mineral rights. The Legislature of Louisiana hereby orders the Board of Levee Commissioners of the *961 Orleans Levee District, the board, to return the ownership of said property to the owners or their successors from whom the property was acquired by expropriation or by purchase under threat of expropriation. Neither the provisions of this Act nor any actions pursuant to this Act shall affect the title to land which was the subject of litigation on the effective date of this Act.[4]
The Board of Commissioners of the Orleans Levee District (hereinafter Levee Board) contended in the district court, in significant part successfully, that Act 233 of the 1984 legislative session, which would operate to transfer this property from the Levee Board to the former owners or their successors, violates the state constitution, including Article VII, § 14(B) which it was designed to implement.[5]
*962 Specifically, the Board argues that the uncompensated taking of property belonging to the Levee Board effected by the passage of Act 233 violates La. Const, art. I, § 4, the constitutional provision guaranteeing the right to property; that Act 233 exceeds the authority of art. VII, § 14(B)(4), the very constitutional amendment which Act 233 attempts to implement, inasmuch as the act attempts to return land to former owners through expropriation (of Levee Board lands by the state) rather than by donation, and by attempting to return land to successors of former owners as well as to former owners; and that Act 233 changes the make-up of the Levee Board in violation of La. Const, art. VI, § 38, when it "severs the Bohemia Spillway from the body of the Orleans Levee Board," a spillway which "has been part of the Levee Board's `constitution' since 1924." Additionally the Levee Board and intervenor, Howard, Weil, Labouisse, contend that Act 233 offends Art. XIV, § 25 of the 1974 Louisiana Constitution in that it tends to impair the obligation, validity, or security of Levee Board bonds authorized under the Constitution of 1921. The foregoing generally identifies the arguments presented in support of the contention that Act 233 is unconstitutional although numerous ancillary sub-arguments permeate the multiple briefs submitted on behalf of the various parties and intervenors.
Opponents of Act 233 of 1984, as noted somewhat more specifically hereinabove, essentially contend that Art. VII, § 14 including subsection B(4) was not intended to and does not override other constitutional provisions, and that those other provisions are offended by Act 233 of 1984; and in all events the act does not comport with Art. VII, § 14(B)(4).
First, we note that the constitutional amendment which triggered passage of Act 233 of 1984, namely the present Art. VII, § 14(B)(4), is a valid amendment, having been adopted by the people of the state in full compliance with Art. XIII, § 1, the Louisiana constitutional provision which sets out the procedure for amending the constitution. No one contends to the contrary. And, the constitution is the paramount law, to which all other laws must yield.
Our principal focus, then, will be on the specific constitutional provision, Article VII, § 14(B), which authorizes the return of property which had previously been expropriated, or purchased under threat of expropriation, and the legislative act, Act 233 of 1984, which purports to implement it.
The jurisprudence has held that a "special [constitutional] provision prevails in respect of its subject matter over general provisions in conflict therewith." Department of Highways v. Macaluso, 235 La. 1019, 106 So. 2d 455, 458 (1958). And, the latest expression of the public will supersedes earlier, more general provisions of the state constitution which conflict with it. Macon v. Costa, 437 So. 2d 806, 810 (La. 1983) (citing State ex rel Kemp v. City of Baton Rouge, 215 La. 315, 40 So. 2d 477 (1949)). In like manner, an implementing act, in full compliance with the later constitutional provision dealing with limited subject matter, will not conflict with more general constitutional requirements which predate the provision upon which the implementing act is based.
The Levee Board surely concedes these fundamental principles. However, they counter with the suggestion that there is no conflict between art. VII, § 14(B)(4) and other constitutional provisions; that § 14 simply prohibits donations, with exceptions, one of them being the return of expropriated property; that § 14, including subsections (A) and (B) were meant to have no effect if in competition with other constitutional provisions.
The constitutional article under consideration is clear and unambiguous. The return of expropriated property is permitted. *963 It would have been difficult indeed for the Legislature and the people to amend the constitution to permit the return of expropriated property other than as was done here by adopting Art. VII, § 14(B)(4).
Subsection (A) of Art. VII, § 14 provides that the loan, pledge or donation of the funds, credit, property or things of value of the state or of any political subdivision are prohibited except as allowed in the constitution. ["§ 14(A) Prohibited Uses. Except as otherwise provided by this constitution,..."] This qualifying phrase is simply designed to incorporate into Art. VII, § 14(A) exceptions contained elsewhere in the constitution, which specifically permit loaning, pledging, or donating the state's funds, credit or property.[6]
Then subsection (B) of Art. VII, § 14 added three more exceptions, now four with the passage of the constitutional amendment Art. VII, § 14(B)(4), to the prohibition against donations, loan or pledge. ["§ 14(B) Authorized Uses. Nothing in this section shall prevent (1) ..., (2) ..., (3) ... and (4) ..."] That fourth exception is the return of property previously expropriated or purchased under threat of expropriation.
Nothing about subsection (B)(4) or § 14 ties (B)(4)'s specific legislative authorization to return expropriated property, to any other provision of the constitution. § 14(B) is not circumscribed in its application.
Therefore we find that Art. VII, § 14(B)(4), a narrowly drawn and recently enacted provision, designed to accomplish a specific objective, does override all other prior constitutional provisions which may be in conflict with it.
Despite this determination, we choose to address the argument concerning the impairment of bond obligations presented by intervenor, Howard, Weil, Labouisse, holder of Series 1973 General Obligation Bonds which were purchased in October, 1984, after the constitution was amended and the Legislature had passed 1984 La. Acts No. 233. They urge that Act 233, and the taking of property of the Levee Board, impairs the security of these general obligation bonds in violation of Art. VI, § 38(B) and of Art. XIV, § 25 of the 1974 Constitution.
Art. VI, § 38(B) provides:
(B) Obligation of Contract Affirmed. No action taken under this Section shall impair the obligation of outstanding bonded indebtedness or of any other contract of a levee district.
Section 38, pertaining to levee districts, merely continues in existence levee districts as organized and constituted on January 1, 1974 (Art. VI, § 38 Subsection A), while allowing the Legislature to provide by law for consolidation, division, or reorganization of existing levee districts and to create new levee districts (Art. VI, § 38 Subsection (A)(1)); and where a levee district is situated entirely within one parish to consolidate and merge the levee district into such parish under certain terms and conditions (Art. VI, § 38, Subsection (A)(2)).
Art. VI, § 38, Subsection B provides merely that no action taken under Section 38, that is, in the respects recited in the immediately preceding paragraph of this opinion, shall impair the obligation of outstanding bonded indebtedness or of any other contract of a levee district. Act 233 is not such an action; it was not taken under Art. VI § 38; it has nothing to do with consolidating, dividing, reorganizing, or merging levee districts. Rather it was taken under and specifically authorized by Art. VII, § 14(B)(4).
Art. XIV, § 25[7] is a transitional provision designed "only to provide for an orderly *964 transition from the Constitution of 1921." Art. XIV, § 14.[8] Assuming, however, that it would otherwise invalidate Act 233, and assuming further that Howard, Weil, Labouisse can show injury within its terms, which is not entirely clear,[9] Art. XIV, § 25 is superseded by the later constitutional amendment, Art. VII, § 14(B)(4). See our discussion along these lines hereinabove.
To consider whether Act 233 comports with Art. VII, § 14(B), we will discuss Act 233 and the three applicable provisions of Art. VII § 14(B): the Legislature's declaration of cessation of public and necessary purpose; the Legislature's order of return of the property; and the terms and conditions specified by the Legislature.
(1) The Legislature's Declaration of Cessation of Public and Necessary Purpose (Act No. 233 of 1984)
In complying with La. Const. art. VII, § 14(B)(4), 1984 La. Acts No. 233, § 1 contains the language that "the Legislature of Louisiana hereby declares that the public and necessary purpose set forth in Act No. 99 of 1924, which may have originally supported the expropriation of property, or any right of ownership thereto, on the east bank of the Mississippi River in the parish of Plaquemines for the construction of a spillway, known as the Bohemia Spillway, has ceased to exist insofar as it ever may have affected the ownership of property, including mineral rights." Although the Levee Board vigorously disputed the determination that the "public and necessary purpose" supporting the creation of the Bohemia Spillway has ceased to exist, that matter is not properly before the court.
The constitution does not require that the public and necessary purpose must cease to exist, but only that the Legislature "by law declares" that this is so. The constitutional amendment thus accords to the Legislature an appropriate prerogative which is legislative in nature, and not within the realm of the judiciary's power and authority, a certain deference to the Legislature's exclusive power which is consistent with the separation of powers articles of our Constitution, 1974 La.Const. art. II, §§ 1 and 2.[10] The wisdom, or accuracy, of the Legislature's declaration in this regard is not for the Courts to assess.
Since Act 233 of 1984 has made the declaration of cessation of public and necessary purpose required by La. Const. art. VII, § 14(B)(4), it complies with that article of the constitution in this respect.
(2) The Legislature's Order of Return of the Property (Act No. 233 of 1984)
The amendment to Art. VII, § 14(B)(4) also requires that the Legislature order "the return of the property to the former owner." The 1984 Legislature's response in Act 233 was to order
the Board of Levee Commissioners of the Orleans Levee District, the board, to return the ownership of said property to the owners or their successors from whom the property was acquired by expropriation *965 or by purchase under threat of expropriation. (emphasis added)
The Levee Board contends that "owner" in Art. VII, § 14(B)(4) does not include a successor of the owner, and that Act 233 thus goes beyond the authorization of Art. VII, § 14(B)(4).
We do not agree with the proposition urged by the Levee Board, that the language of Art. VII, § 14(B)(4) is unambiguous and that the term "former owner" necessarily excludes successors of former owners. Although the amendment does not specify successors, as does Act 233, it likewise does not speak only of surviving former owners. The interpretation of this phrase in the Constitutional provision is a matter for this Court.
It is clear from the legislative committee discussions of House Bill No. 56, enacted as 1983 La. Acts No. 729, and ultimately ratified as Art. VII, § 14(B)(4), that the bill, was designed to address the return of the lands of the Bohemia Spillway. The passage of the joint resolution which was placed on the ballot for statewide voter approval was the culmination of a successful lobbying effort undertaken largely by heirs and successors of former owners of the Bohemia Spillway property. In fact, minutes from the House Committee on Civil Law and Property, which favorably recommended the bill to the full House, specifically refer to heirs and successors of the former owners, who were in attendance at the Committee hearing. It is inconceivable that the Legislature or the people intended to enact a constitutional amendment which would benefit only individual owners who might have survived this fifty-nine year period (from expropriation and threatened expropriation, 1924 to 1926, until passage of the enabling act and adoption of the Constitutional amendment in 1983) and some few corporations.[11] It is fairly certain, and conceded by the parties, that most of the owners from whom property was taken or purchase under threat of expropriation between 1924 and 1926, are deceased.
Furthermore, and not without some weight, we note that Louisiana law and tradition, of which the Legislature is fully cognizant, recognizes a kind of continuum from owners of property or possessors of rights in property to their universal successors. An heir succeeds to the full extent of the rights of the deceased, and the succession of the legal heir follows from the moment of the decedent's death. La.Civ. Code Ann. arts. 943 and 946. The heir represents the deceased in all matters and is authorized to institute all actions which the deceased had a right to institute. La. Civ.Code Ann. art. 945. And the rights to which the heir succeeds and for which he may institute legal action include the rights of the deceased which accrue after his death. La.Civ.Code Ann. art. 872. In succeeding to all of the deceased's rights, the universal successor merely continues the deceased's possession rather than beginning a new possession. Bartlett v. Calhoun, 412 So. 2d 597 (La.1982) (quoting Planiol, Civil Law Treatise, Part 2, Sec. 2674 (12th Ed. La.St.L.Inst.trans. 1959)). Similarly, Professor Yiannopoulas has stated in his Louisiana Civil Law Treatise, Property 325-26, 2d Ed., § 126 (1980), "[t]he succession, that is the patrimony of the deceased,... is an indistinguishable part of the patrimony of the heir."
For these reasons, we conclude that the right to reclaim ownership of land, expropriated or purchased under threat of expropriation by the Levee Board, granted by La. Const. Art. VII, § 14(B)(4) extends to the successors of the owners as well as to surviving former owners, including corporations. Therefore, 1984 La. Acts No. 233 complies with the art. VII, § 14(B)(4) insofar as it orders a return of the property to the former owners or their successors.
(3) Terms and Conditions Specified by the Legislature (Act No. 233 of 1984)
The third requirement, or provision, of Art. VII, § 14(B)(4), relative to return of *966 expropriated property, is the inclusion of "such terms and conditions as specified by the Legislature."
It is contended by the Department of Natural Resources and its allies that § 5 of Act 233 provides terms and conditions, or such terms and conditions as the Legislature chose to specify. That section of the act stipulates that the return of property shall be subject to any servitudes or rights-of-way, surface or mineral leases, or any other valid contract executed by or with the Levee Board prior to the act's effective date, and requires that the deed so state. Further, there is provision for making payments, giving notices, or renegotiating an existing contract prior to the actual transfer of title to the property. (See footnote 4 supra.) These directives are certainly "terms and conditions" of the return. It is not appropriate for the courts to "test the wisdom of the legislature" and dispute the adequacy of the terms they have assigned. Sevin v. Louisiana Wildlife and Fisheries Commission, 283 So. 2d 690, 692 (La.1973). The constitutional amendment simply authorizes the return of expropriated property by the Legislature under such terms and conditions as the Legislature chooses to specify.
The Levee Board insists, however, that the inclusion of the phrase "terms and conditions" was designed primarily to require the Legislature to effect each return in a manner that insures against adverse fiscal impact, that is, to insure compensation when appropriate. In this case, the Levee Board foresees a substantial adverse fiscal impact because of lost royalty income and the concomitant impairment of the marketability of Levee Board bonds. Therefore, they conclude that Act 233 is fatally flawed by its failure to provide compensation as a term or condition of the return. The district court apparently agreed with the Levee Board's position in this regard. On April 8, 1985, the Levee Board's motion for summary judgment was granted on the ground that "Act 233 is unconstitutional because it fails to establish the terms and conditions for the return of land of political subdivisions which are required by the City of New Orleans v. State, 443 So. 2d 562 (La.1984)." And, in his oral reasons for judgment, the trial judge described Act 233 as an "outright gift." The judge apparently relied on City of New Orleans v. State for the proposition that the taking of the property of any political subdivision must be for a public purpose only, and with just compensation.
The language of the constitutional amendment provides no support for this position, that a required term or condition is compensation. Nonetheless, the Levee Board points to the May 23, 1983 meeting of the House Committee on Civil Law and Procedure which discussed House Bill No. 56, the antecedent of Art. VII, § 14(B)(4). At that time, there was discussed the failure of a similar bill in the House the previous year and inclusion of new or different language, "terms and conditions," in the bill, later adopted, which was then under Committee consideration. The discussion included an expression of concern for the amendment's potential fiscal impact on the state and assurances that this factor would have to be considered when and if the Legislature were later to determine that any given property is no longer needed for a public purpose.
That committee discussion, including reference to the fact that conditions, including compensation, might properly be entertained by a later Legislature seeking to implement Art. VII, § 14(B)(4), is hardly helpful to the Levee Board's position. Surely compensation might be a term or condition imposed in a given implementation of Art. VII, § 14(B)(4). Compensation, however, was not a term the Legislature chose to specify in Act 233 of 1984. § 14(B)(4) does not require compensation, but only such terms and conditions as the Legislature specifies.
Nor do we perceive that City of New Orleans v. State, 443 So. 2d 562 (La.1984)[12]*967 dictates the requirement of compensation in this case. Although some language in the opinion supports the conclusion of the trial judge and the arguments of the Levee Board with regard to the applicability of La.Const. art. I, § 4,[13] that decision narrowly held:
[t]he 1974 Louisiana Constitution does not allow the state to take without payment any public thing belonging to a municipality. On the contrary, the rights of local governmental entities are protected by Article VI, § 6. [emphasis added]
Article VI, § 6 restrains legislative interference in the affairs of "any local governmental subdivision which operates under a home rule charter." The Orleans Levee Board is not a "local governmental subdivision," defined in La.Const. art. VI, § 44(1) as "any parish or municipality," and obviously has no home rule charter. Although La.Const. art. VI, § 38 continues to recognize "[l]evee districts as organized and constituted on January 1, 1974," the powers of the Orleans Levee Board, previously articulated in 1921 La.Const. art. XVI, § 7, have been placed in the revised statutes (at La. Rev.Stat. § 38:1235 et seq.). This change from constitutional to statutory authority permits the Legislature a greater opportunity to define the duties and responsibilities of levee boards. The nature of levee boards and degree of Legislative power and authority over them distinguishes them from local governmental subdivisions operating under home rule charters. Moreover, we re-emphasize that the state action here, which is designed to take certain revenue producing property from the Orleans Levee Board and return it to former owners, is itself based in the constitution. It is not simply an action of the state Legislature such as that successfully challenged in City of New Orleans v. State.
On the basis of the above analysis of the three essential provisions of Art. VII, § 14(B) and the provisions of Act 233 of 1984 we find that the act comports with the specific requirements of the constitutional provision, the 1983 amendment which it was enacted to implement.
Another major contention which the Levee Board and its supporters urge upon the court is that the return of the Bohemia Spillway to the former owners under Art. VII, § 14(B)(4) by means of Act 233 or any other act, is prohibited. They contend that La.Const. art. VII, § 14(B)(4) only permits the Legislature to donate, or return, property already owned by the state; that the expropriation by the state of property of a political subdivision for the purpose of donating it to private individuals is not allowed. In this regard, it is argued that Art. VII, § 14(B)(4) permits the return of property by donation, loan, or pledge and that the state cannot donate, loan, or *968 pledge the Bohemia Spillway, which it does not own. For the property known as the Bohemia Spillway to be donated to the former owners, or their successors, a two step process is required, under this theory. First, the state must expropriate the property owned by the Levee Board; second, the property may then be donated by the Legislature to private individuals. Since the 1983 amendment does not endorse the return of formerly expropriated property by still another expropriation, it is suggested that it is impossible to return the Bohemia Spillway to the former owners under its provisions.
This argument implicates the ownership of the Bohemia Spillway as well as the quality of ownership enjoyed by the Orleans Levee Board. The Orleans Levee Board is empowered to own property. La. Rev.Stat.Ann. § 38:1235.1, added to the Revised Statutes by 1975 La. Acts No. 729, § 1, provides that the Board "shall have and exercise all and singular the powers now conferred upon that board by law," and 1890 La. Acts No. 93 had conveyed to the Levee Board the right "to acquire, hold, own and convey all the property, real and personal, needful in the premises." Thus, the Levee Board may own property, and Act 99 of 1924 provided "for the acquisition of the fee title of the lands embraced in the [Bohemia] spillway and for such title to be reposed in the Orleans Levee Board." Emery v. Orleans Levee Board, 207 La. 386, 21 So. 2d 418, 421 (1945). Subsequently, by means of 1942 La. Acts No. 311, the Legislature "confirmed, quieted and acknowledged" the Levee Board's "right, title, ownership and possession ... to all public lands in the area of the Bohemia Spillway." And, more recently, the Fourth Circuit Court of Appeal affirmed the Levee Board's ownership of all land in the Bohemia Spillway, which was formerly private, through acquisitive prescription. Succession of Buras v. Board of Levee Commissioners, 469 So. 2d 1022 (La.App. 4th Cir. 1985) writ den. 475 So. 2d 1095 (La.1985).
Our finding that the Orleans Levee Board "owns" the Bohemia Spillway, however, is not determinative of the issue. Earlier decisions of this Court have held that a political subdivision's ownership of land vis-a-vis the state is not absolute. As stated in Board of Commissioners of Caddo Levee District v. Pure Oil Co., 167 La. 801, 120 So. 373, 376 (1929):
the expression "absolutely vest," used in these and similar acts, in connection with the title given, must be interpreted with reference to the nature or character of the grantee. The grantee, under these and similar acts, is an artificial person, created for the accomplishment of public purposes, developing primarily upon the state. The Legislature, having created plaintiff for public purposes, may revoke the grants made to it, notwithstanding the declaration as to the absolute vestiture of title, by abolishing plaintiff,[14] or by withdrawing the grants, provided that, in doing so, it does not interfere with rights acquired by third persons.
And, again in 1956, the Court reaffirmed the Orleans Levee Board's status as a "creatur[e] or agenc[y] of the State," and the State's right "to abrogate, rescind and nullify any grant of title to land made by it to one of the districts and to vest complete title thereto in the other." Richardson & Bass v. Board of Levee Commissioners of the Orleans Levee District, 231 La. 299, 91 So. 2d 353, 372 (1956) (on second rehearing). In Richardson & Bass, a concursus proceeding in which the Grand Prairie Levee District unsuccessfully contested the Legislature's transfer of "their" property within the limits of the Bohemia Spillway to the Orleans Levee District,[15] the Court further asserted that
by the act quieting title in the Orleans Levee Board the State ... was only placing *969 the property under the control of one of its agencies for supervision and administration. The land to all practical intents and purposes is still the property of the State. Id. at 360.[[16]]
The Levee Board, however, would explain away this jurisprudence on the basis of changes in the 1974 Constitution. They contend that certain clauses of the 1974 Louisiana Constitution now protect public property from uncompensated takings. Of particular significance, according to the Levee Board, are Art. VI, 38(A), which constitutionally recognizes levee districts as organized on January 1, 1974; Art. VI, § 23, which permits political subdivisions to acquire property; and Art. I, § 4, which provides that property shall not be taken by the state except for public purposes and with just compensation. As pointed out earlier in this opinion, the constitutional recognition accorded the Orleans Levee district in art. VI, § 38(A) is not particularly helpful to the Board. While the levee board is given constitutional status, its power and authority has been relegated to the revised statutes, thus placing them in large measure under control of the Legislature. And, the qualifying language at the outset of Art. VI, § 23, which permits a political subdivision to acquire property, "[S]ubject to and not inconsistent with this Constitution and subject to restrictions provided by general law," hardly suggests a change to the jurisprudence which has allowed the Legislature to nullify any grant of title of land to a levee board and to vest title in another. Finally, the proposition that the constitutional provision, Art. I, § 4 (which does not clearly address public property), bars this return of expropriated property to the former owners or successors is supported only by a strained statutory construction,[17] and dicta in City of New Orleans v. State (note earlier discussion of that case herein). It does not persuade us to disregard Board of Commissioners of Caddo Levee District v. Pure Oil Co. and Richardson & Bass v. Board of Levee Commissioners of the Orleans Levee District and to declare an act unconstitutional which is in full compliance with a directly applicable constitutional amendment.
The Legislature was free to return the Bohemia Spillway property under La. Const. art. VII, 14(B)(4), and they chose to do so when they passed Act 233 of 1984.
Decree
For the foregoing reasons the judgments of the district court granting plaintiff relief in the form of preliminary and permanent injunctions, upon finding Act 233 of 1984 unconstitutional, are reversed and set aside. The ruling of the district court denying defendant's motion for summary judgment is reversed; summary judgment dismissing plaintiff's demand at its costs is *970 granted. Act 233 of 1984 is hereby declared constitutional.
REVERSED; SUMMARY JUDGMENT IN FAVOR OF DEFENDANT GRANTED; PLAINTIFF'S PETITION DISMISSED.
DIXON, C.J., concurs in part and dissents in part.
BLANCHE, J., dissents being of the opinion that insofar as Act 233 orders the return of property to the heirs of the original owners, it exceeds the legislator's constitutional authority under Article 7 Sec. 14(B) and thus violates Sec. 14(A). See Chief Justice DIXON'S concurrence and dissent with which this writer agrees.
WATSON, J., dissents and assigns reasons.
DIXON, Chief Justice, concurring in part and dissenting in part.
I respectfully concur in part and dissent in part.
Nothing in these consolidated appeals requires us to hold that Act 233 of 1984 supersedes all general constitutional provisions predating Article 7, § 14(B)(4), and I do not join in this pronouncement. Nevertheless, the majority correctly rejects those claims presented under Article 1, § 4, Article 6, § 38(B) and Article 14, § 25.
Insofar as Act 233 orders the return of property to the heirs of original owners, however, it exceeds the legislature's constitutional authority under Article 7, § 14(B), and thus violates § 14(A). The former section in pertinent part permits "the return of property, including mineral rights, to a former owner from whom the property had previously been expropriated, or purchased under threat of expropriation..." This language is unambiguous and should be respected. E.g., Aguillard v. Treen, 440 So. 2d 704, 707 (La.1983). Heirs are not former owners; they are not persons from whom the property had previously been expropriated, and they are not persons from whom the property had previously been purchased under threat of expropriation. They should not prevail in this action.
The majority looks to legislative history and suggests the drafters of this constitutional provision meant "former owners" to be synonymous with "heirs of former owners." It is true that the legislative history to Act 729 contains reference to the Bohemia Spillway and to the heirs of former owners. Section 14(B)(4) of course refers to neither. It is also true that the legislature resolved, in 1981, to compensate the heirs of original owners, but that House Bill 151 of the 1982 Regular Session, a proposal similar to Act 729 except that it specifically authorized the return of the Bohemia Spillway, failed when put to vote before the House. In view of the unsuccessful 1982 bill, I find it difficult to conclude that the legislature meant what it did not say just one year later.
Even more tenuous is the assumption that the majority of voters who approved Article 7, § 14(B)(4) in its present form ascribed any such meaning to this provision. A constitutional amendment is ratified by statewide referendum. While it is safe perhaps to suggest that those casting ballots in Plaquemines Parish did so with the Bohemia Spillway in mind, the same cannot be said of voters elsewhere in Louisiana.
We have recognized that:
"... where the language of a constitutional provision is clear, as is the case here, we cannot decide constitutional questions on the basis of the drafters' debate, but must rely on the finished product, which is the expression of the voters who adopted the constitution." The Bank of New Orleans and Trust Co. v. Seavey, 383 So. 2d 354, 356 n. 7 (La.1980).
We have also recognized the "strong public policy in this state that control of public things should remain in the hands of the state, absent a clear and unambiguous intent to relinquish such control." State ex rel. Guste v. Board of Commissioners of the Orleans Levee District, 456 So. 2d 605, 610 (La.1984). The instant case calls for rigid application of both principles. This court should not impute to the people of *971 this state an intent not found in such a clear and unambiguous constitutional provision as § 14(B)(4).
WATSON, Justice, dissenting.
I respectfully dissent.
When the legislature passed Act 729 of 1983, amending the Louisiana Constitution of 1974,[1] to provide for the return of land and mineral rights to their former owners, and passed Act 233 of 1984 attempting to return the Bohemia Spillway to both the original owners and their successors, it enacted a massive give away of the state's resources.
I. Act 233 of 1984 is unconstitutional insofar as it:
A. orders the return of property to the heirs of the original owners, thereby exceeding the constitutional authority granted by Art. 7, § 14(B) which limits such return to a "former owner";
B. conflicts with the constitutional command that the legislature enact laws to protect, conserve and replenish the state's natural resources, Art. 9, § 1; and
C. impairs the validity of contracts, Art. 1, § 23.
II. The legislative pronouncement that the public and necessary purpose supporting the original expropriation has ceased to exist is erroneous and subject to judicial review as an abuse of discretion.
I. A. LSA-Const. 1974, Art. 7, § 14(B) permits "the return of property, including mineral rights, to a former owner from whom the property had previously been expropriated, or purchased under threat of expropriation...." Under Aquillard v. Treen, 440 So. 2d 704, 707 (La.,1983), this unambiguous language must be respected. Constitutional questions must be decided on the basis of the finished product approved by the voters, rather than the drafters' debates. The Bank of New Orleans and Trust Co. v. Seavey, 383 So. 2d 354, 356, n. 7 (La.,1980). The phrase "former owners" is not synonymous with "heirs of former owners".
B. The loss of the spillway and its revenues will have a severe, adverse, long-range impact in the areas of hurricane protection and flood control, requiring the raising of other levees to a greater height at a cost of $72 million. In addition, railroad tracks, utilities and port facilities will have to be raised or moved at an almost incalculable cost. This "fuse plug" levee prevents silt from damaging oyster beds below the levee; a side effect of the loss of the Bohemia system will be further encroachment of salt water, causing faster attrition of our fresh water marshes which protect the coastline during storms and help keep the ecological balance. Act 233 is in conflict with Art. 9, § 1, which commands the legislature to enact laws to protect, conserve, and replenish this state's natural resources.[2]
C. Act 233 impairs the validity of the mineral leases and contracts of the Board of Commissioners of the Orleans Levee District, as well as the bonds held by Howard, Weil contrary to the state and federal constitutional prohibitions against impairment of contracts.[3] Series 1973A bonds issued under authority of the 1921 Constitution and held by Howard, Weil are secured, not by the full faith and credit of the state, but by the full faith, credit, and resources of the Orleans Levee District. They are payable first from tax levies and then from other funds of the District. Act 233 deprives the Board of some $4,000,000 annually (about one-fourth of its revenues) without replacing it from other sources. Orleans tax levies, presently limited by the Constitution to 5 ½ mills, are the highest in the state, and cannot be increased without approval of the district voters, which cannot be lightly assumed. The repeal of a covenant which limits the use of revenues *972 available to pay bonds causes an impairment of contracts because it permits a "diminution of the pledged revenues". United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 97 S. Ct. 1505, 52 L. Ed. 2d 92 (1977). State impairment of obligations is permissible under the contract clause of the United States Constitution only when it is "reasonable and necessary to serve an important public purpose." [4] The admittedly important public purpose in United States Trust Company of increasing mass transit facilities was insufficient to validate a statute impairing obligations.
An impairment of the United States contract clause also impairs Louisiana's contract clause. Louisiana Gas Service Co. v. Louisiana Public Service Commission, 245 La. 1029, 162 So. 2d 555 (1964). A statute which destroys or impairs the means or remedy for enforcement of an obligation impairs the obligation itself.[5] The value of a contract cannot be diminished by subsequent legislation.[6] Contractual obligations can yield to a proper exercise of the police power only when the purpose is public and not arbitrary or oppressive. Louisiana Gas Service Co., supra. The state's purpose in divesting the Board of the Bohemia Spillway is neither important nor public; it is an outright gift to private persons.
II. The legislative pronouncement that the Bohemia Spillway no longer serves its original public purpose is arbitrary and capricious. Testimony at trial was that the Bohemia has been used sixteen times during major high water since its opening (more times than the Bonnet Carre' and Morganza combined), was last used for major flooding in 1974, and minor flooding in 1984, and in fact had water standing in it at the time of trial. On an ongoing basis, this "fuse plug" levee serves to prevent silt from ruining oyster beds below. Further, its existence is taken into account in the height and location of other levees protecting the area. A constitutional provision cannot shield an exercise of police power from the scrutiny of the judiciary. State, through Dept. of Highways v. Jeanerette Lumber & Shingle Co., Ltd., 350 So. 2d 847 (La.,1977). Thus, the legislative error in pronouncing the purpose of this give away to be public is reviewable by this court.
I respectfully dissent.
NOTES
[1] La. Const. art. VII, § 14(A) provides:
§ 14. Donation, Loan or Pledge of Public Credit
Section 14. (A) Prohibited Uses. Except as otherwise provided by this constitution, the funds, credit, property, or things of value of the state or of any political subdivision shall not be loaned, pledged, or donated to or for any person, association, or corporation, public or private. Neither the state nor a political subdivision shall subscribe to or purchase the stock of a corporation or association or for any private enterprise.
[2] La. Const. art. VII
Section 14. (B) Authorized Uses. Nothing in this Section shall prevent (1) the use of public funds for programs of social welfare for the aid and support of the needy; (2) contributions of public funds to pension and insurance programs for the benefit of public employees; or (3) the pledge of public funds, credit, property, or things of value for public purposes with respect to the issuance of bonds or other evidences of indebtedness to meet public obligations as provided by law. [Art. 7, § 14(B), as adopted in 1974 Louisiana Constitution]
[3] The Bohemia Spillway consists of some 33,000 acres. It extends from the Bohemia Plantation, fifty miles below New Orleans on the east bank of the Mississippi River, to the Cuselich Canal. The land had been acquired by the Orleans Levee Board between 1924 and 1926, as authorized by 1924 La. Acts. No. 99, § 2, to create a naturally operating spillway which would protect the City of New Orleans from high water in the Mississippi River. The acquisition by the Levee Board involved the purchase of approximately 48% of the 33,000 acres from private owners at appraised fair market value (less than 3% of the land had to be expropriated) and the transfer of the remaining 52% of the land from the State. URS Engineers, Bohemia Spillway Hydraulic Study, Board of Levee Commissioners, Orleans Levee District 11 (December 1984). Although the purchase price for the property amounted to $389,500 in the 1920's, the same property became a major source of revenue for the Levee Board through oil and gas royalties and lease payments. In the early 1950's oil and gas revenues amounted to over $750,000 per year and at the present time provide the Levee Board with some $5,000,000 annually, or ¼ of its revenues. Approximately 40% of the royalties received by the Levee Board (or about $2,000,000) are from land acquired by the Board from the State and are presumably unaffected by Act 233 of 1984.
[4] The remainder of 1984 La. Acts No. 233 consists of the following five sections:
Section 2. The secretary of the Department of Natural Resources shall have rule making and procedure making authority consistent with the Administrative Procedure Act, R.S. 49:950, et seq., for the purpose of establishing procedures and guidelines for the receipt and evaluation of applications, notification of applicants, review of denials by hearings, relaxation of technical rules of evidence, settlement and distribution of funds for successful applications, and any other rules and procedures reasonably necessary for the orderly implementation of the return ordered herein. The secretary shall proceed immediately upon the effective date of this Act with steps necessary for the development and adoption of rules and procedures to begin the implementation of the provisions of this Act by January 1, 1985.
Section 3. The Board of Levee Commissioners of the Orleans Levee District shall provide a thorough accounting to the secretary of the Department of Natural Resources, or his designee, concerning all revenues received from the affected property. The information so provided shall be made available to applicants. The board shall comply with the spirit and letter of the rules and regulations adopted and promulgated by the secretary of the Department of Natural Resources.
Section 4. The secretary of the Department of Natural Resources shall begin steps by January 1, 1985, to notify affected persons.
Section 5. The return of property by the board to the owners or their successors shall be subject to all servitudes and rights-of-way, whether acquired by expropriation or otherwise, or surface or mineral leases, or other valid contracts executed by or with the board prior to the effective date of this Act. Any deed whereby any property is returned shall state that such property is subject to such rights. Any party to a contract in effect on the effective date of this Act with the board concerning property affected by this Act shall be entitled to make payments and give all notices required or permitted under such contract to the secretary until the title to the property affected has been transferred. When such contracts provide for renegotiation of rent between any person and the board, or provide that any person may seek approval by the board, such person shall be entitled to renegotiate such rent or to seek and obtain such approval from the secretary until the title to the property affected has been transferred. Any sum deposited with the secretary pursuant to this Act which represents rent, royalty or other sum attributable to land being returned, shall be paid by the secretary to the appropriate persons.
Section 6. This Act shall become effective upon signature by the governor or, if not signed by the governor, upon expiration of the time for bills to become law without signature by the governor as provided in Article III, Section 18 of the Constitution of Louisiana.
[5] Therefore, when the Department of Natural Resources, acting pursuant to Act 233, began to promulgate rules concerning the collection of claims to the Bohemia Spillway lands, the Orleans Levee Board initiated this action to have Act 233 declared unconstitutional and to have the Department of Natural Resources enjoined from enforcing it. The Department of Natural Resources responded to the suit by filing a motion for summary judgment requesting that Act 233 be upheld as constitutional. At the hearing on the rule for preliminary injunction, the Levee Board also moved for summary judgment, asking that the Act be declared unconstitutional. At the trial level, the action was resolved in favor of the Orleans Levee Board in three separate judgments, two relating to the respective motions for summary judgment and the remaining judgment concerning the Rule for Preliminary Injunction. The judgment which granted the Levee Board's Rule for Preliminary Injunction, based on the judge's finding that Act 233 is unconstitutional, and the judgment granting the Levee Board's motion for summary judgment, which declared Act 233 unconstitutional and issued a permanent injunction, have been appealed directly to this court. The judgment denying the Department of Natural Resources' motion for summary judgment, which sought to have the Levee Board's petition dismissed with prejudice on the basis that Act 233 is a valid, constitutional enactment of the 1984 legislature, is before us by virtue of our having granted the Department's application for writs, Board of Commissioners of the Orleans Levy District v. The Department of Natural Resources, 473 So. 2d 848 (1985), in order that all three district court judgments would be before us.
[6] Thus, Article VII, § 6(C), which provides for the pledge of the full faith and credit of the state for the repayment of all bonds or other evidence of indebtedness, is not in conflict with Article VII, § 14.
[7] § 25. Impairment of Debt Obligations Prohibited
Section 25. Nothing in this constitution shall be construed or applied in such a manner as to impair the obligation, validity, or security of any bonds or other debt obligations authorized under the Constitution of 1921.
[8] § 14. Limitation on Transitional Provisions
Section 14. Nothing in this Part shall be construed or applied in such a manner as to supersede or invalidate or limit or change the meaning of any provision of the foregoing Articles of this constitution, but only to provide for an orderly transition from the Constitution of 1921.
[9] Intervenor's witness, an investment banker in charge of municipal bond trading, admitted that Act 233 had not had an adverse impact upon at least one Levee Board bond issue after its adoption. The fifty million dollars worth of bonds sold in November of 1984 received a Moody's rating of "A," received the lowest possible interest rate at the time, and were marketed "smoothly." This occurred notwithstanding a paragraph in the bonds' prospectus, which discussed both La. Const. art. VII, § 14(B)(4) and 1984 La. Acts No. 233.
[10] La. Const. art. II, §§ 1 and 2 provide:
Section 1. The powers of government of the state are divided into three separate branches; legislative, executive, and judicial.
Section 2. Except as otherwise provided by this constitution, no one of these branches, nor any person holding office in one of them, shall exercise power belonging to either of the others.
[11] Among the 256 tracts, identified by the Department of Natural Resources in Plaintiff's exhibit No. 29, there are listed eleven owners which are not individuals, at least several of which are corporations. Among them is the intervenor, Haspel and Davis Milling and Planting Company.
[12] In City of New Orleans v. State, the city brought action against the state to enjoin implementation of a statute which abolished the Audubon Park commission, a city agency or board, and created a new commission as a political subdivision of the state with members appointed by the governor. A previously unresolved issue was the ownership of Audubon Park, an issue decided in favor of the city on the basis of title acquired in 1877 by the City Council of New Orleans. Furthermore, the court noted that although Audubon Park is open to the public, it is primarily a matter of local concern.
[13] La. Const. art. I, § 4 provides:
§ 4. Right to Property
Section 4. Every person has the right to acquire, own, control, use, enjoy protect, and dispose of private property. This right is subject to reasonable statutory restrictions and the reasonable exercise of the police power.
Property shall not be taken or damaged by the state or its political subdivisions except for public purposes and with just compensation paid to the owner or into court for his benefit. Property shall not be taken or damaged by any private entity authorized by law to expropriate, except for a public and necessary purpose and with just compensation paid to the owner; in such proceedings, whether the purpose is public and necessary shall be a judicial question. In every expropriation, a party has the right to trial by jury to determine compensation, and the owner shall be compensated to the full extent of his loss. No business enterprise or any of its assets shall be taken for the purpose of operating that enterprise or halting competition with a government enterprise. However, a municipality may expropriate a utility within its jurisdiction. Personal effects, other than contraband, shall never be taken.
This Section shall not apply to appropriation of property necessary for levee and levee drainage purposes.
[14] Of course, 1974 La. Const. art. VI, § 38(A) now guarantees the existence of levee districts as organized and constituted on January 1, 1974 except for possible consolidation, division, or reorganization by the Legislature.
[15] It is a bit ironic that the Levee Board's position which prevailed in 1956 in Richardson & Bass v. Board of Levee Commissioners comes back to haunt them in this litigation.
[16] Although the quoted language occurred in the original hearing, it dealt with the court's holding that title and ownership of the Bohemia Spillway had been transferred from the Grand Prairie Levee District to the Orleans Levee District by Act 311 of 1942. The Court did not address that aspect of their original decision on rehearing.
[17] It has been suggested that the separation of art. I, § 4 into two paragraphs, the first specifying "private property" and the second lacking the qualifying word "private," indicates that the second paragraph relates to all property, public and private. Under this analysis, "[Public] [p]roperty shall not be taken ... by the state ... except for public purposes and with just compensation paid to the owner or into court for his benefit."
In response, we point out that the constitutional debates do not indicate an intent on the part of the delegates to protect political subdivisions under this section. Furthermore, § 4 was twice approved as a single paragraph and only took the two paragraph format in the Committee on Style and Drafting. The proposed § 4 was then presented to the entire convention, with no suggestion of substantive change, and was adopted without discussion.
Even without this knowledge of legislative history, however, it would be difficult to conclude that the word "property" was intended to include both public and private property. Certainly, had the constitutional delegates wanted to depart from a provision relating to private property alone, they would have specified that the "property" under contemplation included public as well as private property. An omission (of the word "private") only at the outset of the second paragraph cannot be used to suggest that the delegates intended an expanded interpretation of the word "property."
[1] Art. 7, § 14(B), approved October 22, 1983, effective November 23, 1983.
[2] Louisiana has fact pleadings; it is not necessary to plead legal theories. Thus, this question is properly before the court under the facts pleaded.
[3] LSA-Const. 1974, Art. 1, § 23; U.S. Const., Art. I, § 10, clause 1.
[4] United States Trust Company, supra.
[5] Hibernia Mortgage Co., Inc. v. Greco, 191 La. 658, 186 So. 60 (1938).
[6] Dantoni v. Board of Levee Commissioners of the Orleans Levee District, 227 La. 575, 80 So. 2d 81 (1955). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2428313/ | 237 S.W.2d 734 (1951)
ROWAN et al.
v.
PICKETT et al.
No. 12229.
Court of Civil Appeals of Texas, San Antonio.
February 28, 1951.
*735 Ronald Smallwood, J. Douglas McGuire, San Antonio, for appellants.
Scarborough & Roberts, Kenedy, for appellees.
POPE, Justice.
This is an injunction suit which essentially concerns the construction of Article 2372c, Vernon's Ann.Civ.Stats.
*736 Appellants, taxpayers of Karnes County, by a class action sought to permanently enjoin the Commissioners and County Judge of that County, individually and as the Commissioners' Court, from using county equipment and machinery for private purposes. At the conclusion of the evidence the court entered its judgment against the defendants, who appeared both individually and as members of the Commissioners' Court, permanently enjoining them from using certain county trucks for purposes other than county purposes, from using county equipment to move privately owned houses or buildings and "from making or entering into any private contracts for the use of the road machinery or other equipment of Karnes County, Texas, unless the same, in the opinion of the defendants, is related to soil conservation." All other relief was denied and the costs were equally divided.
The court made findings of fact that the Commissioners' Court had been using county equipment in connection with soil conservation on private farms, that in most instances no written application for this work was made to the Court by the landowner, that in other instances no written contracts were made but sometimes written contracts were prepared by the soil conservation service, signed by the owner and accepted by the Court and the AAA Committee of the county; that this work consisted mostly of a few hours' work when the equipment was in the locality; that it would be impractical to keep machinery idle long enough to hold Commissioners' Court meetings to execute written contracts; that the prices charged for this conservation work were uniform in the county, that the individual commissioners followed the practice of negotiating the original contracts which were later discussed and agreed upon by the Court; that the Commissioners engaged in the practice of dragging and smoothing roads from people's houses along the main roads to the main road; that the evidence failed to show whether such roads were third class county roads; that this road work was also performed around churches and public schools where used by the traveling public; that these works were performed when the equipment was otherwise idle and not needed on the roads; that the county roads had not been neglected by reason of these works; that "some of the defendant commissioners have been using county road machinery and equipment in engaging in private work for private persons or corporations for hire, and in turn paying the proceeds over to the county for the use of such machinery; such work being wholly disconnected with the upkeep, maintenance or construction of any road and not in connection with any soil conservation practice as provided by law"; that "some of the defendants have been using county equipment for their own private use and benefit, wholly disconnected with and independent of any of their official duties as commissioners"; and that there had been no discrimination between citizens of the county in the maintenance of the roads or in soil conservation work.
These findings are followed by conclusions of law wherein the court concluded that the Commissioners' Court of Karnes County, Texas, had ratified and confirmed all of the soil conservation contracts entered into by the individual commissioners; that the matters complained about in connection with those contracts were matters within the discretion of the Commissioners' Court; that the Commissioners' Court did not abuse its discretion in respect to those contracts; that the matter of the construction and maintenance of the public roads and the necessary approaches thereto, were also matters within the discretion of the Commissioners' Court, and that the Commissioners' Court had not abused its discretion; that the leveling and smoothing of public grounds and approaches as a means of egress and ingress for the use and enjoyment of the public generally was not illegal and that the Commissioners' Court had not abused its discretion in that connection in this case; "that engaging in private contracts using the public county road machinery and equipment for hire is illegal and a diversion of public property from the use for which it was intended, regardless of whether the county received remuneration therefor or not, and that such *737 practice should be enjoined," and "that the use by the defendants of any public property for their own private use and benefit, wholly disconnected with any public use for which the property was intended, is illegal and amounts to an unlawful diversion of the property from its intended use, and should also be enjoined."
Appellants have briefed forty-seven points of error consisting of attacks on each finding of fact, each conclusion of law and the court's failure to make additional findings and conclusions. The complaints fall into two general groups. There are points complaining about practices of the Commissioners' Court in permitting the use of county machinery and equipment for soil conservation contrary to and in excess of the powers granted by Article 2372c, Vernon's Ann.Civ.Stats., and there are complaints against the use of county equipment for private purposes including the maintenance of private ways leading into public roads.
Article 2351, Vernon's Ann.Civ. Stats., specifies the general powers and duties of the Commissioners' Court. Its authority over county business is limited to that specifically conferred by the constitution and statutes, but the court possesses broad discretion to accomplish those granted powers. Anderson v. Wood, 137 Tex. 201, 152 S.W.2d 1084; Dodson v. Marshall, Tex.Civ.App., 118 S.W.2d 621. Prior to 1931 no authority existed for a Commissioners' Court to permit the use of road machinery on private property for soil conservation purposes. Article 2372c enacted in that year granted this additional power and prescribed the procedure to be followed in the event the court elected to participate in such conservation work.
The statute is short and clear. It states that a Commissioners' Court may participate in the soil conservation program (1) when the judgment of the County Commissioners' Court is entered upon the minutes of the court that its machinery or equipment is not demanded for the building and upkeep of the county roads, (2) permission may be granted landowners and taxpayers to use the machinery and equipment for such purposes under written contract, (3) the county shall receive compensation upon a uniform basis which shall be paid into the Road and Bridge Fund of the County, and (4) the Commissioners' Court or its representatives shall not go upon the land of any owner to improve, terrace, protect, or ditch such land until requested to do so in writing by such owner.
The trial court improperly refused to make a finding that the arrangements with the various landowners were made by the individual commissioners acting separately rather than sitting and acting as the Commissioners' Court. The court did, however, make a finding that in most instances the individual commissioners of the particular precincts negotiated the contracts for the use of the county machinery, and that later these matters were discussed and agreed upon in the Commissioners' Court. The testimony showed that each individual commissioner as a matter of general practice made his own agreements, and entered upon and performed work in his own discretion in his separate precinct without regard to the Commissioners' Court. Each commissioner used the equipment available in his own precinct in the exercise of his separate judgment. Article 2372c expressly and explicitly imposes these responsibilities upon the Commissioners' Court acting as a governing body rather than upon the individuals acting separately. It does not authorize nor permit county matters to be decided by the single decision of the commissioner for his precinct.
That the Commissioners' Court is something more than the individuals composing the body is no longer an open question.
"By Article 2342 of the Revised Statutes, it is provided that the several commissioners, together with the county judge, shall compose the `commissioners court.' Such court is manifestly a unit, and is the agency of the whole county. The respective members of the commissioners court are therefore primarily representatives of the whole county, and not merely representatives of their respective precincts. The duty of the commissioners *738 court is to transact the business, protect the interests, and promote the welfare of the county as a whole." Stovall v. Shivers, 129 Tex. 256, 103 S.W.2d 363, 366.
And, as stated more recently by the Texas Supreme Court in Canales v. Laughlin, 147 Tex. 169, 214 S.W.2d 451, 455: "Furthermore, the individual commissioners have no authority to bind the county by their separate action. Orange County v. Hogg, Tex.Civ.App., 269 S.W. 225; Parmer County v. Smith, Tex.Civ.App., 47 S.W.2d 883; Tarrant County v. Smith, Tex.Civ.App., 81 S.W.2d 537 (writ of error refused); Swaim v. Montgomery, Tex. Civ.App., 154 S.W.2d 695 (writ of error refused, want of merit)."
This requirement is not formal. "It is substantial, both that the members may have the benefit of the knowledge and opinions of the other members, as well as that the public may know when and where its affairs are being transacted. Const. art. 1, § 13 [Vernon's Ann.St.]." Tarrant County v. Smith, Tex.Civ.App., 81 S.W.2d 537, 538; Swaim v. Montgomery, Tex.Civ.App., 154 S.W.2d 695; Fayette County v. Krause, 31 Tex. Civ. App. 569, 73 S.W. 51.
The trial court also refused to make a findings that the minutes of the Commissioners' Court contained no entry showing that in its judgment the county machinery was not needed for the service of the building and the upkeep of county roads. There was a finding that the county machinery was used for soil conservation purposes when it would otherwise be idle. There also was a finding that the Commissioners' Court orally discussed these matters. But the evidence showed that the minutes of the Commissioners' Court were silent concerning participation in or compliance with Article 2372c. The only record or report made to Karnes County relating to any of the soil conservation uses of county equipment was in the nature of checks in payment for work already performed. The checks were payable to the county and the individual commissioner delivered the checks to the county auditor. Until receipt of these checks, Karnes County had no written record of work performed nor the names of the persons owing the county.
While we recognize the rule that the failure to make a minute entry does not necessarily invalidate a legitimate claim, the Legislature specifically required written records in connection with a county's participation under Article 2372c. The Legislature apparently felt that knowledge of the use of public machinery for private soil conservation purposes was information which the public was entitled to have. The Commissioners' Court speaks to the public through its minutes. We do not think that the requirements of minute entries and written contracts and written applications were intended by the Legislature to be meaningless.
The Legislature having spoken, it is not for the Commissioners' Court to substitute their judgment, nor may we substitute ours, for that of the Legislature. The Legislature granted the authority and defined the procedure within which this beneficial work may be extended to private citizens. The act must be followed. "* * * where a power is granted, and the method of its exercise prescribed, the prescribed method excludes all others, and must be followed." Foster v. City of Waco, 113 Tex. 352, 25 S.W. 1104, 1105; State v. Johnson, Tex.Civ.App., 52 S.W.2d 110.
The trial court's finding that the Commissioners' Court had considered and discussed these past acts and that all oral soil conservation contracts originally made by the individual members of the court had been confirmed and ratified is considered as supported by the evidence and proper. Kutzschbach v. Williamson County, Tex. Civ.App., 118 S.W.2d 930. Appellants, however, seek no remedy as to the past acts, but use those acts only as evidence of a general practice contrary to Article 2372c which will continue in the future unless enjoined. In the absence of a showing that they probably will recur, past acts and practices will not furnish a basis for injunctive relief. Davis v. Upshur County, Tex.Civ. App., 191 S.W.2d 524.
*739 That these practices will, unless enjoined, continue in the future is undisputed. The county judge testified: "Q. And as far as you are concerned, judge, that will continue to be the policy of this commissioners' court and your policy unless the court enjoins you to the contrary? A. It certainly will, yes, sir."
One of the Commissioners testified as follows: "Q. And you, as one of the commissioners, will continue to pursue the same procedure in the future that you have in the past unless the court issues an injunction against you to do otherwise? A. Yes, sir."
Another Commissioner testified concerning the use of county machinery on private property: "Q. And will you also continue to use the equipment and machinery for that purpose until you are enjoined by this court? A. Well, we do, yes, sir."
Another Commissioner testified: "Q. And I believe you testified a moment ago that you are going to keep on doing just exactly like you have in the past unless this court grants an injunction against you? A. That is right. That is custom in this county and all over the state."
The fourth commissioner testified: "Q. You intend to continue to do just as you have done in the past unless you are enjoined by this court? A. I certainly do."
This testimony establishes that the acts and practices will continue unless enjoined.
Another matter urged in various points by appellants is that of road maintenance and repair. The trial court found that various commissioners engaged in the practice of dragging and smoothing roads leading from persons' houses to main roads, and further found that the evidence failed to show the roads were not third class or neighborhood roads. Appellants sought to enjoin appellees by proving they were maintaining private property rather than public roads. The burden was upon them to prove that the roads being maintained and about which they complained, were not public roads, whether by prescription, dedication or eminent domain. Proof that a road is slightly traveled, McCloskey v. Heinen, Tex.Civ.App., 266 S.W. 193, or that it is a cul-de-sac, Decker v. Menard County, Tex. Civ.App., 25 S.W. 727, does not prove the road is not public. Article 6711, Vernon's Ann.Civ.Stats., imposes the power upon Commissioners' Courts to establish neighborhood roads. Wood v. Bird, Tex.Civ. App., 32 S.W.2d 271. Upon appellants' failure to prove the non-public nature of the roads about which they complained, the court ruled properly.
Appellants' other points relate to various practices by which the appellees used the public road machinery and equipment for hire in the performance of private contracts with private citizens in work not of a public nature. However, the trial court by his conclusions of law number six and seven has already determined that such uses were illegal and amounted to an unlawful diversion of the county property whether the county received remuneration or not, and the decree adequately enjoins such private uses.
The decree of the district court is reformed by deleting from the decree the words, "and from making or entering into any private contracts for the use of the road machinery or other equipment of Karnes County, Texas, unless the same, in the opinion of the defendants, is related to soil conservation," and in their place are substituted the words, "and from using the road machinery or other equipment of Karnes County, Texas, for the benefit of private persons, provided, however, that such road machinery and equipment of Karnes County, Texas, may be used for soil conservation as authorized by Article 2372c. It is ordered, however, that such use for soil conservation shall not be done or performed until the judgment of the Commissioners' Court is entered upon the minutes of the court that such machinery or equipment is not demanded for the service of building and the upkeep of the county roads; that such use for soil conservation shall not be done or performed unless the Commissioners' Court or its representatives are requested to do so in writing by the landowner or taxpayer desiring such use, and unless the use of such machinery and equipment has been engaged for soil conservation *740 purposes by a written contract with the Commissioners' Court and the taxpayer or landowner."
The judgment below equally divided the costs between the appellants and the appellees, but Rule 141, Texas Rules Civil Procedure, provides that such a division should be for good cause stated on the record. No such statement in the record is found, and for that reason all costs are adjudged against the appellees. Page v. Key, Tex.Civ.App., 175 S.W.2d 443, 445.
As reformed, the judgment is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2447532/ | 841 S.W.2d 903 (1992)
CHARTER ROOFING CO., INC., Appellant,
v.
TRI-STATE INSURANCE CO. and Securance Corporation Agency, Appellees.
No. C14-92-00177-CV.
Court of Appeals of Texas, Houston (14th Dist).
November 5, 1992.
Rehearing Denied December 31, 1992.
*904 Macon D. Strother, Houston, for appellant.
David A. Carlson, David A. Carp, Theodore B. Jereb, Houston, for appellees.
Before JUNELL, ROBERTSON and DRAUGHN, JJ.
OPINION
ROBERTSON, Justice.
Charter Roofing appeals the trial court's granting of appellees' motions for summary judgment. Appellant brings eight points of error claiming the trial court erred in granting both motions for summary judgment because it had raised a fact issue as to its claims of the appellees' breach of the duty of good faith and fair dealing, as to the appellees' violation of DTPA and Insurance Code provisions, as to the applicable statute of limitations and as to appellant's violation of contractual provisions of the insurance policy. We affirm.
In a summary judgment case, the issue on appeal is whether the movant met his burden for summary judgment by establishing that there exists no genuine issue of material fact and he is entitled to judgment as a matter of law. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671 (Tex.1979); Tex.R.Civ.P. 166a. The nonmovant is entitled to have all reasonable inferences made and all doubts resolved in his favor. University of Texas Health Science Center at Houston v. Big Train Carpet of El Campo, Inc. 739 S.W.2d 792 (Tex. 1987).
The following summary judgment evidence was uncontroverted. On July 2, 1985, Charter Roofing Co., Inc. (Charter) purchased a general comprehensive liability policy from Tri-State Insurance Co. (Tri-State). Charter procured the services of Securance Corporation Agency (Securance) to facilitate in the purchase of the policy.
During July, 1985, Charter contracted with Weingarten Realty (Weingarten) to repair the roof of a shopping center in Louisiana. Charter subcontracted the work to another contractor, and this subcontractor then subcontracted the work to another company. On August 24, 1985, the property in Louisiana was damaged by a wind storm. Weingarten requested payment from Charter for the damages.
Charter sought the assistance of Securance in the handling of the claim. Securance gathered the information and delivered it to Tri-State. Once Tri-State received the information regarding Weingarten's claim, it began its own investigation. By September 16, 1985, Tri-State had hired George Newman, an experienced claims adjuster, to handle the Weingarten claim. Newman was based in Louisiana. Newman first spoke with Brian Walker, a Charter representative responsible for monitoring the claim, took a recorded statement from Mr. Walker and he visited the shopping *905 center and took photographs of the damage in late September. Newman also contacted the subcontractor who was actually on the job.
On September 24, 1985, Newman recommended to Tri-State's senior claim adjuster that the claim be denied because the work was not supervised by Charter, the insurance policy excluded coverage for damage caused by property in the care, custody and control of Charter and damage caused by Charter's workmanship. Newman received word from Tri-State on October 8, 1985 that it agreed with his recommendation. On November 25, 1985, Newman wrote Weingarten and informed them their claim had been denied, and he later received a telephone call from a Weingarten representative who indicated they had received the denial letter and they understood it dealt with their claim for the damages suffered on August 24, 1985.
On February 2, 1988, Charter voluntarily paid Weingarten $9,815.65 for the damages in order to preserve its good business relationship with Weingarten. Weingarten's claim had never been reduced to judgment as Weingarten had never filed suit against Charter, nor was there a writing between Charter and Weingarten to evidence their settlement. Charter filed suit against Tri-State and Securance on August 21, 1989.
In its first two points of error, Charter claims the court erred in granting Tri-State's amended motion for summary judgment because it had raised a fact issue as to whether Tri-State breached its duty of good faith and fair dealing and whether Tri-State had violated the Deceptive Trade Practices Act. Appellant fails to point us to any authority that establishes an action for the breach of good faith and fair dealing in this type of liability insurance policy. In Texas, there are three recognized claims of breach of good faith and fair dealing. This extra-contractual liability has been case-law developed.
The first type of extra-contractual liability occurs when an insurer fails to accept an offer of settlement after being given a reasonable time to do so and the insured then suffers a judgment in excess of its policy limits. G.A. Stowers Furniture Company v. American Indemnity Company, 15 S.W.2d 544 (Tex. Comm'n App. 1929, holding approved); Highway Insurance Underwriters v. Lufkin-Beaumont Motor Coaches, Inc., 215 S.W.2d 904 (Tex. Civ.App.Beaumont 1948, writ ref'd n.r.e.). The courts have also recognized an extra-contractual claim for damages that arise from the handling of workers' claims for benefits under a workers compensation policy. Aranda v. Insurance Company of North America, 748 S.W.2d 210 (Tex.1988).
The last type of extra-contractual claim acknowledged by Texas courts revolves around first party insurance cases. Arnold v. National County Mutual Fire Insurance Company, 725 S.W.2d 165, 167 (Tex.1987). In Arnold, the court sought to protect the rights of the insured due to the unequal bargaining power of the parties and the ability of the insurance company to arbitrarily deny coverage and delay payment of claims. Id. Arnold established the duty of an insurer to deal fairly and in good faith with its insured in the processing and payment of claims. Id. Appellant cites Arnold as authority for its claim of Tri-State's alleged breach of the duty of good faith and fair dealing.
The facts of this case are distinguishable from Arnold and its progeny. The cases imposing the duty of good faith and fair dealing all deal with first-party claims against an insurer. See e.g., Arnold, 725 S.W.2d at 166-67; Vail v. Texas Farm Bureau Mut. Ins. Co., 754 S.W.2d 129, 130-31 (Tex.1988); These decisions concern claims brought by an insured that arose under their own insurance for damage suffered to their own property or their own personal injuries. The policy that Charter purchased was a comprehensive general liability policy. It was intended to cover claims made against Charter by third parties. All potential claims to be covered were those made by these third parties. In this case, the claim was made by Weingarten. As such, Charter had no claim. Appellant cannot point us to, nor have we found, any authority that has allowed a cause of action for breach of the duty of *906 good faith and fair dealing in this type of third-party insurance claim.
Even if this type of claim were to exist, Tri-State would still maintain the right to deny invalid or questionable claims based upon a reasonable investigation. The breach of the duty of good faith and fair dealing created by the Arnold decision arises if:
there is no reasonable basis for denial of a claim or a delay in payment or a failure on the part of the insurer to determine whether there is any reasonable basis for the denial or delay.
725 S.W.2d at 167. Whether there is a reasonable basis for denial must be judged by the facts before the insurer at the time the claim was denied. Viles v. Security Nat. Ins. Co., 788 S.W.2d 566, 567 (Tex. 1990).
The uncontroverted summary judgment evidence shows the claim by Weingarten arose on August 24, 1985. Tri-State, once informed of the claim, hired an experience adjuster to begin investigating the claim by September 16, 1985. By September 24, 1985 the adjuster had made his findings to Tri-State. Before making his findings the adjuster spoke with a representative of Charter. He investigated the scene and spoke with the subcontractor at the job site. Once he gathered this information he then made his report. Based upon his investigation the adjuster recommended the claim be denied. The adjuster based his recommendation on the fact that the work was not supervised by Charter and on the policy provision that excluded coverage for damage caused by property in the care, custody and control of Charter. Tri-State agreed with the adjuster's recommendation and a denial letter was sent to Weingarten on November 25, 1985.
Charter relies upon the affidavit of its president, John Jordan attached to its response to the motion for summary judgment, to show Tri-State had breached its duty. In his affidavit Jordan states Tri-State
in bad faith and unfairly, failed and refused to pay the claim of Weingarten.... Tri-State ... failed to promptly communicate with Charter Roofing Co. with respect to Weingarten's claim; failed to investigate the claim; ... did not attempt in good faith to effectuate a prompt, fair, and equitable settlement of Weingarten Realty's claim; failed to process the claim; and unjustifiably denied the claim.
These statements are not statements of fact but are opinions and conclusions. Statements of opinions and conclusions in affidavits are not competent summary judgment proof. Harley-Davidson Motor Co., Inc. v. Young, 720 S.W.2d 211, 213 (Tex.App.Houston [14th Dist.] 1986, no writ). As stated above, Tri-State established it had timely investigated the claim; it had direct contact with Charter; it had a reasonable basis for denial of the claim, and it timely notified Weingarten that its claim had been denied. Charter did not raise a fact issue as to any of these matters. Charter's first point of error is overruled.
Charter made many of the same allegations in support of its DTPA claim against Tri-State. Charter claimed Tri-State violated the DTPA by engaging in practices contrary to Section Four of Insurance Board Order 18663 by:
(1) not attempting in good faith to effectuate prompt, fair and equitable settlements on the claim submitted in which liability had become reasonably clear;
(2) by its unreasonable refusal to pay the subject claim;
(3) by failing to promptly communicate Tri-State's purported denial of the claim;
(4) by misrepresenting the insurance policy;
(5) by failing to fairly deal with Charter Roofing Company.
Once again, in support of its claim against Tri-State, Charter relies solely on the Jordan affidavit. Charter failed to produce any competent evidence to refute the evidence presented by Tri-State. We find the same evidence offered by Tri-State to show it had not breached its purported duty of good faith and fair dealing also shows it did not violate the Deceptive Trade Practices *907 Act as alleged by Charter. Charter's second point of error is overruled.
In its fourth point of error, Charter asserts the trial court erred in granting Tri-State's summary judgment as to its breach of contract claim. Charter maintains it had raised a fact issue as to whether Tri-State had waived its right to the use of the defense of no action and no voluntary assumption of liability.
The uncontroverted summary judgment evidence established Charter made a voluntary payment to Weingarten in February of 1988. The claim had not been reduced to judgment nor had Charter, Tri-State and Weingarten entered into any type of written settlement agreement. This evidence clearly establishes Charter breached its contract with Tri-State. The policy in question provided that the insured could not voluntarily make any payment or assume any obligation except at its own cost. It further provided the insured had no action against the insurer unless the amount to be paid had been determined by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the insurer. The evidence demonstrates Charter was in violation of both provisions.
Charter argues Tri-State waived its right to insist upon compliance with the policy provisions because it claims to have unquestionably denied coverage. See Gulf Insurance Company v. Parker Products, Inc., 498 S.W.2d 676, 679 (Tex.1973); Ranger Ins. Co. v. Robertson, 707 S.W.2d 135 (Tex.App.Austin 1986, writ ref'd n.r.e.); Owens v. Watson, 806 S.W.2d 871 (Tex.App.Corpus Christi 1991, writ denied). These cases are distinguishable from the present controversy. They all involve fact situations where the insurer refused to defend a suit after suit had been filed. In those situations Texas courts have held the insurer loses the right to insist on strict compliance with policy conditions. Tri-State did not refuse to defend Charter as the evidence shows suit was never filed against Charter. Therefore, Tri-State did not lose its right to insist upon full compliance with its policy provisions. Charter's fourth point of error is overruled.
In Charter's fifth, sixth and eighth point of error, Charter states the trial court erred in granting Securance's motion for summary judgment because it had raised fact issues as to all of its claims against Securance. Charter claimed Securance violated the DTPA and was negligent in handling the Weingarten claim. In addition, Charter alleged Securance breached the duty of good faith and fair dealing in its dealings with Charter.
The undisputed facts show Securance was no more than the procuring agent for Charter. Securance helped Charter obtain insurance from Tri-State. The insurance contract was between Charter and Tri-State. Securance was not the insurer.
Charter bases its claims against Securance on the fact that Securance offered to serve as a conduit between its client, Charter, and Tri-State relative to the Weingarten claim. It contends Securance failed to promptly communicate the denial of the claim, misrepresented the policy and misrepresented that the claim would be paid.
The summary judgment evidence clearly shows that Securance promptly notified Tri-State of Weingarten's claim. The investigation by Tri-State began less than one month after the occurrence. Once Tri-State began its investigation, it dealt directly with a representative of Charter. It no longer needed to deal with Securance to receive information. Securance was an agent only and did not have the ability to deny or pay the claim. Once Tri-State decided to deny the claim it promptly notified the claimant Weingarten.
Securance's summary judgment evidence establishes it did not on its own violate the DTPA nor was it negligent nor did it breach an alleged duty of good faith and fair dealing. Since we have overruled Charter's points of error regarding Tri-State, then Securance cannot be found to have violated these duties vicariously as an agent of Tri-State. Points of error five, six and eight are overruled.
As our disposition of the above points of error are dispositive of this appeal we need not discuss Charter's remaining points of *908 error dealing with the applicable statute of limitations.
Appellee, Securance asks this court to assess damages for delay against appellant, Charter Roofing Co., Inc. Tex. R.App.P. 84. Securance contends this appeal was brought for no reason other than delay as it was clear Securance was only the procuring agent and Charter's claim, if any, was against its insurer Tri-State. Having presented no meritorious arguments by which this court could reverse the trial court, we agree with Securance, and order Charter to pay damages to Securance in the amount of $500.
The judgment of the trial court is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1384062/ | 135 Cal. App. 2d 245 (1955)
JOHN C. RITCHIE et al., Appellants
v.
ANCHOR CASUALTY COMPANY (a Corporation), Respondent.
Civ. No. 20695.
California Court of Appeals. Second Dist., Div. Three.
Aug. 25, 1955.
Abraham Gottfried for Appellants.
Moss, Lyon & Dunn, Gerold C. Dunn and Henry F. Walker for Respondent.
ASHBURN, J. pro. tem. [fn. *]
Plaintiffs appeal from an adverse judgment rendered after a nonjury trial in an action upon an insurance policy issued to them by defendant Anchor Casualty Company. Plaintiffs John C. Ritchie and John Burroughs do business under the name of All American Nut Company, a business of processing and selling food products, including refined peanut oil. In August 1950 they bought from defendant a "comprehensive liability" policy, covering primarily liability from operation of automobiles; but it also contained certain riders, one of which is entitled "Products Property Damage Endorsement for Attachment to Comprehensive Liability Policy." So far as pertinent it provides: "In consideration of the premium at which this endorsement is issued, it is understood and agreed that the Policy to which it is attached is extended to cover the liability imposed upon *249 the assured by law for damages because of injury to or destruction of property, including the loss of use thereof, caused by accident and arising out of"
"(1) the handling or use of or the existence of any condition in goods or products manufactured, sold, handled or distributed by the insured if the accident occurs after the insured has relinquished possession thereof to others and away from premises owned, rented or controlled by the insured." (Emphasis added.)
In April 1951, while the policy was in force, plaintiffs sold to Post Trading Company, a partnership consisting of Max Sorell and Irving Horowitz, 10 drums of refined peanut oil at a price of $1,324.80. The buyers refused to pay for same, claiming that the oil was rancid and they had been damaged through its use. Plaintiffs herein, through an assignee, A. F. Stark, sued to recover the purchase price and the buyer, Post Trading Company, not only resisted that claim but also filed a cross-complaint seeking recovery of damages from plaintiffs herein (as cross-defendants) in the sum of $12,140.80, alleged to have been proximately caused by use of the rancid oil in manufacture of certain food products (corn chips) for which use the oil had been purchased. Plaintiffs furnished the cross-complaint to defendant insurance company, called upon it to defend pursuant to that provision of the policy which provides: "It is further agreed that as respects insurance afforded by this policy the company shall (a) defend in his name and behalf any suit against the insured alleging such injury or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; ..." Defendant insurer refused to defend upon the ground that the causes of action alleged in the said cross-complaint were not within the coverage of the policy. After the Stark case had been partially tried (defendant refusing to have anything to do with it) plaintiffs made a compromise by which they dismissed the Stark complaint and Post Trading Company dismissed its cross-complaint, both dismissals being made expressly with prejudice. This action was brought to recover from the insurance company the sum of $2,574 alleged to be the cost of the settlement to plaintiffs, i.e. surrender of their claim of $1,324.80 plus reasonable attorney fees incurred in the Stark case in the sum of $1,250; they also seek recovery of an attorney fee of $750 in the instant action brought upon the policy. The heart of the trial judge's ruling is found in paragraph VII of the *250 findings, reading as follows: "None of the allegations of said cross-complaint pleaded or alleged an 'accident,' or made claim for damages 'caused by accident' as those terms were used, and intended to be used, by the parties to the insurance policy. None of the allegations of said cross-complaint pleaded or alleged a 'liability imposed upon the assured by law,' as such term was used, and intended to be used, by the parties to the insurance policy. None of the allegations of said cross-complaint pleaded or alleged the 'injury to or destruction of property' caused by any 'accident' occurring after the insured 'relinquished possession' of 'products sold,' as those terms were used, and intended to be used, by the parties to the insurance policy." This sustains defendant's arguments (1) that the cross-complaint alleges no accident, (2) that it alleges a liability created by contract and not one "imposed upon the assured by law" and (3) that the accident, if any, did not occur after the insured had relinquished possession of the oil and away from the premises of insured. Appellant assails each of these phases of the ruling as legally unsound. Defendant introduced no evidence and the ruling is based upon the terms of the policy and the cross-complaint, supplemented by certain undisputed oral evidence, thus presenting questions of law upon this appeal.
The first question is whether the cross-complaint in the Stark case avers an accident. [1] Respondent contends, and we agree, that the insurer's obligation to defend is measured by the terms of the insurance policy and the pleading of the claimant who sues the insured. It is so held in Lamb v. Belt Cas. Co., 3 Cal. App. 2d 624, 630 [40 P.2d 311] and Greer-Robbins Co. v. Pacific Surety Co., 37 Cal. App. 540, 543-544 [174 P. 110]. [2] It is also established that in cases where no judgment has been rendered against the insured, the claim having been compromised, the question of the insurer's liability to defend remains open for adjudication in a later proceeding. (Lamb v. Belt Cas. Co., supra, 3 Cal. App. 2d 624, 631; Chrysler Motors v. Royal Indem. Co., 76 Cal. App. 2d 785, 788 [174 P.2d 318]; see also 45 C.J.S. 937, p. 1073.) [3] But the settlement, or stipulated judgment entered thereon becomes presumptive evidence of the liability of the insured and the amount thereof. (Belt, at page 631; Chrysler Motors at page 788.)
The cross-complaint in question alleges five causes of action, two of which sound in express warranty and three in implied warranty of fitness of the oil for the use for which intended. *251 Counsel for respondent say this is an action in contract and hence is not one to recover for an accident or upon a liability imposed by law.
Examination of the pleading reveals that it does factually allege an accident though it does not use that word. The draftsman of a complaint against the insured is not interested in the question of coverage which later arises between insurer and insured. He chooses such theory as best serves his purpose; if it be breach of contract rather than negligent performance of contract, he chooses the former; if it be negligence rather than warranty he alleges negligence; if he happens to choose warranty it may be an express one or one implied. And when the question later arises under an insurance policy as to what the facts alleged in the complaint do spell,--for instance, whether they aver an accident,--the complaint must be taken by its four corners and the facts arrayed in a complete pattern without regard to niceties of pleading or differentiation between different counts of a single complaint. And the ultimate question is whether the facts alleged do fairly apprise the insurer that plaintiff is suing the insured upon an occurrence which, if his allegations are true, gives rise to liability of insurer to insured under the terms of the policy.
[4] It is settled that "in case of doubt such doubt ought to be resolved in the insured's favor" (Boyle v. National Cas. Co. (D.C.), 84 A.2d 614, 616; see, to same effect, Lee v. Aetna Cas. & Surety Co. (2d Cir.), 178 F.2d 750, 752-753; Pow- Well Plumbing & Heating, Inc. v. Merchants Mut. Cas. Co., 195 Misc. 251 [89 N.Y.S.2d 469, 474]; 8 Appleman on Insurance Law and Practice, 4683, at p. 5 of 1955 Pocket Part). In the Pow-Well case, which depended upon a showing of an accident arising out of a plumber's operations, the court said with reference to a complaint leaving the matter in doubt: "In such a situation, it would seem to be the duty of the insurer to defend, if there is, potentially, a case under the negligence complaint, within the coverage of the policy. If, under the negligence complaint, a claim could be proved, which the insurer must pay, the duty to defend arises." (P. 474.)
[5a] The instant cross-complaint alleges purchase by Post Trading Company of the oil from the Nut Company for use in preparation of food products in the course of the buyer's business; that the seller knew the intended use; that previous purchases of such oil had been made from the Nut Company *252 by Post Trading and the oil was then satisfactory; that the particular batch of oil was used in preparation of food products; that it was not reasonably fit for the intended use; that it was so used without knowledge that it was rancid; that its condition was not discovered until after use or until after damage proximately caused thereby; that it did cause damage consisting of refunds to Post customers who had purchased unmerchantable food products from Post, cost of detergent and labor used in removing the effects of the rancid oil from machinery, cost of laboratory tests to determine cause of Post's bad products, damage to its trade name and good will, in the total sum of $12,140.80. In short it alleges use of rancid oil in the belief that it was sweet, with the unexpected result that the oil ruined all food products in which it was used, and damaged the machinery employed in the manufacture of same. This occurrence was an accident within the law applying to insurance policies worded like the one under discussion. "Caused by accident" is the phrase to be interpreted here; not "accidental means" or "external, violent, and accidental means."
[6] Richards v. Travelers Ins. Co., 89 Cal. 170, discusses the meaning of "accident" as follows, at page 175 [26 P. 762, 23 Am. St. Rep. 455]: "It is impossible to give a precise definition of the word 'accidental.' As every effect has a cause, there is one sense in which nothing is accidental. ... But the authorities to be found on the subject seem to be to the point that 'accident' must be given its popular meaning; that is, a casualty--something out of the usual course of events, and which happens suddenly and unexpectedly, and without any design on the part of the person injured." Then, quoting Judge Withey in Ripley v. Railway Co., 2 Bigelow's Life & Acc. Ins. Cas. 738: " 'Perhaps, in a strict sense, any event which is brought about by design of any person is not an accident, because that which has accomplished the intention and design, and is expected, is a foreseen and foreknown result, and therefore not strictly accident. Yet I am persuaded this contract should not be interpreted so as thus to limit its meaning; for the event took place unexpectedly, and without design on Ripley's part. It was to him a casualty, and in the more popular and common acceptation, "accident," if not in its precise meaning, includes any event which takes place without the foresight or expectation of the person acted upon or affected by the event. ... I think, in construing a policy of insurance against accident, issued to all sorts of *253 people, a majority of whom do not, as the company well knew, nicely weigh the meaning of words and terms used in it, courts are called upon to interpret the contract as a large class not versed in lexicology are sure to regard its terms and scope. That which occurs to them unexpectedly is by them called accident. The company fix the terms of the contract, and are to be held, in the absence of plain unequivocal exceptions and provisions, to intend what, in popular acceptation, the insured party is likely to understand by its terms.' ... the language of Judge Withey seems to us to express correct views of the question." (Pp. 175, 176.) The definition of accident given in the foregoing quotation has been accepted and applied uniformly in this jurisdiction and quite generally in others where the word accident is found without qualifying phrases such as "accidental means." This is true of Rock v. Travelers' Ins. Co., 172 Cal. 462, 465 [156 P. 1029, L.R.A. 1916E 1196]; Price v. Occidental Life Ins. Co., 169 Cal. 800, 802 [147 P. 1175]; Olinsky v. Railway Mail Assn., 182 Cal. 669, 671 [189 P. 835, 14 A.L.R. 784]; Ogilvie v. Aetna Life Ins. Co., 189 Cal. 406, 411-412 [209 P. 26, 26 A.L.R. 116]. See also 14 Cal.Jur. 101, p. 552; 7 Cal.Jur. 10-Yr.Supp., 101, p. 138; 45 C.J.S. 827, p. 880; 29 Am.Jur. 931, p. 706. We quote Zuckerman v. Underwriters at Lloyd's, London, 42 Cal. 2d 460, 473 [267 P.2d 777]; " 'Accident' has been defined as 'a casualty--something out of the usual course of events and which happens suddenly and unexpectedly and without any design of the person injured.' (Rock v. Travelers' Ins. Co., 172 Cal. 462, 465 [156 P. 1029, L.R.A. 1916E 1196]; Richards v. Travelers Ins. Co., 89 Cal. 170, 175 [26 P. 762, 23 Am. St. Rep. 455].)"
There is a clear distinction between injury caused by "accident" and one caused by "accidental means." This is pointed out in most of the cases just cited and in Horton v. Travelers Ins. Co., 45 Cal. App. 462, 466 [187 P. 1070]; Losleben v. California State L. Ins. Co., 133 Cal. App. 550, 555 [24 P.2d 825]; Davilla v. Liberty Life Ins. Co., 114 Cal. App. 308, 313 [299 P. 831]; Zuckerman v. Underwriters at Lloyd's, London, supra, 42 Cal. 2d 460, 476; Rooney v. Mutual Benefit Health & Acc. Assn., 74 Cal. App. 2d 885, 888 [170 P.2d 72]. It is stated in the last cited case: "Where, as here, the policy does not insure against accidental death or accidental injuries, but against death or injuries caused by accidental means, it is not sufficient that the death or injury should be unexpected, but in the means through which the injury was sustained or *254 the death produced there must be something of an unexpected or unforeseen character." (See also annos. in 111 A.L.R. 628 and 166 A.L.R. 469.) As we deal only with an "accident" policy, the unexpected and unforeseeable result of a voluntary act fulfills the term of the policy as to the event covered thereby.
As above indicated the Post cross-complaint sounds in warranty, express as to two counts and implied in the other three counts. Respondent argues that this cannot be a "liability imposed upon the assured by law" because it is a liability arising from contract. [7] Girard v. Commercial Standard Ins. Co., 66 Cal. App. 2d 483, 490 [152 P.2d 509] says that "the term 'liability imposed by law,' when used in connection with liability insurance, is ordinarily construed as meaning liability imposed in a definite sum by a final judgment against the assured." The word "ordinarily" is significant; it does not preclude a different connotation when the policy under consideration so indicates. And that is the case here. [8] Coverage A of the insurance agreement obligates defendant "To pay on behalf of the insured all sums which the insured shall become obligated to pay by reason of the liability imposed upon him by law or by written contract for damages, including damages for care and loss of services, because of bodily injury, disease or illness, including death at any time resulting therefrom, sustained by any person or persons." Coverage B: "To pay on behalf of the insured all sums which the insured shall become obligated to pay by reason of the liability imposed upon him by law for damages because of injury to or destruction of property, ..." The use of the phrase "or by written contract" in A and its omission from B is persuasive that the phrase "imposed upon him by law" as used in this policy and in the subject rider relates to the nature of the liability to be defended rather than the result of the lawsuit against the assured. Like meaning was attributed to the phrase "liability imposed by law" in Bahlman v. Hudson Motor Car Co., 290 Mich. 683 [288 N.W. 309, 313]; Ohio Cas. Ins. Co. v. Welfare Fin. Co. (8 Cir.), 75 F.2d 58, 59; Dryden v. Ocean Acc. & Guar. Corp., Ltd. (7 Cir.), 138 F.2d 291, 292-293. And that is undoubtedly the correct connotation of the phrase in the policy at bar.
[9] If the complaint filed against the insured alleges several causes of action some of which are not covered by the policy but one or more being within its terms, the insurer is *255 bound to defend the action. (8 Appleman Insurance Law and Practice, 4683, p. 10; Pow- Well Plumbing & Heating, Inc. v. Merchants Mut. Cas. Co., 193 Misc. 251 [89 N.Y.S.2d 469, 475]; Christian v. Royal Ins. Co., 185 Minn. 180 [240 N.W. 365, 366]; American Indem. Co. v. Sears, Roebuck & Co. (6 Cir.), 195 F.2d 353, 356.)
[10] It may be conceded that an action upon express warranty rests upon contract, but privity of contract is not necessary to an implied warranty when foodstuffs are involved, as here. (Vaccarezza v. Sanguinetti, 71 Cal. App. 2d 687, 689 [163 P.2d 470]; Klein v. Duchess Sandwich Co., Ltd., 14 Cal. 2d 272 [93 P.2d 799].) Appellant cites Rubino v. Utah Canning Co., 123 Cal. App. 2d 18, 24-26 [266 P.2d 163], which involved the question of the applicable statute of limitations in an action on implied warranty. It held the one- year statute (Code Civ. Proc., 340, subd. 3.), relating to injury "caused by the wrongful act or neglect of another" to be applicable rather than the contract section (Code Civ. Proc., 339, subd. 1). [11] The opinion relies in part upon Gosling v. Nichols, 59 Cal. App. 2d 442 [139 P.2d 86], which passed upon the question of abatement through defendant's death. Dismissal on that ground was there affirmed. The complaint alleged negligence and breach of implied warranty that food sold to plaintiff was wholesome. At page 444 the court said: "The gravamen of a cause of action for breach of an implied warranty that food is fit for human consumption is the personal injury which results, and the action 'sounds in tort.' The cause of action is not ex contractu. (Singley v. Bigelow, 108 Cal. App. 436, 445 [291 P. 899]; Speer v. Brown, 26 Cal. App. 2d 283, 294 [79 P.2d 179]; Harkins v. Provenzo, 116 Misc. 61 [189 N.Y.S. 258, 259 et seq.]. Bernstein v. Queens County Jockey Club, 222 A.D. 191 et seq. [225 N.Y.S. 449].)" See also Automobile Ins. Co. v. Union Oil Co., 85 Cal. App. 2d 302, 306 [193 P.2d 48]; De Mirjian v. Ideal Heating Corp., 91 Cal. App. 2d 905, 909 [206 P.2d 20]; Zellmer v. Acme Brewing Co. (9 Cir.), 184 F.2d 940, 945; Harkins v. Provenzo, 116 Misc. 61 [189 N.Y.S. 258, 260- 261]; Bekkevold v. Potts, 173 Minn. 87 [216 N.W. 790, 791, 59 A.L.R. 1164]; 55 C.J. 701, p. 715; 77 C.J.S. 314, p. 1155. [12] We quote 46 American Jurisprudence, 332, pages 513, 514: "An implied warranty arises under certain circumstances by operation of law irrespective of any intention of the seller to create it. It is a conclusion or inference of law. Similarly, implied warranties provided for *256 by the Uniform Sales Act are imposed by operation of law and, unless specifically negatived or waived, become a part of the contract of sale by virtue of the statute. It has been said that an implied warranty arises from the presumed intention of the parties. Its origin and use are to promote high standards in business and to discourage sharp dealings." Hertzler v. Manshum, 228 Mich. 416 [200 N.W. 155, 157]: "The implied warranty, so called, reaching from the manufacturer of foodstuffs to the ultimate purchaser for immediate consumption is in the nature of a representation that the highest degree of care has been exercised, and a breach of such duty inflicting personal injury is a wrong in the nature of a tort, and not a mere breach of contract to be counted on in assumpsit. Except in name and to establish privity between the manufacturer and the ultimate consumer, it is the same thing as negligence. Plaintiff's case, in its last analysis, is bottomed on negligence. [13] It is apparent that an implied warranty creates a liability imposed by law and the insurer was obligated to defend such an action."
The cited case of Canadian Indem. Co. v. Andrews & George Co. Ltd. (1953), 1 S.C. 19 (Canada Supreme Court Law Reports 1953) lends considerable support to respondent's argument that breach of an implied warranty gives rise to a liability imposed by contract rather than one imposed by law. But its reasoning is opposed to the above cited cases of Gosling v. Nichols, Rubino v. Utah Canning Co. and other authorities stating the law as it has developed in the United States. [14] And it is opposed to the doctrine of Eads v. Marks, 39 Cal. 2d 807 [249 P.2d 257], which involved the question of whether and when a right of action for tort grows out of a breach of contract. The holding is expressed in this quotation from page 811: "Here, the duty of care arose by reason of the contract, and plaintiff has sued in tort for the breach of that duty. The contract is of significance only in creating the legal duty, and the negligence of the defendant should not be considered as a breach of contract, but as a tort governed by tort rules. (Rushing v. Pickwick Stages System, 113 Cal. App. 240 [298 P. 150]; Basler v. Sacramento etc. Ry. Co., 166 Cal. 33 [134 P. 993].) As was said in Peterson v. Sherman, 68 Cal. App. 2d 706, 711 [157 P.2d 863]: 'It has been well established in this state that if the cause of action arises from a breach of a promise set forth in the contract, the action is ex contractu but if it arises from a breach of duty growing out of the contract it is ex *257 delicto. ...' (See also Jones v. Kelly, supra, 208 Cal. 251, 254-255 [280 P. 942].) Where the cause of action arises from the breach of a contractual duty, the action is delictual notwithstanding that it also involves a breach of contract. (Jones v. Kelly, supra; Peterson v. Sherman, supra.)" We are persuaded that the Canadian Indemnity Company case does not represent the law of this state.
There is more than legalism in the application of the foregoing cases to the facts at bar. [15] An insurance policy is to be construed most favorably to the insured, in such manner as to provide full coverage of the indicated risk rather than to narrow the protection. (Olson v. Standard Marine Ins. Co., 109 Cal. App. 2d 130, 135 [240 P.2d 379]; Miller v. United Ins. Co., 113 Cal. App. 2d 493, 497 [248 P.2d 113]; Pendell v. Westland Life Ins. Co., 95 Cal. App. 2d 766, 769 [214 P.2d 392]; Fageol Truck & Coach Co. v. Pacific Indem. Co., 18 Cal. 2d 748, 751 [117 P.2d 669].) [16] The courts will not sanction a construction of the insurer's language that will defeat the very purpose or object of the insurance. (Miller v. United Ins. Co., supra, at p. 497; Narver v. California State Life Ins. Co., 211 Cal. 176, 180 [294 P. 393, 71 A.L.R. 1374].) When American Nut Company bought a property damage endorsement to protect against accidents growing out of the handling or use of its products or any condition in products manufactured, sold, handled or distributed by it, a reasonable expectation would be protection against the type of liability which would ordinarily grow out of its kind of business. The body of the policy describes it as "Nut Processing Co." The particular endorsement: "Food Sundries Mfg. N.O.C.--Code 2455-cleaning, grinding, sorting or mixing of coffee, sugars, confections, pastry flours, spices or nuts--no cereal milling." Another one describes it as "Food Products--N.O.C. in paper or cardboard containers or in bulk." [17] The insurer is presumed to have known of the nature of applicant's business and that it was one in which accidents might occur, not through explosion or violence of any kind but through an unwholesome condition in a food product such as peanut oil. Naturally sales are not conducted wholly through written contracts. [18] And every sale of foodstuffs carries an implied warranty of fitness for consumption. [19] Normally a businessman who takes "comprehensive" insurance with express coverage of "products property damage" would expect his *258 ordinary transactions to be covered. If the insurer would create an exception to the general import of the principal coverage clauses, the burden rests upon it to phrase that exception in clear and unmistakable language. (Pendell v. Westland Life Ins. Co., supra, at p. 770.) If this is not done any ambiguity or uncertainty is resolved in favor of the policyholder. Indeed an exception must be couched in terms which are clear to the ordinary mind (Pendell v. Westland Life Ins. Co., supra, at p. 770) or any doubts as to meaning will be resolved against the insurer.
[5b] That the accident arose out of "the existence of any condition in goods or products manufactured, sold, handled or distributed by the insured" is equally clear. And, as the accident occurred at the time of use of the rancid oil in the belief that it was good, it cannot be gainsaid that it occurred "after the insured has relinquished possession thereof (the rancid oil) to others and away from the premises owned, rented or controlled by the insured."
All of the conditions of the Products Property Damage Endorsement were fulfilled and defendant improperly refused to defend.
[20] This gave plaintiffs the right to make any reasonable and bona fide compromise of the action against them. (Lamb v. Belt Cas. Co., 3 Cal. App. 2d 624, 630 [40 P.2d 311]; St. Louis Dressed Beef & Provision Co. v. Maryland Cas. Co., 201 U.S. 173 [26 S. Ct. 400, 50 L. Ed. 712]; 45 C.J.S. 937b, p. 1072; 142 A.L.R. 812, anno.) This they did. Their complaint for recovery of the purchase price was dismissed with prejudice and the Post Trading cross-complaint was dismissed, also with prejudice. [21] Plaintiffs had incurred in that action an attorney fee of $1,250, and no claim is made that the amount is not reasonable. That item is recoverable here. (O'Morrow v. Borad, 27 Cal. 2d 794, 801 [167 P.2d 483, 163 A.L.R. 894]; 45 C.J.S. 926, p. 1043.) No money passed in the compromise but plaintiffs gave up their claim to the purchase price of the oil, $1,324.80. They argue that that amount is part of their recovery herein as it measures the value of what they gave in order to obtain dismissal of a claim against them in the sum of $12,140.80. That was an agreed purchase price, there is no claim to the contrary, or that it was not the reasonable value of the oil if sweet and wholesome. Had plaintiffs been required to pay $1,324.80 in cash to effect a settlement there would be little question of their right to recover it in this action. The insurance company *259 answer at bar says that plaintiffs had a good defense to the cross-complaint. Appellants at the trial of this case introduced evidence that there was nothing wrong with the oil. If that is so, they gave up a good claim for $1,324.80 as consideration for a compromise. But if the oil was rancid when sold that was the cause of the accident, not the result of it. and hence the value of that oil would not equal the sale price. The court made no finding on the subject and the question of the value of that claim is open for determination as one of fact under the Lamb and Chrysler cases, supra, and cannot be determined as one of law upon this appeal.
[22] Appellant complains of dismissal of the second count of his complaint wherein he seeks recovery of a $750 attorney fee for prosecution of the instant action. There was no error in this. It is so ruled in O'Morrow v. Borad, supra, 27 Cal. 2d 794, 801. To the same effect are Macco Const. Co. v. Fickert, 76 Cal. App. 2d 295, 305 [172 P.2d 951]; Anger v. Borden, 38 Cal. 2d 136, 145 [238 P.2d 976]; Viner v. Untrecht, 26 Cal. 2d 261, 272 [158 P.2d 3], and many other cases.
Appellants also complain of other alleged errors, such as refusal to receive evidence of expenses not alleged in their complaint and refusal to permit amendment to cover same. [23] But this matter of permitting amendment during the trial is a discretionary one. And we do not apprehend that appellants will not have full opportunity upon retrial to fully prove their damages or be refused leave to amend to that end. No other points require discussion.
The judgment is reversed.
Wood (Parker), Acting P. J., and Vallee, J., concurred.
NOTES
[fn. *] *. Assigned by Chairman of Judicial Council. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2457620/ | 437 S.W.2d 62 (1968)
BEE COUNTY et al., Appellants,
v.
John B. ROBERTS et al., Appellees.
No. 469.
Court of Civil Appeals of Texas, Corpus Christi.
December 19, 1968.
*63 Fischer, Wood, Burney & Nesbitt, Allen Wood, Corpus Christi, Richard Rudeloff, Beeville, for appellants.
Wade, Wade & Newton, Jon Newton, Beeville, Luther E. Jones, Jr., Corpus Christi, for appellees.
OPINION
GREEN, Chief Justice.
This suit was brought by a group of tax paying citizens of Bee County against Bee County and its county judge, four county commissioners, auditor and treasurer. All of said officials were sued solely in their official capacity. A permanent injunction was sought enjoining the county and its officials from making or causing to be made any expenditure of county funds in the form of contributions to the retirement program for Bee County for the months of October, November and December, 1968. After a trial before the court, such injunction was granted. Bee County and all of the named county officials except county judge Knight and commissioner Valenta appeal to this Court. At the time the appeal was filed, all appellants were represented by the same attorneys, being the county attorney of Bee County and privately employed counsel.
After the appeal was filed and shortly before the case was submitted on oral argument, Richard E. Rudeloff, the county attorney of Bee County, filed in this Court a motion on behalf of the county asking that this appeal be dismissed. A certified copy of an order of the Commissioners Court adopted November 8, 1968, by a three to two vote of the Commissioners Court was attached to the motion to dismiss. The purport of said order was that all orders theretofore passed by the Commissioners Court relating to the year 1968 concerning retirement of county officials and employees and the amendment of the 1968 budget to include expenditures for retirement purposes were rescinded, and the county attorney and other counsel representing *64 Bee County in the cause were instructed to move for a dismissal of this appeal.
Commissioners Stubenthal and O'Neal who voted against the adoption of the above orders to rescind do not deny the right of Bee County to have the appeal dismissed as to appellant Bee County. Said two appellants through their employed counsel oppose the dismissal of their appeal, taking the position that they have a justiciable interest in the litigation and are therefore legally entitled to carry on their own appeal, and to have the issues determined on the merits. We overrule their contention, and sustain the motion to dismiss the appeal.
Whether Bee County's appeal should have been perfected, and whether there should now be a cessation of its appeal, are matters exclusively within the judicial discretion of the Commissioners Court. Ward County v. Lee Moor Contracting Company, Tex.Civ.App., 319 S.W.2d 398, n. w. h.
Since this was a suit to enjoin the county from making what was alleged to be an illegal expenditure of public funds, the county was a necessary party to the suit. Scott v. Graham, 156 Tex. 97, 292 S.W.2d 324; Hoffman v. Davis, Tex. Com.App., 128 Tex. 503, 100 S.W.2d 94, op. adopted by Sup.Ct. A county operates through its Commissioners Court, and a commissioner has no authority to bind the county by his separate action. Gano v. County of Palo Pinto, 71 Tex. 99, 8 S.W. 634; Canales v. Laughlin, 147 Tex. 169, 214 S.W.2d 451, syl. 3. The county alone, acting by virtue of action of the Commissioners Court and not individual commissioners, had the justiciable interest to defend against the injunction. While the individual commissioners and other county officials were proper parties, their status in the litigation was fixed at being merely nominal parties. Childress County v. Sachse, Tex.Civ.App., 310 S.W.2d 414, 418, wr. err. ref. n. r. e., 158 Tex. 371, 312 S.W.2d 380. They have no interest in the litigation apart from that of the county, and accordingly when the county, through a majority of the Commissioners Court, sees fit to abstain from further prosecution of its appeal, they have no standing to complain. 3 Tex.Jur.2d p. 468, § 195, Appeal and ErrorCivil, note 3.
Since Bee County was the only appellant with any interest which has been or will be affected by the trial court's order, and since each of the county commissioners who is now an appellant was sued, and answered solely in his official capacity, and is only a nominal party with no justiciable interest to complain of the judgment of the trial court as appellant or to complain of any action of the Commissioners Court of which he is a member, the issue of whether the litigation has become moot by reason of the latest actions of the Commissioners Court need not be decided by this Court. The issue of mootness vel non is not reached because of the absence of a party appellant with justiciable interest to present the issue to us, in view of the dismissal as appellant of Bee County.
We accordingly sustain the motion of appellant Bee County to dismiss this appeal. The net effect of such dismissal will be to prevent the payment from county funds of contributions to the county retirement program for October, November and December, 1968, in accordance with the trial court's order. This dismissal is without prejudice to any future litigation which any person with appropriate justiciable interest and not a party to this suit might prosecute to test the validity of any of the orders entered by the Commissioners Court of Bee County concerning the retirement program of the county for the year 1968. We do not here pass upon the merits of any such prospective litigation, if any.
Appeal dismissed. Costs of appeal are adjudged against Bee County. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2901847/ | COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
MARGIE ORTEGA,
Appellant,
v.
ART GONZALEZ, JR. AND JAMES
RASCOE, INDIVIDUALLY AND
D/B/A GROC., INC., D/B/A DELL
MINI MART,
Appellees.
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No. 08-03-00432-CV
Appeal from the
394th District Court
of Hudspeth County, Texas
(TC#3696-394)
O P I N I O N
This is an appeal from the trial court’s granting of a “no-evidence” summary judgment
against Appellant. For the reasons stated herein, we affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
Appellant filed a lawsuit against Appellees alleging various torts related to a business
partnership that purportedly existed among the parties. Appellant contends that she had
entered into a business relationship with Appellees where the parties had agreed to purchase
a grocery business. At some time after, not reflected in the record, the parties had a
disagreement over the arrangement. Appellant filed suit on August 13, 2002, alleging causes
of action based in fraud and forgery, loss of business opportunities, breach of fiduciary duty,
intentional infliction of emotional distress, and tortious interference with prospective
business relationship. The parties filed requests for disclosure and proceeded with other
written discovery. Appellee Gonzalez, individually and d/b/a Groc. Inc. d/b/a Dell Mini Mart
filed special exceptions to Appellant’s original petition. The appellate record reflects an
order granting the special exceptions and providing Appellant with sixty days to replead.
The record does not reflect the filing of any amended pleadings if any were filed.
The parties continued to exchange written discovery. Appellee Gonzalez et al, filed
a “no-evidence” motion for summary judgment pursuant to Texas Rules of Civil Procedure
166a(i) on May 5, 2003. On May 12, 2003, Appellee Rascoe filed his “no-evidence” motion
for summary judgment. Both motions were considered by the court on May 29, 2003. At
the hearing, Appellee Gonzalez apparently presented written objections to the timeliness of
Appellant’s response to the motion for summary judgment and to the form of the affidavit.
Appellee Gonzalez also argued the basis for the objections to the court. The written
objection was not included in the appellate record but the order sustaining all the objections
is included and provides that the trial court sustained all the objections. Thereafter, the trial
court granted the motions for summary judgment in favor of both Appellees. Appellant filed
a notice of appeal. We note that Appellant included as an attachment to her brief a copy of
a document requesting findings of fact and conclusions of law from the trial court. No
proposed findings were included in the record. The copy of the request is not file stamped
and no file stamped copy is included in the clerk’s record provided. We also note that if the
request was properly filed and presented to the trial court, no proposed findings were
provided and no notice of past due findings of fact and conclusions of law was filed.
Further, we note that normally, findings of fact and conclusions of law have no place in
summary judgment proceedings. Linwood v. NCNB Texas, 885 S.W.2d 102, 103 (Tex.
1994); Besing v. Moffitt, 882 S.W.2d 79, 82 (Tex.App.--Amarillo 1994, no writ); State v.
Easley, 404 S.W.2d 296, 297 (Tex. 1966). The failure to make such findings is not error and,
if made, they are correctly disregarded by the appellate court. Cotton v. Ratholes, Inc., 699
S.W.2d 203, 204 (Tex. 1985).
Appellant has appealed, raising one issue.
II. DISCUSSION
In her sole issue on appeal, Appellant complains that the “trial court erred and abused
its discretion under the circumstances of this case by granting [Appellees’] Motion for
Summary Judgement [sic], as an adequate and reasonable time to conduct discovery was not
allowed.” The issue does not clearly complain of the erroneous action of the trial court. It
appears to complain that the trial court’s holding of the hearing was error because Appellant
had not had sufficient time to conduct discovery, implying that the hearing should have been
postponed or continued. The issue as worded and argued does not attack the merits of the
granting of the motions for summary judgment. We note that no motion for continuance was
filed and Appellant’s response was struck and apparently not considered by the trial court.
Further, we observe that any complaint on the merits of the granting of the summary
judgment is not briefed nor argued. Appellant’s brief only challenges the trial court’s failure
to allow more time to continue the discovery process. Appellant’s brief does not present any
argument regarding the substantive reasons why the trial court should have granted her
additional time nor does it articulate any evidence to rebut Appellees’ motions. Appellant’s
argument is, in essence, a contention that the “result reached by the trial court is manifestly
unfair to [Appellant].”
The brief “must contain a succinct, clear, and accurate statement of the arguments
made in the body of the brief.” Tex. R. App. P. 38.1(g). Rule 38 requires Appellant to
provide us with such discussion of the facts and the authorities relied upon as may be
requisite to maintain the point at issue. See Tesoro Petroleum Corp. v. Nabors Drilling USA,
Inc., 106 S.W.3d 118, 128 (Tex.App.--Houston [1st Dist.] 2002, pet. denied); Franklin v.
Enserch, Inc., 961 S.W.2d 704, 711 (Tex.App.--Amarillo 1998, no pet.). This is not done
by merely uttering brief conclusory statements, unsupported by legal citations. Tesoro
Petroleum Corp., 106 S.W.3d at 128. Appellant does not present any case law or argument
to support her contention that a continuance was requested and improperly denied. The only
cases included in her brief identify the standard of review applicable to a “no-evidence”
motion for summary judgment. By presenting such attenuated, unsupported argument,
Appellant waives her complaints.
The argument cites to a few cases regarding the general standard of review applicable
to a summary judgment but no cases that address Appellant’s contention that sufficient time
for discovery had not passed. See Tex. R. App. P. 38.1(h); Stephens v. Dolcefino, 126
S.W.3d 120, 125-26 (Tex.App.--Houston [1st Dist.] 2003, pet. filed); Franz v. Katy Indep.
Sch. Dist., 35 S.W.3d 749, 755 (Tex.App.--Houston [1st Dist.] 2000, no pet.).
Clearly, in order to complain of the denial of a motion for continuance, the party
complaining must have actually requested that a continuance be granted. Here, there is no
evidence that Appellant requested a continuance and as such, any complaint regarding the
same on appeal is waived. To preserve a complaint for appellate review, a party must present
to the trial court a timely request, objection, or motion stating the specific grounds for the
ruling sought. Tex. R. App. P. 33.1(a). Issue No. One is thus waived for inadequate briefing
and a fail to file a motion below.
Despite determining that Appellant’s issue should be overruled as waived, we note,
turning to the substantive question of the granting of the no-evidence summary judgments
by the trial court, we affirm the trial court’s decision. Initially we note that Appellant’s
minimal response was struck and not considered. We do not know on what basis the trial
court struck the response but the order reflects that Appellee’s objections were sustained as
filed. Appellant does not complain of this ruling on appeal.Standard of Review
We apply the usual standard of review for an order granting summary judgment
without specifying grounds and find ample evidence to affirm the trial court’s decision.
Stated conversly, we find no evidence in record that raises a genuine issue of material fact.
See Tex. R. Civ. P. 166a(i). See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex.
2001). Furthermore, when a trial court’s order granting summary judgment does not specify
the ground or grounds relied on for the ruling, summary judgment will be affirmed on appeal
if any of the theories advanced are meritorious. State Farm Fire & Cas. Co. v. S.S., 858
S.W.2d 374, 380 (Tex. 1993); Rogers v. Ricane Enter. Inc., 772 S.W.2d 76, 79 (Tex. 1989).
The orders granting Appellees’ motions do not set out any grounds or make any
findings, they merely grant Appellees’ motions. Because Appellant’s responses to
Appellees’ motions for summary judgment were struck as untimely, Appellant did not raise
any challenges to the motions for summary judgment and therefore may not raise any on
appeal. Tex. R. Civ. P. 166a.
Additionally, Appellant contends that she “requested the Court to file Findings of
Facts and Conclusions of Law along with a notation in the pleading for then Court’s
consideration [sic]. The Court failed and refused to comply with the request.”
Findings of fact and conclusions of law have no place in summary judgment
proceedings. Linwood, 885 S.W.2d at 103; Besing, 882 S.W.2d at 82; Easley, 404 S.W.2d
at 297. The failure to make such findings is not error and, if made, they are correctly
disregarded by the appellate court. Cotton, 699 S.W.2d at 204. Consequently, any failure
to file the findings is irrelevant to this appeal.
Under the “no-evidence summary judgment” rule, the movant may move for summary
judgment if, after adequate time for discovery, there is no evidence of one or more essential
elements of a claim or defense on which the nonmovant would have the burden of proof at
trial. See Tex. R. Civ. P. 166a(i). The motion must state the elements as to which there is
no evidence and the reviewing court must grant the motion unless the nonmovant produces
summary judgment evidence raising a genuine issue of material fact. See id. Under the no-
evidence summary judgment standard, the party with the burden of proof at trial will have
the same burden of proof in a summary judgment proceeding. See, e.g., Esco Oil & Gas, Inc.
v. Sooner Pipe & Supply Corp., 962 S.W.2d 193, 197 n.3 (Tex.App.--Houston [1st Dist.]
1998, pet. denied) (commenting that under Rule 166a(i) “the plaintiff as the nonmovant [has]
the burden to raise a triable issue on each element essential to the plaintiff’s case against each
defendant”).
A no-evidence summary judgment is essentially a pretrial directed verdict, and we
apply the same legal sufficiency standard in reviewing a no-evidence summary judgment as
we apply in reviewing a directed verdict. Marsaglia v. University of Texas, El Paso, 22
S.W.3d 1, 3-4 (Tex.App.--El Paso 1999, pet. denied); see also Hon. David Hittner &
Lynne Liberato, Summary Judgments in Texas, 34 Hous. L. Rev. 1303, 1356 (1998).
A no-evidence summary judgment is properly granted if the nonmovant fails to bring forth
more than a scintilla of probative evidence to raise a genuine issue of material fact as to an
essential element of the nonmovant’s claim on which the nonmovant would have the burden
of proof at trial. See Tex. R. Civ. P. 166a(i); Merrell Dow Pharmaceuticals, Inc. v. Havner,
953 S.W.2d 706, 711 (Tex. 1997), cert. denied, 523 U.S. 1119, 118 S. Ct. 1799, 140 L. Ed. 2d
939 (1998). If the evidence supporting a finding rises to a level that would enable
reasonable, fair-minded persons to differ in their conclusions, then more than a scintilla of
evidence exists. Havner, 953 S.W.2d at 711. Less than a scintilla of evidence exists when
the evidence is “so weak as to do no more than create a mere surmise or suspicion” of a fact,
and the legal effect is that there is no evidence. Kindred v. Con/Chem, Inc., 650 S.W.2d 61,
63 (Tex. 1983).
In the case before us, Appellant filed a petition complaining of the conduct of
Appellees and alleging various business-related torts. After several months of discovery,
Appellees filed their “no-evidence” motions for summary judgment. Appellant did not file
any summary judgment evidence to controvert the “no-evidence” motions for summary
judgment filed by Appellees. Her response was merely a succession of paragraphs which
argued that evidence exists on each issue without stating what evidence exists. The only
evidence presented consisted of an affidavit prepared by Appellant consisting of one
paragraph that merely articulates that, in Appellant’s opinion, the Appellees did certain things
that harmed her. If the response had been timely, the affidavit as attached is not sufficient
evidence to rebut Appellees’ motions. Under Texas Rule of Civil Procedure 166a(i),
Appellant has failed to meet her burden to defeat Appellees’ “no-evidence” motions for
summary judgment. In this case, Appellant, the nonmovant below presented no evidence of
the liability of either Appellee in response to the motions filed. The minimal response, even
if considered by the trial court, was not sufficient. For the reasons stated, we affirm the
judgment of the trial court and overrule Appellant’s issue.
Having overruled Appellant’s issue on review, we affirm the judgment of the trial
court.
RICHARD BARAJAS, Chief Justice
June 30, 2005
Before Panel No. 2
Barajas, C.J., McClure, and Chew, JJ. | 01-03-2023 | 09-09-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2097568/ | 369 Mass. 206 (1975)
339 N.E.2d 709
JOHN DONNELLY & SONS, INC.
vs.
OUTDOOR ADVERTISING BOARD & another.[1]
Supreme Judicial Court of Massachusetts, Suffolk.
October 7, 1975.
December 15, 1975.
Present: TAURO, C.J., REARDON, QUIRICO, BRAUCHER, & WILKINS, JJ.
Joseph J. Hurley (Edward P. Leibensperger with him) for the petitioner.
Ellyn R. Weiss, Assistant Attorney General, for Outdoor Advertising Board.
*207 Donald L. Connors for the town of Brookline, intervener.
Phillip Tocker, for Outdoor Advertising Association of America, Inc., amicus curiae, submitted a brief.
TAURO, C.J.
The petitioner, John Donnelly & Sons, Inc. (Donnelly), appeals from a decree of the Superior Court affirming a decision of the Outdoor Advertising Board (the board) which denied renewal of twenty-two permits issued by the board for off-premise outdoor advertising signs maintained by Donnelly in business and industrial districts of the town of Brookline (the town). The board, in a decision dated April 5, 1973, found that the Donnelly signs were being maintained in violation of the town's zoning and sign by-laws. Donnelly petitioned for judicial review of the board's decision under G.L.c. 30A, § 14, and the town intervened. A judge of the Superior Court, after hearing argument, affirmed the decision of the board.
Donnelly has been engaged in the business of erecting and maintaining billboards, or what are often called off-premise or nonaccessory signs, since 1850. It owns, operates, and maintains twenty-two such billboards, all constructed prior to 1960 in nonresidential districts in Brookline. The billboards, which Donnelly leases for commercial advertising,[2] have been operated under permits issued annually by the board or its predecessor.
On November 16, 1967, art. XXIII (the "sign by-law") was unanimously adopted at a Brookline town meeting. The sign by-law was approved by the Attorney General on November 30, 1967, and became effective on December 7, 1967. Section 4 of the by-law, set forth in the margin,[3] imposes various restrictions, including limitations *208 as to size and location, on nonaccessory (off-premise) signs.[4] Section 7(a) provides that the application of the sign by-law to off-premise signs is to be postponed for a period of five years from the effective date of the by-law. This five-year grace period for the removal of nonconforming signs expired on December 7, 1972.[5]
At a town meeting on December 13, 1971, Brookline adopted an amendment to its zoning by-law prohibiting "[a]ny advertising sign or device, including off-premise signs and non-accessory signs as defined in this By-law or the Sign By-law of the Town of Brookline" in any residential, industrial or business zone. This provision was approved by the Attorney General on January 10, 1972, and became effective on January 22, 1972.
*209 On August 16, 1971, the executive secretary of the town informed the board of the December, 1972, deadline and requested that no permits or renewals be granted beyond that date. An adjudicatory hearing was held by the board at which both Donnelly and the town, represented by counsel, presented evidence. The board found that the zoning by-law had the effect of excluding off-premise signs from the town and assumed, as we do on appeal, that the sign by-law, although not prohibitory in terms, was in effect a prohibition of off-premise signs in the town's business districts. It concluded that the town's by-laws were neither an unreasonable exercise of the police power under the due process clause of the Fourteenth Amendment to the Constitution of the United States nor a violation of the First Amendment, as applied to the States by the Fourteenth Amendment. Further, the board decided that the prohibition of off-premise signs in Brookline, assumed by the board to have been enacted primarily for reasons of aesthetics, was consistent with the Massachusetts Constitution. Having upheld the by-laws, the board ruled that since Donnelly's billboards were in violation thereof, under its regulation 9K, set forth below,[6] the permits for the twenty-two billboards should be denied. A Superior Court judge upheld the board decision, and we affirm.
1. The petitioner contends that the town's prohibitory zoning and sign by-laws are invalid because they are *210 inconsistent with State policy as embodied in the State Constitution, art. 50 of the Amendments, the State statute, G.L.c. 93, §§ 29-33, and the board's rules and regulations. In light of our prior decisions in the area of billboard regulations,[7] we cannot agree with this contention.
The power to regulate and restrict "[a]dvertising on public ways, in public places and on private property within public view" was conferred explicitly on the Legislature by art. 50 of the Amendments to the Constitution, adopted and ratified on November 5, 1918.[8] This amendment was discussed extensively in General Outdoor Advertising Co. v. Department of Pub. Works, 289 Mass. 149 (1935), where this court said: "The words used to confer that power are of broad import. Plainly, advertising of the kind there described has been designated by constitutional mandate as a subject of regulatory and restrictive legislation. No restraints on that power are expressed in the article. Every consideration for the promotion of the public interests which in view of its sweeping terms may reasonably be given weight by a *211 lawmaking body may be taken into account and be a factor in framing regulations or restrictions." Id. at 158-159.
In the exercise of the power granted by art. 50, the Legislature enacted G.L.c. 93, §§ 29-33, which, in part, authorizes the board to adopt "rules and regulations for the proper control and restriction of billboards ... on public ways or on private property within public view of any highway, public park or reservation." G.L.c. 93, § 29, as appearing in St. 1955, c. 584, § 4. Excluded from the operation of the regulatory scheme are on-premise signs; "signs ... which advertise or indicate either the person occupying the premises in question or the business transacted thereon...." G.L.c. 93, § 30, as appearing in St. 1945, c. 233. Although primary responsibility for regulating outdoor advertising is entrusted to the board, the Legislature "apparently recognized that the nature of the subject matter was such that it might not be adequately and appropriately controlled and supervised by general rules of State wide application, and that the physical characteristics of various cities and towns differ within such wide limits that it was deemed expedient to permit them to establish and enforce local regulations for the purpose of lessening the detrimental effect that the general welfare of the community might sustain by the erection and maintenance of billboards...." Milton v. Donnelly, 306 Mass. 451, 455 (1940). Accordingly, the Legislature in G.L.c. 93, § 29, provided that "[c]ities and towns may further regulate and restrict" off-premise signs in a manner not inconsistent with the State statute (G.L.c. 93, §§ 29-30) and board rules and regulations.
Our inquiry is whether Brookline's by-laws, found by the board to have the effect of prohibiting off-premise advertising in the town, come within the power delegated to the town. To be valid, the by-laws must comply with the enabling statute. Lanner v. Board of Appeal of Tewksbury, 348 Mass. 220, 228 (1964). Caires v. Building *212 Comm'r of Hingham, 323 Mass. 589, 594 (1949). In the present case, the specific question is whether the local regulations are "inconsistent with principles clearly established by comprehensive State legislation or by authorized regulations." John Donnelly & Sons, Inc. v. Outdoor Advertising Bd., 361 Mass. 746, 754 (1972) (hereinafter referred to as the "Avon" case).
In determining whether a local regulation is inconsistent with State legislation, it was said in Commonwealth v. Baronas, 285 Mass. 321, 323 (1934), that "[t]he mere existence of statutory provision for some matters within the purview of the by-law will not render it invalid as repugnant to law...." See Commonwealth v. Goodnow, 117 Mass. 114 (1875). In Bloom v. Worcester, 363 Mass. 136, 154 (1973), this court said: "As a general proposition the cases dealing with the repugnancy or inconsistency of local regulations with State statutes have given considerable latitude to municipalities, requiring a sharp conflict between the local and State provisions before the local regulation has been held invalid." Further, it was recognized in Milton v. Donnelly, supra at 458, that the relation between the town and the State with regard to the billboard regulation is "more or less analogous to the power of the State to make regulations for certain phases of interstate commerce, which are valid until they are displaced or abrogated by an Act of Congress...."
In deciding that the town's by-laws are not inconsistent with either the State statute or the board regulations, we note initially that the Legislature has provided explicitly for local regulation of billboards and that the board, in adopting § 9K, supra n. 6, has left wide latitude for local action. Avon, supra at 752. We do not agree, as argued by Donnelly, that since G.L.c. 93, § 29, provides that the board "may require" billboards to be located in business, commercial or industrial districts, it is the State policy to permit off-premise signs in those specified areas. The word "may" is commonly used to *213 import discretion, Turnpike Amusement Park, Inc. v. Licensing Comm'n of Cambridge, 343 Mass. 435, 437 (1962), and thus we interpret this provision as giving the board discretion to determine whether billboards should be confined to business or industrial zones and not mandating their existence in those districts.
The board, in adopting § 9K in 1969, exercised its discretion and changed its policy so as to give greater weight to local restrictions. Avon, supra at 751. Although § 5 of the board regulations defines its policy as permitting outdoor advertising in areas zoned for any business, industrial or commercial activity, § 9K is to be interpreted as controlling other provisions of the regulations. Id. at 752. It is now, under § 9K, of no importance that the board would grant a permit in the absence of a town by-law. That board regulations generally protect billboards in business and industrial areas[9] is of no consequence in light of § 9K which supersedes prior regulations. "The board, in effect, has decided no longer to preempt, by its regulations, the whole field of billboard control and has left wide scope for reasonable local regulation." Ibid. The fact that the town's by-laws go beyond the board regulations by not distinguishing between residential and business districts does not *214 render the by-laws inconsistent with the State statutes and the board regulations. Milton v. Donnelly, 306 Mass. at 458. General Outdoor Advertising Co. v. Department of Pub. Works, 289 Mass. 149, 197 (1935).
Having determined that municipalities may impose more stringent regulations covering business and industrial areas than the board does, we must decide whether the town, consistent with State law, may exclude off-premise signs from those areas. As noted above, the State's authority to regulate and restrict outdoor advertising is found in art. 50 of the Amendments to the Constitution, and this authority has been delegated in the same language to cities and towns in the last sentence of G.L.c. 93, § 29. We cannot conclude, as argued by Donnelly, that this power delegated to towns to regulate and restrict differs so substantially from the power to prohibit that the town's by-laws should be held invalid as inconsistent with State policy.
Article 50 conferred on the Legislature plenary power to regulate and restrict outdoor advertising. General Outdoor Advertising Co. v. Department of Pub. Works, supra at 158. Although the word "prohibit" was omitted from art. 50, it was recognized that the unlimited and unqualified power to regulate and restrict can be, for practical purposes, the power to prohibit "because under such a power the thing may be so far restricted that there is nothing left of it." 3 Debates in the Massachusetts Constitutional Convention, 1917-1918, at 661 (1918). Accord, 3 Debates at 670. The distinction between regulation and outright prohibition is often considered to be a narrow one: "`[t]hat regulation may take the character of prohibition, in proper cases, is well established by the decisions of this court ... [citations omitted].'" General Outdoor Advertising Co. v. Department of Pub. Works, supra at 160, quoting from United States v. Hill, 248 U.S. 420, 425 (1919).
It was determined in the General Outdoor Advertising Co. case that the power to regulate and restrict is not the *215 power to prohibit utterly and without bound, but that art. 50 does "enable the prohibition of advertising on private property within public view in places, areas, divisions, localities or districts, but under present conditions not generally throughout the Commonwealth." 289 Mass. at 160.[10] Measured against this standard, we cannot say that a purely local ordinance prohibiting billboards within the locality, as is the case before us, is invalid.
In General Outdoor Advertising Co. v. Department of Pub. Works, supra at 197, a Concord billboard regulation extending to business districts, which Donnelly concedes was prohibitory in effect, was upheld by a unanimous court which found the by-law not inconsistent with the governing statute or the rules and regulations. Further, in Milton v. Donnelly, supra at 460, this court, although not faced with the question of total prohibition of all billboards, upheld a regulation that would prevent the erection of billboards exceeding five feet in height or eight feet in length in all business districts, excluding possibly a strip of land along the Neponset River. The board, in the present case, found that the above-mentioned by-laws upheld in Concord and Milton would necessitate the removal of all Donnelly's signs in Brookline, with the possible exception of one, if such by-laws had been enacted by Brookline.
Thus, we conclude that the town's by-laws are not inconsistent with the State law, G.L.c. 93, §§ 29-33, or board rules and regulations.
*216 2. Donnelly contends that the town zoning and sign by-laws, which constitute a total exclusion of off-premise signs in Brookline, are both unreasonable and an impermissible exercise of the police power in violation of the due process clause of the Fourteenth Amendment. We treat these arguments together as they present similar issues, for a determination of what constitutes due process, in the context of this case, depends on the reasonableness of the legislation.
We believe that the principles governing the constitutionality of a local by-law or ordinance, adopted pursuant to G.L.c. 93, § 29, are the same as those governing the constitutionality of a zoning by-law or ordinance adopted under the authority granted by The Zoning Enabling Act, G.L.c. 40A. Although the town's by-laws are being enforced by the board and not by the town, our familiar rules are still applicable. The test for determining the constitutionality of a local zoning by-law is whether "its terms are `clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare.'" Turnpike Realty Co. v. Dedham, 362 Mass. 221, 233 (1972), quoting from Euclid v. Ambler Realty Co., 272 U.S. 365, 395 (1926). The by-law is to be presumed valid and, if its reasonableness is fairly debatable, the judgment of the local legislative body must be sustained. Caires v. Building Comm'r of Hingham, 323 Mass. 589, 594-595 (1949). Due regard is to be accorded to the expression of the residents of the town, who we must presume are familiar with the locality and its needs. Id. at 597. Milton v. Donnelly, 306 Mass. at 459. We will not substitute our judgment for that of the town unless its decision is shown to be arbitrary and capricious. Ibid.
We begin our inquiry by determining whether the town by-laws bear a reasonable relation to a permissible objective of the police power. In the past courts have upheld billboard regulations, including total prohibitions, primarily on the basis of traditional police power concepts, *217 such as the preservation of property values and the promotion of highway safety, and have relied only secondarily on aesthetic considerations. See St. Louis Poster Advertising Co. v. St. Louis, 249 U.S. 269 (1919); Murphy, Inc. v. Westport, 131 Conn. 292 (1944); United Advertising Corp. v. Metuchen, 42 N.J. 1 (1964); 1, 2 R. Anderson, American Law of Zoning §§ 7.12, 7.15, 11.76 (1968, Supp. 1975), and cases cited therein; 1, 4 N. Williams, American Land Planning Law cc. 11, 118-119 (1974), and cases cited therein. The reluctance to uphold zoning regulations, including billboard controls, designed to preserve and improve the visual character of the physical environment on aesthetic grounds alone may be based on the belief that aesthetic evaluations are a matter of individual taste and are thus too subjective to be applied in any but an arbitrary and capricious manner. See, e.g., Mayor & City Council of Baltimore v. Mano Swartz, Inc., 268 Md. 79, 86-88 (1973). Accordingly, courts have engaged in a reasoning process, often amounting to nothing more than legal fiction, in order to avoid recognizing aesthetics as an appropriate basis for the exercise of the police power. See Dukeminier, Zoning for Aesthetic Objectives: A Reappraisal, 20 Law & Contemp. Prob. 218 (1955). We feel that this approach not only obscures the basic issues but also is no longer consistent with what we perceive as the modern trend in the law.
The board in its decision assumed that the town by-laws were adopted primarily for reasons of aesthetics and we find no indication in the record of any other reason for their enactment. Although the town argues that its by-laws can be upheld on the basis of public safety and traffic control, our review of the authorities indicates, at best, conflicting support for this proposition. See, e.g., Holme, Billboards and On-Premise Signs: Regulation and Elimination under the Fifth Amendment, Institute on Planning, Zoning, and Eminent Domain 247, 263-265 (1974). Therefore, the issue squarely *218 before us is whether the town by-laws, adopted primarily or solely for aesthetic reasons, are within the scope of the police power. We conclude that aesthetics alone may justify the exercise of the police power; that within the broad concept of "general welfare," cities and towns may adopt reasonable billboard regulations designed to preserve and improve their physical environment.
We live in a changing world where the law must respond to the demands of a modern society. As stated in Euclid v. Ambler Realty Co., 272 U.S. at 387, "[W]hile the meaning of constitutional guaranties never varies, the scope of their application must expand or contract to meet the new and different conditions which are constantly coming within the field of their operation." What was deemed unreasonable in the past may now be reasonable due to changing community values. Among these changes is the growing notion that towns and cities can and should be aesthetically pleasing; that a visually satisfying environment tends to contribute to the well-being of its inhabitants. Recognizing the value of a beautiful city, the United States Supreme Court, in Berman v. Parker, 348 U.S. 26 (1954), adopted the view that the general welfare embraces aesthetic considerations. "The concept of the public welfare is broad and inclusive.... The values it represents are spiritual as well as physical, aesthetic as well as monetary. It is within the power of the legislature to determine that the community should be beautiful as well as healthy, spacious as well as clean, well-balanced as well as carefully patrolled." Id. at 33. See Belle Terre v. Boraas, 416 U.S. 1 (1974). Although Berman involved the use of eminent domain, this expansive view of the general welfare is applicable to the zoning power.[11]
*219 In addition to this judicial expansion of the concept of "general welfare," we note that our Legislature, reflecting the growing concern for the environmental quality of life, adopted art. 97 of the Amendments to the Constitution of the Commonwealth, which was ratified on November 7, 1972, in order to establish as State policy the right of the people to "the natural, scenic, historic, and esthetic qualities of their environment...." This recognition of the importance of an aesthetic environment is also reflected in The Zoning Enabling Act, G.L.c. 40A, § 3, inserted by St. 1954, c. 368, § 2, which provides that zoning regulations shall be designed to "preserve and increase ... amenities" within a city or town. Further, it is apparent from 3 Debates in the Massachusetts Convention, 1917-1918, 621-672 (1918), that art. 50 of the Amendments to the Constitution, which defines the State constitutional limitations on outdoor advertising regulation, was introduced because of a general concern that billboards were a blight on the landscape. Id. at 622-624. A State legislator, in introducing the amendment, said, "I am proud to say that this resolution is based largely upon aesthetic considerations, which, being translated into Anglo-Saxon, means nothing more nor less than considerations of beauty." Id. at 623. Thus, we find a continuing interest in the Commonwealth in the improvement of the aesthetic environment of both cities and towns. Although these pronouncements are not determinative of the constitutionality of Brookline's by-laws under the due process clause, they are a strong indication that citizens in this State consider visual pollution, including billboards, to be a detriment to the general welfare.
The position we announce today in no way marks a radical departure from our prior cases dealing with outdoor advertising regulation. In the 1935 case of General Outdoor Advertising Co. this court affirmed the proposition that outdoor advertising may be restrained in the interest of aesthetics. "Even if the rules and regulations *220 of billboards and other advertising devices did not rest upon the safety of public travel and the promotion of the comfort of travellers by exclusion of undesired intrusion, we think that the preservation of scenic beauty and places of historical interest would be a sufficient support for them. Considerations of taste and fitness may be a proper basis for action in granting and in denying permits for locations for advertising devices." 289 Mass. at 187. In Lexington v. Govenar, 295 Mass. 31, 36 (1936), it was said: "Doubtless aesthetic considerations play a large part in determining that advertising signs should not be permitted in such ... [a residential district] these would seem sufficient to exclude such a use." In expressing the opinion that the proposed legislation establishing historic districts in the town of Nantucket was constitutional, the court noted the growing tendency to give more weight to aesthetic considerations. Opinion of the Justices, 333 Mass. 773, 779 (1955). Further, as stated by Justice Cutter, in Avon, 361 Mass. at 754-755 n. 9: "[G]overnmental and constitutional power ... to restrict and regulate billboards, even principally on aesthetic grounds, has become generally established and has expanded greatly."
Admittedly, there is disagreement among the jurisdictions concerning aesthetic zoning, but we perceive a significant trend in the recent cases toward giving full recognition to aesthetics as a proper basis for land use regulations. See 1 A. Rathkopf, Zoning and Planning § 14.01 (4th ed. 1975). 1 N. Williams, American Land Planning Law c. 11 (1974). Annot., 21 A.L.R. 3d 1222 (1968). For instance, Oregon adopted the approach that an ordinance based solely on aesthetics is valid, saying that "there is a growing judicial recognition of the power of a city to impose zoning restrictions which can be justified solely upon the ground that they will tend to prevent or minimize discordant and unsightly surroundings. This change in attitude is a reflection of the refinement of our tastes and the growing appreciation *221 of cultural values in a maturing society." Oregon City v. Hartke, 240 Ore. 35, 46-47 (1965). In a recent decision by the New Jersey Superior Court, aesthetic zoning was upheld in a case involving a total prohibition of billboards of a certain size. Westfield Motor Sales Co. v. Westfield, 129 N.J. Super. 528 (1974). The court suggested that "[l]ess confusion will result if the courts accept aesthetic zoning per se, instead of purporting to accept it and then dismissing it as inadequate." Id. at 543. See also E.B. Elliott Advertising Co. v. Metropolitan Dade County, 425 F.2d 1141 (5th Cir. Fla.) cert. dismissed, 400 U.S. 805 (1970); State v. Diamond Motors, Inc., 50 Haw. 33 (1967); Jasper v. Commonwealth, 375 S.W.2d 709 (Ky. App. 1964); Mississippi State Highway Comm'n v. Roberts Enterprises, Inc., 304 So. 2d 637 (Miss. 1974); Cromwell v. Ferrier, 19 N.Y.2d 263 (1967). 1 A. Rathkopf, Zoning and Planning, supra, and cases cited therein. Legal commentators have also argued persuasively for the acceptability of aesthetics as a permissible objective of the police power,[12] especially in the area of billboard regulation.[13]
Although we conclude that aesthetic objectives may support local regulation of billboards, the question remains whether the town by-laws should be declared invalid because the means employed bear no reasonable relationship to the aim sought to be accomplished. Milton *222 v. Donnelly, 306 Mass. 451, 459 (1940). In this respect, Donnelly argues that a total prohibition of off-premise signs in a town such as Brookline, which can appropriately be characterized as an urban environment, constitutes as invalid exercise of the police power. Again, we must disagree.
We have recognized, and Donnelly concedes, that prohibition of billboards is permissible in proper circumstances. See General Outdoor Advertising Co. v. Department of Pub. Works, 289 Mass. 149, 160, 180, 183 (1935). Donnelly contends that a total prohibition may be reasonable in a rural community with no real business district but not in an urban community. But can we say that residents of an urban area are not entitled to the benefits of an aesthetic environment while those in a rural district are? We think not.
It is well settled that even a legitimate business or occupation may be restricted or prohibited in the public interest. General Outdoor Advertising Co. v. Department of Pub. Works, supra at 210. Breard v. Alexandria, 341 U.S. 622, 632-633 (1951). For instance, in Oregon City v. Hartke, 240 Ore. 35, 50 (1965), the court upheld the total exclusion of car wrecking businesses, saying that "[i]t is not irrational for those who must live in a community from day to day to plan their physical surroundings in such a way that unsightliness is minimized." Moreover, in the area of billboard regulation, although the results have not been uniform, a city-wide prohibition of off-premise signs has been upheld in Murphy, Inc. v. Westport, 131 Conn. 292 (1944), United Advertising Corp. v. Metuchen, 42 N.J. 1 (1964), United Advertising Corp. v. Borough of Raritan, 11 N.J. 144 (1952), and Cromwell v. Ferrier, 19 N.Y.2d 263 (1967). Contra, Metromedia, Inc. v. Des Plaines, 26 Ill. App. 3d 942 (1975); Norate Corp. v. Zoning Bd. of Adjustment, 417 Pa. 397 (1965). In addition, Hawaii enacted in 1965 a flat prohibition of all off-premise commercial advertising. Hawaii Rev. Laws § 445-112. This court, in *223 General Outdoor Advertising Co. v. Department of Pub. Works, supra at 197, upheld a Concord by-law which had the effect of prohibiting billboards throughout the town. See also Milton v. Donnelly, supra at 460, where the court validated a stringent, if not prohibitory, billboard regulation, citing Euclid v. Ambler Realty Co., 272 U.S. 365 (1926), which upheld a zoning ordinance excluding billboards from four of the six zoning districts.
If it is reasonable totally to prohibit billboards in Concord, General Outdoor Advertising Co. v. Department of Pub. Works, supra at 197, and to prohibit billboards in residential areas, Thomas Cusack Co. v. Chicago, 242 U.S. 526 (1917), we cannot say that it is arbitrary and unreasonable for Brookline to exclude billboards from its community. We believe that it is within the scope of the police power for the town to decide that its total living area should be improved so as to be more attractive to both its residents and visitors. Whether an area is urban, suburban, or rural should not be determinative of whether the residents are entitled to preserve and enhance their environment. Urban residents are not immune to ugliness. As noted by the New Jersey Superior Court in Westfield Motor Sales Co. v. Westfield, 129 N.J. Super. 528, 544 (1974), "Those who live in an urban megalopolis are no strangers to the jungle of signs which daily compete for their attention.... [A] municipality may perceive that a plethora of signs of a certain size, no matter how tasteful, can have an undesirable cumulative effect upon the well-being of the entire community." Moreover, in a densely populated area,[14] it is unlikely that districts are distinctively residential or business; people's homes are often within close proximity to business areas. Thus, the quality of the living environment of these residents cannot be *224 improved without considering both the residential and business areas.
A city-wide prohibition of billboards can also be justified on the ground that a community has a legitimate interest in improving the aesthetic quality of its business districts, as well as its residential districts. Cf. Schloss v. Jamison, 262 N.C. 108, 116-117 (1964). There is no reason why the notion of beauty should be inimical to a business area. As argued by Judge Finch in his dissent in In re Mid-State Advertising Corp. v. Bond, 274 N.Y. 82 (1937), which has since become the prevailing view in New York (Cromwell v. Ferrier, supra at 268): "Perhaps factories, stores and the industrial sections of a city naturally tend to be ugly, but it does not follow that business may not be carried on amid more pleasant surroundings. Certainly any city enacting such an ordinance would present a more pleasing picture to the eye than one plastered with blatant signboards.... A city might well conclude that it is more likely to attract commercial enterprises and permanent residents if it improves its appearance; that its residents will gain financially by such improvement; or that the elimination of distracting and annoying billboards will add to the physical and mental well-being of its inhabitants.... The billboard eyesore is in many ways akin to annoying sounds and undesirable odors which undoubtedly can be prohibited. Although such restrictions may be more desirable in residential areas, nevertheless, their extension to business districts cannot be termed unreasonable." Id. at 89. See E.B. Elliot Advertising Co. v. Metropolitan Dade County, 425 F.2d 1141, 1152 (5th Cir.1970). We agree with Judge Finch's reasoning, for to conclude that an area is too unattractive to justify aesthetic improvement would be both unreasonable and illogical.
It is for the locality to determine the character and quality of its visual environment, and it is not the court's function to decide which towns may preserve or improve their appearance. It is the court's rule to set aside the *225 town's determination only when it is arbitrary and capricious, Milton v. Donnelly, 306 Mass. 451, 459 (1940), and in the instant case we cannot conclude that the town has acted unreasonably by excluding off-premise advertising from its borders.
Donnelly, operating for generations, has had many years to contemplate and prepare for changes in its special mode of doing business. The volume of litigation and legislation in this area here and elsewhere over the past decades has given a clear indication of the ever increasing objections to billboard advertising whether it be in rural or urban communities. Donnelly cannot now argue with persuasion that by-laws or ordinances prohibiting such signs are arbitrary, capricious or unreasonable because of the impact on its business.[15] Such legislative enactments reflect the growing sensitivity to the serious effect billboards have on the aesthetics of a locality. The time has come to recognize that citizens have a right, within certain limitations, to make these decisions concerning their own communities.
Donnelly further argues that the town by-laws violate the Fourteenth Amendment in that a total exclusion of billboards constitutes an infringement of the First Amendment guaranty of freedom of speech. The board, rejecting this argument, concluded that there were no First Amendment restraints on governmental regulation of purely commercial advertising. Although the commercial speech doctrine has been clarified since the board decision, see Bigelow v. Virginia, 421 U.S. 809 (1975), we are of the opinion that, despite this recent case, the *226 town by-laws do not amount to a deprivation of free speech.
We now recognize that commercial advertising is not stripped of all First Amendment protection. Bigelow v. Virginia, supra at 818, 826. Nonetheless, there are degrees of protection accorded speech and, depending on the circumstances, a State may legitimately regulate or even prohibit advertising if the First Amendment interest is outweighed by the governmental interest. Id. at 826. Unlike the Bigelow case, where the newspaper advertisement relating to the availability of abortions in New York was considered to be something more than a normal commercial proposal, id. at 821-822, the Donnelly signs were found by the board to "contain purely commercial copy." Although off-premise signs are sometimes used for public service advertising,[16] this activity can be considered only as incidental to Donnelly's primary function, the leasing of space for commercial or product advertising and not the dissemination of ideas or the communication of information. As stated by Mr. Justice Blackmun in Bigelow, "To the extent that commercial activity is subject to regulation, the relationship of speech to that activity may be one factor, among others, to be considered in weighing the First Amendment interest against the governmental interest alleged." Id. at 826.
Regardless of the extent to which constitutional protection is afforded commercial advertising, a question left unanswered by Bigelow, ibid., we believe that due to the intrusive quality of billboards,[17] passers-by, whether *227 willing or not, are compelled to see the advertisements. The advertiser's message is thrust upon them as a captive audience in violation of the "cardinal principle ... that no person can be compelled to listen [or hear] against his will." T. Emerson, The System of Freedom of Expression 710 (1970). This principle was recognized by the United States Supreme Court in Erznoznik v. Jacksonville, 422 U.S. 205, 209 (1975), Bigelow v. Virginia, supra at 828, and Lehman, v. Shaker Heights, 418 U.S. 298, 302 (1974). In Lehman, Mr. Justice Blackmun reaffirmed the view, first expressed in Packer Corp. v. Utah, 285 U.S. 105, 110 (1932), that "viewers of billboards and streetcar signs [have] no `choice or volition' to observe such advertising and [have] the message `thrust upon them by all the arts and devices that skill can produce.... The radio can be turned off, but not so the billboard or street car placard.'" 418 U.S. at 302. Thus, we conclude that the streetcar placards in Lehman and the billboards in this case fall within the same category and, as such, the petitioner has no constitutional right to use billboards to "spread ... message[s] before [a] captive audience." Id. at 308. (Douglas, J., concurring.)
Further, we note that the present case is analogous to Kovacs v. Cooper, 336 U.S. 77 (1949), where the Court upheld a prohibition of the use of sound trucks. The town by-laws, as was the case in Kovacs, do not regulate the content of ideas expressed, but rather protect individuals from highly distracting and intrusive communications. It is well established that a "State or municipality may protect individual privacy by enacting reasonable time, place, and manner regulations applicable to all speech irrespective of content." Erznoznik v. Jacksonville, supra at 209, and cases cited. "To enforce freedom of speech in disregard of the rights of others would be harsh and arbitrary in itself." Kovacs v. Cooper, supra at 88.
We find support for our conclusion in Markham Advertising Co. v. Washington, 73 Wash.2d 405 (1968), *228 where the Washington Supreme Court rejected an argument similar to the one urged by Donnelly, and decided that a State billboard regulation did not constitute a denial of free speech. Id. at 429. The United States Supreme Court subsequently dismissed an appeal of the Markham case for want of a substantial Federal question. Markham Advertising Co. v. Washington, 393 U.S. 316, rehearing denied, 393 U.S. 1112 (1969).
Thus, we conclude that the petitioner's minimal free speech interest does not outweigh the interests of the unwilling audience.
Decree affirmed.
NOTES
[1] Town of Brookline, an intervener.
[2] Donnelly's general manager and vice-president testified that at any one time three to five per cent of its space is donated to public service advertising.
[3] "Section 4 Non-Accessory Signs. No person shall erect, display or maintain a non-accessory sign: (a) On any premises located in a Residence District as designated by the Zoning By-law. (b) Within any public way upon any property owned by the Town of Brookline or any other governmental body or agency. (c) Within fifty (50) feet of any public way. (d) Within three hundred (300) feet of any public park, playground, or other public grounds, if within view of any portion of the same. (e) Within a radius of one hundred and fifty (150) feet from the point where the center lines of two or more public ways intersect. (f) Upon the roof of any building. (g) Exceeding an area of three hundred (300) square feet or a height of twelve (12) feet. (h) Containing visible moving or moveable parts or be lighted with flashing, animated, or intermittent illumination.
"This section shall not apply to signs exempted by Section 32 of Chapter 93 of the General Laws."
[4] Section 2 of the sign by-law defines an "accessory sign" as "[a]ny billboard, sign or other advertising device that advertises, calls attention to, or indicates the person occupying the premises on which the sign is erected or the business transacted thereon, or advertises the property itself or any part thereof as for sale or to let, and which contains no other advertising matter. The words `Accessory Sign' shall include an `on premise' sign as defined and permitted by the Zoning By-law."
[5] Section 5 of the sign by-law authorizes the building commissioner, with the approval of the planning board and the board of selectmen, to permit nonaccessory signs in business or industrial districts in certain circumstances. At a town meeting on October 24, 1972, it was voted to amend the sign by-law by striking § 5. Although the amendment had not been approved by the Attorney General at the time of the hearing, the board assumed that no variance would be available to Donnelly.
[6] In 1969, the board amended its regulations by adding § 9K, which reads: "No license or permit shall be granted for the location or maintenance of billboards ... within a city or town, except where such location or maintenance is in conformity with applicable city and town ... by-laws enacted in accordance with Section 29 of Chapter 93 of the General Laws; and no ... by-law shall be deemed inconsistent with the rules and regulations of the Board on the ground that such ordinance or by-law prohibits the location or maintenance of a billboard ... which in the absence of said ... by-law would be in conformity with the said rules and regulations." The validity of § 9K was established in John Donnelly & Sons, Inc. v. Outdoor Advertising Bd., 361 Mass. 746, 751-752 (1972).
[7] John Donnelly & Sons, Inc. v. Outdoor Advertising Bd., 361 Mass. 746 (1972). Milton v. Donnelly, 306 Mass. 451 (1940). General Outdoor Advertising Co. v. Department of Pub. Works, 289 Mass. 149 (1935).
[8] We recognize that a second, independent repository of local power to enact zoning ordinances regulating billboards may now exist by virture of § 6 of the Home Rule Amendment, art. 89, of the Amendments to the Constitution. See Collura v. Arlington, 367 Mass. 881, 885 n. 3 (1975); Board of Appeals of Hanover v. Housing Appeals Comm. in the Dep't of Community Affairs, 363 Mass. 339, 359 (1973). The only limit on this right of self-government granted by the Home Rule Amendment is that it not be exercised in a manner that is "inconsistent with the constitution or laws enacted by the general court...." Art. 89, § 6. But since the parties in this case rely on art. 50, and G.L.c. 93, § 29, which requires that local billboard regulations be consistent with G.L.c. 93, §§ 29-33, and board rules and regulations, we confine our discussion here to whether the town by-laws fall within the power delegated to the town by the comprehensive statutory scheme dealing with outdoor advertising regulation.
[9] E.g., § 5 of the board regulations provides in part: "The Division [board] may grant permits for the erection of billboards... only in areas determined to be of a business character by the Division. The area in which the proposed billboard ... is to be located may be determined to be of a business character (1) if the area is zoned by any city or town to permit any business, industrial or commercial activity or (2) with respect to areas, not so zoned, wherever there are two or more separate business, industrial or commercial activities conducted on ... the proposed location of the billboard ... or on other properties within a distance of 500 feet ... from such proposed location ... except as the Division may determine the area ... to be predominantly residential or agricultural in use."
Section 6 reads in part: "Renewal permits shall be granted without notice or hearing ... unless the billboard ... is located in an area not zoned for any ... activity which has been determined to have been of a business character...."
[10] The court reiterated this same standard on p. 180 of the General Outdoor Advertising Co. case that art. 50 establishes "`[a]dvertising ... on private property within public view' as a proper subject for the exercise of the police power by regulation and restriction, which may extend to prohibition of such advertising in certain places, areas, divisions, localities and districts, though not utterly and without bound, throughout the Commonwealth." Accord, General Outdoor Advertising Co., supra at 183.
[11] This court in Avon, supra at 754-755 n. 9, cited Berman, among other cases, as indicating a broadening of the permissible basis of land use regulation.
[12] See, e.g., Dukeminier, Zoning for Aesthetic Objectives: A Reappraisal, 20 Law & Contemp. Prob. 218 (1955); Masotti & Selfon, Aesthetic Zoning and the Police Power, 46 J. Urban L. 773 (1969); Norton, Police Power, Planning and Aesthetics, 7 Santa Clara Lawyer 171 (1967); Comment, Zoning, Aesthetics, and the First Amendment, 64 Colum. L. Rev. 81 (1964); Note, Beyond the Eye of the Beholder: Aesthetics and Objectivity, 71 Mich. L. Rev. 1438 (1973); Aesthetic Regulation of the Urban Environment, 6 Urban Lawyer 622 (1974).
[13] Moore, Regulation of Outdoor Advertising for Aesthetic Purposes, 8 St. Louis U.L.J. 191 (1963). Rodda, The Accomplishment of Aesthetic Purposes under the Police Power, 27 S. Cal. L. Rev. 149, 168-177 (1954). Note, Municipal Corporations: Sign Control Through Municipal Zoning Ordinance, 27 Okla. L. Rev. 735 (1974).
[14] Brookline covers an area of six square miles and has a population of 58,689. See Manual for the General Court, 1973-1976, at 291.
[15] We note that in 1968 a total of $208,000,000 was spent on outdoor advertising throughout the country. This amounted to approximately 1.6% of the total expenditure for all advertising. In both 1969 and 1970, this ratio of outdoor advertising expenditures to total industry expenditures remained almost constant. 4 N. Williams, American Land Planning Law c. 118, at 568 n. 2 (1974), citing Statistical Abstract of United States 757 (1970). See Cromwell v. Ferrier, 19 N.Y.2d 263, 272 (1967).
[16] See n. 2 supra.
[17] This court, in General Outdoor Advertising Co. v. Department of Pub. Works, 289 Mass. 149 (1935), described outdoor advertising as follows: "It does not appeal alone to the desire or consent of such persons [traveling on highways]; it is forcibly thrust upon the attention of all such persons, whether willing or averse. For such persons who strongly wish to avoid advertising intrusion, there is no escape; they cannot enjoy their natural and ordinary rights to proceed unmolested." Id. at 168. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2594280/ | 935 F. Supp. 608 (1995)
SANI-DAIRY, et al. Plaintiffs,
v.
Clayton YEUTTER, Secretary of Agriculture, et al. Defendants.
MILK MARKETING, INC. Plaintiffs,
v.
Clayton YEUTTER, Secretary of Agriculture, Defendant.
Civil Action No. 90-222J.
United States District Court, W.D. Pennsylvania.
March 27, 1995.
Marvin Beshore, Harrisburg, PA, for plaintiffs.
Glen W. Wagner, Port Clinton, OH.
John J. Valkovci, Jr., Johnstown, PA, Donald A. Tracy, U.S. Dept. of Agriculture, Office of General Counsel, Washington, DC, for defendants.
MEMORANDUM ORDER
D. BROOKS SMITH, District Judge.
In this Court's Findings of Fact and Conclusions of Law (Docket No. 47), I found that *609 the Secretary of Agriculture's regulations governing the marketing of fluid milk in the New York-New Jersey milk marketing area, as applied to plaintiffs, constituted a prohibited economic trade barrier to milk producers and sellers outside the New York-New Jersey milk marketing area. Accordingly, I entered judgment in favor of plaintiffs John P. Strittmatter, d/b/a Strittmatters Dairy, Delbert and Ed Thomas, Lowell Friedlin, Arthur Bloom, James L. Harris, and Milk Marketing, Inc., and I denied defendant's motion for summary Judgment.
At that time, I also ordered that in the event that the parties were unable to agree on the appropriate measure of damages due to plaintiffs, they should "apply to the Court for a determination of damages." See Docket No. 47, at 17. Ultimately, the parties were unable to agree on the appropriate measure of damages, with defendant taking the position that "monetary refunds or damages are inappropriate because, in balancing the equities of the situation, the plaintiffs have not suffered any net loss." See Docket No. 48, Exhibit A, at 1. Plaintiffs thereafter filed an Application for Entry of Order Establishing Damages and Other Appropriate Relief (Docket No. 48) and a Motion for Immediate Entry of Order Confirming Declaratory and Injunctive Relief (Docket No. 49).
As plaintiffs correctly note, numerous courts have awarded refunds to prevailing plaintiffs in "milk order cases" where payments were made pursuant to regulations subsequently found invalid. See, e.g., Abbotts Dairies Division of Fairmont Foods, Inc. v. Butz, 584 F.2d 12, 18-21 (3d Cir.1978); Borden, Inc. v. Butz, 544 F.2d 312, 319-20 (7th Cir.1976); Fairmont Foods Co. v. Hardin, 442 F.2d 762, 773 (D.C.Cir.1971); Kinnett Dairies, Inc. v. Madigan, 796 F. Supp. 515, 516 (M.D.Ga.1992); Cumberland Farms, Inc. v. Lyng, 1989 WL 85062 (D.N.J. July 18, 1989).
Nevertheless, defendant urges that "the equities in this case ... argue against ordering any refund" (see Docket No. 48, Exhibit A, at 2), citing authority for the proposition that the court should be guided by equitable principles in awarding refunds of money paid pursuant to invalid regulations. Id. See, e.g., Democratic Central Comm. v. Washington Metropolitan Area Transit Comm'n, 485 F.2d 786, 825 (D.C.Cir. 1973) ("Restitution is essentially an equitable remedy."), cert. denied, 415 U.S. 935, 94 S. Ct. 1451, 39 L. Ed. 2d 493 (1974); Blair v. Freeman, 370 F.2d 229, 239-40 (D.C.Cir.1966) (plaintiffs' eight year delay in filing action objecting to milk marketing regulation "is not laches barring all relief, but it certainly affects the relief that may be claimed"; although regulation declared invalid and injunction entered against future enforcement, plaintiffs not entitled to refund of monies paid pursuant to invalid regulation). Defendant bases his "equitable considerations" argument in this case primarily on the facts that "the producers have been able to receive Class I prices for their milk and to receive the protection of the marketing order system and the market administrator." See Docket No. 48, Exhibit A, at 2.
Taken to its logical conclusion, however, defendant's argument would never permit restitution in a case involving an invalid milk pricing order because in every case, the producers "receive the protection of the marketing order system and the market administrator." Id. Defendant's "equitable considerations" argument paints with too broad a brush and must be rejected. As the Third Circuit in Abbotts Dairies explained:
Equitable restitution to [the plaintiffs] to the extent of the monies in the producer-settlement fund reserve is ... appropriate in our view. Denial of restitution on the facts presented here would virtually remove any possibility of recovery of over-payments due to invalid milk pricing orders.
Abbotts Dairies, 584 F.2d at 20.
The equities in this case, consistent with the authority cited by plaintiffs, support a finding that plaintiffs are entitled to recover the "compensatory payments" imposed pursuant to the Order 2 Producer-Settlement Fund, as found invalid in this Court's Findings of Fact and Conclusions of Law (Docket No. 47). The Secretary of Agriculture's regulations governing the marketing of fluid milk in the New York-New Jersey milk marketing *610 area, as applied to plaintiffs, constitute a prohibited economic trade barrier to milk producers and sellers outside the New York-New Jersey milk marketing area. Those "compensatory payments" placed plaintiffs at a substantial competitive disadvantage, and, unlike the situation in Blair v. Freeman, plaintiffs promptly challenged the imposition of the payments to the Order 2 fund.
Defendant concedes that plaintiffs paid $726,464.41 to the Order 2 Producer-Settlement Fund pursuant to the invalid regulations. See Docket No. 48, Exhibit A, attachment. Plaintiffs agree with that calculation.
Finally, as plaintiffs explain in their application for damages, it is appropriate that interest be allowed on the aforementioned refunds "Otherwise, the beneficiaries of the improper payments would retain ... the value of the money during the interim and innocent parties, such as the Plaintiff dairy farmers here, would never be made whole." See Docket No. 48, at 7. See also Abbotts Dairies, 584 F.2d at 21 n. 18 ("The district judge must also consider the issue whether interest is recoverable and, if so, its amount."); Kinnett Dairies, Inc., 796 F.Supp. at 516 (interest on refunds awarded based on average prime lending rates); Cumberland Farms, Inc., 1989 WL 85062, at *3 (interest on refunds awarded based on prime plus one percent).
Accordingly, upon my review of the parties' positions both in support and in opposition to an award of damages and other relief in this action, I hereby order the following:
1) The "compensatory payments" imposed on plaintiffs in relation to the Order 2 Producer-Settlement Fund, as found invalid in this Court's Findings of Fact and Conclusions of Law (Docket No. 47), ARE HEREBY DECLARED to be in violation of the Agricultural Marketing Agreement Act of 1937, 7 U.S.C. § 608c(5)(G).
2) It is further ORDERED that defendant be and hereby is henceforth permanently enjoined from enforcing the regulations of Federal Milk Order 2 as found invalid in this Court's Findings of Fact and Conclusions of Law (Docket No. 47).
3) It is further ORDERED that defendant is directed to refund $726,464.41 to plaintiff Sani-Dairy, in trust, for redistribution to the producer plaintiffs, and that said refund is to be paid from the Producer-Settlement Fund.
4) It is further ORDERED that plaintiffs are awarded interest on the aforementioned refunds, to be paid from the Producer-Settlement Fund, based on the average monthly prime lending rate which prevailed from the date payment was first made to the fund, May 1990, until the date that payment of damages to plaintiffs is made in full. The Secretary is hereby directed to calculate interest due.
This is a Final Order, and the Clerk shall mark this case closed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1500102/ | 810 F. Supp. 86 (1992)
FEDERAL HOME LOAN MORTGAGE CORPORATION, Plaintiff,
v.
DUTCH LANE ASSOCIATES, Morton L. Ginsberg, d/b/a A & P Maintenance, Village of Spring Valley, and People of the State of New York, Defendants.
No. 90 Civ. 7623 (GLG).
United States District Court, S.D. New York.
December 28, 1992.
*87 Cooper, Liebowitz, Royster & Wright, Elmsford, NY (Thomas B. Decea, of counsel), for plaintiff.
Harvis Trien & Beck, New York City (Robert M. Trien, of counsel), for defendants.
OPINION
GOETTEL, District Judge.
I. FACTUAL BACKGROUND
On October 16, 1991, this court granted summary judgment of foreclosure on a consolidated mortgage and note held by plaintiff the Federal Home Loan Mortgage Corporation ("FHLMC") after defendant Dutch Lane Associates ("Dutch Lane") defaulted on its monthly payments.[1] A judgment of foreclosure and sale was entered in July 1992 and a referee was appointed to conduct the sale. The Referee published a notice of sale once a week for four consecutive weeks in the New York Law Journal pursuant to RPAPL § 231. Defendants claim that no notice of sale was served upon the attorneys for the moving defendants. As a result, the defendants were allegedly unaware of the sale scheduled for September 23, 1992 at which the property was sold at auction for over $1 million to plaintiff as the successful bidder.
Defendants allege that they learned of the sale when plaintiff's attorney served the Referee's Report of Sale upon them. After plaintiff allegedly refused to vacate the sale, defendants moved to have the sale set aside and also moved for Rule 11 sanctions arguing that plaintiff intentionally refrained from informing defendants of the sale. Conversely, plaintiff moves to confirm the sale.
II. DISCUSSION
Essentially, only one issue need be decided by this court, namely whether personal notice to defendants' attorney was required before a valid sale could be done? Resolution of this issue boils down to deciding whether plaintiffs need only have complied with the federal laws on service of notice of the sale of real property or whether plaintiffs were also required to comply with the relevant state procedures.
Defendants argue that New York law requires that pursuant to New York CPLR § 2103(b) defendants, as parties to the foreclosure proceedings who appeared and did not waive service of notice of sale, receive notice of sale in the same manner as all other legal papers have been served upon them. See Aetna Life Ins. Co. v. Avalon Orchards, Inc., 103 A.D.2d 948, 479 N.Y.S.2d 564 (3rd Dep't 1984).[2]
*88 In Avalon Orchards, 479 N.Y.S.2d 564, the court set aside a foreclosure sale holding that "[p]arties to a foreclosure proceeding who appear and do not waive service of notice of sale are entitled to receive such notice in the ordinary manner in which papers are to be served upon a party in a pending action ... Service by notice of sale on defendants' attorney was essential." Id. at 565 (citations omitted). Like the judgment in this case, stress defendants, the judgment of sale involved in the Avalon Orchards also did not specify any notice of sale for other parties to the action but the court nonetheless set aside the sale for failure to provide such notice.
In Shaw v. Russell, 60 N.Y.2d 922, 471 N.Y.S.2d 40, 459 N.E.2d 149 (1983), the New York Court of Appeals affirmed the Appellate Division's decision to vacate a foreclosure sale for improper notice. The court held without much discussion that:
[a] party to a foreclosure proceeding who appears and waives service of the papers but who reserves right to receive notice of sale is entitled to such notice in the ordinary manner in which papers are to be served upon a party in a pending action. Notice by publication pursuant to RPAPL 231 is insufficient to comply with that requirement.
Id., 471 N.Y.S.2d at 40, 459 N.E.2d at 149. This legal holding comports with the position legal commentators take on New York's notice requirements. Bergman On New York Foreclosures ¶ 30.06(1)(b) states in part that:
If a defendant has effectively appeared, then delivering the notice of sale to him is a prerequisite to a valid sale. In such a case publication alone, which would otherwise suffice, will not be enough.
Defendants also argue that because they had no notice of the sale, they were deprived of their right to due process when property in which they had an interest was sold without their personal notice. See Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 103 S. Ct. 2706, 77 L. Ed. 2d 180 (1983) (personal notice to mortgagee in an in rem tax foreclosure on property in which mortgagee had property interest was required by Fourteenth Amendment's due process clause).
Plaintiff contends that neither state procedural nor substantive law applies in this case. The crux of their argument is that the New York cases relied upon by defendants rest on the case of Shaw v. Russell, 60 N.Y.2d 922, 471 N.Y.S.2d 40, 459 N.E.2d 149 (1983), in which, plaintiff states, the court held that a party "who reserves the right to receive notice of sale is entitled to service of such notice in the ordinary manner in which papers are to be served upon a party in a pending action." (emphasis added). Plaintiff stresses that defendants made no such reservations.
By taking this language out of context, plaintiff seriously misrepresents the court's holding in Shaw. The Court of Appeals stated that an affirmative reservation of right to notice triggering the personal service requirement is required when an appearing party had previously waived service of papers. Shaw was recently cited approvingly by the Appellate Division in a case involving a partition action. The court held that parties to such an action "who appear and do not waive service of notice of sale are entitled to notice of sale in addition to the notice from publication required by RPAPL 231." Lajos v. Erps, 176 A.D.2d 703, 575 N.Y.S.2d 85, 86 (2nd Dep't 1991). Contrary to plaintiff's position, the court did not require that the party first reserve the right to notice of sale; it only required that the party appear and not waive service of the notice of sale.
It is thus clear that absent this prior general waiver (or with a subsequent reservation of the notice of sale if a general waiver was made) New York law interprets personal service more like a presumptive requirement of sale. Following the course set by the courts in New York, we find that persons responsible for payment of a debt secured by a mortgage, here the mortgagor *89 Dutch Lane and MLG Properties, one of its general partners, must receive personal notice of the sale of the mortgaged property pursuant to CPLR § 2103(b). See United States v. Whitney, 602 F. Supp. 722, 726 (W.D.N.Y.1985). Publication alone will not suffice under New York law.
It is not disputed that defendants in the present action never waived service of the notice of sale. However, this case involves a default on a federally held or insured loan. The pertinent question becomes whether state notice requirements apply in federal court to the FHLMC's sale of a property pursuant to a default on a federally held or insured loan.
Plaintiff obviously argues the state law's inapplicability. To begin, plaintiff maintains that defendants had actual notice of the sale from a conversation on July 24, 1992 and their receipt of the judgment of foreclosure and sale which stated the property was to be sold after notice was published once a week for four continuous weeks. Plaintiff points out that defendants raised no objections until now.
Plaintiff further contends that defendants experienced no prejudice to warrant vacating the sale at this point. According to plaintiff, defendants could have filed in bankruptcy at any time over the past two years (and defendants' counsel raised this possibility with plaintiff) and also could have settled the case. What is more, says plaintiff, settlements broke down due to defendants' financial position which would preclude them from redeeming the property. Moreover, plaintiff argues that the Federal Rules of Civil Procedure apply since federal law is at issue (this not being a diversity case). Here, the government's foreclosure remedy under an insured mortgage is at stake, an issue of federal law says plaintiff.
Where dealing with default on a federally held or insured loan, federal law certainly governs the substantive rights, liabilities, and remedies of the parties. See United States v. Victory Highway Village, Inc., 662 F.2d 488, 496 (8th Cir.1981) ("[F]ederal law, not [state] law, governs the rights and liabilities of the parties in cases dealing with the remedies available upon default of a federally held or insured loan."). Plaintiff's citation to Federal Home Loan Mortgage Corp. v. Canter, No. 92-330 (D.C.N.J.1992) (unpublished), involving the appointment of a receiver, an issue of the FHLMC's substantive rights under the mortgage, is consistent with this idea. See also United States v. View Crest Garden Apts., Inc., 268 F.2d 380 (9th Cir.1959) (finding federal law controlling for the appointment of a receiver in a foreclosure action).
Further, federal law governs questions involving the rights of the United States arising under nationwide federal programs. See Whitehead v. Derwinski, 904 F.2d 1362, 1365 (9th Cir.1990) (finding no conflict between state laws on foreclosures and deficiency judgments and those set out in the Veterans' Administration regulations); see also United States v. O'Connell, 496 F.2d 1329, 1332 (2d Cir. 1974) (applying New York law to determine what property was purchased during a Federal Housing Administration foreclosure proceeding).
We recognize that federal law establishes notice requirements for the sale of real property pursuant to a federal court order. Sections 2001(a) and 2002 of Title 28 govern post-judgment sales of any realty or interest in realty by order or decree of a United States court. Section 2001(a) provides that:
[a] public sale of realty or interest therein under any order, judgment or decree of any court of the United States shall not be made without notice published once a week for at least four weeks prior to the sale in at least one newspaper regularly issued and of general circulation in the county, state, or judicial district of the United States wherein the realty is situated.
In addition, 28 U.S.C. § 2002 states that:
A public sale of realty or interest therein under any order, judgment or decree of any court of the United States shall not be made without notice published once a week for at least four weeks prior to the *90 sale in at least one newspaper regularly issued and of general circulation in the county, state, or wherein the realty is situated.
It is plain from the express language of these sections that notice by publication is the minimum requirement of notice when property is sold pursuant to federal court order. The decisive question is whether such publication is not only necessary but sufficient for the FHLMC to comply with. Answering this question turns on the degree to which this federal statute on notice preempts New York's CPLR § 2301 notice procedures for real property sales. The preemption effects of federal statutes can either be partial or complete depending upon the pervasiveness of the scheme of federal regulation of an area. Fidelity Federal Sav. and Loan Ass'n v. De La Cuesta, 458 U.S. 141, 153, 102 S. Ct. 3014, 3022, 73 L. Ed. 2d 664 (1982); see also Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S. Ct. 1146, 1152, 91 L. Ed. 1447 (1947).
In the area of mortgage foreclosures, courts have held that the federal law's displacement of state law is not complete. See, e.g., Whitney, 602 F.Supp. at 728 (holding that the Veterans' Administration regulations governing mortgage foreclosures do not totally displace New York law in that field).[3] In O'Connell, 496 F.2d 1329, the Second Circuit, while recognizing that it had previously held that federal law governed Federal Housing Administration foreclosure proceedings, applied New York law to determine precisely what property a buyer had actually purchased at the FHA foreclosure sale. See id. at 1332. The court relied upon the fact that there was no suggestion that state law was hostile to the federal scheme. Id.
"Where Congress has not completely displaced state regulation in a specific area, state law is nullified to the extent that it actually conflicts with federal law." Fidelity Federal, 458 U.S. at 153, 102 S.Ct. at 3022. The basic rule of thumb is clear: to the extent a state law actually conflicts with federal law, the state law must give way. Regarding the notice procedures required for the foreclosure sale of federally insured property pursuant to federal court order, we do not find that New York's notice provisions conflict with federal law. Sections 2001(a) and 2002 clearly establish a four-week publication period as a minimum for the sale of real property pursuant to federal court order. Nothing in their express language suggests that they were intended to establish notice-by-publication as the only notice required for real property sales. Indeed, the provisions only mandate that no public sale of real property pursuant to federal court order shall occur without notice-by-publication. Their language places no express limitations on the notice procedures states may supplement it with, so long as they are not inconsistent with §§ 2001(a) and 2002. We interpret them to mean that notice-by-publication is the minimum notice required to properly effectuate a sale of real property under a federal court's direction.
Requiring the FHLMC to also give defendants who have an undisputed interest in the property personal notice in no way undercuts this federally uniform notice threshold. There is no inherent incompatibility in complying with the notice-by-publication provisions of §§ 2001 and 2002 while also serving personal notice to parties with substantial interests in the property who have appeared pursuant to CPLR § 2301(b).
As such, the present situation is unlike cases such as United States v. Merrick Sponsor Corp., 421 F.2d 1076 (2d Cir.1970), where a state statute of limitations for *91 deficiency judgment motions was mutually inconsistent with Veterans' Administrations regulations. Id. at 1079 n. 1. The court in Merrick noted the "decisions applying `federal law' to supersede state law typically relate to programs and actions which by their nature are and must be uniform in character throughout the Nation." Id. at 1078-79 (quoting United States v. Yazell, 382 U.S. 341, 354, 86 S. Ct. 500, 507, 15 L. Ed. 2d 404 (1966)). Here, applying CPLR § 2301(b) works no mischief on the federal notice-by-publication scheme. Requiring personal notice for parties who have appeared and not waived notice only supplements, not supplants or obstructs, the federal notice provisions. The desirability of a uniform federal rule for the minimum notice required for property sales pursuant to court order is plain. See Clearfield Trust Co. v. United States, 318 U.S. 363, 367, 63 S. Ct. 573, 575, 87 L. Ed. 838 (1943). However, personal notice pursuant to CPLR § 2301(b) causes no interference with the integrity of the federal notice scheme.
Recognizing New York's personal notice requirement also comports with fundamental notions of due process by insuring that a person with an established property interest in a building receives notice of its sale. See Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 103 S. Ct. 2706, 77 L. Ed. 2d 180 (1983). In Mennonite, the Supreme Court held that when a mortgagee was identified in a publicly recorded mortgage, constructive notice by publication must be supplemented by notice mailed to the mortgagee's last known address, or by personal service. Id. at 798, 103 S.Ct. at 2711. The Court stated that:
Notice by mail or other means as certain to ensure actual notice is a minimum constitutional pre-condition to a proceeding which will adversely affect the liberty or property interest of any party, whether unlettered or well versed in commercial practice, if its name and address are reasonably ascertainable.
Id. at 800, 103 S.Ct. at 2712.
The present case may not be as compelling as the circumstances in Mennonite where the mortgagee clearly had no actual notice of the impending tax foreclosure sale. Plaintiff stresses that defendants were fully aware that a sale would occur after the four-week period after judgment of foreclosure had elapsed. Defendants did fully participate in the foreclosure proceedings before this court and were personally served with the judgment of foreclosure and sale which directed that the property be sold, and directed that notice of the sale be published once a week for four weeks. This should have doubtless provided defendants with general notice of the FHLMC's intention of selling the property as soon as the four-week period expired.
However, this says nothing about whether defendants, as parties who had appeared in this action, were entitled to specific notice of the date and place of sale and whether they had somehow acquired actual knowledge of them. Plaintiff describes defendants as having "full knowledge." Plaintiff's Reply Memorandum at 11. However, there is no evidence that defendants possessed actual knowledge of the crucial facts: the date and place of sale. To the contrary, in a letter dated October 20, 1992, defendants' counsel notified plaintiff's counsel after receiving the Referee's Report of Sale that they had been provided no notice of the sale nor had any knowledge that the sale had been scheduled or had occurred on September 23, 1992. See Kazarnovsky Affidavit, Exhibit 1. Defendants's full participation in the proceedings up to that point and their vigorous, though unsuccessful, opposition to foreclosure, which plaintiff's stresses, do not speak to their notice of the sale.
In his Reply Affidavit, plaintiff's counsel states that there can be no dispute "that Mr. Trien [defendants' counsel] had actual notice that the sale would occur shortly after four weeks beyond the date of judgment." Decea Reply Affidavit at 2. Knowledge of a sale "shortly after" the four weeks had concluded following the judgment of foreclosure does not mean that defendants had any notice of when the sale would actually occur. Plaintiff was free to set a date for the property's sale any time after those four weeks had expired. *92 Nothing required plaintiff to set the sale on any particular date. Even if defendants had some general, ballpark idea of the sale's timing, this is not the functional equivalent of knowing specifically when and where the sale would be held. Yet, it is such key information that the notice provisions of New York law are designed to ensure is communicated to parties with substantial interests in the property for sale.
In many cases, defendants indicate no interest in the sale of the property. Where, as here, they have shown an intense interest, notice should be provided. This holding will not erase the benefits of a uniform federal law on notice requirements for real property sales. Sections 2001(a) and 2002 guarantee a minimum standard of uniformity for property sales carried out pursuant to the mandate of federal courts. As such, New York's requirement of personal service of notices of sale poses no discernable obstacle to accomplishing this federal objective. Nor does it grant defendants any additional substantive rights under New York law. Rather, New York's requirement that specific notice be sent enhances the federal goals of ensuring that parties with significant interests in a property are informed when that property will be sold. In this regard, CPLR § 2301(b) helps implement and fulfill the federal policy in ensuring that interested parties receive notice of the sale of property pursuant to a federal court decision.
Recognizing the applicability of state notice provisions which do not conflict with the federal notice-by-publication statutes also comports with past FHLMC practice. In two separate actions in New Jersey relating to other properties owned by the principals of defendant MLG, counsel for the FHLMC personally served all the defendants in that case with a specific notice of sale pursuant to state law. See Trien Reply Affidavit, Exhibits 3, 4 and 5. While this does not necessarily indicate the FHLMC's recognition that it is bound by state notice procedures, it is at least instructive on how the FHLMC conducts its business in some states.
Effecting personal service on defendants here would have been a simple process under the present circumstances. Plaintiff's counsel was well-acquainted with defendants, having dealt with them in this prolonged litigation. Plaintiff's counsel is no doubt fully familiar with the address of defendants' counsel who have represented defendants since August 1991. Given that he has presumably served every other paper on defendants' counsel, we can see no reason why plaintiff's counsel should have chosen not to serve defendants' counsel with a notice of sale, even if only as a matter of courtesy. Serving defendants' counsel with personal notice of the sale would have worked no hardship whatsoever. Any added burden would certainly have been de minimis.
Plaintiffs claim that defendants consciously failed to pursue the two options that existed to stop the sale, bankruptcy or settlement, and should thus be estopped from attacking the sale on notice grounds. Plaintiff recounts that certain attempts at settlement were made but defendants' attorney went on vacation without confirming that letters of inquiry were actually sent or received. We are unable to explain why defendants' counsel, after two years of dealing with Mr. Decea who has handled this case for plaintiff since its inception and works out of Elmsford, New York, sent a last-minute settlement communication to the FHLMC's office in Virginia. As a result, the September 8, 1992 letter was not received by plaintiff's counsel until September 30th, one week after the foreclosure sale had occurred. We shall not attempt to sort out this factual thicket. However, we note that the fact that defendants elected not to file in bankruptcy or failed to effect a settlement with the FHLMC before the sale does not mean that they have somehow waived their right to notice of the sale.
Plaintiff also argue that there is no evidence that defendants could have made a bid on the property with their own funds had they received personal notice. While we harbor serious doubts that defendants would have bid on the property given their precarious financial position (which was a prime cause of their inability to keep up *93 with the property's mortgage payments in the first place), we shall not attempt to sort out this disputed factual issue either. Nor do we give any credence to defendants' speculative claim that notice would have enabled them to encourage other prospective bidders to attend the sale. We presume that rounding up potential bidders is exactly what the month of published notices is intended to accomplish. Given our holding, we also make no attempt to delve into defendants' claim that they could have exercised a right of redemption.[4]
To conclude, we hold that New York's statutory provisions on notice of a sale are not inconsistent with the notice-by-publication requirement of §§ 2001 and 2002. Personal service should have been provided to defendants pursuant to CPLR § 2301(b) before the property was sold. Failure to provide such notice necessitates a new sale upon proper notice. Consequently, we vacate the sale and order plaintiff to effect proper service upon defendants before a second foreclosure sale.
SO ORDERED.
NOTES
[1] We note that defendants Village of Spring Valley and the People of the State of New York filed an appearance in this action and waived their right to interpose an answer. Defendant Patrick McArdle d/b/a A & P Maintenance failed to answer or appear in this action. Accordingly, a default judgment was entered against these defendants in October 1991. At the same time, we granted defendant Morton L. Ginsberg's motion to dismiss. For purposes of this decision, we shall use the term "defendants" to refer only to the two defendants in this action who remain active in its litigation, Dutch Lane Associates and MLG Properties, Inc., one of Dutch Lane's general partners.
[2] Additionally, defendants move for Rule 11 sanctions based on Thomas Decea's signing of the motion to confirm the Referee's Report. They argue that Mr. Decea failed to serve the defendants' attorney notice of the sale knowing full well that New York law clearly required such notice. We shall not award Rule 11 sanctions for the simple reason that the issue of whether or not the Federal Home Loan Mortgage Corporation, as a federal entity in federal court, was required to also comply with state notice procedures was not a clear-cut issue. Plaintiff has made a reasoned argument as to why only federal notice procedures should apply and we shall not sanction them for it.
[3] As an aside, we also note that plaintiff relied upon New York law when it sought summary judgment on its foreclosure on defendants' property. Specifically, plaintiff argued that under New York law there is no obligation to accept a tender of defaulted installments for a properly accelerated mortgage. Plaintiff also argued that New York law governed the interpretation of the mortgage's assignment-of-rent provisions. Additionally, we note that the underlying mortgage and promissory note both state that they shall be governed by the law of the jurisdiction in which the property is located. See Trien Supplemental Affidavit, Exhibits A and B.
[4] We note, however, that at least one judge in this district has held that no redemption rights exists in federal law. See Thwaites Place Associates v. Secr'y of U.S. Dep't of Housing and Development, 638 F. Supp. 301 (S.D.N.Y.), aff'd without opinion, 833 F.2d 1003 (2d Cir.1986). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1527077/ | 119 B.R. 106 (1990)
In re DONDI FINANCIAL CORPORATION, Debtor.
Anthony M. MANCUSO, Trustee, Plaintiff,
v.
Ray CHAMPION, Defendant.
Bankruptcy No. 387-34093 RCM-7, Adv. No. 389-3789.
United States Bankruptcy Court, N.D. Texas, Dallas Division.
August 28, 1990.
Philip I. Palmer, Jr., Dallas, Tex., for plaintiff.
T. Rick Frazier, Dallas, Tex., for defendant.
*107 AMENDED MEMORANDUM OPINION
ROBERT McGUIRE, Chief Judge.
Following are the Court's findings of fact and conclusions of law under Bankruptcy Rule 7052 with respect to a trial held May 16 and 18, 1990. This is an 11 U.S.C. § 544(b) complaint by Anthony M. Mancuso, Trustee ("Plaintiff"), to recover bonuses and dividends paid by Debtor to Ray Champion ("Defendant"), a shareholder of Debtor owning shares of Class A common stock of Debtor. Plaintiff contends these bonuses and dividends were fraudulent conveyances by Debtor under the Texas Fraudulent Conveyance Act ("TFCA") in existence at the time in question.
Background Facts
Debtor is a corporation formed and existing under the laws of the State of Texas.
Debtor filed a voluntary petition for relief under Title 11 on May 9, 1987.
Plaintiff was appointed as trustee of the Debtor on November 4, 1987.
This adversary proceeding was filed November 3, 1989.
Don R. Dixon ("Dixon") owned control of Debtor during pertinent times herein.
Debtor owned control of Vernon Savings and Loan Association ("Vernon").
At all times since at least August 1, 1985, Debtor, in addition to the property transferred, has had an insufficient amount of assets to pay the claims of its creditors in full; Debtor was insolvent within the meaning of 11 U.S.C. § 101(31) from at least August 1, 1985 forward. During all pertinent times herein, Defendant had no knowledge of Debtor's solvency problems. Such problems were due, in a large part, to fictitious loan transactions, which fictitiousness was not known to Defendant until after he ceased a relationship with the Dondi entities. There was no dispute that Defendant was acting in good faith throughout his dealings with Debtor.
At all times since December 1, 1984, there have been unpaid creditors who still hold unsecured claims. (Proofs of Claim Nos. 73, 74, 75, and 76).
Defendant was employed as an officer and director of various subsidiary entities of Vernon, a full time position with substantial duties and obligations. He was an employee of Dondi Commercial Properties, Inc., which was a subsidiary of Dondi Group, Inc., which was a subsidiary of Vernon.
Defendant's first Dondi-related employer was Dondi Residential Property, then he ran Dondi Properties Corporation. He continued to run this company all the time he was employed by a Dondi entity. He also worked for Dondi Commercial. He then helped with Vernon Service Corporation for one transaction. He thereafter worked for Dondi Group. Except for Vernon Service, all the entities for which he worked were owned by Dondi Group.
Debtor was a holding company and its only holding of value (in hindsight) was its ownership in Vernon, which in turn owned Dondi Group. Debtor was formed under the laws of the State of Texas and controlled by Dixon, who owned more than 51% of its stock at all pertinent times in this case. Debtor, in turn, owned over 96% of the capital stock of Vernon. In summary, Defendant's employment relationship to Debtor was: Defendant was an employee of a subsidiary of Dondi Group, Inc., which was a subsidiary of Vernon, itself a subsidiary of Dondi Financial Corporation. Pictorially, the main arteries of Debtor's business were as follows:
Dondi Financial Corporation
↓
Vernon Savings and Loan Association
↓
Dondi Group
↓
(various additional subsidiaries)
Vernon entered into a supervisory agreement with the Federal Savings and Loan Insurance Corporation on August 16, 1984. A cease and desist order was entered by the Federal Home Loan Bank Board on June 16, 1986.
The salary paid to Defendant was not bogus and the quarterly bonus program was part of the total employment benefits *108 offered by Debtor to key personnel of subsidiaries.
The right to buy stock in the Debtor's future was part of the total employment package for key personnel of subsidiaries; however, the amount of dividends on such stock was not related to employment performance.
Prior to January 1, 1984, Defendant owned 1,628 shares of Debtor, represented by Certificate No. 34.
On or about January 1, 1985, Defendant agreed to purchase an additional 261 shares of common stock of Debtor at a price of $102.50 per share.
Under the terms of the agreement, Defendant was to pay 15% as a cash down payment and finance the 85% balance, with interest only payable quarterly, and the principal payable five years later.
Defendant executed a promissory note in favor of Debtor for $23,737.95, payable in accordance with the above terms. Defendant paid off the $23,737.95 note.
Debtor issued its Stock Certificate No. 83 for 261 shares in the name of the Defendant.
Defendant simultaneously executed a pledge agreement securing the promissory note and placing his 261 shares in pledge.
On June 30, 1985, Defendant executed a proxy on all of his shares in favor of Dixon.
Debtor made the following payment to Defendant on the dates indicated for the purposes stated:
Date Purpose $ Amount
January, 1985 dividend 1,174.50
April, 1985 deferred bonus 440.56
April, 1985 dividend 2,833.50
July, 1985 dividend 2,833.50
July, 1985 deferred compensation 2,730.14
October, 1985 dividend 2,833.50
January, 1985 dividend 2,833.50
January, 1986 deferred compensation 5,490.61
January, 1986 dividend 2,833.50
April, 1986 deferred bonus 6,055.90
April, 1986 dividend 2,833.50
Debtor continued to do business after such transfers. There was no allegation or proof that the Debtor's eventual cessation of doing business resulted in whole or in part from the transfers in question.
In connection with his purchase of the stock in Debtor, Defendant made the following payments to Debtor on the dates indicated:
Date $ Amount
January, 1985 418.92
January, 1985 3,770.13
May, 1985 667.63
July, 1985 667.63
October, 1985 667.63
January, 1986 667.63
April, 1986 667.63
May, 1986 23,855.01
The May, 1986 check for $23,855.01 to Debtor was in full payment of the promissory note and remaining interest.
Debtor stamped the duplicate replacement promissory note as paid and returned it to Defendant, along with the 261 shares.
On June 2, 1986, Defendant wrote a letter to Dixon and others requesting that Debtor repurchase his 1,889 shares, but this was never done.
On December 21, 1987, Defendant filed a priority claim for $95,923.19.
Although the TFCA was replaced, effective September 1, 1987, by the Texas Fraudulent Transfer Act, the TFCA remains effective as to all transfers made before September 1, 1987. Acts 1987, 7th leg., ch. 1004, Section 2.
Section 24.02(a)(1) reads as follows:
(a) A transfer of real or personal property, a suit, a decree, judgment, or execution, or a bond or other writing is void with respect to a creditor, purchaser, or other interested person if the transfer, suit, decree, judgment, execution, or bond or other writing was intended to
(1) delay or hinder any creditor, purchaser, or other interested person from obtaining that to which he is, or may become, entitled; or . . .
Under § 24.02(a)(1), any transfer made is fraudulent if intended to delay or hinder any creditor.
Plaintiff did not prove by sufficient evidence a violation of § 24.02(a)(1) with respect to either the bonuses or dividends.
Limitations
Defendant pled the statute of limitations, but Plaintiff, as trustee, is given two years after his appointment in which to institute *109 avoidance actions. In re Hansen, 114 B.R. 927 (Bankr.N.D.Ohio 1990). This action was begun within that period. 11 U.S.C. § 546(a). The transactions were outside the range of 11 U.S.C. § 548 since they occurred more than one year prior to the filing of the bankruptcy petition.
Plaintiff has used § 544(b) to assert fraudulent conveyance claims of actual, existing unsecured claims and can do so if these claims were not barred as of the date of filing. In re OPM Leasing, Inc., 40 B.R. 380 (Bankr.S.D.N.Y.1984). The underlying TFCA limitation period then in effect and applicable to a state fraudulent conveyance action was four years. Texas Sand & Shield, 381 S.W.2d 48 (Tex.1964); § 16.051 Tex.Civ. Practice & Remedies Code.
Since four years had not elapsed between January, 1985 (the date of the first transfer complained about), and the filing of the Chapter 11 on May 9, 1987, the Plaintiff's suit filed within two years of his appointment as trustee is timely under § 546(a).
Transfers For Less Than Fair Consideration
Section 24.03(a) reads as follows:
(a) A transfer by a debtor is void with respect to an existing creditor of the debtor if the transfer is not made for fair consideration, unless, in addition to the property transferred, the debtor has at the time of transfer enough property in this state subject to execution to pay all of his existing debts.
Under § 24.03(a), a transfer is fraudulent if not made for a fair consideration by an insolvent debtor. Burnett v. Chase Oil & Gas, Inc., 700 S.W.2d 737, 743 (Tex.Civ.App.-Tyler 1985); Parker Square State Bank v. Huttash, 484 S.W.2d 429 (Tex.Civ.App.-Ft. Worth 1972, writ ref'd n.r.e.); Pope Photo Records, Inc. v. Malone, 539 S.W.2d 224 (Tex.Civ.App.-Amarillo 1976).
Fair consideration means a reasonably equivalent benefit bestowed to the Debtor in exchange for the transfer. In discussing "fair consideration", most of the Texas cases are fact-specific on the particular transaction.
37 Am.Jur.2d Fraudulent Conveyances has some general conclusions concerning what constitutes "fair consideration".
Although a voluntary conveyance may under some circumstances be valid, lack of fair consideration is recognized to be a prime factor in determining whether a transaction is to be deemed fraudulent. `Fair and valuable' consideration, as distinguished from adequate consideration, means that there shall be a substantial compensation for the property conveyed or that it shall be reasonable in view of surrounding circumstances. What constitutes a fair consideration under the Uniform Fraudulent Conveyance Act must be determined from the standpoint of creditors that is, whether the debtor's estate has been unfairly diminished by his conveyance and the existence of any intent to defraud on the part of either the grantor or the grantee is immaterial.
To determine fair consideration, the value of the property on the date of the transfer is the critical date against which the validity of the transfer must be tested.
37 Am.Jur.2d Fraudulent Conveyances § 18 "Generally; `Fair Consideration' Defined", p. 708.
In determining the adequacy of the consideration, the courts will not weigh the value of the goods sold and the price received in very precise scales, but all circumstances considered, there should be a reasonable and fair proportion between the one and the other. Inadequacy of price does not mean an honest difference of opinion as to price, but a consideration so far short of the real value of the property as to startle a correct mind, or shock the moral sense.
37 Am.Jur.2d Fraudulent Conveyances § 19 "Adequacy of Consideration", p. 709.
An illegal consideration is not a valuable consideration within the meaning and operation of fraudulent conveyance statutes.
*110 37 Am.Jur.2d Fraudulent Conveyances § 20 "What Constitutes Fair or Valuable Consideration", p. 711.
I. THE DEFERRED BONUSES
Vernon had instituted a deferred compensation program for its direct and indirect employees.
The Plaintiff contends that Debtor received nothing in exchange for making the deferred compensation payments to Defendant. Defendant's regular salary, aside from deferred bonuses, was relatively low in comparison to the market. Because of the close intermixed relationship between the various Dondi entities and their identity of interests, Defendant's services to the subsidiaries amounted to fair consideration to Debtor and enhanced Dondi's stock ownership in Vernon.
The Court finds that there was fair consideration to the Debtor for the "downstream" transfer of deferred bonuses paid to the Defendant. Lawrence Paperboard Corp. v. Arlington Trust Co., 76 B.R. 866, 871, 874 (Bankr.D.Mass.1987).
Intangible benefits that were conferred included maintenance of Debtor's financial strength through the retention of key personnel throughout the whole Dondi system. This identity of economic interest ultimately conserved the Debtor's estate for the benefit of creditors by keeping a competent downstream work force in place. Rubin v. Manufacturers Hanover Trust, 661 F.2d 979, 992 (2nd Cir.1981).
II. DIVIDENDS
A. Liability Under Texas Corporation Law
1. Statutory Liability.
The Plaintiff seeks to hold the Defendant Shareholder liable for dividends that were improperly declared under Art. 2.38 of the Texas Business Corporation Act ("TBCA"). Creditors are given a remedy under Art. 2.41 of the Act. This statute provides that the directors who authorized the improper dividends may be held liable to the creditors. However, the statute provides no cause of action for the creditors against the shareholders who received the dividends. The only statutory cause of action against shareholders for improper dividends in this section is found in Art. 2.41 subd. E. which gives a director who is found liable under this statute a right of contribution against any shareholders who received the dividends knowing that the distribution was improper. Thus, even if Defendant knew the corporation was insolvent at the time, the Plaintiff would have no standing under this statute because the only cause of action against a shareholder is given to a director. 15 Tex.Jur.3d, Corporations § 304.
2. Texas Common Law.
Neither is the Defendant liable under Texas common law. Palmer v. Justice, 322 F. Supp. 892 (N.D.Tex.1971) correctly states the law. In order for the Defendant Shareholder to be liable for the illegal dividends, two things must be proved. The corporation must 1) be insolvent and 2) have ceased doing business. Obviously, the Debtor was still conducting business at the time of the dividends. See also, Comment, Shareholder's Liability for Dividends Improperly Declared and Paid, 1 S.W.L.J. 220, 235-236. The case law on this issue is scant. Plaintiff has not produced any authority, nor has this Court been able to find any authority, which supports Plaintiff's position. Defendant cites the cases of Palmer v. Justice, supra, and Temple Lumber Co. v. Pineland Naval Stores Co., 25 S.W.2d 675 (Tex.Civ.App.Beaumont 1930, no writ) for the proposition that the only way the defendant shareholder can be held liable for improper dividends is if he had knowledge of the corporation's insolvency at the time he took them. The Palmer v. Justice court, at p. 895, pointed out that the plaintiff in that case, who, incidentally, is the attorney for the Plaintiff in this case, "did not argue that the transfer was fraudulent under the general fraudulent conveyance statute". Such court, at p. 895, was talking of shareholder innocence in terms of dividends or distributions in violation of the provisions of the TBCA. In Temple Lumber Co., supra, at *111 p. 677, liability was asserted under the "trust fund doctrine". As previously stated herein, for the trust fund theory to apply, there must be both insolvency and ceasing to do business by the corporation. In our case, Debtor continued to do business after the complained of transfers. Therefore, the trust fund theory (if it had been pled, which it was not) would not be applicable. The Court finds Defendant not liable under Texas Common Law for the improper dividends.
B. Liability as a Fraudulent Conveyance
1. The Law.
Plaintiff also argues that the dividends which the Defendant received are fraudulent transfers under the old § 24.03 of the Texas Business and Commerce Code. Plaintiff does not now contend that, with respect to the dividends, there was an intent to hinder within the meaning of § 24.02(a)(1), but rather argues that dividends which are paid while a company is insolvent are, as a matter of law, fraudulent transfers, and a violation of § 24.03(a). The case law on this issue is scant and neither party submitted any briefs.
This issue was briefly discussed in In re Kaiser Steel Corp., 87 B.R. 154 (Bankr.D. Col.1988). There, the court was ruling on a motion to dismiss a complaint, alleging a violation of the fraudulent conveyance law in connection with a leveraged buy out ("LBO") transaction. The court overruled the motion to dismiss the complaint. At p. 163, the court discussed part of the allegations in the amended complaint, which allegations and prayers for relief were 11 U.S.C. § 548 actions against the shareholders who received dividends while the corporation was insolvent. However, the court reached no conclusions.
In the case of Powers v. Heggie, 268 Mass. 233, 167 N.E. 314 (1929), the court found dividend payments to an innocent shareholder a fraudulent conveyance and held that the shareholder was liable. The court, at 167 N.E. 317, said:
The good faith of the defendant in receiving the dividends, his belief that they were earned and were paid out of profits, his absence of knowledge that the corporation was insolvent or that the payment of the specific dividends would defeat, delay or defraud any existing creditor of the corporation, could not change the fact that the dividends received were mere gifts, nor operate to relieve him from the obligation to return them to the corporation or its creditors on demand.
Discussed in Corporations Stockholder's Liability to Refund Dividends, 28 MICH. L.R. at 337 (Jan. 1930).
This view is expounded in Comment, Shareholder's Liability for Dividends Improperly Declared and Paid, supra, at 224. After citing Powers, the author argues that corporations should not be treated differently from any other debtor for the purposes of fraudulent conveyances saying, "[s]imply because the debtor happens to be a corporation to whom a few more devices are available, it should not be allowed to make fraudulent conveyances." See also, Wood v. National City Bank, 24 F.2d 661 (2nd Cir.1928) (opinion by Learned Hand). This issue is also addressed in Clark, The Duties of the Corporate Debtor to its Creditors, 90 Harv.L.Rev. 505 (1977). On page 558, the author complained about the "paucity" of case law on this issue and said:
I would strongly argue that . . . when a state has enacted a fraudulent conveyance statute, it ought to be interpreted as providing an additional set of restrictions that dividends and similar distributions must satisfy.
Other courts have also addressed the issue concerning recovery of dividend payments as fraudulent conveyances in the context of whether the payments were made with the intent to hinder, delay, defraud, etc. Almost all of these cases either involve the principal shareholders of a close corporation declaring dividends to themselves or a subsidiary declaring dividends to its parents while the company is insolvent. In the case of In re Jenkins Landscaping & Excavating, 93 B.R. 84, 88 (D.W.D.Va.1988), the Bankruptcy Court *112 held that declaration of a dividend to principal shareholders was a violation of the state fraudulent conveyance statute because it was made with specific intent to defraud. See also, Ratchford v. Manchester Life & Cas. Management Corp., 679 F.2d 741 (8th Cir.1982).
Philco Finance Corporation v. Pearson, 335 F. Supp. 33 (N.D.Miss.1971) involved a transfer of stock made while the company was going under. The court found such transfer to be made with the intent to hinder. There were dividend rights with the stock transferred, but no dividends had been paid. The court, at p. 42, held there was no fraudulent transfer liability for the dividends because none were paid, but stated that, "[h]ad Heard benefitted from the distributions, we would rule otherwise."
United States v. 58th Street Plaza Theatre, Inc., 287 F. Supp. 475, 491, 497, 499 (S.D.N.Y.1968) is a lengthy tax case where the court found that certain dividend payments by a close corporation were fraudulent transfers because (1) the corporation was insolvent and there was no consideration given; and (2) there was an intent to hinder. The court held the stockholders liable.
United States v. Neidorf, 522 F.2d 916 (9th Cir.1975) involved a suit by the government as a creditor against director/shareholders of the corporation who received dividends while the corporation was insolvent. This case dealt with the appropriate statute of limitations, but the court did state, at p. 918, that "[a] creditor may sue for restitution of such [dividend] payments . . . without regard to any wrongdoing on the part of directors, officers or shareholders."
In Regal Ware, Inc. v. Fidelity Corp., 550 F.2d 934 (4th Cir.1977), plaintiff alleged, among other things, that the board of directors declared illegal dividends. The District Court granted the motion to dismiss. The Fourth Circuit reversed and remanded, holding that a factual finding is required. The court also suggested, at p. 947, that the transaction might have been a fraudulent transfer. The case was remanded.
In Fitzgerald v. Marshall, 161 F. Supp. 470 (D.Col.1958), the trustee brought an action against directors of a debtor corporation for illegally-declared dividends. The court dismissed the suit because that state law cause of action is personal to the creditors. The court did suggest, at p. 472, that, if the trustee had proceeded under § 70(e) [now § 548], the result might have been different.
In In re Ipswich Bituminous Concrete Products, Inc., 79 B.R. 511 (Bankr.D.Mass. 1987), the court found that a stock redemption that took place while debtor corporation was insolvent was for less than reasonably equivalent value, and thus, was a fraudulent transfer under § 548.
2. Fair Consideration.
If § 24.03(a) otherwise literally applies to the dividends, then the only way that the dividend payments would not be fraudulent transfers would be if Defendant gave fair consideration for them. The only conceivable way that Defendant could have given consideration would be if the dividend payments themselves were some form of compensation to Defendant for his services. However, the dividend payments themselves were not compensation.
It is clear that one of the benefits of the Defendant's employment was the opportunity to purchase this stock. Defendant received his stock in exchange for a note to Debtor. The Debtor's plan was generally for dividends from the stock to go towards paying off this type note. The best way to describe this is as a "leveraged stock purchase".
It is undisputed that Defendant paid a fair consideration for his stock interests substantially out of his own funds.
The opportunity to participate in the stock purchase was a form of compensation. The term used for the stock plan was "golden handcuffs", i.e., to entice valuable employees of Debtor or its subsidiaries to remain with Debtor or its subsidiaries. Not only was the sale limited to certain key *113 employees, but the shareholder's agreement itself indicates that the purchase is based on employment. Article 2.01 of the agreement allows the debtor or its principals to repurchase the stock at the sale price (Art. 2.04) if the employment relationship ends. Article 3.01 restricts transfers of the stock. Article 4.01A provides, in addition to Art. 2.01, that if the purchaser enters into a "competing employment relationship" the debtor may repurchase the stock. These provisions illustrate how the purchase was in fact related to the defendant's employment.
The dividend payments were not connected to Defendant's services or performance. Even though the original stock purchase was related to Defendant's employment, i.e., the right to buy the stock and be a part of Debtor's future, the bottom line on the dividend payments is that Defendant was paid according to his stock ownership, and the amount of the dividends was based, not upon the value of his services, but upon the fictional profit of Debtor. Thus, the evidence does not show (unlike the deferred bonuses) that Debtor received fair consideration for the dividends paid while Debtor was insolvent.
3. Conclusion.
This is a difficult issue, and there is little authority on the precise issue raised. Perhaps reasons why this issue has so seldom arisen are (a) because, in most instances, it makes no sense for a director to declare dividends improperly and subject himself to liability; (b) the amounts of dividends in many instances may not be worth the pursuit; and (c) it may have been assumed that the TBCA provided the exclusive remedies against stockholders. Turnover actions can be harsh, and especially in this instance. Looking at the plain language of the fraudulent conveyance statute, it appears that a dividend payment made while the debtor corporation was insolvent is a fraudulent conveyance. Thus, it is held that the three dividend payments, on or after August 1, 1985, totalling $8,500.50 were fraudulent transfers by the debtor that the Trustee may recover.
The Kaiser Steel Corp., supra court, at p. 160, had occasion to discuss the problems with the wording of statutes:
The Supreme Court has previously had occasion to rule as to the proper reading to be given a statute in face of the charge that the literal meaning would be at odds with the spirit and purpose of the act. In the case of Crooks v. Harrelson, 282 U.S. 55, 51 S. Ct. 49, 75 L. Ed. 156 (1930), the Supreme Court stated:
Courts have sometimes exercised a high degree of ingenuity in the effort to find justification for wrenching from the words of a statute a meaning which literally they did not bear in order to escape consequences thought to be absurd or to entail great hardship. But an application of the principle [overriding the literal terms and plain meaning of a statute in order to avoid an absurdity so gross as to shock the general moral or common sense] so nearly approaches the boundary between the exercise of the judicial power and that of the legislative power as to call rather for great caution and circumspection in order to avoid usurpation of the latter [citation omitted]. It is not enough that hard and objectionable or absurd consequences, which probably were not within the contemplation of the framers, are produced by an act of legislation. Laws enacted with good intention, when put to the test, frequently, and to the surprise of the lawmaker himself, turn out to be mischievous, absurd, or otherwise objectionable. But in such case the remedy lies with the lawmaking authority and not with the courts [citations omitted]. 51 S.Ct. at 50-51. See also, Garcia v. United States, 469 U.S. 70, 105 S. Ct. 479, 83 L. Ed. 2d 472 (1984); Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 102 S. Ct. 3245, 73 L. Ed. 2d 973 (1982).
In the recent case of United States v. Nichols, 841 F.2d 1485 (10th Cir.1988), the Tenth Circuit Court of Appeals similarly ruled upon the reading to be given the plain language of a statute. As the Tenth Circuit stated:
*114 But the `fact that [a Law] has been applied in situations not expressly anticipated by Congress does not demonstrate ambiguity. It demonstrates breadth.' United States v. Nichols, 841 F.2d at 1493, citing Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 499, 105 S. Ct. 3275, 3287, 87 L. Ed. 2d 346 (1985).
This amended opinion amends and supercedes the prior memorandum opinion entered herein on July 18, 1990, which contained a mathematical error. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1644985/ | 994 So. 2d 319 (2008)
COSME
v.
STATE.
No. 5D08-2392.
District Court of Appeal of Florida, Fifth District.
November 10, 2008.
Decision without published opinion. Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1113094/ | 75 So. 2d 909 (1954)
Carrie Taylor WINN, Appellant,
v.
CITY OF COCOA, a Municipal Corporation, Appellee.
Supreme Court of Florida, Division A.
November 19, 1954.
Rehearing Denied December 13, 1954.
*910 Truett & Watkins, Tallahassee, for appellant.
Robert Godbey, Cocoa, for appellee.
MATHEWS, Justice.
In this case the husband of the defendant in the court below had himself for a client and also attempted to represent his wife. The primary question presented on appeal is the allowance of an attorney's fee, for the reasonable value of the services rendered by the attorney for the appellant in a condemnation suit, by the Cirsuit Judge after the verdict of the jury which awarded no attorney's fee.
The so-called transcript of record does not reveal what took place except by the unimpeached order of the Circuit Judge. The so-called transcript of record violates most of the rules of this Court and probably the appeal should be dismissed for that reason, but due to the fact that one of the defendants, attorney for appellant here, evidently a layman, is attempting to represent himself and his wife, we will exercise our discretion and decide the case from the record presented.
From the order of the Circuit Judge it appears that title to the property was in Carrie Taylor Winn and that on the 14th day of September, 1951, she employed one Robert Godbey as her attorney in the case. Godbey entered upon his duties as such attorney, prepared all necessary pleadings, made appearances before the Court on various hearings, secured many witnesses to be present at the trial to testify on behalf of his client, and performed all of the duties of an attorney, prior to his dismissal by his client immediately preceding the actual trial of the case. In the order allowing attorney's fee the Circuit Judge said:
"That on the 23rd day of October, 1953, the said Robert Godbey, having been dismissed by his client by telegram dated the 20th day of October, 1953, and containing the words, `We totally disown participation by you during trial October 26.' The said telegram being signed `Carrie B and T.D. Winn, Jr.', That Carrie B. Winn is the same person as Carrie Taylor Winn, Defendant in this case; the said Robert Godbey was by order of this Court, upon the said October 23, 1953, released as attorney of record for Carrie Taylor Winn, Defendant herein. And the terms of the same order declared a lien upon any recovery by the said Carrie Taylor Winn, for a reasonable attorneys fee for the services of the said Robert Godbey, *911 the amount thereof to be fixed by suitable proceedings at an appropriate time by this Court.
"That on October 26, 1953, at the beginning of the trial in this case, the said Robert Godbey was present in the Court room, prepared to resume his duties as attorney for the said Carrie Taylor Winn, should he be requested so to do. That though T.D. Winn, Jr., husband of the said Carrie Taylor Winn, was also present in the Court room at the beginning of the trial of this case, no request was made by any person for the said Robert Godbey to resume his duties as attorney for the said Carrie Taylor Winn, and the said Robert Godbey took no part in the actual trial of this case.
"That no attorney having appeared in behalf of the said Carrie Taylor Winn, the Court, of its own motion, called all the various witnesses who had been secured by the said Robert Godbey, to testify in behalf of the said Carrie Taylor Winn, and the said witnesses did testify in behalf of the said Carrie Taylor Winn.
"That upon an application for allowance of attorneys fees for the said Robert Godbey, heard by this Court on the 22nd day of December, 1953, and being present the said Carrie Taylor Winn, in person, and the said Robert Godbey; the Court did allow the said Robert Godbey a reasonable fee for his services as attorney for the said Carrie Taylor Winn and did give him, the said Robert Godbey, 10 days in which to submit a showing as to the amount of his services and as to what would be a reasonable fee therefore. And the said Robert Godbey having submitted to the Court a showing as to the amount of work done, of the time engaged, supported by statements from L.C. Crofton and J.J. Jackson, attorneys of long practice and good standing at the bar of this Court, that in their opinion, under all the circumstances herein, an allowance of three-fourths (3/4) of Ten percent (10%), or Seven and one-half percent (7 1/2%) of the amount recovered by the said Carrie Taylor Winn, Defendant, would be fair and reasonable. And no showing having yet been made by the said Carrie Taylor Winn as to her opinion of the value of the services of the said Robert Godbey, although she was allowed 10 days from the filing of the showing by the said Robert Godbey, to make any counter, or contrary showing she desired."
With reference to attorneys' fees, the appellant filed before the Circuit Judge a statement containing the following:
"As to Counsellor Robert Godbey, we readily and gladly admit that he has done a vast amount of professional labor in re this Common Law Case No. 3327 and that he should be bountifully compensated therefor; that is to say * * * compensated by The City of Cocoa, Florida. As for ourselves, we have not the slightest sensation of being under any statutory, moral or ethical duty to pay to Counsellor Robert Godbey even one penny for services rendered professionally by him in re Common Law Case 3327. As stated on previous occasions, we stand ready to co-operate with Counsellor Robert Godbey in a bona fide effort to collect his just fees from the City of Cocoa, Florida, but on the other hand, we propose to resist to the very limit of our ability any effort by any one to foist any such fees in the premises upon us."
It appears from the record that when the regularly employed attorney was discharged, he immediately called the matter to the attention of the trial judge and asked for leave to withdraw from the case. His request was granted and at that time the trial judge made an order allowing to the attorney a lien for the reasonable value of his services and a lien upon the amount of recovery, should recovery be had. The jury returned a verdict as to the value of the land but it did not contain any award of attorney's fees because and so far as this *912 record shows, the appellant had made no request for attorney's fees.
The provisions of the law with reference to attorneys' fees is for the benefit of the landowner, and F.S. § 73.11, F.S.A. provides that the verdict of the jury should state the compensation to be made for the land "including a reasonable attorney's fee for the defendant's attorney". F.S. § 73.16, F.S.A. provides that all costs shall be paid by the petitioner, including a reasonable attorney's fee to be assessed by the jury. The attorney's fee therein provided for is for the benefit of the landowner. The landowner employs the attorney and it is the policy of the law to provide that the petitioner should pay a reasonable attorney's fee to the landowner for an expense incurred by him in defending his rights. This right of the landowner to an attorney's fee may be waived by the landowner. In this case the record fails to disclose any effort whatsoever by the landowner to secure a reasonable attorney's fee for the services of her attorney.
The landowner had a perfect right to discharge the attorney but at the time of such discharge was obligated to the attorney for a reasonable fee for the services rendered up to the time of such discharge, and as the services rendered were in connection with the recovery, it was proper for the Circuit Judge to protect the attorney by impressing upon the fund a lien for the reasonable value of the services rendered. At the time of subsequent proceedings fixing the value of the attorney's fee, the fund was in the registry of the Court and subject to its lawful control and disposition.
This case is not like the cases of Jacksonville Terminal Co. v. Blanshard, 77 Fla. 855, 82 So. 300; Id., 85 Fla. 500, 96 So. 286; and De Soto County v. Highsmith, Fla., 60 So. 2d 915. In those cases the petitioners dismissed the actions before verdicts and judgments. In each case this Court held that the petitioner was liable and could not escape liability by dismissing the proceedings before verdict and final judgment.
In this case the landowner was liable to the attorney and could have protected herself by claiming attorney's fees as provided for by the statute. Having failed to request attorney's fees or to offer any evidence as to the value of such attorney's fees, the landowner cannot now relieve herself from liability to the attorney of her choice for the services rendered by him in the case until the time of his discharge by said landowner.
In Randall v. Archer, 5 Fla. 438, this Court held that an attorney who conducts a suit has a lien for his fees from the fund recovered as long as it remains in the custody or control of the Court.
The Federal Court has applied the Florida rule with reference to services rendered in Florida. See the case of Chancey v. Bauer, 5 Cir., 97 F.2d 293.
The record discloses: that the appellant had due and timely notice of the proceedings after judgment and was actually present (through her husband) in Court at the time the Court determined what was a reasonable fee and the appellant agreed that the amount of the fee was reasonable; that the attorney, Robert Godbey, had a lien upon the money recovered; and that the money recovered was still in the registry of the Court. No error has been made to appear in the proceedings whereby the Circuit Judge determined the amount of the lien and the payment from the fund in the registry of the Court.
The right of the appellant to proceed against the City of Cocoa, or the liability of the City of Cocoa to the appellant is not presented and is not passed upon.
No reversible error has been made to appear and the judgment appealed from should be, and the same is hereby,
Affirmed.
ROBERTS, C.J., and TERRELL and SEBRING, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1368593/ | 30 S.W.3d 558 (2000)
Alfred GUTIERREZ and Linda Gutierrez, Appellants,
v.
Juanita A. RODRIGUEZ, Elizabeth G. Camarillo, et al., Appellees.
No. 06-99-00141-CV.
Court of Appeals of Texas, Texarkana.
Submitted July 10, 2000.
Decided September 29, 2000.
*559 William B. Connolly, Kara L. Croom, William B. Connolly & Associates, Houston, Paul P. Reginer, Jr., Houston, for appellants.
Gibbs Spiller, Spiller & Spiller, Houston, for appellee.
Before CORNELIUS, C.J., GRANT and ROSS, JJ.
OPINION
Opinion by Justice GRANT.
Juanita Rodriguez, representing the eight children of Cecilio Gutierrez, filed a suit against Alfred Gutierrez, one of the eight siblings, and his ex-wife, Linda Vargas, seeking a judgment that the eight siblings owned a piece of property in fee simple and that Gutierrez and Vargas did not own the property.[1] The trial court granted judgment in favor of Rodriguez, from which the Gutierrezes appeal.
On appeal, the Gutierrezes contend
1. that the trial court misapplied the law and abused its discretion in determining that the property belongs in fee simple to all eight siblings,
2. that the evidence was legally insufficient to support the judgment, and
3. that the evidence was factually insufficient to support the judgment.
The Last Will and Testament of Cecilio Gutierrez was admitted to probate on July 3, 1990.
The Will devised a certain piece of real property as follows:
if my wife should predecease me, or if she should not survive until six months after my death or until this Will is probated, whichever occurs earlier, then in any of those events, I give, devise and *560 bequeath all of my real property located at 2220 Hardy, Houston, Texas to my son, ALFRED GUTIERREZ and my daughter-in-law, LINDA GUTIERREZ, if my son, ALFRED GUTIERREZ, and my daughter-in-law, LINDA GUTIERREZ, should divorce, then in that event, I give, devise and bequeath all of my real property located at 2220 Hardy, Houston, Texas to ALL MY CHILDREN to share and share alike per stirpes.
Cecilio Gutierrez's wife predeceased him. After Cecilio's death, the other seven children signed special warranty deeds conveying their interests in the Hardy property to the Gutierrezes. At the time of Cecilio's death, Alfred and Linda Gutierrez were married. Alfred and Linda Gutierrez divorced on August 29, 1997. The other seven children of Cecilio then filed suit to have the special warranty deeds declared null and void due to the occurrence of a condition subsequent and to have the eight siblings declared the owners of the Hardy property.
Misapplication of Law
When a trial court determines legal principles, the trial court has no discretion to determine the law or to apply the law to the facts incorrectly. Methodist Home v. Marshall, 830 S.W.2d 220, 223 (Tex.App.-Dallas 1992, no writ). A trial court's determination of legal principles which control its ruling are reviewed by the appellate court with little deference. Id. A clear failure by the trial court to analyze or apply the law correctly will constitute an abuse of discretion. Walker v. Packer, 827 S.W.2d 833, 840 (Tex.1992).
The Gutierrezes specifically challenge the trial court's conclusion of law # 3: "The property belongs in undivided fee simple interest to [the eight children of Cecilio Gutierrez]." Their contention is based on the trial court's determination that the phrase in Cecilio's Will devised the property in fee simple subject to a condition subsequent and that, when the Gutierrezes divorced, the fee was defeated and the eight children had a right to reenter the property, which they exercised.
When a grantor grants or devises a fee simple subject to a condition subsequent, the grantor retains the right of reentry and the right to terminate the grantor's estate if the condition occurs. Deviney v. NationsBank, 993 S.W.2d 443, 448 (Tex.App.-Waco 1999, pet. denied). In the present case, the grantor did not retain in himself the right of reentry and the right to terminate the fee if the condition occurred. Cecilio devised these rights in his Will to all eight of his children. Therefore, the Will devised a defeasible fee subject to executory limitation. Deviney, 993 S.W.2d at 451. The difference between a fee simple subject to a condition subsequent and a fee simple subject to executory limitation is what party has the right to reentry and to termination. In a fee simple subject to a condition subsequent, the grantor retains these rights. In a fee simple defeasible subject to executory limitation, the grantor gives these rights to a third party.
Also, when there is a fee simple subject to a condition subsequent and the condition occurs, the termination of the fee is not automatic; the grantor must exercise that right. Id. When there is a fee simple subject to executory limitation, the termination of the estate on the occurrence of the conditional event is automatic. Id.
When Alfred and Linda Gutierrez divorced, the condition set forth in the Will's devise of the Hardy property occurred. The right to reentry and termination of the fee simple would normally be automatic. However, the Gutierrezes pleaded the affirmative defense of estoppel by deed.
Estoppel by deed and the doctrine of after-acquired title are closely interrelated, and the terms are often used interchangeably. Black's Law Dictionary suggests that title which is acquired by the grantor who has previously attempted to convey *561 the title to the land which he did not own inures automatically to the benefit of the grantees. Black's Law Dictionary 61 (7th ed.1999). Black's Law Dictionary in defining estoppel by deed states that it prevents a grantor who does not have title at the time of the conveyance, but later acquires title, from denying that he or she had the title at the time of the transfer. Black's Law Dictionary 571 (7th ed.1999). The Texas Supreme Court has stated the doctrine of after-acquired title as,
It is a general rule, supported by many authorities, that a deed purporting to convey a fee simple or a lesser definite estate in land and containing covenants of general warranty of title or of ownership will operate to estop the grantor from asserting an after-acquired title or interest in the land, or against the estate which the deed purports to convey, as against the grantee and those claiming under him.
Duhig v. Peavy-Moore Lumber Co., 135 Tex. 503, 144 S.W.2d 878, 880 (1940). It is difficult to ascertain a difference, if any, in these two concepts; they occur under the same situation and the results are the same.
At trial the Gutierrezes entered into evidence six documents, each entitled "Special Warranty Deed."[2] Each of these documents states that the grantor has "granted, sold, and conveyed" to the Gutierrezes the Hardy property. All of the deeds are signed, notarized, and contain a file stamp from the Harris County clerk stating that they were filed. The Gutierrezes contend that these deeds divested the remaining seven children of all interest in the Hardy property.
The Texas Supreme Court has stated that "when a person competent to act has solemnly made a deed conveying not merely his interest had at the time, but a fee-simple estate, he shall not be allowed to gainsay it, to the injury of those whom he has misled thereby." Lindsay v. Freeman, 83 Tex. 259, 18 S.W. 727, 729 (1892). Texas courts have also held that the after-acquired title doctrine and estoppel by deed apply not only to general warranty deeds, but also to special warranty deeds, such as in the present case. Blanton v. Bruce, 688 S.W.2d 908, 912 (Tex.App.-Eastland 1985, writ ref'd. n.r.e.), citing Am. Republics Corp. v. Houston Oil Co. of Texas, 173 F.2d 728 (5th Cir.1949). "For, as we have seen, where the grant is based on an affirmation of ownership and is a conveyance of title as opposed to a chance of title, there is an effectual estoppel at once raised to assert title in diminution of the grant whether the covenant of warranty is general or special, or, indeed there is no covenant of warranty at all." Id.
The trial court in its findings of fact acknowledged that the deeds exist and stated, "In September 1990, Mr. Gutierrez' children, excluding Alfred, and Elizabeth and Juanita in their individual capacities and as Co-Independent Executors, signed documents which purported to be Special Warranty Deeds in which they `granted, sold and conveyed [the Hardy property]' to Alfred Gutierrez and Linda Gutierrez. The deeds were duly recorded."
Rodriguez interprets the trial court's language as determining that the deeds are not valid. We decline to follow this interpretation. The deeds, on their faces, are valid. The deeds are all signed, notarized, and file-stamped by the county clerk. The appellees never claimed that the deeds are invalid, only that they are null and void due to the condition subsequent.
The parties in this case spend much time arguing if the deeds are valid and whose burden it was to prove their validity. First, Rodriguez never challenged *562 the validity of the deeds at the trial court level. Their petition never contested the validity of the deeds; it only requested that the deeds be declared null and void due to the occurrence of a condition subsequent. Rodriguez presented no evidence that there was any basis for the deeds to be considered invalid. Consequently, the issue of the validity of the deeds was never before the trial court and cannot be argued on appeal for the first time. Second, the deeds were entered into evidence without objection by Rodriguez. In fact, when her attorney was tendering his exhibits to the trial court, he commented that an additional exhibit was the deeds which the opposing counsel had in his possession. After the Gutierrezes' attorney offered the deeds into evidence, the trial court stated, "These are all agreed by both sides?" To which Rodriguez's counsel replied, "Yes." Third, Rodriguez contends on appeal that the Gutierrezes never proved up the documents; for example, that neither of the Gutierrezes identified the signatures on the deeds as that of each of the signors. The Gutierrezes did not need to do so. Tex.R. Civ. P. 93(7) requires that a party denying the execution of a document must file a verified pleading of their contentions. Absent such a verified pleading, the document is received into evidence as fully proved. Boyd v. Diversified Fin. Sys., 1 S.W.3d 888, 891 (Tex.App.-Dallas 1999, no pet.).
The deeds were facially valid, the validity of the deeds was never contested, and the deeds were entered into evidence without objection. The deeds divest the seven siblings of their contingent future interest in the Hardy property, and without a challenge to the validity of those deeds, there is no legal basis for the trial court to determine that the deeds were not valid.
The seven siblings signed deeds granting each of their interests in the Hardy property to the Gutierrezes, when in fact the seven siblings only had a future possibility of an interest in the property. While the condition occurred later that would have given the seven siblings an interest in the property, the siblings are estopped now from claiming the property and from denying the validity of the deeds divesting them of their future interests in the land.
A trial court has no discretion to misapply the law. Here, the doctrine of estoppel by deed estops the seven siblings from asserting any right to the Hardy property. The trial court correctly held that the condition subsequent set forth in Cecilio Gutierrez's Will had occurred, but the trial court failed to apply the estoppel by deed doctrine to the deeds signed by the seven siblings.
We sustain appellants' first point of error.
Because the holding on appellants' first point of error is dispositive of the case, we will not address the remaining two points of error.
The trial court order determining that the Hardy property is owned by all eight siblings is reversed, and judgment is rendered for the Gutierrezes.
NOTES
[1] The eight siblings will be referred to as Rodriguez or the siblings. Linda Vargas is also referred to as Linda Gutierrez in different pleadings. For simplicity's sake, we shall refer to her and Alfred as the Gutierrezes.
[2] Elizabeth Camarrillo and Juanita Rodriguez were co-executors of their father's estate. The deed purporting to devise their interest in the Hardy property includes both of their names in both their individual capacities and as co-executors. This is why there are seven children signing deeds, but only six deeds. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1947168/ | 923 F.Supp. 914 (1995)
HERTZ CORPORATION and Reliance Insurance Company, Plaintiffs,
v.
Beatriz PAP, Santa Rivera, Sabino Salazar, Manuel Garcia Velazquez, Braulia Hernandez Velazquez, and Esperanza Flores Morales, as Representative of the Estate of Jose Medina, Deceased, Defendants.
Civil Action No. 4:93-CV-518-Y.
United States District Court, N.D. Texas.
December 14, 1995.
*915 *916 Alexander Nelson Beard, E. Thomas Bishop, Law Office of E. Thomas Bishop, Dallas, Texas, for Plaintiffs.
Robert Lynn Fielder, Fisk & Fielder, Dallas, Texas, for Defendants.
OPINION AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT
MEANS, District Judge.
Pending before the Court is the Motion for Summary Judgment filed November 15, 1993 by plaintiffs The Hertz Corporation ("Hertz") and Reliance Insurance Company ("Reliance"). Also pending before the Court is a Motion for Summary Judgment filed by defendants Santa Rivera, Sabino Salazar, Manuel Garcia Velazquez, Braulia Hernandez Velazquez, and Esperanza Flores Morales, individually and as the representative of the estate of Jose Medina, deceased ("the Rivera Defendants") on July 19, 1994. The Court also has before it responses to Hertz's Motion for Summary Judgment from both the Rivera Defendants and from defendant Beatriz Pap ("Pap"). Having carefully considered the motions, responses, replies, and the applicable law, the Court finds that Plaintiffs' Motion for Summary Judgment should be GRANTED and the Rivera Defendants' Motion for Summary Judgment should be DENIED.
I. Background Facts
On November 2, 1992, Pap rented a car from Hertz at the Dallas/Fort Worth International Airport, pursuant to a rental agreement ("the Rental Agreement"). The Rental Agreement provided liability coverage to Pap. Pap also contracted for the liability insurance supplement, for which she paid an extra daily charge, pursuant to an excess third party liability policy ("the LIS Policy") issued to Hertz by Reliance. Both Policies contain the same relevant exclusions to coverage.
In the pre-dawn hours of November 4, 1992, a Walker County Sheriff's Department deputy was dispatched to assist a motorist near I-45 in Walker County, Texas. When the sheriff's deputy approached the car, which was parked on the side of the road, he found Pap standing alone outside the Hertz vehicle, apparently very distressed. The deputy returned to his patrol car to retrieve his notepad and Pap got into her vehicle and sped off. The deputy pursued her in his car with the emergency lights on. Pap continued at speeds in excess of 90 miles per hour (the speed limit on that portion of I-45 was 65 miles per hour) and she did not have her headlights or parking lights on.
The chase continued to the Madison County line where the pursuit was taken over by Madison County Sheriff's deputies and Madisonville police officers, also with their emergency lights flashing. Pap, still traveling at speeds in excess of 90 miles per hour and with her lights off, crossed the center median of the interstate and began travelling north in the southbound lane. After crossing into Leon County, and still pursued by police, Pap collided with a southbound vehicle occupied by the Rivera Defendants. As a result of the collision, the Rivera Defendants sustained injuries, and one occupant of the vehicle, Jose Medina, was killed. Pap was charged with involuntary manslaughter in the death of Jose Medina.
Pap apparently has a history of mental problems and was experiencing such problems at the time of the accident. However, summary judgment evidence on Pap's mental state at the time of the accident has not been presented to the Court by either side.
The Rivera Defendants filed suit in state court against Pap. That action was removed to the Federal District Court for the Southern District of Texas ("the Underlying Suit"). Hertz and Reliance agreed to provide a defense to Pap, but they reserved their rights to contest coverage under the Rental Agreement *917 and the LIS Policy. They arranged for a Houston attorney, independent from Hertz's and Reliance's present counsel, to represent Pap. This attorney answered for Pap. Hertz and Reliance filed this action seeking a declaratory judgment that they are not obligated to compensate the Rivera Defendants for the injuries caused by Pap.
In her answer to this suit, Pap rejected the conditional Hertz and Reliance defense (apparently accepting a defense from her personal insurance carrier, Hanover Insurance Company ("Hanover")), and demanded an unconditional defense from them. Hertz and Reliance sent another reservation of rights letter to Pap and her new attorney, continuing to offer to provide Pap with a defense until she notifies Hertz and Reliance in writing that she is rejecting that defense.
Motions for summary judgment were filed in this case by Plaintiffs and by the Rivera Defendants.
II. The Policies
A. The Hertz Rental Agreement
The Rental Agreement between Hertz and Pap provided liability coverage for all authorized operators of the car. Pap was such an authorized operator. In the Rental Agreement, Hertz agreed to:
Indemnify, hold harmless, and defend [Pap] and any Authorized Operators FROM AND AGAINST LIABILITY FROM THIRD PARTIES ... IF THE ACCIDENT RESULTS FROM THE USE OF THE CAR AS PERMITTED BY THIS AGREEMENT.
(Plaintiffs' Motion for Summary Judgment, Exhibit "A") (emphasis in original). The agreement also provides, set off in an outlined section in all capital letters, the prohibited uses of the car. This section provides, in pertinent part:
PROHIBITED USES OF THE CAR.
ANY USE OF THE CAR AS PROHIBITED BELOW WILL BREACH THIS AGREEMENT, WILL VOID ANY LIMITATION OF YOUR RESPONSIBILITY UNDER PARAGRAPH IV, AND WILL MAKE YOU FULLY RESPONSIBLE FOR HERTZ' ACTUAL AND CONSEQUENTIAL DAMAGES, COSTS, AND ATTORNEY'S FEES RESULTING FROM THAT BREACH. TO THE EXTENT PERMITTED BY LAW, LDW, PAI, AND PEC, LIS AND ALL LIABILITY PROTECTION UNDER THIS AGREEMENT WILL ALSO BE VOID. UNDER THIS AGREEMENT YOU AND/OR ANY AUTHORIZED OPERATOR MAY NOT:
(d) ENGAGE IN ANY WILLFUL OR WANTON MISCONDUCT, WHICH AMONG OTHER THINGS, MAY INCLUDE RECKLESS CONDUCT SUCH AS: THE FAILURE TO USE SEATBELTS, USE WHEN OVER LOADED, CARRYING PERSONS OR PROPERTY FOR HIRE OR OFF-ROAD OR ON UNPAVED ROADS THAT ARE NOT REGULARLY MAINTAINED ...;
(e) USE OR PERMIT THE USE OF THE CAR BY ANYONE:
(2) FOR ANY PURPOSE THAT COULD PROPERLY BE CHARGED AS A CRIME, SUCH AS ILLEGAL TRANSPORTATION OF PERSONS, DRUGS OR CONTRABAND....
Id. (emphasis in original).
B. The LIS Policy
Pap was offered a liability insurance supplement under the Rental Agreement. The LIS Policy was issued to Hertz by Reliance. For an extra daily charge, Pap accepted the additional coverage under the LIS Policy. The LIS Policy incorporates the exclusions of the Rental Agreement in addition to other exclusions not pertinent to these motions for summary judgment. The Rental Agreement also states that the LIS Policy is "subject to all provisions, limitations and exceptions of the ... [Rental] Agreement." (Plaintiffs' Motion for Summary Judgment, Exhibit "A").
III. Summary Judgment Standard
Summary judgment is proper when the record establishes that no genuine issue as to any material fact exists, and the moving party is entitled to judgment as a matter of law. *918 Fed.R.Civ.P. 56(c); Hill v. London, Stetelman, & Kirkwood, Inc., 906 F.2d 204, 207 (5th Cir.1990). To determine whether an issue of material fact exists, the Court must first consult the applicable substantive law to ascertain what fact issues are material to the disposition of the case. Lavespere v. Niagara Mach. & Tool Works, 910 F.2d 167, 178 (5th Cir.1990), cert. denied, ___ U.S. ___, 114 S.Ct. 171, 126 L.Ed.2d 131 (1993). The Court must then review the evidence presented, viewing the facts and inferences drawn from those facts in the light most favorable to the nonmoving party. Newell v. Oxford Management Inc., 912 F.2d 793, 795 (5th Cir.1990); Medlin v. Palmer, 874 F.2d 1085, 1089 (5th Cir.1989). However, the Court's function is not to weigh the evidence and determine the truth of the matter, but to determine whether there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). Where the movant bears the burden of proof on a claim or defense, he must establish all elements of the claim or defense to prevail on summary judgment. Western Fire Ins. Co. v. Copeland, 651 F.Supp. 1051, 1053 (S.D.Miss.1987), aff'd, 824 F.2d 970 (5th Cir.1987).
When the moving party has carried its summary judgment burden, the respondent "must do more than simply show there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538 (1986). The respondent must produce evidence, not merely argument, in response to a movant's properly supported motion for summary judgment. See Foval v. First Nat'l. Bank of Commerce, 841 F.2d 126, 129 (5th Cir.1988); Martin v. John W. Stone Oil Distrib., Inc., 819 F.2d 547, 549 (5th Cir.1987).
IV. Analysis
A. Waiver and Estoppel
Pap and the Rivera Defendants both claim that Plaintiffs have either waived their right to or are estopped from asserting exclusions to coverage because of their defense of Pap in the Underlying Suit. Hertz and Reliance advised Pap of their intent to reserve their rights to contest coverage by letter dated December 8, 1992. After the Underlying Suit was filed, Hertz and Reliance sent another letter, dated May 20, 1993, again advising Pap that they intended to reserve their rights but would provide her with a defense. In her answer to the instant suit, Pap, through another attorney, purported to reject a conditional defense from Hertz and Reliance, and demanded an unconditional defense. Hertz and Reliance sent Pap a third letter on December 3, 1993 again setting out their position regarding their objections to coverage and offering to provide Pap with a defense by an independent defense counsel.
Pap and the Rivera Defendants claim that the actions of Hertz and Reliance in tendering Pap a defense without securing a nonwaiver agreement amounts to waiver or estoppel. In support of this argument, Pap and the Rivera Defendants rely on Pacific Indemnity Co. v. Acel Delivery Serv., Inc., 485 F.2d 1169, 1173 (5th Cir.1973) (holding that, under Texas law, the doctrines of waiver and estoppel may not create coverage where none existed under the policy, but that an exception to this rule exists when (1) an insurance company assumes the insured's defense without obtaining a nonwaiver agreement; (2) with knowledge of the facts indicating noncoverage; and (3) the insured is harmed or prejudiced)). Pacific Indemnity is factually distinguishable from the instant case because there, the insured was prejudiced by the insurance company's opportunity to manipulate the insured's defense for its own benefit. Id. at 1173-74. Thus, the holding of Pacific Indemnity is inapplicable to the instant case.
For the exception in Pacific Indemnity to apply, there must be a finding of actual prejudice or harm to the insured. Id. at 1173. See also Pennsylvania Nat'l Mut. Cas. Ins. Co. v. Kitty Hawk Airways, Inc., 964 F.2d 478, 481 (5th Cir.1992). Prejudice to the insured arises out of the inherent conflict of interest that occurs when the insurance company pays for the insured's defense while simultaneously contesting coverage. The Court finds that there was no such prejudice to Pap in the instant case, since *919 Hertz and Reliance provided Pap with separate and independent counsel. In addition, the Court finds that neither Pap nor the Rivera Defendants have submitted any summary judgment evidence showing that Pap was harmed or prejudiced by the defense provided by Hertz and Reliance. See Kitty Hawk Airways, 964 F.2d at 482 (holding that "unless the insured suffers a `clear and unmistakable' harm from its insurer's defense, `the insured must show how he was harmed'").[1] There is also no evidence that the counsel provided to Pap by Hertz and Reliance had any conflict of interest or was controlled or manipulated by Hertz and Reliance. There has been no showing of actual harm or prejudice to Pap. Hence the general rule applies that waiver and estoppel cannot create coverage where none exists; the Pacific Indemnity exception does not.[2]
The Court finds that Hertz and Reliance properly reserved their rights to challenge coverage of the Pap accident based on exclusions in the Rental Agreement and LIS Policy.[3] The Court also finds that there is no material question of fact as to the issues of waiver and estoppel and, therefore, the Court holds that Hertz and Reliance have not waived their right to and are not estopped from raising defenses to coverage based on policy exclusions.
B. The Exclusions to Coverage
The Court finds that the facts surrounding the actions of Pap at the time of the accident are not in dispute. The remaining issue is whether those actions exclude coverage under the Rental Agreement and the LIS Policy.[4] The interpretation of contracts and insurance policies is a question of law, and, therefore, summary judgment is appropriate to the determination of the applicability of the exclusions to the undisputed facts.
As a preliminary matter, the defendants contend that the exclusions are ambiguous and should, therefore, be construed by the Court to afford coverage in this case. The Court finds that they are not ambiguous.
*920 Both exclusions set out the prohibited uses and then list examples of those uses. The reckless conduct exclusion prohibits willful, wanton, and reckless misconduct and includes as examples of this type of misconduct: failure to use seatbelts, use when overloaded, use on unpaved roads, and others. The Court finds that the use of the introductory words "such as" indicate that this is clearly not an exhaustive list, but is merely a list of clarifying examples. The criminal use exclusion, likewise includes a nonexhaustive list of examples of conduct which could properly be charged a crime. The Court finds that the use of these examples does not make the exclusions ambiguous. The terms used in the exclusions are clear and unambiguous, and, therefore, must be given their "plain, ordinary, and generally accepted meaning." Ramsay v. Maryland Am. Gen. Ins. Co., 533 S.W.2d 344, 346 (Tex.1976).
Defendants argue that the exclusions require intent on the part of the renter/insured in order to apply. This is clearly not the case. The reckless conduct exclusion prohibits "willful or wanton misconduct, which among other things, may include reckless conduct." There is no requirement that the renter have any intent, since recklessness is expressly included in the language of the exclusion. The criminal use exclusion only requires intent if the particular crime in question requires intent; the exclusion itself does not require a separate showing of intent. The Court finds that no showing of intent on the part of Pap is required for the exclusions to apply to her conduct.
Based upon the undisputed facts set out by the Court in Section I of this opinion, the Court finds as a matter of law that Pap's conduct in fleeing from police and driving at high speed at night without headlights or parking lights, and then proceeding to travel the wrong way on an interstate highway constituted reckless conduct within the meaning of the reckless conduct exclusion.[5]
Also based upon the undisputed facts set out in Section I of this opinion, the Court finds as a matter of law that Pap's conduct in fleeing from police constituted conduct that could properly be charged a crime within the meaning of the criminal use exclusion. Plaintiffs have produced summary judgment evidence, in the form of affidavits from two of the sheriff's deputies who participated in the chase of Pap, showing that Pap's conduct at that time could properly be charged a crime.[6] Both deputies stated that Pap was attempting to evade arrest and was fleeing or attempting to elude a police officer. Both deputies also stated that had the chase not ended in an accident, and with Pap's arrest on the charge of involuntary manslaughter, they would have arrested her for one or both of these crimes. Defendants have failed to produce any summary judgment evidence to rebut the affidavits of the deputies. The Court, therefore, finds that there is no genuine issue of material fact as to whether Pap's conduct could properly be charged as a crime within the meaning of the criminal use exclusion.
C. Texas Insurance Law
The Rivera Defendants make several arguments in support of their motion for summary judgment and in opposition to Plaintiffs' motion for summary judgment based on Texas insurance law, including the Texas Insurance Code and the Texas Safety Responsibility Act ("the Act"). Tex.Rev.Civ.Stat. Ann. art. 6701h. The Court will address each of these arguments separately.
1. Absolute Liability Under the Act
The Rivera Defendants assert that Hertz's and Reliance's liabilities to them were absolute under §§ 18 and 21 of the Act. However, the Court finds that the Rivera Defendants have misinterpreted the provisions of the Act as they relate to both Hertz and Reliance.
*921 The Court finds that Hertz is a qualified self-insured under § 34 of the Act.[7] As a qualified self-insured, Hertz is exempt from the general requirement of the Act which is the requirement of automobile liability insurance. The Act at § 1A(b). The Rivera Defendants contend that Hertz and Reliance are absolutely liable on the Rental Agreement and the LIS Policy for the injuries to the Rivera Defendants pursuant to §§ 18 and 21 of the Act. The Court, however, finds that Hertz and Reliance are not subject to §§ 18 and 21 of the Act.
The Rivera Defendants contend that pursuant to § 18 of the Act, Hertz and Reliance are obligated to pay the same judgments as an insurer would have to pay under an "owner's motor vehicle liability policy." The Court disagrees. Section 18 only applies when "proof of financial responsibility" is required by the Act, and only concerns proof of future financial responsibility. This section applies when a motorist fails to satisfy a prior judgment. When that occurs, the motorist is then required to supply proof of financial responsibility pursuant to § 18 in order to regain his motor vehicle operator privileges. There is no summary judgment evidence that the Hertz Rental Agreement or the LIS Policy were obtained as proof of future financial responsibility, and Defendants do not argue that they were obtained as proof of financial responsibility. There is, therefore, no evidence that the Rental Agreement or the LIS Policy fall under the requirements of § 18 and the Court holds as a matter of law that § 18 of the Act does not apply to the Rental Agreement or to the LIS Policy. National County Mut. Fire Ins. Co. v. Johnson, 879 S.W.2d 1, 2 n. 3 (Tex.1993).
The Rivera Defendants also claim that Hertz and Reliance are absolutely liable pursuant to § 21 of the Act. While § 21 does provide for absolute liability of insurance companies in certain situations, it does not apply to Hertz. For an insurance policy to fall under the requirements of § 21 it must be certified pursuant to § 19 or § 20 as proof of financial responsibility. The Rivera Defendants have provided no summary judgment evidence that the Rental Agreement or the LIS Policy are certified pursuant to § 19 or § 20 as proof of financial responsibility and Defendants have not argued that the Rental Agreement or the LIS Policy were certified. Absent § 19 or § 20 certification, the absolute liability provisions of § 21(b) and (f) are not applicable to the policy in question. Employers Cas. Co. v. Mireles, 520 S.W.2d 516, 518-19 (Tex.Civ.App. San Antonio, 1975 writ ref'd n.r.e.); Western Alliance Ins. Co. v. Albarez, 380 S.W.2d 710, 714-15 (Tex.Civ.App. Austin 1964, writ ref'd n.r.e.). The Court concludes that as a matter of law the Rental Agreement and the LIS Policy are not certified pursuant to § 19 or § 20, and, therefore, § 21 of the Act does not apply to the Hertz Rental Agreement or to the Reliance LIS Policy.
The Court also finds that none of the provisions of the Act apply to the LIS Policy issued by Reliance for another reason. The LIS Policy is an excess third party liability policy and Reliance is an excess insurer. Pap already had the statutory minimum level of insurance through her personal insurance carrier, Hanover, and/or through the Hertz coverage. "The primary purpose of the Act is the regulation of owners and operators of motor vehicles for the protection of the public, not the regulation of insurance companies." Albarez, 380 S.W.2d at 715. The Act established statutory minimum levels of insurance and its requirements do not apply to insurance that is in excess of those minimums. See National County Mut. Fire Ins. Co. v. Johnson, 879 S.W.2d 1, 5 (Tex.1993) (Cornyn, J. concurring in part and dissenting in part). The Court holds as a matter of law, that the provisions of the Act do not apply to the LIS Policy because it is an excess insurance policy.
2. The Validity of the Exclusions to Coverage
The Rivera Defendants and Pap claim that the two exclusions to coverage relied on by Hertz and Reliance are unlawful *922 and invalid. They contend that because the exclusions are not approved by the appropriate state regulatory agencies or in any state insurance law, they are illegal under Texas law.
As a preliminary matter, the Court has already found as a matter of law that §§ 18 and 21 of the Texas Safety Responsibility Act are inapplicable to the Rental Agreement and the LIS Policy.[8] However, the Rivera Defendants and Pap argue that the Rental Agreement and the LIS Policy are subject to the Texas Insurance Code and the Act and that the claimed exclusions are invalid under the general automobile insurance scheme of these laws.
The Rivera Defendants contend that Article 5.06(2) renders "void and of no effect" any exclusions in insurance policies that are not approved by the State Board of Insurance ("the Board"). Rivera Defendants' Motion for Summary Judgment at 7. The Rivera Defendants apparently have badly misread this provision, which states:
(2) Except as provided by Subsections (3) and (4) of this article, an insurer may only use a form adopted by the Board under this section in writing motor vehicle insurance delivered, issued for delivery, or renewed in this State. A contract or agreement not written into the application and policy is void and of no effect and in violation of the provisions of this subchapter, and is sufficient cause for revocation of license of such insurer to write automobile insurance within this State.
Tex.Ins.Code art. 5.06(2) (Vernon Supp.1993) (emphasis added).[9] Only contracts or agreements which are not written in the application and policy are "void and of no effect." DiFrancesco v. Houston Gen. Ins. Co., 858 S.W.2d 595, 598 (Tex.App. Texarkana 1993, no writ).
The issue still remains as to whether the exclusions relied on by Hertz and Reliance are valid under Texas law and the general mandatory automobile insurance scheme. Defendants claim that the exclusions are invalid because the policy forms were not approved by the Board and because they violate the general scheme of Texas motor vehicle insurance law and public policy. The Court finds that the criminal use and reckless conduct exclusions in the Rental Agreement and LIS Policy are valid under and consistent with Texas law and public policy.
Article 5.06(2) of the Texas Insurance Code provides that insurers may only use forms approved by the Board in writing insurance in Texas. Plaintiffs do not contest the allegation that the Rental Agreement and LIS Policy forms were not approved by the Board. Defendants contend that this lack of approval violates the Texas Insurance Code. Defendants' argument, however, is a double-edged sword. Either the failure to get Board approval is irrelevant to the enforceability of the policies, in which case the exclusions will apply, or it renders the policies void, in which case there was never any coverage. The insured cannot choose to void only that language in the policy which does not favor her and retain the remainder of the policy, including the payment provisions. The Court finds that the policies are not void in their entirety for lack of Board approval, since that would preclude coverage altogether. See Travelers Ins. Co. v. Chicago Bridge & Iron Co., 442 S.W.2d 888, 894 (Tex.Civ. App. Houston [1st Dist.] 1969, writ ref'd n.r.e.).
The Court, therefore, holds that the failure to get Board approval for the Rental Agreement[10] and the LIS Policy does not, by itself, *923 render the exclusions invalid. See McLaren v. Imperial Casualty and Indem. Co., 767 F.Supp. 1364, 1376-77 (N.D.Tex.1991), aff'd, 968 F.2d 17 (5th Cir.1992), cert. denied, 507 U.S. 915, 113 S.Ct. 1269, 122 L.Ed.2d 665 (1993).
The Texas Safety Responsibility Act provides that all operators of motor vehicles in Texas must carry liability insurance, or some equivalent like a self-insurance certificate. Defendants argue that the mandatory scheme of motor vehicle insurance and the surrounding public policy renders the criminal use and reckless conduct exclusions invalid.
The Court begins with the premise that parties are free to contract as they wish. The Court holds that, strictly as a matter of contract law, the exclusions in the Rental Agreement and the LIS Policy are perfectly valid contract clauses. Pap signed the contract and presumably read and understood the clear and unmistakable language of the exclusions. Under contract law, she would be bound by these exclusions.
Defendants, however, argue that because motor vehicle insurance is required of all drivers in Texas and since the insurance industry in general is so heavily regulated, the exclusions are invalid as inconsistent with the regulatory and legislative schemes. The Court first notes that the Texas courts have expressly rejected the notion that the compulsory motor vehicle insurance scheme abolishes policy violations as defenses to an insurer's liability. Ratcliff v. National County Mut. Fire Ins. Co., 735 S.W.2d 955, 957-58 (Tex.App. Dallas 1987, writ dism'd w.o.j.) ("Absent the expressed intent of the Legislature to abolish policy defenses in claims against automobile liability policies, we cannot supply such a result."); Members Ins. Co. v. Branscum, 803 S.W.2d 462, 465-66 (Tex.App. Dallas 1991, no writ) ("We have rejected the argument that the Legislature abolished policy defenses to claims against insurers by the Texas Compulsory Automobile Insurance Act [Safety Responsibility Act]"). Motor vehicle liability insurers may rely on policy defenses, including defenses based on exclusions, in defending suits brought against them.
The Texas courts, in dealing with mandatory uninsured motorist coverage, have approved a case-by-case analysis of the validity of exclusions under the Texas Uninsured Motorist Statute. Fontanez v. Texas Farm Bureau Ins. Cos., 840 S.W.2d 647, 650 (Tex. App. Tyler 1992, no writ) (citing Briones v. State Farm Mutual Auto. Ins. Co., 790 S.W.2d 70 (Tex.App. San Antonio 1990, writ denied)). The Court holds that a similar case-by-case analysis is appropriate here in determining whether the criminal use and reckless conduct exclusions are valid.
The Texas courts have expressly upheld specific motor vehicle liability policy exclusions as defenses to coverage. Conlin v. State Farm Mut. Auto. Ins. Co., 828 S.W.2d 332, 336-37 (Tex.App. Austin 1992, writ denied) (upholding the owned-but-unscheduled-vehicle exclusion); Branscum, 803 S.W.2d at 467 (upholding, as a defense to coverage, insured's duty to notify the insurer of a pending suit and cooperate in the defense of that suit); Ratcliff, 735 S.W.2d at 959 (upholding, as a defense to coverage, insured's duty to notify the insurer of a pending suit and cooperate in defense of that suit); Holyfield v. Members Mut. Ins. Co., 566 S.W.2d 28, 29 (Tex.Civ.App. Dallas 1978, writ ref'd n.r.e.) (upholding the owned-but-unscheduled-vehicle exclusion).
The Texas Supreme Court has invalidated the family member exclusion to motor vehicle liability policies based upon the Legislature's policy of providing coverage to all potential innocent victims. National County Mut. Fire Ins. Co. v. Johnson, 879 S.W.2d 1, 5 (Tex.1993).[11] The court held that the family member exclusion "prevents a specific class of innocent victims, those persons related to and living with the negligent driver, from receiving financial protection under an insurance policy." Id. at 3. The Court found this to be inconsistent with the statutory mandatory *924 insurance scheme established by the Legislature and with public policy. Id. at 5.
The Court finds that the reckless conduct and criminal use exclusions are more closely analogous to the owned-but-not-scheduled and duty-to-cooperate-and-notify exclusions than to the family member exclusion. The family member exclusion excludes coverage for a class of victims regardless of the actions of the insured. The owned-but-not-scheduled and duty-to-cooperate-and-notify exclusions deal only with the actions of the insured and exclude coverage based on those actions. These exclusions do not prevent coverage for a specific class of innocent victims, rather they require the insured to act or not act in a certain way in order for coverage to exist. The Court, therefore, holds that the reckless conduct and criminal use exclusions relied on by Hertz and Reliance to preclude coverage in this case are valid, are not inconsistent with the Texas mandatory motor vehicle liability insurance scheme, and are not inconsistent with public policy.
IV. Attorneys' Fees
Hertz and Reliance have claimed attorneys' fees pursuant to 28 U.S.C. § 2201 and the Texas Civil Practice and Remedies Code. An award of attorneys' fees is not warranted in this case, and Plaintiffs' claims will be denied.
VI. Conclusion
The Court holds that there are no genuine issues of material fact remaining to be tried in the above-styled and numbered cause and summary judgment disposition is appropriate for said cause.
It is, therefore, ORDERED that summary judgment is GRANTED in favor of plaintiffs Hertz and Reliance on their declaratory judgment claims in the above-styled and numbered cause.
The Court hereby grants declaratory judgment as follows:
1. Plaintiffs Hertz and Reliance owe no duty under the Rental Agreement or the LIS Policy to defendants Santa Rivera, Sabino Salazar, Manuel Garcia Velazquez, Braulia Hernandez Velazquez, and Esperanza Flores Morales, individually and as the representative of the estate of Jose Medina, deceased; and
2. Plaintiffs Hertz and Reliance owe no duty under the Rental Agreement or the LIS Policy to defendant Beatriz Pap.
It is further ORDERED that Plaintiffs' claim for attorneys' fees is DENIED.
SO ORDERED.
NOTES
[1] Pap and the Rivera Defendants allege that Pap has been harmed because this Court's rulings on the motions for summary judgment and on other issues could have adverse affects on Pap in the Underlying Suit through application of the principles of res judicata and collateral estoppel. This, however, is not the type of harm that was contemplated by the court in Kitty Hawk, which intended for the insured to show that she suffered some harm as a result of the defense provided by the insurer, not as a result of the coverage dispute itself. Kitty Hawk Airways, 964 F.2d at 482. There has not been any allegation, much less any evidence, presented by Pap or the Rivera Defendants that Pap was harmed as a result of the defense provided her by Hertz and Reliance.
[2] Pap and the Rivera Defendants also rely on Western Cas. & Sur. Co. v. Newell Manuf. Co., 566 S.W.2d 74 (Tex.Civ.App. San Antonio 1978, writ refld n.r.e.) to support their waiver argument. However, that case is also factually distinguishable since it involves the insurer's withdrawal from its defense of the insured without proper notice to the insured a fact not present in this case.
[3] The reservation of rights letters from Hertz and Reliance to Pap were adequate to preserve their policy defenses. They specifically identified the policy in question, informed Pap that an attorney had been retained to defend her, and informed Pap of the grounds on which Hertz and Reliance were reserving their rights. The Court finds that these letters were sufficient to preserve Hertz's and Reliance's policy defenses. See Ideal Mut. Ins. Co. v. Myers, 789 F.2d 1196, 1201 (5th Cir.1986). Neither the Rivera Defendants nor Pap have submitted summary judgment evidence to challenge the adequacy of the reservation of rights letters and the Court finds that there is not a genuine issue of material fact regarding the adequacy of the reservation of rights letters.
[4] The exclusions relied on by Hertz and Reliance appear in paragraph 5 of the Rental Agreement entitled "Prohibited Uses of the Car" which provides in pertinent part:
(d) ENGAGE IN ANY WILLFUL OR WANTON MISCONDUCT, WHICH AMONG OTHER THINGS, MAY INCLUDE RECKLESS CONDUCT SUCH AS: THE FAILURE TO USE SEATBELTS, USE WHEN OVER LOADED, CARRYING PERSONS OR PROPERTY FOR HIRE OR OFF-ROAD OR ON UNPAVED ROADS THAT ARE NOT REGULARLY MAINTAINED ...; [hereinafter referred to as "the reckless conduct exclusion"]
(e) USE OR PERMIT THE USE OF THE CAR BY ANYONE:
(2) FOR ANY PURPOSE THAT COULD PROPERLY BE CHARGED AS A CRIME, SUCH AS ILLEGAL TRANSPORTATION OF PERSONS, DRUGS OR CONTRABAND.... [hereinafter referred to as "the criminal use exclusion"]
(Plaintiffs' Motion for Summary Judgment, Exhibit "A").
[5] Defendants argue that Pap was mentally ill at the time of the incident, but they have produced no summary judgment evidence as to her mental state at that time. The Court, therefore, cannot consider the impact any alleged mental defect would have had on her state of mind.
[6] Affidavit of Mike Smith, Exhibit C to Plaintiffs' Motion for Summary Judgment; Affidavit of Jesse Gonzalez, Exhibit D to Plaintiffs' Motion for Summary Judgment.
[7] The Rivera Defendants admit this fact. (See Rivera Defendants' Motion for Summary Judgment at 2).
[8] See supra section IV.C.1.
[9] The Court notes that counsel for the Rivera Defendants has stepped extremely close to the Rule 11 sanction line. The Court chooses to believe that, in their motion for summary judgment, counsel for the Rivera Defendants badly misread this provision and did not intend to mislead the Court.
[10] The Court makes no holding as to whether the Rental Agreement is an insurance policy or is subject to the Texas insurance laws at all or whether Hertz is in the business of insurance for purposes of the Texas Insurance Code. If Hertz is not subject to the Insurance Code at all, the Board approval or lack thereof is irrelevant. The Court merely holds that if Hertz is required by Texas law to have its Rental Agreements approved by the Board, the lack of such approval will not, by itself, void the Agreement or any part of it.
[11] The court only held the exclusion invalid up to the statutorily required minimum amount of liability insurance. Johnson, 879 S.W.2d at 5 (Cornyn, J. concurring in part and dissenting in part). The holding of this case, therefore, would not apply to the LIS Policy and any amounts of the Rental Agreement which exceed the statutory minimum. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3348687/ | [EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.]
MEMORANDUM OF DECISION RE: MOTION TO STRIKE
This motion is an appeal from the action of the Board of Tax Review of the Town of Somers. The plaintiff seek a declaratory judgment that the action of the Clerk are a nullity; damages, costs and reimbursements with interest of taxes paid and punitive damages.
The plaintiff claims that the language of Section 12-118: "the Court shall have power to grant such relief as to justice and equity appertains upon such terms and in such manner and form as appear equitable ---." permits the relief requested.
A declaratory judgment is a statutory proceeding (Section 52-29), and should not be invoked to decide the correctness of an administrative decision, Aaron v. Conservation Commission, 178 Conn. 173 (1979). The question of damages, costs, reimbursements and punitive damages are matters of specific statutory authority. The relevant statute regarding tax appeals do not provide for punitive damages.
The Court, while it may grant equitable relief as provided for by the statutes, can do so only within the specific parameters of the statutes read as a whole. The plaintiffs, who are unable to cite any precedent authority for their propositions would have the Court consider relief beyond that which the statutes relevant to tax appeals permit.
The Motion to Strike the Amended Complaint is granted.
KLACZAK, J. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/2985140/ | January 7, 2014
JUDGMENT
The Fourteenth Court of Appeals
DEVANTE TURREN HESTER, Appellant
NO. 14-13-01032-CR V.
THE STATE OF TEXAS, Appellee
________________________________
This cause was heard on the transcript of the record of the court below. The
record indicates that the appeal should be DISMISSED. The Court orders the
appeal DISMISSED in accordance with its opinion.
We further order appellant pay all costs expended in the appeal.
We further order this decision certified below for observance. | 01-03-2023 | 09-22-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1926581/ | 352 So. 2d 1307 (1977)
The NEW HAMPSHIRE INSURANCE COMPANY
v.
Mrs. W.T. ROBERTSON.
No. 49765.
Supreme Court of Mississippi.
December 14, 1977.
*1308 Watkins & Eager, James L. Carroll, Jackson, for appellant.
Clark, Davis & Belk, W. Dean Belk, Indianola, for appellee.
Before SMITH, P.J., LEE and BOWLING, JJ., and BROOME, Commissioner.
RUFUS H. BROOME, Commissioner for the Court:[1]
This case arises out of a suit to collect on a comprehensive dwelling insurance policy issued by New Hampshire Insurance Company in favor of Mrs. W.T. Robertson covering damage to her dwelling and contents.
The case was tried on a stipulation of facts without a jury in the Circuit Court of Sunflower County. The lower court rendered a judgment for the plaintiff, for $9,949.07, holding the loss was within the coverage of the policy and the insurance company, by its actions, had waived its right to object to Robertson's failure to file a sworn proof of loss.
*1309 On or before April 9, 1975, Robertson noticed water bubbling up through a crack in the terrazzo floor of the den. Her home was built on a concrete slab foundation, and plumbing pipes were located beneath the slab. A plumber was called and found the water was from an underground leak caused by separation of a hot water line.
It was stipulated by the parties that the damage resulted from water pressure exerted upon the foundation or slab of the house and ultimately upon the floors and walls or from earth movement beneath the foundation of the house, or a combination, all of which was caused by the underground leak. The resultant damage in the amount of $9,999.07, consisted of settling and cracking of the patio, walls, floors and related damages.
The insurance policy is entitled "Comprehensive Dwelling Policy". On page one the policy specifies that perils insured against under Coverage Group A are "fire and allied perils as set forth in forms and endorsements attached hereto." Coverage Group A consists of a form insuring contents of the dwelling, and a form insuring the dwelling proper.
The next to last paragraph on page one provides: "... this company . . does insure the named insured ... against all DIRECT LOSS BY FIRE, LIGHTNING AND OTHER PERILS ENUMERATED IN THE SCHEDULE ... EXCEPT AS HEREIN PROVIDED ..."
After the first page, the policy is divided into two separate sections, one for insuring the contents, and the other for insuring the dwelling. The contents insurance section is in the nature of a specific coverage form insuring only that for which coverage is specifically provided and then containing some exclusions, whereas the dwelling insurance form is an all-risk insurance. It does not specify any particular coverage but says all-risk and then goes on to list certain exclusions.
Under "II. Coverage" the policy specifies: "This company agrees to insure against all risks of direct physical loss except as hereinafter excluded, those classes of property specifically covered under Items 1 and 2 of Coverage Group A, subject to all other conditions, limitations and exclusions contained in this policy." (Items 1 and 2 referred to are dwelling and outbuildings.)
In its pertinent parts, the dwelling portion contains these exclusions: "THIS COVERAGE GROUP DOES NOT INSURE AGAINST LOSS (a) by wear and tear, deterioration, rust, mold, wet or dry rot, contamination, smog, smoke from agricultural smudging or industrial operations, mechanical breakdown; settling, cracking, shrinking, bulging or expansion of pavements, patios, foundations, walls, floors, roofs or ceilings; ... (b) caused by, resulting from, contributed to or aggravated by earthquake, volcanic eruption, landslide, or any other earth movement; . . (c) caused by, resulting from, contributed to or aggravated by any of the following (1) Flood, surface water waves, tidal water or tidal waves, overflow of streams, or other bodies of water ... (2) Water which backs up through sewers or drains; (3) Water below the surface of the ground, including that which exerts pressure on or flows, seeps or leaks through sidewalks, driveways, foundations, walls, basement or other floors, or through doors, windows or any other opening in such sidewalks, driveways, foundations, walls or floors ... (h) to plumbing, heating or air conditioning systems or domestic appliances, or by leakage or overflow from such systems or appliance, caused by or resulting from freezing... ."
The contents portion of the insurance policy provides under "II. Coverage": "This company agrees to pay for direct loss to contents insured ... caused by the following perils as defined and limited herein... ." In its pertinent parts, under definitions and limitations regarding coverage is found the following:
"12. Water Damage: Loss by water damage shall mean damage to or destruction of the property covered herein caused by the accidental discharge, leakage or overflow of water or steam from within a *1310 plumbing ... system ... including the cost of tearing out and replacing any part of the building covered required to effect repairs to the system or appliances from which the water or steam escaped. This company shall not be liable for (a) loss caused by or resulting from freezing... ."
In another section, the contents form contains an exclusion form identical to that in the dwelling form with regard to exclusion of loss caused by, resulting from, contributed to or aggravated by water below the surface of the ground.
As noted above, the part of the policy covering dwelling buildings excludes loss by settling and cracking of foundations, walls and floors. It also excludes loss caused by, resulting from, or contributed to by any other earth movement. Finally, it excludes a loss caused by water below the surface of the ground.
It is clear from the stipulated facts that the damage was caused by water below the surface. It is further clear that the damages resulted from earth movement under the foundation which caused the floors, walls and patio to settle and crack.
Based on a superficial reading of the exclusions, they appear to exclude the damage done. However, when read in context, several factors become significant.
(1) The provision excluding loss by settling and cracking of floors, walls, etc. appears in the context of a clause excluding loss by wear and tear, deterioration, rust, mold, wet or dry rot, contamination, smog, mechanical breakdown, etc. In this context, it would appear to exclude loss by settling and cracking due to ordinary swelling, expansion, settling or cracking as opposed to settling or cracking caused by some other external agent (here the water leak).
(2) The provision excluding loss by any other earth movement appears in the context of a clause dealing with earthquakes, volcanic eruption, and landslides. In this context, it would appear to be limited to "earth movement" resulting from natural forces (as opposed to earth movement resulting from the water leak).
(3) The provision excluding loss caused by, resulting from, contributed to, or aggravated by water below the surface of the ground appears in the context of a clause which also excludes (a) flood, surface water, waves, tidal water or tidal wave, overflow of streams, etc.; (b) water which backs up through sewers or drains. In this context it is arguable that the exclusion is either for natural water below the ground (as opposed to leakage from the plumbing system) or from subsurface water stemming from non-natural but exterior sources (as in water backed up from sewer drains or other exterior sources in the sense of not stemming from the dwelling itself).
This construction of the clause excluding either natural subsurface water only or subsurface water stemming from external sources is reinforced by two other clauses.
1. Paragraph H of the dwelling coverage excludes damages to plumbing or by leakage from a plumbing system, but is limited to that caused by freezing. It would appear to have been a simple matter to have excluded all leaks from plumbing if that had been the intent of the drafters of the policy.
2. Under the coverage of contents section of the contract, there is a below surface water exclusion, yet in the specific coverage provision of the contents portion it is provided that there is coverage of water damage. In that clause, "water damage" is defined as "damage to or destruction of the property covered hereby by ... leakage ... from within a plumbing ... system, including the cost of tearing out and replacing any part of the building required to effect repairs to the system... ." (Emphasis added). It, like the dwelling portion of the policy, then goes on to exclude only loss by freezing.
In this portion of the policy, at least, if the subsurface water exclusion is interpreted to mean all subsurface water from any source or cause, an ambiguity results, since to do so would negate the specific coverage *1311 of water damage resulting from leakage within a plumbing system.
There appears to be no Mississippi case considering the precise clauses and facts as occur here.
It is recognized in Mississippi, however, that
If an insurance contract is ambiguous and capable of two reasonable but different constructions, the construction will be adopted which is in favor of the insured since the contract is prepared by the insurer. Key Life Insurance Co. of South Carolina v. Tharp, 253 Miss. 774, 179 So. 2d 555, 559 (1969).
We find from the analysis of facts and coverage clauses that an ambiguity resulted and we have consistently held that ambiguous language should be construed more strongly against the preparer of the contract.
Other state courts have considered virtually the same facts and clauses as involved here. Hartford Accident & Indemnity Co. v. Phelps, 294 So. 2d 362 (Fla.App. 1974); Koncilja v. Trinity Universal Ins. Co., 35 Colo. App. 27, 528 P.2d 939 (1974); King v. Traveler's Ins. Co., 84 N.M. 550, 505 P.2d 1226 (1973); and Cantanucci v. Reliance Ins. Co., 43 A.D.2d 622, 349 N.Y.S. 187 (1973). All these have found the damage to be within the coverage of the policy. The only distinguishing factor was that each of these cases had a coverage clause specifically covering leakage from plumbing systems. (It is unclear from the cases whether this coverage was in the dwelling building section of the policy or in the contents section as here). The insurance company argues that this is sufficient to require a different result here. The fallacy with this reasoning is that the dwelling building policy is an "all risk" policy with no specific coverage listed, only exceptions. We, therefore, hold:
Where an all risk comprehensive dwelling policy excludes coverage of loss from water below the surface of the ground, but (1) construction in the context of adjoining clauses indicates exclusion is limited to natural below the surface waters or at the least to below surface waters stemming from exterior causes (in the sense of not stemming from the insured dwelling itself) and (2) construction of the clause as excluding damage caused by leakage from the plumbing system would negate a specific coverage in another section of the contract, then the policy must be construed as including loss caused by leaking from the plumbing system even though below the surface of the earth.
The appellant next argues that failure of the appellee to file a sworn proof of loss violates the terms of the policy and relieves it of all liability under the policy. Here, the insurance company was promptly notified of the loss on or about April 9, 1975. They were furnished copies of all bills and had access to the property. In addition, the insurance company failed to provide proof of loss forms and it was stipulated that the plaintiff had at all times been ready and willing to submit a sworn proof of loss form. Finally, the insurance company was allowed to and did conduct a full investigation with the cooperation of plaintiff.
These facts taken together with the insurance company's failure to show they were actually prejudiced in any way by the failure to file sworn proof of loss forms, are sufficient to establish a waiver of the proof of loss requirement. Nelson v. Phoenix of Hartford Ins. Co., 318 So. 2d 839 (Miss. 1975); Soso Trucking Co., Inc. v. Central Ins. Agency, Inc., 236 So. 2d 398 (Miss. 1970); Newark Fire Ins. Co. v. McMullen, 142 Miss. 369, 107 So. 523 (1926).
While it is true the insured and insurer signed a non-waiver agreement, it is also clear from the facts that the signing of the non-waiver agreement preceded the denial of liability by the insurance company. Compare Taylor v. Fireman's Fund Ins. Co., 306 So. 2d 638 (Miss. 1974) (where the denial of liability occurred before signing of the non-waiver agreement). Where as here, there was an effective waiver of proof of loss, no prejudice shown by the insurance company, and the non-waiver agreement *1312 was followed by a denial of liability on the grounds of lack of coverage, the signing of a non-waiver agreement under the facts of this case would not bar recovery. See Charles Store, Inc. v. Aetna Ins. Co., 428 F.2d 989 (5th Cir.1970).
For the foregoing reasons, the judgment of the lower court is affirmed.
AFFIRMED.
PATTERSON, C.J., INZER and SMITH, P. JJ., and ROBERTSON, SUGG, WALKER, BROOM, LEE and BOWLING, JJ., concur.
NOTES
[1] pursuant to Chapter 430, Laws of 1976. The above opinion is adopted as the opinion of the Court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1631398/ | 599 S.W.2d 117 (1980)
SUMITOMO CORPORATION OF AMERICA, Appellant,
v.
JAMES K. ANDERSON, INC., Appellee.
No. 20408.
Court of Civil Appeals of Texas, Dallas.
April 17, 1980.
*118 C. A. Searcy Miller, Dallas, for appellant.
Eugene W. Brees, II, Thompson & Knight, Dallas, for appellee.
Before ROBERTSON, CARVER and HUMPHREYS, JJ.
ROBERTSON, Justice.
This is an appeal from an order of the district court overruling the plea of privilege of the appellant, Sumitomo Corporation of America, to be sued in Harris County, Texas. A controverting affidavit relying on sections four and twenty-seven of Tex.Rev.Civ.Stat.Ann. art. 1995 (Vernon 1964), was filed by the appellee, James K. Anderson, Inc. We affirm the trial court's action.
Appellant raises five points of error as follows: The trial court erred in overruling the plea of privilege of appellant because no proof was offered (1) of an exception to the right of venue under article 1995, section 27; (2) of an exception to the right of venue under article 1995, section 4; (3) that appellant manufactured the defective pipe in question; (4) that the appellant was responsible for the damages in question; (5) that the amount of damages was sufficient to invoke the court's jurisdiction. We find that the trial court's action was proper because an exception to venue in the county of one's residence exists and was proven under section twenty-seven.
Section twenty-seven provides that foreign corporations, not incorporated by the laws of this State and doing business within this State, may be sued in any county where such company may have an agency or representative. In reply to interrogatories, which were admitted into evidence before the trial court, appellant stated that it had had an office in Dallas County since 1961 and that five employees were presently working in that office. On this appeal, appellant does not contend that these employees did not have sufficient discretionary powers to constitute them as an agent or representative of appellee. See Rouse v. Shell Oil Co., 577 S.W.2d 787, 789 (Tex.Civ. App.-Corpus Christi 1979, writ dism'd). Thus, the requirement of section twenty-seven that the company have an agency or representative in the county in which suit is brought was satisfied. Appellant did not deny under oath its status as a foreign corporation, and consequently, this fact is deemed admitted. Crosby v. Safeway Stores, Inc., 568 S.W.2d 412, 413 (Tex.Civ. App.-Texarkana 1978, writ dism'd). Appellee therefore proved the statutory elements necessary to establish this exception to venue in appellant's county of residence.
Nevertheless, appellant contends that a question remains whether section twenty-seven is applicable to appellee. Appellant asserts that once a foreign corporation obtains a permit to do business in Texas, it becomes a Texas resident, and thereafter section twenty-seven does not apply because a Texas resident cannot be a foreign corporation. Appellant bases this argument on the holding in Burrows v. Texas Kenworth Co., 554 S.W.2d 300, 304 (Tex. Civ.App.-Tyler 1977, writ dism'd), which upheld the identical contention. The court in Burrows relied upon two other cases in reaching its conclusion. See J. I. Case Co. *119 v. Darcy, 424 S.W.2d 501 (Tex.Civ.App.-Amarillo 1968, writ dism'd), and O. M. Franklin Serum Co. v. C. A. Hoover & Son, 410 S.W.2d 272 (Tex.Civ.App.-Amarillo 1966, writ ref'd n. r. e.). These two cases, however, did not hold that section twenty-seven is inapplicable to foreign corporations authorized to do business in this State, but rather held that foreign corporations become residents of Texas for purposes of venue determination under section three of article 1995 once those corporations obtain a permit to do business in this State. J. I. Case Co. v. Darcy, 424 S.W.2d at 502-03; O. M. Franklin Serum Co. v. C. A. Hoover & Son, 410 S.W.2d at 273. The court in Burrows erroneously concluded that the transformation from nonresident status to resident status also affected a corporation's status as foreign or domestic. We disagree with this conclusion and accept instead the conclusion of the Beaumont Court of Civil Appeals that a corporation's status as foreign or domestic is not affected by whether it has obtained a permit to do business in Texas. Home Indemnity Co. v. Hicks, 488 S.W.2d 614, 615-16 (Tex.Civ.App.-Beaumont 1972, writ dism'd); see, e. g., Gulf Oil Corp. v. Senkirik, 586 S.W.2d 157, 158-59 (Tex.Civ.App.-Eastland 1979, no writ); John Deere Co. v. Ramirez, 503 S.W.2d 382, 384-85 (Tex.Civ.App.-Amarillo 1973, writ dism'd); Andretta v. West, 318 S.W.2d 768, 771 (Tex.Civ.App.-Texarkana 1958, writ ref'd n. r. e.).
Accordingly, we hold that appellee properly established an exception under section twenty-seven of article 1995 to venue in appellant's county of residence. Since this exception was properly sustained by the trial court and the plea of privilege overruled based thereon, we need not address appellant's point of error relating to section four. Neither need we address appellant's other points of error because at a plea of privilege hearing to the court, questions going to the court's jurisdiction or questions going to the merits of the action are not in issue unless raised by the requirements of the venue provision. Farmers' Seed & Gin Co. v. Brooks, 125 Tex. 234, 239, 81 S.W.2d 675, 677 (1935); Fields v. Payne, 342 S.W.2d 363, 365 (Tex.Civ.App.-Austin 1961, no writ); Highway Motor Freight Lines v. Slaughter, 84 S.W.2d 533, 535, 538 (Tex.Civ.App.-Dallas 1935, no writ); Tex.R. Civ.P. 89.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1631397/ | 649 F. Supp. 512 (1986)
Yevgen FROMER, Plaintiff,
v.
Charles J. SCULLY, Harold J. Smith, Walter Kelly, Everett W. Jones, Thomas A. Coughlin III, and Hirschel Jaffe, Defendants.
No. 84 Civ. 5612 (CES).
United States District Court, S.D. New York.
November 25, 1986.
*513 Rosenman Colin Freund Lewis & Cohen, New York City, for plaintiff; Eugene A. Gaer, Neil Miller, of counsel.
Robert Abrams, Atty. Gen., State of N.Y., New York City, for defendants; Martha O. Shoemaker, Douglas Aronin, of counsel.
OPINION
STEWART, District Judge:
Plaintiff Yevgen Fromer, an inmate in the custody of the New York State Department of Correctional Services ("DOCS"), challenges the constitutionality of DOCS Directive # 4914 to the extent that it requires him to shave or trim his beard to a length of no more than one inch.[1] Fromer, an Orthodox Jew, claims that his religious beliefs prohibit him from shaving or trimming his facial hair. During the six days of trial in this action, we heard from numerous witnesses regarding the sincerity of Fromer's religious beliefs and the concerns of DOCS that underlie the beard regulation. We now conclude that Fromer is entitled to the injunctive and declaratory relief that he seeks. Our findings of fact and conclusions of law are set forth below.
SINCERITY OF RELIGIOUS BELIEF
Directive # 4914 establishes basic grooming standards for inmates in the New York state prison system. Pl.Ex. 1. The directive provides that upon being committed to the custody of DOCS, inmates must get a haircut and shave "for reasons of health and sanitation as well as to permit the taking of the initial identification photograph." Thereafter, however, "[a]ll inmates may grow a beard and/or mustache not to exceed one (1) inch in length."
In order to establish his first amendment interest in challenging Directive # 4914, Fromer, as an initial matter, must demonstrate that his beliefs are sincerely held and "are, in his own scheme of things, religious." United States v. Seeger, 380 U.S. 163, 185, 85 S. Ct. 850, 863, 13 L. Ed. 2d 733 (1965); see also Furqan v. Georgia State Board of Offender Rehabilitation, 554 F. Supp. 873, 876 (N.D.Ga.1982). In evaluating the religious nature of Fromer's beliefs, this court must not employ an objective, content-based approach to defining religious belief but rather must examine the plaintiff's "inward attitudes towards a particular belief system." Patrick v. LeFevre, 745 F.2d 153, 157 (2d Cir.1984).
Plaintiff asserts that his refusal to trim his beard is based on the Torah, specifically, on a passage in Leviticus, one of the five books of Moses, which states that one should not mar the corners of the beard. Tr. 104. Fromer testified that he views the wearing of an untrimmed beard as "the main bulwark that would be used against evil," Tr. 103, in that the beard is a physical, unalterable, public symbol of observance of Jewish law "to the highest degree." Tr. 103-04, 234-35. Fromer further stated that he wants to leave his beard untrimmed "to prevent myself from any further breaking the law, civil law or Jewish law or any law, and stay with the hundred percent way of Judaism." Tr. 114.
We find that Fromer has met his burden of showing that his refusal to obey Directive # 4914 is grounded in a sincere religious belief that trimming the beard violates Jewish law. Fromer's refusal to trim his beard is consistent with his religious background and training and is rooted *514 in a body of Jewish law. Furthermore, we find Fromer's testimony regarding his religious beliefs to be credible and find his conduct since he entered prison to be consistent with his professed beliefs.
Fromer was born in 1959 in a town in the Ukraine, Soviet Union, where he lived until the age of fifteen. Tr. 81-82. As Orthodox Jews, Fromer's family members observed "all the practices ... most orthodox Jews do" in the United States, including, for example, keeping Passover strictly. Tr. 83. Members of Fromer's family were leaders in the town's small Jewish community, and weekly religious services were held in Fromer's house. Fromer himself as a child learned how to read Hebrew and studied the Bible with various teachers. At age thirteen he had a bar mitzvah and began to observe the religious practices imposed upon adult men. Tr. 83-88.
While he was in the Soviet Union, Fromer did not receive religious instruction regarding the maintenance of a beard. On cross-examination, Fromer admitted that before he left the Ukraine, the general practice of his male relatives was to either trim or shave their beards. Tr. 164. However, Fromer also testified that he was told that the rabbi grandfather after whom he was named had an untrimmed beard all his life. Tr. 166. Also, one of the two shoctim, or religious officials, in his community had an untrimmed beard. Tr. 165. Fromer resolved in his youth that "one day when I will be able to I will have a beard." Tr. 89.
In 1975, Fromer and his mother arrived in Brooklyn. Tr. 90. Shortly after his arrival, Fromer enrolled in two yeshivas associated with the Lubavitch Hasidic movement. He moved into a Lubavitch dormitory, where he lived until late 1977. Tr. 90-91. During this period he did not discuss with any of his teachers or relatives whether trimming the beard was permitted. Tr. 174. Fromer knew that at least some of his uncles trimmed their beards. However, he observed that all the teachers at his yeshivas had long untrimmed beards and that none of the boys who lived in his dormitory trimmed their facial hair. Tr. 91-92, 94, 96-97, 224.
Around late 1977, Fromer became a bus driver for schools operated by the Lubavitch movement. Fromer continued his religious studies with two men, who told him that Orthodox Jews were forbidden to disturb their beards. Tr. 94. In early 1978, Fromer went to Los Angeles to assist a rabbi in starting a Lubavitch camp for Russian immigrants. Tr. 96. Fromer returned to Brooklyn in late 1978 and started a transportation business that primarily serviced yeshivas. Tr. 97.
During the years when Fromer was enrolled in the yeshivas and was in Los Angeles, he maintained an untrimmed beard. Tr. 97. However, around 1980, he experienced a business setback and decided that if he became more assimilated into the society around him, he would be able to gain more customers. Accordingly, he began trimming his beard and then shaved it off entirely. In addition, he grew his hair longer, shortened his prayers, and wore his yarmulke sporadically. Tr. 98-99. During this period, he engaged in the criminal activity that led to his incarceration.
Fromer testified that in early 1982 he decided that he wanted to resume Jewish religious practices. He began to grow his beard again and vowed that he would completely return to Judaism after his financial problems were over. Tr. 100. At the time of his arrest on a charge of selling cocaine in June 1982, he was bearded. Tr. 102.
During the eight months Fromer spent in the Brooklyn House of Detention prior to his sentencing, he did not trim his beard. Fromer testified that he came to believe that he had ended up in prison because he had failed to abide by Jewish law. Accordingly, he began to study Judaism and observe religious practices that he had previously abandoned. Tr. 103-04.
Fromer entered the custody of DOCS in March 1983. Upon his admission to Downstate Correctional Facility, he was told that he was required to remove his beard. Fromer testified that he requested that an electric shaver rather than a razor be used *515 if he had to be shaved, Tr. 105-07, because he believed that using an electric shaver was less of a violation of Jewish law than using a razor. See Tr. 180. As a result of his request, Fromer stated, he was handcuffed and prodded with a stick by one correction officer while another shaved him with a razor. Tr. 107.
After this initial shave, Fromer let his beard grow undisturbed until an officer at Green Haven Correctional Facility, where Fromer had been transferred, told him to bring his beard into compliance with the one-inch regulation. Fromer then requested that his mother send him an electric shaver, which he used to shave the upper part of his cheeks and neck. However, Fromer did not shave his jaw or near his ears in order to comply with the biblical prohibition on marring "the five corners of the beard." Tr. 109-10.
In the summer of 1983, Fromer was transferred to a different cellblock within Green Haven. At that time, Fromer stopped shaving and trimming his beard completely, both because no correction officer pressured him and because his conviction that his beard should not be trimmed became strengthened. Tr. 113-14. Fromer had intensified his study of Judaism and had attended a sermon by a Lubavitcher regarding the reasons why Jews have untrimmed beards. Tr. 220, 226. In addition, Fromer was influenced by the fact that Sheldon Silver, an attorney and rabbi with whom Fromer met to discuss religious practices at Green Haven, had a long untrimmed beard. Tr. 226-28.
In April 1984, Fromer was transferred to Attica Correctional Facility, where he was told to trim his beard to one inch. Tr. 121. Fromer wrote to Superintendent Harold J. Smith to protest that the application of Directive # 4914 to him violated his first amendment rights. Pl.Ex. 7A. Fromer stated that as an Orthodox Jew, he considered his beard part of his "religious dress." He added that he did "not claim exemption in the cutting of my beard out of personal appearance objectives, but rather out of religious tenets." After Smith denied Fromer an exemption, Fromer filed a grievance with the Attica inmate grievance committee. Pl.Ex. 7B. Although the grievance was denied, Fromer never received a direct order to trim his beard while at Attica, nor did he receive any misbehavior reports there. Tr. 136.
In January 1985, Fromer was transferred to Great Meadow Correctional Facility. Tr. 138. Rabbi Weinberg, the Jewish chaplain at Great Meadow, requested that Deputy Superintendent Cassidy excuse Fromer from shaving or trimming his beard, explaining: "Y. Fromer is an Orthodox Jew of Lubavitch Hassidic sect. These Jews, for religious reasons do not shave or trim their beards." Pl.Ex. 24. However, Fromer was twice disciplined for disobeying an order to trim his beard and required to submit to counseling. Pl.Ex. 8-11. In February 1985, Fromer commenced the portion of this action which challenges Directive # 4914.
In May 1985, Fromer's request to be transferred from Great Meadow, a maximum security prison, to Wallkill Correctional Facility, a medium security prison, was granted. Tr. 148. On the day he arrived at Wallkill, he was told that he would have to trim his beard. Fromer explained that this lawsuit was pending in federal court. Tr. 149. However, Fromer was found guilty of failing to comply with a direct order to trim his beard and was subsequently sentenced to thirty days in a special housing unit. Pl.Ex. 13. Inmates in special housing units are confined to their cells twenty-three hours per day and are denied many of the privileges available to general population inmates. Because Wallkill has no special housing unit, Fromer was transferred to Downstate to serve his sentence. Tr. 152. In addition, Fromer lost one month of good time as well as commissary and telephone privileges. In June 1985, this court granted Fromer's motion for injunctive relief barring enforcement of Directive # 4914 against him and directing his release from the special housing unit.
*516 To demonstrate that his beliefs regarding his beard are grounded in Jewish law, plaintiff presented the testimony of Rabbi Moshe Wiener,[2] who has written a treatise on the growth and cutting of the beard in Jewish law. Rabbi Wiener testified extensively as to the origins of the biblical prohibition on disturbing the beard and stated that "it is the opinion of the mainstream of Jewish authorities throughout the centuries that even trimming the beard should be definitely avoided and proscribed according to Jewish law." Tr. 21. He explained:
[T]he custom of Jews ... throughout the centuries was not to disturb the beard in any manner whatsoever. In fact, the cutting of the beard was always considered an act of religious desecration and sacrilege and was considered an act of basic negating of one's religious functions and religious beliefs.
Tr. 20. Rabbi Wiener testified that, in his opinion, an observant Jewish man is required to refuse to comply with the portion of Directive # 4914 that limits beards to one inch in length. Tr. 30.
As evidence of plaintiff's insincerity, defendants point to the facts that Fromer did not ask a rabbi whether he should trim his beard, Tr. 218-20, and that he cut his hair on a day when Jewish law would appear to prohibit such an activity. Tr. 195. They characterize his account of his initial forcible shave at Downstate as "manifestly incredible," noting that Fromer failed to file a grievance after this alleged incident and that no "use of force" or "unusual incident" report was written up by corrections personnel. Tr. 320-21. In addition, a counselor at Great Meadow described plaintiff's attitude toward his beard problem as "lighthearted." Tr. 289. Defendants further argue that Fromer, during a visit with his mother and cousin at Wallkill, nodded when his cousin assured a counselor that plaintiff would trim his beard. Tr. 259. Finally, they cite to Fromer's inconsistent adherence to an Orthodox Jewish lifestyle and assert that Fromer did not cease trimming his beard until he began this action.
As their religious expert, defendants called Rabbi Moshe Tendler, a professor of Talmudic law at Yeshiva University.[3] Rabbi Tendler testified that although Jewish law prohibits shaving the face with a razor, Tr. 620, "with the rarest exception, all people who consider themselves to be meticulously observant in Jewish law" believe that trimming the beard is not only allowed but indeed is required before certain holidays and events. Tr. 617. Rabbi Tendler further stated that Jewish law requires obedience to the civil law of the state, including prison regulations, as long as not anti-semitic in nature. Tr. 631-32. According to Rabbi Tendler, Jewish law would also require Fromer to accede to his mother's request to trim his beard in order to avoid a transfer to another prison that would make it more difficult for her to visit him. Tr. 635-36.
We find that the evidence, taken as a whole, establishes the sincerity of Fromer's religious belief. Fromer's refusal to trim his beard is consistent with his upbringing as an Orthodox Jew and with his education at Lubavitch yeshivas. Moreover, Rabbi Wiener's testimony established that the practice of not disturbing the beard is grounded in a recognized body of Jewish doctrine. Although Rabbi Tendler vigorously disputed Rabbi Wiener's views, he did concede the existence of rabbinical opinion prohibiting the trimming of the beard. We do not attempt to resolve the controversy between the two rabbis, for "the judicial process is singularly ill equipped to resolve [intrafaith] differences in relation to the Religion Clauses." Thomas v. Review Board of the Indiana Employment Security *517 Division, 450 U.S. 707, 715, 101 S. Ct. 1425, 1430, 67 L. Ed. 2d 624 (1981). Furthermore, "the guarantee of free exercise is not limited to beliefs which are shared by all of the members of a religious sect." Id. at 715-16, 101 S.Ct. at 1430-31; accord, Moskowitz v. Wilkinson, 432 F. Supp. 947, 949 (D.Conn.1977) ("[T]he fact that some Jews do not object to shaving, or that others accept the distinction between shaving and cutting, does not defeat the plaintiff's claim. It is his own religious belief that is asserted, not anyone else's."); Monroe v. Bombard, 422 F. Supp. 211, 215 n. 4 (S.D.N. Y.1976) ("It is not for the courts to decide which practices or observances are or are not strict requirements of a particular faith.").[4]
The sincerity of Fromer's belief is also evinced by his conduct since his incarceration. Although it is obvious that Fromer at times has departed from the tenets of his faith, we are persuaded that his commitment to Orthodox Jewish observance has intensified as a result of his religious studies and reflection while in prison. Furthermore, having examined the photographs in evidence, we find that Fromer has been consistent in his refusal to trim his beard since the end of summer 1983, even though repeatedly threatened with disciplinary action.
STANDARD OF REVIEW
Having found that Fromer has a sincere, religious belief which prohibits him from trimming his beard, we must determine what standard of review to apply to Fromer's claim that Directive # 4914's grooming requirements infringe upon his first amendment right to freely exercise his religion. We begin with the proposition that "[a] prisoner does not shed ... basic First Amendment rights at the prison gate." Procunier v. Martinez, 416 U.S. 396, 422, 94 S. Ct. 1800, 1815, 40 L. Ed. 2d 224 (1974) (Marshall, J., concurring). Furthermore, "a prisoner retains those First Amendment guarantees, including the right to participate in practices which are an integral part of his religious faith, `that are not inconsistent with his status as a prisoner or with the legitimate penological objectives of the corrections system.'" Moorish Science Temple of America, Inc. v. Smith, 693 F.2d 987, 990 (2d Cir.1982) (quoting Pell v. Procunier, 417 U.S. 817, 822, 94 S. Ct. 2800, 2804, 41 L. Ed. 2d 495 (1974)). Because security is the main objective of prison administration, however, "prison officials must have broad latitude to adopt rules that protect the safety of inmates and corrections personnel and prevent escape or unlawful entry." United States v. Cohen, 796 F.2d 20, 22 (2d Cir.), cert. denied, ___ U.S. ___, 107 S. Ct. 189, 93 L. Ed. 2d 122 (1986) (citing Bell v. Wolfish, 441 U.S. 520, 547, 99 S. Ct. 1861, 1878, 60 L. Ed. 2d 447 (1979)).
In Wali v. Coughlin, 754 F.2d 1015 (2d Cir.1985), the Second Circuit recently set out a tripartite standard by which to evaluate claimed violations of prisoner rights. The standard is "drawn by reference to the nature of the right being asserted by prisoners, the type of activity in which they seek to engage, and whether the challenged restriction works a total deprivation (as opposed to a mere limitation) on the exercise of that right." Id. at 1033. First, where the right asserted is held to be inherently inconsistent with established penological objectives, judicial deference to the judgment of corrections officials should be nearly absolute. Second, where the activity sought to be engaged in is presumptively dangerous, deference should be extremely broad, though not categorical. Third,
[w]here ... the activity in which prisoners seek to engage is not presumptively dangerous, and where official action (or inaction) works to deprive rather than merely limit the means of exercising a protected right, professional judgment must occasionally yield to constitutional mandate. In these limited circumstances, *518 it is incumbent upon prison officials to show that a particular restriction is necessary to further an important governmental interest, and that the limitations on freedoms occasioned by the restriction are no greater than necessary to effectuate the governmental objective involved.
Id.
Defendants argue that the Wali analysis does not govern here. As they point out, Wali was a first amendment censorship action involving a prior restraint on access to information, not a free exercise of religion suit. Defendants contend that under Jones v. North Carolina Prisoners' Labor Union, Inc., 433 U.S. 119, 97 S. Ct. 2532, 53 L. Ed. 2d 629 (1977), and Bell v. Wolfish, 441 U.S. 520, 99 S. Ct. 1861, 60 L. Ed. 2d 447 (1979), when an inmate brings a free exercise challenge to a regulation justified by legitimate penological objectives, courts must defer to the judgment of expert prison administrators unless the inmate can show, by substantial evidence, that the regulation constitutes an exaggerated reaction to security considerations. Defendants point out that such a standard has been adopted by a number of circuits. E.g., Hill v. Blackwell, 774 F.2d 338, 342-43 (8th Cir.1985); Madyun v. Franzen, 704 F.2d 954, 959-60 (7th Cir.), cert. denied, 464 U.S. 996, 104 S. Ct. 493, 78 L. Ed. 2d 687 (1983); St. Claire v. Cuyler, 634 F.2d 109, 114-15 (3d Cir.1980).
We find the Wali case to be controlling here. We first note that the Wali court's analysis of Supreme Court precedent included Jones v. North Carolina Prisoners Union and Bell v. Wolfish. Moreover, we are persuaded by the Third Circuit's conclusion in Shabazz v. O'Lone, 782 F.2d 416 (3d Cir.) (en banc), cert. granted, ___ U.S. ___, 107 S. Ct. 268, 93 L. Ed. 2d 245 (1986), that the standard proposed by defendants "provides inadequate protection for the rights of prisoners freely to exercise their religion." Id. at 417; see also id. at 420.
In Shabazz, Muslim prisoners challenged prison regulations that prevented them from attending weekly religious services as violative of their first amendment rights. The Shabazz court found St. Claire's "exaggerated response" standard, 634 F.2d at 114-15, which defendants urge us to adopt, to be flawed because it failed to "require any inquiry into the feasibility of accommodating prisoners' religious practices." Shabazz, 782 F.2d at 420. Rather, "a `mutual accommodation' between the important institutional objective of security and the constitutionally protected rights of prisoners" is required under Bell v. Wolfish, 441 U.S. at 546, 99 S.Ct. at 1877, and Wolff v. McDonnell, 418 U.S. 539, 556, 94 S. Ct. 2963, 2974, 41 L. Ed. 2d 935 (1974). Shabazz, 782 F.2d at 419. To replace the St. Claire standard, the Third Circuit adopted the following analysis for cases involving free exercise rights:
[T]he state must show that the challenged regulations were intended to serve, and do serve, the important penological goal of security, and that no reasonable method exists by which [the inmates'] religious rights can be accommodated without creating bona fide security problems.
Shabazz, 782 F.2d at 420. In the context of the case before us, the Shabazz analysis is substantially identical to the third part of the Wali standard of review.
We hold that the third Wali standard governs the case before us. The first standard is inapplicable because the right of prisoners to wear beards is not inherently inconsistent with established penological objectives. See Burgin v. Henderson, 536 F.2d 501 (2d Cir.1976); Sostre v. Preiser, 519 F.2d 763, 764 (2d Cir.1975); Moskowitz v. Wilkinson, 432 F. Supp. 947 (D.Conn. 1977); Monroe v. Bombard, 422 F. Supp. 211 (S.D.N.Y.1976). The second standard does not apply because unrestricted beard growth is not presumptively dangerous[5] and because requiring Fromer to cut his facial hair would work a total deprivation of his religious belief that the beard must not be disturbed.
*519 The third Wali standard, furthermore, is consistent with prior Second Circuit cases concerning beards in prison. In Burgin, Sunni Muslim prisoners asserted their first amendment right to grow beards. While remanding for factual development, the Second Circuit set forth the following standard:
"But even if the institutional purpose [in prohibiting beards] is legitimate and substantial, `that purpose cannot be pursued by means that broadly stifle fundamental personal liberties when the end can be more narrowly achieved.' Shelton v. Tucker, [364 U.S. 479, 488, 81 S. Ct. 247, 252, 5 L. Ed. 2d 231 (1960)], Procunier v. Martinez, [416 U.S. 396, 413, 94 S. Ct. 1800, 1811, 40 L. Ed. 2d 224 (1974)]."
Burgin, 536 F.2d at 504 (quoting Sostre, 519 F.2d at 764 (inmate challenge to "no beard" prison rule)). The "least restrictive alternative" analysis has also been employed by two district courts to strike down the no-beard rule as applied to prisoners who declined to remove their beards on the basis of sincerely held religious beliefs. Moskowitz, 432 F.Supp. at 951 (Orthodox Jew in federal prison); Monroe, 422 F.Supp. at 218 (Sunni Muslims in state prison); see also People v. Lewis, 68 N.Y.2d 923, 510 N.Y.S.2d 73, 502 N.E.2d 988 (N.Y.1986) (portion of Directive # 4914 requiring Rastafarian inmate to cut dreadlocks for initial photograph held unconstitutional under either the "least intrusive means" or "exaggerated response" test, because facial features can be fully exposed merely by pulling hair back), aff'g, 115 A.D.2d 597, 496 N.Y.S.2d 258 (2d Dep't 1985); Phillips v. Coughlin, 586 F. Supp. 1281, 1285 (S.D.N. Y.1984) (Directive # 4914's requirement that all inmates submit to initial shave upheld as "least intrusive method available" to satisfy state's interest in photographing facial features); Gallahan v. Hollyfield, 670 F.2d 1345, 1346 (4th Cir.1982) (least restrictive alternative standard used to enjoin cutting of Cherokee Indian's hair); Wright v. Raines, 457 F. Supp. 1082, 1088 (D.Kan.1978) ("no beard" regulation struck down as applied to Sikh inmate because regulation does not represent least restrictive method of obtaining goal of security).
Accordingly, defendants must show that application of the one-inch beard restriction is "necessary to further an important governmental interest." Wali, 754 F.2d at 1033. In addition, they must establish "that the limitations on freedoms occasioned by the restriction are no greater than necessary to effectuate the governmental objective involved." Id.
GOVERNMENTAL INTERESTS
Philip J. Coombe,[6] Deputy Commissioner for Facility Operations of DOCS, testified that the governmental interests in identification of inmates, control of contraband, fairness, safety, and hygiene all necessitate the one-inch limit on beards. While each of these interests is unquestionably important in the prison setting, we conclude that defendants have not established that the beard restriction is no greater than necessary to effectuate the governmental objectives involved.
Identification
The governmental interest in effective identification of inmates to insure prison security and to facilitate apprehension of escaped inmates is important and substantial. Moskowitz, 432 F.Supp. at 950. Defendants' evidence establishes that allowing inmates to wear beards poses heightened difficulties in identification. Coombe testified that two inmates escaped from the Green Haven visiting room after shaving their beards and donning women's clothing in the bathroom. Tr. 347, 376.
We are not persuaded, however, that beards longer than one inch pose a significantly greater risk than beards of one inch or less. Coombe testified that while he would prefer to require inmates to be *520 clean-shaven and to wear their hair short, the prison system can tolerate beards up to one inch because facial structure is still visible when the beard is short. Tr. 351. He argued that a long, untrimmed beard would provide an inmate with a set of disguises, in that the inmate could roll, braid, or otherwise manipulate his beard. Tr. 353. The fact that an inmate has innumerable opportunities for instant disguise increases his willingness to escape and makes an escape attempt more likely to succeed. Tr. 381-82.
On this point, we are more inclined to accept the testimony of plaintiff's prison expert, Daniel J. Pochoda,[7] who disagreed with Coombe's assertion that a one-inch beard allows significantly better observation of an inmate's facial structure than does a longer beard. In Pochoda's view, "the change in appearance is brought about by a beard of one inch versus no beard at all, as opposed to a difference of one inch and two or three or four or longer." Tr. 428. Under Directive # 4914, inmates currently have the option of keeping their hair in any length and any style and of keeping their mustaches and beards in any style not exceeding one inch in length. Since inmates may drastically change their appearances in numerous ways while still complying with Directive # 4914, we are not persuaded that the additional disguise options of a braided or rolled beard would lead to an increase in escape attempts or in disciplinary problems within the prison.[8]
To the extent that the one-inch beard restriction does promote identification of inmates, that objective can be obtained by the less restrictive means of rephotographing the inmate whenever the growth of his beard significantly changes his appearance.[9] Directive # 4914 already requires a clean-shaven picture of every inmate upon entry to the prison system. In addition, Directive # 4914 provides that an inmate can be rephotographed at his own expense "[i]f, in the opinion of the Correction Officer or Supervisor, an inmate drastically changes his appearance by changing the length of his hair or growing or shaving a beard and/or mustache." "While such an alternative may be administratively inconvenient or financially burdensome, such difficulties do not suffice to excuse the state from according basic constitutional rights to inmates." Monroe v. Bombard, 422 F.Supp. at 217.
Contraband
Defendants contend that the one-inch beard rule is necessary to prevent inmates from concealing contraband. One of defendants' attorneys demonstrated at trial that he could secrete and securely hold a nail file in his four-inch beard. Tr. 385-86. A nail file resembles a shank, or sharpened piece of metal, which inmates use as a weapon. Tr. 352.
*521 While we recognize the magnitude of the contraband problem facing prison authorities, we find that drugs or weapons could be hidden at least as easily in an inmate's long hair, clothing, or body as in his beard. In fact, defendants' expert conceded that he had never heard of an instance where an inmate had concealed contraband in his hair or beard. Coombe, Tr. 374-75. Furthermore, the governmental objectives of discouraging and detecting contraband in long beards may be served by the search procedures currently in effect. Inmates are searched periodically with metal detectors. In addition, during contraband searches the inmate is required to run his fingers through his hair and beard. If the correction officer suspects that something is still concealed, he himself can run his fingers through the inmate's beard and hair. Coombe, Tr. 373. Therefore, less restrictive alternatives are available to deal with the contraband problem.
Fairness
Defendants argue that the one-inch beard requirement is a neutral, consistent rule that can be understood easily by both staff and inmates. Allowing exceptions to fair and uniform regulations, defendants claim, creates confusion, resentment, and opportunities for confrontation between inmates and guards.
Defendants' position is belied by the fact that numerous DOCS directives already provide for exemptions for prisoners who have sincerely held religious beliefs. For example, "American Indians involved in scheduled and approved Indian cultural ceremonies" need not comply with the portion of Directive # 4914 that requires long hair to be tied back in a ponytail. Directive # 4202 provides that dietary requirements and the restrictions on activity of an inmate's Sabbath should be observed, and allows inmates to wear various religious items. Pl. Ex. 20. Pochoda testified that prisoners do not resent exemptions for other prisoners based on sincere religious belief as long as the exemption is based on a rule and all prisoners have the opportunity to demonstrate their religious interest. Tr. 432. To the limited extent that exceptions do result in confusion and resentment, these problems do not justify the impairment of Fromer's ability to observe his religious beliefs by growing his beard.
Safety and Hygiene
Defendants assert that an untrimmed beard can become caught in machinery and can pose a hygiene problem if the inmate is assigned to food service or if the beard becomes infested with vermin. Once again, we do not see a distinction between the situation presented by long hair and the situation presented by long beards. Inmates with long beards can be required to wear beard guards around machinery and food preparation areas or else be assigned to jobs not involving machines or foods. If vermin is detected in a beard, the inmate can be required to use a special shampoo to combat the problem or to cut his beard as a last resort.
CONCLUSION
Plaintiff has established that his refusal to trim his beard to comply with Directive # 4914 is based on beliefs that are sincerely held and religious in nature. We conclude that defendants' interests in identification of inmates, control of contraband, fairness, safety, and hygiene can all be served with alternatives less restrictive than requiring Fromer to trim his beard. Thus, defendants have failed to show that the limitations on Fromer's religious freedom occasioned by the beard restriction are no greater than necessary to effectuate the governmental objectives asserted. See Wali, 754 F.2d at 1033.
Accordingly, the portion of DOCS Directive # 4914 requiring inmates to trim their beards to one inch in length is hereby declared unconstitutional as applied to Fromer. Defendants are hereby enjoined from trimming, shaving, or in any other way shortening Fromer's beard; from ordering Fromer to trim, shave, or otherwise shorten his beard; and from punishing Fromer for refusing to trim, shave, or otherwise shorten his beard. Furthermore, defendants are ordered to restore to Fromer *522 all good time credits and any other privileges and benefits lost because of his past refusals to trim his beard. Defendants must also expunge from Fromer's record all references to disciplinary proceedings held because of the violation.
SO ORDERED.
NOTES
[1] Plaintiff commenced this action pro se in 1984 claiming retaliatory transfer and deprivation of kosher food and religious services. Following appointment of counsel, Fromer filed an amended complaint which added claims regarding the beard restriction. By order dated July 8, 1985, we consolidated the hearing on plaintiff's application for a preliminary injunction with the trial on the merits of the beard claims.
[2] Rabbi Wiener has been ordained by the Mirrer Yeshiva and the United Lubavitcher Yeshiva and is presently director of the Jewish Community Council of Greater Coney Island. Tr. 9-10.
[3] Rabbi Tendler was ordained by Yeshiva University and is chairman of the biology department there. He is a member of the Beth Din rabbinic court and is on the executive committee of the Union of Orthodox Rabbis of the United States. His father-in-law was Rabbi Moshe Feinstein, a leading Talmudic scholar until his death earlier this year. Tr. 602-04.
[4] Plaintiff's Exhibits 23, 24, and 25 and defendants' Exhibit BB, all of which were offered after trial, were admitted into evidence.
[5] See our discussion of the government's security concerns below.
[6] Mr. Coombe is responsible for the security of the fifty correctional facilities operated by DOCS and reports directly to Commissioner Coughlin. He has served as superintendent of the Otisville and Eastern Correctional Facilities. Tr. 337-38, 341.
[7] Pochoda has worked as a staff attorney with the Prisoners' Rights Project of the New York Legal Aid Society, executive director of the New York State Commission of Corrections, director of the Minimum Standards Unit of the New York City Board of Corrections, chair of a corrections task force of the New York State Division of Criminal Justice Services, and president of the Correctional Association of New York. Tr. 398-408.
We reject defendants' assertion that Pochoda's expert testimony must be disregarded because his "political convictions are very radical." Defendants' Post-Trial Memorandum at 30. We also find defendants' contention that Pochoda "assisted [Attica] inmates in efforts to leverage their demands through illegal strikes" in 1983 to be unsupported. Id. at 84.
[8] Defendants' contention that long beards would pose a significant security threat is also undermined by the fact that the escape rate in New York is one of the lowest in the United States, Coombe, Tr. 348, and by the experience of other prison systems that allow beards of any length. The New York City, federal, and California prison systems all do not restrict beards. Pl. Ex. 18; Combe, Tr. 513. Pochoda, who conducted research in the city correctional system for two years while drafting minimum standards for the New York City prisons, testified that the city has not encountered any problems in security, identification of inmates, safety, or hygiene resulting from its lack of beard restrictions. Tr. 433.
[9] Defendants argue that obtaining photographs of inmates wearing all the variations that could be adopted with a long beard would be impossible. However, photographs of the multiplicity of appearances possible with various hairstyles and facial hair not exceeding one inch are not considered necessary by DOCS. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1729320/ | 494 S.W.2d 624 (1973)
Albert E. FAGAN et al., Appellants,
v.
La GLORIA OIL AND GAS COMPANY, Appellee.
No. 774.
Court of Civil Appeals of Texas, Houston (14th Dist.).
April 25, 1973.
Rehearing Denied May 16, 1973.
*627 John A. Croom, Robert Levine, Pruitt & Monshaugen, Houston, for appellants.
Donald P. Butler, John B. Holstead, III, Vinson, Elkins, Searls, Connally & Smith, Houston, for appellee.
TUNKS, Chief Justice.
Cooper Petroleum Company (Cooper) is a Texas Corporation that was engaged in the marketing of petroleum products. The majority of its shares are owned by Albert E. Fagan. Its other shares are owned equally by Don Fagan, a son, Gerald Arnold and James Clark, sons-in-law of Albert E. Fagan. Those four individuals constitute all of the officers and directors of Cooper.
International Marketing, Inc. (I.M.I.) was also a Texas Corporation engaged in the marketing of petroleum products. Albert E. Fagan owned half of the shares of I.M.I. and the other half were pledged to him to secure his loan for their purchase price.
In 1964 I.M.I. was indebted to La Gloria Oil and Gas Company (La Gloria) for the purchase of petroleum products. I.M.I. was adjudged bankrupt. La Gloria filed suit in the district court of Harris County against Cooper and Albert E. Fagan. That suit was based upon the allegations that the defendants were guarantors of the account owed by I.M.I., the bankrupt, to La Gloria.
After I.M.I. was adjudged bankrupt the trustee in bankruptcy also filed suit against Cooper and Albert E. Fagan. That suit was filed in a federal district court. It was based upon allegations that those defendants had received voidable preferences as creditors of I.M.I. In that suit in June 1966, the trustee recovered a judgment against Cooper for $81,000 and against Albert E. Fagan for $59,000. Later the appellate court, in affirming, increased the principal amount of the judgment against Cooper to $121,000.
In January 1967 La Gloria recovered in its suit a judgment against Cooper for $160,000 and against Albert E. Fagan for $136,000. That judgment was appealed to this Court and was affirmed at 423 S.W.2d 645. It was, however, reversed by the Supreme Court (436 S.W.2d 889) and remanded for another trial. On retrial, on January 22, 1970, La Gloria was adjudged a recovery against Cooper for $160,000 and against Albert E. Fagan for $88,000. That judgment was affirmed by an unpublished opinion of the First Court of Civil Appeals and application for writ of error was not granted. It thereby became final and non-appealable on March 24, 1971. Thereupon Albert E. Fagan paid the judgment against him, but the judgment against Cooper remains unpaid.
In December 1967 the total of the judgment in favor of the trustee in bankruptcy and against Cooper and Albert E. Fagan, together with accrued interest and costs, amounted to about $220,000. On December 27, 1967, Albert E. Fagan paid the trustee $100,000 for which he was given a release of the judgment against him and an assignment of the judgment against Cooper. On the basis of his ownership of the judgment against Cooper, Albert E. Fagan filed judgment liens in those counties wherein Cooper owned realtymostly filling station sites. This procedure effectively prevented La Gloria from reaching Cooper's realty by levy of execution.
Cooper did not supersede the judgment La Gloria got against it upon the second trial. While Cooper's appeal from that judgment was pending La Gloria levied execution but was unable to reach any property of significant value. La Gloria thereupon filed the suit from which this appeal was taken. It is a suit in the nature of a creditor's bill. It named Albert E. Fagan, Don Fagan, Gerald Arnold and James Clark as defendants. After a nonjury trial judgment was rendered against the defendants, jointly and severally, for $238,697.22. The defendants have perfected appeal. The substance of the appellants' contentions *628 is that the debt to La Gloria is owed by the corporation, Cooper, and that appellants have no personal liability for that debt under either the "trust fund doctrine" or the "alter ego" theory. Appellants do not complain of the amount of the trial court's judgment except that they say that James Clark who left Cooper in 1968 should not be held liable on the entire amount.
Appellee La Gloria counters with the contention that the personal liabilities of the defendants are sustainable under either the trust fund or alter ego theory. It also contends that the defendants wrongfully diverted Cooper's corporate assets to themselves for the purpose of preventing La Gloria from reaching those assets and, for that reason, the defendants are personally liable under the principles of equity. It contends that James Clark was a joint participant in the fraud against it and, as such, is jointly liable for the entire judgment.
As noted above, this case was tried before the court without a jury. No findings of fact or conclusions of law were requested or filed. We must, therefore, affirm the trial court's judgment if it can be upheld on any legal theory that is supported by the evidence. The judgment implies findings of fact that support it. No point of error presented by appellants questions the factual sufficiency or preponderance of the evidence as to any implied finding by the trial court. We must, therefore, in determining whether the evidence supports implied findings that constitute a lawful basis for the judgment, consider only that evidence consistent with such implied findings and disregard evidence to the contrary. Seaman v. Seaman, 425 S.W.2d 339 (Tex.Sup.1968); Bishop v. Bishop, 359 S.W.2d 869 (Tex.Sup.1962); Lebow v. Weiner, 420 S.W.2d 755 (Tex. Civ.App.-Houston (14th Dist.) 1967, no writ). It is with these rules as a guide that we examine the evidence in this case.
It is a basic rule of law that officers and directors of a corporation owe to it duties of care and loyalty. They stand in a fiduciary relationship to the corporation. Such duties, however, are owed to the corporation and not to creditors of the corporation. In ordinary circumstances where an officer or director negligently mismanages corporate business to its injury or takes to himself that which belongs to, or in fairness and equity should be acquired by, the corporation, a cause of action in behalf of the corporation arises. Such cause of action can be prosecuted only by the corporation, itself, or by someone authorized to act in its behalf. Such cause of action under some circumstances, may be prosecuted by one standing in the position of the corporation for the benefit of a creditor, but not directly by the creditor, himself. Such breaches of duty neither create a cause of action in a creditor of the corporation for the wrong done the corporation nor, without more, entitle the creditor to collect his claim from the officers and directors. Sutton v. Reagan & Gee, 405 S.W.2d 828 (Tex.Civ.App.-San Antonio 1966, writ ref'd n. r. e.).
There is a well recognized exception to that basic rule. That exception is frequently called the trust fund doctrine. Such exception, stated in general terms, is to the effect that when a corporation (1) becomes insolvent and (2) ceases doing business, then the assets of the corporation become a trust fund for the benefit, primarily, of its creditors. The officers and directors hold the corporate assets in trust for the corporate creditors. They are placed in a fiduciary relation to and owe a fiduciary duty to the creditors. That duty obliges them to administer the corporate assets for the benefit of the creditors and to ratably distribute them. The breach of that duty gives rise to a cause of action against the officers and directors which can be prosecuted directly by the creditors.
The Texas Supreme Court in Lyons-Thomas Hardware Co. v. Perry Stove *629 Manuf'g Co., 86 Tex. 143, 24 S.W. 16 (1893) held the trust fund doctrine to be the law of Texas. At page 25 of that opinion the following language of Corey v. Wadsworth, 99 Ala. 68, 11 So. 350, 353 (1892) was quoted as a correct statement of the law on this subject:
"`At what stage of a corporation's affairs must it be pronounced insolvent, so as to bring it within the principles we have declared? It is not enough that its assets are insufficient to meet all its liabilities, if it be still prosecuting its line of business, with the prospect and expectation of continuing to do so,in other words, if it be, in good faith, what is sometimes called a "going" business or establishment. Many successful corporate enterprises, it is believed, have passed through crises where their property and effects, if brought to present sale, would not have discharged all their liabilities in full. We feel safe in declaring that when a corporation's assets are insufficient for the payment of its debts, and it has ceased to do business, or has taken, or is in the act of taking, a step which will practically incapacitate it for conducting the corporate enterprise with reasonable prospect of success, or its embarrassments are such that early suspension and failure must ensue, then such corporation must be pronounced insolvent.'"
Among other Texas cases that hold the rule applicable are Waggoner v. Herring-Showers Lumber Co., 120 Tex. 605, 40 S.W.2d 1 (1931); Orr & Lindsley Shoe Co. v. Thompson, 89 Tex. 501, 35 S.W. 473 (1896), and Wortham v. Lachman-Rose Co., 440 S.W.2d 351 (Tex.Civ.App.-Houston (1st Dist.) 1969, no writ).
Cooper's records were kept on the basis of a fiscal year ending on June 30. Its balance sheet on June 30, 1966, showed a stated capital of $150,000 and, in round figures, an earned surplus of $102,000. However, that balance sheet, despite the fact that the trustee in bankruptcy had got a judgment against Cooper for $81,000 less than a month earlier, failed to show any liability related to that judgment. The accountant's note to that statement referred to the judgment and explained his failure to show it as a liability by saying, "..., in the opinion of the company's legal counsel, the judgment in its entirety is erroneous and will be reversed." (In fact, that judgment not only was not reversed, but its principal amount was increased by $40,000). Also on that date La Gloria had pending a suit against Cooper that ultimately resulted in a final judgment for $160,000. The balance sheet did not reflect that claim as a basis for any stated liability. The accountant's failure to so reflect it is again explained as being based on the opinion of the company's counsel that the plaintiff would be unsuccessful in the suit.
Not only was there evidence that Cooper's liabilities were understated on its 1966 balance sheet, but also there was evidence that its assets were overstated. Listed as an asset was an account receivable in the amount of $192,000. The evidence showed this item represented money advanced in an oil and gas venture and was repayable only out of the profits, if any, of such venture. At the date in question there was little prospect that any substantial part of it would ever be repaid.
There was evidence to support an implied finding by the court that on June 30, 1966, there existed the first of the facts necessary to apply the trust fund doctrine the insolvency of Cooper.
Cooper did not abruptly cease doing business on June 30, 1966. In fact it continued to operate on a substantial scale for sometime thereafter. In the year ending June 30, 1966, its gross receipts were about seven and a half million dollars. The approximate figures for subsequent years were: 1967six and a half million, 1968two and a half million, 1969two million, 1970one million, and 1971one half million. Thereafter it did no business. In *630 three of those years the company's books showed a small net profit before taxes. In the other three years substantial losses were shown. The total for the six year period was a loss of more than two hundred thousand dollars.
There is other significant evidence that characterizes the manner in which the management of Cooper conducted its business after it became insolvent on or before June 30, 1966.
On July 4, 1966, Cooper assigned all of its accounts receivable, present and future, to Albert and Don Fagan. All subsequent invoices to customers bore a notification of such assignment.
On July 12, 1966, Cooper reduced the bank account that was maintained in its name to a nominal amount and opened a concealed account in the name of "Robert W. Pate, Trustee." Thereafter Cooper manipulated its commercial transactions through use of the Pate account.
When the subterfuge of the Pate account was discovered by La Gloria's attorneys, another procedure was used to prevent La Gloria from reaching any funds Cooper had on deposit. Cooper, when it received collections from its customers, would hold them until checks which Cooper had written to its creditors were presented to the bank for payment. Thereupon Cooper would deposit its collections. If the deposits were more than enough to pay the checks drawn on its account and presented for payment, Cooper would buy cashier's checks to the extent of the excess.
For some years in the past Albert E. Fagan had had a contract with Cooper under the terms of which he was entitled to an annual bonus of 35% of Cooper's net profit before taxes. On September 12, 1966, Cooper's board of directors passed a resolution giving Don Fagan, Gerald Arnold and James Clark each an annual bonus of 15% of the net profits before taxes. The four officers, directors and shareholders thereupon paid themselves more than $100,000 in purported bonuses. Cooper's records show that it sustained a loss during the year ending June 30, 1967.
The false character of the so-called bonus payments that the officers made to themselves is evidenced by a notation on a work sheet upon which the company accountant computed the bonuses payable for the year ending June 30, 1968. As a note to his computation of a $3,000 bonus for Albert E. Fagan, the accountant wrote:
"Per terms of employment contract, literally A. E. Fagan would not receive a bonus, because there was a net loss before taxes; however, according to Don Fagan, this provision has been waived in the past and bonuses have been given (example 1966".
The June 30, 1966 balance sheet showed as a liability notes payable to stockholders in the amount of $67,000. The balance sheet of June 30, 1971, shows that that liability had been reduced to zero.
The Fagan family owned and controlled another corporation, Oil Chemical Marketing, Inc. (O.C.M.) which was engaged in substantially the same business as Cooper. The evidence sustains the conclusion that during the period of Cooper's decline its business was funneled into O.C.M. Some of Cooper's filling station properties and other properties were acquired by O.C.M. On December 31, 1970, Cooper's gasoline tax bond, guaranteed by Albert E. Fagan, expired. Thereafter a gasoline tax bond for O.C.M. was acquired on the basis of Albert E. Fagan's guarantee.
During the period following June 30, 1966, substantially all of the physical assets of Cooper were acquired by members of the Fagan family or by O.C.M. Even the office furniture and fixtures were bought by Don Fagan. The debts owed by Cooper to outside creditors and on which members of the Fagan family were guarantors were paid. At the time of the trial Albert E. Fagan testified that there were no unpaid *631 creditors except for some possible minor ones whom he could not identify and whose combined claims totaled less than $1,500. Albert E. Fagan did, however, contend that he had a valid claim as the owner of the judgment which the trustee in bankruptcy had got against Cooper.
Under the evidence in this record the trial judge was justified in believing that in July 1966 those in control of Cooper conceived and instituted a scheme whereby they would so manipulate Cooper's affairs that it would continue business solely for the purpose of permitting it to pay the claims which they had against it and to pay the claims of creditors to whom they were secondarily liable. It was part of their scheme so conceived and instituted that they would strip the corporation of any surplus funds that it would otherwise have had with which to pay its creditor, La Gloria, by paying to themselves spurious bonuses. Their scheme also included an intention to acquire for themselves, for other members of their family and for O.C.M., which they controlled, all of the physical assets which Cooper owned and to transfer to O.C.M. Cooper's business operations. The evidence shows that their scheme so conceived and instituted was fully carried out so that on December 31, 1970, Cooper was an empty shell and La Gloria was unpaid. That was not the "good faith" continuation of Cooper's corporate business which would, under the rule set forth in the Lyons-Thomas Hardware Co. case, supra, prevent the applicability of the trust fund doctrine. On the contrary, we hold that the evidence sustains the implied finding by the trial court that as of June 30, 1966, Cooper was not only insolvent, but also ceased doing business in good faith and its management had no expectation that it ever again would resume such good faith operation. On that date, or soon thereafter, Cooper's managers began a nonstatutory process of dissolving their corporation, which process was followed to substantial completion. The evidence sustains the trial court's implied finding that La Gloria did not receive its equitable share of the assets of Cooper that were misapplied by the defendants. The appellants have not presented a point of error to the effect that the court's judgment is excessive in amount. The trial court's judgment against the defendants as officers and directors of Cooper is sustainable under the theory of the trust fund doctrine.
We have not ignored the fact that Albert E. Fagan contended that he, too, was a creditor of Cooper by virtue of his purchase of the judgment from the trustee in bankruptcy. We have, however, considered that fact immaterial since the appellants have not preserved any point to the effect that the trial court's judgment is excessive in that it awards La Gloria a recovery that is more than it would have received if Cooper's assets had been ratably and properly distributed among its valid creditors.
Furthermore, when Albert E. Fagan paid the trustee the $100,000, he apportioned the payment so as to fully pay the $59,000 judgment against him, personally, in order to get a valid release from it. He, therefore, paid something less than $41,000 for the assignment to him of the judgment against Cooper which then, with accumulated interest and costs, amounted to more than $138,000. He has already recovered from Cooper more than he paid for the judgment by levying execution on filling stations having a value, according to the testimony, of from $64,000 to $94,000. At the time he bought the judgment, in December 1967, the nonstatutory program to dissolve Cooper had been instituted and substantially accomplished. Cooper's ultimate total dissolution was imminent. Under the circumstances Albert E. Fagan's claim, if any, against the assets of Cooper for any amount in excess of the amount that he had paid for the judgment, which latter amount he had already recovered, could have been adjudged by the trial court to be subordinate to La Gloria's claim. See Taylor v. Standard Gas & Electric *632 Co., 306 U.S. 307, 618, 59 S. Ct. 543, 83 L. Ed. 669 (1939). 3 W. Fletcher, Private Corporations, sec. 869.1 (1965).
Aside from the trust fund doctrine there is another theory of law that sustains the trial court's judgment. The evidence sustains an implied finding that the defendants appropriated to themselves the assets of Cooper and thereby "denuded" it so that it had nothing left with which to pay La Gloria. To the extent that they, as shareholders of Cooper, took to themselves the corporate assets, they are personally liable on La Gloria's claim. World Broadcasting System, Inc. v. Bass, 160 Tex. 261, 328 S.W.2d 863 (1959); Burton Mill & Cabinet Works, Inc. v. Truemper, 422 S.W.2d 825 (Tex.Civ.App.-Waco 1967, writ ref'd n. r. e.). Again we note that appellants have not challenged the amount of the trial court's judgment by contending that it exceeds the value of corporate assets taken by them.
The third theory proposed by the appellee as a basis for support of the trial court's judgment, that based upon the alter ego concept, is not applicable to the facts of this case. That theory is a nebulous one and is often misapplied or loosely applied by the courts. In some cases courts have applied it in fact situations similar to that wherein the Texas Supreme Court in the Lyons-Thomas Hardware Co. case, supra, applied the trust fund theory as a basis for holding officers and directors liable. In other cases the courts have applied it in fact situations similar to that wherein the Texas Supreme Court in the World Broadcasting case, supra, held shareholders personally liable because they had "denuded" the corporation by taking to themselves all of its assets. The U.S. Supreme Court in Taylor v. Standard Gas & Electric Co., supra, at 306 U.S. 322, at 59 S. Ct. 550, said of the rule, which it there called the "instrumentality rule",
"It is not, properly speaking, a rule, but a convenient way of designating the application, in particular circumstances, of the broader equitable principle that the doctrine of corporate entity, recognized generally and for most purposes, will not be regarded when so to do would work fraud or injustice."
There are some situations wherein the rule based upon the alter ego concept can be applied, with some degree of reason, to hold shareholders liable to creditors of their corporation. Those are situations wherein the corporation is not maintained as a bona fide entity, separate and distinct from its shareholders in the conduct of its own business, but rather is used as an agent or servant of the shareholders in the furtherance of their personal business. In such a situation where the corporation purportedly enters into a contract, but in doing so is in reality acting as agent for the shareholders in the furtherance of their personal business, the shareholders become liable on the contract, or for its breach, under the law of principal and agent. Where such a corporation commits a tort while carrying on the personal business of the shareholders, the latter become liable under the rule of respondeat superior. To impose such liability upon the shareholders it must be shown that they used it as a sham to accomplish a fraudulent, illegal or unfair purpose. Bell Oil & Gas Co. v. Allied Chemical Corp., 431 S.W.2d 336 (Tex.Sup.1968). Such theory of liability is not applicable to the facts of this case. La Gloria's claim against Cooper is based upon a guaranty contract made in 1964. There is no showing that in the making of such contract at such time Cooper was anything other than a bona fide corporation acting in the furtherance of its own separate and legitimate business. It was not, in making such contract, acting as the agent (alter ego) of its shareholders.
The final question to be disposed of by this appeal relates to the appellants' contention that James Clark should not be jointly liable for the entire amount awarded La Gloria. Clark left Cooper in October of 1968. Appellants *633 argue that the facts giving application to the trust fund theory did not occur until 1971, so that Clark never became a fiduciary. That argument does not prevail because the trust was fixed as of the end of Cooper's fiscal year on June 30, 1966. Clark became a fiduciary of La Gloria at that time. He jointly participated in the institution and accomplishment of the program by which La Gloria was inequitably deprived of its pro rata share of Cooper's assets on Cooper's dissolution. La Gloria's measure of recovery against the officers and directors of Cooper, who became La Gloria's trustees, is the difference between what it got of such assets (nothing) and what it would have got on equitable distribution. No contention is made here that the judgment rendered is for an amount in excess of such measure. There is no evidence that Clark ever renounced the breach of trust or ever took any action to prevent the fraudulent program thereby set in operation from running its full course. As a joint participant in it, he is jointly and severally liable for La Gloria's entire loss.
Under the theory of liability recognized in the World Broadcasting case, supra, the extent of the liability of the shareholders who have denuded a corporation is the value of the assets that they have wrongfully taken. Those shareholders who jointly participated in the wrongful taking of corporate assets each became jointly and severally liable to the corporate creditors for the entire value of the assets so taken by all shareholders, up to an amount sufficient to satisfy the claims against the corporation. There is no contention made here that the evidence does not support an implied finding that the total value of Cooper's assets wrongfully taken by these defendants does not equal or exceed the amount of La Gloria's judgment. Clark, as a joint participant in that wrong, is jointly and severally liable for the entire judgment.
The judgment of the trial court is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2355861/ | 940 F. Supp. 295 (1996)
Gary McCLAIN, Plaintiff,
v.
SOUTHWEST STEEL COMPANY, INC., a corporation, Defendant.
No. 95-C-751-H.
United States District Court, N.D. Oklahoma.
June 25, 1996.
*296 *297 Thomas L. Bright, Tulsa, OK, for plaintiff.
Janet M. Reasor, Zieren & Reasor, Tulsa, OK, for defendant.
ORDER
HOLMES, District Judge.
This matter comes before the Court on a Motion for Summary Judgment by Defendant, Southwest Steel Company, Inc. (Docket # 19). The Court granted Plaintiff's motion to amend his complaint on June 12, 1996 (styled as "Second Amended Petition"). On June 14, 1996, the Court held a hearing with respect to Defendant's motion.
Defendant Southwest Steel employed Plaintiff Gary McClain as a "draw bench operator" from 1983 until June 14, 1995. In March 1993, Mr. McClain was admitted to Eastern State Hospital in Vinita, Oklahoma, for treatment of problems stemming from several deaths in his and his wife's families, for verbal fighting with people, and for "just everyday living." (Pl.'s Resp. to Def.'s Mot. for Summ. J. at 3.) He subsequently was admitted to Tulsa Regional Medical Center for similar treatment. (Id.) Plaintiff was prescribed medication for depression and high blood pressure.
On June 14, 1995, Plaintiff's supervisor, Dwayne Ross, plant superintendent Earl Williams and safety engineer Roland Ferrell made a joint decision to terminate Mr. McClain for allegedly violating Southwest Steel's policy against absenteeism. Following his termination, Plaintiff told his doctor that he missed work the day he was terminated because he had experienced a "kind of lightheadedness, [and] everything just looked kind of funny." (Pl.'s Resp. to Def.'s Mot. for Summ. J. at 8.)
I.
Summary judgment is appropriate where "there is no genuine issue as to any material fact," Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986); Windon Third Oil & Gas Drilling Partnership v. Federal Deposit Insurance Corp., 805 F.2d 342, 345 (10th Cir.1986), cert. denied, 480 U.S. 947, 107 S. Ct. 1605, 94 L. Ed. 2d 791 (1987), and "the moving party is entitled to judgment as a matter of law," Fed.R.Civ.P. 56(c). In Celotex, the Supreme Court held:
[t]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.
477 U.S. at 322, 106 S. Ct. at 2552.
A party opposing a properly supported motion for summary judgment must offer evidence, in admissible form, of specific facts, Fed.R.Civ.P. 56(e), sufficient to raise a "genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, *298 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986) ("the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment"). "Factual disputes that are irrelevant or unnecessary will not be counted." Id. at 248, 106 S. Ct. at 2510.
Summary judgment is only appropriate where "there is [not] sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Id. at 250, 106 S. Ct. at 2511. As the Supreme Court held, "[t]he mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff." Id. at 252, 106 S. Ct. at 2512. Thus, to defeat a summary judgment motion, the nonmovant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986); Anderson, 477 U.S. at 250, 106 S. Ct. at 2511 ("there is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." (citations omitted)).
In essence, the inquiry for the Court is "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, 477 U.S. at 250, 106 S. Ct. at 2511. In its review, the Court construes the record in the light most favorable to the party opposing summary judgment. Boren v. Southwestern Bell Tel. Co., 933 F.2d 891, 892 (10th Cir. 1991).
II.
In Claim I and Claim II, Plaintiff alleges that his termination constituted a wrongful discharge in violation of Oklahoma public policy. In Claim I, Plaintiff contends that his discharge was based on "handicap and disability discrimination." (Pl.'s Second Amended Petition at 3.) In Claim II, Plaintiff alleges that his termination was motivated by discrimination regarding mandatory leave taken in connection with a serious health condition. (Id. at 5.) In List v. Anchor Paint Mfg. Co., 910 P.2d 1011 (Okla. 1996), the Oklahoma Supreme Court held that common law claims of age discrimination were barred as a matter of law, stating that "[b]ecause Mr. List's statutory remedies are adequate and his common law claim is based solely on his status, his statutory remedies are exclusive." Id. at 1015 (emphasis added). In the present case, Plaintiff's state common law claims are based solely on his status as an allegedly "disabled" individual. Applying List to the instant case,[1] the Court concludes that Plaintiff's statutory remedies under the federal Family and Medical Leave Act ("FMLA"), 29 U.S.C. § 2601 et seq., and the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12101 et seq., are exclusive, and thus his claims for wrongful discharge in violation of Oklahoma public policy are barred. Accordingly, Defendant's motion for summary judgment with respect to Claim I and Claim II is hereby granted.
III.
In Claim III, Plaintiff alleges that Defendant violated the federal Family and Medical Leave Act ("FMLA") by terminating him for absenteeism rather than granting him mandatory leave as required by the statute. Plaintiff contends that he suffers from chronic nausea, diarrhea, vomiting, severe headaches, dizziness, and/or lightheadedness for which he has been under the continuing care of Dr. Dwight Korgan. Plaintiff further claims that he periodically reported these problems to Dr. Korgan, that these symptoms continued over an extended period of time, and that Plaintiff had occasional episodic recurrences of the symptoms that prevented him from working. Defendant denies that the medical evidence is sufficient to support Mr. McClain's claim that, at the time of his termination, he had a "serious health condition" under the FMLA.
*299 Defendant alleges that on May 18, 1995, Plaintiff received a written employee evaluation in which he was given an "unacceptable" rating due to poor attendance and was told he must improve his attendance in the future. Defendant further alleges that on Saturday, June 10, 1995, Plaintiff failed to report for work and also failed to notify his employer that he would be absent. Defendant alleges that Plaintiff again failed to report for work without notice four days later, on June 14, 1995. In response to these allegations, Plaintiff states that he does not recall being expected at work on June 10, a Saturday, and that he had called in sick on the morning of June 14.
The FMLA provides for a private right of action by employees for violations of the statute. 29 U.S.C. § 2617(a)(2). The FMLA states, in applicable part:
Any employer who violates section 2615 of this title shall be liable to any eligible employee affected
(A) for damages equal to
(i) in the amount of
(I) any wages, salary, employment benefits, or other compensation denied or lost to such employee by reason of the violation; ...
. . . . .
(ii) the interest on the amount described in clause (i) calculated at the prevailing rate; and
(iii) an additional amount as liquidated damages equal to sum of the amount described in clause (i) and the interest described in clause (ii), except that if an employer who has violated section 2615 of this title proves to the satisfaction of the court that the act or omission which violated section 2615 of this title was in good faith and that the employer had reasonable grounds for believing that the act or omission was not a violation of section 2615 of this title, such court may, in the discretion of the court, reduce the amount of the liability to the amount and interest determined under clauses (i) and (ii), respectively; and
(B) for such equitable relief as may be appropriate, including employment, reinstatement, and promotion.
29 U.S.C. § 2617(a)(1). The statute and the regulations set forth a framework for any cause of action brought under the FMLA. In order for an "eligible employee" to establish liability by an "employer," as both terms are defined by the FMLA, 29 U.S.C. § 2611(2) & (4), such employee must establish (1) entitlement to leave as defined by 29 U.S.C. § 2612(a)(1), and (2) that such entitlement to leave was interfered with by the employer in violation of 29 U.S.C. § 2615.[2] In response, an employer may assert as affirmative defenses (1) that the plaintiff failed to provide the notice required by the FMLA and the regulations promulgated by the Department of Labor, 29 U.S.C. § 2612(e)(1) (applying to foreseeable leave only); 29 C.F.R. § 825.303 (applying to unforeseeable leave); and/or (2) that the plaintiff failed to provide sufficient "certification issued by the health care provider," if and to the extent certification was required by the employer in the particular case, 29 U.S.C. § 2613; 29 C.F.R. §§ 825.305-308.
With respect to Defendant's liability in the instant case, the Court concludes that there *300 is a genuine issue of material fact at least as to whether Plaintiff was entitled to leave under the FMLA at the time of his termination. See 29 U.S.C. § 2612; 29 C.F.R. § 825.114. Therefore, summary judgment as to Claim III is inappropriate.
With respect to the available affirmative defenses, Defendant argues that Plaintiff failed to provide sufficient notice for his absences under the FMLA, and therefore, he is precluded altogether from seeking its protections. Plaintiff is not required, however, to specify that his request for leave is covered by the FMLA in order to come within its provisions. See Manuel v. Westlake Polymers Corp., 66 F.3d 758, 761-64 (5th Cir. 1995) (holding that an employee requesting unforeseeable medical leave is not required to even mention the FMLA when requesting leave for a serious health condition); see also 29 C.F.R. § 825.303 (setting out notice requirements for unforeseeable leave). As the Fifth Circuit stated in Manuel,
"it is the employer's responsibility to designate leave ... as FMLA-qualifying, based on information provided by the employee." 29 C.F.R. § 825.208(a)(2). If the employer does not have sufficient information about the employee's reason for taking leave, "the employer should inquire further to ascertain whether the paid leave is potentially FMLA-qualifying." Id. To require the employee to designate her leave as pursuant to the FMLA would render these provisions meaningless, if not directly contradict them.
Manuel, 66 F.3d at 762. Thus, Defendant's motion for summary judgment based on inadequate notice under the FMLA must fail.
Based on the foregoing, Defendant's motion for summary judgment with respect to Claim III is hereby denied.
IV.
In Claim IV, Plaintiff alleges that Defendant intentionally engaged in extreme and outrageous conduct that caused him emotional distress.
Under Oklahoma law, recovery for the tort of intentional infliction of emotional distress is strictly limited to circumstances where the acts committed are so extreme or outrageous as to demand redress. As the Oklahoma Supreme Court stated,
"Liability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community. Generally, the case is one in which the recitation of the facts to an average member of the community would arouse his resentment against the actor, and lead him to exclaim, `Outrageous!'
The liability clearly does not extend to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities."
Breeden v. League Services Corp., 575 P.2d 1374, 1376 (Okla.1978) (quoting Restatement (Second) of Torts § 46 cmt. d (1965)). Moreover, the events giving rise to the complaint must be judged within the context in which the events occurred. Eddy v. Brown, 715 P.2d 74, 77 (Okla.1986) (stating that "[t]he salon of Madame Pompadour is not to be likened to the rough-and-tumble atmosphere of the American oil refinery").
In the present case, Plaintiff bases his claim for emotional distress on alleged harassment in the workplace. Co-workers allegedly referred to Mr. McClain as "crazy" and/or as "a lunatic" and talked about people on Prozac or going to the mental health facility in Vinita, Oklahoma. Plaintiff further alleges that his supervisor Dewayne Ross was "hateful" and asked him "what the f* * *'s wrong with you." Plaintiff alleges that he brought these comments to the attention of Defendant's management.
The Court finds that even assuming these allegations to be true, Plaintiff has not established the kind of conduct necessary to support a claim for intentional infliction of emotional distress under Oklahoma law. See Eddy, 715 P.2d at 77. Therefore, Defendant's motion for summary judgment as to Plaintiff's Claim IV is hereby granted.
V.
In Claim V and Claim VI, Plaintiff alleges violations of the ADA and the Oklahoma *301 statutes prohibiting disability and handicap discrimination, respectively. At the hearing, the parties agreed for purposes of the instant motion and for trial that the elements of each claim are identical.
Plaintiffs claims for discrimination can be divided into two separate issues: (1) discriminatory discharge, and (2) hostile work environment. With respect to the former, the Court finds a genuine issue of material fact exists as to whether Plaintiff is "disabled" as defined by the ADA.[3] Thus, Defendant's motion for summary judgment as to Plaintiff's claim of employment discrimination based on his termination is hereby denied.
With respect to Plaintiff's claim of a hostile work environment, this Court is guided by the Supreme Court's decision in Harris v. Forklift Systems, Inc., 510 U.S. 17, 114 S. Ct. 367, 126 L. Ed. 2d 295 (1993), which addresses a hostile work environment claim under Title VII of the Civil Rights Act. Id. at 20-23, 114 S. Ct. at 370-71.[4] The Supreme Court held that language of Title VII prohibiting discrimination on the basis of race, color, religion, sex, or national origin "is not limited to `economic' or `tangible' discrimination." Id. at 21, 114 S. Ct. at 370. By including the phrase "terms, conditions, or privileges of employment" in the statute, 42 U.S.C. § 2000e-2(a)(1), Congress intended "`to strike at the entire spectrum of disparate treatment ... in employment,' which includes requiring people to work in a discriminatorily hostile or abusive environment." Id. (quoting Meritor Savings Bank v. Vinson, 477 U.S. 57, 64, 106 S. Ct. 2399, 2404, 91 L. Ed. 2d 49 (1986)).
Congress included precisely the same language in the ADA's general rule prohibiting discrimination in employment, stating: "No covered entity shall discriminate against a qualified individual with a disability because of the disability of such individual in regard to ... terms, conditions and privileges of employment." 42 U.S.C. § 12112(a). The Court concludes that the use of this language in the ADA indicates that Congress intended for hostile work environment claims under the ADA to be governed by the same standard as that applied to similar claims under Title VII as articulated in Forklift Systems. See, e.g., Haysman v. Food Lion, Inc., 893 F. Supp. 1092, 1106-07 (S.D.Ga.1995); Mannell v. American Tobacco Co., 871 F. Supp. 854, 860-61 (E.D.Va. 1994).
The standard articulated in Forklift Systems requires that:
When the workplace is permeated with "discriminatory intimidation, ridicule, and insult," that is "sufficiently severe or pervasive to alter the conditions of the victim's employment and create an abusive working environment," Title VII is violated.
. . . . .
"[M]ere utterance of an ... epithet which engenders offensive feelings in an employee," ... does not sufficiently affect the conditions of employment to implicate Title VII. Conduct that is not severe or pervasive enough to create an objectively hostile or abusive work environment an environment that a reasonable person would find hostile or abusive is beyond Title VII's purview. Likewise, if the victim does not subjectively perceive the environment to be abusive, the conduct has not actually altered the conditions of the victim's employment, and there is no Title VII violation.
Id. at 21-22, 114 S. Ct. at 370 (citations omitted) (emphasis added). Moreover, "[f]or comments to rise to the level of adverse *302 employment action, the conduct must be so egregious as to `alter the conditions of employment.'" Henry v. Guest Servs., Inc., 902 F. Supp. 245, 252 (D.D.C.1995) (quoting Patterson v. McLean Credit Union, 491 U.S. 164, 180, 109 S. Ct. 2363, 2374, 105 L. Ed. 2d 132 (1989)). Both the objective and the subjective components of this test must be satisfied for a plaintiff to establish a hostile or abusive work environment. See Howard v. Navistar Int'l Transp., 904 F. Supp. 922, 932 (E.D.Wis.1995).
In the present case, Defendant's conduct that allegedly created a hostile work environment is recounted in section IV, above, as the basis for Plaintiff's claim for intentional infliction of emotional distress. Applying the standard articulated in Forklift Systems, the Court holds that the comments attributed to Plaintiff's co-workers and/or supervisor were neither severe nor pervasive so as to "alter the conditions of his employment."[5] "[C]ompared against an objective standard of reasonableness," these comments would not be considered hostile. Howard, 904 F.Supp. at 932 (emphasis added). Therefore, the Court concludes that the conduct and remarks did not create an environment so hostile as to constitute an adverse employment action under the ADA. Defendant's motion for summary judgment as to Plaintiff's hostile work environment claim is hereby granted.
VI.
In summary, Defendant's motion for summary judgment is hereby granted in part and denied in part. Specifically, Defendant's motion for summary judgment is hereby granted with respect to Claim I, Claim II, Claim IV. Further, to the extent that Claim V and Claim VI allege claims of hostile work environment, Defendant's motion for summary judgment is hereby granted. Defendant's motion for summary judgment is hereby denied with respect to Claim III. Further, to the extent that Claim V and Claim VI allege claims of discriminatory discharge, Defendant's motion for summary judgment is hereby denied.
IT IS SO ORDERED.
NOTES
[1] At the hearing, Plaintiff conceded that List controlled the allegations contained in Claim I. The Court holds that List controls the allegations in Claim II as well.
[2] Defendant implies that the standards established under the ADA should apply to a cause of action for wrongful termination under the FMLA. (Def. Br. in Support of Summ. J. 9-11) (citing Oswalt v. Sara Lee Corp., 889 F. Supp. 253, 259 (N.D.Miss.1995).) The Oswalt court held that:
[t]he plaintiff must produce evidence that he or she is protected under the FMLA, that he or she suffered an adverse employment decision, and either that the plaintiff was treated less favorably than an employee who had not requested leave under the FMLA or that the adverse decision was made because of the plaintiff's request for leave.
889 F.Supp. at 259. The Court holds that this formulation of liability is supported neither by the statute nor by the regulations promulgated by the Department of Labor. While the FMLA has some of the same anti-discrimination characteristics as the ADA and Title VII, there is no requirement that a employee requesting leave demonstrate that he had been treated less favorably than an employee not requesting leave. Moreover, the FMLA imposes affirmative duties upon employers with regard to family and medical leave, and thus can be characterized as a present entitlement to qualified leave and not merely a post hoc prohibition against discrimination.
[3] On the issue of Plaintiff's alleged disability, two distinct claims are made: (1) the Plaintiff is disabled under the ADA due to physical complaints that have a substantial impact on the major life activity of working and (2) Defendant "regards" Plaintiff as disabled due to his "major depression." See 42 U.S.C. § 12102(2). Both allegations under the ADA present a genuine issue of material fact, and thus, both survive Defendant's motion for summary judgment.
[4] As a threshold issue, for Plaintiff to make a prima facie case of harassment under the ADA, the Plaintiff must be a qualified individual with a disability. For the purposes of the hostile work environment analysis herein, the Court assumes arguendo that Plaintiff has met this burden.
[5] The United States District Court for the District of Columbia addressed similar facts in Henry. There Plaintiff, who suffered from major depression and had once attempted to commit suicide, alleged that he was "subjected to jokes by management personnel concerning his depression," and that he "discover[ed] a cartoon poking fun at his disability [in his mailbox]." Henry, 902 F.Supp. at 251-52. The Court granted summary judgment to Defendant and held that "[a]s offensive as [this conduct] must have been for the Plaintiff ..., Plaintiff has presented no evidence that such conduct was so severe or pervasive as to alter the conditions of his employment." Id. at 252. Similarly, in Howard, Plaintiff "fail[ed] to introduce any evidence beyond his own bare allegations that he was subject to a pattern of taunting, humiliation and mistreatment by co-workers or that Navistar management was aware of any harassment that may have occurred." Howard, 904 F.Supp. at 932 (finding also that Plaintiff was referred to as a "wussy"). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1748031/ | 79 S.W.3d 240 (2002)
Pablo RENTERIA, Individually and d/b/a Renteria Van Tours, Appellant,
v.
Gerardo C. TREVINO, Appellee.
No. 14-01-01106-CV.
Court of Appeals of Texas, Houston (14th Dist.).
June 6, 2002.
*241 Harry C. Arthur, Houston, for appellants.
Sergio Adrian Trevino, Houston, for appellees.
Panel consists of Justices YATES, SEYMORE, and GUZMAN.
OPINION
CHARLES W. SEYMORE, Justice.
This is an appeal from a post-answer default judgment. We find there was legally insufficient evidence of damages to sustain the judgment. Accordingly, we reverse.
Background
Appellee Gerardo C. Trevino filed a breach of contractfailure to pay rent claim against appellant Pablo Renteria, individually and doing business as Renteria Van Tours. Trevino alleged that he leased certain property to Renteria in exchange for $1,600.00 per month. Trevino and Renteria later agreed that Renteria would send the rent to the IRS in lieu of sending rent to Trevino.[1] Trevino further alleged that Renteria failed to pay rent to him or the IRS for fifteen months and failed to show proof he made such payments to the IRS. Trevino sought damages and attorney's fees. Renteria filed an answer but did not appear for trial.[2]
Following trial, the court granted Trevino's motion for default judgment and awarded Trevino, among other things, $17,600.00 in actual damages. Renteria appeals, raising four points of error.
Discussion
In his first point of error, which is dispositive of this appeal, Renteria complains that the trial court erred by granting a judgment against him and in favor of Trevino for $17,600.00 in actual damages because there was no evidence to support the finding that Renteria owed that sum. Although neither party[3] addressed it, we must determine from the outset whether Renteria preserved his legal insufficiency complaint.
When appealing from a non-jury trial, an appellant is not required to preserve allegations of legal insufficiency. O'Farrill Avila v. Gonzalez, 974 S.W.2d 237, 248 (Tex.App.-San Antonio 1998, pet. denied) (op. on reh'g). Those claims may *242 be raised for the first time on appeal. Id.; see Tex.R.App. P. 52(d)[4] (providing preservation not required, after nonjury trial, for legal sufficiency claims) (replaced and modified by Texas Rule of Appellate Procedure 33.1); Regan v. Lee, 879 S.W.2d 133, 136 (Tex.App.-Houston [14th Dist.] 1994, no writ) (interpreting the amended Rule 52(d) and holding that challenges to legal sufficiency can be made for the first time on appeal from nonjury trials); Tex. R.App. P. 33.1 (comment) (stating former Texas Rule of Appellate Procedure 52 is embodied in Texas Rule of Civil Procedure 324 and that Rule 52(d) was omitted as unnecessary); Tex.R. Civ. P. 324(a)-(b)[5] (providing a point in a motion for new trial is a prerequisite to a complaint on appeal of insufficiency of the evidence only in a jury trial); Owen v. Porter, 796 S.W.2d 265, 268 (Tex.App.-San Antonio 1990, no writ).
This case was tried to the bench. Accordingly, even though Renteria did not address legal insufficiency in his motion for new trial, we may review sufficiency of the evidence supporting the trial court's finding that Trevino sustained damages of $17,600.00. See O'Farrill, 974 S.W.2d at 248.
In a post-answer default judgment case, judgment cannot be entered on the pleadings because the plaintiff must offer evidence and prove his case as in a judgment upon a trial. Stoner v. Thompson, 578 S.W.2d 679, 682 (Tex.1979). A post-answer default judgment constitutes neither an abandonment of the defendant's answer or an implied confession of any issues. Id. The elements of a breach of contract action are (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach. Frost Nat'l Bank v. Burge, 29 S.W.3d 580, 593 (Tex. App.-Houston [14th Dist.] 2000, no pet.).
Because Renteria filed an answer, Trevino had the burden to prove each element of his breach of contract action. See Walker v. Kleiman, 896 S.W.2d 413, 415 (Tex.App.-Houston [1st Dist.] 1995, no writ). After a careful review of the record, we conclude that Trevino failed to prove that Renteria actually did not pay the IRS on his behalf. In other words, Trevino *243 failed to present any evidence of damages.[6] We, therefore, find that Trevino failed to present legally sufficient evidence to establish a breach of contract. See Sutton v. Hisaw & Assocs. Gen. Contractors, Inc., 65 S.W.3d 281, 285 (Tex.App.-Dallas 2001, pet. denied).
Accordingly, we sustain Renteria's first point of error. We reverse the trial court's judgment and render judgment that Trevino take nothing on his breach of contract claim against Renteria.[7] This ruling renders our consideration of Renteria's remaining points of error unnecessary.
NOTES
[1] Beginning in February 1999, Renteria was to forward his rent payments to the IRS, which had allegedly levied on Trevino's right to receive those payments from Renteria.
[2] In his motion for new trial, but not in this appeal, Renteria argued that he did not receive notice of the trial setting. During the trial, however, the court took notice that Trevino sent a copy of the notice of trial setting to Renteria in accordance with the governing rules.
[3] Trevino did not file an appellee's brief.
[4] Rule 52(d) was amended in 1990 to clarify appellate requisites from nonjury trials and provided as follows:
A party desiring to complain on appeal in a nonjury case that the evidence was legally or factually insufficient to support a finding of fact, that a finding of fact was established as a matter of law or was against the overwhelming weight of the evidence, or of the inadequacy or excessiveness of the damages found by the court shall not be required to comply with paragraph (a) of this rule.
Tex.R.App. P. 52(d) (Repealed).
[5] Rule 324(a)-(b) provides the following:
(a) Motion for New Trial Not Required. A point in a motion for new trial is not a prerequisite to a complaint on appeal in either a jury or a nonjury case, except as provided in subdivision (b).
(b) Motion for New Trial Required. A point in a motion for new trial is a prerequisite to the following complaints on appeal:
(1) A complaint on which evidence must be heard such as one of jury misconduct or newly discovered evidence or failure to set aside a judgment by default;
(2) A complaint of factual insufficiency of the evidence to support a jury finding;
(3) A complaint that a jury finding is against the overwhelming weight of the evidence;
(4) A complaint of inadequacy or excessiveness of the damages found by the jury; or
(5) Incurable jury argument if not otherwise ruled on by the trial court.
[6] We also note that Trevino failed to offer a copy of the parties' contract into evidence. Trevino testified that he signed an agreement to lease a former used car lot to Renteria for three years at $1600.00 per month. Texas Business and Commerce Code section 26.01(b)(5) provides that a promise or agreement to lease real estate for a term longer than one year is unenforceable unless the promise or agreement, or a memorandum of it, is (1) in writing and (2) signed by the person to be charged with the promise or agreement or by someone lawfully authorized to sign for him. Tex. Bus. & Com.Code Ann. § 26.01(a), (b)(5) (Vernon 1987).
[7] Trevino argued for attorney's fees as a one-third contingency of the judgment amount. Our rendering a take-nothing judgment on Trevino's breach of contract claim necessarily invalidates the trial court's judgment for attorney's fees. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1777410/ | 695 S.W.2d 817 (1985)
Donald DOUGLAS, Appellant,
v.
The STATE of Texas, Appellee.
No. 10-84-113-CR.
Court of Appeals of Texas, Waco.
August 29, 1985.
*819 David W. Anderson, Marlin, for appellant.
Thomas B. Sehon, Marlin, for appellee.
OPINION
THOMAS, Justice.
The jury convicted Appellant of burglary of a habitation and assessed his punishment at thirty years in prison. He contends on appeal that the court erred when it refused to suppress incriminating oral statements and evidence which he alleged had been illegally seized. He also claims that the court erred when it refused to grant a mistrial after the District Clerk had erroneously informed the jury panel that he was being tried under three cause numbers rather than one. We affirm.
Melvin Judie, who resided at 306 Soders Street in Marlin, returned home and discovered that someone had burglarized his house and stolen some of his property. He immediately notified the police department, and Sergeant Humphrey was dispatched to the scene. Humphrey told Judie that he thought he knew who had committed the burglary and that the suspect lived in a vacant house on Soders Street. Acting on Humphrey's hunch and without his knowledge, Judie immediately conducted his own search of vacant houses on Soders Street. After searching two vacant houses, Judie entered the vacant house at 413 Soders where he discovered Appellant and the stolen property. When Judie accused him of having committed the offense, Appellant made several incriminating statements. Judie placed some of the stolen property in his car, told Appellant to get into the car and then drove Appellant around Marlin until they located Sergeant Humphrey. Judie explained to Humphrey that he had found Appellant in the vacant house with the stolen property, and Humphrey followed Judie and Appellant back to 413 Soders Street. Humphrey gave Appellant a Miranda warning and then entered the house where he discovered and seized other property which had been stolen in the burglary. At trial, Appellant tried unsuccessfully to suppress the stolen property and incriminating statements as evidence.
In his first ground of error, Appellant contends that the court erred when it denied his motion to suppress and admitted the stolen property as evidence of his guilt. He argues that Judie's "citizen's arrest" was illegal, and therefore all evidence seized in connection with his arrest was inadmissible under article 38.23 of the Texas Code of Criminal Procedure. See Tex. Code Crim.Proc.Ann. art. 38.23 (Vernon 1979). However, the State claims that Appellant was legally arrested by Judie under article 18.16 of the Code of Criminal Procedure and that the court therefore properly denied the motion to suppress. The State also argues that Appellant could not question the legality of Judie's warrantless entry of the premises or the warrantless search and seizure of the stolen property because Appellant was a trespasser at 413 Soders Street. Ground one must be overruled.
Article 18.16 provides:
All persons have a right to prevent the consequences of theft by seizing any personal property which has been stolen and bringing it, with the supposed offender, if he can be taken, before a magistrate for examination, or delivering the same to a peace officer for that purpose. To justify such seizure, there must, however, be reasonable ground to suppose *820 the property to be stolen, and the seizure must be openly made and the proceedings had without delay.
Tex.Code Crim.Proc.Ann. art. 18.16 (Vernon 1977).
This article authorizes a private citizen to make a warrantless arrest of a thief where the stolen property is found in the thief's possession. See Lasker v. State, 163 Tex. Cr.R. 337, 290 S.W.2d 901 (1956); Morris v. Kasling, 79 Tex. 141, 15 S.W. 226 (1890). The legality of an arrest and a seizure under this article depends upon whether the party making the arrest and seizure had a "reasonable ground" or "probable cause" to believe that the property seized had been stolen and that the party arrested was the thief who had stolen the property. Adams v. State, 137 Tex. Crim. 43, 128 S.W.2d 41 (1939). The evidence was sufficient for the court to have found that Judie had a reasonable ground and probable cause to believe that the property that he seized had been stolen, as it was Judie's property, and that Appellant was the thief, especially after Appellant had told Judie that he had stolen the property. See id. Furthermore, Judie complied with article 18.16 by immediately delivering the seized property and Appellant into Humphrey's custody. That Judie did not have permission or authority to enter the vacant house at 413 Soders would not, in our opinion, preclude or invalidate his action under article 18.16. Thus, Appellant's warrantless arrest was lawful.
Because Appellant's warrantless arrest was lawful, Judie was authorized to conduct a contemporaneous search of Appellant's person and of the area within Appellant's immediate control. See Gauldin v. State, 683 S.W.2d 411, 414 (Tex.Cr.App. 1984). The evidence established that the duffle bag containing the stolen property was in plain view in the room where Appellant was discovered. Therefore, the stolen property was lawfully seized. See Jones v. State, 565 S.W.2d 934 (Tex.Cr.App.1978). Because the property was seized incident to a lawful arrest, the court did not err when it refused to suppress the stolen property as evidence. In any event, Appellant cannot complain of Judie's warrantless entry of the premises or his warrantless search and seizure of the stolen property because the evidence showed that Appellant was a trespasser on the premises where the search and seizure occurred. As a trespasser, Appellant had no "reasonable expectation of privacy" in the premises. See Rakas v. Illinois, 439 U.S. 128, 99 S. Ct. 421, 58 L. Ed. 2d 387 (1978); Lewis v. State, 598 S.W.2d 280, 283 (Tex.Cr.App.1980). For the above reasons, Appellant's first ground of error is overruled.
Judie testified that when Appellant was accused he initially denied that he had committed the burglary. However, Judie stated that Appellant then told him that "he didn't know it was my house, that if he had knowed it was my house, he wouldn't have gone in there." Appellant tried to suppress these incriminating statements, but the court denied the motion to suppress. In his second ground, Appellant contends that the court erred in this regard. Ground two must also be overruled.
The court could have reasonably concluded that Appellant's incriminating statements had been made voluntarily to Judie prior to Appellant having been placed under citizen's arrest. Therefore, the incriminating statements were properly admitted into evidence as a voluntary admission under section 5 of article 38.22 of the Code of Criminal Procedure. See Atkins v. State, 423 S.W.2d 579 (Tex.Cr.App.1968); Tex.Code Crim.Proc.Ann. art. 38.22, § 5 (Vernon 1979). Accordingly, ground two is also overruled.
The District Clerk administered the following oath to the jurors who heard Appellant's case: "You and each of you do solemnly swear that in [the cause of] the State of Texas vs. Donald Douglas, Cause Nos. 5252, 5253, and 5254 you will a true verdict render according to the law and the evidence, so help you God." Appellant moved for a mistrial on the ground that the District Clerk had informed the jurors that he was charged with extraneous criminal offenses in at least two other indictments, *821 but the court denied the motion for a mistrial. In the third ground, Appellant contends that the court erred when it refused to grant him a mistrial. He argues that he was entitled to a mistrial because evidence of extraneous offenses, which was given to the jury in the oath, prejudiced his rights. This ground must also be overruled.
A fundamental principle of criminal law is that a defendant is entitled to be tried on the offense alleged in the indictment and not for some collateral offense or for being a criminal generally. Albrecht v. State, 486 S.W.2d 97, 100 (Tex.Cr.App. 1972). However, just because some collateral offense is improperly admitted into evidence does not guarantee the accused a reversal. See Prior v. State, 647 S.W.2d 956, 959 (Tex.Cr.App.1983). A judgment will not be reversed for the erroneous admission of evidence, even of extraneous offenses, where the error did not injure the defendant. Id. at 959. In such a situation, the important inquiry is whether there is a reasonable probability that the improperly admitted evidence might have contributed to the conviction, which is an ad hoc decision in each case. Id. at 959. Here, the evidence of Appellant's guilt was overwhelming. The stolen property was found in his possession shortly after the burglary, and he admitted his guilt to Judie. Additionally, the State's evidence was not contradicted or impeached. In the face of the overwhelming evidence of his guilt, we conclude that the mere mentioning of three cause numbers in the jury's oath, the significance of which was never emphasized or explained to the jury, did not contribute to Appellant's conviction or punishment. See id. Therefore, ground three is overruled, and the judgment is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1777415/ | 695 S.W.2d 758 (1985)
U.S. FIRE INSURANCE COMPANY, Appellant,
v.
Lesa REARDEN, Individually, and as Next Friend of Charles L. Rearden, Appellee.
No. 08-85-00031-CV.
Court of Appeals of Texas, El Paso.
July 31, 1985.
*759 Bruce Bangert, Shafer, Gilliland, Davis, McCollum & Ashley, Odessa, for appellant.
G. Bert Smith, Jr., G. Bert Smith, Jr., Inc., Andrews, for appellee.
Before WARD, OSBORN and SCHULTE, JJ.
OPINION
SCHULTE, Justice.
This is a workers' compensation case involving a question of whether an injury suffered in the course of employment was a producing cause of a subsequent heart attack which resulted in the worker's death. Petitioner Lesa Rearden was awarded a judgment against U.S. Fire Insurance Company for death benefits under the Workers' Compensation Act pursuant to a favorable jury verdict. We affirm.
The decedent, Jerry Rearden, was injured while working for Sharp Pipe and Supply Company when the blade of a bulldozer snapped the chain that was securing it and the blade fell on his back. Immediately after this accident, on April 21, 1983, Mr. Rearden was taken to the hospital in Andrews and treated by Dr. Jariwala. At that time, Mr. Rearden was forty-three years of age, 5'8" tall and weighed 170 pounds. Mr. and Mrs. Rearden both testified (Mr. Rearden by earlier deposition) that Mr. Rearden had been in good health prior to this accident and had never experienced any heart problems. The admitting diagnosis revealed that Mr. Rearden had sustained severe contusions and abrasions to the shoulder blade area, numbness of the entire left side of his body, pain in the left shoulder and back, muscle spasms in the neck and lumbar region, blunt trauma to the thoracic region and paresis in the left upper extremity. Mr. Rearden also sustained lacerations and abrasions about the face as a result of being pinned face down to the ground by the blade of the bulldozer. It appears that when he was pinned by the blade, a rock "mashed" all of his teeth back into his head requiring their later removal. Another rock also "mashed" into his face right below the left eye causing the left side of his face to become numb. There was no evidence of brachial neuritis, possible heart disease or heart difficulties.
Mr. Rearden remained hospitalized in Andrews, Texas, for about five days and then was referred to Dr. Meek, a neurological surgeon in Odessa, Texas. Dr. Meek recorded Mr. Rearden's complaints of pain in his neck and shoulders, numbness in the left arm, left thumb and index finger and pain across the anterior portion of the chest. Mr. Rearden also exhibited atrophy in the bicep of his left arm which indicated pressure on the nerves in his neck. Dr. Meek did a myelogram and recommended major surgery which was ultimately performed on May 18, 1983. The surgical procedure was called a cervical laminectomy designed to help alleviate the pain and underlying pressure on the nerves. Dr. Meek admitted that the surgery did not relieve Mr. Rearden's pain as he had anticipated and that he could not explain Mr. Rearden's apparent "progressive downhill course."
Lesa Rearden, the decedent's wife, testified concerning Mr. Rearden's post-operative condition. She testified that he could not rest, sleep or eat. He was in a lot of pain and could not lie down. He had the hiccups for about nine or ten days and saw Dr. Lauderdale in an attempt to cure them. He had also lost considerable weight, as much as forty pounds. Mr. Rearden was very concerned about his inability to work and support his family financially. In addition, Mr. Rearden's son was in a near fatal flash fire on June 13, 1983. This necessitated taking their son to the Shriner's Hospital *760 in Galveston. Mr. Rearden was in so much pain at this time that Mrs. Rearden wrote Dr. Meek a letter requesting that he refer her husband to a doctor in the Galveston area. Dr. Meek replied "[w]e are sorry. No treatment needed. I don't know any neurosurgeon there."
Mr. Rearden's lawyer then referred him to a neurosurgeon in New Mexico since he continued to have constant pain. Dr. Groves had Dr. Kankanala run some tests on Mr. Rearden. Their findings were suggestive of brachial neuritis on the left side involving almost all the branches. He had pain in his shoulders, left arm and back. He also exhibited numbness in his left arm, thumb and index finger, left side of his face, and right lateral thigh. Mr. Rearden also exhibited a "marked atrophy" of his left biceps muscle. Mrs. Rearden testified that before the decedent got hurt he had "huge" biceps and that after the accident the top part of his arm wasted away until it became as small as his wrist. Dr. Groves recommended physical therapy in Andrews which Mr. Rearden took five days per week up until the day he died. Mr. Rearden never returned to work after the accident.
Two days before his death, Mr. Rearden gave his oral deposition complaining of the same maladies as have been previously discussed. On December 18, 1983, approximately eight months after Mr. Rearden's accident at work, he began to have chest pains and was taken to the emergency room at Andrews Hospital where he was pronounced dead by Dr. Jariwala. Apparent cause of death was acute myocardial infarction.
Workers' Compensation Death Benefits are recoverable regardless of the interim time between the accidental injury and the death if there is shown a causal relation between the injury and death in that the injury was a concurring, contributing or producing cause of the death. Insurance Company of North America v. Myers, 411 S.W.2d 710 (Tex.1966). When the contention is made that there is no evidence to support the jury finding as to the existence of producing cause, the Court of Appeals must consider only the evidence and inferences which tend to support the jury finding and disregard all evidence and inferences to the contrary. Stodghill v. Texas Employers Insurance Association, 582 S.W.2d 102, 103 (Tex.1979); Garza v. Alviar, 395 S.W.2d 821 (Tex.1965); In re King's Estate, 150 Tex. 662, 244 S.W.2d 660 (1951). Therefore, only the evidence that is favorable to the finding of the jury that the injury was a producing cause of Jerry Rearden's death will be considered in the determination of a no evidence point.
It is undisputed that Mr. Rearden suffered a compensable injury in the course of his employment due to the accident that occurred on April 21, 1983. Appellee, however, seeks death benefits under the Workers' Compensation Act on the basis that the injuries suffered in the accident caused or aggravated her husband's heart condition thereby causing a heart attack and death. The Appellee contends that the pain and stress which ensued from the original injury in April was a producing cause of the subsequent heart attack which occurred eight months later. The causal base of a heart attack and the theory of its traumatic aggravation are subjects of dispute in the medical profession. Whether an injury and its ensuing pain and stress activated and accelerated a pre-existing heart condition is a question of science determinable only from the testimony of expert medical professionals. A causal connection in such a fact situation must rest in reasonable probabilities; otherwise, it is no more than speculation and conjecture. "Reasonable probability, in turn, is determinable by consideration of the substance of the testimony of the expert witness and does not turn on semantics or on the use by the witness of any particular term or phrase." Myers, supra at 713. So long as the substance of the expert's opinion lies in reasonable medical probability, these "magic words" are not deemed necessary. Stodghill, supra at 105.
The testimony of two physicians support the jury finding that the injury sustained by the decedent was a producing cause of *761 Jerry Rearden's death. Dr. Jariwala testified as to the reasonable medical probability that the accident and the result thereof was one of the producing causes of Rearden's death. Jariwala had previously testified that although Rearden exhibited no symptoms of a heart disease or a heart condition prior to his death, Rearden's x-rays suggested that he had arteriosclerosis, or hardening of the arteries. However, Jariwala also testified that medically, as people get older it is normal for them to exhibit some calcification or hardening of the arteries. The fact that Mr. Rearden may have had arteriosclerosis is not in dispute. Appellee contends that so long as this pre-existing condition, if any, was aggravated by the injury, the injury could be deemed a producing cause of the decedent's heart attack. In any event, Jariwala, who was not only the original treating physician but also the medical attendant at Rearden's death, testified that in reasonable medical probability, the injury and the result thereof was one of the producing causes of death. And when asked on cross-examination whether in reasonable medical probability the stress resulting from the injury contributed to the decedent's death, Jariwala testified:
Q. All right. Now, when you say "may," would you say "reasonable medical probability"?
A. That's correct.
Jariwala made this determination on the basis of a hypothetical which assumed that Mr. Rearden had arteriosclerosis, smoked one to one and a half packs of cigarettes a day, had a history of heart disease in his immediate family, had the type of accident Mr. Rearden experienced and had the same type of pain, stress and injuries that have already been previously discussed.
Dr. Kantor, called by the Plaintiff, who did not ever see the deceased but testified from records, stated that "beyond any doubt" the medical probability would be that the stress and pain from the injury was a producing cause of the decedent's death. Dr. Kantor made this determination on the basis of the decedent's medical records and a hypothetical that was much the same as the one that was given to Dr. Jariwala.
The Texas Supreme Court in Stodghill, supra, has previously dealt with the same fact situation as appears in the case at hand. In Stodghill, the Court found that an accidental on-the-job fall injuring the worker was a producing cause of his death from a myocardial infarction forty-seven days later. It was held that where the substance of the testimony of the doctor was that it was probable that the stress resulting from the worker's fall, when superimposed upon an existing arterial hypertension, was a producing cause of the worker's death, such testimony, "though strongly rebutted by other testimony and circumstances, constitutes some direct evidence of probative force of the causal connection between the injury and the death" and was sufficient to withstand a "no evidence" allegation. Stodghill, supra at 105; See also: Lucas v. Hartford Insurance and Indemnity Company, 552 S.W.2d 796 (Tex.1977); Otis Elevator Company v. Wood, 436 S.W.2d 324 (Tex.1968).
Where there is direct evidence of the vital fact in the record, the Court of Appeals need not concern itself with the scintilla rule nor with inferences in regard to a "no evidence" point. Lucas, supra at 797. The vital fact in this case is whether, in reasonable medical probability, the injury that the decedent sustained was one of the producing causes of his death. Two physicians, both Dr. Jariwala and Dr. Kantor, answered this question in the affirmative. Since the substance of the testimony of the expert witnesses was based in terms of medical "probabilities" and not "possibilities," the testimony was not only admissible but also constituted some probative evidence to withstand the appellant's "no evidence" contentions. Points of Error Nos. One, Two, Four and Six are overruled.
Appellant next contends that the evidence was factually insufficient to support the findings of the jury.
Where the challenge to a jury finding is framed as an "insufficient evidence" *762 point, we are to consider all the evidence in the case, both that in support of and that contrary to the finding, to determine if the challenged finding is so against the great weight and preponderance of the evidence as to be manifestly erroneous or unjust. Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965). If the court so determines, the finding should be set aside and a new trial ordered. Id.
In considering an "insufficient evidence" point, we must remain cognizant of the fact that it is for the jury, as the trier of fact, to judge the credibility of the witnesses, to assign the weight to be given their testimony, and to resolve any conflicts or inconsistencies in the testimony. Taylor v. Lewis, 553 S.W.2d 153, 161 (Tex.Civ.App.Amarillo 1977, writ ref'd n.r.e.). This Court may not substitute its judgment for that of the jury if the challenged finding is supported by some evidence of probative value and is not against the great weight and preponderance of the evidence. Alford, Meroney & Co. v. Rowe, 619 S.W.2d 210, 213 (Tex.Civ.App.Amarillo 1981, writ ref'd n.r.e.).
Commonwealth Lloyd's Insurance Company v. Thomas, 678 S.W.2d 278, 289 (Tex. App.Fort Worth 1984, ref'd n.r.e.).
The substance of the medical conclusions that appear in the record as to the producing cause of Jerry Rearden's death can be summarized as follows:
1. Dr. Jariwala, who was called by the plaintiff, was the original treating physician and the medical attendant at death. He testified that in reasonable medical probability, the stress resulting from the injury contributed to, and was a producing cause of, the decedent's death.
2. Dr. Meek, called by the defendant, was the treating doctor who had performed the operation on the deceased. He first testified that he did not think there was any connection between the pain and stress the decedent was experiencing and the subsequent heart attack. But later, on cross-examination, Dr. Meek acknowledged that stress was a factor which could produce or aggravate a heart condition and admitted that he did not have the expertise to form an opinion as to whether the pain and stress that the decedent had experienced was a producing cause of his death. He could not explain Mr. Rearden's "progressive downhill course."
3. Dr. Mohr, called by the defendant, who never treated or saw the deceased, but testified from records, did not think there was any connection between the heart attack and the pain Mr. Rearden experienced. Dr. Mohr explained the differences between Type A and Type B personalities and how these two types of personalities deal with stress differently. He also explained the differences between chronic pain and stress and acute pain and stress. Dr. Mohr was of the opinion that since the decedent suffered from "blunt trauma" and chronic pain, the resulting stress could not have been a producing cause of the heart attack.
4. Dr. Kantor, called by the plaintiff, who never treated or saw the deceased, but testified from records, stated that "beyond any doubt" the medical probability would be that the stress and pain from the injury was a producing cause of the decedent's death.
This is not a case where the causal connection must be inferred by the jury from their general experience and common sense. Nor is this a case where circumstantial evidence is needed in order to establish that it was an on-the-job accidental injury that was the cause of the fatal heart attack. Stodghill, supra at 105. Here, there was direct medical testimony supporting the finding of the jury that the injury was a producing cause of the decedent's death. Despite the fact that there was conflicting medical testimony, there was sufficient evidence in the record to support the jury finding. Points of Error Nos. Three and Five are overruled.
Appellant asserts in its last point of error that the trial court erred in overruling defendant's motion to correct judgment since it was entitled to a credit pursuant to *763 Tex.Rev.Civ.Stat.Ann. art. 8306, sec. 8b (Vernon 1967). This statute reads as follows:
Sec. 8b. In case death occurs as a result of the injury after a period of total or partial incapacity, for which compensation has been paid, the period of incapacity shall be deducted from the total period of compensation and the benefits paid thereunder from the maximum allowed for the death. Acts 1917, p. 269.
This statute was in existence at the time of Mr. Rearden's injury on April 21, 1983. Effective May 17, 1983, the 68th Legislature amended the above cited statute by adding the following provision:
(b) Section 8b does not apply to lifetime death benefits as provided by Section 8 of this article but applies only to those beneficiaries receiving 360 weeks of benefits.
Tex.Rev.Civ.Stat.Ann. art. 8306, sec. 8b(b) (Vernon Supp.1985). This amendment did not state whether it was to apply retroactively.
The question for determination is whether the May 17, 1983, amendment to Article 8306, sec. 8b, supra, is applicable to a claim for injury arising before, and a claim for death tried after, the effective date of the amendment. Regarding this amendment in May of 1983, Section 2, the emergency provision of the 1983 amendatory act, provides in part: "[i]t is uncertain and has not been judicially determined whether the offset provided by Section 8b, Article 8306, Revised Civil Statutes of Texas, 1925, applies to the lifetime benefits provisions of Section 8 of that article. The fact that no judicial interpretation resolving the conflict exists creates an emergency ...."
Plaintiffs were not entitled to pursue a cause of action for death benefits until December 18, 1983, the date of the injured worker's death. When the injured worker died, a new cause of action arose. TransContinental Insurance Company v. Walsh, 621 S.W.2d 461 (Tex.Civ.App. Waco 1981, no writ). The date of the new cause of action for death benefits, therefore, arose well after the effective date of the amendment to Article 8306, sec. 8b. This amendment disallowed any credits to lifetime death benefits. Therefore, the credit was properly disallowed. Appellant's Point of Error No. Seven is overruled.
The judgment is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1381601/ | 951 F.Supp. 1307 (1996)
Pauline SKINNER, Plaintiff,
v.
Jesse BROWN, Secretary of the Department of Veterans' Affairs, Defendant.
Civil Action No. H-94-0865.
United States District Court, S.D. Texas, Houston Division.
October 31, 1996.
*1308 *1309 *1310 Lionel Mills, Houston, TX, for Pauline Skinner.
William Brad Howard, Office of U.S. Attorney, Houston, TX, for Jesse Brown, The Veterans Administration.
MEMORANDUM AND ORDER
ATLAS, District Judge.
Plaintiff Pauline Skinner, an African-American woman over 40 years of age, *1311 brought this action against Jesse Brown, Secretary of the Department of Veterans' Affairs, alleging discrimination and retaliation on the basis of her race and age in violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. ("Title VII"), and the Age Discrimination in Employment Act, as amended, 29 U.S.C. § 621 et seq. ("ADEA"). Pending before this Court are the parties' motions for summary judgment. See Defendant Brown's Motion for Summary Judgment [Doc. # 43] ("Defendant's Motion"); Plaintiff Skinner's Motion for Summary Judgment [Doc. # 46] ("Plaintiff's Motion").[1] The Court has considered the motions, all responses and replies, the relevant authorities, and all other matters of record in this case. For the reasons stated herein, Defendant's Motion is granted and Plaintiff's Motion is denied.
FACTUAL BACKGROUND
Plaintiff is an African-American woman born on December 9, 1940. She has been employed as a nurse by the Department of Veterans' Affairs ("DVA") for 28 years, and is still employed there. Since 1985, several years prior to the actions at issue in this suit, Plaintiff's title has been Clinical Nurse Specialist at the Houston Veterans Administration ("VA") Medical Center. Plaintiff has received pay and step increases both before and since the events in issue in this suit.[2] Affidavit of Margo D. Snider (Exhibit 2 to Defendant's Memorandum of Law in Support of Defendant's Motion for Summary Judgment) ("Defendant's Memorandum") ("Snider Affidavit"), ¶ 4, at 1. Plaintiff complains of conduct by her supervisors during the period from July 1988 to late 1990.[3]
Plaintiff has received numerous professional honors, including "the Administration's National Excellence Award [in 1988], the Prairie View A & M Alumnae Community Service Award, the Texas Nurses' Association Award in 1992, as one of the 20 best nurses in the State, and an appraisal that did not reflect any major problems in her profession." Plaintiff's Brief in Support of Plaintiff's Cross-Motion for Summary Judgment and Response in Opposition to Defendant's Motion for Summary Judgment [Doc. # 47] ("Plaintiff's Response"), at 3. Plaintiff states that she had served on numerous DVA committees with other DVA personnel, and that she had published papers in the peer-reviewed journal. Plaintiff's Response, at 11. She alleges that Defendant treated her less favorably than similarly situated white nurses, because of her race and age, "by refusing to consider her for promotion after she had demonstrated excellence in her profession," as evidenced by her receipt of various awards. Id.; see also Complaint [Doc. # 1], ¶ VI(A), at 3.
*1312 Plaintiff alleges that, after she received the VA's Administrator's Award for Nursing Excellence in May 1988, Defendant, through Plaintiff's supervisors (Rebecca Williams, an Assistant Chief of Nursing, and Margo Snider, Chief of Nursing), retaliated against her in the following manner:[4]
(1) denying her step increases in July, 1988;
(2) assigning her as staff nurse three days a week on or about September 19, 1988 [for approximately six months until March 1989 and since then for an unspecified period];[5]
(3) denying her request [for only day shift] tours of duty on September 18, 1988;
(4) requiring her to keep a daily calendar on or about October 6, 1988;
(5) by giving her a proficiency rating that was less favorable than she believed she deserved;
(6) by denying her special advancement [a within-grade step increase in pay] or ANA certification and/or publication on or about July 27, 1989[;]
(7) receiving unfair treatment concerning disputes with Dr. Ghusn and Mr. Flores in April and May, 1990[;]
(8) by denying her an individual development plan in May, 1990[;]
(9) by reassigning her to staff nurse duties effective May 28, 1990, while a White nurse was [hired] as a clinical specialist shortly thereafter[;]
(10) by placing her on restrictions on her role when she was reassigned back to clinical specialist position on or about July 23, 1990[;]
(11) by giving her role in the skin management program to another on or about September 18, 1990[;]
(12) by not asking her to a meeting on October 6, 1990[;]
(13) by causing her problems with dual supervision; and
(14) by refusing to give her support on patient therapeutic group meetings and/or patient medication.
Plaintiff's Response, at 3-4; see also Complaint, ¶ VI(B) at 3-4 (listing same fourteen complaints). Plaintiff argues that these fourteen specific incidents constitute a pattern of harassment on the basis of race and age "of such excessiveness and pervasiveness to constitute discrimination." Plaintiff's Response, at 5.[6]
*1313 Defendant submitted, in support of its Motion, ten affidavits from the individuals involved in the incidents in issue and the key individuals who sat on the committees reviewing Plaintiff's application for pay increases or other promotions. These affidavits will be referenced where necessary. The theme to Defendant's explanation is set forth by Plaintiff's former immediate supervisor, Rebecca Williams, who states that in her opinion Plaintiff achieved "near celebrity status" after receiving the national award in 1988, and that thereafter she did not accept constructive criticism. Williams Affidavit, at 2. Defendant has also presented evidence, including Plaintiff's annual performance reviews from 1988 to 1991, that Plaintiff had difficulties with communication and team-building at her workplace that detracted from her overall job performance, even when Plaintiff received an excellent overall performance evaluation in 1988.[7]
In response to Defendant's Motion, Plaintiff submitted ten of her own affidavits, each addressing one of the affidavits submitted by Defendant. Plaintiff also submitted several documents and ten other affidavits (nine of which are identical) which the affiants state generally that they have known Plaintiff for "the past ten (10) years" and that Plaintiff's personality has not and now does not impede her effectiveness as a staff member or community health care provider. See Exhibit I to Plaintiff's Appendix.
SUMMARY JUDGMENT STANDARD
In deciding a motion for summary judgment, the Court must determine whether "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc); Bozé v. Branstetter, 912 F.2d 801, 804 (5th Cir.1990). The facts are to be reviewed with all inferences drawn in favor of the party opposing the motion. Bozé, 912 F.2d at 804 (citing Reid v. State Farm Mut. Auto Ins. Co., 784 F.2d 577, 578 (5th Cir.1986)). However, factual controversies are resolved in favor of the non-movant "only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." McCallum Highlands, Ltd. v. Washington Capital Dus, Inc., 66 F.3d 89, 92 (5th Cir.), revised on other grounds upon denial of reh'g, 70 F.3d 26 (5th Cir.1995).
The party moving for summary judgment has the initial burden of demonstrating the absence of a material fact issue with respect to those issues on which the movant bears the burden of proof at trial. For any matter on which the non-movant carries the burden of proof at trial, however, the movant may, by merely pointing to the absence of evidence supporting the essential elements of the non-movant's case, shift to the non-movant the burden of demonstrating by competent summary judgment proof that there is an issue of material fact so as to warrant a trial. Transamerica Ins. Co. v. Avenell, 66 F.3d 715, 718-19 (5th Cir.1995); Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir.), cert. denied, 513 U.S. 871, 115 S.Ct. 195, 130 L.Ed.2d 127 (1994).
The non-movant's burden may not be satisfied by conclusory allegations, unsubstantiated assertions, metaphysical doubt as to the facts, or a scintilla of evidence. Douglass v. United Services Auto. Ass'n, 65 F.3d 452, 459 (5th Cir.1995), revised on other grounds, 79 *1314 F.3d 1415 (5th Cir.1996) (en banc); Little, 37 F.3d at 1075. In the absence of any proof, the court will not assume that the non-movant could or would prove the necessary facts. McCallum Highlands, 66 F.3d at 92; Little, 37 F.3d at 1075 (citing Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888, 110 S.Ct. 3177, 3188, 111 L.Ed.2d 695 (1990)). Rule 56 mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a sufficient showing of the existence of an element essential to the party's case, and on which that party will bear the burden at trial. Little, 37 F.3d at 1075 (citing Celotex, 477 U.S. at 322, 106 S.Ct. at 2552).
In employment discrimination cases, the employer proffers nondiscriminatory reasons for the challenged employment action, "a plaintiff can avoid summary judgment if `the evidence taken as a whole (1) creates a fact issue as to whether each of the employer's stated reasons was what actually motivated the employer and (2) creates a reasonable inference that age was a determinative factor in the actions of which plaintiff complains. The employer, of course, will be entitled to summary judgment if the evidence taken as a whole would not allow a jury to infer that the actual reason for the discharge was discriminatory.'" Atkinson v. Denton Publishing Co., 84 F.3d 144, 149 (5th Cir.1996) (quoting Rhodes v. Guiberson Oil Tools, 75 F.3d 989, 994 (5th Cir.1996) (en banc)).
DISCUSSION
Plaintiff has alleged disparate treatment on the basis of race and age, retaliation on the basis of race and age, and hostile work environment on the basis of race.[8]
1. DISPARATE TREATMENT
Title VII and the ADEA make it unlawful for an employer to fail or refuse to hire, to discharge, or to otherwise discriminate against an individual with respect to that person's compensation, terms, conditions, or privileges of employment, or to otherwise adversely affect the person's status as an employee, because of that person's race or age. 42 U.S.C. § 2000e-2(a); 29 U.S.C. § 623(a).
A. Disparate Treatment: Prima Facie Case
Plaintiff bears the initial burden of establishing a prima facie case of intentional discrimination. The requirements under Title VII are: (1) that Plaintiff is a member of a protected class, (2) that she was qualified for the position she held, (3) that she was discharged or subject to an adverse employment action, and (4) that those outside the protected class were placed in her position following the discharge or otherwise received more favorable treatment. St. Mary's Honor Center v. Hicks, 509 U.S. 502, 506, 113 S.Ct. 2742, 2747, 125 L.Ed.2d 407 (1993); Meinecke v. H & R Block of Houston, 66 F.3d 77, 83 (5th Cir.1995). Under the ADEA, the elements are the same except that, to establish the fourth element, Plaintiff is not required to show that a person outside the ADEA's protected class received more favorable treatment, but rather that the person who received more favorable treatment was substantially younger than Plaintiff. O'Connor v. Consolidated Coin Caterers Corp., ___ U.S. ___, ___, 116 S.Ct. 1307, 1310, 134 L.Ed.2d 433 (1996).
If Plaintiff establishes a prima facie case, a presumption of discrimination is created, and the burden of production shifts to Defendant to articulate a legitimate, nondiscriminatory reason for its actions. St. Mary's, 509 U.S. at 506-07, 113 S.Ct. at 2747; Meinecke, 66 F.3d at 83. If Defendant satisfies this burden, the presumption disappears and Plaintiff then must prove that the proffered reasons are a pretext for discrimination. Meinecke, 66 F.3d at 83.
As detailed below, Plaintiff Skinner's claims suffer from several legally significant deficiencies going to her prima facie case.
*1315 The fourteen specific allegations listed previously, see supra at 1312-1313, can be categorized as follows: Allegations # 2, 3, 9, 10 and 11 are construed as a complaint of a "demotion," and Allegations # 1, 5, 6 and 8 are read as complaints of denial of "promotions."[9] Accepting all of Plaintiff's evidence as true for the purposes of the Defendant's Summary Judgment Motion, Plaintiff has failed to establish the fourth prong of her prima facie case as to both her demotion and promotion claims, because she has failed to present any competent summary judgment evidence that others who were substantially younger or of a different race received more favorable treatment under similar circumstances.[10] Rather, Plaintiff erroneously argues that it is Defendant's burden to present evidence that such persons did not receive more favorable treatment. Plaintiff's Response, at 2-3.[11]
Since Plaintiff has failed to establish a prima facie evidence of racially or age-based disparate treatment, the Court holds that summary judgment is appropriate in favor of Defendant on both Plaintiff's demotion and promotion claims.
In addition, the Court seriously questions whether the third prong of Plaintiff's prima facie case, that Plaintiff suffered an "adverse employment action" of demotion or promotion, is established by the summary judgment evidence of record. As to "demotion," Defendant presented affidavits stating that Plaintiff's title remained Clinical Nurse Specialist at all times and that her pay was never reduced. Snider Affidavit, at 4; Supplemental Snider Affidavit, ¶ 8, at 3. Defendant has also presented evidence, in response to Plaintiff's complaints about being assigned staff nurse duties, that other nurses (including Judy Jarvis, a white ostomy nurse in her mid-40s) were directed to serve "expanded roles" because of the staffing shortage. Id.[12] Moreover, although Plaintiff complains of being assigned to direct patient care, her job description indicates that direct patient care *1316 always has been within her job duties.[13] In the face of such detailed proof by Defendant, Plaintiff's conclusory affidavits are insufficient to raise a genuine question of material fact as to this issue. Douglass, 65 F.3d at 459; Little, 37 F.3d at 1075. The Court refrains from ruling definitively, however, because it appears that Defendant coupled the patient care duties with a rotation of hours requiring some night shift duties during the 1988-89 six month patient care assignment. See Interview Notes of EEO Counselor Sydney Morrow, April 1992 (Exhibit III-A to Plaintiff's Appendix), at 2-4. See and compare Forsyth v. City of Dallas, 91 F.3d 769, 774 (5th Cir.1996); Click v. Copeland, 970 F.2d 106, 110 (5th Cir.1992); Fyfe v. Curlee, 902 F.2d 401 (5th Cir.), cert. denied, 498 U.S. 940, 111 S.Ct. 346, 112 L.Ed.2d 310 (1990).
The Court also questions if Plaintiff has presented adequate evidence to meet her prima facie burden to raise the inference that she was denied a promotion. Plaintiff did not submit any documentary proof supporting her opinion that a pay raise was possible under her circumstances in 1989, that she was qualified for a Rehabilitation Clinical Nurse Specialist position (the position Fenn received in 1990), that she was in fact eligible for the certification she sought in July 1989, or that her proficiency ratings were unjustified. The Court therefore, if it had to reach the issue on the existing record, would conclude that Plaintiff has not established, at the prima facie stage, that she suffered an adverse employment action insofar as she claims a denial of a promotion.
Summary judgment is granted in favor of Defendant because Plaintiff has failed to raise a genuine issue of material fact as to the fourth prong of her prima facie case, i.e., that those of another race or substantially younger than Plaintiff received more favorable treatment.
B. Disparate Treatment: Pretext
In addition, the Court holds that summary judgment is appropriate in favor of Defendant because Plaintiff has not presented sufficient evidence of pretext. Throughout the case, the Plaintiff retains the ultimate burden of persuading the finder of fact not only that Defendant's reasons are pretextual, but also that Defendant intentionally discriminated against the Plaintiff. St. Mary's, 509 U.S. at 506-07, 113 S.Ct. at 2747. Even if Defendant's proffered reason is rejected, "enough evidence must exist in the record for the fact finder to infer that discrimination was the true reason for the disparate treatment." Polanco v. City of Austin, Tex., 78 F.3d 968, 976-77 (5th Cir.1996) (citing Rhodes v. Guiberson Oil Tools, 75 F.3d 989, 994 (5th Cir.1996) (en banc)). However, "`[t]he fact finder's disbelief of the reasons put forward by the defendant (particularly if disbelief is accompanied by a suspicion of mendacity) may, together with the elements of the prima facie case, suffice to show intentional discrimination.'" Polanco, 78 F.3d at 976 (quoting St. Mary's, 509 U.S. at 511, 113 S.Ct. at 2749).[14]
Allegations Regarding Demotions. Defendant has offered non-discriminatory explanations for each of the alleged discriminatory actions identified by Plaintiff. As for the allegations that can be read to *1317 complain of demotion,[15] Defendant has proffered substantial evidence of a non-discriminatory reasons for the assignment of Plaintiff to direct patient care in various rotating shifts for approximately six months, and possibly occasionally thereafter: nurse staffing shortages, the need to reduce use of overtime by the nursing staff, an effort to maximize Plaintiff's expertise by her providing hands-on assistance when needed with geriatric patients (Plaintiff's speciality). Snider Affidavit, at 2-3; Supplemental Snider Declaration, ¶ 8, at 3; ¶ 10 at 4; see also Williams Affidavit, at 2.[16] Defendant has explained that in July 1990, when Plaintiff's new supervisor, Veronica Magee, assigned Plaintiff to two days of direct patient care, staffing vacancies and shortages of overtime monies motivated the decision. See Affidavit of Veronica Magee (Exhibit 10 to Defendant's Motion) ("Magee Affidavit"), at 2-3.[17] Furthermore, other nursing staff (Ms. Jarvis and Ms. Nix), worked in expanded roles doing direct patient care during the 1990 nursing shortage crisis, although their assignments were not made in writing, as Plaintiff's were, because only Plaintiff insisted on this formality. Supplemental Snider Affidavit, ¶ 6, at 3. At all times, Plaintiff continued to receive performance reviews by an Assistant Chief of Nursing, not the Head Nurse, who evaluated staff nurses. Magee Affidavit, ¶ 3, at 2-3; Supplemental Snider Declaration, ¶ 5, at 3.[18] Plaintiff was, until summer of 1990, the only Clinical Nurse Specialist in the Hospital, and her job description contained several references to direct patient care. See Supplemental Snider Declaration, ¶¶ 6, 8, at 3; Job Description, ¶¶ 1.0, 1.4.
Plaintiff's General Affidavit disputes Defendant's evidence. Plaintiff states that Defendant's evidence of staffing shortages is unavailing because "Plaintiff did not fill a vacant position on the unit where she was assigned," but instead "the staff nurse on the unit where she was assigned moved to another ward where she also did fill a vacancy." Plaintiff's General Affidavit, at 3. This statement, however, merely shows that nursing assignments were being shuffled so as to attend to shortages, and in no way discredits Defendant's evidence. Plaintiff also states that Defendant's claim that they were required to reduce use of overtime is unavailing because "[o]vertime usage continued"; however, the fact that use of overtime continued does not discredit Defendant's statements that the use of overtime was to be reduced. Plaintiff's own memoranda acknowledged that there was a staffing shortage. See Plaintiff's Memorandum to Williams, dated September 18, 1988 (Exhibit 1 to Supplemental Snider Affidavit); Plaintiff's Memorandum to EEO Counselor, dated July 20, 1990 (Exhibit 2 to Supplemental Snider Affidavit).
Plaintiff also alleges that the reassignment sabotaged her role as a mentor and facilitator, and that the need for structure is not supported by any evidence. Plaintiff's General *1318 Affidavit, at 3. These responses are merely Plaintiff's personal opinions. There is no probative documentary evidence or any expert (or third person, independent) opinion submitted on these or Plaintiff's other arguments. To the extent Plaintiff complains that a Clinical Nurse Specialist vacancy in the Rehabilitation Unit was filled by Andrea Fenn, a white woman, Plaintiff's argument fails since she never submitted an application to fill the longstanding vacancy. Id. at 10.[19]
As to Plaintiff's contention that her role in the Skin Management Program was given to another nurse in September 1990, Defendant responds through the Affidavit of Veronica Magee, Plaintiff's supervisor at the time, that in 1990 the Clinical Practice Committee selected two hospital units to serve as pilot units for the Skin Care Program, and that Plaintiff's unit was not selected. Therefore, neither Plaintiff nor others in her unit had a role in the Program. Magee Affidavit, at 3. Instead, since Rehabilitation Unit 2B was selected as the pilot unit, the Clinical Nurse Specialist from that unit was responsible for running the pilot program. Id. Furthermore, Plaintiff was never the sole nurse assigned or designated the nurse in charge of the Skin Management Program. Id. Plaintiff's only response is that she considers Defendant's refusal to permit her to continue to participate in the Skin Management Program in some way to be "harassment and reprisal." Plaintiff's Affidavit in Response to Magee Affidavit (Exhibit II to Plaintiff's Appendix), ¶ 3. This conclusory opinion is obviously insufficient to raise a genuine question of material fact.
Allegations Regarding Promotions. Defendant also has proffered non-discriminatory reasons for the denial of promotions sought by Plaintiff.[20]
As to the allegation that Plaintiff was unfairly denied a step increase, Defendant states that Plaintiff was not given a step increase in July 1988 because VA regulations do not permit more than one step increase within a twelve-month interval. Since Plaintiff had received a step increase in October 1987 and a cash award of $2,500 as a result of her national award in May 1988, she was not eligible for a step increase in July 1988. Snider Affidavit, at 3; Williams Affidavit, at 1; Supplemental Snider Declaration, ¶ 11, at 4. Plaintiff merely asserts generally her disagreement with this conclusion.[21] However, she provides no citations to policies or regulations of the VA or elsewhere, nor does she provide detail as to persons of other races or ages in comparable in a circumstance who were treated differently. Furthermore, she does not tie her complaint to applicable procedures as to her employment anniversary date or the typical timing for pay raise recommendations.
As to the allegation that Plaintiff's 1989 proficiency rating was unfair, Defendant has presented an affidavit of Rebecca Williams, Plaintiff's supervisor who performed the 1989 proficiency rating. Ms. Williams, an African-American who is older than Plaintiff, stated that the rating reflected her honest assessment of Plaintiff's interpersonal skills, which she felt had deteriorated after Plaintiff received the national award in 1988. Williams Affidavit, at 4. Furthermore, although DVA policy permits employees to submit written rebuttals to proficiency reports with which they disagree, Plaintiff did not at the time contest with specifics the rating she now challenges. Id.; Snider Affidavit, at 5. Finally, Plaintiff's evaluations from 1988, 1990 and 1991 also indicated the *1319 supervisors' concern about these skills. See supra note 7.
Plaintiff's allegation of denial of "special advancement of ANA certification and/or publication" appears to relate to her claim that she was unfairly denied a special advancement (a within-grade step increase) by the Nursing Professional Standards Board ("NPSB") in July 1989, which increase she had sought based upon her publication in a peer-reviewed nursing journal. Defendant submitted the affidavits of Joanne K. Carr, Chief Nursing Service, and Ana Valadez, an Assistant Chief of the Nursing Service at the Houston VA Medical Center. Each of these women explains that the NPSB's denial of the requested step increase was because of the April 1989 performance review by Williams, who had reported a merely "satisfactory" performance on Plaintiff's "interpersonal skills." This rating was viewed by the NPSB to be not sufficiently above what was expected of "an average nurse in senior grade to justify an increase." Affidavit of Ana Valadez (Exhibit 4 to Defendant's Memorandum), ¶ 4; Affidavit of Joanne K. Carr (Exhibit 5 to Defendant's Memorandum), ¶ 4. Also, Plaintiff lacked sufficient administrative skills and experience. Affidavit of Paulette Cournoyer (Exhibit 7 to Defendant's Memorandum) ("Cournoyer Affidavit"), ¶¶ 6, 9; Affidavit of Vernice Ferguson (Exhibit 8 to Defendant's Memorandum) ("Ferguson Affidavit"), ¶¶ 2-5. Plaintiff's own evidence was consistent with these explanations. Plaintiff presented the NPSB official record which reflects that she was informed in 1989 that the special advancement was denied because Plaintiff "has not demonstrated excellence in performance as evidence by her inability to work effectively with others." NPSB Board Action, dated July 21, 1989 (attached to Skinner Affidavit in Response to Valadez Affidavit (in Exhibit II to Plaintiff's Appendix)).[22] Moreover, and significantly, Snider states in her affidavit that special advancements based upon publications are very rare. Snider Affidavit, at 5.
Finally, as part of the denial of promotion theme, Plaintiff also argues she was denied the opportunity to develop an "individual development plan" in 1990 and was denied admittance into the Nurse Preceptorship Training Program in 1989. These arguments fail to create a genuine question of material fact in light of the specific explanations of Paulette Cournoyer, one of three members of the Nurse Preceptorship Training Program to which Plaintiff applied in 1989 and Vernice Ferguson, an African-American 67 year old former Assistant Chief Medical Director for Nursing Programs in Washington, D.C., who ultimately made the selection of trainees for the program in 1989. See Cournoyer Affidavit; Ferguson Affidavit. The affidavits of Cournoyer and Ferguson establish that (1) Snider recommended Plaintiff in writing for the program, (2) numerous African-Americans over age 40 have been selected, and (3) Plaintiff's non-selection was based on the three person committee's decision that Plaintiff lacked sufficient administrative experience. Finally, the Court cannot ignore the fact that three of the four people making the selection were African-Americans, all four were over the age of 40. Cournoyer Affidavit, ¶ 6, at 2.
As to her claims for denial of promotion generally and to the position of Rehabilitation Clinical Nurse Specialist, Plaintiff is required to establish that she was "clearly better qualified" than the person who received the promotion. E.E.O.C. v. Louisiana Office of Community Servs., 47 F.3d 1438, 1444 (5th Cir.1995); Odom v. Frank, 3 F.3d 839, 845-46 (5th Cir.1993). Defendant's explanations that Plaintiff did not apply for the position of Rehabilitation Clinical Nurse Specialist and that Fenn, who was hired for the position, had training in rehabilitative medicine that made her more qualified for the appointment, clearly suffice as non-discriminatory reasons for the denial of this promotion. See Magee *1320 Affidavit, at 1-2; Supplemental Snider Affidavit, ¶ 7, at 3. The burden therefore shifts to Plaintiff to establish that these explanations are a pretext for discrimination. However, Plaintiff has presented absolutely no evidence that Defendant's promotion of Fenn was motivated by Plaintiff's race or age.
Conclusion. Plaintiff's own evidence other than conclusions or opinions asserted in her own numerous affidavits does not contradict Defendant's assertions about staffing shortages at DVA and the need to maximize Plaintiff's best skills being the cause of Plaintiff's assignments. The Court, moreover, is entitled to consider Plaintiff's evidence and contentions in context. Here, when viewed in the "big picture," Plaintiff's claims are illogical. The evidence is uncontroverted that Williams and Snider both recommended (or at least affirmatively supported) promotions, salary increases and awards for Plaintiff.[23] These facts create a strong inference against any finding that, during the same time period, these two individuals intended to discriminate against Plaintiff on the basis of her race or age. See Brown v. CSC Logic, Inc., 82 F.3d 651, 658 (5th Cir.1996). Moreover, both Williams and Snider are within the protected class of the ADEA, and Williams is African-American. These facts enhance the inference that no discriminatory motive existed. Id. Plaintiff has not presented evidence sufficient to overcome this inference.
Fundamentally, even accepting as true all of Plaintiff's assertions, Plaintiff has presented evidence strongly suggesting, at best, a personality conflict and differences in management or job assignment philosophies between Plaintiff and others in her workplace.[24] As noted above, even if Plaintiff could persuade this Court that some of Defendant's employment decisions regarding Plaintiff were misguided, this would not lead to liability on the part of Defendant. Title VII and the ADEA are not vehicles for courts to second guess an employer's personnel decisions or substitute their judgment for that of the employer. E.E.O.C. v. Louisiana Office of Community Servs., 47 F.3d 1438, 1445-46 (5th Cir.1995); Bienkowski v. American Airlines, Inc., 851 F.2d 1503, 1507-08 (5th Cir.1988); Deaver v. Texas Commerce Bank, N.A., 886 F.Supp. 578, 585 (E.D.Tex. 1995), aff'd, 79 F.3d 1143 (5th Cir.1996) (citing Bodenheimer v. PPG Industries, Inc., 5 F.3d 955, 959 (5th Cir.1993)). Poor business judgment by a Defendant does not render it liable for race or age discrimination. Deaver, 886 F.Supp. at 585.
The Court holds that the evidence in this case, taken as a whole, does not allow a jury to infer that a reason for the actions challenged by Plaintiff was race or age discrimination. See Atkinson, 84 F.3d at 149. Plaintiff has failed to raise a genuine issue of material fact as to whether or not Defendant's proffered explanations are a pretext for race or age discrimination,[25] and summary judgment for Plaintiff's failure to meet her burden of showing evidence of pretext on these disparate treatment claims is therefore appropriate.
2. RETALIATION
Plaintiff alleges that Defendant retaliated against her, in violation of Title VII and the ADEA, because she complained of discrimination. The alleged retaliatory conduct identified by Plaintiff consists of the same fourteen allegations relied upon for her disparate treatment claim. See supra at 1312-1313 (listing allegations).
Both Title VII and the ADEA prohibit an employer from retaliating against employees who exercise their rights under the statutes. 42 U.S.C. § 2000e-3(a); 29 *1321 U.S.C. § 623(d). In order to establish a prima facie case of retaliation, Plaintiff must establish that: (1) she engaged in an activity protected by the statute, (2) an adverse employment action occurred, and (3) there was a causal connection between the participation in the protected activity and the adverse employment action. Long v. Eastfield College, 88 F.3d 300, 304-05 (5th Cir.1996); Dollis v. Rubin, 77 F.3d 777, 781 (5th Cir.1995); Ray v. Tandem Computers, 63 F.3d 429, 435 n. 22 (5th Cir.1995); E.E.O.C. v. Fina Oil and Chemical Co., 835 F.Supp. 330, 332 & n. 1 (E.D.Tex.1993). If Plaintiff successfully establishes a prima facie case, the burden then shifts to Defendants to articulate a legitimate, nondiscriminatory reason for the allegedly retaliatory conduct, and then back to Plaintiff to prove that the proffered reasons are pretextual. Long, 88 F.3d at 305; Ray, 63 F.3d at 435.
Although Plaintiff's briefing does not cite to it, there is some evidence in the record that Snider was aware that Plaintiff had met four times with a Mr. Sheehan, the Executive Director of the VA Hospital, in October and November 1988, and that Snider told Plaintiff not to see Sheehan again. Interview Notes of EEO Counselor Sydney Morrow, April 1992 (Exhibit III-A to Plaintiff's Appendix), at 2, 5; Plaintiff's Affidavit in Response to Pena (Exhibit II to Plaintiff's Appendix). Plaintiff claims that since Sheehan was the Chief EEO Officer for the hospital, she has satisfied her prima facie burden to show that those who allegedly discriminated against her were aware of her complaints of unfair or discriminatory treatment.
The Court has serious doubts that Plaintiff's evidence is sufficient to raise a genuine issue of material fact as to a prima facie case of retaliation under Title VII or the ADEA.[26] Nevertheless, assuming arguendo that Plaintiff could establish a prima facie case, summary judgment is appropriate in favor of Defendant because Plaintiff has not demonstrated a genuine issue of material fact as to pretext.
The "ultimate determination" in a retaliation case is whether the protected conduct was a "but for" cause of Defendant's adverse employment action. Long, 88 F.3d at 305 n. 4. Therefore, the Fifth Circuit has recently explained that, even if a plaintiff's protected conduct is a "substantial element" in a defendant's decision to take adverse action against an employee, the employer is not liable for unlawful retaliation so long as the employer would have taken the same action "even in the absence of the protected conduct." Id.
Defendant has proffered nondiscriminatory explanations for its conduct which Plaintiff has not sufficiently rebutted. See supra at 1311-1312 (discussing Plaintiff's showing of pretext for her disparate treatment claim). Plaintiff has not presented evidence that, but for her complaints to Sheehan, Defendants would not have taken the same actions regarding her employment. See Long, 88 F.3d at 305 n. 4. Therefore, Plaintiff has failed to raise a genuine issue of material fact as to her claim of retaliation, and summary judgment is granted in favor of Defendant.
3. Racially Hostile Work Environment
To state a claim for relief under a theory of hostile work environment, Plaintiff must show:
(1) that she belongs to a protected class,
(2) that she was subject to unwelcome harassment,
(3) that the harassment was based on race,
(4) that the harassment affected a term, condition or privilege of employment, and
(5) that the employer knew or should have known about the harassment and failed to take prompt remedial action.
Waymire v. Harris County, 86 F.3d 424, 428 (5th Cir.1996); Weller v. Citation Oil & Gas Corp., 84 F.3d 191, 194 (5th Cir.1996), cert. *1322 denied, ___ U.S. ___, 117 S.Ct. 682, 136 L.Ed.2d 607 (1996); Wallace v. Texas Tech Univ., 80 F.3d 1042, 1049 & n. 9 (5th Cir. 1996). In order for conduct to be sufficiently "severe or pervasive" to create an abusive working environment, it must create an environment that a reasonable person would find hostile or abusive. Weller, 84 F.3d at 194. In making such a determination, the courts look to factors such as the frequency of the conduct, its severity, the degree to which it is physically threatening or humiliating, and the degree to which it unreasonably interferes with an employee's work performance. Title VII "was only meant to bar conduct that is so severe and pervasive that it destroys a protected classmember's opportunity to succeed in the workplace," and therefore conduct that only "sporadically wounds or offends but does not hinder" an employee's performance is not actionable. Id.
Taking all of Plaintiff's allegations as true, she has not established a prima facie case for racially hostile work environment. Most importantly, Plaintiff has presented no evidence that the conduct of which she complains was motivated by her race, see supra at 1316-1321 (discussing pretext showing for disparate treatment claim), and therefore has failed to present any evidence going to the third element of her prima facie case.
Plaintiff's allegations also fail to describe conduct that is sufficiently severe or pervasive as to state a claim for hostile work environment. While Plaintiff may have been required to undertake tasks she dislikes, this does not constitute legally actionable racial harassment. As noted above, Defendant has presented evidence that the tasks of which Plaintiff complains, i.e., her assignment to work in direct patient care, were included in her job description, or are differences in judgment as to entitlement for pay increases or work priorities.
Plaintiff's evidence, even if proven, is insufficient as a matter of law to establish a claim for racially hostile work environment.[27] Therefore, summary judgment is granted as to Plaintiff's hostile work environment claim.
CONCLUSION
For the reasons stated herein, it is now
ORDERED that Defendant's Motion for Summary Judgment [Doc. # 43] is GRANTED. It is further
ORDERED that Plaintiff's Motion for Summary Judgment [Doc. # 46] is DENIED. It is further
ORDERED that Defendant's Motion to Preferentially Set Case for Trial, or in the Alternative, to Refer the Case for Trial to the United States Magistrate Judge as a Special Master Under Fed.R.Civ.P. 53(a), (b) [Doc. # 50] is DENIED AS MOOT. It is finally
ORDERED that Defendant's Motion to Dismiss for Want of Prosecution [Doc. # 53] is DENIED AS MOOT.
NOTES
[1] In addition, Defendant Brown has filed a Motion to Preferentially Set Case for Trial, or in the Alternative, to Refer the Case for Trial to the United States Magistrate Judge as a Special Master Under Fed.R.Civ.P. 53(a), (b) [Doc. # 50] and a Motion to Dismiss for Want of Prosecution [Doc. # 53]. Since Defendant's Motion for Summary Judgment is granted in its entirety, the Court need not and does not address these motions.
[2] Plaintiff's salary increased from $38,753 in June 1988 (Senior Grade-Step 6) to $56,844 in May 1996 (Senior Grade-Step 10). She is one of only 42 nurses at Level III, out of a total of 466 registered nurses at the Houston VA Medical Center. There are only four nurses at Level IV, the level above Plaintiff's. Snider Affidavit, ¶ 4, at 1.
[3] Plaintiff's case appears to have serious limitations problems. Defendant has not argued the issue in its motion, although statute of limitations is raised as a defense in Defendant's Answer to Plaintiff's Complaint. See Answer [Doc. # 6], ¶ 4, at 1. Under 42 U.S.C. § 2000e-5(e), a Title VII plaintiff in Texas must file a charge with the EEOC within 300 days of the alleged discriminatory conduct. 42 U.S.C. § 2000e-5(e); Griffin v. City of Dallas, 26 F.3d 610, 612-13 (5th Cir. 1994). Although the Fifth Circuit has recognized an equitable exception to the Title VII limitations period, known as the "continuing violation" exception, Waltman v. International Paper Co., 875 F.2d 468, 474 (5th Cir.1989), Plaintiff has not made such an argument and the doctrine does not appear to apply. Nevertheless, the 300 day limitations period is not jurisdictional and is waivable. See Zipes v. Trans World Airlines, Inc., 455 U.S. 385, 393, 102 S.Ct. 1127, 1132, 71 L.Ed.2d 234 (1982) (filing of a timely charge with the EEOC is not a jurisdictional prerequisite to suit, and therefore waiver, estoppel and equitable tolling are applicable). The Court cannot discern from any of the documents of record when Plaintiff filed her EEOC charge. In light of the Court's other rulings, there is no reason to reach this issue and the Court does not do so.
[4] Williams and Snider both at least orally recommended Plaintiff for the national award she received in 1988. Snider Affidavit, at 1-2; Affidavit of Rebecca Williams (Exhibit 1 to Defendant's Memorandum) ("Williams Affidavit"), at 1. While Defendant concedes that a nurse researcher actually provided the written recommendation, Snider states that "[b]ased upon [her] many years of experience," it would not have been possible for Plaintiff to have received the award without her recommendation as chief of the nursing service at the hospital where Plaintiff was stationed. Snider Affidavit, at 1-2; Supplemental Declaration of Margo Snider (attached to Defendant's Reply to Plaintiff's Response to Motion for Summary Judgment and Response to Plaintiff's Cross-Motion for Summary Judgment) [Doc. # 49] ("Supplemental Snider Affidavit"), at 1. In addition, Snider recommended Plaintiff to be accepted into the preceptorship training program in February 1989. See Exhibit C to Snider Affidavit. Snider also signed off on Plaintiff's proficiency reports by Williams, in which, on a scale of 1 to 8, Plaintiff was given overall ratings of 8 in 1988, and of 7 in 1989. See Plaintiff's Proficiency Reports, 1988-1991 (Exhibit 3 to Supplemental Snider Affidavit); see also infra note 7.
[5] See Interview Notes of EEO Counselor Sydney Morrow, April 1992 (Exhibit III-A to Memorandum of Law in Support of Plaintiff's Cross-Motion for Summary Judgment and in Opposition to Defendant's Motion for Summary Judgment [Doc. # 48] ("Plaintiff's Appendix")), at 2-3.
[6] Plaintiff's Complaint states that the discriminatory conduct was "so severe or abusive" that the EEOC found it to be "punitive." Complaint, ¶ VI(C), at 4. However, Plaintiff has not directed the Court to any summary judgment evidence in support of this allegation. See Jones v. Sheehan, Young & Culp, P.C., 82 F.3d 1334, 1338 (5th Cir.1996) (Rule 56 "saddles the non-movant with the duty to `designate' the specific facts in the record that create genuine issues precluding summary judgment, and does not impose upon the district court a duty to survey the entire record in search of evidence to support a non-movant's opposition"); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (non-movant's summary judgment burden may not be satisfied by conclusory allegations, unsubstantiated assertions, metaphysical doubt as to the facts, or a scintilla of evidence).
[7] See Williams Affidavit, at 2, 4. On a scale of 1 to 8, Plaintiff's proficiency reports reflect an overall rating of 8 by Williams in 1988, and an overall rating of 7 by Williams in 1989. However, Plaintiff's specific ratings in 1988 reported 7 out of 8 on "emotional stability," "interpersonal relations," "emergency effectiveness," "teaching ability," and "administrative judgment." Plaintiff's Proficiency Reports, 1988-1991 (Exhibit 3 to Supplemental Snider Affidavit). Her 1989 proficiency report also reflects special problems in interpersonal relations, rating her as 5 out of 8. After Williams had left DVA in Houston, Plaintiff's reports were completed by Ana Valadez in 1990, who gave Plaintiff an overall rating of "High Satisfactory," and by Veronica Magee in 1991, who gave Plaintiff an overall rating of "Satisfactory". Again, the 1990 and 1991 evaluations reflect Plaintiff's strained interpersonal relations. Snider signed off on Plaintiff's proficiency reports for all four years. Id.
[8] Plaintiff's General Affidavit also alleges that Plaintiff has been discriminated against on the basis of sex. Affidavit of Pauline Skinner (Exhibit I to Plaintiff's Appendix) ("Plaintiff's General Affidavit"), at 1. Since sex discrimination was not pleaded and, indeed, has not been briefed by Plaintiff in her summary judgment papers, the claim is not properly before the Court and will not be addressed.
[9] The remainder of the allegations are patently insufficient to state a claim. The allegations are as follows: that Plaintiff was required to keep a daily calendar on or about October 6, 1988 (Allegation # 4), that she received unfair treatment concerning disputes with Dr. Ghusn and Mr. Flores in April and May 1990 (Allegation # 7), that she was not asked to a meeting on October 6, 1990 (Allegation # 12), that dual supervision caused her problems (Allegation # 13), and that she was refused support on patient therapeutic group meetings and/or patient medication (Allegation # 14). To constitute a cognizable "adverse employment action," an action must be an ultimate employment decision. See Dollis v. Rubin, 77 F.3d 777, 781-82 (5th Cir.1995) (Title VII was designed to address "ultimate employment decisions" such as hiring, granting leave, discharging, promoting, and compensating, but is not designed to "address every decision made by employers that arguably might have some tangential effect upon those ultimate decisions"). Allegations # 4, 7, 12, 13 and 14, in and of themselves, are not actionable as a matter of law. To the extent they may constitute circumstantial evidence of racial or age-based animus, the Court has considered them.
[10] Plaintiff's evidence consists merely of her own conclusory opinions, set forth in her numerous affidavits in her Appendix. The only comparison drawn by Plaintiff is that she was assigned part-time staff nurse duties in 1990 (which Plaintiff argues is effectively a demotion) while a white woman, Andrea Fenn, was promoted to a position of Rehabilitation Clinical Nurse Specialist. See Allegation # 9. However, Defendant has presented evidence that Plaintiff did not even apply for the position Ms. Fenn filled and was not nearly as well qualified for it, if qualified at all, as Ms. Fenn. Snider Affidavit, at 10; Supplemental Snider Affidavit, ¶¶ 6-7, at 3.
[11] Plaintiff argues that "[t]here is no evidence in the record and indeed neither does DVA contend that these type of actions were taken against younger individuals or persons of other races who had served or were serving as clinical nurse specialists or special emphasis nurses with DVA. This evidence is sufficient to support a finding that Mrs. Skinner has shown a prima facie case of race and age discrimination." Plaintiff's Response, at 2-3. Contrary to Plaintiff's argument, Plaintiff, in responding to a proper motion for summary judgment, has the burden to establish a prima facie case. St. Mary's, 509 U.S. at 506, 113 S.Ct. at 2747. Any failure by Defendant to present evidence that persons outside the protected class received similar treatment does not assist Plaintiff or establish her prima facie case. Celotex, 477 U.S. at 323, 106 S.Ct. at 2552-53.
[12] Prior to Andrea Fenn's arrival in 1990, Skinner was the only Clinical Nurse Specialist in the hospital, so her argument that other Clinical Nurse Specialists were not assigned to direct patient care is not probative evidence of her claim. Supplemental Snider Affidavit, ¶ 6, at 3.
[13] One section of the job description, captioned "Clinical Domain," states that the Clinical Nurse Specialist must "[utilize] sound clinical judgment in the implementation of the nursing process to provide systematic patient care," and must "[demonstrate] competency, assist[] and instruct[] others in the implementation and the revision of the plan of care based upon standards, nursing theory, nursing diagnosis, frequent observation and nursing judgments." Job Description for Gerontology Clinical Nurse Specialist (Exhibit 4 to Supplemental Snider Affidavit) ("Job Description"), ¶¶ 1.0, 1.4.
[14] Courts are not to substitute their judgment for that of the employer in evaluating employment decisions. E.E.O.C. v. Louisiana Office of Community Servs., 47 F.3d 1438, 1445-46 (5th Cir. 1995); Bodenheimer v. PPG Industries, Inc., 5 F.3d 955, 959 (5th Cir.1993); Bienkowski v. American Airlines, Inc., 851 F.2d 1503, 1507-08 (5th Cir.1988). "The ADEA and Title VII are not vehicles to question or evaluate personnel moves, which although legal, may have been the result of poor business judgment." Deaver v. Texas Commerce Bank N.A., 886 F.Supp. 578, 585 (E.D.Tex.1995), aff'd, 79 F.3d 1143 (5th Cir. 1996) (citing Bodenheimer, 5 F.3d at 959).
[15] Plaintiff has alleged the following: (i) she was assigned as a staff nurse three days a week on or about September 19, 1988 (Allegation # 2); (ii) her request to work only the day shift was denied (Allegation # 3); (iii) she was reassigned to staff nurse duties effective May 28, 1990, while a white nurse (Andrea Fenn) was hired as a Rehabilitation Clinical Specialist shortly thereafter (Allegation # 9); (iv) she had restrictions placed on her role when she was reassigned back to clinical specialist position on or about July 23, 1990 (Allegation # 10), and (v) by giving her role in the Skin Care Management Program to another in September 1990 (Allegation # 11). Plaintiff alleges that these assignments as a staff nurse created "role contamination," since she was both a peer and a supervisor. General Skinner Affidavit, at 1, ¶ 2(3), at 3, ¶ 9 at 4.
[16] Snider also states that the 1988 assignment facilitated Plaintiff's sharing of her clinical experience with other staff, and providing additional structure which Williams recommended so as to increase Plaintiff's productivity. Snider Affidavit, at 3; see also Williams Affidavit, at 2.
[17] As for Plaintiff's reassignment to staff nurse duties effective May 28, 1990, the reassignment was never undertaken because Plaintiff took 45 days of sick leave effective May 28, 1990. Snider Affidavit, at 9.
[18] Plaintiff's Affidavit in Response to Magee identifies a memorandum by a prior supervisor (Melissa Lockhard) in which reference is made to Defendant's performance review being done by Head Nurse Len Morrow. Plaintiff's Affidavit in Response to Magee Affidavit (Exhibit II to Plaintiff's Appendix), ¶ 2. However, the reviews in 1990 and 1991 were in fact done by the Assistant Chiefs of Nursing.
[19] In addition, Plaintiff's speciality was not rehabilitation but gerontology. Supplemental Snider Declaration, ¶ 9, at 3.
[20] The allegations that can be read to complain of denial of promotion are as follows: (i) Plaintiff was denied step increases in July, 1988 (Allegation # 1); (ii) she was given a proficiency rating in 1989 that was less favorable than she believed she deserved (Allegation # 5); (iii) she was denied special advancement of ANA certification and/or publication on or about July 27, 1989 (Allegation # 6); and (iv) Defendant refused to consider Plaintiff for a promotion to Rehabilitation Clinical Specialist after she received various professional awards. Allegation # 9. See Plaintiff's Response, at 2.
[21] Plaintiff contests Defendant's account, stating that "even after a twelve month period had lapsed, a recommendation for a step increase was not made, as is customary." Plaintiff's General Affidavit, at 3.
[22] Plaintiff appears to argue that such a factor was not appropriate for the Board to consider in evaluating her job performance. The Court notes that, by Plaintiff's own account, a nurse receiving a special advancement must have demonstrated a "sustained high level of performance and ability over and above that normally expected." Plaintiff's Response, at 12-13. Certainly interpersonal relations are a valid indeed, integral consideration when evaluating one's overall performance and abilities, and there is no basis in this record to conclude otherwise.
[23] See supra note 4.
[24] This is also true of the allegations as to Plaintiff's conflicts with Dr. Ghusn and Mr. Flores, the lack of an invitation to the October 6, 1990 meeting, the dual supervision issue, and lack of support for her patient therapeutic meetings and patient medication program. Allegations # 7, 12, 13 and 14.
[25] The conclusion that Plaintiff has failed to raise a genuine question of material fact as to pretext is substantially reinforced by the evidence filed under seal by Defendant. See Docs. # 45 and 52. This evidence is relied upon by the Court as an additional basis for granting summary judgment but, out of courtesy to the parties, is not discussed or cited specifically.
[26] As noted previously in discussion of Plaintiff's disparate treatment claim, the Court has serious doubts as to whether Plaintiff has presented sufficient evidence of an adverse employment action as to either the demotion or the promotion claims, see supra at 1315, or as to the other conduct summarized previously. See supra note 9. In addition, Plaintiff's evidence of causal connection between her alleged complaints and Defendant's conduct is quite thin.
[27] Cf. Weller, 84 F.3d at 195 (reversing jury verdict awarding damages under hostile work environment theory); DeAngelis v. El Paso Municipal Police Officers Ass'n, 51 F.3d 591, 597 (5th Cir.) (same), cert. denied, ___ U.S. ___, 116 S.Ct. 473, 133 L.Ed.2d 403 (1995). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/250222/ | 275 F.2d 251
Leaman Russell SMITH, Appellant,v.F. T. WILKINSON, Warden, United States Penitentiary, Atlanta, Georgia, Appellee.
No. 18104.
United States Court of Appeals Fifth Circuit.
February 29, 1960.
Chester E. Wallace, Atlanta, Ga., for appellant.
Charles D. Read, Jr., U. S. Atty., E. Ralph Ivey, Asst. U. S. Atty., Atlanta, Ga., for appellee.
Before RIVES, Chief Judge, and HUTCHESON and TUTTLE, Circuit Judges.
RIVES, Chief Judge.
1
This appeal is from a judgment denying a petition for habeas corpus. On September 27, 1951, the appellant was convicted in the United States District Court for the Middle District of Pennsylvania of three felonies charged in separate indictments. In case No. 12149, he was sentenced to five years' imprisonment. In case No. 11879, he was sentenced to two years' imprisonment to be served consecutively with the sentence imposed in No. 12149. In case No. 12148, he was sentenced to two years' imprisonment to be served consecutively with the sentence imposed in No. 11879, "and to commence at the expiration of or legal release from sentence imposed in No. 11879." On June 3, 1954, the appellant was convicted in the same District Court of still a fourth felony, and the legal effect of his sentence, as it has now been corrected to read, was:
2
"It is adjudged that the defendant is hereby committed to the custody of the Attorney General or his authorized representative for imprisonment for a period of four years, sentence to begin at the expiration of sentence you are presently serving."
3
The question for decision is whether or not the fourth sentence runs consecutively to the prior three sentences, or consecutively to the first sentence (in case No. 12149) and concurrently with the second and third sentences.
4
The statement of the District Court at the time of imposing sentence indicates that, with some consideration to the appellant's having pleaded guilty, the Court intended to impose a severe sentence on the appellant and his co-defendant Robertson.1 That statement discloses no intent to treat the first three sentences separately and to make the fourth sentence run concurrently with the second and third. In addition, appellant's counsel, in his plea to the Court, had discussed the three successive sentences as a single whole.2 What the Court intended, it is reasonably clear, was to treat the successive periods of imprisonment totaling a certain number of years as one cumulative sentence. That concept has been expressly approved by the Tenth Circuit in a case directly in point, Ong v. Hunter, 1952, 196 F.2d 256. The Supreme Court and other circuits have also recognized that, when the intent is clear, several consecutive sentences may be treated as one general cumulative sentence.3
5
A reading of the entire proceedings at the time of the imposition of sentence resolves any ambiguity and leaves no reasonable doubt that the sentencing court intended to sentence the appellant to four years' imprisonment to begin at the expiration of the "sentence" in the sense of the cumulative sentence comprising the successive periods of imprisonment. The judgment denying habeas corpus is therefore
6
Affirmed.
Notes:
1
In part as follows:
"The Court: It is a vicious looking tool. You are to be commended for what you did in submitting your bodies for experimental purposes and at least you, Robertson, apparently applied yourself, improved your education, but the net result is that you pretty near killed a man, and that sort of thing cannot be tolerated. For better or for worse you only stand before this Court charged with two offenses to which you have entered pleas of guilty: assault with a dangerous weapon with intent to do bodily harm and without just cause or excuse, and the penalty can be either a fine of not more than $1,000 and not more than five years, or both. That is the maximum I can give you under that count.
"The third count, the second one, to which you plead guilty, assault by striking, by fine of not more than $500 or not more than six months, or both.
"Mr. Kalp: If the Court please, may I say a word? I take the position that the second offense is the lessor offense, and is therefore included in the first.
"The Court: I think that is right. The maximum sentence is fine of $1,000 and imprisonment of five years, or both. There is no sense in the fine, of course. It does not call for punitive action over and above what you now have. I understand that Smith has forfeited 250 days of good time. It is a queer psychological quirk, what comes over a man who is serving time and has accumulated that much good time which means that 250 days would be taken off the tail end of his sentence, his time of release from imprisonment would be advanced to just that amount, by this crazy prank. He has robbed himself. He has sentenced himself to 250 days. Robertson has sentenced himself to 276 days.
"Now had you gone to trial and had you been convicted there might have been a maximum of 20 years more. Now I always go on the theory that a plea entitled a defendant to something; in other words, I give consideration to a plea. At least the defendants have not added perjury to their already vicious guilt. So I am going to give both credit for the entry of a plea.
"As to Smith the sentence of the Court is that you be committed to the custody of the Attorney General for a period of four years, sentence to begin at the expiration of the sentence you are presently serving."
2
"Now as far as the record of the prisoner in Lewisburg he started his sentence in September of 1951 for violation of the Dyer Act and for jail break. He had a six to nine sentence and would have been eligible to apply for payroll (sic) this September."
3
Affronti v. United States, 1955, 350 U.S. 79, 76 S.Ct. 171, 100 L.Ed. 62; Henry v. Madigan, 9 Cir., 1957, 241 F.2d 659, overruling the contrary doctrine in Kirk v. United States, 9 Cir., 1950, 185 F.2d 185, 187; Phillips v. United States, 8 Cir., 1954, 212 F.2d 327 | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1870734/ | 763 N.W.2d 277 (2009)
STATE
v.
RAMON.
No. 08-0151.
Court of Appeals of Iowa.
January 22, 2009.
Decision without published opinion. Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2631075/ | 164 P.3d 1141 (2007)
2007 OK CIV APP 63
Dallas E. CURLING, III, Petitioner,
v.
CITY CHEVROLET, Travelers Indemnity Company of America, and The Workers' Compensation Court, Respondents.
No. 104,009.
Court of Civil Appeals of Oklahoma, Division No. 3.
May 18, 2007.
Robert A. Forbes, Jr., Midwest City, OK, for Petitioner.
H. Grady Parker, Jr., Looney, Nichols & Johnson, Oklahoma City, OK, for City Chevrolet and Travelers Indemnity Company of America.
Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 3.
OPINION
ADAMS, Judge.
¶ 1 Claimant Dallas E. Curling, III, appeals an order of a three-judge panel of the Workers' Compensation Court which applied 85 O.S.Supp.2005 § 22(3)(d) and limited his award of temporary total disability (TTD) benefits to eight weeks. The Workers' Compensation Court's finding that Claimant sustained a soft tissue injury is supported by competent medical evidence and is sustained. However, the application of the 8-week limit on TTD benefits in § 22(3)(d) is vacated, and the matter remanded for entry of an order consistent with the statutory analysis adopted in this opinion.
¶ 2 Claimant filed a claim for accidental injuries to his right shoulder and to other parts of his body sustained when he tripped and fell over a curb on August 25, 2005, while working as a car salesman for City Chevrolet (Employer, collectively with its insurer Travelers Indemnity Company of America). Subsequently, an order was entered finding he had sustained an accidental personal injury to his right shoulder which arose out of and was in the course of his employment.[1] The trial judge found Claimant was temporarily totally disabled and in need of medical treatment and awarded him TTD benefits for a period of 24 weeks and four days and continuing for a period "not to exceed 52 weeks" from the date of the order. On Employers en banc appeal, the three-judge panel vacated several paragraphs of the trial judge's order, entered substitute paragraphs, and added one paragraph. As modified, the trial judge's order was affirmed.
¶ 3 The order entered by the three-judge panel added a finding that Claimant's work-related injury to his right shoulder was an aggravation of a pre-existing condition. The panel also found Claimant's injury was a non-surgical soft tissue injury pursuant to § 22(3)(d) and surgery had not been recommended, and therefore TTD benefits were limited to 8 weeks.
¶ 4 Claimant first argues that his injury was not a soft tissue injury as defined in § 22(3)(d) but is instead an aggravation of prior bone and joint injuries from a 1997 gunshot wound.[2] The panel specifically found "THAT at the time of the trial, claimant's injury is a `nonsurgical soft tissue' injury pursuant to Title 85 § 22(3)(d)." We must sustain that factual determination if it is supported by any competent evidence. Davis v. Southwestern Bell Telephone, 2006 OK 48, 139 P.3d 892.
¶ 5 The record contains medical expert opinion that Claimant had re-injured his right shoulder and had a "probable rotator cuff aberration and tear." Section 22(3)(d) defines a soft tissue injury as "damage to one or more of the tissues that surround bones and joints" including but not limited to "sprains, strains, contusions, tendonitis [sic], and muscle tears".[3] and cumulative trauma. The injury described falls into the statutory classification of a soft tissue injury. This stands as competent medical evidence supporting the finding that a soft tissue injury *1143 was sustained. However, that does not end our review in this matter.
¶ 6 Claimant also argues the 8-week limit in § 22(3)(d) does not apply because that provision is followed by another provision stating that "[i]n all cases of soft tissue injury, the employee shall only be entitled to appropriate and necessary medical care and temporary total disability as set out in paragraph 2 of this section, unless there is objective medical evidence of a permanent anatomical abnormality." He argues that the benefit periods set forth in § 22(3)(d) and § 22(2) are in irreconcilable conflict, and that legislative intent must be gleaned from the Workers' Compensation Act as a whole in order to give each provision effect and with a view to its purpose and objective. Walker v. Group Health Services, Inc., 2001 OK 2, 37 P.3d 749.
¶ 7 Claimant cites Gee v. All 4 Kids, 2006 OK CIV APP 155, 149 P.3d 1106, which examined this same statutory conflict. In Gee, another division of this Court applied rules for statutory construction and found that the limits at the beginning of § 22(3)(d) directly conflict with its later provisions referencing "paragraph 2 of this section," and that the later references control and permit an aggregate award of up to 300 weeks of TTD for soft tissue injuries.
¶ 8 Employer argues that legislative intent was not addressed and the construction applied in Gee nullifies the enactments limiting soft tissue injuries and is "at odds with what the Legislature intended." However, Employer's arguments turn on the principle that legislative amendments are presumed to change existing law and ignores that the statutory text referring to "paragraph 2 of this section" was enacted simultaneously with and as part of the same amendment to § 22 adding the earlier text in § 22(3)(d) which the Workers' Compensation Court applied here to limit TTD benefits to 8 weeks. The reference to paragraph 2 stands later in the same statute regarding soft tissue injuries. As the last in position in the same statute, its provisions control here. Earnest, Inc. v. LeGrand, 1980 OK 180, 621 P.2d 1148.
¶ 9 Under the rules of statutory construction applicable to the 2005 amendments to § 22, we find persuasive the analysis in Gee that the conflict created by the later reference to "paragraph 2 of this section" with earlier text in that same statute must be resolved by recognizing that the later text prevails over that set forth earlier. Therefore, Claimant's entitlement to TTD for this injury is not limited to 8 weeks. The panel's order so limiting Claimant's TTD must be vacated, and the case is remanded for entry of an order consistent with this opinion.
VACATED AND REMANDED
JOPLIN, P.J., concurs.
MITCHELL, V.C.J., dissenting.
¶ 10 I disagree with the majority's conclusion that of the conflicting paragraphs in § 22, the later in position must prevail. The Supreme Court has not so held. Earnest, Inc. v. LeGrand, 1980 OK 180, 621 P.2d 1148, relied upon by the majority opinion and by the Court of Civil Appeals in Gee v. All 4 Kids, 2006 OK CIV APP 155, 149 P.3d 1106 holds and is quoted in Gee that ". . . one matter to consider is that the last in order or position and arrangement possibly should prevail." That the order of the paragraphs or their position in the statute is a proper factor to consider, and that the last in order "possibly should prevail" are certainly reasonable guidelines in construing an ambiguity. Our Supreme Court in Earnest, however, only recognized this as a guideline and not as a strict rule of construction that would necessarily preclude the consideration of other factors that might be helpful in construing the statute.
¶ 11 I respectfully dissent.
NOTES
[1] The issue of injury to other parts of his body was reserved for future hearing.
[2] He cites to a portion of a medical expert report stating that an x-ray showed he had sustained "some inferior subluxation of the humeral head in the glenoid and there are some bony changes of the bony head indicative of some possible subtle or mild avascular necrosis changes" and argues these anatomical structures were not soft tissue.
[3] The rotator cuff is a c-shaped structure of muscles and tendons allowing the shoulder to rotate. See Stedman's Medical Dictionary, 377 (25th ed.1990). | 01-03-2023 | 11-01-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2985086/ | January 9, 2014
JUDGMENT
The Fourteenth Court of Appeals
R.F. BEARDEN, Appellant
NO. 14-13-00578-CV V.
WALTON HOUSTON GALLERIA OFFICE, LP, Appellee
________________________________
Today the Court heard appellee's motion to dismiss the appeal from the
judgment signed by the court below on April 17, 2013. Having considered the
motion and found it meritorious, we order the appeal DISMISSED.
We further order that all costs incurred by reason of this appeal be paid by
appellant, R.F. Bearden.
We further order this decision certified below for observance. | 01-03-2023 | 09-22-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1149598/ | 556 So. 2d 303 (1989)
A. Stephen McDaniel, Administrator of Estate of Alton Jerry Speaks, Deceased; Southern Institute of Aviation, Inc., d/b/a Memphis Jet Center; Memphis Aviation, Inc., d/b/a Memphis Jet Center; and J.B. Gaiennie
v.
Glenda J. RITTER and Rebecca F. Ritter.
No. 07-59440.
Supreme Court of Mississippi.
November 29, 1989.
Rehearing Denied February 14, 1990.
*304 Michael Farrell, Wells, Moore, Simmons, Stubblefield & Neeld, Jackson, Charles G. Walker, Petkoff, Lancaster & Walker, Memphis, Tenn., Kenna L. Mansfield, Jr., Wells, Wells, Marble & Hurst, Jackson, for appellants.
Mignon M. DeLaschmet, Wayne E. Ferrell, Jr., Ferrell & Hubbard, Jackson, William W. Ballard, Hernando, John B. Farese, Farese, Farese & Farese, Ashland, for appellees.
En Banc.
ROBERTSON, Justice, for the Court:
I.
Today's appeal arises from the fatal flight of a Memphis-based Beechcraft Bonanza B-36 airplane which experienced severe icing and crashed near Joplin, Missouri, killing pilot and passenger. The passenger's survivors have brought a wrongful death action in this state, suing the estate of the deceased pilot and everyone else in sight. Apparently crediting an assumption of risk defense theory, the jury found for the four defendants who had not been dismissed summarily. In due course, the trial judge held that he had erred in submitting the issue of assumption of risk to the jury and granted a new trial.
*305 Believing the interests of litigant and judicial economy may be served thereby, we accepted Defendants' interlocutory appeal to settle the controlling issues of law prior to retrial. We affirm in part and reverse in part.
II.
The facts of the case are relatively simple the cast of characters and reach of potential liability and identification of law governing same quite complex.
The Plaintiffs are (1) Glenda J. Ritter, second wife of Jack Ritter, Jr., married to him at the time of the fatal accident and a resident of Olive Branch, Mississippi; (2) the minor children of Jack Ritter, Jr., who all live in Holly Springs, Mississippi, represented by their mother, Rebecca F. Ritter, divorced from Jack in 1979. Plaintiffs are Ritter's personal representatives, Miss. Code Ann. § 11-7-13 (Supp. 1989), and are Appellees here.
Appellants today, and among the corporate and individual parties originally named as Defendants[1] in this action are: (1) A. Stephen McDaniel, Administrator of Estate of Alton Jerry Speaks, deceased, who was alleged to be the pilot of the aircraft at the time of the accident; (2) Southern Institute of Aviation, Inc. d/b/a Memphis Jet Center (hereafter "SIA"), a Tennessee corporation with its principal place of business in Memphis, the aircraft charter company which had rented the plane to Speaks and Ritter; (3) Memphis Aviation, Inc., d/b/a Memphis Jet Center, a Tennessee corporation affiliated with SIA and responsible for the maintenance of the Memphis Jet Center charter fleet of aircraft; and (4) J.B. Gaiennie, a Memphis, Tennessee resident, the owner of record of the Beechcraft Bonanza.
Jack Ritter and Alton Jerry Speaks were marketing agents (salesmen) for various agricultural supply and leasing corporations, some of which were partially owned by Speaks. Ritter was a resident citizen of Olive Branch, whose base of business operations lay in Memphis. Speaks was a resident citizen of Memphis, where he had his business base as well. Both held pilot's licenses, although Speaks was by far the more experienced of the two.
On March 19, 1984, Speaks rented a Beechcraft Bonanza aircraft from SIA in Memphis and flew Ritter and himself to Springfield, Missouri. Later the same day, their business in Springfield completed, the two decided to fly to nearby Joplin some thirty minutes away for a social visit to Speaks' mother-in-law. They departed Springfield without obtaining a full weather briefing. En route, the Beechcraft Bonanza B-36 experienced severe icing conditions, became weighted down by "rime ice" (a particularly dangerous form of frozen froth), and crashed while attempting to land near Joplin, killing the two men.
Ritter's survivors commenced this wrongful death action on November 2, 1984 in the Circuit Court of Hinds County. Plaintiffs charged Speaks with negligent aviation and demanded judgment of and from his estate. Plaintiffs further charged liability on the part of SIA, Memphis Aviation, and Gaiennie upon the allegations that these corporate and individual owners were negligent in the lease, maintenance and ownership of the crashed aircraft. In addition, Plaintiffs alleged that Miss. Code Ann. § 61-11-1, et seq. (1972) and the Federal Aviation Act of 1958, 49 U.S.C.App. § 1301 et seq. (1970), impose strict vicarious liability upon the owners and lessors of aircraft.
Trial began in the Circuit Court of Hinds County on May 18, 1987. At the close of the evidence, the Circuit Court held Speaks negligent in piloting the Bonanza, and that his negligence proximately caused Jack Ritter's death. The Court granted Plaintiffs a directed verdict on those issues. Rule 50(a), Miss.R.Civ.P.
Of significance was the Circuit Court's ruling on the defense of assumption of the risk. The Court refused Plaintiffs' request for a comparative negligence instruction, submitting to the jury only whether Ritter had assumed the risk of injury or death by *306 accompanying Speaks into weather which he, as a pilot himself, must have known to be dangerous. Both parties had drafted assumption of the risk instructions. See Rule 3.09, Unif.Cir.Ct.Rules. The Court submitted to the jury that offered by the Plaintiffs. In due course, the jury returned a verdict for all Defendants. Plaintiffs timely moved for a new trial, Rule 59, Miss.R.Civ.P., and the Court granted Plaintiffs' motion, holding that it had erred in granting the assumption of the risk instruction.
The Defendants then moved the Circuit Court to allow an interlocutory appeal of all issues in the case which had been resolved adversely to them. On January 26, 1988, the Circuit Court denied this motion. The Defendants then petitioned this Court for leave to appeal the Circuit Court's grant of a new trial, again raising the various issues upon which they had not prevailed in their various summary judgment motions. By order entered March 16, 1988, this Court granted the interlocutory appeal.
III.
At the outset, the Plaintiffs/Appellees, the Ritters, seek to limit the issues presented for review. Their premise is that the order granting the new trial is all that is the subject of this interlocutory appeal. Since that order addressed only the assumption of the risk/comparative negligence jury instructions, the appeal should be limited to those issues, or so we are told. The Ritters rely upon the Circuit Court's denial of the defendants' motion for interlocutory appeal relating to the broader range of issues.
Our appellate jurisdiction extends to cases and not just issues. While we normally limit our review to specific issues presented by the parties, that limitation is one of expedition and not jurisdiction, else how our familiar plain error rule. See Rule 28(a)(3), Miss.Sup.Ct.Rules; and Rule 103(d), Miss.R.Ev. Interlocutory appeals are no different.
Interlocutory appeals are governed by Rule 5, Miss.Sup.Ct.Rules. By its own terms Rule 5 does not require certification of the issues by the lower court. The rule states:
An appeal from an interlocutory order may be sought if the order grants or denies certification by the trial court that a substantial basis exists for a difference of opinion on a question of law... .
The Advisory Committee Comment to Rule 5 notes: "the rule contemplates that either the trial court will grant an interlocutory appeal subject to appellate review of that decision, ... or the Supreme Court will grant the appeal itself." Under Rule 5, the scope of the issues presented for appellate resolution is ordinarily and practically restricted only by the contents of the petition presented to this Court pursuant to Rule 5(b), not the order of the trial court. Moreover, once a case becomes subject to our appellate jurisdiction, we have authority to address all matters as may appear in the interests of justice and economy.[2]
Of course acceptance of this appeal is not obligatory in any sense, and for pragmatic reasons we deny most petitions for interlocutory appeal. The grant of a new trial may not be appealed of right, as there has been no final judgment. Maxwell v. Illinois Central Gulf Railroad, 513 So. 2d 901, 908 (Miss. 1987); Bowman v. Rutledge, 369 So. 2d 768, 769 (Miss. 1979); Street v. Lokey, 209 Miss. 412, 413, 47 So. 2d 816 (1950).
We have precedent of recent vintage for discretionary grant of an interlocutory appeal from an order granting a new trial. Clark v. Viniard By and Through Viniard, 548 So. 2d 987, 988 (Miss. 1989). The parties have completed an expensive and time consuming trial and face another. Difficult issues have been sharply contested. Appellate consideration of those issues *307 at this time likely will "materially advance the termination of the litigation and avoid exceptional expense to the parties." Rule 5(a)(1), Miss.Sup.Ct.Rules. We have exercised our discretion, granted the interlocutory appeal, and now consider and decide the issues discussed below.
IV.
The Defendant/Appellants argue that they may not be held subject to in personam jurisdiction in Mississippi. Because of the disposition we make of the case on other issues,[3] we need only consider the point with respect to defendant/appellant Stephen McDaniel, Administrator of the Estate of Alton Jerry Speaks, deceased.
Two distinct questions must be addressed.[4] First, we inquire whether the estate of Speaks was amenable to suit here by virtue of the Mississippi Long Arm Statute. Miss. Code Ann. § 13-3-57 (Supp. *308 1989). Assuming an affirmative answer there, the question is whether the estate of Speaks may be amenable to suit in Mississippi consistent with the due process clauses of the federal constitution, and, as well, this state's constitution, that is, the familiar minimum contacts rule.
A. Mississippi Long Arm Statute
Section 13-3-57, in relevant part, declares
Any non-resident person, firm, general or limited partnership, or any foreign or other corporation not qualified under the constitution or laws of this state as to doing business herein, who shall ... do any business or perform any character of work or service in this state, shall by such act or acts be deemed to be doing business in Mississippi.
Any such non-resident is declared amenable to suit in Mississippi "in any actions or proceedings accrued or accruing from such act or acts, or as an incident thereto, ... ." [Emphasis supplied] This latter clause will acquire significance below.
The Long Arm Statute specifically addresses the power of a Mississippi court to gain in personam jurisdiction over a foreign executor or administrator:
Any such cause of action against any such nonresident, in the event of death or inability to act for itself or himself, shall survive against the executor, administrator, receiver, trustee, or any other selected or appointed representative of such nonresident.
* * * * * *
The doing of such business, or the engaging in any such work or service in this state, or the making of such contract, or the committing of such tort in this state, shall be deemed to be a signification of such nonresident's agreement that any process against it or its representative which is so served upon the secretary of state shall be of the same legal force and effect as if served on the nonresident at its principal place of business in the state or country where it is incorporated and according to the law of that state or country.
Miss. Code Ann. § 13-3-57 (1972 & Supp. 1989) [emphasis supplied].
The use of the word "representative" (1) encompasses executors and administrators of an estate and (2) contemplates that the actions of a decedent during his lifetime which would have rendered him amenable to suit here will similarly subject his administrator or executor (i.e. his personal "representative") to in personam jurisdiction in Mississippi.
Such a view is consonant with the Restatement (Second) of Conflict of Laws, § 358 (1971) which declares:
An action may be maintained against a foreign executor or administrator upon a claim against the decedent when the local law of the forum authorizes suit in the state against the executor or administrator and
(a) suit could have been maintained within the state against the decedent during his lifetime because of the existence of a basis of jurisdiction other than mere physical presence, or
(b) the executor or administrator has done an act in the state in his official capacity.
Determinations of whether a defendant is "doing business" within the state proceeds on an ad hoc basis. Miss Cal 204, Ltd. v. Upchurch, 465 So. 2d 326, 330 (Miss. 1985); S & A Realty Co. v. Hilburn, 249 So. 2d 379, 382 (Miss. 1971). Our review of jurisdictional issues is essentially de novo: "In making this determination, this Court is in the same position as the trial court, since all facts are set out in the pleadings or exhibits, and the chancellor may be reversed if he erred whether the error was manifest or not." Miss Cal, 465 So.2d at 330.
The record reflects that
(1) Speaks was a native Mississippian, although he was a citizen of Tennessee at all times relevant hereto.
(2) Speaks had incorporated Consolidated Enterprises, Inc. as a Mississippi corporation this corporation was Ritter's employer.
(3) Speaks had entered into a partnership, S & S Enterprises, which conducted *309 business in Mississippi and owned land near Sardis, Mississippi.
(4) He was a principal stockholder of Consolidated Agri Leasing, a Tennessee corporation which is qualified to do business in Mississippi and which in fact does conduct business here.
Speaks was doing business in Mississippi in the sense that he did various acts here for the purpose of realizing a pecuniary benefit or otherwise accomplishing an object. Restatement (Second) of Conflict of Laws § 35, Comment a (1971). Though his domestic and business residences were in Memphis, Speaks' presence within Mississippi was of such a continuing and substantial a nature that we regard him doing business here within the meaning and contemplation of Section 13-3-57.
We are told that in personam jurisdiction over Speaks' Estate must nevertheless fail for lack of a sufficient nexus between Speaks' Mississippi activity and the Ritters' claim. The long arm statute requires no direct nexus to the non-resident's business done here, only that the claim be incident thereto. The statute thus requires far less than that the liability generating conduct have occurred in Mississippi. Here we focus upon Consolidated Enterprises, Inc., a Mississippi corporation, organized by Speaks and of which Speaks was the principal shareholder. Consolidated is engaged in the business of leasing dairy cows to farmers and has an office in Columbus, Mississippi. Speaks was a director and officer an employee, if you will of the corporation which paid him a salary. Consolidated Enterprises also employed Ritter. Speaks' and Ritter's trip to Missouri (though not necessarily to Joplin) was on behalf of Consolidated. The fatal crash occurred before their return to Memphis.
On these facts, we hold the Plaintiffs Ritter's claim to have arisen out of facts sufficiently incident to business done by Speaks in Mississippi that Speaks' estate is amenable to suit here under Section 13-3-57.
B. Minimum Contacts/Due Process
The general principle regarding the exercise of jurisdiction over a nonresident is that he "may not be subjected to a litigation in a foreign jurisdiction unless he has `certain minimum contacts with it such that the maintenance of the suit does not offend the traditional notions of fair play and substantial justice'. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95, 102 (1945)." Administrators of the Tulane Ed. Fund v. Cooley, 462 So. 2d 696, 702 (Miss. 1984). These contacts must amount to something more than occasional "fortuitous" instances where the defendant had in the past come into some casual, isolated contact with an in-state resident. Cooley, 462 So.2d at 703 (citing Worldwide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295, 100 S. Ct. 559, 566, 62 L. Ed. 2d 490, 500 (1980))
"Purposeful activity" by a non-resident in the forum state may subject him to in personam jurisdiction there. If a nonresident corporate or individual defendant has "purposefully availed itself of the privilege of conducting activities within the forum state", then it is considered not "unfair" that the nonresident's important rights be adjudged in that forum. Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1240, 2 L. Ed. 2d 1283, 1298 (1958). See Wilkinson v. Mercantile National Bank, 529 So. 2d 616, 618-20 (Miss. 1988); Anderson v. Sonat Exploration Co., 523 So. 2d 1024, 1026-27 (Miss. 1988).
We perceive no constitutional imperative that the action arise out of the non-resident defendant's contacts/activities in this state. Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414, 104 S. Ct. 1868, 80 L. Ed. 2d 404, 411 (1984); Perkins v. Benquet Consolidated Mining Co., 342 U.S. 437, 72 S. Ct. 413, 96 L. Ed. 485 (1952); Administrators of the Tulane Educational Fund v. Cooley, 462 So. 2d 696, 703 (Miss. 1984). All that is required is that the non-resident defendant have continuous and systematic general contacts with this state. See Restatement (Second) of Conflict of Laws § 35(3) (1971). In the latter years of his life, Speaks had such Mississippi contacts.
*310 The Circuit Court did not err in holding the Estate of Speaks subject to in personam jurisdiction in this state.
V.
Points of personal jurisdiction settled, we turn to questions of choice of substantive law. By order dated May 12, 1987, the Circuit Court granted Plaintiffs' motion that Mississippi law be applied to all aspects of the case. Defendants had opposed the motion, contending that Tennessee law was applicable, as that state had the most significant relationship to both the events giving rise to the lawsuit and the parties involved. Defendants reassert the point on appeal.
Since Craig v. Columbus Compress & Warehouse Co., 210 So. 2d 645, 649 (Miss. 1968) and Mitchell v. Craft, 211 So. 2d 509 (Miss. 1968), Mississippi has ascribed to the most significant relationship test embodied in the Restatement (Second) of Conflicts of Law.[5] This general view has been reaffirmed in a number of cases, culminating in Boardman v. United Services Automobile Association, 470 So. 2d 1024 (Miss. 1985); see also White v. Malone Properties, Inc., 494 So. 2d 576, 578 (Miss. 1986). Nothing in Williams v. Taylor Machinery, Inc., 529 So. 2d 606, 609 (Miss. 1988), or Shewbrooks v. A.C. & S, Inc., 529 So. 2d 557, 564-68 (Miss. 1988) suggests a differing view on any of the choice of law issues presented today.
The Restatement (Second) § 145 governs choice of law questions in tort actions and provides:
(1) The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in § 6.
(2) Contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:
(a) the place where the injury occurred,
(b) the place where the conduct causing the injury occurred,
(c) the domicile, residence, nationality, place of incorporation and place of business of the parties,
(d) the place where the relationship, if any, between the parties is centered.
These contacts are evaluated according to their relative importance with respect to the particular issue.[6]
The principles of Sections 6 and 145 of the Restatement (Second) defy mechanical application they are less "rules of law" than generally-stated guideposts. Additionally, the factors relevant to issues of in personam jurisdiction and those regarding choice of law must be kept distinct. While a foreign defendant may have sufficient contacts to be amenable to suit in Mississippi, it does not necessarily follow "that Mississippi substantive law will govern the rights and liabilities of the parties." Boardman, 470 So.2d at 1035; see also Administrators of the Tulane Educational Fund v. Cooley, 462 So. 2d 696, 701 (Miss. 1984). For in personam jurisdiction purposes, the court focuses upon the contacts of a single party. On choice of law we look at all contacts of all parties and more. Minimum contacts suffice for in personam jurisdiction. Choice of law seeks the state where the contacts are maximized.
Joplin, Missouri, the locus delicti, was not quite as fortuitous as in some fatal aircraft accident suits. See Proprietors Insurance Company v. Valsecchi, 435 So. 2d 290, 294-97 (Fla.App. 1983). Still, this is one of those cases where locus bears little relation to the parties. Where the *311 plane went down will not necessarily control the choice of law issues before us if with respect to a given issue another state has a more significant relationship. See Vick v. Cochran, 316 So. 2d 242, 246 (Miss. 1975); Turner v. Pickens, 235 So. 2d 272, 274 (Miss. 1970); Mitchell v. Craft, 211 So. 2d 509, 512 (Miss. 1968); Restatement (Second) of Conflict of Laws §§ 145, Comment e, 146 and 175 (1971).
Before proceeding, a seriatim notation of the seemingly significant facts may be of benefit. These facts are:
(1) The Beechcraft Bonanza was registered in the state of Tennessee.
(2) The aircraft was owned by defendant J.B. Gaiennie, a Tennessee resident.
(3) The aircraft was hangared at the Memphis, Tennessee, airport.
(4) The lease-back arrangement between Gaiennie and Memphis Jetcenter was negotiated and entered into in Tennessee.
(5) The lessors of the aircraft, the Memphis Jetcenter companies, are Tennessee corporations centered in Memphis.
(6) On the occasion at issue, the aircraft was leased by Consolidated Agri Leasing, Inc., a Tennessee corporation centered in Memphis, which had leased various aircraft (through Speaks) from the Jetcenter on fifty-nine previous occasions.
(7) The flight originated from the Memphis Airport; plans had called for the flight to terminate there as well.
(8) The pilot was Jerry Speaks, a Tennessee resident.
(9) Plaintiffs' decedent, Jack Ritter, was a resident of Olive Branch, Mississippi, a commuter with his business base in Memphis.
(10) Plaintiffs, the heirs of Jack Ritter, are all Mississippi residents.
(11) Ritter was employed by Consolidated Enterprises, a Mississippi corporation having its principal place of business in Memphis.
The Plaintiffs emphasize that Ritter lived in Mississippi and was employed by a Mississippi corporation and that this employment was the central relationship which led him to Joplin. In truth and in fact, Tennessee was Ritter's business base. Of importance is the pilot/passenger relationship between Speaks and Ritter which was established in Memphis. See Vick v. Cochran, 316 So. 2d 242, 246 (Miss. 1975) (application of the Alabama "guest statute" where the "guest" relationship was established in Alabama). The interstate trip began and was to have ended in Memphis. Vick v. Cochran, 316 So.2d at 246. Of course, the record reflects incidental and on occasion not insignificant Mississippi contacts. The tort occurred in Missouri. Both in number and significance, the relevant "contacts" considered as a whole suggest without serious doubt that, vis-a-vis Mississippi or Missouri, Tennessee is the state with the most significant relationship to the occurrence and the parties.
The Circuit Court erred when it held Mississippi law applicable to all issues in the case, but that does not answer what state's law controls each specific issue, e.g., vicarious liability. "[T]he law of a single state does not necessarily control every issues in a given case. We apply the center of gravity test to each question presented, recognizing that the answer produced in some instances may be that the law of this state applies and on other questions in the same case the substantive law of another state may be enforceable." Boardman, 470 So.2d at 1031.
VI.
Our first substantive question is whether SIA, Memphis Aviation and Gaiennie may be held liable vicariously for damages occasioned by Speaks' neglect. The place of the accident and the tortious conduct, i.e., Missouri, is certainly relevant. Restatement (Second) of Conflicts of Laws §§ 145(2)(a) and 146 and 174 (1971). If the party injured or killed had been a Missourian, that state's law would control. Restatement, § 174, Comment b, Illustration 2 (1972). We find a distinct and predominant Tennessee flavor emanating from the ownership, management, maintenance, lease and operation of the aircraft, and, as well, the Tennessee contacts noted above. On these facts one may but conclude that *312 Tennessee law controls this particular issue. Cf. Vick v. Cochran, 316 So.2d at 246-48. The lone Mississippi contact with this issue is the presence of a Mississippi resident in the passenger's seat. This is not enough.
The Tennessee legislature has enacted that:
The liability of the owner of one aircraft to the owner of another aircraft or to aeronauts or passengers on either aircraft for damages caused by collision on land or in the air shall be determined by the rules of law applied to torts on land.
Tenn. Code Ann. § 42-1-106 (1964) (emphasis added). Lacking judicial guidance from Tennessee courts, we take the statute at face value.
Plaintiffs argue that this section only has application to collisions between two aircraft an "air crash", for lack of a better term, not to the results of a single aircraft impacting against the ground. The position is untenable. But a moment's reflection recalls to mind that mother earth and her inherent power, the pull of gravity, are the pilot's primary peril. Earth is a larger and relatively more stationary object than another aircraft. Even when planes collide in the air, the damage occurs when each thereafter collides with earth. We perceive no rational principle which would exempt the owner in event of collision in the air but hold him liable as here where the plane collides with the ground particularly where the cause of damage in the former case is likely not the collision in air but that with the ground.
The word "collision" means simply "striking together of two objects, one of which may be stationary... . The term implies an impact or sudden contact of a moving body with an obstruction in its line of motion, whether both bodies are in motion or one stationary and the other, no matter which, in motion." Black's Law Dictionary 239-40 (5th ed. 1979). Literalistic contortion does not generate legal construction where absurd results would obtain. See Johnson v. United States, 196 U.S. 1, 25 S. Ct. 158, 49 L. Ed. 363 (1904).
Turning to the Tennessee "law applied to torts on land," we find the familiar common law rule which declines to impose vicarious liability upon a bailor for the negligence of the bailee. Hamrick v. Spring City Motor Co., 708 S.W.2d 383, 385 (Tenn. 1986); Smith v. Bullington, 499 S.W.2d 649, 660 (Tenn. App. 1973); English v. Stephens, 35 Tenn. App. 557, 249 S.W.2d 908, 910 (Tenn. App. 1952), and Siegrist Bakery Co. v. Smith, 162 Tenn. 253, 36 S.W.2d 80, 81 (Tenn. 1931). We perceive no basis in Tennessee law for imposing vicarious liability upon SIA, Memphis Aviation or Gaiennie.
Nor may the Federal Aviation Act of 1958 be so construed.[7] 49 U.S.C.A.App. § 1301 et seq. (1971). Recent readings of this federal statute (and its state statutory clones) have limited liability solely to the pilots of aircraft. Broadway v. Webb, 462 F. Supp. 429, 433 (W.D.N.C. 1977); McCord v. Dixie Aviation, 450 F.2d 1129, 1130 (10th Cir.1971); Nachsin v. DeLaBretonne, *313 17 Cal. App. 3d 637, 95 Cal. Rptr. 227, 228 (1971); Ferrari v. Byerly Aviation, Inc., 131 Ill. App. 2d 747, 268 N.E.2d 558, 560-61 (1971); see also 2 S. Speiser & C. Krause, Aviation Tort Law § 14:3 (1979 & Supp. 1988); and L. Kreindler, Aviation Accident Law § 4.02 (1986).
In sum, we find no applicable or enforceable law, either state or federal in sovereign origin, under which SIA, Memphis Aviation or Gaiennie may be held vicariously liable for the negligence of pilot Speaks. The Circuit Court erred in holding otherwise. Since no other basis appears upon which liability may be imposed on these Defendants, or any of them, we may only hold that the Circuit Court erred when it denied the motion of each for a directed verdict at the close of the evidence, Rule 50(a), Miss.R.Civ.P., and, as well, when it granted Plaintiffs' motion for a new trial against these Defendants. To this extent, we reverse the judgment of the Circuit Court and render final judgment here in favor of SIA, Memphis Aviation and Gaiennie.
VII.
Defendants argued below, and renew the argument on this appeal, that the exclusiveness of liability provision of the applicable workers' compensation statute precludes a part of this action because Ritter, generally speaking, was on a business trip at the time of his death. Tenn. Code Ann. § 50-6-108 (Supp. 1988). Defendants' position is that "the applicable Workmen's Compensation statute covers business trips `from beginning to end.'" In view of our holding in Part VI above, the import of Defendants' point is that Plaintiffs would have no tort action against Estate of Speaks, for Speaks also was an employee of Consolidated Enterprises. Majors v. Moneymaker, 196 Tenn. 698, 704-05, 270 S.W.2d 328, 331 (1954); Spears v. Morris & Wallace Elevator Co., 684 S.W.2d 620, 621 (Tenn. App. 1984).
The facts leading up to the fatal flight, and the reason the two men chose to fly on that icy night, were extensively developed below. Speaks and Ritter often conducted business in southern Missouri and had made the acquaintance of two women who lived in Joplin. In fact, Speaks had recently married Janna Thomas, a Joplin native.[8] Ritter had developed a relationship (platonic we are told) with another Joplin resident, Gloria Gough. The four would often dine together when Ritter and Speaks were both in Joplin.
On the day in question, March 19, 1984, Ritter and Speaks arrived in Springfield and rented a car, giving the name of a local motel as their "local address" on the car rental form. The two met with a local "Consolidated" employee, Jeanne Rippee, at the nearby Mansfield office and indicated that they would be staying in the Springfield area through the following day. Speaks told Rippee that they would be able to help her take delivery of a new company pick-up truck the next day. Speaks also made arrangements to fly a prospective customer, Shirley Hambelton, from Mansfield to the Neosho, Missouri Airport on March 20 to inspect some chicken houses she might purchase. At some point during the day, Speaks telephoned his mother-in-law and arranged to dine with her that evening in Joplin. Ritter telephoned Gloria Gough at approximately 6:00 PM and invited her to join them for dinner that evening, as he would be accompanying Speaks to Joplin.
Defendants have but a single circumstance to support their claim the flight was business related the arrangements made by Speaks with the Neosho chicken farmer, Jackie Osborne, to meet with a prospective buyer on the 20th. Neosho is in the general vicinity of Joplin. No one proposes to know whether Ritter and Speaks intended to return to Springfield or Mansfield after dinner in Joplin.
Defendants' contend that the entire Missouri trip of Speaks and Ritter was business-related *314 that their "business travel" would not conclude until their return to the Memphis Airport. This is far too general a mischaracterization to be of value. From the facts surrounding the flight the following seems clear: Speaks' and Ritter's business in Mansfield had concluded for the day, to resume the next morning in Mansfield. The "side-trip"[9] to Joplin which resulted in the death of the two men was for purely personal endeavors a "frolic". As such, it lies outside the coverage of the Tennessee Workers' Compensation Act. Gregory v. Porter, 204 Tenn. 582, 322 S.W.2d 591, 592 (1959).
Enforcing our procedural law, Defendants' plea of protection from the compensation act's exclusiveness of liability provisions was an affirmative defense. Rule 8(c), Miss.R.Civ.P. As such, Defendants bore the burden of production and the risk of non-persuasion. Smith v. Sanders, 485 So. 2d 1051, 1053 (Miss. 1986). The Circuit Court correctly held that the evidence regarding the proposed visit to the Neosho chicken farm was insufficient that a jury may reasonably have found that the two men were in the course and scope of their employment at the time of the crash. Stubblefield v. Jesco, Inc., 464 So. 2d 47, 54 (Miss. 1984); Paymaster Oil Mill Co. v. Mitchell, 319 So. 2d 652, 657 (Miss. 1975). Plaintiffs' tort action against Estate of Speaks is not barred by the exclusiveness of liability protections of the Tennessee Workers Compensation Act.
VIII.
As will be recalled, the Circuit Court granted the Plaintiffs' motion for a new trial on the ground that the assumption of risk instruction should not have been given. Defendants argue that this was error.
At trial the Court had refused Plaintiffs' request for a comparative negligence instruction, submitting to the jury only whether Ritter had assumed the risk of injury or death by accompanying Speaks into weather which he, as a pilot himself, must have known to be dangerous. In ruling on the matter, the Court stated:
I'm going to rule that this is not a contributory negligence case. It's a pure assumption of the risk case. There is no evidence of contributory negligence that overlaps with an assumption of risk... . In this case, Mr. Ritter could not have been negligent in any way and could only have assumed the risk of Mr. Speaks' negligence, therefore, a contributory negligence instruction is not warranted and it will be refused.
Both parties had drafted assumption of risk instructions. Rule 3.09, Unif.Cir.Ct. Rules. The Court submitted to the jury that offered by the plaintiffs.[10]
*315 Mitchell v. Craft and progeny again mandate that we seek Tennessee law, but when we do so we find a Tennessee choice of law rule that mandates enforcement of the law of the state where the accident occurred, the old lex loci rule, if you will. Winters v. Maxey, 481 S.W.2d 755, 756 (Tenn. 1972); Patterson v. Smith, 57 Tenn. App. 673, 424 S.W.2d 204, 208 (1965); see Smith, Choice of Law in the United States, 38 Hastings L.J. 1041, 1144-46 (1987). The accident occurred in Missouri.[11] That a Tennessee court would likely enforce Missouri law does not control us; it is but a factor.
To submit to a jury the matter of a plaintiff's (or, here Plaintiffs' decedent's) assumption of risk, Missouri law mandates that the defendant must demonstrate: (1) Knowledge on the part of the injured party of a condition inconsistent with his safety; (2) appreciation by the injured party of the danger of the condition; and (3) a deliberate and voluntary choice on the part of the injured party to expose his person to that danger in such a manner as to register assent on the continuance of the dangerous condition. Turpin v. Shoemaker, 427 S.W.2d 485, 489 (Mo. 1968); Day v. Mayberry, 421 S.W.2d 34, 42-43 (Mo. 1967); Terry v. Boss Hotels, Inc., 376 S.W.2d 239, 247-51 (Mo. 1964). Happily, Tennessee law appears the same.[12]Haga v. Blanc & West Lumber Co., 666 S.W.2d 61, 65 (Tenn. 1984); Ellithorpe v. Ford Motor Co., 503 S.W.2d 516, 522 (1973); Rogers v. Garrett, 217 Tenn. 282, 287, 397 S.W.2d 372 (1965). We need not decide which state's law would control were there a conflict.
The facts surrounding the fatal flight itself are threadbare. No one accompanied the men to the airport. All that is known about Speaks' flight preparations come from FAA recordings of radio transmissions between Speaks and the Springfield and Joplin control towers. What conversations Ritter overheard from the radio, what he knew or appreciated prior to takeoff is subject to the conjecture of both parties.
Defendants' trial theory was that, because Jack Ritter was also a pilot, he knew and appreciated the danger of flying into unknown weather conditions. Defendants further assert that Ritter could not help but appreciate the deteriorating weather conditions before departure and that this bolsters their premise that Ritter voluntarily placed himself into a position which he knew to be perilous.
The Plaintiffs Ritter, on the other hand, note facts that tend to exonerate their decedent from any assumption of risk:
(1) Weather conditions occurring at ground level are not informative of weather conditions at flying altitude, particularly regarding freezing temperature and icing conditions.
(2) Ritter's certification was limited to Visual Flight Rules (VFR), and he could be presumed to have relied upon Speaks' superior (IFR) training in instrument flying conditions.
(3) Defendants presented no evidence that Ritter was privy to any of Speaks' pre-flight communications, as the aircraft may have been equipped with earphones which allow only the pilot to hear the radio.
As is apparent, there is little "hard" evidence to support either scenario.
The skeletal record regarding the acts of Speaks and Ritter prior to the March 19 flight is legally insufficient to support the assumption of risk instruction as it is based entirely upon what might have happened. The evidence at trial, even giving the defense the benefit of every doubt, only raised an issue regarding Ritter's negligence. *316 That evidence did not, however, rise to a level approaching that required by law that Ritter knew, appreciated and affirmatively chose to encounter the risk.
Even assuming that Ritter so assumed the risk of flying into bad weather, he cannot be assumed to have assented to the continuing negligence of Jerry Speaks. The Circuit Court found three distinct acts of negligence committed by Speaks: (1) failure to obtain the weather briefing; (2) failure to return to Springfield once the severity of the condition became apparent (FAA records indicated that Speaks reported severe icing five minutes into the thirty minute flight); and (3) failure to request an emergency "straight-in" landing in Joplin, choosing instead to take an approach requiring a banking maneuver, which reduced the aircraft's "lift".
To the point, Prosser notes:
It is not true that in any case where the plaintiff voluntarily encounters a known danger he necessarily consents to any future negligence of the defendant. A pedestrian who walks across the street in the middle of a block, through a stream of traffic traveling at excessive speed, cannot by any stretch of the imagination be found to consent that the drivers shall not use care to watch for him and avoid running him down... . This is contributory negligence pure and simple; it is not assumption of risk.
... [T]he plaintiff has exposed himself to the risk of future harm, but he has not consented to relieve the defendant of any future duty to act with reasonable care. This is a distinction which has baffled a great many law students, some judges, and unhappily a few very learned legal writers.
Prosser & Keeton, The Law of Torts § 68, at p. 485 (5th ed. 1984) (emphasis added).
The Circuit Court erred when it submitted to the jury the issue of Ritter's assumption of risk. The verdict may only be explained by assuming that the jury found that Ritter had indeed assumed the risk. Contrast McLeod v. Whitten, 413 So. 2d 1020, 1023-24 (Miss. 1982); and Wallace v. J.C. Penney Co., 236 Miss. 367, 373-74, 109 So. 2d 876, 878 (1959). The Circuit Court correctly held that the erroneous granting of the assumption of risk instruction required the grant of a new trial.
IX.
We have held that the Circuit Court correctly ruled that it had erred when it refused to submit the case to the jury on comparative negligence, i.e., that the Court had previously erred in holding this only an assumption of risk case. The case, of course, must now go back for a new trial against the Estate of Speaks. We have held above that Tennessee law controls several other liability issues, with respect both to the Estate of Speaks and other Defendants we this day exonerate. Tennessee holds to the common law rule that contributory negligence is a bar to a plaintiff's recovery in tort. Arnold v. Hayslett, 655 S.W.2d 941 (Tenn. 1983); Street v. Calvert, 541 S.W.2d 576 (Tenn. 1976). The question becomes whether this issue will be tried anew under Tennessee law or under a rule of comparative negligence, a suggestion instantly causing thought of our familiar statute. Miss. Code Ann. § 11-7-15 (1972).
Notwithstanding that another state may have the most significant relationship to a given issue, we have expressed our reluctance to enforce the law of that state where such would be offensive to the deeply ingrained or strongly felt public policy of this state. Boardman v. United Services Automobile Assoc., 470 So. 2d 1024, 1038-39 (Miss. 1985). Following this principle,[13] we have preferred our comparative negligence *317 statute over the common law contributory negligence rules of other jurisdictions.[14]Fells v. Bowman, 274 So. 2d 109, 112-13 (Miss. 1973); Mitchell v. Craft, 211 So. 2d 509, 513-16 (Miss. 1968); see also Boardman, 470 So.2d at 1038 and Restatement (Second) of Conflict of Laws, §§ 6(2)(b), (c) and (e), 145 and 164(1) (1971). Both from the point of view of civil justice[15] and economic efficiency,[16] comparative negligence, as an approach to the effect that ought be given a plaintiff's contributory fault, is demonstrably superior to the traditional common law contributory negligence bar.
The fatal crash occurred in Missouri, which at least since 1983 has adhered to a regime of comparative fault. Love v. Park Lane Medical Center, 737 S.W.2d 720 (Mo. 1987); Gustafson v. Benda, 661 S.W.2d 11 (Mo. 1983); see Comment, Comparative Fault in Missouri, 50 Mo.L.Rev. 141 (1985). Our law recognizes as controlling the law of the state where the fault and the injury occur, absent a more significant relationship with another state. Mitchell v. Craft, 211 So.2d at 515-16; Restatement, §§ 145(2), 146 and 164(2) (1971). Mississippi comparative negligence law is not identical to Missouri's, but is quite similar in practical effect.
No extended discussion of the relevant interests, Mitchell, 211 So.2d at 516, and Restatement, § 6, is necessary. On the authority of the foregoing, we declare that upon retrial, the effect, if any, of Ritter's negligence, if any, will be governed by Mississippi's comparative negligence statute to the exclusion of the Tennessee contributory negligence rule.
AFFIRMED IN PART; REVERSED AND RENDERED IN PART; REMANDED FOR A NEW TRIAL AGAINST ESTATE OF SPEAKS ONLY.
ROY NOBLE LEE, C.J., and PRATHER, ANDERSON, PITTMAN and BLASS, JJ., concur.
HAWKINS, and DAN M. LEE, P.JJ., and SULLIVAN, J., dissent.
SULLIVAN, J., writes separately.
HAWKINS, Presiding Justice, dissenting:
This case is before the Court on a interlocutory appeal from a circuit court order directing a new jury trial on all issues.
I respectfully dissent.
The Court erred in ever granting an interlocutory appeal, and had the motion for such appeal ever been presented en banc I would have dissented from the order granting it.
The authority of a trial judge to grant a new trial for perceived errors during trial is of ancient common law origin. Fayter v. Shore, 114 Fla. 115, 153 So. 511 (1934), and the power and duty of a circuit judge to grant a new trial when appropriate has been an integral part of our constitutional system since the beginning of this State's history. Jakup v. Lewis Grocer Co., 190 Miss. 444, 200 So. 597 (1941). The wisdom of the centuries has been that it is far better for the litigants and for the efficient administration of justice for the trial judge to correct his mistakes, himself, at the trial level, rather than burden the litigants and the appellate courts with a case he could have corrected on his own.
66 C.J.S. New Trial, § 1(b.) states:
b. Object; Function
The object or function of a motion for a new trial is to secure the correction of, or to give the trial court an opportunity to correct, errors occurring in the conduct *318 of the trial, without the delay, expense, or inconvenience of an appeal, and to preserve such errors for appellate review.
The purpose of the law relating to new trial has been said to be that the court be given a real opportunity to review all asserted grounds of error and, if meritorious, to correct them by granting the motion for new trial.
The purpose, office, or function of a motion for a new trial has been variously stated to be to give the trial court an opportunity to correct its own errors, or errors that have occurred in the conduct of the trial or proceedings, without the delay, expense, inconvenience, or other hardships of an appeal; to bring before the court errors which, without the motion, would not be called to its attention; to direct the attention of the trial court to all errors not waived; to call to the court's attention errors that may have been committed during the trial, whether they are such as have been discovered since the trial or were committed in opposition to the moving party's contentions asserted at the trial; to secure the correction of errors by the court having such matters directly in hand, without the necessity of incurring the often heavy expense, the sometimes long delays, and the inconvenience, of appeals to a higher court; and to show to the appellate court that such opportunity for corrections was furnished. [Footnotes omitted]
Indeed, this Court has consistently held the necessity of giving a circuit judge an opportunity to correct trial errors so important that a litigant cannot complain on appeal of any perceived error that he did not first specifically point out to the circuit judge in a motion for a new trial. Mississippi State Highway Commission v. Rives, 271 So. 2d 725 (Miss. 1972); Cooper v. Lawson, 264 So. 2d 890 (Miss. 1972); T.G. Blackwell Chevrolet Co. v. Eshee, 261 So. 2d 481 (Miss. 1972); Mercier v. Davis, 234 So. 2d 902 (Miss. 1970); Colson v. Sims, 220 So. 2d 345 (Miss. 1969); Graham v. Swinney, 174 Miss. 579, 165 So. 438 (1934); Hayes v. Slidell Liquor Co., 90 Miss. 583, 55 So. 356 (1911); Armstrong v. Gaddis, 81 Miss. 35, 32 So. 917 (1902); Barney v. Scherling 40 Miss. 320 (1866).
This Court looks with favor upon a trial judge's rulings on a motion for a new trial, especially when granted. Mississippi State Highway Commission v. Hancock, 309 So. 2d 867 (Miss. 1975); Houston v. Page, 208 So. 2d 901 (Miss. 1968); Conner v. Hatcher, 203 So. 2d 309 (Miss. 1967); Womble v. Mississippi State Highway Commission, 239 Miss. 372, 123 So. 2d 235 (1960); Long v. Magnolia Hotel Co., 236 Miss. 655, 111 So. 2d 645, sugg. error o'ruled 236 Miss. 655, 114 So. 2d 667 (1959). And, except for an order directing a new trial on damages alone, in which instance an appeal is specifically authorized by statute, Miss. Code Ann. § 11-7-213, we have never permitted an appeal from an order granting a motion for a new trial. Woods v. Lee, 390 So. 2d 1010, 1011 (Miss. 1980); Bowman v. Rutledge, 369 So. 2d 768 (Miss. 1979); State v. Richardson, 350 So. 2d 59 (Miss. 1977), (dismissing appeal from such an order on our own for lack of appellate jurisdiction); Byrd v. Sinclair Oil & Refining Co., 240 So. 2d 623 (1970).
If Rule 5(a) of the Rules of the Mississippi Supreme Court authorizes this appeal, then the rule is meaningless as any brake on interlocutory appeals.
Human nature being what it is, it is not easy to recognize our own mistakes, and harder still to openly admit it. Thus, it is much simpler for a circuit judge to overrule a motion for a new trial and pass the case on to us. It is equally demonstrable that far fewer new trials are granted at the trial level than should be. Otherwise, why the substantial percentage of reversals of cases where motions for new trial have been denied? Yet historically we have with good reason encouraged trial judges to grant new trials when appropriate. If the trial judge should occasionally make an error in doing so, it can be corrected upon appeal from the second trial.
In this case we have a circuit judge who had the intelligence to recognize and courage to correct a mistake he considered he *319 made. He was doing the very thing we have pleaded with judges for two centuries to do when they considered a mistake had been made: order a new trial.
And, what do we do? Grant an interlocutory appeal and decide all issues in the case ourselves. Vanity, that psychological defense against the terror of extinction, has not passed over the judiciary. We publicize our erudition.
But what has happened to stability, or judicial economy?
And, we have just extinguished an endangered species, circuit judges intelligent enough to recognize their mistakes and courageous enough to correct them on their own.
My discomfort with this Court's abolition of settled principles governing interlocutory appeals has been expressed. Kilgore v. Barnes, 490 So. 2d 895, 896 (Miss. 1986); Southern Farm Bureau Casualty Insurance Co. v. Holland, 469 So. 2d 55, 60 (Miss. 1984). This case does not allay my apprehension.
DAN M. LEE, P.J., and SULLIVAN, J., join this opinion.
SULLIVAN, Justice, writing separately:
IS ASSUMPTION OF THE RISK A SEPARATE DOCTRINE UNDER COMPARATIVE NEGLIGENCE?
In 1917 the State of Mississippi adopted the doctrine of comparative negligence and codified it in the state code. See Hemingway's 1917 Mississippi Code § 502; Miss. Code Ann. (1930) § 511; Miss Code Ann. (1942) § 1454. This doctrine is presently stated in § 11-7-15, Miss. Code Ann. (1972), as Amended. This section states:
In all actions hereafter brought for personal injuries, or where such injuries have resulted in death, or for injury to property, the fact that the person injured, or the owner of the property, or person having control over the property may have been guilty of contributory negligence shall not bar a recovery, but damages shall be diminished by the jury in proportion to the amount of negligence attributable to the person injured, or the owner of the property, or the person having control over the property.
Since contributory negligence was no longer a bar to recovery this Court became plagued with another question:
Does the doctrine of assumption of the risk remain a viable and distinct alternative to comparative negligence? (i.e. should assumption of the risk be treated the same as contributory negligence under Mississippi's comparative negligence statute)?
Drawing a clear distinction between contributory negligence and assumption of the risk has always been difficult. Hill v. Dunaway, 487 So. 2d 807, 810 (1986). In early cases assumption of the risk was seen as a complete bar to recovery while contributory negligence was almost like a lesser included offense. For assumption of the risk there had to be the element of "venturousness" but "carelessness" was all that was required for contributory negligence. Saxton v. Rose, 201 Miss. 814, 823, 29 So. 2d 646, 649 (1947). The doctrines began to become muddled when jury instructions began to eliminate the distinction between assumption of the risk and contributory negligence. Wallace v. J.C. Penny Co., Inc., 236 Miss. 367, 372, 109 So. 2d 876, 877-78 (1959). The Court struggled in numerous cases to keep the distinction between the two doctrines. Crouch v. Mississippi Power and Light, 193 So. 2d 144, 146-47 (Miss. 1966); White v. Mississippi Power and Light Company, 196 So. 2d 343, 351-53 (Miss. 1967); Shurley v. Hoskins, 271 So. 2d 439, 443-44 (Miss. 1973).
As it became more difficult to maintain the distinction between assumption of the risk and contributory negligence the Court began to move away from assumption of the risk. The Court leaned away from assumption of the risk by stating that when there is uncertainty as to which is the proper legal theory, contributory negligence is favored. Braswell v. Economy Supply Co., 281 So. 2d 669, 677 (Miss. 1973) (by favoring contributory negligence rather than the absolute bar of assumption of the *320 risk the party was still entitled to recover because of the comparative negligence statute, § 11-7-15). In Braswell the conflict was finally addressed by this Court. While assumption of the risk was not abolished by Braswell this Court further limited the use of the doctrine by stating that an assumption of the risk instruction should rarely be granted. Singleton v. Wiley, 372 So. 2d 272, 274-75 (Miss. 1979). The Court's trend of removing assumption of the risk faltered in Nichols v. Western Auto Supply Co., Inc., 477 So. 2d 261, 264-65 (Miss. 1985), but Braswell was distinguished, thereby leaving in place the framework for abolishing the doctrine of assumption of the risk. Nichols, while it stated that assumption of the risk is still viable, admitted that most jurisdictions refer to it as contributory fault. 477 So.2d at 264. So the case would still seem to support removal of assumption of the risk as a separate doctrine.
The movement away from assumption of the risk returned on track in Hill v. Dunaway. In a footnote in Hill this Court recognized the trend of moving assumption of the risk into the defense of contributory negligence. Hill, 487 So.2d at 810 n. 1. The footnote cited two cases and a law review article for support of the merger of assumption of the risk into the contributory negligence doctrine. The case Wilson v. Gordon, 354 A.2d 398, 402-03 (Maine 1976), cited in the Hill footnote listed nine states that had abolished the defense of assumption of the risk. Wilson stated that there were very few jurisdictions that believed assumption of the risk could exist with the doctrine of comparative negligence. In the other case cited in the Hill footnote Li v. Yellow Cab Company of California, 13 Cal. 3d 804, 119 Cal. Rptr. 858, 532 P.2d 1226, 1240-42 (1975), the California Supreme Court stated that the adoption of a comparative negligence system should involve the merger of the doctrine of assumption of the risk since assumption of the risk is no more than a variant of contributory negligence. This Court stated in Hill that it was not the proper case for resolution of the issue but admitted that the comparative negligence rule serves the same purpose as assumption of the risk.
The Hill case brings the Court to where it is today, waiting for the right case to once and for all abolish the doctrine of assumption of the risk and treat all fault under the comparative negligence statute. Gaiennie is such a case. It is an example how even with the best intentions the doctrines of assumption of the risk and contributory negligence are still confused.
In this case the argument was made that Ritter had enough information prior to the flight to make his decision to fly "knowing and voluntary" thus qualifying for an assumption of the risk instruction. In reality a comparative negligence instruction was more appropriate to the facts since there was insufficient evidence to show that Ritter had enough weather information to make his decision to fly "knowing and voluntary". Despite the guidelines set forth in Braswell and Singleton limiting the use of the doctrine, an assumption of the risk instruction was given. This confusion shows that regardless of good intentions or the diligence of the judge as long as assumption of the risk continues to exist as a separate doctrine it will continue to be confused with the comparative negligence doctrine.
What should have been done in the case at bar was state that Ritter was careless as a pilot in accompanying Speakes on the flight without further investigation of the weather conditions. This carelessness should have been used to reduce any award or if the jury found this carelessness serious enough prohibit any award. Yet, because assumption of the risk is still a valid doctrine it was mentioned, which caused the judge to rethink his decision and grant a new trial.
If assumption of the risk had not been available as a separate doctrine prior to this trial the cost of a retrial could have been saved. The doctrine should be incorporated into the doctrine of contributory negligence and covered by Mississippi's comparative negligence statute, § 11-7-15. For no reason other than to alleviate further confusion when the doctrine is merged *321 the new concept should be titled comparative fault rather than comparative negligence. This new title would more properly reflect the purpose of the doctrine. When the plaintiff is partly at fault for the injuries he receives his recovery should be reduced and when the plaintiff is totally at fault his recovery should be barred.
I would so declare our law to be.
NOTES
[1] There were a number of other Defendants in the action below, in each of whose favor judgment has been entered summarily and become final.
[2] Compare Robbins v. Professional Construction Co., 72 Ill. 2d 215, 222, 20 Ill. Dec. 577, 580, 380 N.E.2d 786, 789 (1978); Turner v. Commonwealth Edison Company, 63 Ill. App. 3d 693, 698-99, 20 Ill. Dec. 499, 504, 380 N.E.2d 477, 482 (1978) (on interlocutory appeal from order granting new trial, appellate court will review entire case).
[3] As will appear below, final judgment must be entered exonerating Appellants Gaiennie, SIA and Memphis Aviation, Inc. We well recognize the conceptual difficulty with entering an adjudication on the merits affecting important rights of non-resident parties arguably not subject to in personam jurisdiction in the forum state. To the end that our disposition may be final and have res judicata effect, we hold, without discussion, that Gaiennie, SIA and Memphis Aviation, Inc. are each wholly subject to in personam jurisdiction in Mississippi for purposes of this action.
[4] A note regarding the basics may be of value. Before a court, any court, has authority to make an adjudication affecting the important rights of a non-resident (or any other party, for that matter), at least four distinct predicates must be established. In no particular order these are:
(1) The defendant must be amenable to suit in the forum state consistent with due process; that is, the defendant must have constitutionally adequate minimum contacts with the forum state. See, e.g., Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985); International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945); Administrators of the Tulane Educational Fund v. Cooley, 462 So. 2d 696 (Miss. 1984). Though this imperative is largely a function of U.S. Const. Art. XIV, it may derive as well from the state's due process clause. Miss. Const. Art. 3, § 14 (1890). See Restatement (Second) of Conflict of Laws § 24 (1971).
(2) The defendant must have been accorded procedural due process consistent with the federal constitution; that is, he must have been given reasonable advance notice of the trial or hearing and a meaningful opportunity to be heard in response. See, e.g., Tulsa Professional Collection Services, Inc. v. Pope, 485 U.S. 478, 108 S. Ct. 1340, 99 L. Ed. 2d 565 (1988); Mullane v. Central Hanover Bank & Trust Company, 339 U.S. 306, 314, 70 S. Ct. 652, 657, 94 L. Ed. 865, 873 (1950); Covington v. Covington, 459 So. 2d 780, 782 (Miss. 1984). Again, this requirement emanates from the Due Process Clause of the Fourteenth Amendment. It may also be predicated upon the state's constitutional due process imperative. See Restatement (Second) of Conflict of Laws §§ 25, 26 (1971).
(3) The defendant must be amenable to suit here as a matter of state statutory law. See Restatement (Second) of Conflict of Laws § 35, Comment f (1971). Here we refer to such requirements in our law as those found in Miss. Code Ann. § 13-3-57 (Supp. 1986) (that defendant has made a contract to be performed here, committed a tort here, or done business here), § 11-31-1 (Supp. 1986) (that defendant has property here), etc. A state's long arm statute need not necessarily extend to the federal constitutional outer limits of state power.
(4) The defendant must have been served with process in conformity with the requirements of a procedural rule prescribing the manner of service of process. Most prominent here is Rule 4, Miss.R.Civ.P.
Each of these requisites is independent of the other three. All four must be satisfied before a court of the forum state may do anything that affects the important rights of the defendant and that is entitled to enforcement in the forum state or to full faith and credit elsewhere. Only (1) and (3) are challenged on this appeal, and our discussion above is so limited.
Conceptually, the state constitutional due process analogies to International Shoe and Mullane, Inquiries Nos. (1) and (2) above may be more like Inquiries Nos. (3) and (4). There is nothing that would prohibit our holding that our due process clause, Miss. Const. Art. 3, § 14 (1890), affords non-resident defendants greater rights and protections than are found in International Shoe and Mullane and progeny. See Michigan v. Long, 463 U.S. 1032, 1037, 1040, 103 S. Ct. 3469, 3474, 3476, 77 L. Ed. 2d 1201, 1212, 1214-15 (1983); Pruneyard Shopping Center v. Robins, 447 U.S. 74, 81, 100 S. Ct. 2035, 2040-41, 64 L. Ed. 2d 741, 752 (1980). In fact, we have given our due process clause no such construction and in several contexts have held that it should be construed identically with federal due process requirements. Mississippi Power Co. v. Goudy, 459 So. 2d 257, 261-62 (Miss. 1984); N.C.A.A. v. Gillard, 352 So. 2d 1072, 1081 (Miss. 1977); Walters v. Blackledge, 220 Miss. 485, 515, 71 So. 2d 433, 444 (1954). We have in dicta suggested (arguably incorrectly at the time or even now!) that this state's long arm reaches as far as the federal constitution allows. Breckenridge v. Time, Inc., 253 Miss. 835, 842, 179 So. 2d 781, 783 (1965); Mladinich v. Kohn, 250 Miss. 138, 147, 164 So. 2d 785, 789 (1964).
[5] See Smith, Choice of Law in the United States, 38 Hastings L.J. 1041, 1090-91 (1987); but see Selder, Rules of Choice of Law Versus Choice of Law Rules: Judicial Method in Conflicts Torts Cases, 44 Tenn.L.Rev. 975, 1009-12 (1977).
[6] We have accepted and enforced the Restatement's issue by issue approach. Boardman v. United Services Automobile Assoc., 470 So. 2d 1024, 1031 (Miss. 1985); Vick v. Cochran, 316 So. 2d 242, 246 (Miss. 1975); Fells v. Bowman, 274 So. 2d 109, 112 (Miss. 1973).
[7] The provision relied upon by the plaintiffs for the proposition that federal law imposes vicarious liability upon the lessors, bailors and owners of aircraft is contained in the "definitions" section of the Act and reads as follows:
"Operation of aircraft" or "operate aircraft" means the use of aircraft, for the purpose of air navigation and includes the navigation of aircraft. Any person who causes or authorizes the operation of aircraft, whether with or without the right of legal control (in the capacity of owner, lessee, or otherwise) of the aircraft, shall be deemed to be engaged in the operation of aircraft within the meaning of this chapter.
49 U.S.C.A. § 1301(26).
Many state statutes regarding the regulation of aircraft are modeled after this federal act. See e.g. Miss. Code Ann. § 61-1-3(j) (1972) (identical to Section 1301(26)). Plaintiffs place reliance upon an opinion of the United States Court of Appeals for the Fifth Circuit construing this definition of "operator" to impose statutory vicarious liability upon owners and bailors of aircraft. Hays v. Morgan, 221 F.2d 481, 483 (5th Cir.1955) (construing predecessor to section 61-1-3(j)). Subsequent cases, however, have criticized the rationale employed in Hays and the holding has since been limited by the Fifth Circuit. That court now considers the holding but a reading of Mississippi statutory law and has declined to extend the rationale to the identically worded federal counterpart. Rogers v. Ray Gardner Flying Service, Inc., 435 F.2d 1389, 1393-94 (5th Cir.1970). As Tennessee law governs, we have no occasion to resolve the point.
[8] The record in this case reflects that Speaks' first marriage had not yet legally terminated, as he was scheduled to execute an instrument of final divorce upon his return from Missouri. We take no position nor do we make any comment upon the legal rights of Speaks' survivors.
[9] Mississippi law is like Tennessee's.
If a servant steps aside from the master's business for some purpose of his own disconnected from his employment, the relation of master and servant is temporarily suspended and "this is no matter how short the time, and the master is not liable for his acts during such time."
Persons v. Stokes, 222 Miss. 479, 486, 76 So. 2d 517, 519 (1954).
This rule, borrowed from the tort principle of respondeat superior, obtains in the area of workers' compensation as well. Collier v. Texas Construction Co., 228 Miss. 824, 828, 89 So. 2d 855, 857 (1956); Earnest v. Interstate Life & Accident Ins. Co., 238 Miss. 648, 652, 119 So. 2d 782, 783 (1960). Thus, deviations from that which is necessary to carry the worker to and from business events are not within the reach of the act. Dowdle & Pearson, Inc. v. Dep. of Hargrove, 222 Miss. 64, 69, 75 So. 2d 277, 278 (1954); see Dunn, Mississippi Workers' Compensation, § 171 (3d ed. 1982). See generally Restatement (Second) of Conflict of Laws § 183 (1971).
[10] Defendants argue Plaintiffs may not complain as the assumption of risk instruction given the jury was the one drafted and submitted by Plaintiffs' counsel. They ignore our long standing policy that, when the trial court makes a ruling adverse to a litigant, that litigant and his lawyer are entitled to try the rest of the case on the assumption that the trial judge's ruling will not be disturbed on appeal. When that litigant reaches this Court, we will not imply a waiver from subsequent conduct which does nothing more than show the lawyer's obligatory respect for the trial judge while at the same time continuing as best she can to advance her client's cause. Stringer v. State, 500 So. 2d 928, 946 (Miss. 1986); Stong v. Freeman Truck Line, Inc., 456 So. 2d 698, 711 (Miss. 1984); Home Insurance Co. of New York v. Dahmer, 167 Miss. 893, 901, 150 So. 650, 652 (1933). As this policy is in the nature of local procedure, we may enforce it, notwithstanding the choice of law principles articulated above.
[11] This is as good a point as any to note that Mitchell v. Craft did not declare the place of the accident irrelevant in the choice of law inquiry. The law of that state still controls the rights and liabilities of the parties, unless, with respect to the issue at hand, some other state has a more significant aggregate relationship. Restatement (Second) of Conflict of Laws § 146 (1971).
[12] The Mississippi rules regarding assumption of risk seem identical to Missouri's and Tennessee's. Nichols v. Western Auto Supply Co., 477 So. 2d 261, 264 (Miss. 1985); Elias v. New Laurel Radio Station, Inc., 245 Miss. 170, 179, 146 So. 2d 558, 561-62 (1962).
[13] In Restatement parlance we act by reference to the "relevant policies of the forum" and the "basic policies underlying the particular field of law." Restatement (Second) of Conflict of Laws § 6(2)(b) and (e) (1971). Prof. Robert A. Leflar's more brazen form of expressing the point would be that we enforce our comparative negligence rule because it is a "better rule of law", cited in Mitchell, 211 So.2d at 514; see Leflar, Conflicts Law: More on Choice-Influencing Considerations, 54 Calif.L.Rev. 1584, 1587 (1966); see also Hill, The Judicial Function in Choice of Law, 85 Colum.L.Rev. 1585, 1618-19 (1985).
[14] We can but confess Tennessee appears to take a different view. See Patterson v. Smith, 57 Tenn. App. 673, 424 S.W.2d 204, 208 (1965), which enforced our comparative negligence statute, notwithstanding Tennessee's contributory negligence rule. Perhaps the Tennessee courts similarly recognize that comparative negligence is the better rule, believing only that implementation of the new regime is not within the judicial prerogative. See Street v. Calvert, 541 S.W.2d at 586; Arnold v. Hayslett, 655 S.W.2d at 945 n. 4.
[15] Prosser and Keeton, The Law of Torts § 67 (5th ed. 1984); Schwartz, Contributory and Comparative Negligence: A Reappraisal, 87 Yale L.J. 697, 721-27 (1978).
[16] Rubinfeld, The Efficiency of Comparative Negligence, 16 J.Legal Stud. 375 (1987). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1332317/ | 203 Va. 755 (1962)
BAILEY L. CONDREY, ATTORNEY IN FACT FOR THE HEIRS AT LAW OF J. S. CHILDRESS, DECEASED
v.
FLOYD S. CHILDRESS AND FLOYD S. CHILDRESS, JR.
Record No. 5470.
Supreme Court of Virginia.
August 31, 1962.
Kenneth I. Devore and Jay A. Price, for the plaintiff in error.
Arthur E. Smith; Evans B. Jessee; Carrol D. Rea; W. S. Roop; Allen Sowder, for the defendants in error.
Present, All the Justices.
After entry of final judgment in the trial court appellant filed with the clerk of that court his notice of appeal and assignments of error, and later his designation of the parts of the record to be printed. Attached to the designation was a notice to the clerk to transmit the record to the Clerk of the Court of Appeals "as provided by law." Petition for writ of error was timely filed, but it was four months and seventeen days after entry of final judgment before the record was received by the Clerk. For this failure to observe the mandatory and jurisdictional requirement of Rule 5:4 and of Code 1950, section 8-489, that the record and petition be delivered to the Clerk within four months of final judgment, motion to dismiss the writ of error was sustained.
Motion to dismiss writ of error to a judgment of the Circuit Court of Montgomery county. Hon. W. S. Jordan, judge presiding. The opinion states the case.
SPRATLEY
SPRATLEY, J., delivered the opinion of the court.
Floyd S. Childress and Floyd S. Childress, Jr., appellees, have moved to dismiss the writ of error granted in this case upon the ground that the record therein was not delivered to the Clerk of this Court at Richmond or Staunton or presented to a Justice within four months from the date of the final judgment of the trial court. Code of Virginia, 1950, | 8-489; Rule of Court 5:4. *756
Final judgment in this case, an action of unlawful detainer, was entered by the trial court on July 10, 1961. Within sixty days thereafter, on September 6, 1961, appellant filed with the clerk of the trial court his notice of appeal and assignments of error. Rule of Court 5:1, | 4. A transcript of the evidence was duly certified by the trial court and delivered to the clerk. Rule of Court 5:1, | 3(f), (e).
On October 17, twenty-four days before the expiration of four months after date of the final judgment, appellant filed with the clerk of the trial court his designation of the parts of the record that he wished to be printed. Attached to the designation was a notice to the clerk to transmit the record to the Clerk of this Court, "as provided by law."
On November 10, 1961, the last day of the four months period following the date of final judgment, appellant filed with the Clerk of this Court his petition for a writ of error. On November 27, 1961, four months seventeen days after the entry of final judgment, the record was received by the Clerk of this Court. Prior thereto, on November 21, 1961, appellees filed a brief in opposition to the granting of a writ of error, in which no mention was made of any delay in the transmission of the record.
We granted writ of error on February 28, 1962. The motion to dismiss the writ was made on March 13, 1962.
Section 8-463 of the Code of 1950, requires the petition for appeal to be presented within four months of final judgment, and | 8-489, so far as material here, provides that:
"No process shall issue upon an appeal, writ of error, or supersedeas allowed to or from a final judgment, decree or order of any court * * *, if, when the record with the petition required by law is delivered to the clerk of the Supreme Court of Appeals, there shall have elapsed four months since the date of such final judgment, decree, order or finding, * * *."
"The appeal, writ of error or supersedeas shall be dismissed whenever it appears that four months, * * * has elapsed since the date of such final judgment, decree, order, finding or award, before the record, with such petition, is delivered to such clerk, * * *." (Emphasis added.)
Rule of Court 5:1, | 7 provides: "After the appellant has filed his designation of the parts of the record to be printed, the record shall remain in the clerk's office for twenty days and thereafter until counsel for appellant notifies the clerk to transmit it; and the clerk *757 shall then transmit it with the designations of the parts to be printed to the clerk of this Court at Richmond or Staunton or to any Justice of this Court, as requested by counsel for appellant. But the clerk shall transmit them sooner if requested by all counsel."
Rule of Court 5:4 provides that: "The Petition for appeal and the record shall be filed with the clerk of this Court at Richmond or Staunton or presented to a Justice within the time allowed by statute for presenting a petition for appeal. The petition shall be filed with the clerk of this Court or presented to the Justice to whom the record is transmitted. * * *." (Emphasis added.)
Thus, in clear, simple and concise language it is provided that the record, together with the petition for appeal, must be physically in the Clerk's Office of this Court, or in the hands of a Justice, within four months next following the day on which the judgment appealed from was entered. The provision is an express limitation, a mandatory and jurisdictional requirement which cannot be waived. Hudson Transportation Co. McMurran, 148 Va. 231, 235, 138 S.E. 470; Skeens Commonwealth, 192 Va. 200, 64 S.E.2d 764; Avery County School Board, 192 Va. 329, 335, 64 S.E.2d 767, 771; Lawrence Nelson, 200 Va. 597, 106 S.E.2d 618; Luhring Finley, Inc., 202 Va. 260, 117 S.E.2d 126.
Cf. Andrews, Executrix Cahoon, 196 Va. 790, 86 S.E.2d 173 *.
* See note on "Appellate Procedure in Virginia under the Rules of Court," by Aubrey Russell Bowles, Jr., 44 Va. Law Review, pages 475 et seq. (April, 1958).
Our rules of appellate procedure are simple, brief and expressed in unambiguous language, and "compliance with them is necessary for the orderly, fair and expeditious administration of justice." Lawrence Nelson, 200 Va., supra, at page 598.
Appellant asks us to waive the failure to transmit the record within the time required on the ground that such failure was wholly due to the fault of the clerk. He asserts that a denial of the writ of error would deprive him of a fair hearing and his property rights. The answer is that the transmission of the record within the required time is of the essence of the right of appeal, a mandatory and jurisdictional requirement.
It is plainly the duty of a clerk, upon receiving due notice, to transmit the record in compliance with Rule of Court 5:1, | 7. It is also the responsibility of counsel for appellant, when he files a petition to inform himself whether or not the record has been transmitted by the clerk of the trial court. A full and fair consideration by this Court, or a Justice, of the merits of a petition requires the *758 physical delivery of both the petition and the record within four months after the date of final judgment.
We have repeatedly held upon the presentation of petitions for appeals and writs of error that the failure to present the petition and the record within the time provided by statute and our Rules is fatal. That the failure may have been due to the fault of the clerk of a trial court, or to inadvertence of counsel, cannot be allowed to nullify the mandatory requirement. A variance from, or denial of, the provisions of Code, | 8-489 and Rule 5:4 would create confusion and uncertainty in our appellate procedure.
The motion to dismiss the writ is sustained.
Writ dismissed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1514915/ | 601 S.W.2d 73 (1980)
Robert PUTTER, Appellant,
v.
Barry ANDERSON, Appellee.
No. 20206.
Court of Civil Appeals of Texas, Dallas.
April 24, 1980.
Rehearing Denied June 25, 1980.
*74 Richard M. Lannen, Akin, Gump, Hauer & Feld, Dallas, for appellant.
Jack C. Pate, Robert M. Gorsky, Burleson, Pate & Gibson, Dallas, for appellee.
*75 Before ROBERTSON, CARVER and HUMPHREYS, JJ.
CARVER, Justice.
Robert Putter appeals from a judgment for three libels obtained against him by Barry Anderson, a Dallas police officer. We reverse and render as to two of the claimed libels because (1) Anderson's pleading and proof raised the issue of absolute privilege, and (2) Anderson's proof showed, as a matter of law, that two of the libels, being separate defamatory letters from Putter to the Dallas Police Department's Internal Affairs Division, were published to a quasi-judicial body and hence were absolutely privileged. We reverse and remand as to the third claimed libel, a defamatory letter from Putter to a member of the Dallas City Council, because the jury's damage findings, inclusive of all three alleged libels, cannot be apportioned so as to affirm the judgment for only the third libel.
None of the facts necessary for our ruling are in dispute. Anderson is a police officer employed by the City of Dallas. On January 25, 1976, Anderson arrested Putter's 16 year old son, Alan, for "unauthorized use of a motor vehicle." Putter and his wife went to the police station to look into the matter. Their son's physical condition, conversations that the Putters had with Anderson and other officers, and the Putter's dissatisfaction with the whole affair led to an immediate oral complaint about Anderson to the Internal Affairs Division of the Dallas Police Department. No cause of action was asserted on this oral complaint. When Putter was informed that no consideration could be given to complaints unless and until they were reduced to writing, he wrote, and hand-delivered, a letter dated March 5, 1976, to Captain Billy Prince, head of the Internal Affairs Division. Anderson claims that this March 5 letter was defamatory. In the fall of 1976, Anderson again arrested Putter's son, Alan, on a possession of marijuana charge. This arrest resulted in a second letter from Putter to Captain Prince, dated October 16, 1976, which Anderson claims was defamatory. Anderson also claimed that he was defamed by a letter dated October 17, 1976, which was prepared by Putter and sent to a member of the Dallas City Council. On January 21, 1977, Anderson sued Putter for libel on all three of the letters. Putter answered with a general denial. Shortly before the trial was scheduled to begin, Anderson filed a motion for continuance to which Putter agreed. The trial court overruled the motion. When the agreed motion for continuance was denied, Putter sought leave to amend his answer to add the defenses of absolute privilege, qualified privilege truth, and non-liability for actual damages. The court denied leave to amend, as well as subsequently tendered trial amendments, which raised these same defenses. The court denied Putter's motion for an instructed verdict; found liability as a matter of law; submitted only issues on actual and exemplary damages; and rendered judgment for Anderson on the jury's verdict. Putter's motion for new trial was overruled and this appeal followed.
DEFENSIVE PLEADINGS
As the trial proceeded, Anderson offered the testimony of Captain Prince, the head of the Internal Affairs Division of the Dallas Police Department. Anderson elicited testimony from Prince to the effect that Putter's two separate letters to the Internal Affairs Division invoked a General Order of the police department which imposes upon the Division a duty to make an investigation and to draw a conclusion as to whether Putter's complaints about Anderson were sustained. Putter, relying on Prince's testimony, offered a trial amendment, including his plea of "absolute privilege," on the grounds that (1) the plea was an omission to be freely cured in the absence of prejudice to the other side under Tex.R.Civ.P. 66 or that (2) the issues had been tried by consent and the amendment would make the pleadings conform to the proof under Tex.R.Civ.P. 67. These rules provide as follows:
Rule 66. Trial Amendment
If evidence is objected to at the trial on the ground that it is not within the issues *76 made by the pleading, or if during the trial any defect, fault or omission in a pleading, either of form or substance, is called to the attention of the court, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the allowance of such amendment would prejudice him in maintaining his action or defense upon the merits. The court may grant a postponement to enable the objecting party to meet such evidence.
Rule 67. Amendments to Conform to Issues Tried Without Objection
When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. In such case such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made by leave of court upon motion of any party at any time up to the submission of the case to the Court or jury, but failure so to amend shall not affect the result of the trial of these issues; provided that written pleadings, before the time of submission, shall be necessary to the submission of special issues, as is provided in Rules 277 and 279.
The application of Rules 66 and 67 is within the sound discretion of the trial court. Nevertheless, that discretion is to be exercised liberally in favor of justice. American Produce & Vegetable Co. v. J. D. Campisi's Italian Restaurant, 533 S.W.2d 380 (Tex. Civ.App. Tyler 1975, writ ref'd n. r. e.). When Anderson showed, by his own pleadings and proof, the publication of the two alleged libels to the Internal Affairs Division, whose duty to investigate and draw a conclusion on such investigation made it a quasi-judicial body (as concluded in the next section of this opinion), the particular issue of absolute privilege was before the court and the trial amendment offered should have been allowed so as to conform the pleadings to this issue under Rule 67. See Johns-Manville Sales Corp. v. R. J. Reagan Co., Inc., 577 S.W.2d 341 (Tex.Civ.App. Waco 1979, writ ref'd n. r. e.).
ABSOLUTE PRIVILEGE
The nature of "absolute privilege" is described in Reagan v. Guardian Life Ins. Co., 140 Tex. 105, 166 S.W.2d 909 (1942).
1. An absolutely privileged communication is one for which, by reason of the occasion upon which it was made, no remedy exists in a civil action for libel or slander. Stated in another way, where there is an absolute privilege, no action in damages for language, oral or written, will lie; and this is true even though the language is false and uttered or published with express malice. [Citations omitted.]
2. Any communication, oral or written, uttered or published in the due course of a judicial proceeding is absolutely privileged and cannot constitute the basis of a civil action in damages for slander or libel. The falsity of the statement or the malice of the utterer is immaterial, and the rule of nonliability prevails even though the statement was not relevant, pertinent and material to the issues involved in the case. [Citations omitted.]
3. The rule that communications uttered or published in the course of a judicial proceeding are absolutely privileged, applies to proceedings before executive officers, and boards and commissions which exercise quasi-judicial powers.
166 S.W.2d at 912. Not all "executive officers, and boards and commissions" are quasi-judicial but only those which exercise quasi-judicial powers. Quasi-judicial power may briefly be described as the power or duty to investigate and to draw a conclusion from such investigation.
In Reagan, the court held the Board of Insurance Commissioners to be a quasi-judicial body when it exercised the duty to investigate an applicant for a license to sell insurance and to conclude from that investigation whether the applicant was of "good character and reputation." Other authorities have held, on similar reasoning, that *77 the State Bar Grievance Committee is a quasi-judicial body, McAfee v. Feller, 452 S.W.2d 56 (Tex.Civ.App. Houston [14th Dist.] 1970, no writ); that pardon proceedings before the Governor are quasi-judicial in nature, Connellee v. Blanton, 163 S.W. 404 (Tex.Civ.App. Fort Worth 1913, writ ref'd); that a grand jury, before which an accusatory letter is published, is a quasi-judicial body, Hott v. Yarbrought, 245 S.W. 676 (Tex.Com.App.1922, opinion adopted); that the Railroad Commission, before which an accusatory letter was published, is a quasi-judicial body, Aransas Harbor Terminal Railway v. Taber, 235 S.W. 841 (Tex. Com.App.1921, judgment adopted); and that the Pharmacy Board, before which a drug manufacturer's letter regarding a druggist's practices in dispensing the manufacturer's drug was published, is a quasi-judicial body, Bloom v. A. H. Robins Co., 479 S.W.2d 780 (Tex.Civ.App. Waco 1972, writ ref'd n. r. e.), cert. denied, 410 U.S. 983, 93 S. Ct. 1504, 36 L. Ed. 2d 179 (1973).
With these authorities before us, we must determine if the Internal Affairs Division of the police department of the City of Dallas is a quasi-judicial body or is exercising the functions of a quasi-judicial body when it received and acted upon Putter's letters. Captain Prince, the head of the Internal Affairs Division, and the recipient of Putter's letters, was called as a witness by Anderson. Anderson's own counsel proceeded to prove, by Captain Prince's testimony, that the Internal Affairs Division is required to conduct an investigation and conclude whether the citizen's complaint is justified. A finding by the Internal Affairs Division that a complaint is justified may go directly to the Chief of Police, for discipline of the officer, or it may go to a disciplinary board first and then to the Chief of Police. Captain Prince testified that this procedure was "in accordance with state law" and constituted a "General Order" of the police department. We do not find the General Order in our record, though both counsel have quoted it extensively in their briefs and in their argument. We accept Captain Prince's statement of the General Order and the exercise of the Division's duty thereunder. The state law apparently referred to by Captain Prince is Tex.Rev.Civ.Stat.Ann. art. 6252-20 (Vernon 1970), which provides as follows:
In order that a complaint against a law enforcement officer of the State of Texas, including but not limited to officers of the Department of Public Safety and the Liquor Control Board, or against a fireman or policeman may be considered by the head of a state agency or by a chief or head of a fire department or police department, neither of which is under the protection of a civil service statute, the complaint must be placed in writing and signed by the person making the complaint. A copy of the signed complaint must be presented to the affected officer or employee within a reasonable amount of time after the complaint is filed and before any disciplinary action may be taken against the affected employee.
The testimony of Captain Prince is not challenged or disputed in the record; moreover he was called and examined as Anderson's own witness. Nothing exists in the record to suggest that Prince's testimony was anything but conclusive on the subject.
We find, from this testimony, that the Internal Affairs Division of the Dallas Police Department was a quasi-judicial body when, under its General Order, it exercised the duty to investigate Putter's written complaint of Anderson and the duty to draw a conclusion from the investigation regarding whether that complaint was sustained. Consequently, Putter's two letters to the Division were absolutely privileged and no cause of action may be predicated upon these letters. Reagan v. Guardian Life Insurance Co., supra.
REMAINING CAUSE OF ACTION
Anderson also sought relief on a third letter prepared by Putter and sent to a member of the Dallas City Council. We are, however, unable to affirm the judgment in favor of Anderson since we do not have a jury finding of damages restricted to this third cause of action for libel. The *78 finding of the jury was for the damages, actual and exemplary, from all three libels urged by Anderson. This court cannot treat this finding to be the damages the jury would have found for one libel nor can this court perceive any means to apportion these damages from this record.
In Grissom v. Lopez, 280 S.W. 613 (Tex.Civ.App. San Antonio 1926, writ dism'd), the court of civil appeals held that it was fundamentally erroneous for a single cause of action for malicious prosecution to be expanded into two or more causes of action and different damage awards found on each. In our case, the reverse has occurred and three causes of action have been compressed into one by virtue of single damage submission. In Jackson-Strickland Transp. Co. v. Seyler, 123 S.W.2d 928 (Tex. Civ.App. Ft. Worth 1938, writ dism'd by agr.), the court was weighing the proper submission of a negligence case with separate elements of damage. In holding that separate elements should be submitted and jury's answer given separately, the court stated:
It is unnecessary to cite a list of authorities which appropriately lay down the rule that where all such items of recovery are submitted to the jury in one issue and the jury returns a verdict in a single sum covering all such items and it is found that any one or more items be not supported by the evidence, the case must be reversed because the reviewing court cannot tell from the verdict how much the jury assessed in its verdict as a proper amount of recovery for the item or items which have no support in the evidence.
On the other hand, if the jury finds on each separate item, or issue, separately, it is a simple matter to reform the judgment to fit the facts.
Similarly, in our case three libels were in issue, the trial court assumed all three had support in the evidence and submitted one damage issue for all three together. Now that it has been shown that two of the three libels were "not supported by the evidence," (being absolutely privileged) we can neither affirm nor modify but must remand Anderson's cause of action against Putter based upon Putter's letter to a member of the Dallas City Council. While no point of error discussed liability as related to this particular letter, we do not find evidence of "publication" in the record. "Publication" of libel by letter not only requires a showing that Putter composed and sent the letter, but must show the letter to have been received, read, and understood by a third person. See 50 Am. Jur.2d, Libel and Slander § 154 (1970). No doubt, this omission, as well as other concerns reflected in this record, will not recur on new trial.
Reversed and rendered in part and reversed and remanded in part. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1607884/ | 773 F. Supp. 932 (1991)
Agripin CEDILLO, Plaintiff,
v.
VALCAR ENTERPRISES & DARLING DELAWARE COMPANY, INC., Defendant.
Civ. A. No. CA3-91-1645-D.
United States District Court, N.D. Texas, Dallas Division.
October 1, 1991.
*933 John E. Wall, Jr. of Dallas, Tex., for plaintiff.
Laura M. Franze and D. Michelle McCullough of Gardere & Wynne, Dallas, Tex., for defendant.
FITZWATER, District Judge:
Plaintiff's motion to remand presents the questions whether a workers' compensation retaliation action made nonremovable by 28 U.S.C. § 1445(c) becomes removable when pendent to a federal question claim and whether the court should exercise supplemental jurisdiction over the retaliation claim.
I
Plaintiff Agripin Cedillo ("Cedillo") sued defendant Valcar Enterprises & Darling Delaware Company, Inc. ("Valcar") on March 19, 1990 in Texas state court for violating the Texas Commission on Human Rights Act ("TCHRA"), Tex.Rev.Civ.Stat. Ann. art. 5221k, § 1.01 et seq. (West 1987 & Supp.1991), contending Valcar discriminated against him on the basis of age and/or handicap by terminating him, discriminating against him in the terms, conditions, and privileges of his employment, and retaliating against him. See Orig.Pet. ¶¶ IV-V. Cedillo alleged Valcar violated Tex.Rev.Civ.Stat.Ann. art. 8307c (West Pamp.Supp.1991), by discharging him in retaliation for prosecuting a workers' compensation claim. Orig.Pet. ¶ VII. In June 1991 plaintiff filed a first amended petition alleging Valcar discriminated against him in violation of the TCHRA on account of age and national origin/creed by terminating him, discriminating against him in the terms, conditions, and privileges of his employment, and retaliating against him. See 1st Am.Pet. ¶¶ 4-5. The national origin/creed component was later withdrawn by agreement of the parties. The first amended petition retained the article 8307c workers' compensation retaliation claim. See id. ¶ 7. On August 9, 1991 Cedillo filed a second amended original petition in state court. This amended petition alleged discrimination on account of "age and compensation proceedings." See 2nd Am.Pet. ¶ 5. The pleading once again claimed Valcar had violated article 8307c. See id. ¶ 7. It also added for the first time a claim for relief pursuant to the Age Discrimination in Employment Act of 1967 ("ADEA"), 29 U.S.C. § 621 et seq. See 2nd Am.Pet. ¶ 4.
*934 Within 30 days of the date Cedillo filed his second amended petition, Valcar removed the action to this court on the basis of federal question jurisdiction. Valcar asks the court to exercise pendent jurisdiction over plaintiff's state law claims. Cedillo moves to remand the case, contending Valcar's removal was untimely and is precluded by 28 U.S.C. § 1445(c).
II
The court turns first to the timeliness issue. Cedillo urges the court that removal is tardy because his original petition presented the federal age discrimination claim. He points to TCHRA § 1.02(1), which states that one purpose of the Act is to provide for the execution of the policies in 29 U.S.C. § 633. He therefore reasons the case was removable from its inception because a federal age discrimination question was always involved. When Valcar failed timely to remove the case in relation to the original petition, Cedillo contends, it lost its removal right. The court disagrees.
The well-pleaded complaint rule governs the apposite removability analysis. "The rule provides that the plaintiff's properly pleaded complaint governs the jurisdictional determination, and if, on its face, such a complaint contains no issue of federal law, then there is no federal question jurisdiction." Aaron v. National Union Fire Ins. Co., 876 F.2d 1157, 1160-61 (5th Cir.1989) (citing cases), cert. denied, 493 U.S. 1074, 110 S. Ct. 1121, 107 L. Ed. 2d 1028 (1990). Cedillo's original petition did not state an ADEA claim. It purported only to obtain relief for age discrimination on the basis of the TCHRA. See Orig.Pet. ¶¶ III-V and VIII(a) and (b). Plaintiff's first amended petition was similarly cast. See 1st Am.Pet. ¶¶ 3-5 and 8(a) and (b). And Cedillo's age discrimination claim was not a necessarily federal cause of action phrased in state law terms, such that this court will look beyond the letter of the petition to the substance of the claim. Cf. Brown v. Southwestern Bell Tel. Co., 901 F.2d 1250, 1254 (5th Cir.1990) (where common law claims in state court complaint necessarily were federal in character because essence was that defendant violated ERISA, federal question was presented and case was removable). An age discrimination claim is not exclusively federal. That Cedillo could have, but did not, allege the ADEA in his original and first amended petitions is not controlling. He was the master of his complaint and was entitled to avoid federal court by the claims he chose to prosecute. See The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25, 33 S. Ct. 410, 411-12, 57 L. Ed. 716 (1913); Aaron, 876 F.2d at 1161 n. 7; see also 14A C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3722 at 275-76 (1985) (where there is a choice between federal and state remedies, federal courts will not ignore plaintiff's choice of state law as basis for action).
Accordingly, the court agrees with Valcar that the federal question on which it predicates removal jurisdiction did not enter the case until August 9, 1991. Valcar timely removed within 30 days thereafter.
III
Cedillo next urges that 28 U.S.C. § 1445(c)[1] precludes removal because his case involves a retaliation claim brought pursuant to article 8307c.[2] Valcar argues *935 this court may hear Cedillo's retaliation claim pursuant to principles of pendent jurisdiction, because the ADEA claim presents a removable federal question and "Plaintiff's claims all arise from a common nucleus of fact the termination of his employment from [Valcar]." D.Br. at 3.[3]
A
Valcar relies for its pendent jurisdiction argument principally upon Nabors v. City of Arlington, Tex., 688 F. Supp. 1165 (E.D.Tex.1988). Nabors essentially analyzed the removability question in terms of § 1441(b)[4] and pendent jurisdiction. A plaintiff discharged by the defendants sued for relief pursuant to 42 U.S.C. § 1983 for federal constitutional violations. The plaintiff also brought state claims for breach of contract and retaliatory discharge in violation of article 8307c. 688 F.Supp. at 1166. The defendants removed the action and the plaintiff moved to remand. The Nabors court held § 1441(c) was unavailable to the *936 removing defendants because the plaintiff's claims were not separate and independent. Id. at 1167. The court then concluded that § 1441(b) made the plaintiff's § 1983 action removable. See id. at 1169.[5] Because the federal claim was removable, the Nabors court determined whether the retaliation action could be removed as a pendent claim. The dispositive issue in determining removability was whether § 1445(c) precluded removal. The court held the statute did not because the animating policy for enactment of § 1445(c) to restrict removal of diversity cases was not implicated. The court also apparently held article 8307c was not within the reach of § 1445(c). Id. at 1169-70.[6] The court was therefore free to exercise pendent jurisdiction over the retaliation claim.
The court in Fernandez v. Reynolds Metals Co., 384 F. Supp. 1281, 1283 (S.D.Tex.1974), suggested a different result. In dictum the court stated the entire case could not be removed, even if the plaintiff's state court petition presented claims in addition to the retaliation action.[7]
As a district court bound by Fifth Circuit precedent, this court first turns to decisions of the circuit court to ascertain whether they command the outcome in this case. No opinion expressly decides the issue, but a recent case can be read to favor removability when an article 8307c retaliation claim is within the district court's pendent jurisdiction.
In Jones v. Roadway Express, Inc., 931 F.2d 1086, reh'g denied, 936 F.2d 789 (5th Cir.1991), a plaintiff sued for retaliatory discharge and (apparently) for relief pursuant to a collective bargaining agreement. 931 F.2d at 1087. The defendant removed to federal court on the basis of diversity of citizenship and federal question jurisdiction. Id. The defendant contended the plaintiff's claims were preempted by the Labor Management Relations Act. Id. The plaintiff moved to remand and the district court denied the motion. Id. The plaintiff then amended his complaint to assert only an article 8307c claim. Id. at 1088. The district court granted summary judgment against the plaintiff, who then appealed. Id.
The Fifth Circuit held the plaintiff's claim was neither precluded by state law nor preempted by federal law. Id. at 1089-90. This left only the state law workers' compensation retaliation claim. After deciding the plaintiff's retaliation claim fell within the proscription of § 1445(c), the court said "[o]ur holding requires that this case be remanded to state court." Id. at 1092.
The circuit court's decision to order a remand to state court was presented as an issue on rehearing. In his opinion for the *937 court, Judge Wiener explained that the panel had "instructed the district court to vacate its judgment and remand the case to state court because only a state-law claim remained and because Congress had declared its intent that workers' compensation suits should be resolved in state court whenever possible." 936 F.2d at 792. He emphasized that the dispositive issue was whether to remand the case to state court when only a state law claim remained. Id. The opinion suggests the retaliation claim was properly removed and could have been retained as a matter of discretion pursuant to the court's pendent jurisdiction. See id. The court ordered the remand not of necessity, but in deference to Congressional intent:
Congress clearly intended that state courts should resolve workers' compensation suits. Though Congress expressed its intent in the context of removal, we believe that in the remand context now before us when only a pendent state-law claim remains that intent merits no less consideration. Given the discretion vested in the court to remand pendent state-law claims to state court, we believe that the intent of Congress that, whenever feasible, state workers' compensation claims be resolved in state court favors remand to state court.
Id. This court reads Jones to indicate that a civil action covered by § 1445(c) may be removed when pendent to a federal question claim.[8]
B
Because Jones did not expressly decide the question of removability,[9] and since no other Fifth Circuit opinion appears to do so, this court now addresses the question anew.
The first issue to be decided, of course, is one of subject matter jurisdiction. If a civil action that falls within § 1445(c) is withdrawn from this court's subject matter jurisdiction, the court cannot hear the retaliation claim, even if it otherwise falls within the court's pendent jurisdiction.
That § 1445(c) is not a jurisdictional proviso is strongly suggested by the en banc Fifth Circuit's recent decision involving § 1445(a), which makes FELA civil actions nonremovable. See Lirette v. N.L. Sperry Sun, Inc., 820 F.2d 116 (5th Cir.1987) (en banc). Lirette was reheard en banc to consider the validity of Gamble v. Central of Ga. Ry. Co., 486 F.2d 781 (5th Cir.1973). In Gamble a plaintiff sued in state court to recover damages under the FELA. The defendant impleaded a third party defendant, who removed the case to federal court on the basis of diversity of citizenship. The Fifth Circuit reversed the district court's refusal to remand the FELA claim. After discussing the legislative history behind § 1445(a), the panel held the statute "made it impossible for FELA suits instituted in state courts ever to be removed to federal court on any grounds." 486 F.2d at 784. The panel saw § 1445(a) as a limitation upon subject matter jurisdiction. See id. at 785. Therefore, the district court lacked any power to hear the FELA claim and should have remanded the entire case or severed the FELA suit and remanded it. Id. In Lirette, following a panel opinion that was critical of, but felt bound by, Gamble, the en banc court overturned "[t]he language in Gamble which construes the nonremovability provision of § 1445(a) in strict jurisdictional terms."[10]*938 The court held that a party entitled to object on the basis of § 1445(a) to removal of an FELA action could waive the right to preclude removal by failing to object in the district court and by participating in the conduct of the litigation. 820 F.2d at 118.
This court sees no reason to analyze differently the closely analogous provisions of § 1445(c). Both § 1445(a) and § 1445(c) are subsections of the same statute and purport to accomplish similar restrictions on removal. This court therefore holds that § 1445(c) does not withdraw federal court jurisdiction over civil actions that arise under the workers' compensation laws of the forum state.
Judge Parker implicitly reached this conclusion in Cook v. Shell Chem. Co., 730 F. Supp. 1381 (M.D.La.1990), on the basis of similar reasoning. In Cook the question as it pertained to § 1445(c) was not expressly framed in terms of subject matter jurisdiction; instead, the issue was whether § 1445(c) was a procedural limitation so that its provisions could be waived. See id. at 1382. Judge Parker held by analogy, relying on Lirette's determination that the statutory bar of § 1445(a) could be waived, that the failure timely to object on the basis of § 1445(c) resulted in a waiver. See id. This conclusion in Cook necessarily assumes § 1445(c) is not a limit upon subject matter jurisdiction.
C
Having decided that a civil action within the reach of § 1445(c) is not withdrawn from this court's subject matter jurisdiction, the court must next address whether, as Valcar urges and Nabors held, an article 8307c civil action may be removed as a pendent claim.
1
Although neither party has raised this issue, in light of the recent enactment of the Judicial Improvements Act of 1990, Pub.L. 101-650, title III, § 310, 104 Stat. 5089, 5113 (Dec. 1, 1990), this question must be addressed in terms of "supplemental" rather than "pendent" jurisdiction. See Samaad v. City of Dallas, 940 F.2d 925, 928 n. 2 (5th Cir.1991) ("In accordance with the [Act], for actions commenced on or after December 1, 1990, the term `supplemental jurisdiction' is used in lieu of `pendent jurisdiction'"). The supplemental jurisdiction statute, 28 U.S.C. § 1367,[11] codified the doctrine of pendent jurisdiction, see Promisel v. First American Artificial *939 Flowers, Inc., 943 F.2d 251, 254 (2d Cir. 1991) ("The availability of pendent jurisdiction was codified in 1990 at 28 U.S.C. § 1367(a)"); Salazar v. City of Chicago, 940 F.2d 233, 243 n. 2 (7th Cir.1991) ("Congress has since codified the doctrine of pendent jurisdiction under the name "Supplemental Jurisdiction"). Supplemental jurisdiction combines the concepts of pendent and ancillary jurisdiction. See 13B C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3567.3 at 35 (Supp.1991). Except as limited by 28 U.S.C. § 1367(b) and expressly provided otherwise by federal statute, such jurisdiction is extended over all claims that are so related to claims in the action within the court's original jurisdiction that they form part of the same case or controversy under Article III of the Constitution. 28 U.S.C. § 1367(a). This statute effectively "gives federal courts supplemental jurisdiction to the limits Article III of the Constitution permits." 13B Wright, Miller & Cooper § 3567.3 at 35 (Supp.1991). It "ratifies and incorporates the constitutional analysis the Supreme Court made in the Gibbs case." Id. at 35-36 (footnote omitted).
Section 1367 took effect and "is applicable only to civil actions commenced on or after December 1, 1990." Id. at 36 (citing Pub.L. 101-650, title III, § 310(c)); see In re Shell Oil Co., 932 F.2d 1518, 1521 n. 7 (5th Cir.1991) (ancillary jurisdiction question) ("we note that under recently enacted legislation the term "supplemental jurisdiction" is to be used for all civil cases commenced on or after December 1, 1990"). The present case was initiated in state court prior to December 1, 1990 but removed to this court after the effective date of § 1367. The statute applies to the present case because the pertinent time for determining federal jurisdiction is the date on which such jurisdiction is invoked. Because Valcar did not remove this action until after the effective date of the Judicial Improvements Act of 1990, the supplemental jurisdiction provision of the Act was fully applicable. See by analogy FDIC v. Loyd, 744 F. Supp. 126, 129-30 (N.D.Tex.) (Judicial Improvements and Access to Justice Act took effect on date of enactment and controlled case removed 15 days prior to effective date of law), appeal docketed No. 90-1714 (5th Cir.1990).
2
Analyzing the removal question in terms of § 1367 is a three-step process in the present case. Because § 1367(a) confers supplemental jurisdiction to the limits of Article III of the Constitution except as expressly provided by federal statute, the court first considers whether a federal statute withdraws jurisdiction over Cedillo's workers' compensation retaliation claim.[12] The court determines second whether it otherwise has supplemental jurisdiction. If the claim is within the court's supplemental jurisdiction, the court must exercise such jurisdiction unless one of the four categorical exceptions in § 1367(c) is satisfied. The court therefore analyzes third whether any of these considerations warrants declining to exercise supplemental jurisdiction.
The court turns to the first step. For reasons already set out, see supra § III(B), the court declines to read § 1445(c) as a federal statute that withdraws subject matter jurisdiction from a federal court to hear a retaliation claim arising under the workers' compensation law of the forum state. The court is unaware of any other federal statute that arguably could be understood to deprive the court of subject matter jurisdiction.
The court next considers whether Cedillo's retaliation claim is within the court's supplemental jurisdiction when measured in relation to Cedillo's federal question claim under the ADEA.[13] This analytical *940 step is best probed in terms of the pendent jurisdiction components of supplemental jurisdiction.
Pendent jurisdiction jurisprudence is familiar, involving both notions of Article III power and of federal court discretion. The power of a federal court with jurisdiction over a federal question to exercise jurisdiction over a pendent claim is very broad. See 13B Wright, Miller & Cooper § 3567.1 at 114. Such jurisdiction exists when the relationship of the state claim to the federal question claim is sufficient to permit the conclusion that the entire action before the court comprises but one constitutional case. United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S. Ct. 1130, 1139, 16 L. Ed. 2d 218 (1966). The state and federal claims must derive from a common nucleus of operative fact. Id. A federal court is empowered to hear both federal and state claims if the claims are such that the plaintiff would ordinarily be expected to try them all in one judicial proceeding. Id.
Not all retaliation claims will fall within this broad constitutional grant of power. The nature of the federal question theory or theories in the case are of course highly relevant. A retaliation claim may be too attenuated depending upon the facts on which the federal cause of action is based. Cedillo's retaliation claim, as reflected in his second amended petition, does have a sufficient nexus to the ADEA theory of recovery. He lists in ¶ 5(a)-(c) of his pleading three categories of discriminatory acts and alleges they constitute discrimination "on account of his age and compensation proceedings." This is a clear indication that plaintiff's federal ADEA and state workers' compensation civil actions are sufficiently related to permit the exercise of supplemental jurisdiction. The court must therefore allow removal of Cedillo's pendent retaliation claim unless § 1367(c) permits the court to decline to do so.
This conclusion brings the court to the third prong of its analysis, in which it considers whether it may refuse to exercise supplemental jurisdiction. The decision whether to exercise pendent jurisdiction has always been a matter within the court's discretion. See Gibbs, 383 U.S. at 726, 86 S.Ct. at 1139 ("It has consistently been recognized that pendent jurisdiction is a doctrine of discretion, not of plaintiff's right"). Because § 1367(a) codifies pendent jurisdiction, the discretionary element of the doctrine is necessarily retained. But the statute also cabins that discretion by mandating that supplemental jurisdiction be exercised unless one of the categories in § 1367(c) is met. The court now examines these four considerations.
Section 1367(c)(3) has no application to the present facts. The court therefore considers whether Cedillo's retaliation claim raises novel and complex issues of state law, substantially predominates over his ADEA claim, or presents exceptional circumstances or other compelling reasons for declining jurisdiction. See § 1367(c)(1)-(2) and (4).
Cedillo's retaliation claim is a straightforward one under Texas law. To prove retaliation the plaintiff "has the burden of establishing a causal link between the firing and the employee's claim for worker's compensation benefits. Once the link has been established the employer must rebut the alleged discrimination by showing there was a legitimate reason behind the discharge." Hughes Tool Co. v. Richards, 624 S.W.2d 598, 599 (Tex.App.1981, writ ref'd n.r.e.), cert. denied, 456 U.S. 991, 102 S. Ct. 2272, 73 L. Ed. 2d 1286 (1982). These are not especially novel and complex issues when viewed in relation to the similar burden shifting and proof regimens of an ADEA claim. Cf., e.g., Bienkowski v. American Airlines, Inc., 851 F.2d 1503, 1504-05 (5th Cir.1988) (discussing ADEA proof burdens).
Cedillo's workers' compensation action does not predominate over his ADEA claim. The theories are, in fact, interrelated and *941 arise from conduct that the plaintiff alleges caused his termination.[14]
The retaliation claim does not present exceptional circumstances or other compelling reasons for declining jurisdiction. In the present case there appear to be two considerations relevant to divining the presence of such circumstances and factors.
The first is whether workers' compensation claims that could not otherwise be removed by virtue of express congressional action should be entertained when appended to a removable federal question claim. This is the consideration the Jones panel addressed. Because only the retaliation claim remained, the panel thought it appropriate that the case be returned to state court. There are certainly repeated instances in Fifth Circuit jurisprudence where the court has evinced a somewhat cold juridical shoulder to hearing unnecessarily state workers' compensation-type claims. See, e.g., Jones, 931 F.2d at 1092 ("Because Congress intended that all cases arising under a state's workers' compensation scheme remain in state court, we believe that we should read section 1445(c) broadly to further that purpose"); Kay v. Home Indem. Co., 337 F.2d 898, 901 (5th Cir.1964) ("we see nothing to suggest that we should strain to find a way to entertain workmen's compensation suits").
This court does not find the exercise of supplemental jurisdiction over a claim that comes within § 1445(c) to be unwarranted when the claim has a sufficiently close nexus to a federal question civil action so as to fall within that jurisdiction. Congress enacted § 1445(c) "[t]o restrict diversity jurisdiction and to stop the removal of compensation cases which were increasing the already overburdened docket of the federal courts." Jones, 931 F.2d at 1091. This underlying purpose for § 1445(c) becomes largely irrelevant when the plaintiff also alleges in state court a removable federal question claim.[15] Nothing about § 1445(c) justifies erecting it as a per se bar to exercising pendent jurisdiction when the usual considerations warrant this approach.
The second relevant consideration focuses not upon § 1445(c) but upon the nature of the federal question to which the retaliation claim is appended. Courts have not uniformly found it appropriate to exercise pendent jurisdiction over state law claims when the sole federal claim is grounded on the ADEA. Compare Ritter v. Colorado Interstate Gas Co., 593 F. Supp. 1279, 1285 (D.Colo.1984) (declining to exercise jurisdiction over pendent state claims for breach of contract and breach of covenant of good faith and fair dealing in ADEA case); James v. KID Broadcasting Co., 559 F. Supp. 1153, 1157 (D.Idaho 1983) (dismissing pendent state claims in ADEA and Title VII action where pendent state issues predominated in terms of comprehensiveness of remedy sought and there was real likelihood of jury confusion); Deutsch v. Carl Zeiss, Inc., 529 F. Supp. 215, 219 (S.D.N.Y.1981) (declining to exercise pendent jurisdiction over state age discrimination claim where to do so would permit indirect recovery of compensatory damages); Douglas v. American Cyanamid Co., 472 F. Supp. 298, 306 (D.Conn.1979) (refusing to exercise jurisdiction over defamation claim); Hannon v. Continental Nat'l Bank, 427 F. Supp. 215, 218 (D.Colo. 1977) (state tort claims for intentional infliction of emotional distress or loss of reputation in the community would not be heard with ADEA claim), with Promisel, 943 F.2d at 258 (affirming district court's exercise of pendent jurisdiction over state *942 law age discrimination claim); Rechsteiner v. Madison Fund, Inc., 75 F.R.D. 499, 506 (D.Del.1977) (court would exercise jurisdiction over breach of contract claim pendent to ADEA claim); Fellows v. Medford Corp., 431 F. Supp. 199, 202 (D.Or.1977) (without addressing issue, exercising jurisdiction over ADEA and pendent state claims that implicated age discrimination). This court's reading of the cases that decline to exercise pendent jurisdiction discloses no peculiarity about the ADEA that renders it an unsatisfactory predicate for appropriate pendent claims. Indeed the opinions appear either expressly to analyze the jurisdiction question in terms of Gibbs' teachings or implicitly conduct a Gibbs-type assessment.[16] These decisions likely must now be interpreted in the context of § 1367(c), but even if they need not, the court concludes under a traditional Gibbs analysis that ADEA claims present no per se impediment to the exercise of supplemental jurisdiction.
In Gibbs the Court spoke in broad terms of the pendent jurisdiction doctrine's justification, including considerations of judicial economy, convenience, and fairness to litigants. 383 U.S. at 726, 86 S.Ct. at 1139. It warned that needless decisions of state law should be avoided, id., and indicated that pendent claims could be dismissed where it appeared state issues predominated in terms of proof, of the scope of the issues raised, or of the comprehensiveness of the remedy sought. Id. For the reasons set out above, the court discerns no predominance of state issues. The court in this case will not be called upon to make needless state law decisions. The scope of the issues raised presents no impediment to the exercise of supplemental jurisdiction. The age claims overlap in proof and the retaliation claim is sufficiently related to the ADEA theory to permit the exercise of supplemental jurisdiction.
The remedies sought do not precisely coincide, but the court does not find that this difference warrants bifurcating this case. The present action is unlike the cases cited above, in which courts have declined to exercise pendent jurisdiction where the state remedies appeared substantially broader than available ADEA relief, and the right to trial by jury depended upon the federal and state nature of the claims. The TCHRA has been interpreted to accord a plaintiff such as Cedillo only equitable relief. See Central Power & Light Co. v. Caballero, 804 S.W.2d 534, 543 (Tex.App.1990, writ filed) (TCHRA authorizes only equitable relief and discretionary attorney's fees). It is apparently narrower not broader in remedial scope than is the ADEA. And while Cedillo has a right to a jury trial of his retaliation claim, he also has such a right with respect to his ADEA action. The presence of the retaliation claim does not therefore fundamentally alter the nature of the trial process.
The court concludes that no factors permitted by § 1367(c) warrant declining to exercise supplemental jurisdiction over Cedillo's retaliation claim. The claim was therefore properly removed within this court's supplemental jurisdiction as a claim pendent to Cedillo's ADEA cause of action.
* * *
Cedillo's motion to remand is denied.
SO ORDERED.
NOTES
[1] 28 U.S.C. § 1445(c):
A civil action in any State court arising under the workmen's compensation laws of such State may not be removed to any district court of the United States.
[2] Tex.Rev.Civ.Stat.Ann. art. 8307c (West Pamp. Supp.1991):
Section 1. No person may discharge or in any other manner discriminate against any employee because the employee has in good faith filed a claim, hired a lawyer to represent him in a claim, instituted, or caused to be instituted, in good faith, any proceeding under the Texas Workmen's Compensation Act, or has testified or is about to testify in any such proceeding.
Sec. 2. A person who violates any provision of Section 1 of this Act shall be liable for reasonable damages suffered by an employee as a result of the violation, and an employee discharged in violation of the Act shall be entitled to be reinstated to his former position. The burden of proof shall be upon the employee.
Sec. 3. The district courts of the State of Texas shall have jurisdiction, for cause shown, to restrain violations of this Act.
[3] Valcar also asserts that "[s]ince Plaintiff's ADEA claim was joined with two claims or causes of action arising from the same factual core, the entire case was properly removed." D.Br. at 3. Valcar relies for this proposition upon 28 U.S.C. § 1441(c). Id. Section 1441(c) does not appear to support this argument. Section 1441(c), as amended on December 1, 1990, provides:
Whenever a separate and independent claim or cause of action within the jurisdiction conferred by section 1331 of this title, is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed and the district court may determine all issues therein, or, in its discretion, may remand all matters in which State law predominates.
Section 1441(c) makes removable an entire case when a separate and independent claim or cause of action within the district court's federal question jurisdiction is joined with one or more otherwise nonremovable claims or causes of action. Valcar's assertion that plaintiff's ADEA and other claims "aris[e] from the same factual core" would appear to render § 1441(c) inapposite. See American Fire & Cas. Co. v. Finn, 341 U.S. 6, 14, 71 S. Ct. 534, 540, 95 L. Ed. 702 (1951) (there is no separate and independent claim or cause of action where there is single wrong for which relief is sought arising from interlocked series of transactions).
Even if § 1441(c) arguably applies, other issues are presented. First, it is questionable whether § 1441(c) has any continued vitality in view of the 1990 amendment to the statute. Although § 1441(c) in its pre-1990 form was not expressly limited to diversity cases, as Judge Posner pointed out in Thomas v. Shelton, 740 F.2d 478 (7th Cir.1984), "its principal and maybe only application is to such cases. If it were not for section 1441(c) the diversity plaintiff who wanted to litigate his case in state court could, simply by joining a claim against a resident of his state, destroy the complete diversity required for federal diversity jurisdiction and thus prevent the nonresident defendant from removing." Id. at 483. In its pre-amended form § 1441(c) had no meaningful relevance to federal question cases because these cases were also removable as part of the court's pendent jurisdiction. See id. The Thomas panel thus knew "of no federal-question case that was held nonremovable before section 1441(c) was enacted merely because the plaintiff had joined a state claim with his federal claim." Id. Professors Wright, Miller, and Cooper have, in fact, expressed difficulty envisioning with respect to the 1990 amendment "what was gained by leaving Section 1441(c) at play in federal-question cases." 14A Wright, Miller & Cooper § 3724 at 72 (1991 Supp.).
Second, and potentially troublesome, if § 1441(c) has any intended effect in federal question cases, constitutional issues are raised because a nonremovable claim so completely separate and independent as to comply with § 1441(c) "may not be [a] case within the meaning of Article III of the Constitution." See Thomas, 740 F.2d at 483; Contemporary Servs. Corp. v. Universal City Studios, Inc., 655 F. Supp. 885, 890 (C.D.Cal.1987) (collecting cases and commentaries on this issue); cf. United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S. Ct. 1130, 1138, 16 L. Ed. 2d 218 (1966) (pendent jurisdiction exists when relationship between federal question and state claims permits conclusion that entire action before court comprises but one constitutional case). As applied to the present case, if Cedillo's retaliation claim is sufficiently separate and independent from his ADEA claim so as to satisfy § 1441(c)'s literal terms, it is questionable whether this court may constitutionally exercise jurisdiction over the claim.
[4] 28 U.S.C. § 1441(b):
Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.
[5] This court declines to follow Nabors' reliance upon § 1441(b) as conferring a right of removal. Section 1441(b) should be understood not as providing a removal right but rather as imposing a limitation on the removal right set out in § 1441(a). See Thomas, 740 F.2d at 482 (§ 1441(a) allows removal subject to limitations in § 1441(b)); Contemporary Servs. Corp., 655 F.Supp. at 887 (§ 1441(b) modifies § 1441(a) by limiting when diversity of citizenship cases are removable). The exercise of pendent jurisdiction following removal is better understood in relation to § 1441(a). "Where removal is properly effected under section 1441(a), the district court may also elect to exercise pendent jurisdiction over state law claims." Emrich v. Touche Ross & Co., 846 F.2d 1190, 1196 (9th Cir.1988).
When § 1441(b) is viewed as conferring rather than limiting a right of removal, § 1441(a) is improperly disregarded. The problem with this approach is that § 1441(a) contains a limitation on removal that must be addressed because it renders the right of removal unavailable where "otherwise expressly provided by Act of Congress." 28 U.S.C. § 1441(a). If § 1441(b) is viewed as the peg for pendent jurisdiction, one arguably need not address the limiting language of § 1441(a).
[6] The second premise on which the court relied is not entirely clear from the opinion. To the extent it may be understood as this court now reads it, the proposition is overruled by Jones v. Roadway Express, Inc., 931 F.2d 1086, 1092 (article 8307c claim is within § 1445(c) removal prohibition), reh'g denied, 936 F.2d 789 (5th Cir.1991).
[7] This statement was dictum because plaintiff's first amended petition "reveal[ed] but one claim." 384 F.Supp. at 1283. Fernandez also cited for this proposition the Fifth Circuit's decision in Gamble v. Central of Ga. Ry. Co., 486 F.2d 781 (5th Cir.1973), which the court notes infra has since been partially overruled.
[8] In a recent opinion involving article 8307c, Pope v. MCI Tel. Corp., 937 F.2d 258, 263 (5th Cir.1991), the panel stated in dictum that "§ 1445(c) does indeed prohibit the removal of Workers' Compensation claims." This should not be understood as contrary to the result the court reaches today. Jones also contains strong statements about the nonremovability of such actions and yet appears to have viewed remand as being discretionary.
[9] See 931 F.2d at 1091; 936 F.2d at 792 (distinguishing between questions of removal and remand and deciding, with reference to removal considerations, whether case should be remanded).
[10] Lirette did not overrule Gamble in any other respect, see Lirette v. N.L. Sperry Sun, Inc., 831 F.2d 554, 555 (5th Cir.1987) (per curiam) (on remand from en banc court) ("The [en banc] court overruled Gamble insofar as it deprived the district court of jurisdiction"). See 14A Wright, Miller & Cooper § 3724 at 73 (1991 Supp.) (discussing Lirette).
[11] 28 U.S.C. § 1367:
(a) Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties.
(b) In any civil action of which the district courts have original jurisdiction founded solely on section 1332 of this title, the district courts shall not have supplemental jurisdiction under subsection (a) over claims by plaintiffs against persons made parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedure, or over claims by persons proposed to be joined as plaintiffs under Rule 19 of such rules, or seeking to intervene as plaintiffs under Rule 24 of such rules, when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of section 1332.
(c) The district courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) if
(1) the claim raises a novel or complex issue of State law,
(2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction,
(3) the district court has dismissed all claims over which it has original jurisdiction, or
(4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.
(d) The period of limitations for any claim asserted under subsection (a), and for any other claim in the same action that is voluntarily dismissed at the same time as or after the dismissal of the claim under subsection (a), shall be tolled while the claim is pending and for a period of 30 days after it is dismissed unless State law provides for a longer tolling period.
(e) As used in this section, the term "State" includes the District of Columbia, the Commonwealth of Puerto Rico, and any territory or possession of the United States.
[12] Section 1367(b), which precludes the exercise of supplemental jurisdiction in actions in which jurisdiction is founded solely on diversity of citizenship, has no application in the instant case.
[13] This determination is made as a threshold matter on the basis of the plaintiff's state court petition. Gibbs makes clear, however, that "the issue whether pendent jurisdiction has been properly assumed is one which remains open throughout the litigation." 383 U.S. at 727, 86 S.Ct. at 1139. The court does not read § 1367 to change this principle. Therefore, although the court holds today that all of Cedillo's claims are removable, subsequent developments in the case may make the supplemental jurisdiction theories subject to remand to state court.
[14] Cedillo's ADEA and TCHRA age discrimination claims are factually identical although the remedies are different. See, e.g., Promisel, 943 F.2d at 254 (plaintiff's state law age discrimination claim clearly derived from same nucleus of operative fact as his federal ADEA claim).
[15] Moreover, exercising jurisdiction does not unfairly deprive the plaintiff of a state forum. Removal is triggered, not because the parties are diverse citizens, but because the plaintiff's well-pleaded complaint over which he is master has provided the predicate for removal. To avoid this result the plaintiff can simply opt not to plead a federal question claim. Or, if he is displeased with the federal forum, the plaintiff can drop any federal claims and seek remand to state court. See Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 357, 108 S. Ct. 614, 622, 98 L. Ed. 2d 720 (1988).
[16] An exception to this is Pandis v. Sikorsky Aircraft Div. of United Technologies Corp., 431 F. Supp. 793, 795-96 (D.Conn.1977). Pandis declined to exercise pendent jurisdiction over a state law age discrimination claim because it interpreted 29 U.S.C. § 633(a) to preclude a plaintiff from alleging a pendent state age discrimination claim in a federal court action when the state claim was still pending before a state administrative agency and could not have been brought in state court. See id. at 796. This analysis was recently disapproved, however, in Promisel, 943 F.2d at 255-256. | 01-03-2023 | 10-30-2013 |
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