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https://www.courtlistener.com/api/rest/v3/opinions/1687450/ | 682 So. 2d 326 (1996)
Donald MOYLES
v.
Reina Maria CRUZ, et al.
Cynthia JAMES
v.
Samuel Joshua COLEMAN, et al.
Nos. 96-CA-0307, 96-CA-0308.
Court of Appeal of Louisiana, Fourth Circuit.
October 16, 1996.
Rehearing Denied November 22, 1996.
*327 W. Gregory Merritt, Silbert & Garon, New Orleans, for Cynthia James.
Gregory P. Snodgrass, Kenan S. Rand, Jr., Christovich & Kearney, New Orleans, for Progressive Casualty Insurance Company,
Before BYRNES, CIACCIO and LOBRANO, JJ.
BYRNES, Judge.
Plaintiff, Cynthia James,[1] appeals the summary judgment dismissal of her claim for uninsured motorist ("UM") coverage against Progressive Casualty Insurance Company ("Progressive"). We affirm.
Cynthia James was a passenger on a Regional Transit Authority ("RTA") bus on February 14, 1992, when it collided with a vehicle operated by defendant, Reina Maria Cruz. Ms. James sued Cruz and others, including Progressive, RTA's UM carrier. Ms. James's suit was consolidated with the suits of other passengers on the bus.
Progressive moved for summary judgment denying coverage based upon the UM rejection form executed by RTA's chairman, Kern Reese. Ms. James urged a cross motion for partial summary judgment, claiming that Progressive's rejection form did not effect a valid waiver of coverage by the RTA.
The trial court denied Ms. James' motion, granted Progressive's motion and dismissed Ms. James' claim against Progressive. Ms. James appeals.
This case represents consolidated cases of plaintiff/passengers on the RTA bus. The insurance policy has a routine UM selection/rejection form signed by RTA's chairman. Therefore, the issue in this case of whether or not the insurance policy provides UM coverage as a matter of law may effect other claims under this policy or other RTA policies which contain the same UM selection/rejection form.
Absent a valid rejection by the insured, UM coverage is specifically read into all automobile liability policies in the amount provided for bodily injury coverage. La. R.S. 22:1406(D)(1)(a)(1); Henson v. Safeco Ins. Companies, 585 So. 2d 534 (La.1991). The policy at issue in this case is an excess indemnity *328 policy[2] with liability limits of $4,750,000.
Appellate courts review summary judgments de novo. Smith v. Our Lady of the Lake Hosp., Inc., 93-2512 (La.7/5/94), 639 So. 2d 730. An appellate court thus asks the same questions as does the trial court in determining whether summary judgment is appropriate: whether there is any genuine issue of material fact, and whether the mover is entitled to judgment as a matter of law. McCrae v. Hankins, 720 F.2d 863, 865 (5 Cir. (La.) 1983). A material fact is one whose existence or nonexistence may be essential to plaintiff's cause of action under the applicable theory of recovery, i.e., one that would matter on the trial of the merits. Smith v. Our Lady of the Lake Hosp. Inc., supra. A genuine issue is a triable issue. Id. at 751. Even under the amended version of article 966, if genuine issues of fact remain, this court must still reject summary judgment. In Short v. Giffin, 96-0361 (La.App. 4 Cir. 8/21/96), 1996 WL 478111, 682 So. 2d 249, this court found that the amended statute, La. C.C.P. art. 966, applies retroactively but does not change the law regarding the burden of proof in a summary judgment proceeding although legislative intent is to favor summary judgments. See also Walker v. Kroop, 96-0618 (La.App. 4 Cir. 7/24/96), 678 So. 2d 580; and Daniel v. Blaine Kern Artists, Inc., 96-1348 (La.App. 4 Cir. 9/11/96), 1996 WL 519834, 681 So. 2d 19.
Whether an insurance policy, as a matter of law, provides or precludes coverage is a dispute which can properly be resolved within the framework of a motion for summary judgment. Garcia v. Certified Lloyds Insurance Co., 598 So. 2d 1278 (La.App. 4 Cir.1992), writ denied, 604 So. 2d 969 (La. 1992).
In support of its motion for summary judgment, Progressive offered the waiver executed by RTA which reads:
I hereby acknowledge that the above mentioned Company has offered me Uninsured Motorist's Coverage and where applicable, Underinsured Motorist's Coverage, with limits equal to the Bodily Injury Liability Limits I have selected. However, I hereby elect to purchase limits of Uninsured Motorist's coverage that are lower than the Bodily Injury limits selected.
I also agree that this endorsement will apply to this policy and all future renewals unless otherwise directed in writing.
As witness my signature, I elect to purchase the following limits of Uninsured Motorist's coverage:
() I accept Uninsured Motorist's Coverage at the minimum limits required by the state financial responsibility law being:_____________.
() I want Uninsured Motorist's Coverage with the following increased limits: __________.
(X) I do not want Uninsured Motorist's Coverage. I reject the coverage completely.
/s/ Kern A. Reese 6/16/89
Progressive also offered an affidavit signed by Kern Reese in which he confirms his position with the RTA; details the authority vested by his position, which included entering into insurance contracts; identifies the policy in question; states that the RTA uniformly rejects UM coverage; that it was RTA's express intent to reject said coverage and that decision was an informed one.
La. R.S. 22:1406(D)(1)(a) provides that uninsured motorist coverage exists in amounts not less than the limits of bodily injury liability unless an insured rejects in writing the coverage or selects lower limits. The clear purpose of the statute is to promote the recovery of damages for innocent victims when the tortfeasor is either uninsured or underinsured. This purpose is accomplished by making UM coverage available for the victim's benefit as primary protection against the tortfeasor not adequately insured. Uhrich v. National Fire Ins. Co., 569 So. 2d 1062 (La.App. 3 Cir. 1990), writ denied, 572 So. 2d 96 (La.1991). *329 The statute is to be liberally construed such that statutory exceptions to the UM coverage are interpreted strictly. Tugwell v. State Farm Ins. Co., 609 So. 2d 195 (La. 1992). The burden of proving that any named insured rejected, in writing, UM coverage equal to the bodily injury liability limits or selected lower limits is on the insurer. Id. The law imposes UM coverage in this state notwithstanding the language of the policy, the intentions of the parties, or the presence or absence of a premium charge or payment. Roger v. Estate of Moulton, 513 So. 2d 1126, 1131-32 (La. 1987). If the rejection is unambiguous, but not in proper form, it is ineffective. Dibos v. Bill Watson Ford, 622 So. 2d 677 (La. App. 4 Cir.1993).
The Supreme Court noted in Tugwell, supra, 609 So.2d at 197:
... a valid rejection or selection of lower limits must be in writing and signed by the named insured or his legal representative. (Citations omitted.) Further, the insurer must place the insured in a position to make an informed rejection of UM coverage. In other words, the form used by the insurance company must give the applicant the opportunity to make a "meaningful selection" from his options provided by the statute: (1) UM coverage equal to bodily injury limits in the policy, (2) UM coverage lower than bodily injury limits in the policy, and (3) no UM coverage.
OPTIONS FOR ACCEPTANCE/REJECTION OF UM COVERAGE
Ms. James challenges the rejection executed by RTA, arguing that it does not meet statutory or jurisprudential requirements for a valid waiver because it did not offer the insured a "meaningful selection" from among the three options mandated by Tugwell. She maintains that the only option clearly offered RTA by Progressive's form was rejection of UM coverage.
The rejection form shows that the initial paragraph of the endorsement indicates that Progressive offered its insured UM coverage "with limits equal to the Bodily Injury Liability Limits" selected in the policy. The first requirement of Tugwell has been met.
Next, the fourth paragraph of the form offers the insured the option to select UM coverage "at the minimum limits required by the state financial responsibility law." The statutory minimum limits of $10,000/$20,000 are well below the bodily injury limits contained in the policy. The fifth paragraph read in conjunction with the fourth paragraph presents the insured with the opportunity to select UM options at any level above the statutory minimum it desired.
Finally, the last paragraph offered, and RTA selected, complete rejection of UM coverage.
During his oral argument, plaintiff's attorney contended that Gordon v. Southern United Fire Ins. Co., 95-2388 (La.App. 4 Cir. 8/21/96), 679 So. 2d 582, requires that the insured be informed that coverage equal to bodily liability coverage is automatically written into the policy by operation of law unless it is rejected or lower limits are selected. This court imposed that requirement in Gordon only because the acceptance option in Gordon was tacit, i.e., it occurred by operation of law if UM coverage were not rejected. There was no place on the form in Gordon to elect coverage. This is valid because La. R.S. 22:1406(D)(1)(a) does not require that an acceptance of UM coverage be in writing because it can occur by operation of law, but does require a rejection to be in writing because a rejection cannot occur by operation of law. See also Bryk v. Brock, 95-0889 (La.App. 4 Cir. 10/26/95), 663 So. 2d 522, 524, in which the policy has language that "unequivocally informs the insured that he need do nothing in order to secure coverage."
Gordon stands for the principle that the form need only offer a means of exercising the desired option, whether expressly in the case of rejection or tacitly in the case of acceptance. The insured in the present case was offered an option to accept the minimum limits by operation of law, as well as any limit above the minimum limit, or to reject UM coverage. This is consistent with Tugwell, supra.
Plaintiff misinterprets Gordon to require that the insured be informed that he *330 will receive coverage equal to the bodily liability coverage as required by law if he does not reject UM coverage. That is not what this court meant to imply in Gordon. In Gordon it was necessary for the selection/rejection form to explain that the insured would receive coverage if he did not reject it, i.e., tacit selection by operation of law, because there was no place on the form to accept such coverage in writing. In the instant case there is no need for the form to provide for tacit selection by operation of law because the form provides the option of explicit selection in writing.
This result is consistent with Morgan v. Sanchez, 94 0090 (La.App. 1 Cir. 4/15/94), 635 So. 2d 786, in which the appellate court was satisfied with the offering of the legally required options. There is no mention in that case of the consequences of failure to reject. The same result was reached in Thomas v. Goodson, 26,356 (La.App. 2 Cir. 12/7/94), 647 So. 2d 1192; and West v. Louisiana Indem. Co., 26,845 (La.App. 2 Cir. 4/5/95), 653 So. 2d 194, writ denied, 95-1099 (La.6/16/95), 655 So. 2d 337.
In Banks v. Patterson Ins. Co., 94-1176 (La.App. 1 Cir. 9/14/95), 664 So. 2d 127, writ denied, 95-2951 (La.2/16/96), 667 So. 2d 1052, the form allowed the insured to reject UM coverage but did not: (1) offer the insured the option to accept coverage; or (2) inform the insured that he would automatically be covered with the minimum limits as a matter of law if the insured did not reject coverage. Without one of the two options, the form was invalid.
In Holbrook v. Holliday, 93-1639 (La.App. 3 Cir. 6/1/94), 640 So. 2d 804, writ denied 94-1735 (La.10/7/94), 644 So. 2d 642, the appellate court found that issues of material fact existed based on the question of whether the policy holder knew she rejected UM coverage on not only a 1982 vehicle but also vehicles purchased as replacements for the 1982 automobile. Also, the policy holder's affidavit showed that she only signed the form but did not mark the rejection option herself but the mark was made by her agent so that the form was insufficient to establish an affirmative rejection by the insured. That court suggested options in a valid form without mentioning the consequences of failure to reject. See also Henson v. Safeco Ins. Companies, 585 So. 2d 534, 539 (La.1991).
In McCoy v. State Farm Mut. Auto. Ins. Co., 95-689 (La.App. 3 Cir. 11/2/95), 664 So. 2d 572, the form was invalid where it provided only two options: (1) selection of lower limits; and (2) rejection. In that case the form did not mention the consequences of failure to reject or provide for selection above lower limits.
In Herman v. Rome, 95-666 (La.App. 5 Cir. 1/17/96), 668 So. 2d 1202, the form was invalid where it did not state that the failure of the applicant to reject UM coverage or select UM limits lower than that provided for bodily injury would result in UM coverage being provided at the bodily injury limits. In that case the applicant was provided only with the options of UM limits lower than the bodily injury liability limit or rejection of UM coverage. In the present case the applicant was offered three options: (1) to accept at the minimum amount provided by law; (2) to accept UM coverage "at the following increased limits: ____________," i.e., any amount above the minimum required by law; and (3) the option to reject UM coverage. Further the paragraphs preceding the options inform the applicant that he is offered UM coverage with limits equal to the bodily injury liability limits which the applicant selected, and that the endorsement applies to that policy and all future renewals unless otherwise directed in writing. The form constitutes a valid waiver, without informing the applicant of the consequences of a rejection of UM coverage.
In Fontenot v. Henderson, 95-2784 (La.App. 4 Cir. 2/15/96), 670 So. 2d 489, this court found that the form was invalid where the applicant had two options: (1) to select UM coverage with inserted lower limits, or (2) to reject UM coverage. In the present case plaintiff's argues that the UM options did not include an offer to select UM coverage at the same amount as the bodily injury limits. However, in the present case the applicant had the option to accept UM coverage at any increased limits above the minimum required by law.
*331 In the present case Progressive's form comports with statutory and jurisprudential requirements for a valid waiver of UM coverage as a matter of law.
TYPE-WRITTEN REJECTION
Ms. James also contends that the rejection is invalid because the means employed to signify choice of rejection was type-written, not handwritten by Mr. Reese. Moreover, Ms. James argues the trial court erred in considering Progressive's insured's affidavit as curative of the form's defect and cites Thomason v. City of New Orleans, 94-1508 (La.App. 4 Cir. 2/23/95), 650 So. 2d 1247.
Aside from not citing any authority mandating a handwritten mark as opposed to a typewritten selection, Ms. James does not consider the contents of Mr. Reese's affidavit. He specifically attests: "That the Secretary for RTA, under instructions from the Board of RTA, marked the box on the Uninsured Motorists Endorsement form rejecting all UM coverage." As for the trial court's consideration of Mr. Reese's affidavit, Ms. James' reliance on Thomason, supra, is misplaced. In Thomason the rejection form did not specifically state or imply that the insured had the option of selecting UM limits less than or lower than the limits of the auto liability policy. The Thomason court concluded that an affidavit could not supply validity to a rejection form that was invalid under the UM statute. The form in this case does not suffer the Thomason deficiencies.
TIMELY REJECTION
Finally, Ms. James argues that the rejection is invalid because it was not executed until approximately two months after the policy was issued. She cites Futch v. Commercial Union Ins. Co., 625 So. 2d 1019 (La. 1993), as authority for her position that a waiver of UM coverage executed after issuance of the policy cannot alter an existing policy.
Ms. James mistakenly seizes dictum from Futch and attempts to apply it as the ruling of the court. In reading Futch it is apparent the court was not making a specific ruling regarding the timeliness of the UM rejection in that case. In fact, two concurring opinions in Futch noted as unnecessary dictum, the author's reference to the validity of the UM waiver. The other concurring and dissenting opinions do not reach that issue. The issue of the timeliness of the rejection was not before the court. Moreover, the Futch rejection was executed "midway into the policy period." The declaration sheet issued with the policy in this case indicates a policy period from April 1, 1989 to April 1, 1992.
In the present case Mr. Reese's affidavit shows that customarily it was RTA's routine policy to reject UM coverage. Mr. Reese had the authority and the experience in the law and in RTA's routine policy to make a valid informed knowledgeable rejection of UM coverage on behalf of RTA. The rejection signed on June 16, 1989, two months after inception of a three year policy, became effective as of the date it was executed. The execution of the rejection preceded the accident that occurred on February 14, 1992. The rejection of UM coverage is valid with regard to any claim that arose subsequent thereto.
Accordingly, the ruling of the trial court is affirmed.
AFFIRMED.
NOTES
[1] Now Cynthia Delay.
[2] In Southern American Ins. Co. v. Dobson, 441 So. 2d 1185 (La.1983), the Louisiana Supreme Court ruled that commercial excess/umbrella liability policies were governed by the requirements of the UM statute, La. R.S. 22:1406. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1730015/ | 398 So. 2d 820 (1981)
STATE of Florida, Petitioner,
v.
Tony Howard WEBB, Respondent.
No. 59346.
Supreme Court of Florida.
May 14, 1981.
*821 Jim Smith, Atty. Gen., and Andrea T. Mohel and Paul H. Zacks, Asst. Attys. Gen., West Palm Beach, for petitioner.
Richard L. Jorandby, Public Defender, and Robert C. Fallon, Asst. Public Defender, West Palm Beach, for respondent.
ALDERMAN, Justice.
We have for review the decision of the District Court of Appeal, Fourth District, in Webb v. State, 384 So. 2d 210 (Fla. 4th DCA 1980), which conflicts with Hetland v. State, 387 So. 2d 963 (Fla. 1980),[1] and Byrd v. State, 380 So. 2d 457 (Fla. 1st DCA 1980). The issue before us is whether information given the police from an apparently anonymous informant[2] under the totality of the circumstances provided a reasonable basis for the stop and, since a valid frisk does not inevitably follow from every valid stop, we must separately determine whether the frisk was reasonable. We hold that the stop was proper because the information in the BOLO carried sufficient indicia of reliability so as to give the police officers a reasonable suspicion founded in articulable facts that Webb was the perpetrator of the robberies. We further hold that the frisk was proper since the officers based on the information in the BOLO had reason to believe that they were dealing with an armed and dangerous individual.
The factual basis for the stop and the frisk and for the subsequent arrest is as follows. At a daily briefing session by their superiors, the arresting police officers were told to be on the lookout for an armed robbery suspect who was described as a white male, five feet nine inches, one-hundred thirty pounds, thin build, long blond hair in a ponytail, who had committed two armed robberies at two named drug stores on the two previous days. The officers were further told that the robbery suspect was carrying a black colored gun. They wrote all this information on the back of a "hot sheet" at the time they received it. Approximately six hours after this briefing, the officers saw Webb walking down a street approximately two miles from the scene of the robberies. They stopped him because he matched the BOLO description. Because they had been advised that the robbery suspect was carrying a gun, one of the officers touched Webb's shirt at the waist and found a concealed, fully loaded .32 caliber pistol. Webb was then arrested for carrying a concealed firearm. Later at a lineup, Webb was not identified as the perpetrator of the armed robberies, and no robbery charges were filed against him. He was, however, charged and convicted of the crime of carrying a concealed firearm.[3]
After a hearing on the motion to suppress held to determine whether the officers at the time of the stop had a reasonable suspicion founded in articulable facts that Webb was the perpetrator of the armed robberies and to determine whether the officers were justified in believing that Webb was armed, the trial court denied Webb's motion to suppress the gun. The court concluded that the initial stop was reasonable and that the officers would have taken an unnecessary risk of a shooting if they had sought additional information from Webb prior to the frisk.
The district court, relying primarily on St. John v. State, 363 So. 2d 862 (Fla. 4th DCA 1978), reversed on the basis that the BOLO was unreliable and was insufficient to support a reasonable suspicion on the part of the police officers that Webb was the armed robbery suspect. The district court emphasized that there was no testimony at the suppression hearing concerning *822 the source of the information and that when the police stopped Webb, there was nothing suspicious in his appearance or conduct.
Since Terry v. Ohio, 392 U.S. 1, 88 S. Ct. 1868, 20 L. Ed. 2d 889 (1968), and its companion case of Sibron v. New York, 392 U.S. 40, 88 S. Ct. 1889, 20 L. Ed. 2d 917 (1968), decided over a decade ago, the test for the limited intrusion of a stop and frisk has been reasonableness rather than probable cause.[4]Terry created an exception to the probable cause requirement and thereby granted police officers a greater right to stop and frisk a suspect. To determine reasonableness, the Supreme Court in Terry balanced the limited violation of an individual's privacy against the opposing interests in crime prevention and detection and the police officer's safety. To justify a stop, a police officer must be able to point to specific and articulable facts which, taken together with rational inferences from these facts, reasonably justify the stop. The Court announced the following objective standard by which a reviewing court should judge the reasonableness of the intrusion: "[W]ould the facts available to the officer at the moment of the seizure or the search `warrant a man of reasonable caution in the belief' that the action taken was appropriate?" Terry v. Ohio, 392 U.S. at 21-22, 88 S.Ct. at 1880.
A valid stop does not necessarily mean that there can be a valid frisk. Under the Terry exception, a law enforcement officer, for his own protection or the safety of others, may conduct a pat down to find weapons that he reasonably believes or suspects are then in possession of the person whom he has stopped. Weighing this limited right to frisk, the Supreme Court found the State's proffered justification the safety of the officer both legitimate and weighty. Pennsylvania v. Mimms, 434 U.S. 106, 98 S. Ct. 330, 54 L. Ed. 2d 331 (1977). As pointed out in Terry: "Certainly it would be unreasonable to require that police officers take unnecessary risks in the performance of their duties." 392 U.S. at 23, 88 S.Ct. at 1881. When a Terry stop is made, in order to validly frisk the person stopped, "[t]he officer need not be absolutely certain that the individual is armed; the issue is whether a reasonably prudent man in the circumstances would be warranted in the belief that his safety or that of others was in danger." 392 U.S. at 27, 88 S.Ct. at 1883. However, "[n]othing in Terry can be understood to allow a generalized `cursory search for weapons' or, indeed, any search whatever for anything but weapons. The `narrow scope' of the Terry exception does not permit a frisk for weapons on less than reasonable belief or suspicion directed at the person to be frisked." Ybarra v. Illinois, 444 U.S. 85, 93-94, 100 S. Ct. 338, 343-344, 62 L. Ed. 2d 238 (1979).
Four years after Terry, the Supreme Court, in Adams v. Williams, 407 U.S. 143, 92 S. Ct. 1921, 32 L. Ed. 2d 612 (1972), further explained the test of reasonableness as applied to a stop and frisk based on information from an informant. The Court held that an informant's tip, bearing sufficient indicia of reliability, could serve as the basis for reasonable suspicion that criminal activity was afoot. The Court, in reaching its decision, expressly rejected the defendant's argument that reasonable cause for a stop can only be based on an officer's personal observations. It also held that the frisk was valid since the officer had ample reason to fear for his safety because the defendant was reported by the informant to be carrying a concealed weapon. Citing with approval the decision of the United States Court of Appeals, Eighth Circuit, in United States v. Unverzagt, 424 F.2d 396 (8th Cir.1970), the Supreme Court said: "A brief stop of a suspicious individual, in order to determine his identity or to maintain the status quo momentarily while obtaining more information, may be most reasonable in light of the facts known to the officer at *823 the time." Adams v. Williams, 407 U.S. at 146, 92 S.Ct. at 1923.
United States v. Unverzagt involved a stop and frisk based on a tip from an unknown informant who was never located and whose personal reliability had not been established. The circuit court of appeals held that the information from this unknown informant could serve as a basis for reasonable suspicion and that the officers had a limited right under the circumstances to stop the defendant for investigation. The court further held that the information received relative to defendant's being armed constituted a reasonable basis under Terry for the frisk for weapons.
Until this Court's decision in Hetland v. State, which expressly adopted in its entirety the decision of the District Court of Appeal, Second District, in State v. Hetland, 366 So. 2d 831 (Fla. 2d DCA 1979), it was not clear whether under Florida law an anonymous tip could serve as the basis for reasonable suspicion.[5] In Hetland, we held that Florida's "stop and frisk" law imposes no greater standard than the fourth amendment. Employing the federal standards, we concluded that a valid stop and frisk may be based on information obtained from an anonymous tipster if that information appears sufficiently reliable because of the surrounding circumstances. We expressly disapproved St. John v. State insofar as it was inconsistent with Hetland.
In Hetland, two deputies were informed by radio dispatch that an anonymous phone call from an unknown female had been received, advising the authorities that a man named Hetland was on his way to a particularly named bar to shoot someone. The caller described Hetland's features and reported that he was carrying a silver revolver with a black handle. The deputies went to the bar and observed Hetland who fit the caller's description. Hetland's conduct, however, was in no way suspicious. They approached Hetland, asked him his name, and, observing the butt of a gun protruding from Hetland's waistband, one of the deputies reached under Hetland's shirt and took the revolver. He was then arrested for carrying a concealed firearm. Because of the earlier Second District Court of Appeal decision in State v. Hendry, 309 So. 2d 61 (Fla. 2d DCA 1975), the trial court granted Hetland's motion to suppress the firearm on the basis that it was obtained from him by an unlawful search and seizure. On appeal, the district court expressly receded from its earlier decision in Hendry and approved the stop and the frisk.
This Court, through its adoption of the district court's opinion in Hetland, held that the fact that the information serving as the basis for the police suspicion comes from an anonymous tip does not in and of itself invalidate a stop based on that information. Our adopted opinion in Hetland discusses the indicia of reliability by which an anonymous tip is judged. Rather than looking just to the source of the tip or an after-the-fact statement directed to the reliability of the source as the Fourth District suggests in the present case, Hetland holds that we may also look to the information provided by the tip and determine its reliability by the specificity of the information and its corroboration by prompt police action finding an individual in the general area of a named location who precisely fits the description given in the BOLO. However, as Hetland points out, a vague description would not justify a law enforcement officer in stopping every individual who might possibly fit that description.
The decision of the District Court of Appeal, First District, in Byrd v. State, 380 So. 2d 457 (Fla. 1st DCA 1980), decided prior to our adoption of the district court's decision in Hetland is consistent with Hetland In Byrd, patrolling officers had received information over the radio based on an unverified informant's tip that a white female had been abducted by two black males and had been placed in a white Lincoln Continental automobile at a certain location in *824 Tallahassee. They later received a BOLO pertaining to a purse snatching in this same area by two black males similar to the description of those in the first BOLO. The officers stopped a white Continental, and, while questioning the driver, one of the officers saw what he thought was a purse in the back seat of the Continental. Upon gaining Byrd's consent to check the purse, the officers opened the car door and saw marijuana roaches in an open ashtray. They thereupon arrested Byrd and searched the automobile. Byrd argued that his initial detention was invalid because it was based upon an unverified anonymous tip. The First District held that the articulable facts which the officers should be able to point to at a suppression hearing to show that they were warranted in believing that criminal activity was afoot need not be directly observed by the police officer. Because the automobile and its occupants fit the specific description furnished in the BOLO and because the detaining officer was able to articulate facts at the suppression hearing based on the BOLO which gave rise to his suspicion that Byrd was involved in criminal conduct, the court held that the stop was valid.
Since rendering its decision in the present case, the Fourth District has modified its view regarding BOLOs based on anonymous tips. Adopting the rationale of Hetland and State v. Francois, 355 So. 2d 127 (Fla. 3d DCA 1978), cert. denied, 361 So. 2d 832 (Fla. 1978), in Isham v. State, 369 So. 2d 103 (Fla. 4th DCA 1979), cert. denied, 381 So. 2d 770 (Fla. 1980), it held that, based upon an anonymous call to police advising that defendant was on a certain street corner attempting to sell drugs, the police had a perfect right, and perhaps a duty, to investigate the call. The court, although finding the stop valid, held that the frisk was invalid because there was no information to suggest that Isham was armed. It further stated, however, that had the anonymous tip included information that Isham was armed, the frisk would have been justified. See also Romanoff v. State, 391 So. 2d 783 (Fla. 4th DCA 1980), wherein the Fourth District upheld a stop and a frisk based on information from an anonymous tip contained in a BOLO.
In Hetland we were confronted with the issue of whether a stop was valid and we utilized the standards announced by the Supreme Court of the United States to hold that it was. Also, through adoption of the district court opinion, we held that for the same reason the stop was valid, so was the frisk. The standard for evaluating the reasonableness of a frisk is whether the officers were justified in believing that the suspect was armed and dangerous. If the tip bears sufficient indicia of reliability and it relates that the suspect is armed and dangerous, then the officer, acting on the tip, is justified in his belief that the suspect is carrying a weapon and may frisk him. For the same reasons that we held that there need not be personal observation by the law enforcement officer of criminal conduct, we also hold that what is required for a valid frisk is not probable cause but rather a reasonable belief on the part of the officer that a person temporarily detained is armed with a dangerous weapon.
The Florida stop and frisk law does employ the term probable cause as the basis for a valid frisk, but this term is not utilized in the same sense that the term is used when referring to arrests or search warrants. This is evident from the bill's title. It is a fundamental rule of statutory construction that legislative intent is the polestar by which the court must be guided, and this intent must be given effect even though it may contradict the strict letter of the statute. Furthermore, construction of a statute which would lead to an absurd or unreasonable result or would render a statute purposeless should be avoided. To determine legislative intent, we must consider the act as a whole "the evil to be corrected, the language of the act, including its title, the history of its enactment, and the state of the law already in existence bearing on the subject." Foley v. State, 50 So. 2d 179, 184 (Fla. 1951) (emphasis added). In determining legislative intent, we must give due weight and effect to the title of *825 section 901.151, Florida Statutes (1977), which was placed at the beginning of the section by the legislature itself. The title is more than an index to what the section is about or has reference to; it is a direct statement by the legislature of its intent. Berger v. Jackson, 156 Fla. 251, 768, 23 So. 2d 265 (1945).
Applying these rules of statutory construction to section 901.151, Florida Stop and Frisk Law, there is no doubt that the legislature intended to adopt the federal standards for stop and frisk, and not any stricter standards. This was made abundantly clear in its title where the legislature says that section 901.151 is:
AN ACT relating to "stop and frisk"; authorizing a law enforcement officer to temporarily detain and question a person under circumstances which reasonably indicate that such person has committed, is committing, or is about to commit a criminal offense; permits search of the person detained, to the extent necessary, to disclose if said person is armed, when the officer reasonably believes that said person is armed with a dangerous weapon; provides that said person shall not be detained more than is reasonably necessary for such search unless an arrest is made; providing an effective date. Ch. 69-73, Laws of Florida. (Emphasis added.)
Viewing section 901.151 in the context of its stated purpose to permit officers to temporarily detain and question persons under circumstances reasonably indicating criminal activity, past, present, or imminent, and to frisk where they have reasonable belief that the person detained is armed, it would be unreasonable and contrary to the legislature's intent to require an officer, before he may frisk a person whom he reasonably believes is armed with a dangerous weapon, to have the same probable cause that would be required for an arrest or for a search warrant. If the officer has "probable cause" to believe that a suspect is carrying a concealed weapon, he need not limit his search of the suspect to the frisk allowed under Terry. Under those circumstances, he could immediately arrest and completely search the suspect. It is evident that the Florida stop and frisk law does not require probable cause in the same sense that probable cause is required for a search warrant or for an arrest.[6]
Thus we hold that so long as an anonymous tip upon which a BOLO is based contains sufficient indicia of reliability, then a stop and a frisk based on the tip will be valid. We note, however, that the validity of a stop and frisk can only be decided in the concrete factual context of each individual case.[7]Sibron v. New York.
*826 Applying the standards of reasonableness for a valid stop and frisk to the present case, we hold that the police officers were justified in relying on the BOLO as a basis for their articulated reasonable suspicion that Webb was the robbery suspect about whom they had been alerted to be on the lookout for earlier the same day and as a basis for their reasonable belief that Webb was armed and dangerous. The trial court so found, and its rulings on the motion to suppress are clothed with a presumption of correctness and must be accepted if the record contains evidence to support them. McNamara v. State, 357 So. 2d 410 (Fla. 1978). The evidence at the suppression hearing and the inferences derived therefrom interpreted in a manner most favorable to sustain the trial court's findings support the trial court's ruling that the stop and frisk of Webb under the totality of the circumstances was reasonable, and the district court erred in reversing the trial court's order denying the motion to suppress.
The Fourth District believed this case to be controlled by its prior decision in St. John v. State because there was no testimony at the suppression hearing concerning the source of the information contained in the BOLO. This is contrary to our holding in Hetland. It also noted that the officers personally observed nothing suspicious in Webb's conduct at the time of the stop. We held in Hetland that an officer's personal observation of suspicious conduct is not a prerequisite to the officer's having a reasonable suspicion founded in articulable facts.
The apparently anonymous information in the BOLO upon which the officers acted in the present case bore sufficient indicia of reliability. The description of the robbery suspect, which the officers immediately wrote down, was specific, and the information was corroborated when the officers acted promptly and found Webb who matched the description in the same general vicinity where the two robberies had occurred on the two previous days. Based on this information bearing sufficient indicia of reliability to warrant a stop, they were justified in believing that he was armed. Facts were articulated at the suppression hearing upon which the officers founded their suspicion. Under the totality of the circumstances, we hold that the stopping and the frisking of Webb was valid and that the trial court correctly denied the motion to suppress.
To hold otherwise would place in jeopardy the lives of police officers who have made a valid stop and who have reason to believe that the suspect is armed. As Justice Harlan stated in his concurring opinion in Terry v. Ohio, "[t]here is no reason why an officer, rightfully but forcibly confronting a person suspected of a serious crime, should have to ask one question and take the risk that the answer might be a bullet." 392 U.S. at 33, 88 S.Ct. at 1886. Upon the information known to the officers, failure to have stopped Webb would "have been poor police work indeed," Terry v. Ohio, 392 U.S. at 23, 88 S.Ct. at 1881, and failure to frisk could have cost the officers their lives.
Accordingly, the decision of the district court is quashed, and the cause is remanded with directions to reinstate the trial court's order denying the motion to suppress and to affirm the judgment of the trial court.
It is so ordered.
SUNDBERG, C.J., and ADKINS, BOYD and OVERTON, JJ., concur.
ENGLAND, J., concurs with an opinion, with which SUNDBERG, C.J., concurs.
McDONALD, J., dissents.
ENGLAND, Justice, concurring.
Reasonable men could possibly differ as to whether the anonymous tip and surrounding *827 circumstances bore sufficient indicia of reliability to justify Webb's "stop" in this case. The specificity of the information given is important, as are the time and space relationships between the tip and the stop.[1]
Based on testimony at a suppression hearing, the trial judge thought the indicia were reliable and that, I submit, ought to end the matter in this case. The fact that appellate judges think otherwise[2] is irrelevant, for by no stretch of imagination can it be said the trial judge abused his discretion to evaluate the evidence and rule on the reliability of the tip. See McNamara v. State, 357 So. 2d 410, 412 (Fla. 1978).
SUNDBERG, C.J., concurs.
NOTES
[1] At the time the district court decided the present case, it did not have the benefit of our decision adopting the decision of the District Court of Appeal, Second district, in State v. Hetland, 366 So. 2d 831 (Fla. 2d DCA 1979).
[2] At the suppression hearing, there was no testimony concerning the source of the description of the robbery suspect. We assume, for purposes of disposition of this cause, that the tip was anonymous because the State did not prove otherwise.
[3] The fact that Webb, after his arrest, was not charged with the robberies in no way affects the validity of the stop and frisk that resulted in his arrest for carrying a concealed firearm.
[4] The Supreme Court explained that as a practical matter, the type of police conduct with which it was dealing in Terry "necessarily swift action predicated upon the on-the-spot observations of the officer on the beat" could not be subjected to the warrant requirement. Terry v. Ohio, 392 U.S. at 20, 88 S.Ct. at 1879.
[5] See. e.g. State v. Hendry, 309 So. 2d 61 (Fla. 2d DCA 1975), and St. John v. State, 363 So. 2d 862 (Fla. 4th DCA 1978).
[6] This is confirmed in the following historical note by the legislative reference bureau:
Senate Bill 125, Chapter 69-73, reiterates the circumstances under which a law enforcement officer may reasonably temporarily detain a person suspected of breaking the law, or about to break the law, as enunciated in the case of Terry v. State of Ohio, 392 U.S. 1, 88 S. Ct. 1868, 20 L. Ed. 2d 889, and is given the short title "Florida Stop and Frisk Law." While this statute does nothing more than set forth the circumstances under which a reasonable stopping, detaining and searching of a suspect may be carried out by a law enforcement officer, it will serve as a guideline to better inform lawmen how to successfully start a preliminary investigation into a crime that is being committed or is about to be committed. This act is effective October 1, 1969.
Florida Legislative Service Bureau, 1969 Digest of General Legislation (July 1969).
[7] Validating a frisk based on information obtained from an unknown informant, the United States Court of Appeals, First Circuit, in Ballou v. Massachusetts, 403 F.2d 982 (1st Cir.1968), cert. denied, 394 U.S. 909, 89 S. Ct. 1024, 22 L. Ed. 2d 222 (1969), acknowledged the problems that could arise with the use of anonymous tips as the basis for justifiable suspicion for a stop and frisk but countered:
[T]o the argument that tips may stem from informants motivated by spite or desire for revenge, we observe that even "reliable" or paid informers may be so motivated and that the critical question is the accuracy of the tip, to be assured both by its specificity and capability of being substantially corroborated by observation. Finally, of course, there is the possibility that an unscrupulous officer could manufacture a tip which would allow him to do what he otherwise could not do. But even in cases of tips from "reliable" informers, there is ordinarily no verification of the police testimony of reliability; there is always the necessity of relying to some extent on the good faith of law enforcement officials. This is true even where an officer testifies, as in Terry, to having observed unusual conduct on the street. In all such cases, of course, the testimony of the police is subject to cross-examination. Each case must, in the final analysis, be decided on its own facts.
403 F.2d at 986.
[1] State v. Hetland, 366 So. 2d 831, 839 (Fla.2d DCA 1979), approved, 387 So. 2d 963 (Fla. 1980).
[2] The district court thought the time of the stop "remote" from the prior robberies and the place of the stop "distant". Webb v. State, 384 So.2d at 211. Those conclusions are not supported by the record. No evidence was presented as to the range of the apprehending officers' "beat" in metropolitan Ft. Lauderdale. One of the two drugstores previously robbed was said to be about two miles from the place of Webb's stop. A conclusion by appellate judges that the stores were "distant" from the stop simply is not warranted. As regards the time being "remote", the arresting officer testified that the subject of the BOLO had committed one drugstore robbery the day before and one the day before that. The time was clearly not remote. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2372977/ | 833 S.W.2d 103 (1992)
Robert J. ROWNTREE, II, M.D., Petitioner,
v.
Penelope HUNSUCKER and John Hunsucker, Respondents.
No. D-1665.
Supreme Court of Texas.
May 27, 1992.
Leonard Davis, Douglas R. McSwane, Jr., Michael E. Starr, Potter, Guinn, Minton, Roberts & Davis, Tyler, for petitioner.
C.L. Mike Schmidt, Ronald D. Wren, Stradley, Schmidt & Wright, Dallas, for respondents.
OPINION
GONZALEZ, Justice.
This is an appeal in a medical malpractice case based on allegations of a failure to diagnose the injury-causing condition. The trial court granted a summary judgment for the doctor on limitations grounds. The court of appeals, with one justice dissenting, reversed and remanded, holding that "the summary judgment evidence raises a question whether (the doctor's) treatment of (the plaintiff) continued for as long as she was taking the medication which he prescribed during the time for which it was prescribed." 815 S.W.2d 779, 782 (Tex. App.-Texarkana 1991). We reverse the judgment of the court of appeals and affirm that of the trial court.
The summary judgment evidence shows that Penelope Hunsucker's family doctor referred her to Dr. Robert Rowntree, II, a specialist in internal medicine, because of hypertension. During her first visit on October 4, 1985, Dr. Rowntree performed an examination and prescribed the medication Sectral for the treatment of that condition.
Mrs. Hunsucker returned to Dr. Rowntree's office to have her blood pressure checked by nurses on October 11, 1985, *104 November 11, 1985, and January 3, 1986, but Dr. Rowntree did not see her on any of these occasions. During Mrs. Hunsucker's February 13, 1986 office visit, Dr. Rowntree examined her for an unrelated condition, prescribed a refill for Sectral, and referred her to a urologist.
She did not return until September 15, 1986, at which time she complained of stress due to recent deaths in her family and her mother's surgery. Dr. Rowntree performed a limited examination and continued the prescription for Sectral. This was the last time Dr. Rowntree saw or talked to her and future appointments were not scheduled.
Mrs. Hunsucker telephoned Dr. Rowntree's office on May 22, 1987, requesting a refill of Sectral. She did not express any complaints nor did she receive any medical advice at that time. She was given a prescription authorizing five refills. The exact prescription is not in the record, but each refill contained 30 capsules, and the testimony established that this was a six-month supply. This was the last contact between Dr. Rowntree or his office and the Hunsuckers prior to Mrs. Hunsucker's debilitating stroke on January 5, 1988 due to an occluded carotid artery.[1]
A pharmacy refilled Mrs. Hunsucker's Sectral prescription on May 22, July 10, September 7, October 29, and December 12, 1987. Mrs. Hunsucker was also treated by another physician in December of that year for a respiratory infection.
The Hunsuckers gave notice of claim to Dr. Rowntree on July 31, 1989, and filed suit on October 30, 1989. They alleged that, during Dr. Rowntree's treatment of Mrs. Hunsucker for high blood pressure, he negligently failed to diagnose, monitor, and otherwise properly treat the occluded artery. The Hunsuckers do not allege any injury from taking the medication Dr. Rowntree prescribed.
Based on this evidence and the pleadings of the parties, we must determine whether Dr. Rowntree, in moving for summary judgment based upon an affirmative defense, established as a matter of law that there were no questions of fact regarding the essential elements of that defense. Smiley v. Hughes, 488 S.W.2d 64, 67 (Tex. 1972). Under his defense, Dr. Rowntree is not entitled to summary judgment unless he conclusively established that the statute of limitations barred the lawsuit. Delgado v. Burns, 656 S.W.2d 428, 429 (Tex. 1983). For limitations purposes, the controlling issue becomes whether Mrs. Hunsucker's taking medication on a prescription that Dr. Rowntree agreed to refill constitutes "a course of treatment," absent any other concomitant medical care, e.g., office visits or related diagnostic services. This is a question of law rather than fact.
The applicable statute of limitations is found in Tex.Rev.Civ.Stat.Ann. art. 4590i, § 10.01. It provides that:
Notwithstanding any other law, no health care liability claim may be commenced unless the action is filed within two years from the occurrence of the breach or tort or from the date the medical or health care treatment that is the subject of the claim or the hospitalization for which the claim is made is completed....
Thus the statute will begin to run from one of three possible dates: (1) the occurrence of the breach or tort; (2) the date the health care treatment that is the subject of the claim is completed; or (3) the date the hospitalization for which the claim is made is completed. Kimball v. Brothers, 741 S.W.2d 370, 372 (Tex.1987).
In order for the suit to be timely, an event giving rise to liability must have occurred after August 15, 1987.[2] Dr. Rown *105 tree argues that the first option in Kimball controls, and that the statute should run from the date of the last examination. The Hunsuckers contend that the statute should begin to run from the date "treatment" ended, which they claim occurred within the statutory period. While we agree with Dr. Rowntree that, in this case, the statute began to run from the date of the alleged wrongful act, we reject his assertion that the last examination of a patient is necessarily the triggering event for the statute of limitations in a medical malpractice suit.
In Kimball, we held that if the precise date of the specific breach or tort is ascertainable from the facts of the case, then the statute begins to run from that date. Id. We said that the provision that the statute runs from the date of the last treatment:
contemplates a situation wherein the patient's injury occurs during a course of treatment for a particular condition and the only readily ascertainable date is the last day of treatment. Such a situation often arises in suits alleging misdiagnosis or mistreatment.
Id. (emphasis added).
In many cases, the applicability of this provision will be clear. There are some situations in which the statute would run from the date of the last drug treatment, if the course of that treatment is the direct cause of the injury. That is not the situation here. The Hunsuckers do not claim that the drug prescribed by Dr. Rowntree caused harm.
Likewise, when the complaint is that the defendant instituted an improper course of treatment based upon a misdiagnosis, the last date of such mistreatment is the date the statute begins to run. Kimball v. Brothers, 741 S.W.2d at 372. The Hunsuckers concede, however, that Mrs. Hunsucker did indeed suffer from high blood pressure, and that the Sectral was appropriately prescribed.
Dr. Rowntree argues that this "course of treatment" was for one condition, hypertension, while the "subject of the claim" is a different condition, an occluded artery. Thus Dr. Rowntree contends that the Hunsuckers do not allege misdiagnosis followed by improper treatment, but a failure to diagnose a different condition.
In Texas, the existence of a general physician-patient relationship does not axiomatically constitute a course of treatment. For example, in Atha v. Polsky, 667 S.W.2d 307 (Tex.App.-Austin 1984, writ ref'd n.r.e.), the plaintiff sued for mistreatment of a skin ailment. The treatment which caused the injury was the use of a drug in connection with ultraviolet light, which the defendant doctor had administered more than two years before the suit was filed. The patient visited the doctor again within two years of suit, but for treatment totally unrelated to the injury. The court held that this latter treatment could not prevent application of the statute of limitations because it was unrelated to the suit's substantive claim. The court concluded that the mere existence of a physician-patient relationship does not, on its own accord, constitute a "course of treatment." Id. at 309; accord Fleishman v. Richardson-Merrell, Inc., 226 A.2d 843, 845 (N.J.Super.Ct.App.Div.1967); Borgia v. City of New York, 12 N.Y.2d 151, 237 N.Y.S.2d 319, 321-23, 187 N.E.2d 777, 779 (1962); Grubbs v. Rawls, 235 Va. 607, 369 S.E.2d 683, 686 (1988).
The operative statute clearly states that the date of last treatment is relevant only if a course of treatment has been established for the condition that is the subject of the claim. New York's highest court said of its own similar statute of limitations: "While the failure to treat a condition may well be negligent, we cannot accept the self-contradictory proposition that *106 the failure to establish a course of treatment is a course of treatment." Nykorchuck v. Henriques, 78 N.Y.2d 255, 573 N.Y.S.2d 434, 437, 577 N.E.2d 1026, 1029 (1991). In that case, the patient sued a doctor for failure to diagnose and monitor breast cancer. The patient was treated continuously for infertility due to endometriosis during a period within the statutory limits. The court concluded that the treatment for endometriosis did not extend the time for bringing suit for failure to diagnose the breast cancer. The court held that:
[E]ssential to the application of the doctrine is that there has been a course of treatment established with respect to the condition that gives rise to the lawsuit. We have held that neither the mere "continuing relation between physician and patient" nor "the continuing nature of a diagnosis" is sufficient to satisfy the requirements of the doctrine.
Id. 573 N.Y.S.2d at 436, 577 N.E.2d at 1028 (citations omitted). Because there was no connection claimed between the course of treatment for endometriosis and the breast cancer, the court held that the claim was time-barred as a matter of law. Id. 573 N.Y.S.2d at 437, 577 N.E.2d at 1029.
The subject of the Hunsuckers' claim is the alleged failure of Dr. Rowntree to diagnose, treat, and monitor Penelope Hunsucker's occluded arteries. If the blockage of the arteries is a condition discrete from high blood pressure, then ongoing treatment for high blood pressure is not treatment for the condition that is the basis of the Hunsuckers' claim.
Nevertheless, this issue cannot be resolved by summary judgment on the present record. It was Dr. Rowntree's burden as summary judgment movant to establish when the cause of action accrued. Burns v. Thomas, 786 S.W.2d 266, 267 (Tex.1990). There is no summary judgment evidence, for example, that within a reasonable medical probability, the condition of occluded arteries was not a cause of the high blood pressure. We must indulge all reasonable inferences and resolve any doubts in favor of the non-movant. Acker v. Texas Water Comm'n, 790 S.W.2d 299, 302 (Tex.1990). For summary judgment purposes we cannot say that, as a matter of law, the condition of occluded arteries and high blood pressure are two unrelated conditions.
Alternatively, Dr. Rowntree argues that a course of continuing treatment cannot be based on the fact that the patient continued to take the medication. He contends that we must establish a rule that the statute must run from the date of last contact with the physician, because the statute would never run in many situations such as when a prescription for medication is to be taken as needed, or a recommendation of a particular exercise or regimen. The Hunsuckers claim that treatment continued as long as she was taking the medication, or at least when she obtained the last prescription from the pharmacist in December 1987.
The answer to questions of whether the patient is receiving a course of treatment, and when the course of treatment ends will depend upon the specific facts of the case. Courts have considered such factors as whether a physician-patient relationship is established with respect to the condition that is the subject of the litigation, whether the physician continues to examine or attend the patient, and whether the condition requires further services from the physician. See, e.g., Wheeler v. Schmid Laboratories, Inc., 451 N.W.2d 133, 138 (N.D. 1990); Couillard v. Charles T. Miller Hosp., Inc., 92 N.W.2d 96, 103 (Minn.1958); see generally 2 Miles Jaremski & Louis Goldstein, Medical & Hospital Negligence, § 31:05 (1990).
The Hunsuckers cite a number of cases that stand for the proposition that drug treatment is medical treatment. See, e.g., Scarborough v. Aetna Life Ins. Co., 572 S.W.2d 282, 284 (Tex.1978); accord Thomas v. Jacksonville Electric Auth., 536 So. 2d 310, 311-12 (Fla.App.1988); Freeman v. Mid-South Ins. Co., 197 Ga.App. 445, 398 S.E.2d 727, 728 (1990). While we do not question this truism, we do question whether self-administration of a drug in and of itself is a course of treatment that *107 tolls the statute. Courts that have considered the question have generally rejected a per se rule that a course of treatment continues as long as the patient continues taking a drug prescribed by the defendant. In Fleishman v. Rickardson-Merrell, Inc., 94 NJ.Super. 90, 226 A.2d 843 (App.Div. 1967), the complaint was that a drug prescribed for the treatment of high cholesterol levels caused cataracts. The prescription authorized two refills and the patient saw the doctor only one additional time, which was the week after the doctor prescribed the medication. The patient continued to take the drug for the next year and a half. The court held that any duty to monitor the patient's condition was "owed only to one who actually remains under the physician's treatment and who follows the course of treatment prescribed." Id. 226 A.2d at 845. The court concluded that the defendant's treatment of the patient ceased shortly after the last office visit, and that the defendant owed a duty only while the patient was consulting the physician and taking the medication pursuant to the prescription. Id.
In Parrott v. Rand, 126 A.D.2d 621, 511 N.Y.S.2d 57 (1987), suit was filed on June 27, 1983, for misdiagnosis of basal cell carcinoma "on June 27,1979." The court said, "where as here, the patient is relying solely upon his continued use of a medication long after the last contact with the physician who prescribed it, we find the continuous treatment doctrine to be inapplicable." Id. 511 N.Y.S.2d at 58.
In Bernardo v. Ayerest Laboratories, 99 A.D.2d 430, 470 N.Y.S.2d 395 (1984), the suit was for injury caused by the drug Premarin. The drug was prescribed in 1969, and the patient saw the doctor for an unrelated matter the next year. The patient took the drug for the next six years, obtaining refills at a pharmacy without the participation of the defendant. The court said, "the record here shows clearly that plaintiff treated herself for a number of years. Her contentions amount to a claim that the dispensing of a prescription continues a physician's services and course of treatment in perpetuity without further consultation and with no other evidence than her own self-serving statement that she continued to fill the same prescription for a period well beyond the statutory period of limitation." Id. 470 N.Y.S.2d at 396.
In Bikowicz v. Nedco Pharmacy, Inc., 114 A.D.2d 708, 494 N.Y.S.2d 541 (1985) suit was filed in 1981, complaining that the defendant doctor prescribed an addicting drug in 1973. The defendant had no contact with the plaintiff after the initial visit, but the plaintiff continued to obtain refills from a pharmacist. There was evidence that the pharmacist consulted with the defendant over the telephone as late as 1977. The court said that the alleged malpractice occurred in 1973, and treatment ended either at the end of direct consultations or when the pharmacist last consulted the defendant in 1977. The court held that "the continuous treatment doctrine has no application where, as here, the patient undertakes self-treatment by continuing use of a drug prescribed many years before, long after she has discontinued treatment by the prescribing doctor." Id. 494 N.Y.S.2d at 542.
Common to all of these cases is a recognition that a plaintiff who takes medication significantly beyond the period contemplated by the physician's prescription, without further attentions from the physician, is not being treated by that physician, but is engaging in self-treatment. The cases stand for the proposition that a physician may establish a course of treatment by enlisting the aid of the patient to selfadminister a medication, but only if the physician controls the treatment and continues to render medical services.
The court of appeals' holding that limitations is extended by a patient's taking of medication is an unworkable rule. It replaces the fixed period set by the Legislature with a period that is determined by the patient. A rule that extended limitations until all authorized prescription refills had been obtained is equally unworkable. It would encourage physicians not to authorize refills and to insist upon an office visit for each prescription, increasing the cost of medical care.
*108 In the case before us, after the initial consultation, there were no regular examinations or other services, and no return appointment scheduled. A single instance of prescription renewal does not demonstrate sufficient involvement by the physician to constitute a continuing course of treatment.
In sum, the Hunsuckers do not allege that a course of treatment was the direct cause of Mrs. Hunsucker's injury. They do not claim that an improper course of treatment was instituted on a misdiagnosis. The Hunsuckers do not otherwise allege a course of treatment for the condition made the basis of their claim so that the statute could run from the last date of such treatment under Kimball. Rather, the Hunsuckers claim that Dr. Rowntree breached a duty to perform the proper examinations from which he should have detected the occluded arteries. Dr. Rowntree could have breached this duty only on those occasions when he had opportunity to perform such examinations. Thus, in this case, the statute of limitations began to run on the date of the alleged wrongful act. This act, ascertainable from the facts of the case, was the last visit that Mrs. Hunsucker paid to Dr. Rowntree's office. Kimball, 741 S.W.2d at 372. We hold that, as a matter of law, limitations bars the claims of the Hunsuckers, and the trial court correctly rendered summary judgment for Dr. Rowntree.
The judgment of the court of appeals is reversed, and the judgment of the trial court is affirmed.
NOTES
[1] Both Mr. and Mrs. Hunsucker recall a second telephone call for renewal of the prescription in August or September 1987. This conflict in evidence, however, is not determinative of the issues in this case.
[2] The critical date for limitations purposes is August 15, 1987. The Hunsuckers gave notice of the claim on July 31, 1989, and filed suit on October 30, 1989, a span of 91 days. Under the provisions of article 4590i, § 4.01(c) of the Texas Revised Civil Statutes, proper notice "... shall toll the applicable statute of limitations to and including a period of 75 days following the giving of the notice...." (emphasis added). TexRev Civ Stat art. 4590i, § 4.01 (1992). As is a tolling provision, notice stops the running of the statute for 75 days, at the end of which the statute resumes running. Phillips v. Sharpstown Gen. Hosp., 664 S.W.2d 162, 165-66 (Tex.App.-Houston [1st Dist.] 1983, no writ).
Thus, the Hunsuckers' suit is not timely unless they gave notice at least 16 days before the end of statutory two-year period (91 days 75 days 16 days). Thus, there can be no liability for events occurring prior to August 16, 1987. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2597289/ | 902 F. Supp. 730 (1995)
AMOCO CHEMICAL COMPANY and Amoco Corporation
v.
TEX TIN CORPORATION, Associated Metals and Minerals Corporation, Asoma Corporation, Steel Holdings Corporation, Macsteel, Macsteel, Inc., The Estate of Franz A. Lissauer, Diana Fraid Lissauer, Emil Lissauer, Gordon Lissauer, Sharon Drakides, Hannah Hirschfeld, Peter Eliel, Unknown Lissauer Family Members, Colin H. Benjamin, Steve E. Eliel, Donald P. Wefer, and Salvatore Purpura.
Civ. A. No. G-95-405.
United States District Court, S.D. Texas, Galveston Division.
October 24, 1995.
*731 Katherine McIlroy Shoebotham, Weiss & Associates, Theodore F. Weiss, Jr., Attorney at Law, Houston, TX, for Amoco Chemical Company, Amoco Corporation.
Ross Citti, Jackson & Walker, Houston, TX, for Tex Tin Corporation, Associated Metals and Minerals Corporation, Asoma Corporation, Steel Holdings Corporation, Macsteel, Macsteel, Inc., Estate of Franz A. Lissauer, Diana Fraid Lissauer, Emil Lissauer, Gordon Lissauer, Sharon Drakides, Hannah Hirschfeld, Peter Eliel, Unknown Lissauer Family Members, Colin H. Benjamin, Steve E. Eliel, Donald P. Wefer, Salvatore Purpura.
ORDER DENYING MOTION TO REMAND
KENT, District Judge.
Plaintiffs, Amoco Chemical Co. ("Amoco") and Amoco Corp., commenced this action in the 56th Judicial District Court of Galveston County, Texas. The gravamen of Plaintiffs' Complaint is the alleged breach of a private contract which obligated Defendant Tex Tin Corp. ("Tex Tin") to reimburse Amoco for expenses incurred under an Administrative Order on Consent involving the United States Environmental Protection Agency ("EPA"). Pursuant to 28 U.S.C.A. § 1446 (West 1994 & Supp 1995), Defendants removed this case to the United States District Court for the Southern District of Texas, Galveston Division, on the basis that the breach of contract cause of action is one "arising under" federal law within the meaning *732 of 28 U.S.C.A. § 1331 (West 1993). Now before the Court is Plaintiffs' Motion to Remand for lack of subject matter jurisdiction pursuant to 28 U.S.C.A. § 1447(c) (West 1994) and Plaintiffs' Motion for Costs and Attorneys Fees for improper removal under that section.[1] These Motions are DENIED.
I. Background
For purposes of Plaintiffs' Motion to Remand, the Court accepts as true all relevant allegations contained in the Complaint. Willy v. Coastal Corp., 855 F.2d 1160 (5th Cir. 1988); see also Kidd v. Southwest Airlines, Co., 891 F.2d 540, 542 (5th Cir.1990) ("In cases that have been removed to federal court, the plaintiff's complaint rather than the removal petition must establish federal jurisdiction."). Those allegations are as follows:
Amoco and Tex Tin own adjacent lots of real property in Texas City, Texas, which are hereinafter referred to collectively as "the Texas City Site" or "the Site." The EPA, acting on referrals from the Texas Department of Water Resources and the Texas Control Board, concluded that the Texas City Site released or threatened release of hazardous substances, pollutants, or contaminants. This finding prompted the EPA to propose inclusion of the Texas City Site on the National Priorities List ("NPL"), which lists those sites deemed federal priorities for long-term remedial evaluation and response.
Thereafter, at the EPA's initiative, Amoco, Tex Tin, and the EPA entered into an Administrative Order on Consent ("AOC") to settle the EPA's claims against Amoco and Tex Tin under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.A. §§ 9601-75 (West 1995). The AOC directs Amoco and Tex Tin to conduct a remedial investigation/feasibility study ("RI/FS") of the Texas City Site during such time as the Site is listed on the NPL. The AOC specifically includes a court order among those events capable of terminating Amoco and Tex Tin's RI/FS obligations:
[Amoco and Tex Tin's] obligations to EPA under this Agreement shall terminate and be deemed satisfied upon the earliest of the following events:
. . . . .
C. Any decision by an authorized court reversing or enjoining the listing of the site on the NPL.
The AOC makes Amoco and Tex Tin jointly and severally liable for all expenses incurred in connection with the RI/FS.
To provide for joint administration of the RI/FS and to allocate the cost of performing their AOC obligations, Amoco and Tex Tin, along with one guarantor for each, entered into a separate, private contract ("Funding Agreement"). The Funding Agreement requires the parties to hire a consultant to perform the RI/FS. While obligations are owing under the AOC, Amoco must pay ten percent and Tex Tin ninety percent of all amounts due to the hired consultant and the EPA. Once AOC obligations cease, the Funding Agreement directs reallocation of expended funds according to the relative RI/FS cost attributable to the parties' respective lots of property.
Five months after the AOC and the Funding Agreement were executed, the Texas City Site was listed on the NPL. Tex Tin then challenged this listing by filing a petition for review in the United States Court of *733 Appeals for the District of Columbia Circuit. While Tex Tin's action was pending, Amoco and Tex Tin uneventfully abided by the terms of the Funding Agreement. But, once the Court rendered its decision in Tex Tin Corp. v. U.S. Envtl. Protection Agency ("Tex Tin I"), 935 F.2d 1321 (D.C.Cir.1991), Tex Tin notified the EPA and Amoco that the parties' obligations under the AOC had been terminated. Despite the EPA's threat to penalize Tex Tin for discontinuation of the RI/FS, Tex Tin refused to proceed as before. Amoco, aware that the EPA disagreed with Tex Tin's view of Tex Tin I, maintained the RI/FS without Tex Tin's continued financial contributions. Only after Amoco expended an additional $ 8.1 million conducting the RI/FS was the Texas City Site unequivocally removed from the NPL in Tex Tin Corp. v. U.S. Envtl. Protection Agency ("Tex Tin II"), 992 F.2d 353 (D.C.Cir.1993).
Amoco has made repeated requests for money allegedly owed by Tex Tin under the Funding Agreement for the $ 8.1 million in expenditures. Acting consistently with its previously stated position, Tex Tin has refused to fund any of Amoco's post-Tex Tin I efforts. Amoco now seeks damages, declaratory relief, and attorneys fees for breach of contract, fraud, and related wrongs.
II. Analysis
An independent jurisdictional basis must exist for each claim adjudicated by this Court. See United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S. Ct. 1130, 1138, 16 L. Ed. 2d 218 (1966) (discussing instances in which the Constitution permits District Courts to adjudicate pendent state law claims). As the defendant, Tex Tin bears the burden of proving subject matter jurisdiction. Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97, 42 S. Ct. 35, 37, 66 L. Ed. 144 (1921) (stating that the defendant bears the burden of establishing subject matter jurisdiction for removed actions); Willy, 855 F.2d at 1164 (same). Tex Tin contends that section 1331 confers subject matter jurisdiction over Amoco's breach of contract claim and implicitly relies upon section 1367 for all remaining claims. The Court's analysis proceeds accordingly. See Willy, 855 F.2d at 1164 (focusing exclusively on § 1331 as a basis for subject matter jurisdiction where the defendant did not claim diversity of citizenship was present).
Section 1331 provides: "The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C.A. § 1331; see also 28 U.S.C.A. § 1447(b) (West 1994) (providing the Court with jurisdiction over all removed cases falling within section 1331's grant of original jurisdiction). Despite its strong resemblance to section 2 of Article III, Section 1331 is narrower in scope. E.g., Verlinden B.V. v. Central Bank of Nig., 461 U.S. 480, 495, 103 S. Ct. 1962, 1972, 76 L. Ed. 2d 81 (1983) ("Article III `arising under' jurisdiction is broader than federal-question jurisdiction under § 1331...."); see also U.S. Const. art III., § 2 ("The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority...."). A simple but precise statement of the statute's meaning has not yet been devised: "[N]o one formulation of [section 1331] captures all of the nuances involved in determining which cases fall within the federal court's original jurisdiction." Kidd, 891 F.2d at 542. The United States Supreme Court has specifically declined to recognize an "automatic test" for federal question jurisdiction. Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U.S. 804, 814, 106 S. Ct. 3229, 3235, 92 L. Ed. 2d 650 (1986); see also Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for S. Cal, 463 U.S. 1, 8, 103 S. Ct. 2841, 2845, 77 L. Ed. 2d 420 (1983). Instead, the Court has consistently emphasized "the need for careful judgments about the exercise of federal judicial power in an area of uncertain jurisdiction." Merrell Dow, 478 U.S. at 814, 106 S. Ct. at 3235; see also id. at 808, 106 S. Ct. at 3232 at ("There is no `single, precise definition' of [federal question jurisdiction]; rather, `the phrase `arising under' masks a welter of issues....'" (quoting Franchise Tax Bd., 463 U.S. at 8, 103 S. Ct. at 2846)); Franchise Tax Bd., 463 U.S. at 8, 103 S. Ct. at 2846 ("Since the first version of § 1331 was enacted ... [it] has resisted all attempts to frame a single, precise definition for determining *734 which cases fall within, and which cases fall outside, the original jurisdiction of the district courts."); Gully v. First Nat'l Bank, 299 U.S. 109, 117, 57 S. Ct. 96, 100, 81 L. Ed. 70 (1936) (stressing the importance of common sense to making jurisdictional determinations).
As a starting point, the jurisdictional analysis centers on the plaintiff's well-pleaded complaint. E.g., Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S. Ct. 1542, 1547, 95 L. Ed. 2d 55 (1987); Kidd, 891 F.2d at 542. "Congress has given the lower federal courts jurisdiction to hear, originally or by removal from a state court, only those cases in which a well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law." Franchise Tax Bd., 463 U.S. at 27, 103 S. Ct. at 2856. In other words, a well-pleaded complaint must reveal a federal question. Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S. Ct. 2425, 2429, 96 L. Ed. 2d 318 (1987); Sarmiento v. Texas Bd. of Veterinary Medical Examiners, 939 F.2d 1242, 1245 (5th Cir.1991). This rubric, coined "the well-pleaded complaint rule," e.g., Franchise Tax Bd., 463 U.S. at 9, 103 S. Ct. at 2842, forbids a plaintiff from obtaining federal jurisdiction simply by anticipating a federal question as part of a defense or by phrasing a state law claim in federal law terms. E.g., Louisville & Nashville R.R. v. Mottley, 211 U.S. 149, 152, 29 S. Ct. 42, 43, 53 L. Ed. 126 (1908) (holding that a federal question must appear in "the plaintiff's statement of his own cause of action" rather than "some anticipated defense to his cause of action"); Kidd, 891 F.2d at 544 (5th Cir.1990) ("The Court will not permit [a party] to transform a state-law action into a federal claim merely by rephrasing the claim in terms of federal law."). Nor may a plaintiff defeat federal jurisdiction by omitting a federal question from the complaint, for example by couching in state law terms what is in substance a federal claim. See Metropolitan Life Ins., 481 U.S. at 63-64, 107 S. Ct. at 1546; Aquafaith Shipping Ltd. v. Jarillas, 963 F.2d 806, 808 (5th Cir.) ("The court may find that the plaintiff's claims arise under federal law, even though the plaintiff has not characterized them as federal claims."), cert. denied, ___ U.S. ___, 113 S. Ct. 413, 121 L. Ed. 2d 337 (1992). As "master of the complaint," though, the plaintiff may choose to pursue state causes of action exclusively despite the availability of federal causes of action. Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S. Ct. 2425, 2429, 96 L. Ed. 2d 318 (1987) ("The ... plaintiff ... may avoid federal jurisdiction by exclusive reliance on state law."); see also Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25, 33 S. Ct. 410, 411, 57 L. Ed. 716 (1913) ("[T]he party who brings a suit is master to decide what law he will rely upon, and therefore does determine whether he will bring a `suit arising under' [a] law of the United States by his declaration or bill.").
Looking to the well-pleaded complaint, the Court must consider the importance of federal law to the litigation. Maroney v. University Interscholastic League, 764 F.2d 403, 405 (5th Cir.1985) ("The [jurisdictional] test [looks] to the legal substance of the plaintiff's claim, not to the value of the interests implicated."). If federal law creates the cause of action, then federal question jurisdiction is present. American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260, 36 S. Ct. 585, 586, 60 L. Ed. 987 (1916) ("A suit arises under the law that creates the cause of action."); see also Franchise Tax Bd., 463 U.S. at 9, 103 S. Ct. at 2846 ("[I]t is well settled that Justice Holmes' test [stated in American Well Works] is more useful for describing the vast majority of cases that come within the district courts' original jurisdiction than it is for describing which cases are beyond district court jurisdiction"). In addition, causes of action created by state law "often" give rise to federal jurisdiction, because federal question jurisdiction exists over claims created by state law which "necessarily turn[] on some construction of federal law." Franchise Tax Bd., 463 U.S. at 9, 103 S. Ct. at 2846 (citing as examples Smith v. Kansas City Title & Trust Co., 255 U.S. 180, 41 S. Ct. 243, 65 L. Ed. 577 (1921), and Hopkins v. Walker, 244 U.S. 486, 37 S. Ct. 711, 61 L. Ed. 1270 (1917)). "Even though state law creates [the plaintiff's] causes of action, its case might still *735 `arise under' the laws of the United States if a well-pleaded complaint establishe[s] that its right to relief under state law requires resolution of a substantial question of federal law in dispute between the parties." Franchise Tax Bd., 463 U.S. at 13, 103 S. Ct. at 2848 (1983). A plaintiff's right to relief presents a substantial question of federal law if it is "such that it will be supported if the Constitution or laws of the United States are given one construction or effect, and defeated if they receive another." Gully, 299 U.S. at 112, 57 S. Ct. at 97.
Plaintiffs' right to relief for breach of contract is created by state law. Plaintiffs must prove the following allegations to recover on their breach of contract claim: (1) the existence of a contract; (2) the creation of duties under the contract; (3) a breach of a duty by the defendant; and (4) damages sustained by the plaintiff as a result of the breach. Snyder v. Eanes Indep. Sch. Dist., 860 S.W.2d 692, 695 (Tex.App. Austin 1993, writ denied); Corpus Christi v. Bayfront Assocs. Ltd., 814 S.W.2d 98, 103 (Tex.App. Corpus Christi 1991, writ denied). As revealed in the Complaint, the Funding Agreement serves as the sole basis for Plaintiffs' breach of contract claim. Since the Funding Agreement allocates only those expenses incurred under the AOC, the AOC must be interpreted to determine whether any duties actually arose under the Funding Agreement. In other words, Plaintiffs cannot show a duty of reimbursement arose under the Funding Agreement without proving that Amoco's expenditures were made pursuant to the AOC. Interpretation of the AOC, like interpretation of all contracts between federal government agencies and private parties, is governed by federal law. Priebe & Sons v. United States, 332 U.S. 407, 414, 68 S. Ct. 123, 127, 92 L. Ed. 32 (1947) (Black, J., dissenting) ("[T]he decisions of this Court ... hav[e] established that the construction and validity of all government contracts are governed by federal law. . . .") (emphasis in original) (citing National Metropolitan Bank v. United States, 323 U.S. 454, 65 S. Ct. 354, 89 L. Ed. 383 (1945), United States v. Allegheny County, 322 U.S. 174, 64 S. Ct. 908, 88 L. Ed. 1209 (1944), and Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S. Ct. 573, 87 L. Ed. 838 (1943)); Falls Riverway Realty, Inc. v. City of Niagara Falls, 754 F.2d 49, 55 n. 4 (2d Cir.1985) (noting that federal common law governs the interpretation of government contracts) (citing Priebe & Sons, 332 U.S. at 414, 68 S. Ct. at 127). Reliance on federal law, therefore, is essential to the success of Plaintiffs' breach of contract claim, irrespective of any defenses raised. Accordingly, this Court has subject matter jurisdiction over this claim under section 1331. See Katz v. Cisneros, 16 F.3d 1204, 1207 (Fed. Cir.1994) ("Even where a case is contractual, however, the presence of issues which require the interpretation of federal law and regulation necessarily give rise to federal questions [sufficient to invoke § 1331]"); A & S Council Oil Co. v. Saiki, 799 F. Supp. 1221, 1230 (D.D.C.1992) ("[W]hile plaintiffs' causes of action are not based specifically on their contracts with the government, they do arise from contracts to which the government is a party. Subject matter jurisdiction, then, exists under 28 U.S.C. § 1331 ... [because] contracts with the federal government are governed by federal common law.") (footnote and citations omitted), rev'd sub nom. on other grounds A & S Council Oil Co., Inc. v. Lader, 56 F.3d 234 (1995) (reversing because the plaintiffs failed to exhaust administrative remedies).
The Court notes that its finding of federal question jurisdiction in this case is consistent with opinions rendered in analytically similar situations by the United States Supreme Court and the United States Court of Appeals for the Fifth Circuit. In Gully v. First Nat'l Bank, 299 U.S. 109, 57 S. Ct. 96, 81 L. Ed. 70 (1936), a state tax collector sued in state court to enforce a contract between two national banking entities under which one assumed the tax liabilities of the other. Id. at 111-12, 57 S. Ct. at 97. The bank removed to federal court, asserting that federal question jurisdiction existed because no tax liability was owing under the contract in the absence of a federal statute creating the power to tax national banks. Id. at 112, 57 S. Ct. at 97. The Supreme Court rejected this rationale, finding that "[t]here is no necessary connection between the enforcement of such a contract according to its terms and *736 the existence of a controversy arising under federal law." Id. at 114, 57 S. Ct. at 98. Acknowledging that the federal statute was a prerequisite to the tax collector's suit on the contract, the Supreme Court warned in an oft quoted passage:
What is needed is something of that commonsense accommodation of judgment to kaleidoscopic situations.... One could carry the search for causes backward, almost without end.... To set bounds to the pursuit, the courts have formulated the distinction between controversies that are basic and those that are collateral, between disputes that are necessary and those that are merely possible.
Id. at 115-18, 57 S. Ct. at 98-100 (holding that "[t]he most one can say is that a question of federal law is lurking in the background, just as farther in the background there lurks a question of constitutional law, the question of state power in our federal form of government."). Unlike the contract discussed in Gully, though, the Funding Agreement is not "valid and enforceable without reference to a federal law." Id. at 114, 57 S. Ct. at 98. To the contrary, Plaintiff cannot establish a prima facie case for breach of the Funding Agreement without referring to the AOC, the interpretation of which is governed by federal law. See supra. Furthermore, interpretation of the AOC lies at the heart of the controversy between Plaintiffs and Defendants, making the federal issue "basic" as opposed to "collateral" as the terms are used in Gully. Gully, therefore, supports this Court's finding of federal question jurisdiction in the instant case.
In Oliver v. Trunkline Gas Co., 789 F.2d 341 (5th Cir.1986), the United States Court of Appeals for the Fifth Circuit, concluding that subject matter jurisdiction was lacking, dismissed a breach of contract action in which the defendant allegedly failed to pay the maximum rate allowed by federal law for natural gas purchased from the plaintiff. Id. at 343. In an opinion denying the plaintiffs' petition for rehearing, the Court stated that "a private contract can [not] give rise to federal-question jurisdiction simply by `incorporating' some federal regulatory standard that would not have been binding on the parties by its own force." Oliver v. Trunkline Gas Co., 796 F.2d 86, 89-90 (5th Cir. 1986) (emphasis omitted). This statement in Oliver, however, does not control the outcome of the instant case. The Funding Agreement does not merely refer to a federal standard as a quantitative measure of funds owing to one party; the Funding Agreement was devised for the very purpose of allocating obligations existing independently under the AOC, which must be interpreted according to federal law principles. This distinction regarding substantiality of the federal claim to the litigation takes the instant case out of Oliver's ambit, because the Oliver situation concerns the adequacy of performance whereas the present case involves the issue of whether a duty to perform arose in the first instance. Cf. Superior Oil Co. v. Pioneer Corp., 706 F.2d 603, 607 (5th Cir.1983) (holding that the well-pleaded complaint rule barred the district court from exercising federal question jurisdiction over the plaintiff's breach of contract action because "the [federally imposed] price ceilings do not give the gas producer a federal right to receive a particular price for its gas" (emphasis omitted)), cert. denied, 464 U.S. 1041, 104 S. Ct. 706, 79 L. Ed. 2d 171 (1984). The above-quoted statement of Oliver's holding also distinguishes Oliver from the instant case not only does this case not involve a federal regulatory standard, but the AOC creates obligations governed by federal law which would be binding on the parties without the Funding Agreement, namely joint and several liability for failing to conduct the RI/FS. Oliver, therefore, does not preclude this Court from exercising jurisdiction over the case at bar.
The United States Court of Appeals for the Fifth Circuit also decided Epps v. Bexar-Medina-Atascosa Counties Water Improvement Dist. No. 1, 665 F.2d 594, 595 (5th Cir.1982), another case meriting individual discussion. In Epps, the Court held that subject matter jurisdiction was lacking over a suit involving the enforcement of contractual rights recognized in a federal judicial opinion. Id. at 594-95; see also Illinois v. City of Milwaukee, 406 U.S. 91, 99, 92 S. Ct. 1385, 1390, 31 L. Ed. 2d 712 (1972) (holding that, as used in section 1331, the term "law" includes *737 "court decisions"). The Court opined: "[t]he mere fact that a suit involves the construction and effect of an earlier order or judgment of a federal court does not automatically clothe the dispute in a federal question jurisdiction garment." Id. at 595 (emphasis added). Although the case at bar will likely involve assessing the impact of Tex Tin I on the parties' AOC obligations, this Court may nonetheless exercise jurisdiction without doing violence to Epps. Most importantly, the need to interpret the AOC, not the need to interpret Tex Tin I, serves as the basis for federal question jurisdiction in the present case. See discussion supra. In addition, Tex Tin I, unlike the federal order discussed in Epps, does not "merely appl[y] Texas law" or "specifically recognize[ ] that subsequent regulation and administration of the rights of the parties ... be subject to the Texas authorities." To the contrary, Tex Tin I involves judicial scrutiny of a federal agency's actions and orders a remand of the case. See Tex Tin I, 935 F.2d 1321 (D.C.Cir.1991). This Court may therefore exercise jurisdiction over Plaintiffs' breach of contract claim consistently with Epps.
III. Conclusion
For the reasons stated above, the Court concludes that section 1331 provides this Court with subject matter jurisdiction over Plaintiffs' breach of contract claim. The Court has supplemental jurisdiction over Plaintiffs' remaining state law claims, all of which stem from a common nucleus of operative fact.[2] 28 U.S.C.A. § 1367 (West 1993); see also Gibbs 383 U.S. at 725, 86 S. Ct. at 1138 (holding that the exercise of pendent jurisdiction is constitutional if the federal claim is sufficiently substantive to confer jurisdiction, the state and federal claims derive from "a common nucleus of operative fact," and all of the plaintiff's claims would ordinarily be expected to be tried in one judicial proceeding). Plaintiffs' Motion to Remand pursuant to section 1447(c) is accordingly DENIED. Consequently, Plaintiff's Motion for Costs and Attorneys Fees under that section is also DENIED.
IT IS SO ORDERED.
NOTES
[1] The Court considers Plaintiffs' Motion to Remand before considering other Motions which do not go to the question of subject matter jurisdiction. Cf. Walker v. Savell, 335 F.2d 536, 537 (5th Cir.1964) (holding that a motion to dismiss for lack of personal jurisdiction may be decided prior to a motion to remand which is not based on lack of subject matter jurisdiction) (emphasis added). Other pending motions include: Defendant Stefan Eliel's Motion to Dismiss for lack of personal jurisdiction; the Motion of Defendants Emil Lissauer, Gordon Lissauer, Sharon Drakides, Hannah Hirschfeld, Peter Eliel, The Estate of Franz Lissauer, and Unknown Lissauer Family Members to Dismiss for lack of personal jurisdiction and, subject to such Motion, the Motion of these Defendants for Summary Judgment; the Motion of Defendants Steel Holdings Corp., Colin Benjamin, Donald Wefer, and Salvatore Purpura to Dismiss for lack of personal jurisdiction; and the Motion of Defendants Tex Tin Corp., Metallon Holdings Corp., Asoma Corp., Steel Hldigns Corp., Macsteel Inc., Coling Benjamin, Donald Wefer, and Salvatore Purpura to Dismiss for failure to state a claim upon which relief may be granted.
[2] No party asserts, and the Court does not find, that 28 U.S.C.A. § 1367(c) grants discretion in this case to decline the exercise of supplemental jurisdiction over state law claims related to the breach of contract claim. 28 U.S.C.A. § 1367(c)(1)-(4) (West 1993). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2401270/ | 477 S.W.2d 349 (1972)
CITY OF HOUSTON, Appellant,
v.
UNITED COMPOST SERVICES, INC., Appellee.
No. 15791.
Court of Civil Appeals of Texas, Houston (1st Dist.).
February 10, 1972.
Rehearing Denied March 9, 1972.
*350 William A. Olson, City Atty., City of Houston, W. Lawrence Cook, Senior Asst. *351 City Atty., Willard E. Dollahon, Senior Asst. City Atty., Houston, for appellant.
Fulbright, Crooker & Jaworski, Alton F. Curry, Houston, for appellee, United Compost Services, Inc.
Vinson, Elkins, Searls & Smith, James W. McCartney, Houston, for appellees, Phoenix Mutual Life Ins. Co. and First City National Bank of Houston.
BELL, Chief Justice.
Appeal from a judgment in favor of appellee by which it recovered from appellant the sum of $2,093,669.95 as damages growing out of the breach by appellant of a contract with appellee under which appellee agreed to construct and operate a garbage composting plant. The case was submitted to the jury on three theories of recovery. The first theory was breach of a valid contract by appellant, and the second, and alternative, theory was a contract implied in law. The third asserted estoppel to deny the validity of the contract. The jury's answers to all controlling fact issues submitted were answered favorably to appellee.
Appellant assigns twenty-five points of error. They deal with, in the aggregate, all theories of recovery. We will discuss only those relating to recovery on the theory of breach of contract because we have reached the conclusion that the judgment is supported on a basis of the breach of a valid contract by appellant.
On June 3, 1964, the City Council finally passed an ordinance calling a special election to be held June 27, 1964, at which a proposition concerning a proposed ordinance authorizing a contract for disposal of garbage by composting or other effective methods for a period of not to exceed twenty years would be submitted to the qualified voters.
The preamble to the ordinance, which was expressly made a part of the ordinance, recited that the principal terms of the contract would be as follows:
1. It would be for a term not to exceed 20 years.
2. The contractor would be unconditionally obligated to receive a stated minimum of garbage each day, or at other agreed times, and to dispose of same by composting or by some other agreed method found to be effective, and the City would be obligated to make such garbage available at an agreed location or locations.
3. The City would make no capital investment in the facilities to be utilized by the contractor.
4. The City would pay the contractor a fixed agreed price per ton for each ton disposed of in accordance with the contract.
5. The contractor would be required to furnish a performance bond to be approved by the City Council in an amount found by the City Council to be sufficient to indemnify the City for any failure of the contractor to perform satisfactorily.
The ordinance then provided the following proposition should be submitted:
"Shall the City Council of the City of Houston adopt the proposed ordinance authorizing the negotiation of a contract for the disposal of garbage by composting or other effective method for a term not to exceed twenty years?"
The ordinance designated the locations of the polling places and the person who should be the judge at each place.
It is provided that the ordinance would constitute the election order and the City Secretary was directed to post a copy at each polling place and at the City Hall for not less than 20 days before the election and to cause same to be published on the same day in each of two consecutive weeks in a newspaper of general circulation that had been regularly published in Houston for one year before the date of the ordinance, the first publication to be not less than fourteen days prior to the date of the election.
*352 It is undisputed that the directions immediately above noted with regard to the posting and publication of the ordinance were fully carried out. Publication was in both the Houston Post and Houston Chronicle. In addition a proclamation of the Mayor calling the election and reciting the proposition above quoted, which had been authorized by the ordinance, though not required, was published in the above named newspapers. Voting machines were to be used in holding the election.
Following the election which approved the proposition submitted the City officials negotiated a contract with appellee that was executed March 24, 1965, after having first advertised for bids. The contract was then ratified by the City Council by ordinance. The contract obligated appellee to construct the plant and facilities at its own expense. The plant was to be capable of composting from 300 to 330 tons of garbage per day through employment of the aerobic process. The plant was to be operated in a nuisance-free manner. The City was to pay monthly a specified fee per ton for garbage composted and was to deliver or pay for a minimum tonnage of 1800 tons per week. The plant was to be completed within 12 months following the approval of plans and specifications. The plans and specifications were approved by ordinance August 24, 1965. Failure to complete within said period would subject appellee to a daily penalty of $100 per day. The City claimed a delay of 82 days and exacted a penalty of $8200. It seems not to be contested that the plant was substantially completed in March 1967, so that "shakedown" operations provided for in the contract could and did begin. The operations contemplated that as soon as the plant was "substantially" completed the City, on request of the contractor, would deliver on not less than 24 hours' notice any tonnage of garbage and residential trash the contractor desired to be used for the purpose of testing the equipment and for a "shakedown" of the plant. After the shakedown had been satisfactorily completed the contractor was to notify the City and request a "Test Run" program. During the test run period between 300 and 330 tons of garbage and trash were to be delivered by the City each day for six consecutive business days and such refuse was to be completely processed in full compliance with the contract. The contract provided that "if the contractor shall not successfully complete said test run within 6 months after the scheduled completion date, this contract may be terminated by the City, at its option, at any time thereafter."
Shakedown operations began in early 1967. In March 1967 an attempt to complete a test run was unsuccessful. A second test run was made during April 19-27, 1967. On April 27, appellee wrote the Director of Public Works that the test run had been successful. On April 28 the Director of Public Works wrote appellee a letter stating the "recently completed test run was not successfully completed in accordance with the terms of the contract." The portions of the contract which allegedly had not been complied with dealt generally with the obligation of appellee to operate a nuisance-free plant and not violate any valid law. We do not notice the details of the provision because the City is really contending that the plant emitted odors that penetrated the area outside of the plant and were so extensive as to constitute a nuisance. The letter also stated since appellee had stated the last test run was successful, the City intended "that day" to file a declaratory judgment suit to ascertain the rights of the parties. The suit was filed on April 28, 1967. On April 28, appellee wrote the Mayor stating it had learned through the news media of the unilateral action of the City in refusing to deliver garbage pending judicial determination of the rights of the parties. The letter, while asserting that appellee claimed a successful test run had been made and the contract was in full force and effect, stated that without waiving any claims appellee was thereby notifying the City of completion of shakedown runs and requested the City to fix a test run program. Demand *353 was made for the delivery of garbage during the litigation. The City refused to deliver the garbage. Appellee lost its entire investment. There is no contention that the plant was not substantially completed within the time authorized by the contract. Apart from the claim of invalidity of the contract, it is merely contended that when completed on Feb. 2, 1967, as represented by appellee, the plant could not be operated nuisance free. Under the contract there was to be a test run period of six months from completion. The test run period would therefore extend until August 2, 1967.
After the City filed its suit for declaratory judgment, appellee filed its counterclaim against the appellant to recover damages for breach of contract. The City made the First City National Bank of Houston, Trustee for Phoenix Mutual Life Insurance Company, and said insurance company parties to the suit. The insurance company, who had furnished the financing to appellee, plead against appellee to recover its debt and to foreclose its lien. It recovered of appellee and there is no appeal from that part of the judgment.
By its Third Amended Original Petition appellant asserted for the first time that the contract was void ab initio because Article II, Section 7b of the City Charter providing for an election to be held where a contract of this nature was to be for a longer term than five years, was not complied with in that the proposition submitted at the election did not include the proposed ordinance and the material terms of the contract. It was further asserted that the legislative act, herein referred to as Article 976c, Vernon's Ann.Tex.St., was invalid as being a special local law passed in violation of Article III, Section 56 and Section 57 of the Texas Constitution, Vernon's Ann.St. and was therefore ineffective to validate the contract.
We reach the conclusion that there was sufficient compliance with the Charter provision and also that even if there were irregularities that affected the validity of the contract, and we think there were none, Article 976c is valid and had the effect of validating the contract.
Article II, Section 7 of the CHARTER makes it the duty of the City "to care for and dispose of ... garbage ... and to make rules and regulations governing the same ..." Also Article II, Section 2 of the Charter is granted broad power to do acts affecting the general welfare, including, in addition to those express and implied, "all other powers' which "it would have been competent for this Charter to enumerate."
Article II, Section 7b also gives the power to buy, among other things a service. The power to make the contract for disposal of garbage existed. Article II, Section 7b merely deals with the mechanics of the exercise of the power where the contract is for a term longer than five years. That section provides "that before the City shall be bound by any contract sought to be made by the council ... for a longer period of time than five years, the proposition therefor shall be submitted to a vote... which proposition shall consist of the ordinance proposed ... and the material terms of the contract ..."
The full 15 page ordinance was not put on the voting machine. An ordinance of this length could not as a practical matter have been incorporated verbatim in the proposition and put in the voting machine. However, it was just as effectively at the polls by posting for the voters to see as if it had been incorporated verbatim in the proposition and printed on the ballot. The proposition on the voting machine asked if City Council should adopt the proposed ordinance authorizing the negotiation of a contract for disposal of garbage by composting, or other effective method, for a term not to exceed 20 years. This gave the essentials. Also it had been published in full in the newspapers in Houston. The *354 terms of the ordinance we have noticed above. It certainly gives notice of the material terms of the contract to be negotiated.
We hold the terms of Article II, Section 7b were sufficiently complied with. If it may be argued there was not literal compliance, certainly it must be said there was substantial compliance. This is all that is required. Railroad Commission v. Sterling Oil Co., 147 Tex. 547, 218 S.W.2d 415; Christy v. Williams, 292 S.W.2d 348 (Tex. Civ.App.Galveston) writ dism'd, w. o. j.; England v. McCoy, 269 S.W.2d 813 (Tex. Civ.App.Texarkana) writ dism'd; 29 C. J.S. Elections § 170; 29 Am.Jur.2d, Elections, 221.
While we hold the contract was valid for the reasons stated above, if there were any defects they were cured by the legislative validating act that became effective June 1, 1965. Article 976c, Section 1 of the act provides it "is applicable only to cities (including Home Rule Cities) having a population in excess of 900,000, according to the last preceding Federal Census or any future Federal Census." Section 2 provides that in every instance where the governing body of a city, prior to the effective date of the act, has entered into a contract involving terms in excess of five years for the use of land or interest in land owned or to be acquired by such city and for the purpose of services related to garbage disposal and for the disposal of garbage on a contract basis, and has adopted orders or ordinances to authorize or ratify the execution of such contracts and all proceedings, ordinances, orders are validated, ratified, confirmed and approved.
Appellant urges the unconstitutionality of the acts asserting that at the time of passage, and when it became effective it could only apply to appellant. It relies on City of Ft. Worth v. Bobbitt, 121 Tex. 14, 36 S.W.2d 470 (Tex.Com.App.), opinion adopted. That case is not controlling. There the validating act applied to a city having not less than 106,000 and not more than 110,000 inhabitants "according to the United States Census of 1920." Ft. Worth was the only city in that population bracket. Because of the wording "according to the United States Census of 1920" the act could never in any contingency apply to any other city. However, a new validating act was passed that applied to cities having "a population of more than 100,000 inhabitants according to the last preceding United States census." This was upheld as not being a local or special law. See 121 Tex. 14, 41 S.W.2d 228 (Tex.Com.App.).
Article 976c is not so restrictive that it could never apply to another city because it would be applicable to any city having a population in excess of 900,000 inhabitants according to the last or any future Federal Census.
The burden is on the party asserting unconstitutionality of a statute to establish its invalidity. Every intendment and presumption will be made in favor of the constitutionality of the statute. County of Cameron v. Wilson, 160 Tex. 25, 326 S.W.2d 162; Koy v. Schneider, 110 Tex. 369, 221 S.W. 880; 53 Tex.Jur.2d, Statutes, Section 184. Appellant has failed to discharge that burden. While it urges that when passed and when it became effective the act could only apply to Houston because Houston was the city with over 900,000 inhabitants, this is not enough. The act was drawn so that it would apply to cities later. There is no evidence that there were no other cities that had contracts of the kind validated. Presumptively there were and the act would be applicable to them when they reached the requisite population. In a comparable situation the same contention was made by the City of Houston and rejected by our Supreme Court. Board of Managers of Harris County Hospital District v. Pension Board of Pension System for City of Houston, Tex., 449 S.W.2d 33.
It was clearly established that after April 27, 1967, the City refused to deliver garbage to appellee so appellee could continue *355 test runs. This resulted in appellee being unable to repay its indebtedness and it lost its entire investment represented by the expenses incurred in constructing the plant. It was known to all parties that appellee would borrow the money to construct the plant and that the revenues derived from performance of the contract would be the source of repayment. The contract and plant were the security for the loan. That they would be was known to all parties. The City knew the sole income was the per ton service fee to be paid by the City and the revenue received by appellee from the sale of salvageable materials and compost obtained from the garbage delivered by the City.
The jury found in response to Special Issue No. 13 that appellee "could have in all reasonable probability completed a test run without emitting offensive or obnoxious odors outside of the plant premises within six months from February 2, 1967, if the City of Houston had not refused from and after April 27, 1967 to deliver garbage" to appellee. There is no attack made on that finding as being without support in the evidence or as being insufficiently supported by the evidence. We have a case where an appellee has performed its part of the contract insofar as the City permitted and in doing so necessarily incurred vast expenses. Since the City breached its part of the contract it prevented appellee from fully completing the contract. Appellee seeks, therefore, to recover the expenses it reasonably and necessarily incurred in performing.
The jury found in response to Special Issue No. 14 that the amount of expenses which appellee "reasonably and necessarily" incurred to April 28, 1967, in preparation for performance of the contract to be $1,928,117.70. It found in response to Issue No. 14-a that such expenses incurred after April 28 were $379,853.60. Judgment was for the total of these two sums less credits of $214,301.35
Appellant complains of the submission of the issues, the substance of these complaints being as follows:
1. There was no pleading or evidence of the value of the contract to appellee and here that is the measure of damages.
2. There was error in allowing recovery of the amounts expended instead of limiting recovery to amounts determined according to Section 4F of the contract.
3. Allowing a lump sum recovery is error because it creates a debt against the City when there was no compliance with Article XI, Sections 5 and 7 of the Texas Constitution.
4. The damages should have been limited to $200,000 because this was all appellee had repaid on its loan.
Appellee sued to recover as damages the expenses reasonably and necessarily incurred and the jury found the amount. The evidence supports the jury's findings.
Appellee could not recover for lost profits because its business had not yet been established. It was in effect a new business. Southwest Battery Corp. v. Owen, 131 Tex. 423, 115 S.W.2d 1097.
The rule is that where complete performance by a party to the contract has been prevented by the other party the party suffering the loss is entitled to recover, if it chooses, the amount of its expenses incurred in preparation for performance and in performance of the contract. United States v. Behan, 110 U.S. 338, 4 S. Ct. 81, 28 L. Ed. 168; Delhi Pipe Line Corp. v. Lewis, Inc., 408 S.W.2d 295 (Tex.Civ.App. Corpus Christi), ref. n. r. e.; Austin Stone Industries, Inc. v. Capitol Powder Company, 290 S.W.2d 689 (Tex.Civ.Ap Austin), ref., n. r. e.; Osage Oil & Refining Co. v. Lee Farm Oil Co., 230 S.W. 518 (Tex.Civ.App.Amarillo), writ ref.; Corbin, Contracts, Sections 996, 1031-1036. The form of issue submitted in this case *356 was approved in Delhi Pipe Line Co. v. Lewis, Inc., supra.
Appellant contends that paragraph 4F of the contract precludes recovery of expenses. This paragraph provides that except for delivery of materials for disposal, payment of the service fee and furnishing the plant site and landfill site, the City shall have no obligation. It places on appellee the obligation to construct and operate the plant at its cost and expense and provides the City shall have no liability for such. The City cites no authority for its position. The liability asserted here does not arise out of the contract but arises by reason of a breach of the contract in preventing complete performance by appellee. The rule of damages applicable is therefore the one above stated. It is extensively discussed in the sections of Corbin on Contracts above cited.
The substance of Article XI, Sections 5 and 7, is that no debt shall be created by a city unless at the time it is created provision is made for levy and collection of a tax sufficient to pay the debt. The City cites no decided case in support of its position. The term "debt" as used in these sections refers to an obligation imposed by the contract and not one imposed by law for breach of a valid contract. City of Dallas v. Miller, 7 Tex. Civ. App. 503, 27 S.W. 498 (Dallas), n. w. h.
We also overrule the City's contention that recovery should be limited to the $200,000 appellee has repaid on the loan. Appellee is legally obligated to pay all it recovered from appellant, less what it had paid, as Phoenix, the lender, recovered a judgment against appellee for the monies used by appellee in performing the contract. See Taylor v. Mark, 376 S.W.2d 927 (Tex.Civ.App.Waco), ref., n. r. e., and authorities there cited.
Issue No. 13 inquired whether in reasonable probability appellee could have, had the City not refused to deliver garbage, successfully completed a test run without emitting offensive or obnoxious odors outside the plant premises within six months from February 2, 1967. The objections of appellant were that an affirmative answer would be so against the great weight and preponderance of the evidence as to be unjust, and the term "reasonable probability" should not be used as it makes a jury finding speculative and also the contract would not have gone into effect based on reasonable probability.
A reading of the statement of facts shows evidence clearly supporting submission and the affirmative answer and the answer is not contrary to the overwhelming weight of the evidence. Actually in its brief appellant does not properly assign that the answer is contrary to the greater weight of the evidence. It complains of the submission of the issue. If there is evidence of probative force the issue should be submitted even though an affirmative answer would be against the greater weight of the evidence. We also hold use of the term "in reasonable probability" was proper.
There was no error in refusing the City's requested issue which inquired whether the plant emitted odors that caused annoyance, harm or inconvenience to persons in the vicinity of the plant during the period from February 2, 1967 through April 18, 1967. This was not a controlling issue. Appellee had until August 2 to make the plant nuisance free. It breached the contract in April. How the plant operated prior to the expiration of the test run period is not an ultimate issue. It is purely evidentiary on the issue submitted.
The City's other requested issue as to whether the continuation of the operation of the plant after April 26 in all reasonable probability resulted in the spreading of odors, etc., was properly refused. It amounted to the converse of Issue No. 13. It is not error to refuse to submit the converse of an issue. Northeast Texas Motor *357 Lines v. Hodges, 138 Tex. 280, 158 S.W.2d 487 (Tex.Com.App.), opinion adopted.
The court did not err in refusing to require appellee to elect prior to submission to the jury between express and implied contract. Electric Wire and Cable Co. v. Ray, 456 S.W.2d 260 (Tex.Civ.App. Houston1st), ref., n. r. e.; Roby Industries, Inc. v. Maxwell Electronics Corp., 409 S.W.2d 559 (Tex.Civ.App.Dallas), ref., n. r. e.; Musick v. Pogue, 330 S.W.2d 696 (Tex.Civ.App.San Antonio), ref., n. r. e.; Hodges, Special Issue Submission in Texas, Section 1, p. 3.
Any point of error relating to recovery on the theory of express contract, though it may not have been specifically discussed, has been considered and is overruled.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1143152/ | 661 So. 2d 445 (1995)
CITY OF BATON ROUGE
v.
Eric WILLIAMS.
No. 95-KA-0308.
Supreme Court of Louisiana.
October 16, 1995.
*446 Richard P. Ieyoub, Attorney General, Veronica R. Jones, Carl J. Jackson, Lon Darrell Norris, Baton Rouge, for applicant.
Albert H. Town, III, Baton Rouge, for respondent.
*447 DOUCET, Judge.[1]
In this case, we consider whether a municipality may impose a penalty for a misdemeanor offense greater than that imposed by the state for the same offense.
On July 3, 1994, the Baton Rouge City Police issued a citation to Eric Williams, charging him with disturbing the peace by fistic encounter, in violation of city ordinance 13:103. On September 27, 1994, Williams was arraigned. The court set a trial date of November 3, 1994. On November 3, 1994, Williams withdrew his plea of not guilty and pled guilty as charged. A sentencing hearing was scheduled for December 19, 1994. However, on November 7, 1994, before the sentencing hearing, Williams filed a motion to quash. In his motion, Williams argued that the city ordinance under which he was charged is unconstitutional in that it imposed a penalty in excess of that imposed by the state for the same offense; that the sentence provided by the municipal ordinance is excessive under La.Const. art. I, § 20 because it is more severe than the sentence which may be imposed under state law, and; that the ordinance violates the equal protection clause because it subjects a defendant to the possibility of a different punishment for the same offense under state law. The city prosecutor objected to the hearing on the motion, arguing that it was not timely filed. The prosecutor asserted that a motion to quash could only be filed before trial. The trial court ruled that it was within its discretion to allow the hearing of the motion. On appeal the City of Baton Rouge (the City) does not contest the correctness of this ruling.
After a hearing, the trial court granted the motion and declared paragraph B of Metropolitan Ordinance 13:103 to be unconstitutional. The City appeals arguing that the ordinance violates no statutory or constitutional principles.
The penalty provision of the Baton Rouge City Ordinance Title 13:103, Disturbing the Peace, provides:
Whoever commits the crime of disturbing the peace shall be fined not more that five hundred dollars ($500.00) or imprisoned for not more that six (6) months, or both.
La.R.S. 14:103(A), the state's disturbing the peace statute includes the following penalty provision:
Whoever commits the crime of disturbing the peace shall be fined not more than one hundred dollars or imprisoned for not more than ninety days, or both.
The City argues that its home rule charter gives it the power to enact ordinances and provide for penalties not to exceed the maximum penalties allowable under state law for offenses falling within the jurisdiction of the Baton Rouge City Court. La.R.S. 13:1894 provides the limits of criminal jurisdiction of city courts:
The criminal jurisdiction of city courts is limited to the trial of offenses committed within their respective territorial jurisdictions which are not punishable by imprisonment at hard labor, including the trial of cases involving the violation of any city or parochial ordinance.
This limits the jurisdiction of the city courts to misdemeanors. See La.R.S. 14:2(4) and (5).
Municipalities, such as Baton Rouge, derive their power to enact ordinances from the state constitution. The City derives from its home rule charter its authority to enact ordinances prohibiting certain criminal conduct, and to punish violations of those ordinances. That charter was enacted under the authority of Article XIV, § 3(a), of the Louisiana Constitution of 1921. The Louisiana Constitution of 1974, art. VI, § 4 provides for the continuance of existing home rule charters, as follows:
Every home rule charter or plan of government existing or adopted when this constitution is adopted shall remain in effect and may be amended, modified, or repealed as provided therein. Except as inconsistent with this constitution, each local governmental subdivision which has adopted such a home rule charter or plan of government shall retain the powers, functions, and duties in effect when this *448 constitution is adopted. If its charter permits, each of them also shall have the right to powers and functions granted to other local governmental subdivisions. (Emphasis added.)
La. Const. art. 6, §§ 5 and 7, on the other hand, impose additional restrictions on the power of immunity from state oversight granted to the remaining local governments which might assume home rule powers subsequent to the adoption of the constitution. La. Const. art. 6, § 5(E) states that:
A home rule charter adopted under this Section shall provide the structure and organization, powers, and functions of the government of the local governmental subdivision, which may include the exercise of any power and performance of any function necessary, requisite, or proper for the management of its affairs, not denied by general law or inconsistent with this constitution. (Emphasis added.)
In short, the 1974 constitution creates two classes of home rule governments with different levels of immunity from control by the state legislature: (1) preexisting home rule municipalities may exercise within their boundaries any legislative powers not in conflict with the 1974 state constitution; and (2) all other local governments may exercise home rule powers consistent with the constitution except when the exercise of such power is denied by general law. City of New Orleans v. Board of Com'rs of Orleans Levee Dist., 93-0690 (La. 7/5/94), 640 So. 2d 237.
In City of New Orleans v. Board of Com'rs of Orleans Levee Dist., 640 So.2d at 248, this court explained the effect of the 1974 Constitution on municipalities with home rule charters preexisting its adoption:
Furthermore, Section 4 of Article VI cannot be construed without absurdity to permit the legislature to supersede the ordinances of the [City of New Orleans (CNO)] simply by enacting an inconsistent general state law; for this would reduce the immunity of the CNO to a level below that of the nonantecedent home rule governments whose valid ordinances are protected by Sections 5 and 7 of Article VI from reversal by the legislature except by general state laws that deny, rather than merely conflict with, their local laws. To interpret the Constitution as conferring on the CNO a power of immunity no greater [or weaker] than that attributed to the local governments which acquire home rule authority after the adoption of the 1974 Constitution would conflict with the clear intent of the drafters and ratifiers to grant all preexisting home rule governments a greater degree of autonomy.
As this court noted in Francis v. Morial, 455 So. 2d 1168, 1171 (La.1984): "[A] home rule charter government possesses, in affairs of local concern, powers which within its jurisdiction are as broad as that of the state, except when limited by the constitution, laws permitted by the constitution, or its own home rule charter."
The constitution provides only two specific limitations on the powers of a municipality under a home rule charter.
(A) Limitations. No local governmental subdivision shall (1) define and provide for the punishment of a felony; or (2) except as provided by law, enact an ordinance governing private or civil relationships.
(B) Police Power Not Abridged. Notwithstanding any provision of this Article, the police power of the state shall never be abridged.
La. Const. art. 6, § 9.
Further, the legislature has provided the maximum penalty for commission of a misdemeanor. La.Code Crim.P. art. 779; La.R.S. 14:2(4) and (5). It is uncontested that the penalty provided by the City of Baton Rouge does not exceed this limit. There have been decisions by this court which invalidated municipal ordinances that provided greater penalties than the state statute punishing the same crime.[2] Those cases fall into two categories: those in which the municipalities' own home rule charter prohibited a penalty *449 greater than that set in a state statute for the same conduct; and, those in which there is a specific state statute which places a ceiling on the penalty a parish or municipality may exact for the prohibited conduct.
Since this case concerns a misdemeanor, the limitation provided in La.Const. art. 6, § 9(A) need not be considered. Additionally, there exists no statute which specifically places a ceiling on the penalty that a municipality may set for disturbing the peace. Therefore, we must consider:
1.) Whether this statute conflicts with state law in such a way as to abridge the state's police power?
2.) Whether enforcement of this statute would result in a violation of the Equal Protection Clause?
3.) Whether the City's home rule charter prohibits the enactment of an ordinance with a penalty greater than that set in a state statute for the same conduct?
POLICE POWER
Our first consideration is whether Title 13:103 constitutes an abridgment of the state's police power as prohibited by La. Const. art. 6, § 9(B). This court, in City of New Orleans v. Board of Com'rs of Orleans Levee Dist., 640 So. 2d 237, observed that La.Const. art. 6, § 9(B) is ambiguous. However, the court in that case found that La. Const. art. 6, § 9(B) was adopted as "... a principle of harmonizing the replete home rule powers granted local governments with a basic residuum of the state's power to initiate legislation and regulation necessary to protect and promote the vital interests of its people as a whole." Id. at 249.
It is a general principle of constitution law that a state cannot surrender, abdicate, or abridge its police power. However, while the police power of the state is inalienable, it may be delegated "to municipalities and other governmental subdivisions because these entities are part of the total government of the state." Further, "[t]he police power does not justify an interference with constitutional rights which is entirely out of proportion to any benefit redounding to the public." (Citations omitted.) Francis v. Morial, 455 So.2d at 1173.
This court has explained the effect of a home rule charter on the state's police power as follows:
Consequently, the constitutional grant of the home rule power to initiate legislation and the power of immunity from control of the legislature to a local government does not necessarily cause the state as a whole to sustain an abridgment of its police power. The total police power of the state is not diminished every time the legislature is constitutionally denied the right to substitute its legislative initiative for that of the home rule governments. A net loss in the exercise of the police power of the state would occur only when a local government's conflicting law or ordinance would prevent the state from initiating action through its legislative branch necessary to promote or protect the health, safety, welfare, or morality of the state as a whole. In other words, division and delegation of the police power within the state itself does not automatically cause its abridgment.
City of New Orleans v. Board of Com'rs of Orleans Levee Dist., 640 So.2d at 250.
This court concluded that the principle of harmonization contained in La.Const. art. VI § 9(B) does not allow for an interpretation of that provision which would permit the legislature the unqualified power to withdraw, preempt, or overrule a local law that is consistent with the constitution and was enacted pursuant to a constitutionally maintained preexisting home rule charter. However, there may be circumstances in which the legislature will need to enact legislation which is necessary to protect a vital interest of the state as a whole, in spite of the fact that it conflicts with a valid local ordinance. In these circumstances the legislative action would be within the range of power reserved by the state. Id. at 251. Accordingly, this Court enunciated a method of analyzing possible abridgments of the state's police power:
[A] litigant claiming that a home rule municipality's local law abridges the police power of the state must show that the local law conflicts with an act of the state legislature *450 that is necessary to protect the vital interest of the state as a whole. To establish that the conflict actually exists, the litigant must show that the state statute and the ordinance are incompatible and cannot be effectuated in harmony. Further, to demonstrate that the state statute is "necessary" it must be shown that the protection of such state interest cannot be achieved through alternate means significantly less detrimental to home rule powers and rights. [Citations omitted.]
Id.
To demonstrate that a home rule municipality's local law abridges the police power of the state, the defendant must show (1) that the local law conflicts with an act of the state legislature, and that (2) the state law is necessary to protect the vital interest of the state as a whole. Id.
Here, the parties agree that the penalties provided under the two laws are different. While this is arguably a conflict sufficient to impringe on the state's police power, it is doubtful that this conflict is sufficient to contravene state authority. The penalty provided by the ordinance is within the statutory limit set by the legislature for misdemeanors. As long as municipalities adhere to this limit, the state's law enforcement objectives are not defeated. Further, the City does not appear to have exceeded the authority to enact misdemeanor ordinances granted home rule charter municipalities under the constitution. Any conflict which would arise from the ability to enforce both the city and state ordinances is not great enough to cause a disruption in state law making effort.
However, despite any possible conflict, to prevail on an argument that an ordinance abridges the state's police power, the litigant must show that the primacy of the state law is vital to the interests of the state as a whole. The constitution has clearly delineated the state's vital interest in defining and providing for the punishment of felonies. La. Const. art. 6 § 9. Just as clearly, the constitution fails to make such a provision concerning misdemeanors. We infer, from this failure to speak, that state law misdemeanors may be duplicated and penalties set without abridgment of the state's police power as long as the penalty remains within the state's maximum allowable range of penalties for misdemeanors. If the state did not mean to allow some degree of discretion on the part of municipalities, it would not have granted them the power to enact misdemeanor ordinances and would have delineated more specifically the limits of acceptable penalties.
Furthermore, even if a litigant shows a vital interest to the state as a whole, to demonstrate that the state statute is necessary, it must be shown that the protection of the state interest cannot be achieved through alternate means significantly less detrimental to home rule powers and rights. Id.
The constitution, in providing for home rule charters, has delegated a part of its police power to municipalities. This delegation of power includes the power to provide penalties for misdemeanors within the limits provided by state law. The constitution has given the City the power to enact Title 13:103, and the limits imposed on the city court jurisdiction have appropriately limited the range of punishment for the offense created. When a municipality enacts an ordinance within the statutorily acceptable limits for penalties, state authority is not contravened. Furthermore, given the City's constitutional status, the higher penalty provided by the municipal ordinance does not constitute an abridgement of the state's police power. Williams has shown at most that a conflict exists. He has not shown that it is in the vital interest of the state as a whole that the penalty provision of the local ordinance not exceed the penalty provided by state law for the same conduct, where the local penalty does not exceed the maximum penalty allowable for a misdemeanor.
EQUAL PROTECTION
On appeal, Williams further argues that enforcement of the ordinance constitutes a violation of equal protection because it could subject an individual to different penalties for the same offense depending on whether he was charged under the city or state law.
La. Const. art. 1, Sec. 3 states that:
*451 No person shall be denied the equal protection of the laws. No law shall discriminate against a person because of race or religious ideas, beliefs, or affiliations. No law shall arbitrarily, capriciously, or unreasonably discriminate against a person because of birth, age, sex, culture, physical condition, or political ideas or affiliations. Slavery and involuntary servitude are prohibited, except in the latter case punishment for crime.
This court in State v. Brown, 94-1290 (La. 1/17/95), 648 So. 2d 872 explained the ambit of the equal protection clause:
The state and federal constitutional guarantees of equal protection mandate that state laws affect alike all persons and interests similarly situated. Detraz v. Fontana, 416 So. 2d 1291 (La.1982); U.S.C.A. Const.Amend. 14; LSA-Const. Art. 1 Sec. 3 (1974).
As stated in Grider v. Adm'r, Dept. of Employment Sec., 564 So. 2d 751 (La.App. 2d Cir.1990) (citing Sibley v. Board of Sup'rs, 477 So. 2d 1094 (La.1985))
[w]hen a state law does not classify individuals by race, religion, birth, age, sex, culture, physical condition, or political ideas, but does so on any other basis, Art. 1 Sec. 3 of the Louisiana Constitution commands the court to decline the enforcement of the statute whenever a member of the disadvantaged class shows that the classification does not suitably further any appropriate state interest.
Thus, absent any suspect or intermediate classifications under the equal protection analysis, the defendants must show that the legislative classification is not rationally related to a legitimate state purpose.
Id. at 876.
Because Williams has not claimed that the difference in treatment springs from his membership in a suspect class, but from the fact that the laws set forth different penalties for the same crime which are equally applicable to an individual, the rational basis test is applicable in this case.
Under the Louisiana constitution, municipalities have the power to enact ordinances to regulate conduct within their boundaries. La. Const. art. VI, §§ 4, 5. Because situations are different from city to city, the constitution and the legislature have given municipalities some leeway in exacting the penalties they deem appropriate. Because it is conceivable that the state and municipalities can have different and equally legitimate policy objectives, there is a rational basis for allowing a city to set different penalties from those contained in identical state law.
The United States Supreme Court has held that where an act violates more than one criminal statute, the government may prosecute under either provision and not run afoul of the equal protection clause, if the statutes do not discriminate against any class of individuals. United States v. Batchelder, 442 U.S. 114, 99 S. Ct. 2198, 60 L. Ed. 2d 755 (1979). In Batchelder, the Court upheld a defendant's conviction under a federal statute even though there was a similar state statute prohibiting the same act and assigning a lesser penalty. The court in Batchelder stated that:
[T]here is no appreciable difference between the discretion a prosecutor exercises when deciding whether to charge under one of two statutes with different elements and the discretion he exercises when choosing one of two statutes with identical elements. In the former situation, once he determines that the proof will support conviction under either statute, his decision is indistinguishable from the one he faces in the latter context. The prosecutor may be influenced by the penalties available upon conviction, but this fact, standing alone, does not give rise to a violation of the Equal Protection for Due Process Clause.
Id. 442 U.S. at 114, 99 S.Ct. at 2205.
As a result, we find that a rational basis exists for allowing different penalty provisions for identical conduct under the state law and the local ordinance. Consequently, we find no equal protection violation resulting from the accused's exposure to different penalties under state and municipal statutes.
*452 LIMITATIONS UNDER BATON ROUGE'S HOME RULE CHARTER
Finally, we must consider whether Baton Rouge's home rule charter, by its own terms, prohibits enactment of a statute with a penalty greater than that of its state law counterpart.
The Plan of Government for the City of Baton Rouge § 3.03 provides that:
For the purpose of carrying out the powers and duties conferred or imposed on the Metropolitan Council, such Council shall have the power, whenever it deems it necessary, ... and to provide penalties for the violation of any ordinance or regulation, which shall not exceed the maximum penalties allowable under the Laws of the State of Louisiana for offenses which fall within the jurisdiction of the Baton Rouge City Court.
By this provision, the City reserves to itself the right to provide penalties not to exceed the jurisdictional limit set by the state for city courts. Where this court has recognized that a municipality could not enact ordinances with penalties greater than that provided by a specific state law, the limiting language has been specific. In McAllister v. City of New Orleans, 255 La. 405, 231 So. 2d 368 (1970), the charter provided that its ordinances "shall not directly conflict with the provisions of any state laws on the same subject." Further, there existed a state statute specifically limiting the penalty which municipalities could adopt in connection with its vagrancy ordinances. In Town of Waterproof v. Towles, 180 La. 168, 156 So. 211 (1934), the municipality was governed by an act which prohibited it from punishing violations of ordinances by fines greater than $100 or imprisonment exceeding 30 days.
Under the provisions of the City's home rule charter, the penalty provided by Baton Rouge City Ordinance Title 13:103 must fall within the jurisdictional limit set by state law for city courts. The statutes defining the jurisdiction of city courts make it clear that all prosecutions must be tried without a jury. A city court cannot constitutionally sentence a defendant to a term of imprisonment of more than six months without hard labor, or a fine of more than $1000. See La.R.S. 13:1895; La.Code Crim.P. art. 779; State v. Bosworth, 373 So. 2d 152 (La.1979); State v. Hebert, 543 So. 2d 637 (La.App. 1 Cir.1989). City of Baton Rouge v. Ross, 94-0695 (La. 4/28/95), 654 So. 2d 1311.
Baton Rouge city ordinance title 13:103(b) provides a penalty of a fine of not more than $500.00 and/or imprisonment for not more than six months. Because the penalty provided by Baton Rouge City Ordinance Title 13:103 does not exceed the jurisdictional limit set for city courts by the laws of the State of Louisiana, it does not violate Baton Rouge's home rule charter.
CONCLUSION
Baton Rouge city ordinance title 13:103 has not been shown to constitute an abridgement of the police power of the State of Louisiana. Nor does it violate the constitutional guarantee of equal protection. The penalty provided thereunder, additionally, does not exceed the limit set by the home rule charter of the City of Baton Rouge. Accordingly, the judgment of the City Court for the City of Baton Rouge is reversed. This case is remanded for further proceedings.
REVERSED AND REMANDED.
NOTES
[1] Judge Ned E. Doucet, Jr., Court of Appeal, Third Circuit, sitting by assignment in place of Justice James L. Dennis. Calogero, C.J. not on panel. Rule IV, Part 2, § 3.
[2] See McAllister v. City of New Orleans, 255 La. 405, 231 So. 2d 368 (1970) and Town of Waterproof v. Towles, 180 La. 168, 156 So. 211 (1934). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1886329/ | 505 So. 2d 894 (1987)
COMMUNICATIONS WORKERS OF AMERICA AFL-CIO LOCAL 10414, Plaintiff-Appellant,
v.
Deborah CONLEY, Alma H. Johnson, Doris Heckard, Linda Sue Harris, Marilyn Patton, Myrtle Richmond, Elizabeth Masters, Patricia Jackson, Mary Hernandez, Richard Davis, Mary H. Robinson, Annie Braddock, Defendants-Appellees.
Nos. 18560-CA to 18571-CA.
Court of Appeal of Louisiana, Second Circuit.
April 1, 1987.
Bruscato, Loomis & Street by Anthony J. Bruscato, Monroe, for plaintiff-appellant.
Charles D. Jones, Monroe, for defendants-appellees.
Before HALL, MARVIN and NORRIS, JJ.
MARVIN, Judge.
In 12 consolidated cases, the plaintiff union appeals judgments in its favor enforcing partly or wholly fines that were levied against each defendant union member who crossed the union's picket line to work during a strike. The issues concern whether eight of the defendants effectively resigned from the union on the first day of the strike and whether legal interest on each judgment should run from date of judicial demand rather than from date of trial. We amend to award interest from date of judicial demand and affirm each judgment as amended.
FACTS
A nationwide strike against AT & T and the Bell System began on August 7, 1983, and continued for three weeks. Defendants were employees of South Central Bell in Monroe and were members of the union when the strike was announced. On the first day of the strike, each of eight defendants signed a memorandum requesting that *895 the deduction of union dues from his or her paycheck be stopped. All 12 defendants continued to work during the strike. The union fined each defendant an amount equal to his or her rate of regular pay for three weeks. These actions were instituted to judicially enforce the unpaid fines.
The trial court found that the eight defendants who signed the memo to stop dues checkoffs had resigned from the union on the first day of the strike and could be fined only $50 for crossing the picket lines on that day, instead of $1,050 for the entire three-week period as the union had levied and demanded. The judgments against the other four defendants were not similarly reduced because these defendants did not prove that they resigned during the strike.
The judgments award legal interest from the date of trial, which was held 19 months after the actions were filed. In its reasons for judgment, the trial court stated "that it would be manifestly unfair on the defendants to order them to pay interest from date of judicial demand since it was obviously not the fault of any of them that the matters lingered so long before finally coming to trial."
RESIGNATION FROM THE UNION
The union contends that the request to the employer to stop the payroll deduction of union dues did not constitute notice of resignation to the union, and that the evidence does not support the trial court's finding that the memos used here had been accepted by the union as a notice of resignation during earlier strikes.
The eight memos, signed on the first day of the strike, were directed to South Central Bell's accounting office in New Orleans. Each memo read "Please cancel payroll deductions for union dues on: [employee's name, social security number and work location]" and was signed by that employee.
Except for the signature, each memo was written by Bobbie Lynn Edwards, an assistant supervisor in South Central Bell's Monroe office who was responsible for personnel and payroll matters. She testified that in the early 1970's, when someone asked how an employee could get out of the union, she was told by the payroll office in New Orleans to send the New Orleans office a memo signed by the employee requesting cancellation of the employee's payroll deduction for union dues. She said she followed this procedure over the years and was not told of any other procedure to use when an employee wanted to get out of the union.
Several defendants explained they had used this same memo to "resign" from the union during previous strikes. Defendants assumed from past experience that the union considered the cancellation of dues checkoffs as resignation because the union did not question or complain about the form of the memo and eventually asked them to rejoin the union.
The union points out that the union constitution allows a 90-day grace period before a member is automatically expelled for nonpayment of dues. Although the defendants who had "resigned" previously were not aware of this provision, they were also not aware of any procedure for resigning other than the signed request to stop dues checkoffs. The union constitution is silent as to how members may resign.
The union president testified that the union has always accepted any written notice that a member has resigned, whether by letter to the union or by copy of a letter directed to the employer, but the letter would usually include a statement that the member wished to resign from the union and a request to the employer to cancel the dues deduction.
The description of the practice for communicating notice of resignation to the union before the strike, given by the union secretary, is consistent with the instructions received and followed by the employer's assistant supervisor, Ms. Edwards. The union secretary said:
A letter had to be written by that individual stating their name, social security number, and their work location, they wanted to withdraw from the union or cease paying dues. The letter had to go *896 to the company [South Central Bell]. (Emphasis added.)
When asked if she knew of any arrangement for South Central Bell to handle resignation notices for the union, the secretary testified:
They would receive a letter. And then normally they'd send us a form letter that states that person's name, a social security number, that they request the dues be stopped.
Although the union did not get copies of the memos in these cases, and although the union records indicate the dues deductions did not stop until the month after the strike, we agree with the trial court that the eight defendants expressed their intent to resign on the first day of the strike by following the resignation procedure which had been accepted by the union in the past. We also agree that defendants should not be held responsible for any lack of communication between the employer and the union, especially during a strike when tension is great.
The union cites Bradley v. Local 119, Internat'l U. of Electrical, R. & M. Wkrs., 236 F. Supp. 724 (E.D.Pa.1964), as authority for its contention that cancellation of dues checkoffs does not constitute resignation from the union. We distinguish and do not follow that case. There, the union members revoked their checkoff authorizations in an attempt to put pressure on the union to act on their grievances against the employer. The union treated the revocations as resignations and refused to allow the members to attend or participate in union meetings, even though the members tendered their dues payments at the union office after the deductions stopped. The court found that the plaintiffs' actions showed they did not intend to terminate their membership by revoking the dues checkoff authorization and that it was not a matter of general knowledge among the membership that the revocations had been or would be construed by that union as resignations.
Here, defendants are not seeking to force the union into action and it is shown that the eight defendants intended to terminate their union membership by requesting cancellation of the dues deduction before beginning their work assignments on the first day of the strike. The record also shows that many South Central Bell employees considered it to be "common knowledge" that such a request was the way to resign from or get out of the union. Some employees had used this method before, without objection by the union, to resign their membership during earlier strikes. These defendants took no action as union members after signing the memos. By working during the strike, they clearly separated themselves from union activities.
Under the circumstances of this record, we find no clear error in the trial court's conclusions that the eight defendants who signed the memos effectively resigned from the union on the first day of the strike and could be fined only for that day and not for any other days they crossed the picket lines.
LEGAL INTEREST
The union prayed for legal interest from date of judicial demand. The court awarded interest only from the date of trial because so much time had passed since these suits were filed. The duration of judicial proceedings does not affect the time when legal interest begins to run. Palmer v. Waguespack Pratt, Inc., 457 So. 2d 19 (La.App. 4th Cir.1984). Plaintiff is entitled to legal interest from date of judicial demand on all awards in these cases. See CCP Art. 1921; CC Art. 2000 (former Art. 1938).
DECREE
We amend each judgment to award legal interest from date of judicial demand. The cost of each appeal is assessed to the defendant. As amended, AFFIRMED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1659792/ | 58 Wis. 2d 290 (1973)
206 N.W.2d 134
RICHARDS and others, by Guardian ad litem, Appellants,
v.
RICHARDS, Respondent: ANCHOR SAVINGS & LOAN ASSOCIATION, Defendant.
No. 22.
Supreme Court of Wisconsin.
Argued March 26, 1973.
Decided April 20, 1973.
*291 For the appellants there was a brief by Pfannerstill, Camp & Tyson of Wauwatosa, and oral augument by Mark M. Camp.
For the respondent there was a brief by Donald S. Eisenberg & Associates, Donald S. Eisenberg and Jerome S. Schmidt, all of Madison, and oral argument by Donald S. Eisenberg.
HEFFERNAN, J.
This action was brought by the children of Jack Richards to recover the proceeds of a life insurance policy on the life of their father which were *292 paid to Patricia K. Richards, the second wife of the decedent. The case was submitted to the court on stipulated facts. These facts show that Jack Richards was divorced from Joan Richards, the mother of the three children who are parties plaintiff herein, in December of 1967.
Pursuant to a written stipulation, the divorce judgment provided:
"`It Is Further Ordered, Adjudged and Decreed... that the defendant name the minor children of the parties as beneficiaries of the following life insurance policies, or such other policies in the equivalent amounts as the following policies:
"`(a) National Service Life Insurance 30 day policy $10,000.
"`(b) State Group Term Insurance$9,000.00.'"
Subsequently, Jack Richards entered into a ceremony of marriage with Patricia K. Lew, who is the principal defendant in this action.
On April 9, 1969, Jack Richards changed the beneficiary designation in the State Group Term Insurance policy from his minor children to Patricia Lew Richards but did not procure any other insurance to replace it. This change was made without the knowledge of his first wife, and the existence of the policy was unknown to Patricia until after Jack's death in September of 1970. She first became aware of this policy of insurance when she received a letter from the Minnesota Mutual Life Insurance Company, the underwriter of the State Group Term Insurance policy, stating that she was the beneficiary under the policy. On October 20, 1970, Minnesota Mutual issued its check to "Patricia K. Richards, Widow of Jack Richards, Deceased" in the sum of $11,000. Patricia deposited $9,000 of the proceeds of this check in savings accounts at the Anchor Savings & Loan Association at Madison, Wisconsin. Two thousand dollars was spent by Patricia. Subsequently, after the service of process in *293 this action, Patricia withdrew the sum of $1,000 from one of the savings accounts. The proceeds of the National Service Life Insurance policy were paid for the benefit of the children. Jack Richards died without any assets in his estate.
In the action commenced by the plaintiffs, they argued that, by virtue of the divorce decree, they received a vested interest in the Minnesota Mutual Life Insurance Company policy which could not be defeated by a change of beneficiary. They argued also that a constructive trust had arisen by operation of law and that the court should order that the funds in the hands of the defendant be subject to that trust.
The trial judge held that, since the divorce judgment permitted Richards to substitute other insurance policies, the plaintiffs received no vested interest in the policy in question. He resolved the contention that the insurance policies were impressed with a constructive trust by concluding that that doctrine was not applicable when Patricia Richards, the recipient, was not guilty of any wrongdoing. The trial judge concluded that Patricia Richards was entitled to the insurance proceeds and dismissed the plaintiffs' complaint.
The Anchor Savings & Loan Association is not a party to this appeal, and it appears that its only function is that of a garnishee defendant or a stakeholder.
It is true, as the defendant contends, that one who purchases a life insurance policy and pays the premium may change the beneficiary at will. Rawson v. Milwaukee Mutual Life Ins. Co. (1902), 115 Wis. 641, 645, 92 N.W. 378. The beneficiary has a "mere expectancy," which may be defeated by the act of the insured acting in conformance with the rights under the policy. Slocum v. Northwestern National Life Ins. Co. (1908), 135 Wis. 288, 292, 115 N.W. 796. Nevertheless, we conclude that, under the circumstances of this case, the children of the *294 deceased were equitably entitled to the proceeds of the insurance policy and that a constructive trust should be imposed on the proceeds for their beneift.
Our conclusion is supported by two fairly recent cases decided by this court. Lee v. Preiss (1962), 18 Wis. 2d 109, 118 N.W.2d 104, and Estate of Boyd (1963), 18 Wis. 2d 379, 118 N.W.2d 705.
In Lee v. Preiss, a divorce judgment was entered which provided that the husband make child support payments. The husband orally promised the wife that he would maintain an insurance policy on his wife, naming her as beneficiary, to compensate for his failure to pay support during the pendency of the divorce action. Although the husband made representations from time to time that either his first wife or his children were the beneficiaries of the policy, nevertheless, after the divorce, he changed the beneficiary to Miss Preiss. The first wife and the decedent's children brought suit against Preiss to recover the proceeds. Preiss argued that, since under the insurance policy, she had been properly named the beneficiary, the proceeds were free of any claim of the first wife or the children. The trial court agreed with Preiss' contention, but on appeal this court reversed. It agreed that Preiss was entitled to the proceeds as against the insurer and held that the insurance company could make payments in reliance on its policy provisions in the absence of any notice to the contrary. Significantly, in respect to the problem which arises in the instant case, the court held that the husband's promises to the plaintiffs gave them equitable rights in the insurance policy superior to those of the named beneficiary. In so doing, the court overruled two cases relied upon by the defendant herein: Faubel v. Eckhart (1912), 151 Wis. 155, 138 N.W. 615, and Malancy v. Malancy (1917), 165 Wis. 642, 163 N.W. 186. In respect to those two cases, the court in Lee v. Preiss stated at page 116:
*295 "Insofar as Faubel v. Eckhart and Malancy v. Malancy hold that an agreement between the insured and another with respect to designation of a beneficiary of a life insurance contract can confer on the promisee, in equity, no rights in the proceeds superior to those of the named beneficiary, they are overruled."
In Estate of Boyd, supra, page 380, the divorce judgment carried the provision:
"`6.... and the name of Beatrice M. Boyd, the plaintiff herein, shall be inserted as beneficiary in Policy No. C-0651-9765 with the Equitable Life Assurance Society for two thousand dollars ($2,000).'"
About a month after the divorce judgment, Boyd removed the name of his former wife, Beatrice, as a beneficiary of the policy. Upon the death of Boyd, Beatrice filed a claim against his estate for the amount of the policy. The trial court concluded that the claim had to be disallowed because Beatrice Boyd did not have a vested right in the insurance contract and, accordingly, her husband was entitled to remove her as the beneficiary. In his memorandum opinion the trial judge noted that the divorce judgment contained no express prohibition against a change in beneficiary. This court reversed. We pointed out that the provision in the divorce decree was pursuant to a stipulation of the parties. We relied upon the rule of Miner v. Miner (1960), 10 Wis. 2d 438, 444, 103 N.W.2d 4, which holds that a stipulation in a divorce action is in the nature of a contract and that a contract should be given a construction which will effectuate what appears to have been the intention of the parties. In considering the facts of Boyd, this court concluded that the interpretation urged to contravene the claim of the first wife would only be tenable if the parties to the divorce action had intended to stipulate "to something valueless and that the judgment based thereon was intended to mirror such emptiness."
*296 Boyd apparently left a solvent estate, and the court permitted a recovery from the assets. No attempt was made to impress a trust upon the proceeds in the hands of the beneficiary of the life insurance policy. The holding in Boyd makes it clear that, although a divorce judgment does not expressly prohibit the owner of an insurance policy from changing the beneficiary, the decree of the court is to be given the effect of a continuing obligation to carry out the provisions set forth therein.
While the divorce judgment entered in the action between Jack and Joan Richards specifically provided that there could be a substitution with another policy, no substituted policy was taken out. There was only a substituted beneficiary in contravention of the clear intent of the stipulation and of the divorce judgment.
In Lee v. Preiss, although the court did not use the term constructive trust, it did, on the basis of oral promises, impose the equivalent of a constructive trust for the benefit of the children. The Estate of Boyd gives a similar recognition to the continuing effect that must be placed upon a portion of a divorce judgment that requires one of the parties to the divorce to name a beneficiary of a policy of insurance. Considered together, these two cases support the plaintiffs' contention that the proceeds in the hands of Patricia Richards were impressed with a constructive trust for the benefit of the children.
The constructive trust is an invention of equity by which liability is imposed to prevent unjust enrichment and unfairness. Mortgage Associates, Inc. v. Monona Shores (1970), 47 Wis. 2d 171, 189, 177 N.W.2d 340; Masino v. Sechrest (1954), 268 Wis. 101, 110, 66 N.W.2d 740. A constructive trust does not depend upon the intent of the parties to create an express trust. Will of Kalicicki (1967), 33 Wis. 2d 277, 285, 147 N.W.2d 343. Rather, it is created by law to equitably prevent unjust enrichment, which arises when one party receives a benefit, *297 the retention of which would be unjust as against the other. Hanson v. Valdivia (1971), 51 Wis. 2d 466, 476, 187 N.W.2d 151; Weber v. Sunset Ridge, Inc. (1955), 269 Wis. 120, 125, 68 N.W.2d 706, 70 N.W.2d 5. By means of this device, the person equitably entitled to the res becomes the cestui que trust and may obtain possession from the wrongful holder, the constructive trustee. See: Bogert, Trusts and Trustees (2d ed.), p. 3, sec. 471; 5 Scott, Trusts (3d ed.), pp. 3412, 3413, sec. 462.
It is forcefully argued, however, that a constructive trust, even though otherwise applicable, is not, in equity, to be impressed as against one not guilty of "fraud positive or constructive." Will of Jaeger (1935), 218 Wis. 1, 13, 259 N.W. 842. In the instant case, Patricia Richards was not, initially at least, acting from any improper motive or intent. The stipulated facts indicate that she was entirely unaware of the change of beneficiaries and, in fact, had no knowledge of the existence of the insurance policy until her notification by the insurance company after Jack's death.
We conclude that the trial judge erred in relying upon the Jaeger requirement that a constructive trust will arise only if there is evidence of fraud. In the Estate of Massouras (1962), 16 Wis. 2d 304, 114 N.W.2d 449, the fraud requirements of Jaeger were abandoned as being too restrictive and inconsistent with the basic purpose of the equitable device of a constructive trust. We stated in Massouras, at page 312:
"[A constructive trust] is implied by operation of law as a remedial device for the protection of a beneficial interest against one who either by actual or constructive fraud, duress, abuse of confidence, mistake, commission of a wrong, or by any form of unconscionable conduct, has either obtained or holds the legal title to property which he ought not in equity and in good conscience beneficially enjoy."
*298 See also: Estate of Demos (1971), 50 Wis. 2d 262, 268, 184 N.W.2d 117; Bogert, Trusts and Trustees (2d ed.), p. 3, sec. 471.
The rule is also stated in 5 Scott, Trusts (3d ed.), p. 3444, sec. 470:
"Where a person holding property transfers it to another in violation of his duty to a third person, the third person can reach the property in the hands of the transferee [by means of a constructive trust] unless the transferee is a bona fide purchaser."
Despite the fact that Jaeger indicated that a constructive trust will be impressed only when there was fraud on the part of the recipient, the rationale stated by Scott, supra, was applied in a much earlier case by this court. In Truelsch v. Miller (1925), 186 Wis. 239, 202 N.W. 352, funds embezzled from an employer were used to pay the premiums on an insurance policy under which the wife of the embezzler was the beneficiary. The wife was completely ignorant of her husband's conduct. Upon his death, however, the defrauded employer sought to impress a constructive trust on the insurance proceeds in the beneficiary's hands. This court concluded that a constructive trust was an appropriate remedy, stating that such trust may be asserted:
"... against third parties to whom the property has been transferred with knowledge of the trust or who have paid no consideration for it, provided the identity of the trust fund can be established." (Emphasis supplied.) Truelsch, page 252.
While the case emphasized the wrongdoing of the embezzler, it made it clear that the mere ignorance of the recipient of the original impropriety did not make the recipient an innocent purchaser or, as contemplated in the rules stated by Scott on Trusts, a bona fide purchaser.
Accordingly, we conclude that Jack Richards' wrongful conduct, in violation of the divorce decree, furnishes a proper foundation for the impressing of a constructive *299 trust upon the insurance proceeds which may be followed and recovered from Patricia Richards, who was not a bona fide purchaser. We conclude that the defendant is liable to the plaintiffs in the sum of $11,000, the proceeds of the insurance policy which she received as constructive trustee for the benefit of the children of Jack Richards' first marriage.
By the Court.Judgment reversed, and cause remanded for further proceedings not inconsistent with this opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1308718/ | 581 S.E.2d 68 (2003)
PIEDMONT INSTITUTE OF PAIN MANAGEMENT, T. Stuart Meloy, M.D., Nancy T. Faller, D.O., and William Joseph Martin, D.O., Plaintiffs,
v.
STATON FOUNDATION and Phillip A.R. Staton, in his individual capacity and in his representative capacity as Trustee of the Staton Foundation, Defendants.
Piedmont Institute Of Pain Management, T. Stuart Meloy, M.D., Nancy T. Faller, D.O., and William Joseph Martin, D.O., Plaintiffs,
v.
Centura Bank, Poyner & Spruill, and Poyner & Spruill, L.L.P., Defendants.
No. COA02-147.
Court of Appeals of North Carolina.
May 20, 2003.
*69 Elliot Pishko Morgan, P.A., by Robert M. Elliot, Winston-Salem, for plaintiffs-appellants the PIPM Parties.
*70 Adams Kleemeier Hagan Hannah & Fouts, by Daniel W. Fouts, Greensboro, for defendant-appellee Centura Bank.
Smith Helms Mulliss & Moore L.L.P., by Larry B. Sitton, Manning A. Connors, and Jonathan P. Heyl, Greensboro, for defendants-appellee Poyner & Spruill, L.L.P.
Bell, Davis & Pitt, P.A., by William K. Davis, James R. Fox, and Kevin G. Williams, Winston-Salem, for defendants-appellees Phillip A.R. Staton and the Staton Foundation.
WYNN, Judge.
This appeal arises from a determination: (1) that a settlement agreement ("Settlement") between the Piedmont Institute of Pain Management ("the Piedmont Clinic"), the doctors employed by the Piedmont Clinic ("Doctors") (collectively "The Piedmont Parties"), Phillip Staton, and the Staton Foundation ("Foundation") was binding and enforceable, and (2) that the Settlement released the law firm of Poyner & Spruill and Centura Bank "to the extent that [the Piedmont Parties'] damages ... [did] not exceed $365,000."
On appeal, the Piedmont Parties argue that the negligent, fraudulent, and deceptive actions of Phillip Staton, and his agents, proximately resulted in the Piedmont Parties' decision to execute that Settlement. Accordingly, the Piedmont Parties seek to set aside the Settlement in order to pursue damages against Phillip Staton and the Foundation arising under the original breach of contract. Furthermore, the Piedmont Parties concede that their damages, excluding those arising from the Settlement's termination of the Foundation's contractual obligations to fund Piedmont ("loss of funding damages"), do not exceed $365,000. However, the Piedmont Parties argue that the trial court erred by not permitting the Piedmont Parties to pursue loss of funding damages against Centura Bank and Poyner & Spruill under causes of action sounding in tort. After carefully reviewing the record and relevant case law, we affirm the trial courts' summary judgment order.
I. Facts
The summary judgment order of Judge Tennille sets out the complex factual background culminating in the five consolidated cases presently before this Court and decided herein. We summarize the facts relevant to this case as follows.
Albert Staton founded the Pan American Beverage Company ("Panamco"). In the late 1980s, upon Albert Staton's passing, his son, Phillip Staton, his daughter, Ingeborg Staton, and his wife, Mercedes Staton ("the Statons"), inherited Albert Staton's interest in Panamco. On 8 June 1993, the Statons entered into a Purchase Agreement to sell their stock in Panamco for approximately $119,000,000.00. On that date, Mercedes and Ingeborg Staton appointed Phillip Staton as the sellers' agent. On 25 June 1993, Phillip Staton executed a power of attorney naming Tom and Jerri Brame as his agents to act in his place and stead "with particular regard to the receipt and disbursement of [the Panamco] funds to be wired to Centura Bank on [his] behalf." [1] Pursuant to this authority, the Brames opened an account for Phillip, Ingeborg, and Mercedes Staton, for the receipt of the Panamco funds at Centura Bank in Winston-Salem, North Carolina. On 16 July 1993, the proceeds of the Panamco stock sale were wired to Centura Bank.
In August 1993, Tom Brame discussed with Dr. Stuart Meloy the possibility of financing a pain clinic in order to create a tax shelter for the proceeds of the Panamco sale. In September 1993, Dr. Meloy sent Tom Brame a proposal for the establishment of the Piedmont Clinic. On 1 November 1993, Tom Brame met with three Centura Bank trust officers to discuss the creation of a charitable trust and foundation to fund the Piedmont Clinic. The parties selected the law firm of Poyner & Spruill to prepare the necessary documents. After reviewing documentary material, Poyner & Spruill questioned whether the existing power of attorney *71 authorized Tom Brame to make charitable gifts. To resolve this problem, Poyner & Spruill drafted a new durable power of attorney specifically authorizing charitable gifts. Despite the specific request by Poyner & Spruill that the Statons personally sign their respective durable power of attorney, Phillip Staton signed for Ingeborg and Mercedes Staton as their attorney-in-fact.
On 1 February 1995, the Piedmont Clinic opened and began accepting patients. Shortly thereafter, on 29 March 1996, the Statons informed the Piedmont Parties, Centura Bank, and Poyner & Spruill, that they did not authorize the funding framework for the Piedmont Clinic, wanted to terminate the Foundation, and wanted to retrieve their monies from the charitable trusts funding the Foundation and the Piedmont Clinic. For Poyner & Spruill this revelation created a potential conflict between their legal representation of Centura Bank and the Piedmont Parties. Consequently, immediately after the meeting, Mary Beth Johnston, an attorney for Poyner & Spruill, informed the Doctors that Poyner & Spruill would not be able to represent the Piedmont Parties without a conflict waiver from Centura Bank. On 30 March 1996, William West, then representing the legal interest of Ingeborg and Mercedes Staton, contacted Drs. Meloy and Martin and recommended that the Piedmont Parties hire his former law partner, Edward Powell. On that same date, the Piedmont Parties consulted with and hired Powell.
On 16 April 1996, a settlement agreement was completed. The Piedmont Parties, represented by Powell, agreed to "release, acquit and forever discharge the Foundation, Phillip [Staton], individually and as Trustee of the Foundation, [and] Ingeborg [Staton]" in exchange for the Foundation's payment of $365,000 to the Piedmont Parties. The Settlement expressly provided that the $365,000 "shall be in full, complete, and final satisfaction of any and all claims ... actions, causes of actions, and rights arising under or in connection with the [contract and] ... the Foundation's funding of [the Piedmont Clinic]."
II. The Settlement Agreement (00 CVS 2178)
On 25 February 2000, the Piedmont Parties filed a complaint contending that the Settlement should be set aside because the Piedmont Parties executed the agreement "under duress as a direct result of the fraud, threats, undue influence, mutual mistakes of fact and law, and other improper actions of the Statons' agents." The Piedmont Parties alleged:
(a) Centura Bank and Poyner & Spruill now represent, contrary to indications conveyed to plaintiffs at the meeting at Centura Bank in March, 1996, that the creation and funding of the [charitable trusts] were properly authorized by the Statons, and that therefore, the grants to plaintiffs were valid.
(b) Phillip Staton has testified under oath in a deposition that he was aware of the creation of his trusts at the time it was created in 1993, as well as the amount of his funds committed thereto; that he executed durable powers of attorney in favor of Tom and Jerri Brame on behalf of himself and Ingeborg Staton....
(c) Ingeborg Staton had given to Phillip Staton a general power of attorney in 1992 to act as her attorney-in-fact, and Phillip Staton had given a copy of this 1992 power of attorney to [his attorney] immediately prior to the negotiations which led to the purported settlement agreement....
(d) Ingeborg Staton has testified in depositions to actions which she took ratifying or acquiescing in numerous transactions handled by Tom or Jerri Brame.
Based on these allegations, the Piedmont Parties alleged that the Statons "conspired to misrepresent the facts concerning the validity of the trusts to induce [the Piedmont Parties] to release their interests in continued funding as promised in the grants." Accordingly, the Piedmont Parties asked the trial court to rescind the Settlement.
On 5 February 2001, the Statons and the Foundation filed a motion for summary judgment *72 on all claims asserted by the Piedmont Parties. In his 31 May 2001 summary judgment order, Judge Tennille succinctly framed the issue in noting that "the heart of each cause of action is the premise that [the Piedmont Parties] did not know that Phillip Staton had signed the 1993 Durable Power in his own name and the knowledge of that fact might have kept [the Piedmont Parties] from signing the Settlement, thereby releasing their contract claims against the Foundation." After reviewing the evidence, and detailing the undisputed facts, Judge Tennille granted the Foundation's summary judgment motion and concluded that the Settlement was binding and enforceable. From this determination, the Piedmont Parties appeal and assign error.
A. Standard of Review
Under Rule 56 of the North Carolina Rules of Civil Procedure, summary judgment is properly granted where "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 any party is entitled to a judgment as a matter of law." N.C. Gen.Stat. § 1A-1, Rule 56(c) (2002). "An issue is material if the facts alleged would constitute a legal defense, or would affect the result of the action, or if its resolution would prevent the party against whom it is resolved from prevailing in the action." Koontz v. City of Winston-Salem, 280 N.C. 513, 518, 186 S.E.2d 897, 901 (1972). "The moving party bears the burden of establishing the lack of a triable issue of fact." Sykes v. Keiltex Industries, Inc., 123 N.C.App. 482, 484-485, 473 S.E.2d 341, 343 (1996) (citation omitted). Furthermore, "the evidence presented by the parties must be viewed in the light most favorable to the non movant." Bruce-Terminix Co. v. Zurich Ins. Co., 130 N.C.App. 729, 733, 504 S.E.2d 574, 577 (1998) (citation omitted).
B. Breach of Fiduciary Duty
In ruling that the Settlement was binding and enforceable, Judge Tennille addressed each of the Piedmont Parties' allegations challenging the validity of the Settlement's execution. First, Judge Tennille concluded that, even if a fiduciary duty did exist between Phillip Staton and the Piedmont Parties, this fiduciary duty was repudiated before the settlement negotiations.
{85} [The Piedmont Parties] claim[] that Phillip as trustee to the Foundation owed a fiduciary duty to [the Piedmont Parties] to affirmatively disclose the existence of the powers of attorney signed by Phillip that were used to establish the Foundation and the [charitable trusts]....
{86} Even if Phillip did owe a fiduciary duty to [the Piedmont Parties], this duty ended when Phillip, through his lawyer, told the parties that he would no longer fund the Foundation or [the Piedmont Clinic], (citation omitted). Hence, Phillip repudiated the fiduciary relationship, and his duty to disclose the existence of any powers of attorney ended at that time....
On appeal, the Piedmont Parties challenge this conclusion by arguing that "the Statons were only adversarial in the sense that they had stated that they would no longer permit funding of [the Piedmont Clinic]." Based on this limited repudiation, the Piedmont Parties argue that they "had no evidence to indicate that Phillip, in particular, was misrepresenting the facts ... that his [power of attorney] to Tom [Brame] was not valid." Accordingly, the Piedmont Parties contend it was error for the trial court to conclude that a fiduciary duty did not compel Phillip Staton to disclose the existence of any documentation supporting the Piedmont Clinic's claims to funding.
After reviewing the record and relevant case law, we disagree. In Lancaster v. Lancaster, 138 N.C.App. 459, 530 S.E.2d 82 (2000), for instance, this Court held that "while a husband and wife generally share a confidential relationship ... It is well established that when one party to a marriage hires an attorney to begin divorce proceedings, the confidential relationship is usually over." Id. at 463, 530 S.E.2d at 85; see also Small v. Dorsett, 223 N.C. 754, 761, 28 S.E.2d 514, 518 (1944) (noting that a trust relationship continues until repudiated). In the case sub judice, the Piedmont Parties *73 concede that at the time of the settlement negotiations both parties were represented by counsel, both parties were negotiating for the termination of legal rights, and that, as of March 1996, Phillip Staton had repudiated his fiduciary duties.[2] The Piedmont Parties have not presented any evidence creating a genuine issue of material of fact with respect to the absence of the adversarial nature of their relationship with Phillip Staton during the relevant time. As case law indicates, in such an adversarial setting, Phillip Staton did not have an affirmative duty to disclose unfavorable facts. See e.g., supra, Lancaster, 138 N.C.App. at 463, 530 S.E.2d at 85; Small, 223 N.C. at 761, 28 S.E.2d at 518. Absent a fiduciary duty, the Piedmont Parties' claim for breach of fiduciary duty is untenable. Accordingly, we affirm the trial court's decision to grant summary judgment on the Piedmont Parties' claim for breach of fiduciary duty.
C. Fraud
After disposing of the Piedmont Parties' breach of fiduciary duty claim, Judge Tennille addressed the Piedmont Parties' claim for fraud.
{90} The statute of limitations for fraud [is] three years after the fraud is discovered or should have been discovered.... [The Piedmont Parties] admit[] in [their] brief that Phillip, "in March 1996 ... refused to pay the grant monies due and repudiated his fiduciary duties." .... In light of this repudiation, [the Piedmont Parties were] put on notice in March 1996 to use due diligence to investigate and discover whether fraud existed before signing the settlement agreement; the statute limitation began to accrue in March 1996 and ran out in March 1999. If [the Piedmont Parties] had requested at that time a copy of the very documents at issue, it could have discovered any alleged fraudulent behavior by defendant. [The Piedmont Parties] did not ask for any documents as it entered into settlement negotiations.... This action was not filed until February 2000. Although the parties signed a tolling agreement it too was signed outside the statute of limitations period on April 14, 1999. The statute of limitations bars [the Piedmont Parties'] fraud claims against Phillip.
Accordingly, Judge Tennille dismissed the Piedmont Parties' fraud claim as barred by the statute of limitations.
On appeal, the Piedmont Parties' contend that they "did not obtain information establishing Phillip Staton's fraud until his deposition in January, 1997." Relying on our decision in Spears v. Moore, 145 N.C.App. 706, 551 S.E.2d 483 (2001), the Piedmont Parties argue that "when there is a dispute as to a material fact regarding when the plaintiff should have discovered the fraud, summary judgment is inappropriate, and it is for the jury to decide if the plaintiff should have discovered the fraud." Id. at 708, 551 S.E.2d at 485. The Spears Court, however, also held that: "Failure to exercise due diligence may be determined as a matter of law ... where it is `clear that there was both capacity and opportunity to discover the mistake.'" Id. at 708-09, 551 S.E.2d at 485.
In the case sub judice, Judge Tennille ruled, and we affirm his ruling, that the Piedmont Parties failed to exercise due diligence in uncovering the alleged fraud as a matter of law. The trial court's order noted that on 4 April 1996 Poyner & Spruill "sent a fax memo to Edward Powell[, counsel for the Piedmont Parties,] ... offering to provide *74 copies of documents from [the] file." This file contained Phillip Staton's 1993 durable power of attorney, and other documents relied upon by the Piedmont Parties in their fraud claim. Although given the opportunity, neither counsel nor the Piedmont Parties requested access to this file before entering into the Settlement. Under our decision in Spears, as relied upon by the Piedmont Parties, "it is clear that [the Piedmont Parties had] both capacity and opportunity to discover" Phillip Staton's alleged fraud in March 1996. Accordingly, the Piedmont Parties' fraud claim began to accrue in March 1996 and expired in March 1999. The Piedmont Parties did not file their action alleging fraud until February 2000. Therefore, the Piedmont Parties' action is barred by the statute of limitations; accordingly, we affirm the decision of the trial court.[3]
D. Breach of Contract
Next, Judge Tennille ruled that the Piedmont Parties' breach of contract claim against Phillip Staton was also barred by the statute of limitations. Judge Tennille reasoned that:
{95} The statute of limitations on [the Piedmont Parties'] breach of contract claim filed in 00-CVS-2178 has also run. As indicated above, Phillip had both breached his contract with [the Piedmont Parties] in 1995 and repudiated any continuing obligations in March 1996. The statute of limitations for breach of contract is three years.... This action was not filed until February 2000.... Thus, the claim for breach was filed outside the limitations period.
Although the Piedmont Parties assigned error to this conclusion, the Piedmont Parties have abandoned this assignment of error on appeal. Under well settled principles, the Piedmont Parties' decision to abandon this assignment of error renders the trial court's decision to dismiss the breach of contract claim, as barred by the statute of limitations, "the law of the case on that issue, and it is res judicata and binding upon the court in the second trial." Duffer v. Royal Dodge, Inc., 51 N.C.App. 129, 130, 275 S.E.2d 206, 207 (1981).
E. Negligent Misrepresentation
On appeal, the Piedmont Parties also assign error to the trial court's decision to grant summary judgment on the pleadings with respect to the Piedmont Parties' claim for negligent misrepresentation against the Foundation and the Statons.[4] As essential elements of negligent misrepresentation, the Piedmont Parties must prove that (1) Phillip Staton owed a duty of care to the Piedmont Parties, and (2) that the Piedmont Parties justifiably relied on Phillip Staton for accurate information. Jordan v. Earthgrains Cos., ___ N.C.App.___,___, 576 S.E.2d 336 (2003). However, as noted in our discussion of the Piedmont Parties' breach of fiduciary duty claim, during the settlement negotiations Phillip Staton and the Piedmont Parties were adverse. Accordingly, Phillip Staton neither owed a duty to the Piedmont Parties nor could the Piedmont Parties have justifiably relied upon him. Consequently, we affirm the trial court's judgment and overrule this assignment of error.
We have reviewed the Piedmont Parties remaining assignments of error relating to Phillip Staton, Ingeborg Staton, and the *75 Foundation, and find them to be without merit. Therefore, we affirm the trial court's summary judgment order.[5]
F. Mootness
Furthermore, as an alternative ground for affirming the trial court's summary judgment order, we hold that the Piedmont Parties' appeal is fatally defective with respect to the Foundation and the Statons. Although the Piedmont Parties initially assigned error to the trial court's decision to grant summary judgment on the underlying breach of contract claim, they abandoned this assignment of error by failing to brief it on appeal. See N.C. R.App. Proc. 28(a); State v. Prevatte, 356 N.C. 178, 214, 570 S.E.2d 440, 460 (2002). As noted, under well settled principles, the Piedmont Parties' decision to abandon this assignment of error renders the trial court's decision to dismiss the breach of contract claim, as barred by the statute of limitations, "the law of the case on that issue, and it is res judicata and binding upon the court in the second trial." Duffer, 51 N.C.App. at 130, 275 S.E.2d at 207.
The Piedmont Parties assignments of error relating to breach of fiduciary duty, negligent misrepresentation, and fraud, are contingent on the viability of the Piedmont Parties' claims arising from an alleged breach of contract.[6] Consequently, even if this Court were to set aside the Settlement on the basis of fraud, negligent misrepresentation, or breach of fiduciary duty, the statute of limitations forever bars the Piedmont Parties' claims arising from the Foundation's and the Statons' alleged breach of contract. "Whenever, during the course of litigation it develops that the relief sought has been granted or that the questions originally in controversy between the parties are no longer at issue, the case should be dismissed, for courts will not entertain or proceed with a cause merely to determine abstract propositions of law." In re Peoples, 296 N.C. 109, 147, 250 S.E.2d 890, 912 (1978). In the case sub judice, the questions originally in controversy between the Piedmont Parties, the Foundation, and the Statonsnamely, damages arising from the alleged breach of contractare no longer at issue. Accordingly, as an alternative ground for affirming the trial court's summary judgment order, we find that the Piedmont Parties' collateral attack of the Settlement is moot by virtue of the trial court's unchallenged ruling that the underlying breach of contract claim is barred by the statute of limitations.
III. Poyner & Spruill and Centura Bank (96 CVS 7140)
On 14 May 1996, the Piedmont Parties filed an amended complaint alleging numerous *76 claims against Centura Bank and Poyner & Spruill including breach of fiduciary duty, fraud, constructive fraud, negligent misrepresentation, professional negligence, breach of rules of professional conduct, and unfair and deceptive trade practices. In these claims, the Piedmont Clinic and the Doctors, in their individual capacities, sought to recover loss of funding damages proximately caused by the alleged negligence of defendants. On 5 February 2001, Centura Bank and Poyner & Spruill filed motions for summary judgment on all claims asserted by the Piedmont Parties. On 31 May 2001, the trial court granted summary judgment with respect to all claims, except for professional negligence and negligent misrepresentation. On appeal, the Piedmont Parties contend the trial court erred in granting summary judgment on their claims against Poyner & Spruill and Centura Bank. After carefully reviewing the record, we disagree.
The trial court dismissed the Piedmont Parties' claims on numerous grounds. Judge Tennille addressed "the damages issues first because the measure of damages permeates the liability issues." Judge Tennille realized that "the heart of the dispute between [the Piedmont Parties, Poyner & Spruill] and Centura Bank is the measure of damages under any cause of action" asserted by the Piedmont Parties. We agree.
In his summary judgment order, Judge Tennille framed the damages issue by concluding that "the damages recoverable by [the Piedmont Parties] ... [are] limited to damages in excess of [those] recovered by [the Piedmont Parties] in the Settlement agreement." Furthermore, the trial court provided that "if [the Piedmont Parties'] claims for damages other than loss of funding do not exceed $365,000, [Poyner & Spruill] and Centura Bank are entitled to summary judgment, and this order would constitute a final order on all claims." In order to certify that the trial court's summary judgment was a final order, and immediately appealable, the Piedmont Parties "stipulated ... that [their] damages, other than those relating to the loss of funding, [did] not exceed the amount of $365,000." On appeal, the Piedmont Parties argue the trial court erred because "under standard tort damage principles [they are] entitled to recover ... the loss of [] funding" proximately caused by the negligent and fraudulent acts of Centura Bank and Poyner & Spruill.
A. Standard of Review
As noted, under Rule 56 of the North Carolina Rules of Civil Procedure, summary judgment is properly granted where "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 any party is entitled to a judgment as a matter of law." N.C. Gen.Stat. § 1A-1, Rule 56(c). Furthermore, "the evidence presented by the parties must be viewed in the light most favorable to the non-movant." Bruce-Terminix Co. v. Zurich Ins. Co., 130 N.C.App. at 733, 504 S.E.2d at 577 (citation omitted).
A party is entitled to judgment as a matter of law if the non-movant fails to forecast evidence with respect to an essential element of a claim. Murray v. Justice, 96 N.C.App. 169, 174, 385 S.E.2d 195, 199 (1989). "Certain torts require as an essential element ... that plaintiff incur actual damage." Hawkins v. Hawkins, 101 N.C.App. 529, 532, 400 S.E.2d 472, 474 (1991). Relevant to the present case, these torts include: (1) negligent misrepresentation, Simms v. Prudential Life Ins. Co. of Am., 140 N.C.App. 529, 532, 537 S.E.2d 237, 240 (2000); (2) breach of fiduciary duty, Pitts v. Am. Sec. Ins. Co., 144 N.C.App. 1, 8, 550 S.E.2d 179, 186 (2001); (3) fraud, Myers & Chapman, Inc. v. Thomas G. Evans, Inc., 323 N.C. 559, 568, 374 S.E.2d 385, 391 (1988); (4) constructive fraud, Jay Group, Ltd. v. Glasgow, 139 N.C.App. 595, 600, 534 S.E.2d 233, 236 (2000); and (5) unfair and deceptive trade practices, N.C. Gen.Stat. § 75-1.1 (2002).
Accordingly, the trial court properly granted summary judgment with respect to all claims if (1) the non-profit Piedmont Clinic failed to forecast evidence of actual damage proximately caused by the negligent, fraudulent, and deceptive practices of Centura Bank or Poyner & Spruill, and (2) the Doctors, *77 in their individual capacities, failed to forecast evidence of actual damage.
B. The Piedmont Clinic's Loss of Funding Damages
The Piedmont Clinic and the Doctors concede that they "received an amount in excess of [their] non-funding losses" in the Settlement. However, the Piedmont Clinic argues that the trial court erred by denying it the opportunity to seek loss of funding damages against Centura Bank and Poyner & Spruill which exceeded $365,000. After carefully reviewing the record and relevant case law, we hold that the Piedmont Clinic may not seek loss of funding damages against Poyner & Spruill or Centura Bank because the Piedmont Clinic was completely compensated for these losses in the Settlement.
We note, at the onset of our analysis, that a search of legal databases for the term "loss of funding damages" does not return one case in the annals of the state or federal judiciary in the past two hundred years. Furthermore, during oral argument the Piedmont Clinic conceded that it was not aware of one case where a non-profit organization was awarded damages, or even alleged damages, on the basis of lost funding. Nevertheless, the Piedmont Clinic argues that they should be able to recover damages, measured by their lost funding attendant to the grant letter with the Foundation, through tort actions against Poyner & Spruill and Centura Bank. Although, for the reasons stated herein, it is unnecessary for this Court to decide whether or not loss of funding damages are available in North Carolina, we note that a claim to such damages is tenuous, at best.
The Piedmont Clinic relies on our decision in Leftwich v. Gaines, 134 N.C.App. 502, 521 S.E.2d 717 (1999), for the proposition that loss of funding damages are available in North Carolina tort actions. In Leftwich, we held that "a plaintiff may recover loss of bargain damages in a tort action if she establishes (1) that the damages are the natural and probable result of the tortfeasor's misconduct and (2) that the amount of damages is based upon a standard that will allow the finder of fact to calculate the amount of damages with reasonable certainty." The Piedmont Clinic's reliance on Leftwich is misplaced. Despite its broad language, Leftwich does not stand for the proposition that loss of bargain damages, let alone loss of funding damages, are available in all tort actions in North Carolina. See e.g., Middleton v. Russell Group, 126 N.C.App. 1, 483 S.E.2d 727 (1997).
Moreover, even assuming that Leftwich controls, the Piedmont Clinic has failed to present any evidence to satisfy the requirement in Leftwich "that the amount of damages is based upon a standard that will allow the finder of fact to calculate the amount of damages with reasonable certainty." The Piedmont Clinic's loss of funding claims arise from a 21 October 1994 grant letter which provided:
[T]he Foundation agrees that it will provide additional funding to [the Piedmont Clinic] in an amount of approximately $900,000 per year for a period of twenty years.... [H]owever, this agreement for long-term funding is expressly conditional upon the Foundation itself having such funds available.... [Additionally the Piedmont Clinic] must renew its grant request annually in writing.... [Moreover,] in the event that [the Piedmont Clinic's] tax-exempt status is revoked, [the Piedmont Clinic] shall return to the Foundation any funds not expended or committed at such time, and the Foundation will suspend its financial support of [the Piedmont Clinic].
Consequently, the Piedmont Clinic's theory of damages requires the finder of fact to speculate, in contravention of Leftwich, as to whether (1) the Piedmont Clinic would have remained tax-exempt for twenty years, (2) the Piedmont Clinic would have continued to submit annual grant requests for twenty years, and (3) the Foundation would have had funds available for twenty years. Given these contingencies, it can not be said that the Piedmont Clinic's alleged damages could have been ascertained to a "reasonable certainty." Accordingly, the Piedmont Clinic can not rely on Leftwich for the proposition that they are entitled to loss of funding damages.
Notwithstanding the Piedmont Clinic's misplaced reliance on Leftwich, we need *78 not fully address the issue of whether loss of funding damages are available in North Carolina, as this issue is resolved on more narrow grounds. In the Settlement, the Piedmont Clinic agreed to "release, acquit and forever discharge the Foundation" in exchange for $365,000 which was to be considered a "full, complete, and final satisfaction of any and all claims [the Piedmont Clinic had] with respect to ... any claims, actions, causes of actions, and rights arising under" the contract including "the Foundation's funding" of the Piedmont Clinic. By settling its alleged "loss of funding damages" with the Foundation and the Statons, the Piedmont Clinic is barred, as a matter of law, from obtaining "double recovery" for the same loss or injury from Centura Bank and Poyner & Spruill. This result is required by this Court's decision in Chemimetals Processing, Inc. v. Schrimsher, 140 N.C.App. 135, 535 S.E.2d 594 (2000), where we held that a plaintiff, who had previously entered into a settlement fully compensating plaintiff, could not recover against its board of directors, or its Certified Public Accountants ("CPAs"), for the same injury. See also Kogut v. Rosenfeld, ___ N.C.App.___,___, 579 S.E.2d 400, 403 (2003).
"In Chemimetals, the plaintiff sued its corporate president for breach of contract, breach of fiduciary duty, and unfair and deceptive trade practices arising from the president's scheme to divert money to himself. Before the case proceeded to trial, the parties entered into a `Settlement Agreement and Mutual Release.' In consideration for the settlement, plaintiff dismissed the complaint. Plaintiff then initiated a second lawsuit against the board of directors and accountants alleging that they conspired to present financial statements which overstated the assets for three fiscal years. The trial court entered summary judgment for the board of directors and accountants." Kogut, ___ N.C.App. at___, 579 S.E.2d at 402 (citations omitted).
"The plaintiff in Chemimetals appealed the order of summary judgment arguing that the release entered in the first action did not preclude the claims brought in the second action against the board of directors and accountants. This Court acknowledged that although the plain terms of the release did not bar the second action, the plaintiff could not assert a second action against the board of directors and accountants to collect for the same losses recovered in the first action against its president. Our Court asserted that:"
[The plaintiff] has suffered but one injury in this casemonetary loss due to the purported diversion of profits and labor from [the plaintiff] by [the plaintiff's president]. Under the facts as alleged by [the plaintiff], all actions in the course of events leading to financial demise of [the company] were concurrent. [The plaintiff's] monetary loss, which was the injury created by [the president's] scheme, is the same injury caused by the alleged failure of the board of directors and CPAs to notice [the president's] unlawful acts. That only one injury occurred is in no way altered by the fact that the board of directors and CPAs may have been guilty of separate wrongdoing.... [Plaintiff] may not assert a second action seeking to collect for those losses against the board of directors and CPAs.
"The Chemimetals court held that by entering into the settlement agreement in the first action, plaintiff had been compensated for the company's decline in income and could not seek to recover for those same losses from the board of directors and CPAs." Kogut, ___ N.C.App. at ___, 579 S.E.2d at 403 (citations omitted).
In concluding that our decision in Chemimetals was a bar to the Piedmont Parties' claims against Poyner & Spruill and Centura Bank, Judge Tennille noted:
The facts in Chemimetals are strikingly similar to those in the case at bar. Like Chemimetals, the losses [the Piedmont Parties] seek[] to recover for damages resulting from the creation and termination of the [charitable trusts] and Foundation are the same losses that were compensated by the Settlement with Phillip and the Foundation. Thus, from this event, [the *79 Piedmont Parties] may only recover once for its damages.[7]
On appeal, the Piedmont Clinic argues that the Settlement did not fully compensate them for their non-funding losses. However, the clear terms of the Settlement provide that the $365,000 payment "shall be in full, complete, and final satisfaction of any and all claims [the Piedmont Parties have] with respect to the [contract] .... [including] the Foundation's funding of [the Piedmont Clinic]."[8] The Piedmont Clinic did not present any evidence which, when viewed in the light most favorable to the Piedmont Clinic, created a genuine issue of material fact concerning the measure of damages.
In sum, we affirm the trial court's summary judgment order dismissing the Piedmont Clinic's remaining claims against Centura Bank and Poyner & Spruill because (1) the Piedmont Clinic concedes that its non funding damages do not exceed $365,000, (2) the Piedmont Clinic was fully compensated for its loss of funding damages, if any, in the Settlement, and (3) the Piedmont Clinic has not alleged any other damages.
C. Doctor's Loss of Funding Damages
The Doctors, in their individual capacities as employees of the Piedmont Clinic, have asserted claims identical to those asserted by the Piedmont Clinic against Centura Bank and Poyner & Spruill. Although certainly not clear in their complaint, seemingly, the Doctors seek an amount equal to their contemplated annual salaries at the Piedmont Clinic multiplied by twenty years. The trial court limited the Doctors' recovery to damages based upon reliance and change of circumstance in procuring alternative employment. On appeal, the Doctors claim entitlement to twenty years of anticipated damage flowing from the negligent acts and omissions of Poyner & Spruill and Centura Bank which resulted in the Doctors' decision to forego their rights to an annual salary paid by the Piedmont Clinic's lost funding. Therefore, the Doctors assign error to this ruling.
After carefully reviewing the record, we hold that the related assignments of error and arguments are fatally undermined by the Doctors' multiple stipulations in the trial court and on appeal. On 25 October 2000, the Doctors made the following pertinent stipulations:
2. ... Any fluctuation (increases or decreases between the years) in the doctors' annual compensation from [Piedmont Anesthesia and Pain Consultants, P.A.] since 1997 is not caused by or attributable to [Poyner & Spruill].
3. Had Dr. Stuart Meloy remained with Winston-Salem Anesthesia Associates and not begun working for the Piedmont Clinic in 1995, he would have earned compensation from [the Winston-Salem Anesthesia Associates] ranging between $317,120.03 (his 1994 compensation from [the Winston-Salem Anesthesia Associates]) and *80 $317,279.04 (his 1997 compensation from [Piedmont Anesthesia and Pain Consultants]).
4. Had Drs. William J. Martin and Nancy Faller remained with the Medical University of South Carolina and not moved to North Carolina in 1995 [to work at the Piedmont Clinic], they each would have earned less compensation since 1995 than they actually earned from [the Piedmont Clinic] and [the Piedmont Anesthesia and Pain Consultants].
Furthermore, on 7 June 2001, the Doctors, in their individual capacities, stipulated and agreed that their "damages, other than those relating to the loss of funding, [did] not exceed the amount of $365,000." As noted, the Piedmont Parties' settled their claims against the Foundation and the Statons for $365,000.
The damages that the Doctors now seek against Poyner & Spruill and Centura Bank, based upon various negligence, fraud, and breach of fiduciary duty claims are not properly termed "loss of funding damages" under North Carolina law. Instead, damages in such actions are measured by the difference between the benefit receivedthe Doctors' current and reasonably certain annual salaries over the next twenty yearsand the benefit promisedthe Doctors' reasonably certain annual salaries at the Piedmont Clinic over the next twenty years. See e.g., River Birch Assoc. v. Raleigh, 326 N.C. 100, 130, 388 S.E.2d 538, 556 (1988) ("The measure of damages for fraud ... is the difference between the value of what was received and the value of what was promised."); Middleton v. Russell Group, 126 N.C.App. 1, 29, 483 S.E.2d 727, 743 (1996) ("The damages recoverable for a negligent misrepresentation are those necessary to compensate the plaintiff for the pecuniary loss...."); Bernard v. Central Carolina Truck Sales, Inc., 68 N.C.App. 228, 233, 314 S.E.2d 582, 585 (1984) (Prior to trebling damages in an unfair and deceptive trade practices case, "[t]he measure of damages ... is [intended] `to restore the victim to his original condition....").
Consequently, the Doctors' alleged damages are not based on or measured by the Piedmont Clinic's "loss of funding," rather the Doctors' damages, if any, are limited to individual pecuniary loss measured by the difference between the benefit promised and the benefit received. However, based upon the Doctor's own stipulations, they have not suffered any damages, other than "loss of funding" damages. Accordingly, the Doctors have failed to allege damages under any tort theory, and, therefore, their claims against Poyner & Spruill and Centura Bank were properly dismissed for failing to allege as damage an essential element of each cause of action.
Affirmed.
Judges TYSON and STEELMAN concur.
NOTES
[1] The trial court noted the existence of substantial evidence that in the "Brames' management of these various accounts, tens of millions of dollars were lost, and substantial sums were transferred by the Brames for their own benefit." As a result, Tom Brame asserted his Fifth Amendment privilege and refused to testify in the civil proceedings below.
[2] These sentiments are echoed in the trial court's unchallenged ruling that the Settlement was not the product of undue influence.
{92} [The Piedmont Parties] claim of undue influence in connection with the Settlement also fails for lack of any evidence supporting such claim.... [The Piedmont Parties] retained its own experienced counsel.... [The Piedmont Parties] were [not] in any immediate physical or financial danger....
{93} Phillip's counsel clearly put [the Piedmont Parties] on notice that Phillip was contesting the creation of the [charitable trusts] and the Foundation. That fact was true. Legal grounds for Phillip's challenge existed. Whether or not he would have prevailed on his claims at trial was the risk he and [the Piedmont Parties] faced in April 1996 and on which they negotiated and compromised.... There was no misrepresentation.
[3] During oral argument, the Piedmont Parties argued that access to the documents was contingent on the consent of all parties and, therefore, they did not, in a literal sense, have the opportunity and capacity to obtain the 1993 durable power of attorney. Despite this argument, one critical fact remains: Poyner & Spruill offered the Piedmont Parties an opportunity to view the materials which are the basis for this fraud claim, and the Piedmont Parties did not diligently pursue this opportunity.
[4] On 1 August 2000, the Piedmont Parties' claims against the Foundation and Phillip Staton for interference with contract, breach of duty of good faith, mutual mistake of fact, duress, and negligent misrepresentation were disposed of by the Honorable L. Todd Burke on a 12(c) Motion for Judgment on the Pleadings. We note, that "[t]he standard of review for a Rule 12(c) motion is whether the moving party has shown that no material issue of fact exists upon the pleadings and that he is clearly entitled to judgment." Affordable Care v. N.C. State Bd. of Dental Examiners, 153 N.C.App. 527, 532, 571 S.E.2d 52, 57 (2002).
[5] As noted, the present action before this Court is actually five consolidated cases for the purposes of appeal. In three of these cases, 96 CVS 1409, 96 CVS 7224, and 99 CVS 5156, the Piedmont Parties assign error to the trial court's approval of a confidential settlement ("Settlement II") in which Centura Bank, Phillip Staton, individually and as trustee of the Foundation, Ingeborg Staton, and Poyner & Spruill, agreed to terminate the charitable trusts and dissolve the Foundation. In addition to assigning error, the Piedmont Parties have filed a petition for a writ of certiorarianticipating that this Court would likely conclude that they lacked standing to challenge Settlement II to which they were not a party. Herein, we decline to address the Piedmont Parties' assignments of error, and deny their petition for a writ of certiorari, because by the express terms of the first Settlement:
8. It [was] agree[d] that [the Piedmont Parties]... [would not] oppose any effort by Phillip to dissolve the Foundation or his alleged charitable trusts that have funded the Foundation.
By affirming the trial court's decision that the Settlement is binding and enforceable, the Piedmont Parties released any right, if any, to oppose Settlement II which dissolved the trusts and the Foundation.
[6] For instance, in its claim to set aside the Settlement on the basis of fraud, the Piedmont Parties allege that "statements made by [the Foundation, the Statons, and the Statons' agents] ... were made with the intent to induce, coerce, and mislead [the Piedmont Parties] into releasing valuable contractual rights." In the Piedmont Parties' claim to set aside the Settlement on the basis of negligent misrepresentation, the Piedmont Parties allege that "[the Statons' agents] negligently or recklessly misrepresented facts concerning the Statons' authorization of the funding of [the Piedmont Clinic] and other facts concerning the validity of the [contract]." In the Piedmont Parties' claim to set aside the Settlement on the basis of breach of fiduciary duty, the Piedmont Parties allege that the Foundation and the Statons "obtained potential benefits from their wrongful acts in the purported release of them from their ongoing contractual obligations."
[7] As an alternative ground for denying the Piedmont Parties loss of funding damages, Judge Tennille also noted that the settlement "further deprive[d] [the Piedmont Parties] of any claim for damages they would have recovered from any party under its contract, including Centura Bank and [Poyner & Spruill], because [the Piedmont Parties] released their contractual rights in return for a cash payment." Accordingly, Judge Tennille reasoned:
{114} The Settlement itself acts as a bar to any claim for loss of funding. [The Piedmont Parties] had a contract with the Foundation. The Settlement released the Foundation from that contract, thus terminating it in exchange for cash. Having terminated the contract, [the Piedmont] Parties may not now sue [Poyner & Spruill] and Centura Bank for the loss of funding the contract provided.
[8] Although the Settlement expressly provided that it "in no way shall ... operate as a release of any claims ... against Centura Bank [or] Poyner & Spruill," this language does not provide the Piedmont Parties with a right, or a forum in which, to seek double recovery. Furthermore, the settlement agreement construed by this Court in Chemimetals contained a similar provision. Notwithstanding this provision, we held "the plain language of the release ... [did] not end our inquiry." Instead, we determined that "only one injury occurred" despite the existence of "separate wrongdoing." Because plaintiff had already obtained a "full recovery" for that injury, as in the case sub judice, we held that "Chemimetals may not assert a second action seeking to collect for those [same] losses...." Chemimetals, 140 N.C.App. at 138, 535 S.E.2d at 597. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1459824/ | 863 F.Supp. 165 (1994)
UNITED STATES of America, Plaintiff,
v.
James COLLINS, Defendant.
No. 94 Cr. 106 (KMW).
United States District Court, S.D. New York.
September 16, 1994.
*166 Jeremy H. Temkin, Asst. U.S. Atty., Mary Jo White, U.S. Atty., New York City, for plaintiff.
Viktor V. Pohorelsky, Gold & Wachtel, New York City, for defendant.
MEMORANDUM OPINION AND ORDER
KIMBA M. WOOD, District Judge.
Defendant James Collins is charged with knowingly possessing a firearm in interstate commerce after having been convicted previously of a crime punishable by imprisonment for a term exceeding one year. He moves to suppress all evidence concerning the gun seized from him on the ground that the search violated his Fourth Amendment rights. A suppression hearing was held on July 7, 1994, and the parties submitted both pre- and post-hearing memoranda. For the reasons set forth below, the court grants the defendant's motion to suppress.
I. BACKGROUND
Testimony at the July 7, 1994 suppression hearing revealed the following uncontroverted facts. On February 14, 1994 four agents of the Drug Enforcement Administration ("DEA") went to the Milford Plaza Hotel ("hotel") based on information obtained from the DEA's Bogota, Columbia office regarding the suspected drug activity of Delio Mosquera ("Mosquera"), reportedly a guest in the hotel. Upon their arrival, the DEA agents were assisted in locating Mosquera's room by Eduardo Santiago ("Santiago"), the hotel's security officer. When the DEA agents identified themselves at Mosquera's door, Mosquera consented to a search of the room, where the agents discovered approximately 750 grams of heroin. Mosquera was then arrested.
Shortly after the arrest, the telephone in the hotel room rang. Mosquera told the DEA agents that the caller was likely to be his New York heroin connection, and DEA Agent Rafael Reyes ("Reyes"), posing as Mosquera, answered the telephone, and made arrangements to meet with the unidentified female caller in order to complete the drug transaction. The woman informed Agent Reyes that she was currently with another person in an automobile that could not be left unattended, but that she could meet him in front of the hotel in twenty minutes.
Rather than follow that plan, the woman knocked on the door of the room in which Mosquera and the DEA agents were located, approximately ten to fifteen minutes after the telephone call. Agent Reyes admitted the woman, later identified as Carmen Giraldo ("Giraldo"). After she instructed him to accompany her to a second, undisclosed location to exchange the money for the heroin, he placed her under arrest. Because of the woman's earlier reference on the telephone to a car, Agent Brian Connelly ("Connelly") went downstairs after her arrest to look for *167 the car that had brought her to the hotel. After observing nothing unusual, Agent Connelly returned to the room upstairs.
At roughly this same time, Santiago observed a car double-parked in front of the hotel. At the suppression hearing, Santiago testified that he was suspicious of the car because he had approached it twice to verify that its occupants were, in fact, waiting for someone inside the hotel, and on each occasion the car drove around the block in an evasive manner. Santiago testified, and the DEA agents confirmed, that when the DEA agents came downstairs after the arrests in the hotel room, Santiago promptly reported to them that he had observed a car outside the hotel that he had concluded was suspicious. Santiago did not tell these agents the factual basis for his conclusion. Rather, Santiago simply reported that a suspicious car was parked outside, and the agents thereafter prepared to search that car.
(The "suspicious" car was, in fact, wholly unconnected to the drug transaction that had recently unfolded inside the hotel. Instead, the car was a livery cab that contained the driver in the front seat, and the defendant and his five year old nephew in the back; the cab driver had been instructed to remain parked outside of the hotel while the defendant's sister-in-law attempted to secure accommodations for her family for the evening. At the suppression hearing, the cab driver and the defendant contradicted Santiago's claim that the cab had twice driven around the block; both testified that the cab had remained stationary for the entire time that the defendant's sister-in-law was inside the hotel.)
After escorting defendants Mosquera and Giraldo to a government vehicle, Agents Reyes and Connelly, along with two New York City Police Department officers who had been dispatched to the hotel to assist the DEA agents with their search of the car, approached the livery cab in which the defendant was waiting, and knocked on the windows. The driver, Ramon Perez ("Perez"), was instructed to surrender his keys, and to exit the automobile. (Transcript of the Suppression Hearing of July 7, 1994 ("Tr.") at 112, 163).
There is a dispute as to what occurred next.[1] The court does not need to resolve that dispute however, because the Terry stop itself was made without the reasonable basis required by law.
II. DISCUSSION
The defendant contends that the seizure violated his Fourth Amendment rights because it ran afoul of the guidelines enunciated in Terry v. Ohio, 392 U.S. 1, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968) and its progeny governing so-called investigatory stops. The court agrees.
Terry held that even a limited investigatory stop by law enforcement officers implicates the Fourth Amendment because such a stop clearly constitutes a seizure. Terry, 392 U.S. at 16, 88 S.Ct. at 1877. However the Court also held that so long as the investigating officer has "a reasonable suspicion supported *168 by articulable facts that criminal activity `may be afoot'," U.S. v. Sokolow, 490 U.S. 1, 7, 109 S.Ct. 1581, 1585, 104 L.Ed.2d 1 (1989) (quoting Terry, 392 U.S. at 30, 88 S.Ct. at 1884), such a limited stop for questioning does not offend the Constitution, even in circumstances where probable cause for arrest may be lacking. See also U.S. v. Glover, 957 F.2d 1004, 1008 (2d Cir.1992). Under certain circumstances, an officer may not only briefly detain an individual for questioning, but may also "frisk" him for weapons if it is reasonable for the officer to believe that he may be armed. Terry, 392 U.S. at 25-26, 88 S.Ct. at 1882-1883; see also Glover, 957 F.2d at 1009 (2nd. Cir.1992).
An investigative stop comports with the Fourth Amendment only if it satisfies two, distinct criteria. First, the stop itself must be based on the officers' reasonable suspicion, supported by articulable facts, that criminal activity is underway, and second, the scope of the stop and search must be reasonably related to the circumstances that initially justified the stop. Terry, 392 U.S. at 20, 88 S.Ct. at 1879.
The agents here failed to satisfy the first requirement, that there be a factual predicate for a reasonable suspicion prior to the search. The standard for assessing the reasonableness of an officer's suspicion is not subject to "hard and fast rules," but it is an objective standard. Glover, 957 F.2d at 1010; U.S. v. Salazar, 945 F.2d 47, 49 (2nd Cir.1991). In this context objective means that "in justifying the particular intrusion, the police officer must be able to point to specific and articulable facts which, taken together with rational inferences from those intrusions, reasonably warrant that intrusion." Terry, 392 U.S. at 21, 88 S.Ct. at 1880. "Anything less would invite intrusions upon constitutionally guaranteed rights based on nothing more substantial than inarticulate hunches, a result this Court has consistently refused to sanction." Id., 392 U.S. at 22, 88 S.Ct. at 1880.
When assessing whether particular information possessed by the officer is sufficient, courts look to the totality of the circumstances. See, e.g., Alabama v. White, 496 U.S. 325, 332, 110 S.Ct. 2412, 2417, 110 L.Ed.2d 301 (1990); Sokolow, 490 U.S. at 78, 109 S.Ct. at 1585-1586. The Second Circuit Court of Appeals has stated that in cases involving anonymous tips, the "totality of the circumstances" inquiry requires a court to consider what information underlying the tip itself was possessed by the police before they made the Terry stop. An officer's independent verification of the tip's specific details or observation of additional circumstances consistent with the unlawful activity have each been cited by the Court of Appeals as a way of enhancing the reliability of the tip. See U.S. v. Walker, 7 F.3d 26, 31 (2d Cir.1993); U.S. v. Bold, 19 F.3d 99, 103 (2d Cir.1993); Salazar, 945 F.2d at 51.
In this case, the DEA agents had ample reason to be on the look-out for suspicious cars, given that the woman arrested in the drug transaction had stated that she would arrive at the hotel in a car that could not be left unattended. The agents were not, however, justified in relying only on Santiago's bare conclusion that this particular cab was suspicious. Rather, to justify an investigative stop of the cab, the officers would need to be aware of articulable facts corroborating Santiago's suspicion. If, for instance, after Santiago pointed out the car, the agents had observed particular features of the car and its movements that confirmed Santiago's impression, the agents may have may have had a reasonable basis for a Terry stop. Indeed, such specific information provided in tips and later corroborated by officers' own observations of particular vehicles suspected to be involved in criminal activity have supported findings of reasonable suspicion. See, e.g., Bold, 19 F.3d at 102-03 (anonymous tip describing location and physical description of defendants and their automobile, along with information that one of them possessed a gun, was sufficient to constitute a reasonable suspicion when combined with officers' own observations that a car meeting that precise description was parked suspiciously in a remote area of the described parking lot). However, as both Agents Reyes and Connelly testified, at the time that they approached the cab, ordered the driver out, and questioned the defendant, they knew only that Santiago believed that the cab was suspicious, and that the cab had tinted windows. The prosecutor has not argued that the mere presence of tinted windows in the cab justifies *169 a search, and I hold that it does not. The agents thus did not have the required factual basis to justify the stop of that particular cab.
As the Second Circuit Court of Appeals recently noted, "[a] Terry-type patdown is permissible with respect to persons who are believed, on the basis of specific and articulable facts, to have behaved suspiciously ...; but such a patdown is not permissible with respect to a person in a public place where the officers have no specific and articulable facts on which to base a suspicion of that person in particular." (emphasis added) U.S. v. Jaramillo, 25 F.3d 1146, 1152 (2d Cir.1994). The Court of Appeals in Jaramillo also cited approvingly the Supreme Court's determination in Ybarra v. Illinois, 444 U.S. 85, 100 S.Ct. 338, 62 L.Ed.2d 238 (1979), that "`a person's mere propinquity to others independently suspected of criminal activity' provides neither probable cause to search that person, nor the basis for `a reasonable belief that he was armed and presently dangerous.'" Jaramillo, 25 F.3d at 1152 (quoting Ybarra, 444 U.S. at 91, 100 S.Ct. at 342).
Because the government did not demonstrate that its Terry stop of the defendant was based on the reasonable suspicion required by the Fourth Amendment, the evidence obtained in the search must be suppressed.[2]
III. CONCLUSION
For the reasons set forth above, the defendant's motion to suppress the evidence is granted.
SO ORDERED.
NOTES
[1] The livery cab had tinted windows. Agent Reyes testified that Agent Connelly opened the door from the outside at precisely the same moment that the defendant opened it from the inside (Tr. at 13), whereas Agent Connelly testified that he opened the door on his own, after observing the defendant in the back seat. (Tr. at 163-64). Both agents testified that as soon as the rear door was opened, they began questioning the defendant about what he was doing outside the hotel. (Tr. at 17-18, 164). In response to this questioning, the defendant responded that he was waiting for his wife, who was getting a room inside. Id.
The defendant testified, however, that the agents did not question him immediately after opening his car door, but, rather, began by ordering him to step out of the car, stating that they were conducting a "legal search" of the car, and asked the defendant to display his hands. (Tr. at 134). The defendant testified that at that point he attempted to conceal under the seat the gun he was carrying for protection in his sister-in-law's neighborhood, from which he had just come. (Tr. at 148). Santiago's testimony tends to confirm the defendant's statement that he was asked to step out of the car before the questioning began, and before the agents saw the gun. Santiago testified that he observed the entire encounter between the defendant and the agents, and that as soon as the car doors were opened, he heard Agent Reyes ask the defendant to step out of the car, and then, seconds later, heard the agents yelling "gun." (Tr. at 91-3).
The defendant and the agents agree, however, that at some point, Agent Connelly asked the defendant to display his hands, and that the defendant at that time attempted to conceal a weapon. The agents saw the weapon, grabbed it, and then proceeded to arrest the defendant.
[2] I note that the defendant has the initial burden of establishing that his or her own Fourth Amendment rights were violated by the challenged search or seizure by demonstrating that he or she has a legitimate and reasonable expectation of privacy in the place searched. U.S. v. Osorio, 949 F.2d 38, 40 (2nd Cir.1991). Once this burden is met (and the government did not contest that the defendant here met his burden of demonstrating that he had a right to privacy inside the cab), the burden then shifts to the government to show that a warrantless search fell within one of the exceptions to the warrant requirement. See, e.g., U.S. v. George, 975 F.2d 72, 77 (2nd Cir.1992); U.S. v. Ochs, 461 F.Supp. 1 (S.D.N.Y.1978), aff'd, 636 F.2d 1205 (2d Cir. 1980). Specifically, the government must show by a preponderance of the evidence that the warrantless search does not contravene the Fourth Amendment. U.S. v. Matlock, 415 U.S. 164, 178, 94 S.Ct. 988, 996, 39 L.Ed.2d 242 (1974). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1511610/ | 939 F.Supp. 584 (1996)
Dru RHODES, Plaintiff,
v.
OHIO HIGH SCHOOL ATHLETIC ASSOCIATION, et al., Defendants.
No. 5:96cv1816.
United States District Court, N.D. Ohio, Eastern Division.
September 5, 1996.
*585 *586 Leslie Iams Kuntz, Robert Paul Harbert, II, Krugliak, Wilkins, Griffiths & Dougherty, Canton, OH, for Dru Rhodes, plaintiff.
Steven L. Craig, Heichel, Craig & Prelac, Canton, OH, for Ohio High School Athletic Association.
E. Carroll Thornton, Jr., Newman, Olson & Kerr, Youngstown, OH, for Catholic Diocese of Youngstown, The Department of Education.
ORDER
SAM H. BELL, District Judge.
Currently before the court is the motion of Plaintiff Dru Rhodes for a preliminary injunction enjoining Defendants Ohio High School Athletic Association (OHSAA) and The Catholic Diocese of Youngstown (the Diocese) from enforcing the OHSAA's "eight consecutive semester" rule which would otherwise preclude Plaintiff from participating on his high school football team. The court took evidence and heard argument on this matter in a hearing held Thursday, August 22, 1996. The parties have also favored the court with briefs on the question, and the court is now well-prepared to issue its findings.
I. Background
Plaintiff Dru Rhodes is an eighteen year old student in his senior year at St. Thomas Aquinas High School, a school owned and operated by the Defendant Diocese. In 1987, while Dru was in the fourth grade, he was diagnosed with learning disabilities, including Attention Deficit Disorder. At that time he began receiving special services for his disability through the North Canton City School District.
Prior to Dru's freshman year in high school, he enrolled at Western Reserve Academy where Dru and his parents believed he could continue his personalized educational program. While at Western Reserve, Dru also played on the school football team. As a private boarding school, the Academy was not required to provide accommodations for Plaintiff's learning disabilities, nonetheless, he did receive out of class attention from his teachers and from his headmaster, who oversaw Plaintiff's studying for at least a couple of hours each week. While enrolled there, Dru's scholastic performance took a decidedly downward turn, and he now disputes the quality of the out-of-class attention that he received, saying that it fell far short of the tutoring which his disability requires. That year, Plaintiff's grade average was only 2.5 on 7 point scale, and he earned only one credit toward graduation. The student was informed that he would not be asked back to Western Reserve for the 1993-94 school year.
Consequently, in the fall of 1993 Dru Rhodes enrolled as a freshman in St. Thomas Aquinas High School. The school determined that Dru was academically ineligible to play football that fall semester because of his failing marks the year before. Fortunately, Dru thrived at St. Thomas where he received tutoring and other assistance for his disabilities; his present cumulative grade average is 2.633 on a 4 point scale. Dru has been involved in athletics since his second semester at St. Thomas.
The 1996-97 school year will mark Dru Rhodes's fifth and senior year in high school. It will also mark his ninth and tenth high school semesters. In the present fall semester, Dru would like to compete on the school football team, but he has been denied that privilege pursuant to an OHSAA rule which states: "After a student completes the eighth grade, the student shall be eligible [to compete in high school athletics] for a period not to exceed eight semesters taken in order of attendance, whether the student participates or not." (OHSAA Rule 4-3-4, docket # 4, ex. 1.) Although Dru has competed in only seven semesters of high school athletics, he has already been enrolled in high school for eight consecutive semesters, thus, according to the rule, Dru's athletic eligibility has expired.
Dru and his parents sought relief from the rule through the OHSAA's waiver and appeal *587 procedures, first requesting a waiver from the Commissioner of the OHSAA, Clair Muscaro. After the request was denied, Dru appealed to the OHSAA Board of Control who, after a hearing, denied Dru's appeal on June 13, 1996. A little over two months later, or twelve days before the first scheduled football game of the season, Dru Rhodes filed the instant cause of action in which he seeks an emergency injunction to protect him from what he claims are OHSAA violations of the Americans with Disabilities Act, Section 504 of the Rehabilitation Act of 1973, and Ohio Revised Code Section 4112.01 et seq. Defendant OHSAA denies any violation of law and opposes the Plaintiff's motion. The Defendant Diocese is a "friendly" defendant because, according to counsel at the hearing, the Diocese supports Dru Rhodes's claim insofar as it would not subject the Diocese or St. Thomas to an OHSAA penalty. The court will therefore consider the instant motion primarily insofar as it relates to OHSAA's enforcement of its rule.
II. Analysis
It is well established that when considering a motion for a preliminary injunction, the court must address the following factors:
(A) Whether the party seeking the order has shown a substantial likelihood of success on the merits;
(B) Whether the party seeking the order will suffer irreparable harm absent the injunction;
(C) Whether the order will cause others to suffer substantial harm; and
(D) Whether the public interest would be served by injunctive relief.
Golden v. Kelsey-Hayes Co., 73 F.3d 648, 653 (6th Cir.1996), petitions for cert. filed, 64 USLW 3727 (U.S. April 17, 1996) (No. 95-1674), 64 USLW 3795 (U.S. May 17, 1996) (No. 95-1884); Forry, Inc. v. Neundorfer, Inc., 837 F.2d 259, 262 (6th Cir.1988); North Avondale Neighborhood Ass'n v. Cincinnati Metro. Hous. Auth., 464 F.2d 486, 488 (6th Cir.1972); Reynolds v. International Amateur Athletic Fed'n, 841 F.Supp. 1444, 1454 (S.D.Ohio 1992); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Kramer, 816 F.Supp. 1242, 1246 (N.D.Ohio, E.D.1992). No single factor is dispositive; rather, the court must balance them collectively to determine whether an injunction should issue. In re DeLorean Motor Co., 755 F.2d 1223, 1229 (6th Cir.1985).
A. Substantial Likelihood of Success on the Merits.
1. Applicability of the I.D.E.A.
The Plaintiff has based his argument on three separate grounds which the court shall consider in turn. First, however, the court must address the Defendant's argument that the Plaintiff's claims are not properly before the court because Dru Rhodes has not exhausted his administrative remedies in accordance with the Individuals with Disabilities Education Act (I.D.E.A), 20 U.S.C. Section 1415. That Act, also known as the Education of the Handicapped Act, requires that states receiving certain federal financial assistance establish procedures "to assure that handicapped children ... are guaranteed procedural safeguards with respect to the provision of free appropriate public education[.]" 20 U.S.C. § 1415(a). The I.D.E.A. then specifies "with painstaking care" the minimum requisites for due process in that administrative context. Id.; Crocker v. Tennessee Secondary Sch. Athletic Ass'n., 873 F.2d 933, 934 (6th Cir.1989). Ohio has since implemented its own "Impartial Due Process Hearing" regulations in accordance with the federal mandate. See Ohio Administrative Code § 3301-51-02(G). Before a student can bring a claim in either Federal court or state municipal court, he or she must exhaust the state administrative hearing process. 20 U.S.C. § 1425(e)(2); Crocker, 873 F.2d at 935.
In the instant case, it is clear that Plaintiff Rhodes has not subjected his claim to Ohio's Impartial Due Process Hearing procedure. However, Rhodes argues that the exhaustion requirement and, indeed, the entire I.D.E.A. do not apply to him. Plaintiff relies on the terms of the statute which state that the I.D.E.A. governs only those who seek "safeguards with respect to the provision of free appropriate public education[.]" (Docket # 8, at 2 (quoting 20 U.S.C. § 1415(a)).) Plaintiff Rhodes's education is neither free *588 nor public. The court appreciates this difference but finds that the case hinges on a narrower issue: whether Plaintiff's athletic program is pursuant to an Individual Educational Plan ("IEP"). In a Sixth Circuit decision, Crocker v. TSSAA, the plaintiff, a disabled student, sought a waiver of a Tennessee Secondary School Athletic Association rule which precluded him from competing in varsity athletics at his public high school by reason of his transfer of schools. The Sixth Circuit dismissed the case because the Court assumed that the "State" Athletic Association's decision was a part of the Plaintiff's IEP, and because Plaintiff failed to subject this complaint about his IEP to Tennessee's mandatory administrative review procedure. Crocker, 873 F.2d at 937.
In the instant case, Plaintiff attended a private school that has chosen to subject itself to an athletic association to which the state delegates a great deal of authority and, thus, it is likely that the Plaintiff's claim would typically be subject to Ohio's administrative process. However, there is no evidence in this matter that Rhodes had an IEP in recent history, save for the one implemented in order to aid him in his preparation for the ACT college board examination. Thus, unlike the plaintiff in Crocker, Plaintiff Rhodes had no IEP from which to appeal through the Ohio administrative process. To dismiss the instant action for failure to comply with an administrative process which was not open to Plaintiff would be manifestly unjust, and is not compelled by the statute. The court will thus reach the merits of Plaintiff's claims under the Americans with Disabilities Act, 42 U.S.C. Section 12101-12213, and Section 504 of the Rehabilitation Act of 1973, codified at 29 U.S.C. Section 794.
2. Plaintiff's Federal Claims.
The ADA and the Rehabilitation Act both prohibit discrimination against the disabled. In Section 504 of the Rehabilitation Act, Congress declared that "[n]o otherwise qualified individual with a disability ... shall, solely by reason of her or his disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal [funding.]" 29 U.S.C. § 794(a). Similarly, the ADA provides that "no qualified individual with a disability shall, by reason of such disability, be excluded from participation in or be denied the benefits of the services, programs, or activities of a public entity, or be subjected to discrimination by any such entity," 42 U.S.C. § 12132, and that "[n]o individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who ... operates a place of public accommodation." 42 U.S.C. § 12182(a). The main difference between the Rehabilitation Act and the ADA is that the coverage of the ADA is broader, extending its prohibition against discrimination to private individuals, including the private owners and operators of places of public accommodation. 42 U.S.C. §§ 12181, 12182; see also, 42 U.S.C. § 12201(a) ("[N]othing in this chapter shall be construed to apply a lesser standard than [those] applied under title V of the Rehabilitation Act of 1973 (29 U.S.C. 790 et seq.) or the regulations issued ... pursuant to such title."). Both Acts may be invoked by aggrieved individuals such as Plaintiff. 29 U.S.C. § 796a(2), (same remedies as provided in 42 U.S.C. § 2000d et seq.); 42 U.S.C. § 12188(a)(1), 2000a-3(a).
a. The Rehabilitation Act Claim.
To successfully prosecute a cause of action under the Rehabilitation Act in the instant setting, Plaintiff must prove four elements:
1. That he suffers from a disability;
2. He is otherwise qualified for participation in the program;
3. He is being excluded from participation in, being denied the benefits of, or being subjected to discrimination under the program solely by reason of his disability; and
4. The program or activity is receiving federal funding.
Sandison v. Michigan High Sch. Athletic Ass'n., Inc., 64 F.3d 1026, 1030-31 (6th Cir. 1995).
*589 In Sandison v. MHSAA, the Sixth Circuit considered a scenario quite similar to the instant scenario, brought by two nineteen-year-old learning-disabled high school seniors. Like the Plaintiff in the instant case, the two young plaintiffs in Sandison were diagnosed with learning disabilities rather early in their school careers. Both were placed in special programs and when they were finally mainstreamed into regular classrooms they were old for their grade. In high school, both plaintiffs ran for the cross country and track teams, but in the May preceding their senior years in high school, both turned nineteen years old. As in the instant case, the plaintiffs' high schools in Sandison were members of a high school athletic association, the MHSAA. A MHSAA regulation forbids students from competing in interscholastic sports after their nineteenth birthday; no waiver of the rule was to be permitted, and none was allowed in the plaintiffs' cases. The two youths challenged the MHSAA's enforcement of the regulation as violating, inter alia, the ADA and the Rehabilitation Act.[1]
When addressing the plaintiffs' Rehabilitation Act claims, the Sixth Circuit considered the third element first, that is, the Court determined that the MHSAA's "nineteen-year-old rule" could not be classified as a "decision made, solely by reason of each student's learning disability." Sandison, 64 F.3d at 1032. The Court reasoned that under a natural reading of the Act, the MHSAA's nineteen-year-old rule is neutral with respect to disability. Id. For example, during the plaintiffs' first three years of high school, the rule did not preclude them from participation despite their learning disabilities. Id. "It was not until they turned nineteen that [the regulation] operated to disqualify them." Id. It was not the students' disabilities which prevented them from meeting the neutral MHSAA requirement, but rather the passage of time. Id. at 1033. Accordingly, it was clear that while the regulation did exclude the plaintiff students from participating in high school athletics, it did not do so "solely by reason of" their disabilities. Id. at 1032, 1033.
In the instant case, Defendant OHSAA argues that its "eight consecutive semester rule" is similarly neutral and thus does not exclude Plaintiff Rhodes from participation in interscholastic football "solely by reason of" his learning disability. This court agrees. The OHSAA regulation, like that of the MHSAA in Sandison, did not preclude Plaintiff Rhodes from participating in high school athletics earlier in his high school career, rather it was not until Rhodes entered his fifth, senior year that the rule "operated to disqualify him." See id. Where the students in Sandison were held back due to their difficulties in school, so too was Plaintiff Rhodes. However, here as in Sandison, it is the passage of time, measured out in semesters, which precludes Plaintiff from competing, not the disability which allegedly caused him to repeat his freshman year. Moreover, the court makes a preliminary finding that Rhodes failed his first freshman year due to the combination of his learning disability and his adjustment to a new and, for him, unpleasant boarding school experience. Thus, the causal connection has not been established between the learning disability and the repeat of Rhodes's freshman year, let alone the consequent expiration of his eligibility.
The eight consecutive semester rule can be applied to students regardless of disability, and it was so applied here. The court, therefore, finds that the rule cannot be characterized as a decision made solely on the basis of Plaintiff's disability. For this reason, Plaintiff Rhodes does not state a cause of action under the Rehabilitation Act, and he has not demonstrated a substantial likelihood of success on that claim.
b. The Americans with Disabilities Act Claims.
The Plaintiff actually brings his ADA claims under two separate, complimentary provisions, 42 U.S.C. Sections 12132 and 12182. The former prohibits discrimination by a "public entity," the latter by "any person who [operates] a place of public accommodation." The two provisions are mutually exclusive, but together, encompass nearly every *590 public and private entity in the country. Nevertheless, Plaintiff Rhodes alleges that Defendant OHSAA is somehow both a private and a public entity. Defendant OHSAA argues that it is not a public entity, but does not dispute its private status. The court shall consider the applicability of the two provisions in turn.
The ADA defines the term "public entity" as including "any State or local government" and "any department, agency, special purpose district, or other instrumentality of a State or States or local government." 42 U.S.C. § 12131. The Defendant OHSAA argues that it is a private, voluntary association not encompassed by this definition of a "public entity" and that it is, therefore, outside the purview of Section 12132. In support of its contention, the OHSAA argues that it receives no public funds, and is governed by its members which consist of both public and private schools. "The actions of public schools taken in accordance with the OHSAA bylaws," the OHSAA argues, "do not operate to transform the OHSAA's conduct into state action." (Docket # 4, at 16-17.) The OHSAA's argument is supported by an 1962 Ohio Supreme Court case, State ex rel OHSAA v. Judges of the Court of Common Pleas of Stark County, 173 Ohio St. 239, 181 N.E.2d 261 (1962), in which the Court held that Ohio schools may be members of the OHSAA, which it described as an unincorporated voluntary nonprofit private foundation. Id. at 246, 248-49, 181 N.E.2d 261 (the Court expressly rejected the Ohio Attorney General's argument that "government regulation of interscholastic athletes in the public schools is desirable and a virtual necessity").
Plaintiff Rhodes counters that Defendant is an instrumentality of the State of Ohio because schools and facilities in which it carries out all of its functions receive federal assistance, because some coaches and other school employees receive federal financial assistance, and because the OHSAA can sanction public and private schools for noncompliance with its rules. (Docket # 8, at 10-11.) Plaintiff cites to a portion of a Sixth Circuit opinion, Yellow Springs Exempted Village Sch. Dist. Bd. of Educ. v. OHSAA, 647 F.2d 651, 652-53 (1981), in support of its position, but the portion cited by Plaintiff is merely a recap of the findings of the district court below. The Circuit did not adopt these findings; in fact, after its recitation of those findings the Court reversed and remanded the case on wholly independent grounds. Id. As a matter of fact, the Court held that because the OHSAA was not a "recipient" of federal funds, and because it does not bear the burden of non-compliance with Title IX, it had no discretion to implement Title IX. Id. at 656. Compliance with Title IX was limited to individual schools who are recipients of federal funding. Id. Thus, by rejecting the OHSAA's argument that it obtained indirect discretion pursuant to the delegation of power to it from public schools receiving federal funding, the Sixth Circuit in Yellow Springs actually casts doubt on Plaintiff Rhodes's argument that OHSAA is an indirect actor or instrumentality of the State in the instant case.
The other case relied upon by Plaintiff to establish the OHSAA's public status, Alerding v. OHSAA, 779 F.2d 315 (6th Cir.1985), states in a footnote that the "OHSAA is a state actor for purposes of Section 1983 because Ohio has implicitly delegated to OHSAA its power to regulate and organize interscholastic athletic activities." Id. at 316 n. 1. The Court offered no other factual findings or reasoning regarding this statement, but relied upon the Yellow Springs opinion referred to above which, briefly put, does not support the notion for which the Alerding Court cited it.
Nonetheless, this court notes that every available district court opinion which has addressed this very issue has found that a state athletic association is an instrumentality of the State. See Hoot v. Milan Area Schs., 853 F.Supp. 243, 251 (E.D.Mich., S.D.1994); Sandison v. MHSAA, 863 F.Supp. 483, 487 (E.D.Mich., S.D.1994), rev'd in part, 64 F.3d 1026 (1995); Dennin v. Connecticut Interscholastic Athletic Conf., Inc., 913 F.Supp. 663, 670 (D.Conn.1996); Johnson v. Florida High Sch. Activities Ass'n. Inc., 899 F.Supp. 579, 583 (M.D.Fla.1995); Pottgen v. Missouri State High Sch. Activities Ass'n, 857 F.Supp. 654, 662 (E.D.Mo., E.D.1994), rev'd, 40 F.3d 926 (8th Cir.1995). Of particular interest is *591 the opinion of the court in Hoot. That Court explained that the Michigan High School Athletic Association is an instrumentality of the state because the MHSAA, a private, nonprofit association that is sanctioned by state law, is the "official association" of the state, has a permanent ex officio member of the State Board on its governing board, and is composed of primarily public schools and "frequently uses public facilities" thus intertwining the MHSAA with state instrumentalities. Hoot, 853 F.Supp. at 250-51.
This court does not have the same quality of evidence before it as did the court in Hoot, but weighing that evidence which was submitted on this question in the instant case, the court finds that Plaintiff has proven that the Defendant OHSAA is an instrumentality of the State of Ohio. The evidence tends to show that Ohio has delegated a substantial amount of state authority to the OHSAA: the great majority of OHSAA's members are public schools, it frequently uses public facilities, and it exercises the ability to sanction public schools for violations of its rules. The OHSAA is thus an instrument of the State and a "public entity" amenable to suit pursuant to Section 12132.
While Defendant does not dispute that Plaintiff's claim is properly brought pursuant to Section 12182, the court finds to the contrary. In a definitional section, Section 12181(7), Congress has listed a multitude of private entities which are considered to be public accommodations. This list is qualified, however, by the definition of "private entity" which provides that the term encompasses all of those not considered public entities pursuant to 42 U.S.C. § 12132(1). 42 U.S.C. § 12181(6). Taken together, these definitions have been understood to mean that a place of public accommodation must be operated by a private entity. Sandison 64 F.3d at 1036 (citing 28 C.F.R. § 36.104). Because in the instant case, the court has determined that OHSAA is a public entity, and because a private entity cannot, by definition, also be a public entity, see 42 U.S.C. § 12181(6), OHSAA cannot be a private entity. Thus, the court will not analyze Plaintiff's claim under Section 12182.
i. The Section 12132 Claim.
Again, the ADA as codified at 42 U.S.C. Section 12132, provides that a public entity such as the OHSAA cannot exclude a "qualified individual with a disability" from participation in activities, nor deny him benefits, nor discriminate against him in any way "by reason of such disability." 42 U.S.C. § 12132.
Under the ADA, a "qualified individual with a disability" means "an individual with a disability who, with or without reasonable modifications to rules, policies, or practices, ... meets the essential eligibility requirements for the ... participation in programs or activities provided by a public entity." 42 U.S.C. § 12131(2). The court is to make factual findings concerning both whether the requirement is essential, and whether some reasonable modification is available which satisfies the legitimate interests of both the Association and Dru Rhodes. Sandison, 64 F.3d at 1037, 1034-35.[2]
Here, as in Sandison, the Defendant Athletic Association argues that the regulation in question is an "essential" requirement of its program. In that cause, the Sixth Circuit upheld the district court finding that the nineteen-year-old rule was "necessary" and "essential" because the rule advanced two purposes: first, it "safeguards against injury to other players;" and second, it "prevents any unfair competitive advantage that older and larger participants might provide." Id. at 1035. In the instant case, the court finds that the eight consecutive semester rule also promotes at least three important purposes: first, it prevents red-shirting[3] of all students, especially those who due to their relatively young age might not be deterred by the nineteen-year-old rule; second, it limits the *592 level of athletic experience and skill of the players so as to create a more even playing field for the competitors; and third, and particularly, it encourages student-athletes to graduate in four years. The court recognizes the legitimacy of these concerns for an organization which sees its role as supplemental to the education process. However, Plaintiff contests the alleged "essential" nature of the OHSAA rule on the ground that Defendant has allowed waivers of the requirement in the past. Of particular note is the case of a student who, during the school year, was incarcerated and thus unavailable to compete in high school athletics. Later, that student was released without having been convicted, and sought to play football. Under a normal application of OHSAA's rule, the youth was ineligible because he had already been enrolled in school for eight semesters. An application for waiver was granted by the OHSAA Board, however, and the youth was allowed to compete. Plaintiff asks how a rule which can bend in order to allow an incarcerated student the chance to compete, can be considered too essential to bend in favor of a student with a learning disability.
Ultimately, the court need not decide this issue because Plaintiff has failed to meet a separate requirement of a Section 12132 claim. As in his Rehabilitation Act claim, to successfully assert an ADA claim Plaintiff Rhodes must demonstrate that his exclusion from participation on the football team was "solely by reason of [his disability.]" Sandison 64 F.3d at 1036. This court has already concluded that Rhodes was excluded because he could not satisfy the eight consecutive semester rule, not because he was disabled. Furthermore, the court finds it unlikely that Plaintiff will be able to establish that his repetition of his freshman year was solely due to his disability, rather than partially due to his disability and partially due to his uncomfortable setting at the boarding school. In short, no causal connection between Plaintiff's disability and OHSAA's enforcement of its eight consecutive semester rule has been established. For these reasons, the court finds that Plaintiff is not likely to be successful on the merits of his ADA claim.
3. Plaintiff's State Law Claim.
In his Complaint, Plaintiff Rhodes states Ohio Revised Code Section 4112.01 et seq. as a basis for his claim of discrimination. He restates his claim for the protection offered by that Code provision in his motion for a preliminary injunction, (docket # 3, at 3), but then fails to make any arguments or offer evidence specifically in support of his state law claim. Understandably, Defendant has not addressed that issue of law either. Because it is Plaintiff's duty to demonstrate some likelihood of success on the merits and because he has not attempted to make such a demonstration regarding his state law claim, the court finds that Plaintiff has not demonstrated any likelihood of success on that claim.
The court concludes that Plaintiff has not demonstrated that it is likely he will succeed on the merits of any of his claims in the instant case. This first element of the preliminary injunction paradigm weighs in favor of Defendant OHSAA.
B. Irreparable Harm.
Plaintiff Rhodes has convincingly demonstrated that he will suffer irreparable harm if his motion for an injunction is denied. This is Dru Rhodes's senior year in high school and possibly his last chance to participate in organized interscholastic athletics. Indeed, Rhodes testified that his ability to compete on the college level will be greatly diminished if he is unable to play football this season. The court finds that Rhodes will suffer irreparable harm in the absence of an injunction requiring OHSAA to waive its eight consecutive semester rule. This factor weighs decidedly in favor of Plaintiff Rhodes.
C. Substantial Harm to Others.
Defendant OHSAA argues that an injunction would injure the "integrity and academic goals of St. Thomas Aquinas High School and the [OHSAA] and by that is meant all member schools," and it would "further displace a student athlete on Rhodes' team and provide[] an unfair advantage against Rhodes' opponents." (Docket # 4, at 17-18.) It is doubtful that a court order requiring *593 Defendants to allow Plaintiff to play football would damage the Defendants' integrity, rather, it seems that upholding a court order could only be seen as a symbol of integrity. Nonetheless, the court agrees with the Defendant that the academic goal of encouraging successful completion of high school in four years would not be served by the injunction. An injunction would also harm the OHSAA's ability to achieve another of its important goals: limiting "the level of athletic experience and skill of the players so as to create a more even playing field for the competitors." (See supra.) Finally, the court accepts Defendant's common sense argument that an injunction would displace another student athlete from participation in football. All having been said, the court finds that an injunction would create harm to others and thus, this element weighs in favor of the OHSAA.
D. The Public Interest.
Plaintiff believes that the public interest would best be served by an injunction which ensures the right of a disabled student to a complete education, including the ability to participate in athletics. Defendant disagrees, instead offering the view that the public interest is embodied in the regulations of the OHSAA which have been approved by a board which is itself representative of school districts and athletic officials throughout the state. In the end, the court is not required to weigh the rights of the disabled against the voice of the people of Ohio as spoken by the OHSAA, because the court found previously that Plaintiff is unlikely to demonstrate that his disability was the sole cause of his ineligibility under the OHSAA's rules. The court finds, therefore, that the public interest in upholding the rules established by the OHSAA is greater than its interest in Plaintiff Rhodes's individual predicament. This factor too, weighs in favor of the Defendant OHSAA.
III. Conclusion
The court finds that Plaintiff is unlikely to succeed on the merits of his claim, that he will suffer irreparable harm if an injunction does not issue, that there is a likelihood of some harm to others if the injunction should issue, and that the public interest disfavors an injunction in the instant case. Accordingly, the court concludes that Plaintiff's request for a preliminary injunction enjoining the Defendants from enforcing OHSAA's eight consecutive semester rule, should be, and is, DENIED. The OHSAA is free to enforce its rules as it sees fit, in accordance with the law.
IT IS SO ORDERED.
NOTES
[1] Like the Defendant Diocese in the instant case, the defendant schools in Sandison did not oppose the plaintiffs but rather offered conditional support for their student athletes.
[2] The Sandison Court explained that its ADA analysis tracked its analysis under the Rehabilitation Act, and thus, this court will also take guidance from Sandison's discussion of the Rehabilitation Act.
[3] The court understands this term, red-shirting, to mean holding a student back in a grade level regardless of his or her scholastic performance in order to gain physical and mental maturity which would presumably lead to greater athletic achievement. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1677976/ | 921 S.W.2d 778 (1996)
Graciela B. DURAN, Appellant,
v.
FURR'S SUPERMARKETS, INC., d/b/a Furr's Supermarket No. 939, and Steve Romero, Appellees.
No. 08-95-00169-CV.
Court of Appeals of Texas, El Paso.
April 4, 1996.
Rehearing Overruled May 1, 1996.
*783 Evelina Ortega, Caballero & Ortega, L.L.P., El Paso, for appellant.
Mark C. Walker, Mounce & Galatzan, El Paso, E.K. Peticolas, Peticolas and Shapleigh, El Paso, for appellees.
Before BARAJAS, C.J., and LARSEN and McCLURE, JJ.
OPINION
McCLURE, Justice.
Graciela B. Duran (Duran), appeals from a summary judgment entered in favor of Appellees, Furr's Supermarkets, Inc. d/b/a Furr's Supermarket No. 939 (Furr's) and Steve Romero (Romero). We reverse and remand for trial.
FACTUAL SUMMARY
Duran's causes of action against Furr's and Romero arose out of an incident which occurred in the parking lot of a Furr's supermarket. Duran alleges that Romero, an off-duty police officer working as a security guard for Furr's, became verbally abusive towards her when he asked her to move a vehicle in which she was a passenger from the fire lane located in front of the store. After moving the vehicle, Duran returned to where Romero was standing and asked Romero for his name. Romero walked over to the vehicle, opened the door, and while repeatedly threatening to arrest Duran, pulled and twisted on her left arm in an apparent effort to forcibly remove her from the vehicle. Duran suffered injuries to her arm which required surgery. She further alleges that the Furr's store manager watched the assault and did nothing to stop it. Romero, on the other hand, asserts that Duran became extremely upset and directed vulgar language at him because he asked her to move the car out of the fire lane. Romero admits opening the door to the vehicle and placing his hand on Duran's arm, but said that he did so only in an effort to calm her.
Alleging that Romero is an employee or agent of Furr's, Duran filed suit against Furr's for negligent hiring and supervision of Romero. She also made claims against *784 Furr's and Romero for assault and battery, false imprisonment, and defamation of character. The trial court granted Furr's and Romero's motions for summary judgment.
STANDARD OF REVIEW
In Point of Error No. One, Duran contends that the trial court erred in granting summary judgment in favor of Furr's. The standard of review on appeal is whether the successful movant at the trial level carried the burden of showing that there is no genuine issue of material fact and that a judgment should be granted as a matter of law. Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex.1991); Nixon v. Mr. Property Mgmt. Co., Inc., 690 S.W.2d 546, 548 (Tex. 1985); Victory v. Bills, 897 S.W.2d 506, 508 (Tex.App.El Paso 1995, no writ); Hernandez v. Kasco Ventures, Inc., 832 S.W.2d 629, 631 (Tex.App.El Paso 1992, no writ). Thus, the question on appeal is not whether the summary judgment proof raises fact issues as to required elements of the movant's cause or claim, but whether the summary judgment proof establishes, as a matter of law, that there is no genuine issue of material fact as to one or more elements of the movant's cause or claim. Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970); Victory, 897 S.W.2d at 508.
In resolving the issue of whether the movant has carried this burden, all evidence favorable to the non-movant must be taken as true and all reasonable inferences, including any doubts, must be resolved in the non-movant's favor. Nixon, 690 S.W.2d at 548-49; Victory, 897 S.W.2d at 508; Stoker v. Furr's, Inc., 813 S.W.2d 719, 721 (Tex. App.El Paso 1991, writ denied). When the defendant is the movant and submits summary evidence disproving at least one essential element of each of the plaintiff's causes of action, then summary judgment should be granted. Perez, 819 S.W.2d at 471; Victory, 897 S.W.2d at 508; Hernandez, 832 S.W.2d at 633. Where the summary judgment order does not state the specific grounds on which it was granted, the non-movant on appeal must show that each ground alleged in the motion is insufficient to support the granting of summary judgment. Southerland v. Northeast Datsun, Inc., 659 S.W.2d 889, 891 (Tex.App.El Paso 1983, no writ).
GENERAL GROUNDS FOR SUMMARY JUDGMENT
Romero's Status as a Police Officer
Furr's moved for summary judgment on the ground that it cannot be held liable because the alleged acts of Romero were committed in his sole capacity as a police officer of the El Paso Police Department. Citing City of Dallas v. Half Price Books, Records, Magazines, Inc., 883 S.W.2d 374, 377 (Tex. App.Dallas 1994, no writ) (Half Price I), Leake v. Half Price Books, Records, Magazines, Inc., 918 S.W.2d 559 (Tex.App.Dallas 1996) (Half Price II), and City of Phoenix v. Industrial Commission of Arizona, 154 Ariz. 324, 742 P.2d 825 (App.1987), Furr's argues that when Romero observed the vehicle illegally parked in the fire lane or saw Duran committing disorderly conduct by using vulgar language in a public place, Romero ceased being an independent contractor or employee of Furr's and acted solely in his capacity as a police officer. The summary judgment evidence does not support Furr's contention that a violation of law occurred, and Furr's authorities are thus distinguishable.[1]
Furr's first argues that parking in a fire lane is a violation of El Paso Municipal Ordinance 9.76.050. According to Furr's, Ordinance 9.76.050 states that "[i]t is unlawful to park any vehicle other than an authorized emergency vehicle in any fire lane established pursuant to this chapter." Furr's offered no summary judgment evidence to show that the fire lane in question is established pursuant to the Municipal Code. Thus, it failed to establish that a violation of *785 the Municipal Code occurred.[2] Further, in approaching Duran and asking her to move the vehicle, Romero was carrying out one of the functions for which he was hired, that is, handling parking violations in the store's parking lot. Since Romero did not issue a citation for the violation and admitted he had no intention to do so, whether Romero had ceased functioning in his capacity as an independent contractor or employee of Furr's at the time he asked Duran to move the vehicle is a question of fact.
Furr's also argues that Romero ceased being an independent contractor when he observed Duran commit the offense of disorderly conduct. If Furr's is to succeed on this specific ground, it must establish that Romero had probable cause[3] to believe that Duran had committed or was committing a violation of Section 42.01(a)(1) of the Texas Penal Code[4] in his presence. See De La Paz v. State, 901 S.W.2d 571, 575 (Tex.App.El Paso 1995, pet. ref'd)(an arrest, whether made with or without a warrant, must be based upon probable cause). Section 42.01(a)(1) applies only to "fighting words" which by their very utterance tend to incite an immediate breach of the peace as required by Chaplinsky v. New Hampshire, 315 U.S. 568, 62 S.Ct. 766, 86 L.Ed. 1031 (1942). See Jimmerson v. State, 561 S.W.2d 5, 7 (Tex.Crim.App.1978)(Section 42.01(a)(4) by implication applies only to fighting words); Ross v. State, 802 S.W.2d 308, 314-15 (Tex. App.Dallas 1990, no pet.) (Section 42.01(a)(1) applies only to "fighting words" and is not unconstitutionally vague); Estes v. State, 660 S.W.2d 873, 875 (Tex.App.Fort Worth 1983, pet. ref'd)(Section 42.01(a)(1) and (a)(2) proscribe fighting words or acts in public places); Op. TEX. ATT'Y GEN. No. JM-900 (1988)(Section 42.01(a)(1) applies only to speech which as a matter of fact constitutes fighting words).
Whether particular words are fighting words is a question of fact. Chaplinsky, 315 U.S. at 573, 62 S.Ct. at 770; Op. Tex. Att'y Gen. JM-900 (1988). The test is what a person of common intelligence would understand to be words likely to cause an average addressee to fight. Gooding v. Wilson, 405 U.S. 518, 523, 92 S.Ct. 1103, 1106, 31 L.Ed.2d 408 (1972); Op. TEX. ATT'Y GEN. JM-900. Speech punishable under Section 42.01 does not include language that is merely harsh and insulting. Op. TEX. ATT'Y GEN. No. JM-900, see Gooding, 405 U.S. at 525, 92 S.Ct. at 1107. Derisive and annoying words can be taken as coming within the purview of the statute only when they have this characteristic of plainly tending to excite the addressee to a breach of the peace. OP. TEX. ATT'Y GEN. No. JM-900, quoting Gooding, 405 U.S. at 522, 92 S.Ct. at 1106.
Romero stated in his deposition that Duran called him "estupido" or "idiot" several times during this incident. Duran admitted that she told Romero as he twisted and pulled on her arm, "Let me go, estupido." The word "vulgar" as used in Section 42.01(a)(1) is not defined. Therefore, we apply its ordinary meaning. TEX.GOV'T CODE ANN. § 312.002 (Vernon 1988); Geters v. Eagle Ins. Co., 834 S.W.2d 49, 50 (Tex.1992). "Vulgar" is defined in Webster's New Collegiate Dictionary as: "offensive in language, earthy; lewdly or profanely indecent." WEBSTER'S NEW COLLEGIATE DICTIONARY 1304 (1980). The language used by Duran does not appear to fall within the ordinary meaning of "vulgar." Moreover, Furr's did not *786 offer any summary judgment evidence which tends to show that the words spoken by Duran would be words likely to cause an average addressee to fight. Therefore, Furr's failed to establish as a matter of law that the facts known to Romero are sufficient in themselves to warrant a person of reasonable caution in the belief that Duran had violated Section 42.01(a)(1).
Focusing on Romero's duty as a peace officer to "preserve the peace,"see TEX.CODE CRIM.PROC.ANN. art. 2.13 (Vernon 1977), Furr's next argues that Romero was functioning solely as a police officer during his confrontation with Duran because he was attempting to quell a breach of the peace, and the matter did not expressly concern store security. When taken in the light favorable to the non-movant, the summary judgment evidence reflects that Romero was the aggressor in the incident and he committed a breach of the peace by assaulting Duran. Whether Romero was attempting to quell a breach of the peace is a question of fact. Moreover, Romero was hired by Furr's to deter crime in the parking lot, work with the store's customers, and assist management. Whether these duties include quelling a disturbance that does not rise to the level of a criminal offense is a question of fact. Because fact issues exist with respect to whether Romero acted solely as a police officer, and not as an independent contractor or employee of Furr's, summary judgment on this ground is improper.
Independent Contractor/Employee Status
Furr's next moved for summary judgment on the ground that Romero is an independent contractor, rather than an employee or agent of Furr's, and it is not vicariously liable because it retained no control over the work to be performed by Romero. The right of control is an issue in determining whether Romero is an employee or independent contractor, and if he is an independent contractor, whether Furr's is vicariously liable.
Under Texas law, an independent contractor is one "who, in the pursuit of an independent business, undertakes to do a specific piece of work for other persons, using his own means and methods, without submitting himself to their control in respect to all its details." Pitchfork Land and Cattle Co. v. King, 162 Tex. 331, 346 S.W.2d 598, 602-03 (1961); Hoechst Celanese Corp. v. Compton, 899 S.W.2d 215, 220 (Tex.App. Houston [14th Dist.] 1994, writ denied). The standard tests for determining whether one is acting in the capacity of an independent contractor measure the amount of control that the employer exerts or has a right to exert over the details of the work. Newspapers, Inc. v. Love, 380 S.W.2d 582, 591 (Tex. 1964); Hoechst Celanese Corp., 899 S.W.2d at 220. In determining whether a person is an employee or an independent contractor, a court is required to examine a number of factors, including (1) the independent nature of the contractor's business; (2) his obligation to supply necessary tools, supplies, and materials; (3) his right to control the progress of the work except as to final results; (4) the time for which he is employed; and (5) the method by which he is paid, whether by the time or by the job. Pitchfork Land and Cattle Co., 346 S.W.2d at 603; Hoechst Celanese Corp., 899 S.W.2d at 220. The most fundamental of these factors, however, is the right of control. See Ross v. Texas One Partnership, 796 S.W.2d 206, 210-11 (Tex.App.Dallas 1990), writ denied per curiam, 806 S.W.2d 222 (Tex.1991). Where there exists no dispute about the controlling facts and only one reasonable conclusion can be inferred, the question of whether one is an "employee" or "independent contractor" is a question of law. Crow v. TRW, Inc., 893 S.W.2d 72, 78 (Tex.App.Corpus Christi 1994, no writ); Sherard v. Smith, 778 S.W.2d 546, 548 (Tex.App.Corpus Christi 1989, writ denied).
The general rule is that an owner of premises is not liable for harm arising out of activity conducted by, and under the control of, an independent contractor. Ross, 796 S.W.2d at 209; see Exxon Corp. v. Quinn, 726 S.W.2d 17, 19 (Tex.1987); Sanchez v. Mbank of El Paso, 792 S.W.2d 530, 531 (Tex.App.El Paso 1990), aff'd, 836 S.W.2d 151 (Tex.1992). The doctrine of respondeat superior is not applicable in such a situation. Ross, 796 S.W.2d at 209; Phillips Pipe Line *787 Co. v. McKown, 580 S.W.2d 435, 438 (Tex. Civ.App.Tyler 1979, writ ref'd n.r.e.). The employer in an independent contractor relationship may be liable when he retains the right to control the contractor's work but fails to exercise his retained control with reasonable care. Exxon Corp., 726 S.W.2d at 20; Redinger v. Living, Inc., 689 S.W.2d 415, 418 (Tex.1985).
The summary judgment evidence established that Romero had worked as a security guard at Furr's Supermarket since early 1992.[5] He filled out an application at the police station, but never spoke with anyone at Furr's before he began working there. Jorge Ortiz, a sergeant with the El Paso Police Department, testified that the police department sets a minimum rate of $13 per hour with a minimum of two hours guaranteed work for patrol officers who provide offduty security services for businesses. Romero said that Furr's paid him $12 per hour and paid him by check mailed to his home address. Xavier Lucero, an employee of Furr's, said that the first time he met Romero he instructed him to be visible in the front of the store, deter crime, work with the customers and make them feel secure, assist management when needed, and "if you have to act as police officer we're out of it." When asked whether he ever talked to anyone in management about how he was supposed to handle his job at Furr's, Romero testified that he had spoken with a manager when he first started working at Furr's. According to Romero, Furr's instructed him where he was to perform his job, told him to make his presence known and to use his expertise as a police officer in handling situations. He said that Furr's relied upon his expertise as a police officer in "handl[ing] any situation."
Both Romero and the store manager testified to a subjective believe that Romero was an employee of Furr's. Prior to his employment by Furr's, Romero signed a waiver provided by the City of El Paso which stated that he and/or his employer would be responsible for his conduct while employed in an off-duty job. While there is summary judgment evidence showing that Furr's did not retain control over Romero's work insofar as it generally concerned arresting individuals, Duran offered summary judgment evidence showing that Romero asked Jose Encerrado, the store manager, whether he wished to have Duran arrested. Duran said that Encerrado shook his head, indicating "yes" to that question. This is some evidence that Furr's retained control over the decision to arrest an individual. Further, Encerrado testified that he would interfere if he saw a security guard verbally abusing or mistreating a patron of the store because he "was in charge." Thus, Furr's retained control over Romero with respect to how he treated patrons of the store. Because there is some evidence that Furr's retained control over the performance of security work by Romero, a fact issue exists with respect to whether Romero was an employee or independent contractor, and if he is an independent contractor, whether Furr's is vicariously liable. The existence of these fact issues precludes summary judgment on this ground.
Inherently Dangerous/Personal Character Exceptions
Assuming that Romero is an independent contractor, Furr's next argued that it is not vicariously liable for Romero's actions as an independent contractor because the personal character and inherently dangerous exceptions to non-liability do not apply. Because we find that fact issues exist with respect to whether the personal character exception to non-liability applies, it is unnecessary to address the inherently dangerous exception.
The personal character exception to non-liability provides that a premise occupier or owner is not immune from liability where the work involves duties which are personal in character. If the duties being carried out *788 by an independent contractor are of a personal character owed to the public by one adopting measures to protect his property, owners and operators of enterprises cannot, by securing special personnel through an independent contractor for the purpose of protecting property, obtain immunity from liability for at least the intentional torts of the protecting agency or its employees. Dupree v. Piggly Wiggly Shop Rite Foods, Inc., 542 S.W.2d 882, 888 (Tex.Civ.App.Corpus Christi 1976, writ ref'd n.r.e.).
In Dupree, the store contracted with the private firm of Denco Security Systems to protect the store's property from shoplifters. Two security guards employed by Denco accused Dupree of shoplifting and filed criminal charges against her although she had a sales receipt showing that she had purchased the items earlier in the day, and said that she had returned to the store to make an exchange. Upon dismissal of the criminal charges against her, Dupree filed suit against Piggly Wiggly for false imprisonment. Piggly Wiggly defended on the ground that Denco was an independent contractor. The court of appeals held that an owner or operator of an enterprise may not employ or contract with a special agency or detective firm to ferret out the irregularities of its customers or employees and then escape liability for malicious prosecution or false arrest on the ground that the agency and or its employees are independent contractors. Dupree, 542 S.W.2d at 889. Public policy considerations require that the enterprise be held liable for the acts done by others to its patrons in the prosecution of its business. Id. The Court noted that cases adopting this policy have been founded on the principle that an individual who expects to derive advantage from an act which is done by another for that individual, must answer for any intentional injury which a third party may sustain from it. Id. Consequently, the Court determined that the task of protecting the store's property was personal in nature, and as such, was a nondelegable or nonassignable duty. Id. at 890.
Furr's contends that the personal character exception applied in Dupree should not be extended to the instant case because the incident of which Duran complains did not arise out of Romero's protection of the property of Furr's, but rather, arose out of Romero's enforcement of the law as a police officer. First, we disagree with Furr's that Dupree is distinguishable because the function being performed by Romero is not personal in character. Furr's hired Romero to protect its own property as well as that of its customers, to protect the well-being of the store's patrons, and to deter crime both inside the store and in the parking lot. Romero said that one of his duties at Furr's was to handle parking violations. As was the case in Dupree, Furr's would obviously benefit from Romero's efforts to protect its own property. It cannot be disputed that Furr's efforts to protect its customers and their property from the criminal acts of others also inures to Furr's benefit because shoppers will be more likely to return to a business in which they feel secure. We find that the exception applied in Dupree is equally applicable where, as here, a business undertakes to protect, in addition to its own property, the property and well-being of its patrons because the business benefits both directly and indirectly from the security work performed for it by others. Consequently, Furr's has a duty to protect its customers from the intentional torts done by its security guards in the performance of that work. Whether Romero was engaged in the performance of his function as a security guard for Furr's is a question of fact. Second, as we have already determined, Furr's failed to establish that Duran had committed a violation of law. Therefore, we cannot conclude, as a matter of law, that Duran's injuries arose out of Romero's enforcement of the law rather than out of Romero's performance of his duties as a security guard for Furr's. For these reasons, it cannot be determined that the personal character exception does not apply. Consequently, summary judgment on this ground is improper.
Non-liability for Exemplary Damages
Furr's next argued that it is not liable for exemplary damages based upon Romero's acts because: (1) an employer-employee or an agency relationship does not exist; and (2) vicarious liability under one of the exceptions to non-liability for the acts of *789 an independent contractor does not include exemplary damages. Furr's again asserts that the summary judgment evidence established Romero's status as an independent contract as a matter of law. As we have previously held, a fact issue exists in that regard. Therefore, these grounds would not support summary judgment.
Non-Ratification of Romero's Unauthorized Acts
Furr's also argued that it is not vicariously liable for exemplary damages because Romero's actions were unauthorized acts that do not bind Furr's and Furr's did not ratify or approve of these acts. Generally, a principal is not bound by the conduct of his agent when the agent acts in excess of the actual authority given to him unless (1) the principal ratifies those actions, or (2) something estops the principal from denying the authority of those actions. Longoria v. Atlantic Gulf Enterprises, Inc., 572 S.W.2d 71, 77 (Tex.Civ.App.Corpus Christi 1978, writ ref'd. n.r.e.). Further, a principal or master is liable for exemplary or punitive damages because of the acts of an agent only if: (1) the principal authorized the doing and the manner of the act; or (2) the employer or agent was reckless in employing him; or (3) the employer or agent was employed in a managerial capacity and was acting in the scope of the employment; or (4) the employer or manager of the employer ratified or approved of the act. Purvis v. Prattco, Inc., 595 S.W.2d 103, 104 (Tex.1980); Shearson Lehman Hutton, Inc. v. Tucker, 806 S.W.2d 914, 926 (Tex.App.Corpus Christi 1991, writ dism'd w.o.j.).
We find that material issues of fact exist with respect to both of these rules. First, whether Romero acted within the scope of his authority as a security guard or acted solely in his capacity as a police officer is a question of disputed fact. Second, there is evidence that Romero, while he was physically restraining Duran, asked the store manager whether he wanted Duran arrested, and the store manager indicated "yes" by nodding his head. The store manager did nothing to prevent or stop Romero from assaulting Duran. This evidence raises a fact issue as to whether Furr's ratified or approved Romero's actions, or whether Furr's authorized the doing and the manner of the act by Romero. Accordingly, these grounds would not support the summary judgment.
NEGLIGENT HIRING CLAIM
With respect to the negligent hiring claim, Furr's moved for summary judgment on the grounds that: (1) Furr's actions were not a proximate cause of Duran's injuries; (2) Duran's actions constituted a new and independent cause that severed any causal link between any alleged negligent acts of Furr's and Duran's injuries; (3) Duran was a trespasser; and (4) Romero was justified in his use of force as a matter of law.
Proximate Cause
The basis of responsibility under the doctrine of negligent hiring is the master's own negligence in hiring or retaining in his employ an incompetent servant whom the master knows or by the exercise of reasonable care should have known was incompetent or unfit and thereby creating an unreasonable risk of harm to others. Peek v. Equipment Services, Inc., 906 S.W.2d 529, 534 (Tex.App.San Antonio 1995, no writ h.); Estate of Arrington v. Fields, 578 S.W.2d 173, 178 (Tex.App.Tyler 1979, writ ref'd n.r.e.). In order to impose liability upon an employer under the doctrine of negligent hiring, there must be evidence that the plaintiff's injuries were brought about by reason of the employment of the incompetent servant or independent contractor and be, in some manner, job-related. Peek, 906 S.W.2d at 534; Dieter v. Baker Service Tools, 739 S.W.2d 405, 408 (Tex.App.Corpus Christi 1987, writ denied). Stated another way, negligence in hiring the employee or independent contractor must be the proximate cause of the injuries to the plaintiff. Peek, 906 S.W.2d at 534; Dieter, 739 S.W.2d at 408. The components of proximate cause are cause in fact and foreseeability. Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 477 (Tex.1995). "Cause in fact" means that the act or omission was a substantial factor in bringing about the injury, without which the harm would not have occurred. *790 Id. at 477. Cause in fact is not shown if the defendant's negligence did no more than furnish a condition which made the injury possible. Id. The foreseeability element of proximate cause requires that a person of ordinary intelligence should have anticipated the danger created by a negligent act or omission. Id. at 478. The precise injury that occurred need not have been foreseen, only that it be of such a general character as might reasonably have been anticipated. Nixon, 690 S.W.2d at 551. To sustain the summary judgment, the evidence must have been sufficient to establish, as a matter of law, that Furr's negligence was not a proximate cause of the harm alleged by Duran. See Lear Siegler, Inc., 819 S.W.2d at 471.
The summary judgment evidence showed that Furr's did not require Romero to complete a job application and otherwise made no inquiry into his background as a police officer. Furr's never interviewed Romero or spoke with him before he began working at the store. If Furr's had conducted an investigation of Romero's performance as a police officer, it would have learned that Romero had a prior complaint for using vulgar and abusive language towards a member of the public while on duty as a police officer. Duran argues that this complaint demonstrates Romero's propensity for aggressive behavior so that Furr's could have reasonably anticipated that Romero might verbally and physically abuse a patron of the store. On the other hand, Furr's argues that even if it had discovered the prior complaint, the information would not have caused Furr's to reasonably anticipate his physical assault upon Duran. In attempting to distinguish between the prior verbal abuse complaint and the physical assault upon Duran, Furr's ignores the summary judgment evidence showing that Romero first verbally abused Duran during this incident. According to Duran, the verbal abuse escalated into the physical assault. We find that a fact question is raised whether knowledge of this abusive language complaint would put a reasonable person on notice that Romero might verbally abuse a store patron, and that such conduct might escalate into a physical assault. Because of the existence of this fact issue, summary judgment on this ground is improper.
Duran's Acts as New and Independent Cause
Asserting that Duran was verbally and physically aggressive towards Romero, Furr's also contended that Duran's actions constituted a new and independent cause that severed any causal link between the alleged negligent acts of Furr's and Duran's injuries. Furr's cites Nealy v. Fidelity Union Life Ins. Co., 376 S.W.2d 401, 404 (Tex.Civ.App.Dallas 1964, no writ) in support of its argument. The term "new and independent cause" means the act or omission of a separate and independent agency that destroys the causal connection between a negligent act or omission of the defendant and the injury complained of, and thereby becomes in itself the immediate cause of the injury. Phoenix Refining Co. v. Tips, 125 Tex. 69, 81 S.W.2d 60, 61 (1935); Cook v. Caterpillar, Inc., 849 S.W.2d 434, 440 (Tex. App.Amarillo 1993, writ denied); Eoff v. Hal and Charlie Peterson Foundation, 811 S.W.2d 187, 192 (Tex.App.San Antonio 1991, no writ). Such cause contemplates that an independent force rather than the negligent acts of the parties was responsible for such injuries. Eoff, 811 S.W.2d at 192-93.
The instant case is easily distinguishable from Nealy. There, a security guard shot and killed the decedent after he repeatedly and aggressively attacked the guard. The Court held that the decedent's physically aggressive acts constituted a new and independent cause of his death because he forced the security guard to use deadly force in selfdefense. Nealy, 376 S.W.2d at 404-06. Here, there is no evidence that Duran was physically aggressive towards Romero or that Romero's use of force against Duran was justified as a matter of self-defense. The evidence, when taken in the light favorable to Duran, demonstrates that Romero was the aggressor. By arguing that Duran was verbally aggressive towards Romero, Furr's necessarily takes its own summary judgment evidence as true and disregards the remainder of the evidence. The summary judgment evidence shows that Duran *791 became agitated only after Romero yelled at her and used profanity towards her. Thus, whether Duran was "verbally aggressive" towards Romero is disputed. Furr's has failed to establish this ground for summary judgment as a matter of law.
Duran's Status as a Trespasser
Furr's also moved for summary judgment on the basis that Duran, an invitee of the business, exceeded the limits of her authority as an invitee when she began using loud, abusive, and profane language, and became a trespasser when she was asked to leave, but refused to do so. Although there is evidence that Romero asked Duran to move the van out of the fire lane, there is no evidence that anyone, including Romero, asked her to leave the premises. As we noted earlier, there is no evidence that Duran used vulgar or profane language. Because Furr's failed to establish that Duran was a trespasser as a matter of law, summary judgment on this ground is improper.
Justification in Use of Force
Relying upon Section 9.51 of the Texas Penal Code, Furr's argues that Romero was justified in the use of force as a matter of law. See TEX.PENAL CODE ANN. § 9.51(a)(1), (2) (Vernon 1994). By its very language, Section 9.51(a) applies only to situations in which the peace officer is attempting to effectuate the arrest of an individual. At best, whether Romero touched Duran in an effort to effect her arrest is a fact issue. Duran stated that Romero grabbed her arm while threatening to arrest her. Romero stated he did not intend to arrest Duran and touched her only in an effort to calm her. The undisputed evidence shows that Romero eventually walked away from the conflict and did not arrest Duran. Because of the existence of these fact issues, Furr's failed to conclusively establish justification under Section 9.51.
FALSE IMPRISONMENT CLAIM
With respect to the false imprisonment claim, Furr's moved for summary judgment on the grounds that: (1) the statute of limitations had run at the time the amended petition was filed; and (2) there was no detention, or alternatively, Romero had authority to stop and question Duran.
Statute of Limitations
The incident in question occurred on March 28, 1992. Duran's original petition did not contain a false imprisonment claim. More than two years after the incident, she amended her petition to allege a false imprisonment claim. Furr's moved for summary judgment with respect to this claim on the ground that it is barred by the statute of limitations, arguing that because the claim is wholly based on a new, distinct, or different transaction or occurrence, the filing of the original petition did not toll the running of the statute of limitations.
Texas Civil Practice & Remedies Code, Section 16.068 governs application of the statute of limitations in situations such as this. Dillard's Dept. Stores, Inc. v. Strom, 869 S.W.2d 654, 658 (Tex.App.El Paso 1994, writ dism'd by agr.). It provides:
If a filed pleading relates to a cause of action, cross action, counterclaim, or defense that is not subject to a plea of limitation when the pleading is filed, a subsequent amendment or supplement to the pleading that changes the facts or grounds of liability or defense is not subject to a plea of limitation unless the amendment or supplement is wholly based on a new, distinct, or different transaction or occurrence.
TEX.CIV.PRAC. & REM.CODE ANN. § 16.068 (Vernon 1986).
When an amended pleading sets up a new cause of action under Section 16.068, it will relate back to the date of the original pleading for the purposes of limitations, so long as the amended pleading does not allege a wholly new, distinct, or different transaction. Ex parte Goad, 690 S.W.2d 894, 896-97 (Tex.1985); Strom, 869 S.W.2d at 658; Dorney v. Henderson Clay Products, Inc., 838 S.W.2d 314, 316 (Tex.App.Texarkana 1992, writ denied). Here, the amended claim does not allege a wholly new, distinct, or different transaction. Both the earlier and later claims involve the same wrongdoer and the *792 same event. Furr's argument in this regard is without merit and does not support summary judgment.
No Detention/Detention Authorized by Law
Furr's next argues that no detention occurred, or alternatively, Romero was authorized to detain Duran and question her. The essential elements of false imprisonment are: (1) willful detention; (2) without consent; and (3) without authority of law. Randall's Food Markets, Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex.1995); Sears, Roebuck & Co. v. Castillo, 693 S.W.2d 374, 375 (Tex.1985). Furr's arguments concern the first and third elements of false imprisonment.
Furr's first asserts that the summary judgment evidence establishes that Romero did not detain Duran. To the contrary, Duran stated that Romero opened the door to her van, grabbed her arm, twisted it, and would not let go. She also stated that he attempted to pull her from the vehicle. This evidence creates a fact issue as to the element of detention. With respect to the third element, Furr's argues that Romero had authority to arrest Duran for the parking violation. As discussed previously, Furr's failed to establish as a matter of law that Duran had committed or was committing a violation of law. Thus, it did not conclusively establish that Romero had authority to arrest Duran. Alternatively, Furr's argues that Romero had authority to temporarily detain Duran for further investigation with respect to the disorderly conduct violation. We disagree for two reasons. Inasmuch as Duran testified that Romero was pulling and twisting violently on her arm in an effort to forcibly remove her from the vehicle, while asking Encerrado whether he wished to have her arrested, a fact issue exists whether this type of restraint in fact constituted an arrest rather than an investigative detention. See Amores v. State, 816 S.W.2d 407, 411-12 (Tex.Crim.App.1991) (Court found that arrest, not detention, occurred when police officer blocked the appellant's car in the parking lot, drew his service revolver, ordered the appellant from his car at gunpoint, ordered him to lie face-down on the pavement with his hands behind his back, and told him he would be shot if he did not obey these orders); Hoag v. State, 728 S.W.2d 375, 379 (Tex.Crim.App.1987) (detention constituted a warrantless arrest rather than an investigative detention where the police officers removed the defendant from his car at gunpoint, took him to the rear of the car and gave him Miranda warnings). Additionally, Furr's has not pointed to any evidence showing as a matter of law that Romero had a reasonable suspicion, based on specific, articulable facts, that Duran was involved in criminal activity. See Gaines v. State, 888 S.W.2d 504, 508 (Tex.App.El Paso 1994, no pet.). Because of the existence of these facts issues, summary judgment is improper.
DEFAMATION CLAIM
Duran alleged that Romero's statements to her and his conduct were defamatory because they imputed the commission of a crime and exposed to her public ridicule. Furr's moved for summary judgment on the grounds that: (1) Romero's statements to Duran are not defamatory and are not slanderous per se because they do not falsely impute criminal conduct; (2) the statements are true; and (3) the statements are privileged under the First Amendment. To be entitled to a summary judgment, Furr's had the burden to prove that Romero's alleged statements were not defamatory or slanderous per se as a matter of law. Diaz v. Rankin, 777 S.W.2d 496, 498 (Tex. App.Corpus Christi 1989, no writ).
Slander is a defamatory statement that is orally communicated or published to a third person without legal excuse. Randall's Food Markets, 891 S.W.2d at 646; Diaz, 777 S.W.2d at 498. A statement is defamatory if the words tend to injure a person's reputation, exposing the person to public hatred, contempt, ridicule, or financial injury. TEX.CIV.PRAC. & REM.CODE ANN. § 73.001 (Vernon 1986); Einhorn v. LaChance, 823 S.W.2d 405, 410-11 (Tex.App. Houston [1st Dist.] 1992, writ dism'd w.o.j.). Whether words are capable of the defamatory meaning the plaintiff attributes to them is a question of law for the court. Musser v. *793 Smith Protective Serv., Inc., 723 S.W.2d 653, 654-55 (Tex.1987); Einhorn, 823 S.W.2d at 411. The court construes the statement as a whole in light of surrounding circumstances based upon how a person of ordinary intelligence would perceive the entire statement. Id. Only when the court determines the complained of language to be ambiguous or of doubtful import should a jury be permitted to determine the statement's meaning and the effect the statement has on the ordinary reader or listener. Diaz, 777 S.W.2d at 499; see Musser, 723 S.W.2d at 655. If a written or oral statement unambiguously and falsely imputes criminal conduct to the plaintiff, it is libelous or slanderous per se. Diaz, 777 S.W.2d at 499; Ramos v. Henry C. Beck Co., 711 S.W.2d 331, 334 (Tex.App.Dallas 1986, no writ). In suits brought by private individuals, truth is an affirmative defense to slander. Randall's Food Markets, 891 S.W.2d at 646; Town of South Padre Island v. Jacobs, 736 S.W.2d 134, 140 (Tex.App.Corpus Christi 1986, writ denied).
Although the surrounding circumstances in which Romero's words were spoken are controverted, Furr's does not dispute that Romero's threats to arrest Duran imputes criminal conduct to her. It argues, however, Romero's words did not falsely impute criminal conduct because Romero's statements that he was going to arrest Duran were true. Furr's argument is unpersuasive because the question is not whether Romero's statements are true because he actually intended to arrest Duran. Rather, the question is whether his statements falsely imputed criminal conduct to her. As we have noted throughout this opinion, Furr's has not conclusively established that Duran committed a violation of criminal law. This is true despite Romero's subjective belief that she had committed the offense of disorderly conduct. Further, Romero testified that he had no intention of arresting Duran. Therefore, at the very least, fact issues exist with respect to the falsity of Romero's statements. For this same reason, Furr's failed to establish its affirmative defense as a matter of law.
Finally, Furr's urges that Romero's statements in which he allegedly called Duran rude names and used profanity towards her are not defamatory and are absolutely privileged under the First Amendment. Although Furr's claims that Duran bases her defamation claim, in part, on these statements, neither the pleadings nor the summary judgment evidence support this contention.
For the foregoing reasons, none of the grounds raised by Furr's supports the granting of its motion for summary judgment. Point of Error No. One is sustained.
QUALIFIED IMMUNITY
In Point of Error Two, Duran contends that the trial court erred in granting summary judgment in favor of Romero on the basis of qualified immunity. Romero moved for summary judgment as to all of Duran's claims against him on the ground that he is entitled to qualified immunity because he was performing a discretionary duty in good faith within the scope of his authority as a police officer. Qualified or official immunity is an affirmative defense. City of Lancaster v. Chambers, 883 S.W.2d 650, 653 (Tex.1994); Victory, 897 S.W.2d at 508; Half Price Books, 883 S.W.2d at 376. To establish the defense, Romero must show that the disputed incident occurred while he was (1) performing discretionary duties, (2) in good faith, and (3) was acting within the scope of his authority. Chambers, 883 S.W.2d at 653; Victory, 897 S.W.2d at 508. The underlying purpose of official immunity is to free government officials to exercise their duties without fear of damage suits that would consume their time and energy and the threat of which might appreciably inhibit the fearless, vigorous, and effective administration of policies of government. Victory, 897 S.W.2d at 508; Tyrrell v. Mays, 885 S.W.2d 495, 497 (Tex.App.El Paso 1994, writ dism'd w.o.j.). When a party seeks summary judgment on an affirmative defense, it must prove conclusively all elements of the affirmative defense. Montgomery v. Kennedy, 669 S.W.2d 309, 310-11 (Tex.1984); Half Price Books, 883 S.W.2d at 376. No disputed question of material fact can remain on the affirmative defense. Black v. Victoria Lloyds Ins. Co., 797 S.W.2d 20, 27 (Tex.1990); Half Price Books, 883 S.W.2d at 376.
*794 Romero states in his affidavit that he was acting in his capacity as a police officer during the incident in question because he asked Duran to move the illegally parked vehicle and he had reasonable grounds upon which to arrest her for disorderly conduct. As noted earlier, a fact issue exists whether Romero was acting in his capacity as a police officer when he asked Duran to move the vehicle. Further, despite Romero's subjective belief that he was acting in his capacity as a police officer during the incident in question, the summary judgment evidence does not conclusively establish that Duran committed a violation of law, including disorderly conduct. Consequently, Romero failed to establish as a matter of law that he was acting within the scope of his authority as a police officer during the incident in which Duran suffered the injury to her arm.[6] Because Romero failed to conclusively establish one of the elements of the affirmative defense of qualified immunity, the trial court erred in granting Romero's motion for summary judgment. Point of Error No. Two is sustained.
CONCLUSION
Having sustained both points of error, we reverse the judgment of the trial court and remand the cause for trial.
NOTES
[1] We note that in Half Price II, Leake claimed that a fact issue existed as to whether the officer actually saw a crime being committed. Concluding that Leake had not raised that contention in Half Price I, the Court declined to revisit their earlier opinion and applied the law of the case doctrine.
[2] These same facts would not show that a violation of state law occurred. Section 684.011(a)(3) of the Texas Transportation Code prohibits the owner or operator of a vehicle from leaving a vehicle unattended on a parking facility that is in or obstructs an appropriately marked fire lane. Tex.Transp.Code Ann. § 684.011(a)(3) (Vernon Pamph.1996). Since Duran was in the vehicle and moved it when requested, it obviously was not left unattended by the owner or operator.
[3] Probable cause exists where the facts and circumstances within the officer's knowledge and of which he has reasonably trustworthy information are sufficient in themselves to warrant a person of reasonable caution in the belief that a particular person has committed or is committing an offense. Torres v. State, 868 S.W.2d 798, 801 (Tex.Crim.App.1993); Amores v. State, 816 S.W.2d 407, 413 (Tex.Crim.App.1991); De La Paz, 901 S.W.2d at 575.
[4] A person commits an offense if he intentionally or knowingly uses abusive, indecent, profane, or vulgar language in a public place, and the language by its very utterance tends to incite an immediate breach of the peace. TEX.PENAL CODE ANN. § 42.01(a)(1) (Vernon 1994).
[5] In the motion for summary judgment, and in its brief on appeal, Furr's refers extensively to the deposition testimony of Xavier Lucero to establish that Furr's did not retain control of the police officers it employed to perform off-duty security services. Although other portions of Lucero's deposition are included in the appellate record, the portions pertaining to the hiring process and the officers' relationship with Furr's are not included. Therefore, the omitted portions have not been considered.
[6] Compare City of Dallas v. Half Price Books, 883 S.W.2d at 376-77 where an off-duty police officer working as a security guard observed two men removing a taillight from a parked car in an adjacent parking lot. As he attempted to stop them, the men got in a vehicle and attempted to flee. The officer removed the keys from the ignition, but began to struggle with the passenger. When the driver recovered the keys and started the vehicle, the officer dove across the seat in an effort to get the keys again. As the passenger was striking the officer, the driver began to move the vehicle. The officer then shot and killed the driver. The court concluded that when the officer saw a crime being committed, he ceased being an independent contractor or employee and was an on-duty police officer. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1812924/ | 230 Miss. 110 (1957)
92 So.2d 354
INGALLS SHIPBUILDING CORPORATION, et al.
v.
DICKERSON
No. 40351.
Supreme Court of Mississippi.
February 4, 1957.
*112 White & White, Gulfport, for appellants.
*113 Donald W. Cumbest, Pascagoula; Travis & Moore, Jackson, for appellee.
*114 HOLMES, J.
The appellee, L.D. Dickerson, filed a claim against his employer, Ingalls Shipbuilding Corporation, and the latter's insurance carrier, American Mutual Liability Insurance Company, appellants here, for compensation *115 benefits under the Mississippi Workmen's Compensation Law. The attorney-referee denied the claim. The commission, one member not participating, reversed the order of the attorney-referee and ordered the payment of disability and medical benefits. The action of the commission was affirmed by the circuit court and from the judgment of the circuit court, this appeal is prosecuted.
There is no substantial dispute between the parties as to the correctness of facts set forth in the attorney-referee's opinion. These facts are as follows:
For a number of years prior to February, 1955, the claimant had been employed as a carpenter by the Ingalls Shipbuilding Corporation. In February 1955, his average weekly wage was $82.80. In the performance of the duties of his employment, he was required to handle large timbers. On November 17, 1954, according to his testimony, he was engaged in the performance of his duties and it became necessary that one or more heavy pieces of timber be lifted several inches in order that a line from a gantry or crane could be placed thereunder. While so engaged, he became sick and notified the gantry operator of that fact. He did not notify his supervisor or leave the job at the time. Shortly thereafter, he was directed to dismantle some scaffolding. This work also involved the handling of large timbers. According to the testimony of the claimant, he again became ill while engaged in this work and reported to the first-aid station, where the nurse in charge gave him some medicine. After the completion of his shift, he returned to his home and later that night he suffered pain in the arms and chest and called Dr. G.W. Hicks. At the direction of Dr. Hicks he went to the company hospital where he was given some shots. The pain persisted and on November 19, 1954, he was admitted to the hospital where he remained for about ten days. He did not thereafter return to his work for approximately five weeks and upon his return he was given lighter work to do, and continued in *116 the performance of such work for about six weeks and then returned to his regular duties.
On February 21, 1955, he was directed by one of his superiors to assist other employees in placing some scaffold boards weighing about 150 to 200 pounds each upon scaffold benches approximately seven feet high. The boards were twelve inches by fourteen inches and twelve feet long. While engaged in this work, he again became ill. This occurred, according to his testimony, at approximately 10 P.M. on the shift that began at 3:45 P.M. and terminated at 12:15 A.M. The claimant did not report to first aid after this incident, but testified that he rested in an electrician's shack during the remainder of the shift. Thereafter, W.E. Little, the claimant's leaderman or supervisor on the shift, took the claimant in his car to within a short distance of his home. The claimant did not report the alleged illness or accident to Little and did not complain of pain.
At approximately 1:20 A.M., the claimant called Dr. Hicks and complained of pain in his arms and chest. He was taken to the hospital where shots were administered to him and he then returned to his son's home, but the pain persisted and he was thereafter admitted to the hospital where he remained for approximately nine weeks. After a period of two weeks spent at home, he returned to the hospital for an additional period of about five weeks. The claimant made no demand for compensation under the Mississippi Workmen's Compensation Law until September 16, 1955, on which date he forwarded his claim to the Workmen's Compensation Commission. The claimant was 48 years of age at the time of the hearing before the attorney-referee. The claimant was examined by Dr. Hicks in November 1954, and again in February 1955. He was also examined by Dr. T.T. Justice, a specialist in internal medicine, on February 25, 1955, at which time there was made an electrocardiagram of his heart. On October 27, 1955, he was examined by *117 Dr. E.F. Chanton, a specialist in internal medicine. On October 31, 1955, claimant was examined by Dr. K.D. Gregory, a specialist in internal medicine. All of the doctors agreed that the claimant had on at least two occasions suffered a coronary occlusion or posterior and anterior myocardial infarction.
The doctors differed in their opinion as to causal relationship between the attacks suffered by the claimant and his employment. Dr. Chanton, testifying for the claimant, stated that he saw the claimant on one occasion and that he was of the opinion that heavy labor such as the claimant was engaged in aggravated and precipitated the heart attacks and caused the disability. Dr. Gregory, testifying for the defendants, stated that he saw the claimant on one occasion and he was of the opinion that heavy labor such as the claimant was engaged in did not aggravate or precipitate the heart attacks. Dr. Justice, testifying for the defendants, stated that he saw the claimant shortly after the attack in February 1955, and that at that time the claimant gave him a history of pain in the chest and arms occurring while he was at rest at home, the claimant stating that the pain awakened him from sleep. The claimant testified that he continued to hurt from the time he left his place of work to the time he called the doctor. Based on the history given him by the claimant, Dr. Justice testified that in his opinion the attacks were not causally related to claimant's work.
The history of the attacks given by the claimant to Dr. Chanton and Dr. Gregory differed from the history related to Dr. Justice, in that the history on which Dr. Chanton based his opinion of casual relationship between the claimant's work and his attacks was one of onset of pain while performing his usual duties, while the history as related to Dr. Justice four days after the alleged injury of February 21, 1955, was of an onset of pain while asleep and sometime after completing the day's *118 duties. Both Dr. Gregory and Dr. Justice testified that the time element as to the onset of pain is important in determining causal relationship.
From the facts stated by the attorney-referee in his opinion, he made the following findings: (1) That on February 21, 1955, claimant, L.D. Dickerson, was employed by the defendant, Ingalls Shipbuilding Corporation, as a carpenter at an average weekly wage of $82.80; (2) that on or about February 21, 1955, claimant consulted Dr. G.W. Hicks in regard to pain in the arm and chest; that claimant was hospitalized for a period of approximately 15 weeks and is presently disabled from performing his usual duties as carpenter for the defendant-employer; (3) that on February 25, 1955, claimant was examined by Dr. T.T. Justice, a specialist in internal medicine, who found claimant had suffered a posterior and anterior myocardial infarction; (4) that claimant did not notify the employer of the alleged accident on February 21, 1955, nor demand compensation and medical treatment therefor until on or about September 16, 1955.
The record further reveals that while Dr. Hicks did not expressly testify that the claimant's work accelerated, aggravated, or precipitated his heart attacks, he did say that strain upon the heart would tend to aggravate an existing disease or precipitate a new one. Dr. Hicks further testified that when he saw the claimant in November 1954, he had the typical symptoms of a heart attack, that is, pain in the left chest, pain in the left arm, extreme apprehension and cold perspiration.
The evidence further reveals that when the claimant became ill while at work on February 21, 1955, he went to the company's first-aid station where he was attended by the company's nurse in charge, and that his condition was such that the nurse called the company ambulance to transport him to the hospital and thence to his home. Within a few days after he was admitted to *119 the hospital after the February 1955 attack, he was visited by his co-workers and among them was his foreman or superior.
The commission, in its order, recited that it was of the opinion that the statement of the case contained in the attorney-referee's opinion was true and correct and that the findings of facts of the attorney-referee Nos. 1, 2, 3 and 4 were correct. The order of the commission further recited that a majority of the commission were of the opinion that based upon the facts contained in the record and found by the attorney-referee, there was substantial evidence upon which an award should be made. It should be noted that the attorney-referee made no specific finding that there was not causal relationship between the claimant's attacks and his work. He expressed the opinion that there was insufficient evidence upon which to base a finding that the claimant suffered an accidental injury which arose out of and in the course of his employment.
The overwhelming weight of the evidence establishes the fact that the claimant's attacks came upon him while he was in the performance of the duties of his employment, and engaged in handling heavy timbers which caused physical strain and exertion. It is further undisputed from the evidence that he is at present disabled from the performance of the work in which he was engaged at the time he suffered his heart attacks. The main dispute in the evidence arises out of the medical testimony and pertains to the question of causal relationship between the claimant's work and his attacks. Dr. Chanton testified that the claimant's work, consisting of heavy labor, aggravated and precipitated the claimant's heart attacks and caused his disability. Dr. Hicks did not specifically express the opinion that the claimant's work aggravated and precipitated his heart attacks, but did say that where one is susceptible to such an attack any severe strain upon the heart would tend to aggravate *120 an existing disease or precipitate a new one. Dr. Gregory testified unqualifiedly that in his opinion there was no causal relationship between the claimant's work and his attacks. Dr. Justice based his opinion upon the assumption that the attacks came upon the claimant while at rest or asleep, and after an interval between the time that he quit work and the time of the attack. He stated, however, that "if there is an immediate relationship between severe pain or its equivalent in a patient who was known to have coronary artery disease, there may be a causal relationship."
(Hn 1) It is mainly contended by the appellants on this appeal that the order of the attorney-referee is based upon substantial evidence and that the commission was, therefore, not warranted in reversing the order and decision of the attorney-referee. The appellants contend that the attorney-referee is the trier of the facts and not the commission, and that the decision of the attorney-referee, if supported by substantial evidence, is controlling on the commission. They admit that this contention is in direct conflict with the decision of this Court in Railway Express Agency, Inc. v. Hollingsworth, 221 Miss. 688, 74 So.2d 754, and Malley v. Over-the-Top, 90 So.2d 678. They argue that these two cases are in conflict with the prior decisions of this Court, and particularly the decisions of this Court in Pearson v. Dixie Electric Power Association, 219 Miss. 884, 70 So.2d 6, and Guess v. Southeastern Utilities Service Co., 85 So.2d 173. They urge the Court to adopt the rule that the trier of facts in compensation cases is the attorney-referee. In the Pearson case and the Guess case, the Court expressed the opinion that the decision of the attorney-referee was supported by the great weight of the evidence and should not be reversed by the commission. It is manifest in both of these cases that the Court was of the opinion that there was not substantial evidence to support a decision of the commission contrary to that of *121 the attorney-referee, and the effect of the decisions in these cases was to so hold. It was not the holding of the Court in these cases that the attorney-referee is the trier of the facts and that his decision is not to be disturbed if supported by substantial evidence. Be that as it may, however, the question as to whether the attorney-referee or the commission is the trier of the facts in compensation cases has been definitely put to rest in the case of Railway Express Agency v. Hollingsworth, supra, and Malley v. Over-The-Top, supra. In both of these cases the Court announced the definite rule that the commission is the trier of facts and we now re-affirm that holding.
(Hn 2) It is also contended by the appellants that since the commission adopted as correct the statement of facts contained in the opinion of the attorney-referee and adopted the findings of the attorney-referee it was error for the commission to reverse the decision of the attorney-referee. It is true that the commission adopted as correct the facts stated by the attorney-referee in his opinion and the findings of fact of the attorney-referee Nos. 1, 2, 3 and 4. As heretofore stated, the attorney-referee made no specific finding that the facts were insufficient to show causal relationship between the claimant's attacks and his work. However, the commission was not precluded from considering the facts stated by the attorney-referee as well as other facts appearing in evidence, and from the record as a whole determining whether or not there was causal relationship between the claimant's attacks and his work. So considering the case, the commission determined from the conflicting testimony that the claimant's injury was compensable. (Hn 3) There is, in our opinion, substantial evidence to support the decision of the commission.
It is next contended that the commission reversed the findings made by the person who heard the witnesses and observed their demeanor, on the sole ground that there was evidence in the record in favor of the claimant *122 and held as a matter of law that this evidence must be believed by the triers of the facts to the exclusion of the testimony offered by the defendants, and the appellants argue that such an order by the commission was arbitrary, capricious, and unwarranted, and a denial to the defendants of their constitutional rights under the Constitution of the United States and the State of Mississippi. It is clear from the record that the commission did not hold as a matter of law that the evidence in the record in favor of the claimant must be believed by the trier of facts to the exclusion of the testimony offered by the defendants. The commission, considering the testimony as a whole and determining the conflicts therein, found that the claim was compensable and there was substantial evidence to support this finding and decision.
(Hn 4) It is also contended by the appellants that the claimant is precluded from recovery because of his failure to give to his employer notice of his injury within the time prescribed by the act. The act expressly provides that absence of notice shall not bar recovery if it is found that the employer had knowledge of the injury and was not prejudiced by the employee's failure to give notice. In the case of Pearl River Tung Co. v. John's Estate, 83 So.2d 95, we held that where the employer's foreman in charge of the deceased drove the deceased to the hospital after a heart attack, the employer had actual knowledge of the injuries to the deceased within the meaning of the workmen's compensation statute. We also held in the case of Port Gibson Veneer and Box Co. v. Brown, 83 So.2d 757, that under the compensation act requiring notice of injury within thirty days, notice to any superior of the employee is sufficient. It was also said in the case of Port Gibson Veneer and Box Co. v. Brown, supra, as follows:
"The law looks with disfavor on strained and technical interpretations of statutes regarding notice of injury; and even in cases where no timely notice was *123 given, the tendency is to temper the literal harshness of statutory bars by the recognition of various excuses, and permitting waivers and exceptions."
(Hn 5) It is undisputed that within a few days after both attacks suffered by the claimant he was visited in the hospital by his co-workers, including his foreman, and further that he was treated in the first-aid station maintained by the employer for the benefit of injured employees, and was transported in the employer's ambulance to the hospital and from the hospital home. It is unreasonable to deduce from this evidence that the employer had no knowledge of the claimant's injury and of the fact that it was suffered in the course of his employment and was related to his work. It is clear from the record that the employer was not prejudiced by the claimant's failure to give notice. We therefore find that this contention of the appellants is untenable.
It follows from the views expressed that the judgment of the circuit court affirming the order of the commission and remanding the cause to the commission for enforcement should be and it is affirmed.
Affirmed.
Roberds, P.J., and Hall, Lee and Kyle, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1808184/ | 417 So.2d 912 (1982)
Carol S. AYERS and Richard J. Ayers
v.
J. Michael PETRO.
No. 53181.
Supreme Court of Mississippi.
July 21, 1982.
*913 George M. Quin, Gulfport, for appellants.
Herbert W. Wilson, Gulfport, for appellee.
Before SUGG, P.J., and ROY NOBLE LEE and DAN M. LEE, JJ.
SUGG, Presiding Justice, for the Court:
The principal question in this case is whether a deed to a husband and wife conveying the property to them, "as joint tenants, not as tenants in common, but with the right of survivorship in each upon the death of either," created a joint tenancy or a tenancy by entirety.
This appeal is from a decision of the Chancery Court of the First Judicial District of Harrison County, Honorable Jason Floyd, Jr. presiding, granting appellee's petition to sell real property for a division of proceeds. We affirm.
The facts are not in dispute. Steven K. Streetman and wife, Carol S. Streetman purchased the property from Hubert J. Pickle and wife, Faye Pickle on September 25, 1978. The deed conveyed the property to the Streetmans "As joint tenants, not as tenants in common, but with the right of survivorship in each upon the death of either... ." On the same date the Streetmans executed a deed of trust to the Pickles for the balance of the purchase price of the property in the amount of $4,500. Subsequently the Streetmans were divorced and Carol Streetman married Richard J. Ayers before June, 1980.
On June 30, 1980, the property was sold by the trustee at a foreclosure sale to Richard J. Ayers and wife, Carol S. Ayers for $4,417.52, "As joint tenants, not as tenants in common, but with the rights of survivorship in each... ." On September 5, 1980, Steven K. Streetman conveyed the property to appellee, J. Michael Petro, by a quitclaim deed. The quitclaim deed purported to convey the entire title to Petro, but of course, operated only as a conveyance of Streetman's undivided one-half interest. Petro claims only Streetman's interest in the property.
Appellants argue that the deed from Pickle to the Streetmans, (1) created an estate by entirety in the Streetmans who were then husband and wife, (2) Streetman could not destroy the tenancy by the entireties by conveying his interest to Petro, and (3) the purchase of the property by appellants at a trustee's sale did not inure to the benefit of Streetman.
I
At the outset it is necessary to note the similarity and the difference between estates *914 in joint tenancy and estates by entirety. This is clearly stated in 41 C.J.S., Husband and Wife, section 33(b) as follows:
An estate by entirety is sometimes regarded as a species of, or modified form of, joint tenancy, the modification being rendered necessary by the common-law theory that husband and wife are but one person. The unities of time, title, interest, and possession are common to both estates but in an estate by entirety there is an additional unity, namely, that of person. Strictly speaking, a tenancy by entirety is not a joint tenancy but is a sole tenancy, and, while the two estates resemble each other and possess some qualities in common, yet they differ both in form and substance and are distinguishable, and it has been said that the disfavor with which the courts look on joint tenancies does not extend to estates by entirety. The seizin of the tenants distinguishes the two estates, and a marked, and perhaps the principal, distinction lies in the possibility of severance and destruction.
An estate by entirety may exist only in a husband and wife and may not be terminated by the unilateral action of one of them because they take by the entireties and not by moieties. While the marriage exists, neither husband nor wife can sever this title so as to defeat or prejudice the right of survivorship in the other, and a conveyance executed by only one of them does not pass title. Cuevas v. Cuevas, 191 So.2d 843 (Miss. 1966); McDuff v. Beauchamp, 50 Miss. 531 (1874); Hemingway v. Scales, 42 Miss. 1 (1868)[1].
Conversely a joint tenancy may be destroyed by one of the joint tenants conveying his undivided interest. This was expressed in Richardson v. Miller, 48 Miss. 311 (1873) in the following language:
Joint tenancy is created by the same instrument, a will or a deed, and must have a unity of title and interest, as to nature, duration and quantity. Each tenant is seized of the whole and of every part; each may exercise all reasonable acts of ownership. Litt. 288; Co. Litt. 186; 4 Kent Com. 394
The estate is destroyed by breaking up any of its constituent unities. If there be three tenants, and one convey his undivided interest to F., he becomes tenant in common with the other two, who as to each other remain joint tenants. Litt. 292, 294. The distinguishing feature of this estate was the right of survivorship, which could not be defeated by a devise by one tenant of his interest, unless the devisor survived, and then only by a republication of the will after survivorship had accrued. Co. Litt. 186 b. (48 Miss. at 333, 334)
Accord, Hemingway v. Scales, supra.
Where a husband and wife own property as tenants by entirety, the property is held by them as joint tenants following a divorce. In Shepherd v. Shepherd,[2] 336 So.2d 497 (Miss. 1976) we held that an estate by entirety would not become an estate in common following a divorce of the parties but the parties would hold the property as joint tenants with the right of survivorship.
*915 In the case before us the conveyance was to husband and wife as an estate in entirety with the right of survivorship. An estate in entirety is a joint tenancy with the right of survivorship plus the marital relation. If it can be said that after the dissolution of the marriage the parties could no longer be tenants by the entirety, they certainly remained joint tenants with the right of survivorship. The dissolution of the marital relation under the statute as now written did not destroy the joint tenancy with the right of survivorship. The parties continued to own the property as joint tenants with the right of survivorship until the death of Fannie Shepherd. (336 So.2d at 499)
II
The Streetmans' deed to the property recited that it was conveyed to them, "as joint tenants, not as tenants in common, but with the rights of survivorship in each upon death of either." Despite the unambiguous language creating a joint tenancy, appellants argue that the deed created an estate by entirety. Appellants' argument is based on the common law rule that the same deed, which would create an estate in joint tenancy in other persons, make a husband and wife tenants of the entirety. Wolfe v. Wolfe, 207 Miss. 480, 42 So.2d 438 (1949); McDuff v. Beauchamp, 50 Miss. 531, (1874); Hemingway v. Scales, 42 Miss. 1 (1868); Sale v. Saunders, 24 Miss. 24 (1852).
The common law rule stated in Wolfe, McDuff, Hemingway, and Sale was changed in 1880 by the amendment to Art. 18, Code 1857 and by the removal of disabilities of coverture of married women.
The effect of the statutes was discussed in Conn v. Boutwell, 101 Miss. 353, 58 So. 105 (1911) where this Court held that a conveyance to a husband and wife created an estate in common rather than an estate by entirety. In Conn the Court stated:
Section 2770[3] of the Code of 1906, which has been the law in this state since the adoption of the Code of 1880, is as follows: "All conveyances or devises of land made to two or more persons, or to a husband and wife, shall be construed to create estates in common, and not in joint tenancy or entirety, unless it manifestly appears, from the tenor of the instrument that it was intended to create an estate in joint tenancy or entirety with the right of survivorship; but this provision shall not apply to mortgages or devises, or conveyances made in trust." Prior to 1880 the statutory law in force in this state was the same as the above-quoted statute, except there was omitted from the statute the expression "or to a husband and wife;" in other words, prior to 1880 the statute read as follows: "All conveyances or devises of lands made to two or more persons, shall be construed to create estates in common," etc. Rev.Code 1857, ch. 36, art. 18. The question is presented, for the first time in this court, whether under this statute a conveyance to a husband and wife created an estate in common, or in joint tenancy, or in entirety.
In Hemingway v. Scales, 42 Miss. 1, 97 Am.Dec. 425, 2 Am.Rep. 586, this court, in construing this statute, says that its evident purpose was to abolish the jus accrescendi, the right of survivorship, the distinguishing feature of joint tenancy, so that the estate of a joint tenant, upon his death, might descend to his heirs as in case of tenancy in common. It merely converted a joint tenancy into tenancy in common. It made no change in the law in regard to the estate of husband and wife, which, as was pointed out, is a very different estate from that of joint tenancy; and consequently the court held that the statute did not apply to conveyances to husband and wife, which in legal construction, by reason of the unity of husband and wife, are not strictly joint tenancies, but conveyances to one person, the court saying that husband and wife are seised of the entirety, and the survivor takes the whole, and during their joint lives neither of them can alien so as to bind the other. This principle was reaffirmed in McDuff v. Beauchamp, 50 Miss. *916 531, wherein it is held that under the statute of 1857 a conveyance to a husband and wife jointly created an estate of entirety. It does not make them joint tenants or tenants in common. Both are seised of the entirety, and have none of the incidents of cotenancy. This decision was rendered in 1874, and when the disabilities of coverture were removed by the legislature in 1880, in order to change the effect of conveyances when made to husband and wife, as announced by this court in the authorities hereinbefore cited, there was inserted in the statute (Rev. Code, 1880, section 1197) for the first time the clause "or to a husband and wife;" the manifest object and purpose of this amendment being to place husband and wife upon the same footing relative to conveyances or devises of lands as other persons. (101 Miss. at 356, 357, 58 So. at 106)
Conn holds that, after the legislature removed the disabilities of coverture in 1880, and amended Article 18 of the Revised Code of 1857 by including the clause "or to a husband and wife," a husband and wife are in the same position as other persons relative to conveyances or devises of lands. We therefore hold that section 89-1-7 Mississippi Code Annotated (1972), the current version of section 1197 Revised Code of 1880, authorizes a husband and wife to hold land either as tenants in common, as joint tenants, or as tenants by entirety. The deed to the Streetmans specifically created a joint tenancy.
III
Appellants also contend that the trial court erred in holding that the purchase of the property at the foreclosure sale by them inured to the benefit of Streetman, a cotenant of the appellant, Mrs. Ayers. This question was answered contrary to appellant's contention in Beaman v. Beaman, 90 Miss. 762, 44 So. 987 (1907) in the following language:
Without especial consideration in detail of the various grounds of demurrer so ably argued, it is plain that appellant's case is without life if Mrs. Loanna Beaman, wife of Charles Beaman, could not buy, either for cash or on credit, at the sale by the trustee in the trust deed of Alexander Beaman, the ancestor. Charles Beaman was a cotenant, and, with his wife, was in actual possession of the land when his father died and when the trustee sold and she bought. If he had bought, the purchase, subject to what he paid in satisfaction of his father's debt, would plainly have inured to the benefit of all the cotenants, and himself as one of them. Smith v. McWhorter, 74 Miss. 400, 20 South. 870; Walker v. Williams, 84 Miss. 392, 36 South. 450; Wyatt v. Wyatt, 81 Miss. 219, 32 South. 317. The inability of a cotenant to buy for himself or herself is based on grounds of public policy. On the same grounds of public policy, the husband or wife cannot so purchase. Robinson v. Lewis, 68 Miss. 69, 8 South. 258, 10 L.R.A. 101, 24 Am.St. Rep. 254; Clark v. Rainey, 72 Miss. 151, 16 South. 499; Hamblet v. Harrison, 80 Miss. 118, 31 South. 580. (90 Miss. at 765, 766, 44 So. at 987)
We therefore hold that the purchase of the property by appellants at the foreclosure sale inured to the benefit of Streetman.
IV
After appellant purchased the property at the foreclosure sale, Streetman conveyed the property to J. Michael Petro by quitclaim deed. Under the rule announced in Richardson v. Miller, supra, and Hemingway v. Scales, supra, Streetman, as a joint tenant, could convey his undivided interest and thus destroy the joint tenancy that formerly existed between him and his ex-wife.
The trial court required Petro, within 15 days, to pay into the registry of the court $2,208.76, which represented one-half of the amount paid by appellants when they purchased the property at the foreclosure sale. We therefore affirm and remand to the trial court for the entry of an order directing the sale of the property and a division *917 of the proceeds. After payment of the expenses of sale the proceeds shall be divided; one-half to appellants and one-half to appellee.
AFFIRMED AND REMANDED.
PATTERSON, C.J., WALKER, P.J., and BROOM, ROY NOBLE LEE, BOWLING, HAWKINS and DAN M. LEE, JJ., concur.
HAWKINS, J., specially concurs.
PRATHER, J., took no part.
HAWKINS, Justice, specially concurring:
I concur in the result reached in this case, on the issue raised on appeal.
I am troubled by our holding in Shepherd v. Shepherd, 336 So.2d 497 (Miss. 1976); in my view, we should have adopted the holding of the majority of the jurisdictions that husbands and wives who own property as tenants in the entirety or as joint tenants with the right of survivorship, by virtue of a decree of divorce, thereafter own the same property as tenants in common. I certainly believe the chancery court should have the power in a divorce action, where one of the parties prays specifically for such relief, to decree along with the divorce that property theretofore owned by the parties as tenants in the entirety or as joint tenants with right of survivorship should thereafter be owned as tenants in common. The chancery court in such a case is not simply dealing with one spouse's property, but with their joint property. I do not read Shepherd as depriving the chancery court of this power, however.
NOTES
[1] Of historical interest about cases appearing in 42 Miss.Reports is the following quotation from Lusby v. Railroad Co., 73 Miss. 360, 19 So. 239 (1895).
Perhaps the case most cited for the false view is that of Railroad Co. v. Devaney, in the book entitled 42 Miss.Rep. [555]. The case has no binding authority upon us, nor does the doctrine of stare decisis have any application in the case referred to, nor in any other case found in the so-called 42 Miss. The opinions found in that volume are the utterances of a tribunal appointed by the military satrap who then ruled in a prostrate commonwealth, and have no other binding authority upon us than that each case therein must be regarded as res adjudicata.
[2] Our holding in Shepherd is contrary to the weight of authority. 41 Am.Jur., Husband and Wife, par. 106, p. 106, 59 A.L.R. 718 and 52 A.L.R. 890. It is generally held that a decree of divorce severs an estate by the entireties and makes the divorced spouses tenants in common. Although not expressed in our opinion in Shepherd, the reason for our holding is that only the unity of person is destroyed by the divorce, leaving intact the unities of time, title, interest and possession.
[3] Now Section 89-1-7 Mississippi Code Annotated (1972). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1825234/ | 616 So. 2d 1290 (1993)
STATE of Louisiana, Appellee,
v.
Billy L. GAY a/k/a Karl R. Wolfe, Appellant.
No. 24452-KA.
Court of Appeal of Louisiana, Second Circuit.
March 31, 1993.
Rehearing Denied April 29, 1993.
*1292 Milton Dale Peacock, Monroe, for appellant.
Richard Ieyoub, Atty. Gen., Baton Rouge, Jerry L. Jones, Dist. Atty., Marcus R. Clark, Asst. Dist. Atty., Monroe, for appellee.
Before NORRIS, VICTORY and STEWART, JJ.
STEWART, Judge.
Defendant, Billy L. Gay, was charged and convicted of possession with intent to distribute methamphetamine, in violation of LSA-R.S. 40:967, and was later sentenced to ten years at hard labor. He appeals the conviction and sentence on two grounds: (1) ineffective assistance of counsel, and (2) insufficient evidence to support the verdict. Due to our finding the first assignment to have merit, we do not discuss the other assignment. We reverse the conviction and sentence and remand for a new trial.
FACTS
The state's evidence showed that on September 28, 1990, the defendant, Billy Gay, using the name Karl Wolfe, and Charles Hayes were sitting together in a pickup truck owned by the defendant at the 103 Truck Stop in Ouachita Parish. Deputy Mickey Hooks, who had been investigating Karl Wolfe, drove by on the service road adjacent to the truck stop and recognized the pickup. As the deputy approached, the defendant and Hayes exited the vehicle. The deputy watched defendant walk toward the rear of the vehicle and throw a shiny object onto the top of a closed barrel, located behind the truck. After calling for backup, the deputy ordered the defendant to the front of a car parked west of the defendant's truck while he questioned Hayes.
While being advised of his rights, Hayes informed Hooks that he and the defendant had just snorted a line of methamphetamine and that the defendant was dangerous. (At trial, Hooks testified he thought Hayes told him that defendant had snorted cocaine, not methamphetamine.) After Hayes admitted to possessing methamphetamine, a small pill bottle containing methamphetamine residue and a bag containing caffeine were recovered from his pocket.
When backup arrived, Deputy Hooks and Deputy Cummings searched the defendant, recovered $1,787 in cash, and a razor blade in defendant's right front pocket. Deputy Hooks then recovered a sandwich wrapper with five small bags containing a white powdery substance from the top of the *1293 barrel, later determined to be approximately three and one-half grams of methamphetamine.
The state tried and convicted the defendant of possession of methamphetamine with intent to distribute. Thereafter, defendant obtained new counsel who filed a post-verdict motion for acquittal based on insufficient evidence and, alternatively, a motion for new trial based on ineffective assistance of counsel. After receiving evidence, both motions were denied by the trial court, and defendant was sentenced to ten years at hard labor. Defendant now appeals claiming the trial court erred in denying his post-trial motions.
DISCUSSION
INEFFECTIVE ASSISTANCE OF COUNSEL
Defendant asserts that the trial court erred in denying his motion for new trial based on ineffective assistance of counsel. In support of the ineffective assistance complained of, defendant cites six instances in which he claims he was deprived of the type counsel required by the Sixth Amendment of the United States Constitution.
In assessing a claim of ineffective assistance of counsel a two-pronged test is employed. The defendant must show that (1) his counsel's performance was deficient, and (2) the deficiency prejudiced him. Strickland v. Washington, 466 U.S. 668, 104 S. Ct. 2052, 80 L. Ed. 2d 674 (1984). To show prejudice, the defendant must demonstrate that, but for the unprofessional conduct, the outcome of the proceedings would have been different. Therefore, the defendant must show a reasonable probability that counsel's error so undermined the proper functioning of the adversarial process that the trial court cannot be relied upon as having produced a just result. Effective counsel has been defined to mean "not errorless counsel, and not counsel judged ineffective by hindsight, but counsel reasonably likely to render effective assistance." State v. Ratcliff, 416 So. 2d 528, 531 (La.1982). Only if defendant has shown both error and prejudice will his conviction be found unreliable and set aside. See State v. Wright, 598 So. 2d 493 (La.App.2d Cir.1992). There is a strong presumption that the conduct of counsel falls within the wide range of responsible professional assistance. State v. Myers, 583 So. 2d 67 (La.App.2d Cir.1991), writ denied, 585 So. 2d 576 (La.1991).
Generally, the issue of ineffective assistance of counsel is a matter more properly addressed by an application for post-conviction relief, filed initially in the trial court where a full evidentiary hearing can be conducted. State v. Prudholm, 446 So. 2d 729 (La.1984). However, since defendant had the opportunity to, and did, produce evidence on this issue in the trial court, and since the record discloses sufficient evidence to rule on the merits of the claim, we will consider the issues on appeal in the interest of judicial economy. State v. Seay, 521 So. 2d 1206, 1213 (La.App.2d Cir.1988).
First, defendant asserts that his trial counsel testified he had not properly investigated the case because he had not been paid. Specifically, defendant claims trial counsel did not make long distance phone calls to investigate the veracity of defendant's claim regarding a prior incident in Washington Parish. Some of the details of this incident, involving an altercation with a deputy, were inquired into by the prosecution on cross-examination of defendant.
The defendant has not demonstrated that he was prejudiced in the above instance. At the hearing on the motion for new trial, defendant's trial counsel testified that he was ready for trial on August 5, 1991 and September 9, 1991 and that he had, in fact, filed a motion for speedy trial. In addition, he met with the defendant and the prosecutor several times before trial. There is no showing by the defendant of what the true facts of the incident involving the deputy were, thus he has failed to show prejudice by the alleged failure to properly investigate the incident. See State v. Landrum, 307 So. 2d 345, 348 (La.1975), in which a defendant unsuccessfully claimed that his appointed counsel was unprepared for trial.
*1294 Second, defendant asserts that his trial counsel failed to cross-examine the prosecution's chief witness, Charles Hayes, concerning his record of prior convictions. Although Hayes admitted on direct examination that he had been previously convicted of a charge involving methamphetamine, he did not testify that this was his only conviction. Defendant argues that an individual's criminal record is an important factor for the jury to consider in determining credibility.
Despite defendant's contentions, the record shows that, throughout the cross-examination of Hayes, trial counsel asked questions which placed Hayes' credibility at issue. Consider the following:
(a) Q. In the last five years has anyone seized any drugs off of you other than this one packet that supposedly Deputy Hooks got off of you?
Mr. Clark: Objection.
The Court: What's the basis of the objection?
Mr. Clark: Improper impeachment.
The Court: Sustained.
Q. Have you ever testified at trial against anyone, in reference to a drug case?
A. No, Sir.
(b) Q. You say over your lifetime you've only used approximately fifty hits of meth?
A. I didn't say fifty hits. I said I had bought fifty, sixty grams.
(c) Q. Had you been convicted at that time of possession of methamphetamine in the past?
A. Yes, Sir, I have.
Q. You know it's against the law?
A. Yes, sir.
The above excerpts demonstrate that defendant's trial counsel questioned Hayes as to his prior criminal history. Furthermore, at the hearing on the motion for new trial, defendant failed to show that Hayes actually had other convictions that were not mentioned at trial. A defendant who alleges that his counsel was ineffective must couple that allegation with a specific showing of prejudice. State v. Landrum, supra. Because defendant has not shown that he was prejudiced by his counsel's examination of Hayes, this argument is without merit.
Third, defendant asserts that his trial counsel failed to obtain the rap sheet of Hayes although it had been requested by first appointed counsel. This, defendant argues, emphasizes his attorney's ineffectiveness and inability to cross-examine Hayes. In support, defendant cites State v. Laird, 551 So. 2d 1310 (La.1989) and State v. Miles, 569 So. 2d 972 (La.1990) for the proposition that the state is required to provide the accused, upon his request, with copies of the rap sheets of the state's principal witness.
The defendant has not demonstrated that he was prejudiced by the state's failure to provide the rap sheet. Shortly before trial Hayes informed the prosecutor that he had a drug conviction and the prosecutor, in turn, relayed this information to the defense. The trial judge opined that this information was properly disclosed to the defense and noted that there was no prejudice.
Further, the failure to provide a rap sheet is a deficiency on the part of the state, not the defense counsel. The record reveals that trial counsel timely sought the defendant's rap sheet during discovery. For this reason, defendant's argument of ineffective assistance of counsel on this issue is misplaced. Defendant has not assigned as error the state's failure to provide Hayes' criminal record. Defendant made no showing that he was prejudiced by counsel's examination of Hayes, nor that Hayes actually had other convictions not mentioned at trial.
Fourth, defendant asserts that his trial counsel failed to attack Hayes' credibility on cross-examination by asking about any deal that he might have made with the state in exchange for his testimony against the defendant. The defendant argues that this was a critical error as Hayes was in separate possession of other methamphetamine and a caffeine filler that might have been used to cut the methamphetamine seized from the barrel at the time of defendant's *1295 arrest, thus indicating the drugs belongs to Hayes, not the defendant.
Defendant has failed to show how he was prejudiced by trial counsel's failure to question Hayes about a possible plea bargain or other deal with the state. Specifically, at the hearing on the motion for new trial, defendant failed to show that any deal was made with Hayes in exchange for his testimony. Deputy Hooks testified that everything Hayes told him was confirmed by the evidence seized and his personal observations, thus the jury was not simply relying on Hayes' credibility, but the physical evidence and the personal observation of Deputy Hooks, who saw the defendant throw the drugs onto the closed barrel. Absent a showing of prejudice, we do not find that counsel's actions constitute ineffective assistance of counsel.
Fifth, in regard to the prior incident in Washington Parish, defendant's trial counsel stated the following to the jury during closing argument:
Let's go to Deputy Hooks.... Don't get me wrong, but if you thought you were coming up on a man who had shot a deputy in Washington Parish would your heart be racing a little bit?
On direct examination, the defendant had testified that he was using an alias when he was arrested for the instant offense because he had run from a deputy in Washington Parish who had shot at him three times. On cross-examination, the defendant vehemently denied the prosecutor's inquiry into whether he had shot at and tried to kill the deputy in Washington Parish. Defendant claims during closing arguments, his trial counsel stated the defendant shot the deputy. The defendant argues that counsel would have never referred to the shooting during closing arguments had he properly investigated defendant's version of the incident with the necessary long distance phone calls.
The defendant is mistaken as to what his trial attorney said during closing arguments and has failed to show how he was prejudiced by counsel's statement to the jury. Despite defendant's interpretation of his counsel's remarks, the record reveals that counsel was merely asking the jury to consider the state of mind of Deputy Hooks, who was looking for defendant based upon this altercation in Washington Parish. Defense counsel did not actually state that defendant shot at a deputy, but only speculated about what Deputy Hooks might have been thinking as he approached defendant at the truck stop. Without a showing of prejudice, trial counsel's statement does not constitute ineffective assistance of counsel.
Defendant's final claim of ineffective assistance of counsel is that his trial counsel repeatedly failed to object and move for a mistrial under LSA-C.Cr.P. Art. 770 based upon the prosecution's numerous impermissible references to alleged other crimes committed by defendant. Three of these references occurred as follows:
(a) Q. Isn't it true the reason why he shot at you is because you tried to kill him?
A. No.
Q. That is incorrect?
A. That is incorrect.
Q. So that deputy is incorrect too?
(b) A. The officer did shoot at me.
Q. Was he returning your fire?
A. I don't know where you got this from, Mr. Clark....
(c) Q. You are a meth dealer, isn't that true, Sir?
A. No, Sir.
The prosecutor's statements referred to in (a) and (b) were not grounds for a mistrial. On direct examination, the defendant was asked why he was using the alias of Karl Wolfe when he was arrested for the instant offense. The defendant explained that on December 25, 1989 he had run from a deputy who shot at him three times during a roadside stop in South Louisiana. The state followed up on this line of questioning to show the jury how the defendant would slant his testimony to his benefit. The defendant had previously referred to the incident as merely a difference of opinion.[1]
*1296 References to arrests and indictments cannot be used even for the purpose of impeachment. State v. Gaspard, 301 So. 2d 344 (La.1974). However, the state is not precluded from contradicting the defendant's testimony given on direct examination upon an issue which the defendant himself has brought into the case. State v. Constantine, 364 So. 2d 1011 (La.1978). Where the defendant has "opened up" the issue of his arrest record, evidence pertaining to such arrest is clearly admissible. State v. Cotten, 438 So. 2d 1156 (La.App. 1st Cir.1983), writ denied, 444 So. 2d 606 (La.1984). Defense counsel, in an attempt to explain to the jury defendant's use of an alias, questioned the defendant about this prior incident and opened the door to the prosecutor's questions on the specifics of the incident. For these reasons, the state's questions were not improper and an objection from defense counsel would have been meritless.
Likewise, the prosecutor's question in (c) involving characterization of defendant as a methamphetamine dealer was not grounds for a mistrial. Defendant had testified earlier during cross-examination that he was convicted in 1986 of possession of methamphetamine with intent to distribute and further testified as to the amounts in which methamphetamine is usually sold. Under LSA-C.E. Art. 609.1(A), evidence that a witness, including the defendant, has been convicted of a crime is admissible to impeach the credibility of that witness. Furthermore, Hayes testified that defendant had distributed methamphetamine to him just prior to his arrest.
The defendant further submits that the prosecutor's remarks in the following were references to other crimes evidence, were grounds for a mistrial, and that trial counsel was ineffective for failing to object to such statements:
(d) Q. Isn't it true the reason why you lied to him about the trailer is that you didn't want him to go to that trailer and find the other bags of methamphetamine, to go find the little empty baggies that you used to bag up these so that you could sell them?
A. No, that's not true.
(e) Q. Isn't it true that you didn't want him to find the scales until after you made your first phone call and got it all moved?
A. No, that's not true.
(f) Q. You were scared of them finding your scales or your meth or your other baggies like this, Sir?
A. I don't have none of that.
(g) State's closing argument: Why did he lie about where he lived? Did he not want the officers to find more of this? He didn't want the officers finding scales.
In fact, defense counsel did object to (g) during the state's closing argument, but the objection was overruled. The court admonished the jury to "go on your recollection of the evidence." Defense counsel neither requested a mistrial or asked for an admonition.
LSA-C.Cr.P. Art. 770 provides in pertinent part as follows:
Upon motion of a defendant, a mistrial shall be ordered when a remark or comment made within the hearing of the jury by the judge, district attorney, or a court official, during the trial or in argument, refers directly to:
. . . .
(2) Another crime committed or alleged to have been committed by the defendant as to which evidence is not admissible; ...
The denial of a motion for a mistrial based on a prosecutor's reference which falls within the scope of the article, is per se a substantial violation of a statutory right. State v. Nuccio, 454 So. 2d 93 (La.1984); State v. Ramoin, 554 So. 2d 278 (La.App. 3d Cir.1989); State v. Vanderlinder, 552 So. 2d 1274 (La.App. 5th Cir.1989). To be within the scope of Article 770(2), the remark complained of must be an unambiguous reference to crimes alleged to have *1297 been committed by the defendant. State v. Robertson, 421 So. 2d 843 (La.1982).
There are exceptions to the general prohibition of this article. For example, references to inadmissible evidence of other crimes do not apply to evidence of words or actions which form an integral part of the charged offense, formerly res gestae. State v. Preston, 569 So. 2d 50 (La.App. 4th Cir.1990); State v. Hicks, 554 So. 2d 1298 (La.App. 1st Cir.1989). To be admissible, a very close connexity between the charged offense and the other crimes must exist. State v. Haarala, 398 So. 2d 1093 (La.1981); State v. Brown, 340 So. 2d 1306 (La.1976); State v. Edwards, 412 So. 2d 1029 (La.1982).
In addition, a mistrial is not mandated where, considering the totality of the evidence, there is no reasonable probability that, absent the error, the trier of fact would have had a reasonable doubt respecting the defendant's guilt, absent the error. State v. Sigur, 578 So. 2d 143 (La.App. 1st Cir.1990).
The jurisprudence has further developed in this area to include an exception for an impermissible reference to another crime made by a state witness which is deliberately elicited by a prosecutor. As a general rule, because a state witness is not a "court official" within the meaning of LSA-C.Cr.P. Art. 770, the provisions of LSA-C.Cr.P. Art. 771 would apply requiring only an admonition. Where, however, the impermissible reference is deliberately elicited by the prosecutor, the reference is imputable to the state and would mandate a mistrial under LSA-C.Cr.P. Art. 770. State v. Madison, 345 So. 2d 485 (La.1977); State v. Boudreaux, 503 So. 2d 27 (La.App. 1st Cir.1986); State v. Cook, 590 So. 2d 720 (La.App. 3d Cir.1991). The reference must be to another crime alleged to have been committed by the defendant as to which evidence is not admissible. State v. Madison, supra.
Another exception to the rule of LSA-C.Cr.P. Art. 770 occurs when the defendant has "opened the door" to evidence of other crimes. A mistrial is not required when the prosecutor's references or questions can be classified as responsive to an issue which the defendant himself has brought into the case. See State v. Cotten, 438 So. 2d 1156 (La.App. 1st Cir.1983), writ denied, 444 So. 2d 606 (La.1984).
In the instant case, defendant argues that the prosecutor's references to additional methamphetamine and drug paraphernalia in (d), (e), (f), and (g), should have mandated a mistrial under LSA-C.Cr.P. Art. 770 and his trial counsel was ineffective in failing to object and move for a mistrial. We agree. The failure to object to the references and move for a mistrial cannot be cured by any of the jurisprudential exceptions to LSA-C.Cr.P. Art. 770 given the particular facts of defendant's case.
When asked for his address at the scene of the arrest, defendant stated that he did not have a place to live but was looking to rent a trailer. Later, the defendant admitted to police he had already rented a trailer in Ouachita Parish at the time of his arrest. The fact that defendant had lied about renting the trailer had already come out at trial before any of the prosecutor's questions and remarks. It is submitted, by the state, that the references to the trailer and paraphernalia were specifically made in an attempt to get the defendant to admit he lied about where he was living in order to keep the officers from finding more drugs and paraphernalia. In addition, the state argues it was seeking to rebut the impression given by the defense that the drugs belonged to Hayes, not the defendant.
The state presented no evidence during the trial that more methamphetamine or drug paraphernalia, such as scales and baggies, were secreted in the defendant's trailer. It was improper for the prosecuting attorney to suggest by means of specific questions to the defendant that more drugs and drug paraphernalia existed at the defendant's trailer, when he had no evidence to prove their existence. As there was no evidence of other drugs forming an integral part of the transaction, the reference can not have been admitted as part of the res gestae exception. Trial counsel for the *1298 defendant should have objected to the references to other crimes.
Defendant was charged with possession with intent to distribute methamphetamine and the state was required to prove beyond a reasonable doubt that the defendant possessed the methamphetamine with the specific intent to distribute it. Intent is a condition of mind which is usually proven by evidence of circumstances from which intent may be inferred. State v. Fuller, 414 So. 2d 306 (La.1982); State v. Phillips, 412 So. 2d 1061 (La.1982); LSA-R.S. 15:445.
The state's evidence in chief included the three and one-half grams of methamphetamine located in five small baggies; the testimony of Deputy Hooks that the defendant threw a shiny object, later determined to be a plastic bag containing packets of methamphetamine, onto the barrel; the testimony of Deputy Cummings that a large amount of cash, $1,787, in small bills, was found on the defendant; the testimony of Investigator Royce Tony that while questioning the defendant at the police station, he noticed that the defendant had "cotton mouth," a condition consistent with methamphetamine use; and the testimony of Charles Hayes that one gram of methamphetamine is consistent with personal use and that it yields approximately 20 hits. The jury also heard the defendant's testimony as previously described herein.
In the absence of circumstances from which an intent to distribute may be inferred, mere possession of a drug does not amount to evidence of intent to distribute, unless the quantity is so large that no other inference is possible. State v. Greenway, 422 So. 2d 1146 (La.1982); State v. Harveston, 389 So. 2d 63 (La.1980); State v. Willis, 325 So. 2d 227 (La.1975). Mere possession, however, may establish intent to distribute if the amount of the drug in possession of the accused is inconsistent with personal use only. State v. Trahan, 425 So. 2d 1222 (La.1983); State v. Sibley, 310 So. 2d 100 (La.1975). Where intent to distribute a controlled dangerous substance is at issue, the trier of fact may consider whether the defendant actually distributed or attempted to distribute the drug, whether it was in a form usually associated with possession for distribution, whether the amount was such as to create a presumption of attempt to distribute, whether the amount found on the defendant was inconsistent with personal use, and whether there was any paraphernalia such as baggies or scales evidencing an intent to distribute. State v. McNair, 597 So. 2d 1096 (La.App.2d Cir.1992); State v. Hunt, 568 So. 2d 1104 (La.App.2d Cir.1990), writ granted in part 573 So. 2d 1130 (La.1991), denied in part, 580 So. 2d 914 (La.1991), citing State v. House, 325 So. 2d 222 (La.1975).
In the instant case, there was no expert testimony from the crime lab or police officers that the amount of drug found was consistent with distribution. Instead, the prosecutor deliberately made a series of references to drugs and paraphernalia supposedly secreted at defendant's trailer to establish the intent to distribute element. The jury may well have convicted Gay of the charged offense because it heard repeated references that he possessed more drugs and paraphernalia at his home. Absent the error, there is a reasonable probability that the jury would have had reasonable doubt respecting the defendant's guilt of the charged offense.
Likewise, the error was not otherwise cured by a waiver of defendant after objection. While an attorney's decision to request an admonition instead of a mistrial may be a tactical decision which will not constitute ineffective assistance of counsel, such is not the case here. Gay's trial counsel failed to object despite the fact that the prosecutor's references to "other crimes" evidence in this case would have been grounds for a mistrial under LSA-C.Cr.P. Art. 770, notwithstanding the jurisprudential exceptions to the rule previously discussed.
CONCLUSION
For the reasons given, we hold that Gay was denied the effective assistance of counsel in violation of the Sixth Amendment of the United States Constitution. Defendant's conviction and sentence are reversed and the case is remanded for a new trial.
*1299 REVERSED; VACATED; REMANDED FOR NEW TRIAL.
VICTORY, J., dissents in part, with reasons.
VICTORY, Judge, dissenting in part.
I agree with much of what is said in the majority opinion. However, I dissent from that part of the opinion that reverses the conviction on the grounds of ineffective assistance of counsel. Further, I believe the evidence is clearly sufficient to sustain the defendant's conviction.
In determining the possible prejudice of defense counsel's failure to object to the prosecutor's questions to the defendant on cross-examination about why he lied to the police in initially denying that he had a local residence affected the outcome of the case, we must first examine the strength of the state's case for possession with intent to distribute methamphetamine. This is accomplished by examining the evidence presented with regard to the House factors which are (1) whether the defendant ever distributed or attempted to distribute the drug; (2) whether the drug was in a form usually associated with possession for distribution to others; (3) whether the amount of drug created an inference of an intent to distribute; (4) whether expert or other testimony established that the amount of drug found in the defendant's possession is inconsistent with personal use only; and (5) whether there was any paraphernalia, such as baggies or scales, evidencing an intent to distribute. State v. House, 325 So. 2d 222 (La.1975); State v. Coleman, 552 So. 2d 513 (La.App.2d Cir.1989), writ denied 559 So. 2d 138 (La.1990).
The first House factor is satisfied by Hayes' testimony that the defendant distributed methamphetamine to him by them sharing a line of defendant's drugs just prior to the arrival of the police. In addition, the state produced evidence that the defendant has a prior conviction for possession with intent to distribute methamphetamine.
As to the second, third and fourth House factors, Deputy Hooks told the jury that a "large amount" of a controlled dangerous substance was seized. He testified he arrested and booked the defendant with possession with intent to distribute based on the large amount of the drug, the packaging of the 3.5 grams in five small bags, and the large sum of money in small bills [$1,787] seized from defendant. According to Hayes, an admitted methamphetamine user, one gram yielding approximately 20 hits, is consistent with personal use. Defendant testified that methamphetamine is usually packaged and sold in grams at a cost of $100 per gram. Although mere possession of a drug does not amount to evidence of intent to distribute, the jury had testimony that the quantity involved was three and a half times that for just personal use, and that the drugs were packaged for distribution. See State v. Hearold, 567 So. 2d 132 (La.App.2d Cir.1990), in which a bag containing between 3.2 and 3.5 grams of methamphetamine was considered too large for personal use. Contrary to what the majority opinion implies, there is no requirement that there be expert testimony on this issue. House says "expert or other testimony." Hayes was certainly considered knowledgeable on this issue as an admitted methamphetamine user.
There is also evidence of an intent to distribute under the fifth House factor, concerning possession of paraphernalia. The state produced the five small baggies used to package the methamphetamine which was seized. Although no other drug paraphernalia was recovered, $1,787.00 in small bills was found on the defendant at the time of his arrest, indicating possible recent drug sales.
Based upon the House factors discussed above, a rational trier of fact could have easily concluded beyond a reasonable doubt that defendant was guilty of possession of methamphetamine with intent to distribute.
Considering the strength of the state's case for possession with intent to distribute, the defendant has not shown that the jury verdict was compromised by the cross-examination and argument suggesting he lied to the police in order to hide more *1300 drugs and paraphernalia. The state certainly is allowed to explore on cross-examination the reasons why a defendant has lied to the police. The mere suggestion on cross-examination that a drug dealer might not have his entire drug supply with him at all times and might lie about it surely came as no surprise to the common sense of the jury. See State v. Sterling, 558 So. 2d 1336 (La.App. 4th Cir.1990), in which a similar question posed by the state was not considered prejudicial. Further, I question whether this is really "other crimes" evidence, rather than simply more evidence of the crime charged.
Since defense counsel's failure to object and/or move for a mistrial has not been shown to have affected the outcome of defendant's trial, defendant's claim for ineffective assistance of counsel is without merit.
APPLICATION FOR REHEARING
Before NORRIS, VICTORY, BROWN, STEWART and WILLIAMS, JJ.
Rehearing denied.
NOTES
[1] During the hearing on the motion for new trial, defendant's attorney presented evidence through a witness from the Department of Justice that an arrest warrant was pending in Washington Parish against defendant for the attempted murder of a police officer. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1418764/ | 699 F. Supp. 585 (1988)
Stephen G. CROUCH and Jessie Crouch, Plaintiffs,
v.
GENERAL ELECTRIC COMPANY, Defendant.
Civ. A. No. J87-0476(L).
United States District Court, S.D. Mississippi, Jackson Division.
September 14, 1988.
*586 *587 Thomas W. Tardy, III, Susan L. Runnels, Thomas, Price, Jackson, Miss., Clarence L. McDorman, Jr., Lamar & McDorman, Birmingham, Ala., for plaintiffs.
S. Craig Panter, Michael Allred, Satterfield & Allred, Jackson, Miss., for defendant General Elec.
MEMORANDUM OPINION AND ORDER
TOM S. LEE, District Judge.
This cause is before the court on the amended motion of defendant General Electric Company (GE) for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Plaintiffs Stephen G. Crouch and Jessie Crouch timely responded to the motion and the court has considered the memoranda of authorities together with attachments submitted by the parties.
This is a products liability action in which plaintiffs have charged defendant GE with defective design, manufacture, assembly, sale and/or distribution of the helicopter engine, related systems and component parts of a Sikorsky UH-60A Black Hawk helicopter which crashed and injured plaintiff Stephen Crouch. At the time of the crash, which occurred on August 25, 1981 in the vicinity of Fort Bragg, North Carolina, Stephen Crouch was serving in the United States Army and assigned to Fort Bragg. As part of his duties, Crouch operated as an instructor pilot for the Black Hawk helicopter in question.
The issue presented on this motion for summary judgment is whether the Crouches' right to maintain this action has been extinguished by the applicable law. The parties do not dispute the facts material to a resolution of that issue. They do, however, disagree as to the legal conclusion to be drawn from the facts.
The court would first note that this lawsuit is not the first to be filed by the Crouches as a result of the helicopter accident. Following the crash, they brought suit in August 1983 against United Technologies Corporation, Norton Company, Associated Aviation Underwriters and Simula, *588 Inc. in a Florida state court. After three years and extensive discovery, that action was dismissed for lack of prosecution on October 6, 1986. No appeal was taken from that dismissal. Subsequently, plaintiffs filed a second suit in Jefferson County, Alabama, naming as defendants GE, United Technologies Corporation and others, and alleging claims for breach of warranty and negligence. That action was dismissed on motion by GE for summary judgment.[1] Finally, the Crouches, on August 21, 1987, brought their claims to this court, alleging negligence, breach of warranty, strict liability in tort and intentional tort, all arising out of the alleged defective design, manufacture, assembly and sale of the engine and related systems and parts.[2]
The parties agree that while a number of states have had some contact with this litigation, Mississippi is not among them except to the extent that Mississippi is now the forum for this action. Neither the crash nor any of the events leading up to the crash had any connection with the State of Mississippi. None of GE's activities relative to the design, manufacture, assembly, sale or delivery of the helicopter engine occurred in Mississippi and no action taken by anyone in the State of Mississippi caused or contributed to the accident. Moreover, when this suit was filed, plaintiffs were residents of Alabama; they are not now nor were they at any time relative to their claims residents of Mississippi. Neither is GE a Mississippi corporation. Because of the forum state's obvious lack of any connection with the parties or the events giving rise to this lawsuit, this court is required to determine which state's substantive law will apply.
In this diversity action, the court is bound to apply the law of the forum state, Mississippi, including Mississippi conflict-of-law rules. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477 (1941). Under Mississippi choice-of-laws principles, application of the "center of gravity" or "most substantial relationship" test determines the substantive law applicable to actions brought in Mississippi. Mitchell v. Craft, 211 So. 2d 509, 515 (Miss.1968) (adopting center of gravity test). Utilizing this analysis, a Mississippi court will apply the law of the state which has "the most substantial contacts with the parties, and the subject matter of the action." Boardman v. United Services Automobile Ass'n, 470 So. 2d 1024, 1031 (Miss.1985)).
[T]he court trying the action applies the law of the place which has the most significant relationship to the event and parties, or which, because of the relationship or contact with the event and parties, has the greatest concern with the specific issues with respect to the liabilities and rights of the parties to the litigation.
Mitchell, 211 So.2d at 515 (quoting Craig v. Columbus Compress & Warehouse Co., 210 So. 2d 645 (Miss.1968)).
Since the law of a single state will not necessarily control every issue in a particular case, the center of gravity test must be applied to each question presented, with the result that in some instances the law of more than one state will be applied in a given lawsuit. Boardman, 470 So.2d at 1031; Price v. Litton Systems, Inc., 784 F.2d 600, 605 (5th Cir.1986) (quoting Boardman). In this action, plaintiffs allege four counts: (1) negligent, wanton or willfull design, manufacture, assembly, sale and distribution of the helicopter engine and related systems; (2) breach of express and/or implied warranty; (3) sale of a defective product in an unreasonably dangerous condition, i.e., strict liability in *589 tort; and (4) gross, wanton and reckless conduct. While each of these claims are premised on an alleged defect in the helicopter engine and systems, three arise under tort law and one under contract or warranty law.
PLAINTIFFS' TORT CLAIMS
In Mitchell v. Craft, the Mississippi Supreme Court adopted section 145 of the Restatement (Second) of Conflict of Laws as governing choice-of-law for tort actions. Section 145 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, as 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 domicil, residence, nationality, place of incorporation and place of business of the parties, and
(d) the place where the relationship, if any, between the parties is centered.
Although the parties agree as to the applicable conflicts analysis and as to the appropriate characterization of plaintiffs' claims, it is as to the proper application of these factors that they part company. Defendant contends that North Carolina substantive law is applicable to the Crouches' tort claims. The Crouches urge, however, that Massachusetts law applies.
Clearly, under the first factor to be considered, the injury occurred in North Carolina which is where the accident happened. On the issue of where the conduct causing the injury occurred, the following facts are undisputed. The Lynn Production Division of GE's Aircraft Engine component designed and manufactured the engine of the Black Hawk helicopter involved in the accident. The engine was manufactured pursuant to an award/contract with the United States Army Aviation Research and Development Command. Negotiations for this contract occurred between GE personnel in Ohio and Massachusetts and United States Army personnel in Missouri; the contract was actually executed at St. Louis, Missouri.
GE's Aircraft Engine component is an operating division of GE; its headquarters and certain manufacturing facilities are located at Evendale, Ohio. The Lynn Production Division is a major facility of GE's Aircraft Engine component and is located at Lynn, Massachusetts. The design and manufacture of the engines occurred at the Lynn Production Division facility in Lynn, Massachusetts and the engines were sold and delivered to the United States Army at Lynn, Massachusetts. The United States Army transported the engines to the facilities of United Technologies Corporation at Stratford, Connecticut, where United Technologies manufactured the helicopter involved in the accident. There, the engine at issue was installed in the helicopter. United Technologies sold and delivered the manufactured helicopters to the United States Army at Stratford, Connecticut, following which the helicopter in which Stephen Crouch was injured was assigned by the United States Army to Fort Bragg, North Carolina, where it remained in use until the accident. While conduct relative to the engine at issue is traceable to a number of states, the conduct charged by plaintiffs to have caused their injuries, the alleged defective design and manufacture of the engine, occurred in Lynn, Massachusetts at the Lynn Production Division.[3]See Price v. Litton Systems, 784 F.2d at 603-04.
*590 GE is incorporated and has its principal place of business in New York and its general headquarters in Connecticut. At the time of the accident, Stephen Crouch was assigned to Fort Bragg, North Carolina, and had been since August 1979. That is, both plaintiffs had been living in North Carolina for approximately two years prior to the accident. Nevertheless, plaintiffs deny having been residents of North Carolina, stating that although Stephen Crouch was in fact assigned to Fort Bragg, Tennessee was their state of legal residence. Under the facts presented and for this court's purposes, the fact that plaintiffs may have claimed Tennessee as their state of legal residence does not impact upon the choice-of-law analysis. In Price v. Litton Systems, two army personnel were killed in a helicopter accident in Alabama while stationed in Alabama. One of the decedents claimed Texas as his state of legal residence; the other claimed Ohio. The Fifth Circuit there held that Alabama was "the place of residence (albeit temporary)," of the decedents, thus recognizing that the state in which army personnel are stationed is relevant in the conflict-of-law analysis. Price v. Litton Systems, Inc., 784 F.2d at 604; see also Davis v. National Gypsum Co., 743 F.2d 1132, 1134 (5th Cir. 1984) (not "clearly fortuitous" that accident occurred in Colorado where decedent, although Mississippi resident, was stationed in Colorado at time of death). The court is of the opinion, therefore, that North Carolina should be considered plaintiffs' state of residence for purposes of determining the applicable law.[4]
As to the final factor to be considered, plaintiffs assert that there is no relationship between the parties. The court is of the opinion, however, that the relationship between the parties, though slight, is centered in North Carolina. That is "the only location where [Stephen Crouch] came in contact with the products of the defendant." Price v. Litton Systems, Inc., 784 F.2d at 604.
Upon consideration of the relevant choice-of-law factors for plaintiffs' tort claims, North Carolina emerges as the state having "the most substantial contact with the parties and the subject matter of the action." Boardman, 470 So.2d at 1031. Clearly, no state has a more substantial relationship to the parties and the subject matter than does North Carolina. And, even accepting plaintiffs' evaluation of the factors and conclusion that Massachusetts has "as significant relationship to the litigation as North Carolina[,]" North Carolina's substantive law would nevertheless apply. The Mississippi Supreme Court has adopted the view that the law of the state in which the injury occurred will determine the rights and liabilities of the parties unless some other state has a more significant relationship to the occurrence and the parties. Mitchell, 211 So.2d at 516. Thus, even assuming that all other factors pointed equally to North Carolina and Massachusetts, the undisputed place of the injury is North Carolina. Hence, North Carolina substantive law applies. See Siroonian v. Textron, Inc., 844 F.2d 289, 292 (5th Cir. 1988) (in wrongful death action, law of place where injury occurred applies unless some other state has more significant relationship to accident and parties). Having determined that North Carolinia law governs the Crouches' tort claims, the question then becomes whether plaintiffs' claims remain viable or whether their rights have been extinguished by the applicable substantive law.
While Mississippi applies the substantive law of the state found to have the most substantial relationship to the claim *591 and parties, Mississippi applies its own procedural law which has traditionally and usually included its statute of limitations. An exception exists, however, when a limitations period imposed by the law of the "center of gravity" state is determined to be substantive. In such cases, the Mississippi courts will apply that time limit as part of the substantive law of that state. White v. Malone Properties, Inc., 494 So. 2d 576, 578 (Miss.1986); Siroonian v. Textron, Inc., 844 F.2d at 292 (citing Ramsay v. Boeing Co., 432 F.2d 592, 596-597 (5th Cir.1970)) (exception to be broadly applied). Whether a time limitation is substantive depends on whether it is "an integral part of the statute which created the cause of action...." Siroonian, 844 F.2d at 292. If so, "expiration of the limitations period extinguishes the cause of action." Id.; see also Bethlehem Steel Co. v. Payne, 183 So. 2d 912 (Miss.1966) (limitations period part of substantive law where "built in" or in "same enactment" as statute which creates right of action); Price v. International Tel. and Tel. Corp., 651 F. Supp. 706, 708 (S.D.Miss.1986) (statutory limitations period part of substantive law if statute operates to extinguish right of action after time period has elapsed).
The North Carolina legislature in 1979 enacted a comprehensive products liability act. See N.C.Gen.Stat. § 99B-1 through 99B-10. Under the Act, a "product liability action"
includes any action brought for or on account of personal injury, death or property damage caused by or resulting from the manufacture, construction, design, formulation, development of standards, preparation, processing, assembly, testing, listing, certifying, warning, instructing, marketing, selling, advertising, packaging or labeling of any product.
N.C.Gen.Stat. § 99B-1(3) (1987). Clearly, the present action is a product liability action as defined by this section. The North Carolina legislature also enacted, in connection with its products liability act, N.C.Gen. Stat. § 1-50(6), which provides that:
[n]o action for the recovery of damages for personal injury, death or damage to property based upon or arising out of any alleged defect or any failure in relation to a product shall be brought more than six years after the date of initial purchase for use or consumption.
Whether the limitation period referenced in section 1-50(6) is substantive or procedural is determinative of its applicability to plaintiffs' claims and in considering this issue, this court is bound to honor the construction of the statute placed on it by the courts of North Carolina. See Siroonian, 844 F.2d at 292. The North Carolina courts have clearly, unambiguously and unequivocally held that the N.C.Gen.Stat. § 1-50(6) is a statute of repose, not a statute of limitations, and as such is more than a rule of procedure but rather is part of the substantive law of that state.[5]See Bernick v. Jurden, 306 N.C. 435, 293 S.E.2d 405, 413 (N.C.1982) (section 1-50(6) makes *592 substantive changes in law of products liability); Boudreau v. Baughman, 86 N.C. App. 165, 356 S.E.2d 907, 911 (N.C.App. 1987) (failure to file within prescribed time effectively clears defendant of wrongdoing and gives defendant vested right not to be sued). In Davidson v. Volkswagenwerk, A.G., 78 N.C.App. 193, 336 S.E.2d 714, 716 (N.C.Ct.App.1985), the court observed that section 1-50(6) was intended as "a substantive definition of rights which sets a fixed limit after the time of the product's manufacture beyond which the seller will not be held liable." Similarly, the North Carolina Supreme Court has held in construing this section that
[a] plaintiff must prove the condition precedent that the cause of action is brought no "more than six years after the date of initial purchase [of the product] for use or consumption." A plaintiff must also meet the time limitation of the applicable procedural statute of limitations.
Bolick v. American Barmag Corp., 306 N.C. 364, 293 S.E.2d 415, 420 (N.C.1982).
Based on the foregoing, the court must conclude that North Carolina law, and in particular, the limitations period set forth in section 1-50(6), applies in the instant case. That six-year period expired six years after the date of "initial purchase for use or consumption." Plaintiffs admit that the initial purchase of the helicopter engine occurred on February 21, 1981; purchase of the assembled helicopter took place on March 31, 1981, the date of delivery by United Technologies and acceptance by the United States Army. This action was brought August 27, 1987, over six years later. Accordingly, plaintiffs' claims based in tort have been extinguished and may not be maintained. They must therefore be dismissed. See Wayne v. Tennessee Valley Authority, 730 F.2d 392 (5th Cir.1984) (Tennessee statute of repose treated as substantive in conflicts analysis); Hines v. Tenneco Chemicals, Inc., 728 F.2d 729 (5th Cir.1984) (North Carolina statute of repose held substantive in context of choice-of-law).[6]
PLAINTIFFS' BREACH OF WARRANTY CLAIMS
The Crouches' breach of warranty claims are premised on the sale of the helicopter engine and/or helicopter and arise under contract or warranty law.[7] In the absence of an effective choice of law by the parties, the relevant factors in a contract choice-of-law analysis, as adopted by the Mississippi court, derive from section 188 of the Restatement (Second) of Conflict of Laws and are:
(a) the place of contracting,
(b) the place of negotiation of the contract,
(c) the place of performance,
(d) the location of the subject matter of the contract and
(e) the domicil, residence, nationality, place of incorporation and place of business of the parties.
Boardman, 470 So.2d at 1032. The contract under consideration in the case sub judice was executed in Missouri. Negotiations occurred in Missouri, Ohio and Massachusetts. The contract was performed in Massachusetts as that is where GE designed, manufactured and delivered the subject engine. The engine was delivered in Massachusetts, then transported to Connecticut *593 for assembly with the remaining parts of the helicopter. The helicopter, after assembly, was placed in use in North Carolina and was located in North Carolina at the time of the accident. Thus, the subject matter of the contract, the helicopter engine, was located in Massachusetts on the day of delivery. See Price v. International Tel. and Tel., 651 F.Supp. at 711 (pertinent consideration is location of subject matter at time of delivery). Finally, the court has already concluded that the Crouches were North Carolina residents at the time of the accident. GE is a New York corporation with its principal place of business in New York and general headquarters in Connecticut; GE's Lynn Production Division has its principal place of business in Massachusetts.
In the court's view, having weighed the various factors, Massachusetts has the most significant contacts with the plaintiffs' warranty claim. The parties agree that under Massachusetts law, statutes of limitation are construed as matters of procedural rather than substantive law. Wilson v. Hammer Holdings, Inc., 671 F. Supp. 94, 96 (D.Mass.1987). Accordingly, Mississippi's statute of limitations will apply.
Section 75-2-725 of the Mississippi Code provides a six-year limitations period for breach of warranty actions:
(1) An action for breach of any contract for sale must be commenced within six (6) years after the cause of action has accrued.
(2) A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.
Miss.Code Ann. § 75-2-725 (1972). The helicopter engine at issue was delivered by GE to the United States Army on February 27, 1981. Once the helicopter was assembled and the engine installed, the helicopter was delivered to the Army on March 31, 1981. Tender of delivery having been made more than six years prior to plaintiffs' institution of the present case, their breach of warranty claims appear to be barred by application of section 75-2-725. Plaintiffs, however, assert that the contract between GE and the United States Army contained express warranties as to future performance, thus bringing their warranty claims within the exception provided by the statute such that the cause of action accrued not at the time of tender of delivery but at the time the engine's defects were discovered, i.e., the time of the crash.[8]
The alleged express warranties as to future performance to which plaintiffs refer are as follows:
J 1 T700 NEW EQUIPMENT LIMITED WARRANTY
A. WARRANTY OF MATERIAL AND WORKMANSHIP
The Contractor warrants that each of the one hundred seventy (170) engines under contract DAAK50-78-C-001 will, at the time delivery [sic] be free from defects in material and workmanship.
B. MAXIMUM TERM AND LIABILITY OF WARRANTY
The warranty on each of the one hundred seventy (170) T700-GE-700 engines shall cease three (3) years from the date the Government accepts the first engine under Contract DAAJ01-77-C-0002, or upon expiration of five hundred (500) total engine hours on each serial number engine delivered to *594 the Government, whichever occurs first.
This provision is followed by a description of GE's obligations in the event of a covered defect which are limited to the repair and replacement of defective parts.
The "overwhelming majority" of courts have interpreted future performance exceptions such as those contained in section 75-2-725 very strictly. Wilson v. Hammer Holdings, Inc., 671 F.Supp. at 96; Standard Alliance Indus. v. Black Clawson Co., 587 F.2d 813, 820 (6th Cir.1978), cert. denied, 441 U.S. 923, 99 S. Ct. 2032, 60 L. Ed. 2d 396 (1979) (courts have been harsh in determining whether warranty is one of future performance). To come within the future performance exception, a warranty must explicitly promise or guarantee future performance of the goods; it must be clear, unambiguous and unequivocal. Rutland v. Swift Chemical Co., 351 So. 2d 324, 325 (Miss.1977). The "warranty of material and workmanship" relied on by plaintiff does not expressly guarantee the future performance of the helicopter engines. Rather it simply warrants the condition of the goods at the time of delivery. See Ranker v. Skyline Corp., 342 Pa.Super. 510, 493 A.2d 706, 708 (1985); Holdridge v. Heyer-Schulte Corp. of Santa Barbara, 440 F. Supp. 1088, 1103-04 (N.D.N.Y.1977) (express warranty merely constituted representation of product's condition at time of delivery and did not extend to future performance).
Although a number of courts have had occasion to address the applicability of the future performance exception to the normal accrual rule under UCC § 2-725(2), only rarely has an express warranty been held to be a warranty explicitly extended to future performance. As Professors White and Summer have noted, "extension of the normal warranty period does not occur in the usual case, even though all warranties in a sense apply to future performance of goods." J. White and R. Summers, Uniform Commercial Code § 11-9, at 419 (2d ed. 1980). They recognize, however, that such a warranty would arise in a case in which the seller gave a "lifetime guarantee" or one in which he, for example, "expressly warranted that an automobile would last for 24,000 miles or four years whichever occurred first."
In the case at bar, the "maximum term of liability of warranty" provision claimed by plaintiffs to constitute an express warranty of future performance is, in the court's opinion, merely a repair and replace warranty which designates a remedy in the event of a defect and limits the exercise of that remedy to a three-year period. As one court has recognized,
[A] repair or replace warranty does not warrant how the goods will perform in the future. Rather, such a warranty simply provides that if a product fails and becomes defective, the seller will replace or repair within a stated period.
Ontario Hydro v. Zallea Systems, Inc., 569 F. Supp. 1261, 1266 (D.Del.1983). Unlike a promise that a product will satisfactorily perform at all times or will work properly for a lifetime, which are words of warranty going to the performance of the goods, a promise to repair and/or replace warrants not that the goods will perform in the future but that if they do not, the supplier or manufacturer will make the necessary repairs. See Owens v. Patent Scaffolding Co., 77 Misc. 2d 992, 354 N.Y. S.2d 778 (Sup.Ct.1974). In fact "[u]nderlining the warranty to make needed repairs is the assumption that the goods may fall into disrepair or otherwise malfunction. No warranty that the goods will not, is to be inferred from the warranty to make needed repairs." Id.
In Centennial Insurance Company v. General Electric Company, 74 Mich.App. 169, 253 N.W.2d 696, 697 (1977), the court held that provisions in a contract practically identical to those found in GE's contract with the United States but which limited the agreement to repair and replace to the first year, were not warranties of future performance, but rather amounted to simply "a specification of the remedy to which the buyer is entitled should breach be discovered within the first year." Centennial Insurance Co., 74 Mich.App. at 169, 253 N.W.2d at 697; see also Frey Dairy v. *595 A.O. Smith Harvestore Products, Inc., 680 F. Supp. 253, 254-55 (E.D.Mich.1988) (express warranty for repair and/or replacement of defective parts or workmanship for 365 days clearly did not extend to future performance); Ranker v. Skyline Corp., 342 Pa.Super. 510, 493 A.2d 706 (Pa.Super. Ct.1985) (express written warranty providing for repair of defects within one year of delivery not explicit and unambiguous statement of warranty of future performance); New England Power Company v. Riley Stoker Corp., 20 Mass.App. 25, 477 N.E.2d 1054 (Mass.App.Ct.1985) (promises to repair or replace generally viewed as specifications of remedy rather than independent or separate warranty); Allis-Chalmers Credit Corp. v. Herbolt, 17 Ohio App. 3d 230, 479 N.E.2d 293 (Ohio Ct.App. 1984) ("repair-and-replacement" language in express warranty was remedy rather than warranty of future performance); Poppenheimer v. Bluff City Motor Homes, 658 S.W.2d 106, 110 (Tenn.App.Ct. 1983) (12 months/12,000 mile repair or replace warranty not one explicitly extended to future performance of goods). But see Standard Alliance Industries, 587 F.2d at 821 (warranty to repair or replace for specified period of time is warranty extending to future performance).[9] In the court's view, the warranty upon which plaintiffs rely to extend the accrual time for their claims cannot and should not be construed as a warranty explicitly extending to future performance. There was no representation that the engine would perform, but simply if it did not, the needed repairs would be made. The alleged warranty, thus, does not clearly, unambiguously and explicitly extend to a future time. Plaintiffs therefore do not escape application of the limitations bar of Miss.Code Ann. § 75-2-725.
THE SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940
The Soldiers' and Sailors' Civil Relief Act, 50 U.S.C.App. § 501 et seq. (SSCRA), was enacted in 1940 for the benefit of persons on active service in the United States military and naval forces. It was intended:
[t]o provide for, strengthen, and expedite the national defense under the emergent conditions which are threatening the peace and security of the United States and to enable the United States to more successfully fulfill the requirements of the national defense....
50 U.S.C.App. § 510. In the instant case, plaintiffs urge that the SSCRA renders all issues relative to the applicability of any limitations period moot since the Act tolled the running of the statute of limitations against Stephen Crouch[10] from the time of the accident until his discharge from military service. Specifically, Stephen Crouch relies upon section 205 of the Act, entitled "Statutes of Limitations as Affected by Period of Service" which provides, in pertinent part, as follows:
The period of military service shall not be included in computing any period now or hereafter to be limited by any law, regulation, or order for the bringing of any action or proceeding in any court ... by or against any person in military service ... whether such cause of action or the right or privilege to institute such action or proceeding shall have accrued prior to or during the period of such service....
50 U.S.C.App. § 525.
It is undisputed that Stephen Crouch was in active service in the United States Army at the time of the helicopter crash on August 25, 1981, and continued in active service *596 until his medical discharge on April 14, 1987. This suit was filed on April 21, 1987, only seven days after his discharge. Thus, Crouch takes the position that the instant action is viable, regardless of which state's statute of limitations is applied, inasmuch as the limitations period under any statute could not begin running until April 15, 1987.
This court's disposition of plaintiffs' assertion is governed by the Fifth Circuit's decision in Pannell v. Continental Can Co., Inc., 554 F.2d 216 (5th Cir.1977). In Pannell, the Fifth Circuit considered whether section 525 tolled the running of an adverse possession time limitation while the owner was in military service. Noting the absence of any evidence that Colonel Pannell was in any way handicapped by his military service and further that Colonel Pannell's service of over thirty-one years was voluntary and reached far beyond the years of compulsory military service, the court concluded that section 525 was inapplicable. Specifically, the court stated:
We are of the opinion that the Soldiers' and Sailors' Civil Relief Act ... is inapplicable to a career serviceman like Colonel Pannell. He is not shown to have been handicapped by his military service from asserting any claim he had prior to the expiration of the prescribed period. Thus the prescriptive period was not tolled as to him.
Pannell, 554 F.2d at 225. Pannell's distinction between categories of active duty military personnel has been criticized as an unjustified excursion from the plain meaning of the language of section 525.[11] However, the rationale underlying the court's decision in Pannell is consistent with the objective sought to be served by Congress in enacting the SSCRA, see 50 U.S.C.App. § 510, and in the court's view, is particularly suited to a case such as the present one.
Like the serviceman in Pannell, Stephen Crouch was a career military person. At the time of his injury, he had accumulated fifteen years with the United States Army and has since retired with a total of twenty years and five months in the Army. Moreover, like the serviceman in Pannell, Crouch has not and cannot demonstrate any prejudice or hardship as a result of his military service which interfered with his ability to bring and prosecute this action. In fact, during the period of his military service, Crouch instituted two separate actions in two jurisdictions for the same injury for which he now seeks recovery. It is apparent to the court that Mr. Crouch, after the dismissal of both his Florida and Alabama lawsuits, has come to this court in search of a forum in which his claim has not been barred by a statute of limitation and in which his claim has not been previously dismissed. Moreover, permitting Mr. Crouch to utilize the SSCRA would not advance the legitimate and laudable purposes of the Act but rather would place in his hands a sword which would enable him to gain an unfair advantage. This practice has been denounced by the Mississippi Supreme Court and will not succeed before this court. In Brown v. Brown, 493 So. 2d 961 (Miss.1986), a serviceman filed an action for divorce in the Mississippi state courts, but did not have process issued. Thereafter, his wife sued for divorce in California. Preferring to proceed in Mississippi, Mr. Brown, in reliance on section 201 of the SSCRA,[12] sought and was granted a stay of the California proceeding. The chancellor, on motion by Mrs. Brown, refused to dismiss the Mississippi action but entered a stay pending resolution of the California action. On appeal of the order granting the stay, the Mississippi Supreme Court observed that
Clayton Brown was engaged in a certain amount of gamesmanship invoking the Soldiers' and Sailors' Civil Relief Act when it suited his convenience and waiving *597 it when it did not. Clayton Brown is trifling with the courts in a manner we do not find endearing.
Brown v. Brown, 493 So.2d at 964 (emphasis added); see also Roberts v. Fuhr, 523 So. 2d 20, 28 (Miss.1987) (serviceman should not be permitted to selectively invoke protection of SSCRA after having so recently sought to his benefit the services of Mississippi courts). This court likewise will not allow plaintiff to benefit from the protections of the Act when he himself has so recently chosen to waive its protections. Such "gamesmanship" should not and will not be tolerated.[13]
Accordingly, it is ordered that defendant's motion for summary judgment should be granted and this cause dismissed. A separate judgment shall be entered in accordance with Federal Rule of Civil Procedure 58.
NOTES
[1] GE's motion for summary judgment was premised on several grounds including a statute of limitations bar, laches, lack of jurisdiction and improper venue. While the order of dismissal does not indicate the basis upon which the motion was granted, GE asserts and plaintiffs do not dispute that plaintiffs' claims were dismissed as time-barred by the applicable Alabama statute of limitations. The Alabama court's judgment of dismissal is presently on appeal to the Alabama Supreme Court.
[2] Originally named as a defendant was United Technologies Corporation. However, since jurisdiction was predicated on diversity of citizenship, United Technologies was dismissed as it is an Alabama corporation and the Crouches were, at the time of filing suit, Alabama residents.
[3] Defendant agrees with this evaluation, in part, but adds that insofar as plaintiffs' claims are based on the failure of the engine and/or related parts, the conduct causing the injury occurred in North Carolina. Under defendant's analysis, in any products liability action, the place where the injury occurred would be synonymous with the place where the conduct causing the injury occurred since in most, if not all cases, the injury will occur in the place where the product ultimately fails. This reasoning would render the first factor in the conflicts analysis superfluous, a position which the court cannot accept.
[4] In the court's view, it is apparent that the reason the residence of parties has any significance in a conflict-of-law analysis is because the state of the parties' residence might well be expected to have a "[great] concern with ... respect to the liabilities and the rights" of its citizens involved in litigation. See Mitchell v. Craft, 211 So. 2d 509, 515 (Miss.1968). On the facts presented, it is clear that the Crouches have not resided in Tennessee at any time since 1979 when Stephen Crouch was initially assigned to Fort Bragg. Thus, Tennessee could be expected to have little, if any, concern with the rights and liabilities of the Crouches.
[5] Statutes of repose acquire a substantive character since they operate to extinguish not only the right to enforce a remedy but the substantive right itself. Statutes of limitation, while in the nature of statutes of repose, apply only to extinguish the right to enforce the remedy. 51 Am Jur.2d Limitation of Actions §§ 15-16 (1970); see Boudreau v. Baughman, 86 N.C.App. 165, 356 S.E.2d 907, 910 (N.C.Ct.App.1987) (statutes of repose are "hybrid" statutes of limitations having potentially both procedural and substantive effect).
The Fifth Circuit, in Wayne v. Tennessee Valley Authority, 730 F.2d 392 (5th Cir.1984), construed a Tennessee statute similar to North Carolina's section 1-50(6) as a statute of repose, rather than of mere limitation, and explained as follows:
In recent years many states have enacted such statutes. They have been labeled "statutes of repose" in order to distinguish them from ordinary statutes of limitations which usually set much shorter time periods which run from the time the cause of action accrues, rather than from an arbitrary time such as the date of purchase. F. McGovern, The Variety, Policy and Constitutionality of Product Liability Statutes of Repose, 30 Am.U.L.Rev. 579, 584 (1981). Because the date of injury is not a factor used in computing the running of the time period, and such statutes typically do not have tolling provisions, the statutes acquire a substantive nature, barring rights of action even before injury has occurred if the injury occurs subsequent to the prescribed time period.
Wayne, 730 F.2d at 401-02.
[6] Plaintiffs urge that North Carolina's interpretation of the statute is not "unassailable," and in support of that assertion rely on Habenicht v. Sturm, Ruger & Co., Inc., 660 F. Supp. 52, 53 (D.Conn.1986), in which the court rejected all of the North Carolina cases characterizing section 1-50(6) as substantive. However, as defendant correctly observes, the court in Habenicht noted that Connecticut's conflict-of-laws rules do not require a Connecticut court to accept the interpretation of the statute given it by the North Carolina courts. Habenicht, 660 F.Supp. at 53. Mississippi, unlike Connecticut, "honors the construction of a statute placed on it by the courts of the state whose legislature enacted it." Siroonian, 844 F.2d at 292.
[7] While a cause of action premised on breach of an implied warranty could be, and in fact by some courts has been, construed as one in the nature of a tort claim rather than contract, the appropriate characterization of plaintiffs' implied warranty claim is an issue which this court need not address since the result in either case will be the same under the facts presented.
[8] Plaintiffs' claim premised on an implied warranty obviously does not satisfy the statute's requirement that the warranty must explicitly relate to future performance of the goods since "[e]xplicit means something expressed or clearly stated and is more than merely implied." Rutland v. Swift Chemical Co., 351 So. 2d 324, 325 (Miss.1977); see also J. White & R. Summers, Uniform Commercial Code § 11-9, at 419 n. 73 (2nd ed. 1980) (implied warranty by nature cannot be explicit). Clearly, therefore, plaintiffs' implied warranty claim is barred by operation of section 75-2-725.
[9] Two rare examples of courts' finding express warranties to extend to future performance are Rempe v. General Electric Co., 28 Conn.Supp. 160, 254 A.2d 577 (Conn.Super.Ct.1969), and Mittasch v. Seal Lock Burial Vault, Inc., 42 A.D.2d 573, 344 N.Y.S.2d 101 (2d Dept.1973). In Mittasch, that finding was made as to an express warranty that a casket and burial vault would give satisfactory service "at all times." In Rempe, the product, a disposal unit, was warranted to "work properly for a lifetime."
[10] The SSCRA does not operate in favor of Jessie Crouch since she was not a member of the military but rather was the wife of a serviceman. Lester v. United States, 487 F. Supp. 1033, 1039 (N.D.Tex.1980) (wife of serviceman not entitled to benefits of Act). Thus, regardless of the applicability of the Act, her claims would be time-barred.
[11] See Bickford v. United States, 228 Ct. Cl. 321, 656 F.2d 636, 640-41 (1981); Barstow v. State of Texas, 742 S.W.2d 495 (Tex.Ct.App.1988) (Texas state court not bound by Pannell's judicial construction of section 525).
[12] Section 201 of the Act provides for a stay of any proceedings in any court in which a person in military service is involved unless his ability to prosecute or defend the action is not materially affected by reason of his military service. 50 U.S.C.App. § 521.
[13] Defendant asserts that the Alabama court's judgment dismissing the Alabama action in response to a motion raising the issue of the applicability of the SSCRA, among other grounds, is res judicata in the present action. In this regard, contrary to plaintiffs' assertions, the fact that the action is presently on appeal to the Alabama Supreme Court does not affect the finality of the judgment for purposes of res judicata. 18 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 4433 (1981). However, the Alabama court's order of dismissal does not indicate on which of the several grounds raised that dismissal was ordered. The court would also note, though, that plaintiffs have not disputed defendant's assertion that dismissal was based on statute of limitation grounds, and hence carried with it a finding that SSCRA provided no protection to Stephen Crouch. Nevertheless, the court need not reach the issue of the preclusive effect of the Alabama judgment since the court has concluded that under the Pannell career serviceman exception, Stephen Crouch cannot seek refuge under the SSCRA. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1479864/ | 18 F.2d 27 (1927)
RENDLEMAN
v.
UNITED STATES.[*]
No. 4977.
Circuit Court of Appeals, Ninth Circuit.
March 21, 1927.
Warren Hardy and Henry Clay Agnew, both of Seattle, Wash., for plaintiff in error.
Thos. P. Revellee, U. S. Atty., and Paul D. Coles, Asst. U. S. Atty., both of Seattle, Wash.
Before HUNT, RUDKIN, and DIETRICH, Circuit Judges.
HUNT, Circuit Judge.
On the trial of Rendleman, plaintiff in error, who was convicted of the unlawful possession of morphine, and of having dealt in morphine without having registered or paid a special tax as required by law, the court ruled that Rendleman's wife was not a competent witness in his behalf. Review of the ruling is sought.
The case of Louie Ding v. United States (C. C. A. 1918) 247 F. 12, presented the question of the competency of a witness who did not believe in a Supreme Being who would reward or punish him for his acts in this world. We held that, while under the Judiciary Act of September 24, 1789, ch. 20, 1 Stat. 73, a change in the rules of the state as to the competency of witnesses cannot affect the rules as to their competency in the federal court, nevertheless, the rules of the state as to competency of witnesses in force when the federal courts, sitting within the borders of such state, were created, should control, and that therefore the common-law rule that the witness offered was incompetent did not apply in the federal court in Washington, where the statute of the state in force when the federal court was there established made incompetent as witnesses only persons of unsound mind, those intoxicated when produced, and children under ten years of age incapable of receiving correct impressions. The test applied was what local law obtained at the time of the creation of the state, not what the law was at the time of the enactment of the Judiciary Act of 1789. Withaup v. United States (C. C. A. *28 1903) 127 F. 530; Brown v. United States (C. C. A. 1916) 233 F. 354, L. R. A. 1917A, 1133
Upon the same day that we handed down the decision in the Louie Ding Case the Supreme Court decided Rosen v. United States, 245 U.S. 467, 38 S. Ct. 148, 62 L. Ed. 406, which arose in New York. The question there considered was the competency of a government witness who had pleaded guilty of a felony and was serving sentence. It was argued that by the common law as administered in New York in 1789 a person convicted of forgery and sentenced was thereby made incompetent as a witness until pardoned. The court adopted the modern view by holding the witness was competent, and said the decisions in Logan v. United States (1891) 144 U.S. 263, 12 S. Ct. 617, 36 L. Ed. 429, and in Benson v. United States (1892) 146 U.S. 325, 13 S. Ct. 60, 36 L. Ed. 991, had "seriously shaken" the authority of United States v. Reid, 12 How. 361, 13 L. Ed. 1023, decided in 1851, where it was held that the competency of witnesses in criminal trials in federal courts was to be determined by the rules of evidence which were in force in the respective states when the Judiciary Act of 1789 was passed. Referring to earlier decisions, the court said: "In the almost twenty years which have elapsed since the decision of the Benson Case, the disposition of courts and of legislative bodies to remove disabilities from witnesses has continued, as that decision shows it had been going forward before, under dominance of the conviction of our time that the truth is more likely to be arrived at by hearing the testimony of all persons of competent understanding who may seem to have knowledge of the facts involved in a case, leaving the credit and weight of such testimony to be determined by the jury or by the court, rather than by rejecting witnesses as incompetent, with the result that this principle has come to be widely, almost universally, accepted in this country and in Great Britain."
The opinion made no reference to Hendrix v. United States (1911) 219 U.S. 79, 31 S. Ct. 193, 55 L. Ed. 102, where, in reviewing a conviction of murder in Texas, the Supreme Court dismissed the assignment that the wife of Hendrix was not allowed to testify as to certain matters in his behalf, with the brief statement that the ruling was not error, citing Logan v. United States, supra.
In Greer v. United States (1918) 245 U.S. 559, 38 S. Ct. 209, 62 L. Ed. 469, decided a few weeks after Rosen v. United States, supra, defendant was convicted of introducing whisky from without the state into that part of Oklahoma that formerly was within the Indian Territory. Greer contended that the trial court was bound by the rules of evidence as they stood in 1789, but the court, through Justice Holmes, said "that those rules would not be conclusive is sufficiently shown by Rosen v. United States," and affirmed the conviction.
The question of the right of the wife to testify in her husband's behalf was involved in Jin Fuey Moy v. United States (1920) 254 U.S. 189, 41 S. Ct. 98, 65 L. Ed. 214, upon a review of a conviction in the federal court in Pennsylvania. Regarding the point as hardly requiring mention, the court proceeded upon the concession that the wife was not a competent witness for all purposes; her evidence not having been admissible at the time of the Judiciary Act. For this statement Logan v. United States, supra, and Hendrix v. United States, supra, were the only cases cited. The court added: "But, it is said, the general rule does not apply to exclude the wife's evidence in the present case because she was offered not `in behalf of her husband,' that is, not to prove his innocence, but simply to contradict the testimony of particular witnesses for the government who had testified to certain matters as having transpired in her presence. The distinction is without substance. The rule that excludes a wife from testifying for her husband is based upon her interest in the event, and applies irrespective of the kind of testimony she might give."
No reference was made to the Rosen Case, decided three years previously, although, as we have said, the opinion in the Rosen Case stated the contention that under the common law as administered in New York in 1789 the person called as a witness was incompetent. It seems to us that, if the Jin Fuey Moy Case is general as to all federal criminal trials where a wife is called to testify for her husband, then the principle recognized in Rosen v. United States has been restricted, and the District Court held correctly in the case now before us. On the other hand, if the Jin Fuey Moy Case is applicable only to Pennsylvania, where the wife's evidence was not admissible at the time of the first Judiciary Act, then the rule of the Rosen and Louie Ding Cases obtains, and the lower court was in error.
Considering the several cases, our judgment is that it was not intended by the Jin Fuey Moy Case to depart from the broader *29 rule laid down in the Rosen decision, where the question was disposed of by overruling the common law practice.
Turning to some of the recent decisions of the Courts of Appeals, we find that in the Fifth Circuit in McCoy v. United States (C. C. A. 1918) 247 F. 861, the court held as we did in the Ding Case.
In the Fourth Circuit, in Krashowitz v. United States (C. C. A. 1922) 282 F. 599, on writ of habeas corpus to the District Court in West Virginia, it was held that, upon the authority of the Jin Fuey Moy Case, defendant's wife could not testify in his behalf.
In Neal v. United States (C. C. A. 1924) 1 F.(2d) 637, upon review of a conviction had in the federal court in Oklahoma, the Court of Appeals for the Eighth Circuit held that the rules of evidence governing federal courts in criminal cases arising in the Western District of Oklahoma are those which were in force in Oklahoma Territory at the time of the admission of the territory into the Union. As authority, the court cited Withaup v. United States, supra; Logan v. United States, supra; United States v. Reid, supra, and Ding v. United States, supra; 1 Wigmore on Evidence, § 6.
In Parker v. United States (C. C. A. 1925) 3 F.(2d) 903, upon application for writ of habeas corpus in proceedings instituted to remove a man from California to the District of Columbia for trial, we held that whether the wife was a competent witness against her husband under the laws of California was not of vital importance, for the reason that competency of witnesses in criminal trials in federal courts is governed by the common law, not by the law of the state, except where Congress has legislated specifically upon the subject.
In Liberato v. United States (C. C. A. 1926) 13 F.(2d) 564, defendant was convicted of conspiracy in the District Court of Washington. Upon the trial the wife of defendant was called to testify in defendant's behalf. The record shows that, upon objection of the prosecuting attorney, defendant's counsel conceded that under the general rule she could not testify for or against her husband, but argued that he wished to prove certain physical facts which the wife knew of; thus assuming a position like that taken by defendant in the Jin Fuey Moy Case. The trial court held that she could not testify for or against her husband in any respect. Upon writ of error, this court accepted the admission of counsel and followed the Jin Fuey Moy Case.
After re-examination of the question, we conclude that the decision in the Ding Case is correct and in accord with the Rosen Case, and that any rulings that we may have made inconsistent therewith must be modified.
The judgment is reversed and the cause remanded for a new trial.
Reversed and remanded.
NOTES
[*] Rehearing denied May 2, 1927. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1692386/ | 253 Miss. 356 (1965)
175 So. 2d 471
CHEVRON OIL COMPANY
v.
SNELLGROVE
No. 43543.
Supreme Court of Mississippi.
May 24, 1965.
W.C. Wells, Jr., Wells, Thomas & Wells, Jackson, for appellant.
*359 Stanford Young, Waynesboro, for appellee.
RODGERS, J.
This is an appeal by the Chevron Oil Company from a judgment of the Circuit Court of Wayne County, Mississippi, for damages alleged to have been inflicted on the land of plaintiff by defendant-company in conducting seismic exploration work thereon.
*360 Plaintiff in the court below brought suit for damages caused by trespass upon the lands of appellee for actual and statutory damage to 150 trees, damage to cultivable lands and damage to a well. Defendant filed an answer denying the damages alleged by plaintiff and affirmatively pleaded that the statutory damage charged was barred by Mississippi Code Annotated section 1087 (1956) for the reason that the action was not brought within twelve months from the date of the alleged injury. The jury returned a verdict in favor of the landowner in the sum of $1,750.00. Motion for a new trial was filed, which was sustained unless a remittitur of $900 was entered by plaintiff. The remittitur was filed and a final judgment was entered in the amount of $850 in favor of plaintiff. From this judgment, defendant-appellant has appealed.
It appears from the record in this case that G.B. Snellgrove owned 220 acres in Wayne County, Mississippi, and in December 1960, he left his farm and moved to Florida because of his health. He permitted Mrs. J.J. McCurley to occupy the land and use it in his absence. Testimony shows that a well was bored near the house, from which water could be drawn by the use of a windlass and bucket. In 1962, an agent of appellant called on Mrs. McCurley to obtain permission for the purpose of conducting seismic exploration work on appellee's lands. Testimony is conflicting as to whether or not she gave permission. It is admitted, however, that the Chevron Oil Company went upon the land and bored holes, in which dynamite was exploded, and it is also admitted that some four or five trees were cut on the property. At the time that appellant went upon the property, there was not much water in the well, and after they had begun to "shoot", the water disappeared from the well, but it is also shown that the water had begun to diminish several months before the time the Chevron Oil Company conducted its operation on the *361 land. It is admitted that there were three "shot" points, or locations, used by the appellant. Each "shot" point consisted of five holes fifty feet deep, and two pounds of explosive were exploded in each hole. The center of the first shot point was 770 feet from the well. The center of the second shot point was 690 feet from the well. The center of the third shot point was 1,990 feet from the well. The landowner testified that one of the shot points was only 60 feet from his well. The landowner testified that there were 150 to 200 trees cut, and that the appellant's trucks cut ruts in the pasture and caused a wash in his cultivated land. The landowner also introduced a statement showing that he paid a well-drilling company the sum of $403.76 to drill and equip a new well. This well consisted of two-inch well piping, 64-feet deep, and an air-force powered jet pump, together with a 42-gallon tank, and a stainless steel screen. The landowner also testified that the damage to the trees was worth "$350 to him", and that he thought that the damage to his terrace would cost "$50 to get it fixed." The landowner's testimony shows that the trees said to have been cut by defendant were from the size of a finger to six or eight inches. No count was made of the actual trees cut, nor was any evidence offered to prove the market value of the merchantable timber.
I
On appeal, the appellant complains that the trial court committed error in permitting evidence to be introduced with reference to the well: First, because there was no evidence that plaintiff's well was in any way injured by defendant's seismic work. Second, where the cost of repairs are relied upon as a measure of damages, the proof must establish (1) that repairs were necessary as a result of a wrongful act; and (2) the cost was reasonable. There was no evidence introduced to show this necessary proof.
*362 (Hn 1) We do not believe it is necessary to discuss the second point since we have held in a similar case that the mere proof that an event happened, or that a certain result was possibly caused by a past event, is not sufficient proof of proximate cause to make a jury issue.
In the case of Kramer Service, Inc. v. Wilkins, 184 Miss. 483, 469-497, 186 So. 625 (1939), we pointed out that "post hoc ergo propter hoc" is not sound as evidence on argument. Possibilities will not sustain a verdict.
In the case of Magnolia Petroleum Co. v. McCollum, 211 Miss. 166, 51 So. 2d 217 (1951), this Court discussed the testimony set out in several cases theretofore reported from this Court, and stated:
"In the case that we now have before us Leon Bryant, who drilled the new well for Scott McCollum, stated that it was his opinion that the concussion caused by the explosion of the 20-pound charge of dynamite caused the well curbing in the old well to give way. In the Pittman case experienced drillers of water wells testified that water in ample quantity and of usable quality was still available in Pittman's well, but that the well was too deep for the size of the pump, and another expert's view was that the cause of the stoppage was the faulty pump and strainer. These facts were pointed out in the opinion in the Pittman case to show a lack of causal connection between the explosion and the damaged condition of the well, and to distinguish that case from the case of General Geophysical Company v. Brown, 205 Miss. 189, 38 So. 2d 703.
"In the case that we now have before us we think that there was sufficient evidence to justify the jury in finding that the dynamite explosion was the proximate cause of the damage to appellee's well."
(Hn 2) In the instant case, the only testimony we have on the subject is to the effect that the dynamite charge used was not sufficient to damage the well here involved. *363 In fact the testimony is positive, and there is no testimony to the contrary; therefore, we must hold that the appellee-landowner was not entitled to recover under the facts in this case for damages alleged to have been done to his well. We discussed this point in a recent case. See Western Geophysical Company of America v. Martin, 253 Miss. 14, 174 So. 2d 706. We are of the opinion that this case now before the Court is controlled by that case as to the damage to the well.
The instruction requested by defendant that the jury could not allow plaintiff any amount for damages alleged to have been done by defendant to his water well should have been granted by the court.
II
It is next contended by defendant, appellant here, that the following instruction was erroneously refused by the court:
"The Court instructs the jury for the defendant that even though you may believe from a preponderance of the evidence in this case that the defendant trespassed on the lands of the plaintiff, still, under the evidence in this case, you may find for the Plaintiff only for nominal damages."
The landowner testified, in answer to the question "Do you know the value of the trees that were cut?" that "Well, they were worth $350.00 to me when they were standing there, and now they are not any good to me, tore down, rotted, dead." He was asked: "Did you count how many merchantable size timber trees actually cut down, damaged?", and he answered: "I didn't ever check it that close." The landowner also testified "Well, they would run the size of your finger to six, eight inches", but said he did not count the trees.
(Hns. 3, 4) It is a principle of universal application that every trespass gives the landowner a right to at least nominal damages. Keirn v. Warfield, 60 Miss. 799-808 *364 (1883). However, in order to recover more than nominal damages, actual damages must be shown. Clark v. Hart, 3 So. 33 (Miss. 1887). It is sometimes a preplexing question as to the method to be used in proving damages to real property.
(Hns. 5-7) As a general rule, the measure of damages in actions for permanent injury to land where there is no willful trespass is the difference in value in the before-and-after damage to the premises. We have called attention to this rule repeatedly. Waggener v. Leggett, 246 Miss. 505, 150 So. 2d 529 (1963); Union Producing Co. v. Pittman, 245 Miss. 427, 146 So. 2d 553 (1962). See also 87 C.J.S. Trespass § 117 (1954). It is also true that where the land, or buildings located on the property, has been damaged but the property may be restored to its former condition at a cost less than the value determined by the diminution of the value of the land, the cost of restoration of the property, plus compensation for the loss of its use, may be the measure of damages. Miss. Power Co. v. Harrison, 247 Miss. 400, 152 So. 2d 892 (1963); Copiah Dairies, Inc. v. Addkison, 247 Miss. 327, 153 So. 2d 689 (1963); Broadhead v. Gatlin, 243 Miss. 386, 137 So. 2d 909 (1962); Long v. Magnolia Hotel Co., 236 Miss. 655, 111 So. 2d 645, sugg. of error 114 So. 2d 667 (1959); Sears, Roebuck & Co. v. Creekmore, 199 Miss. 48, 23 So. 2d 250 (1945); Yorkshire Ins. Co. v. Brewer, 175 Miss. 538, 166 So. 361 (1936); Bowyer & Johnson Const. Co. v. White, 255 Fed.2d 482 (1958). This rule, however, is usually confined to the introduction of evidence to show a reduction, and not an increase, of damages above the diminution in value of the land resulting from the injury. The damage for cutting and removing, or destroying, marketable trees, where the trespass is not willful, is generally held to be the value of the timber at the time and place where the trees were cut. Consumers Veneer Co. v. Chestnut, 210 Miss. 430, 49 So. 2d 734 *365 (1951); Anderson-Tully Co. v. Campbell, 193 Miss. 790, 10 So. 2d 445 (1942); Teasley v. Roberson, 149 Miss. 188, 115 So. 211 (1928); Fleming v. Dunigan Cooperage Co., 144 Miss. 769, 109 So. 851 (1926); Barclay v. Smith, 36 So. 449 (Miss. 1904); Bond v. Griffin, 74 Miss. 599, 22 So. 187 (1897).
(Hns. 8, 9) On the other hand, where the trees are not marketable as timber, or pulpwood, and have no value separate from the land, the measure of damages is the injury to the land that is caused by their destruction. Young timber, saplings or bushes, smaller than merchantable pulpwood, may have little value separate from the land. The land stripped of growing timber may have little value, but the standing timber and the land together may have considerable market value. The proper measure of damages for the destruction of small natural growth of timber would be the difference in value of the land before and after the injury. 87 C.J.S. Trespass § 121 (4), at 1080 (1954). Damages for destruction of "seedlings" on tree farms may be determined, however, by showing the cost of restoration, plus such injury as may be shown to have been done to the land. See also Stigall v. Sharkey County, 213 Miss. 798, 58 So. 2d 5 (1952).
In the case of Keystone Lumber & Improvement Co. v. McGrath, 21 So. 301 (Miss. 1897), where log haulers cut ruts in the real property of another, this Court said: "The plaintiffs were also entitled to such actual damages as the testimony fairly showed they had sustained, by reason of the cutting up of the land by wagons, etc." The record shows the damage in that case was estimated by witnesses.
Thus, it is seen in the case now before the Court we are dealing with three distinct methods of proof for the determination and measurement of damages to real estate. (1) A few merchantable trees were cut by appellant; (2) small natural growth of trees and bushes *366 were destroyed; and (3) it is alleged that ruts were cut in the land by trucks of the Chevron Oil Company which caused the land to wash.
McCormick, Law of Damages Section 126 (1935), at 492 says:
"When trees, valuable chiefly for timber, are damaged or destroyed by fire or other cause, it is frequently said that the plaintiff may sue either for the loss or injury of the trees, when the damages are measured by the market value of the standing timber, or he may sue for the injury to the land, determined by the amount of reduction in value of the realty. As to mature standing timber, these measures seem to reach the same result, but, if some or all of the trees injured are immature and too small for cutting, then it behooves the plaintiff to shape his pleading and proof to support a judgment for the loss in value of the realty, as the mere recovery of the value of the young growth, if it had been cut for timber just before the injury, would not compensate him for its potential value."
This rule is set out in 15 Am. Jur., Damages § 118 (1938) at p. 528, as follows:
"Some courts draw a distinction between standing timber which has a value independent of the land itself and young growing timber, and hold that in the former case the measure of damages is the value of the property actually destroyed and the injury beyond replacement to the premises as a whole, while in the latter case it is the difference in the value of the land before and after the injury. Under this rule, where part of the timber is marketable and part not marketable, the measure of damages applicable is one which will cover the entire loss and, hence, is the difference in the market value of the land before and after the injury."
*367 (Hn 10) After an extensive study of this case, we have reached the conclusion that appellee, plaintiff in the trial court, could have pursued either course, that is, since there were few merchantable trees, damage to the bushes and land, as well as to the merchantable trees, could have been determined by showing the difference between the value of the land before and after the trespass; or damage could have been determined by showing the value of the merchantable trees, plus damage in the diminution of the value of the land, but both methods cannot be used.
(Hns. 11, 12) The proof in this record with reference to damages is not satisfactory because damages were not shown with reasonable certainty. State Highway Comm'n v. Brown, 176 Miss. 23, 168 So. 277 (1936). It is admitted that there was actual damage to the land, not only as to merchantable timber cut, but other damages were shown. The instruction requested by appellant with reference to nominal damages should not have been granted under the facts and admissions shown in this record.
(Hn 13) This case must be reversed for a new trial to determine the amount of damages due the landowner. However, since the jury has determined that appellant trespassed upon the land of the appellee, we affirm the judgment of the trial court as to liability and reverse the case for a new trial as to damages only, but we hold that there was no damage shown to have been done to the well by appellant.
Affirmed as to liability, and reversed as to damages only.
Lee, C.J., and Ethridge, Patterson and Inzer, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1694475/ | 662 So. 2d 648 (1995)
LEAF RIVER FOREST PRODUCTS, INC., Great Northern Nekoosa Corporation and Georgia-Pacific Corporation
v.
Thomas Dixon FERGUSON, Jr. and Bonnie Jane Ferguson.
No. 92-CA-00387-SCT.
Supreme Court of Mississippi.
October 19, 1995.
*650 Lee Davis Thames, Butler Snow O'Mara Stevens & Cannada, Jackson, W. Wayne Drinkwater Jr., Lake Tindall & Thackston, Jackson, Joe Sam Owen, Owen Galloway & Clark, Gulfport, for Appellant.
John M. Deakle, Hattiesburg, Patrick W. Pendley, Plaquemine, LA; Lawrence E. Abernathy, III, Laurel, Curtis R. Hussey, Hattiesburg, for Appellee.
Luther T. Munford, Phelps Dunbar Firm, Jackson, Carlton W. Reeves, Jackson, John H. Price, Jr., Price & Zirulnik, Jackson, for Amicus Curiae.
EN BANC.
PITTMAN, Justice, for the Court:
Eleven plaintiffs sued Georgia-Pacific Corporation, Great Northern Nekoosa Corporation, Leaf River Corporation, and Leaf River Forest Products, Inc., in Jackson County Circuit Court, alleging that the defendants had, through operation of the Leaf River Paper Mill, discharged harmful substances into the Leaf and Pascagoula Rivers, thereby causing the plaintiffs personal injury and property damage. After filing two amended complaints the three remaining plaintiffs were Thomas Ferguson, Jr., his wife, Bonnie Jane Ferguson, and Louise H. Mitchell. After a trial the jury found in favor of the appellants, Leaf River Forest Products, Inc., et al. as to all of the claims made by the appellee, Louise H. Mitchell. Further, the jury found in favor of the appellants, Leaf River Forest Products, Inc., et al. as to any trespass committed against the appellee's property by the placing of any foreign substance on the said property. The jury did award the Fergusons $10,000.00 each on their nuisance claim; $90,000.00 each on their emotional distress claim; and $3,000,000.00 in punitive damages. After consideration of the briefs, a voluminous record and oral argument, we find that the evidence is insufficient to support verdicts based either on infliction of emotional distress or nuisance. Accordingly, we reverse and render judgment in favor of the defendants/appellants.
THIS COURTS FINDINGS
We have before found that emotional distress inflicted either negligently or intentionally is compensable. However, emotional distress based on the fear of a future illness must await a manifestation of that illness or be supported by substantial exposure to the danger, and be supported by medical or scientific evidence so that there is a rational basis for the emotional fear. We do not harm and, in fact, preserve a recovery for emotional distress when the same is based on such a foundation. We, therefore, reverse and render any award made based on emotional distress caused by a future illness and allow the claimants to await a manifestation of such future illness.
We find as to nuisance that there is little evidence and scarce testimony of any invasion by substance or odor by the defendants as to the appellants specific property. Without such there can be no nuisance.
PROCEDURAL HISTORY
In 1984 the Leaf River Paper Mill began operation in New Augusta, Perry County, Mississippi. The mill is located on the Leaf River, which eventually combines with the Chickasawhay River to form the Pascagoula River. The mill processes timber into a paper pulp product for domestic and foreign sale. In 1985 2,3,7,8-tetrachlorodibenzo-p-dioxin ("dioxin"), a toxic substance, was detected in the sludge, or solid waste material, produced by certain paper mills in Maine. It was subsequently determined that this type of dioxin was a by-product of the pulp-making process, particularly resulting where chlorine was used to bleach pulp to make it whiter. Dioxin was eventually found in the effluent, or waste water, and sludge produced by the Leaf River mill. Testing for dioxin was subsequently performed on fish caught in the Leaf River. As a result of these tests the Mississippi Department of Wildlife and Fisheries closed the Leaf, Pascagoula and Escatawpa Rivers to commercial fishing from October 1990 to January 1991, and issued consumption advisories for fish caught from the Leaf and Pascagoula Rivers. The consumption advisory for the Pascagoula *651 was lifted in December 1990, but remained in effect for the Leaf River.
On March 1, 1991, eleven plaintiffs, including Thomas Ferguson, Jr., his wife, Bonnie Jane Ferguson, and Louise H. Mitchell filed suit in Jackson County Circuit Court against Leaf River Forest Products, Inc.; Warren Richardson; Acker Smith; Great Northern Nekoosa Corporation; and Georgia-Pacific Corporation. The plaintiffs alleged that the defendants, through the operation of the Leaf River mill, had discharged toxic chemicals into the Leaf River, causing injury to the plaintiffs, who lived along the Pascagoula River. The complaint was based on negligence, strict liability, nuisance and trespass. The plaintiffs alleged that they had suffered emotional distress and were entitled to actual and punitive damages totaling approximately $560,000,000.00. Louise Mitchell's property was located approximately one hundred miles down river from the mill; the Fergusons' property was approximately one hundred twenty-five miles downriver from the mill.
Defendants answered and denied the allegations of the plaintiffs, raising several affirmative defenses. Plaintiffs' first amended complaint was filed on July 30, 1991. The amended complaint added Leaf River Corporation as a defendant. The defendants admitted that Leaf River Forest Products operated the mill; that Leaf River Forest Products was a wholly owned subsidiary of Leaf River Corporation; that Leaf River Corporation was a wholly owned subsidiary of Great Northern Nekoosa Corporation; and that Great Northern Nekoosa Corporation was a wholly owned subsidiary of Georgia-Pacific. Trial began on January 7, 1992.
PLAINTIFFS/APPELLEES
Thomas Ferguson, Jr., was born in Georgia but had lived in south Mississippi since 1945. In 1960, Ferguson purchased fifteen acres of land on the Pascagoula River. He cleared the land and built bayous, two boat sheds, a house, a bait shop and a trailer park. He had hoped to leave the property to his son. He stated that he could no longer swim or fish in the river and he had developed a fear of cancer, as he had eaten large amounts of fish caught in the Pascagoula before knowing about the dioxin problem. Ferguson also stated that his property had flooded several times recently and this had worsened his fear that his property was contaminated with dioxin.
Ferguson testified that if he had known that the mill was discharging dioxin into the river, he would have made "different arrangements with [his] lifestyle." He had first noticed the river water getting darker in 1986-87. Ferguson had seen Dr. Charlton Stanley, a psychologist, and Dr. Donald Guild, a psychiatrist, but had not taken the medicine prescribed for him. He had not been informed of any kind of evaluation or diagnosis until his pretrial deposition was taken. Ferguson had not had his property or his well water tested for dioxin, and had not tried to sell his property. He had not had his blood tested for determination of dioxin levels. Ferguson had a separate fear of cancer claim in asbestos-related litigation, and he had been tested in connection with that particular claim.
Bonnie Jane Ferguson, wife of Thomas Ferguson, Jr., was born and raised in south Mississippi. She was a housewife and she also ran their marina, which included collecting the rent and keeping the records of the rent money. She stated that over the past few years the river had gotten darker, a light coffee color, and the fish did not bite like they once had. She had first noticed the change in the color of the river in 1985. Her greatest sense of loss came from the belief that the property she and her husband had planned to leave to their son was now worthless. She had declined Leaf River's offer to pay for her blood to be tested, stating that if dioxin was in her system and could not be removed she did not want to know about it. She claimed to have developed a fear of cancer because of the large amount of catfish she had eaten which had been caught in the Pascagoula. The fear was not something that paralyzed her or kept her from functioning.
We must note a lack of evidence as to substance on the Ferguson's property or dioxin in their body. The Fergusons testify only to a mental fear, a fear without foundation in fact.
*652 OTHER RIVER RESIDENTS
O.V. Stringer had been fishing and camping on the Pascagoula River since 1940. Stringer had first noticed a change in the color of the Pascagoula in 1990. He had also noticed that the sandbars were copper or dark tea-colored from where the water had settled on them, and that the water had turned the color of dark, strong tea. He had also noticed in 1987 a decline in the fishing quality of the river. He particularly noticed a scarcity of catfish and a large quantity of dead mussels. Stringer agreed that he was also suing Georgia-Pacific, that members of his family were also dioxin plaintiffs, and that Mr. Deakle, lead counsel for the Fergusons, was his attorney.
Kenneth McGuire had come to south Mississippi from Kansas in 1959 for military service and had settled on the Pascagoula. He and his wife had owned a fishing camp on the Pascagoula for twelve years. McGuire noticed a change in the river color in 1985 or 1986. He stated that the river at that time was "about the consistency and the color of Tang drink" for about three or four weeks and there had been a fish kill. He said that the river had become darker over recent years and had developed a fibrous consistency. There were fewer fish being caught and some of those being caught had open sores. McGuire testified that he was a plaintiff in the dioxin litigation against Georgia-Pacific and that he had "a financial interest in the outcome of this case and the litigation in general."
APPELLEES' EXPERTS
Dr. Arnold Schecter, physician and professor of preventative medicine at the State University of New York, Binghamton, referred to 2,3,7,8-tetrachlorodibenzodioxin, or dioxin, as a "super toxin," because a very tiny amount would produce increased ill effects in an animal. Schecter testified that dioxin was fat-soluble, that it could enter the body through breathing, ingestion or through contact with the skin; that the dioxin in food that was eaten and not eliminated through waste would be absorbed into the bloodstream and throughout the body's organs; and that dioxin was a persistent compound, with an estimated half-life of seven years. Schecter testified that studies showed that human health effects resulting from exposure to dioxin included several different cancers; malformation and death of unborn children; weakening of the immune system; liver damage; lipid alteration; damage to the central nervous system; skin rashes; and learning disabilities. Schecter felt that there was no doubt that dioxin caused cancer in humans. He had visited with the appellees for less than an hour before trial and had reviewed a number of fish studies performed by the State of Mississippi as well as medical and psychological tests concerning the appellees. He stated that he felt that, based on a reasonable degree of medical probability, the appellees' fear of developing cancer from eating fish from the Pascagoula River was reasonable. Schecter agreed that a comprehensive medical evaluation, including blood tests, was the best method of determining exposure to dioxin, and stated that he had his own blood and fat tested for dioxin after he became involved with a chemical cleanup in Binghamton, New York. He could not say that the appellees' health was actually at risk because of their exposure to dioxin. He also did not know the level of dioxin in the appellees' bodies, either before or after their alleged exposure due to eating fish from the river.
Dr. Arthur Hume, a member of the Department of Pharmacology and Toxicology at the University of Mississippi, was accepted as an expert in toxicology and chemistry. Hume testified that tests had shown that dioxin had a harmful effect on all the different systems in a mammal's body, with the most notorious effect being its ability to damage the immune system. Recent toxicological evidence had convinced Hume that dioxin was a human carcinogen, and Hume also believed that appellees, who had eaten fish from the Pascagoula River, had a reasonable basis for fear of an increased chance of contracting cancer. Dr. Hume agreed that no one could know the level of dioxin in the fish eaten by the appellees, however he maintained that it was probable that the fish had dioxin in them. Hume also agreed that the best way to measure increases in dioxin levels *653 after exposure was to take fat or blood samples and test them.
Dr. Walter Roberts, a veterinarian and aquatic scientist who had taught in the Departments of Environmental Health and Natural Science at Mississippi Valley State University, had gone to the Leaf River, apparently in 1991, and had caught an unknown number of catfish specimens which he later checked for parasites and bacterial infections. Dr. Roberts found that some of the fish he had caught had lesions on them. His opinion was that the lesions were caused by chemical stress, and he did not find any lesions on fish caught above the mill. Dr. Roberts did not know what chemical had induced the stress in these fish, and he did not claim that dioxin or anything produced by the mill was at fault.
Dr. Charlton Stanley, a psychologist, was admitted as an expert in the field of human psychology and particularly in the area of human psychological effect of environmental disasters. Dr. Stanley had seen the Fergusons on May 13, 1991. He interviewed them jointly, and took a history. He found that the Fergusons' primary fear besides contracting cancer was not being able to leave something of value, their property, to their son. Stanley believed that the Fergusons suffered from an adjustment disorder. He believed that the Fergusons' fears and distress were genuine and reasonable under the circumstances. Dr. Stanley had not informed the Fergusons of his findings concerning them and it was his understanding that they had not sought any follow-up psychotherapy or counseling.
Guy Blankinship was accepted as an expert in the field of real estate appraisal. Blankinship based his appraisal of the Ferguson property, totaling approximately 14 acres, on 6.1 acres facing the Pascagoula. He estimated a market value of $12,000.00 per acre, for a total of $73,200.00, and stated that the diminution in value of the property due to the presence of dioxin in the Leaf River and the stigma involved with the river was $65,000.00. Blankinship did not know whether dioxin was actually on the Fergusons' property. He had recommended to them that they have the property tested, but they had not tested the property.
TESTING FOR DIOXIN
As the Fergusons did not have themselves or their property tested for the presence of dioxin, they relied on tests of wildlife in the area of the Leaf River to support their claims of emotional distress and nuisance. Appellants used the same test results in an effort to repudiate these claims. The testing took place from 1988 to 1990. The majority of the test results dealt with fish caught in the vicinity of the Leaf River mill. The earlier results showed detectable levels, in parts per trillion or quadrillion, of dioxin in fish caught on the Leaf River. Some of the later results showed a reduction of dioxin levels in the fish tested. None of the testing of fish took place in the vicinity of the Fergusons' property. The testing sites closest to the Fergusons' property were at Merrill, approximately eighty miles upriver from the Fergusons.
GEORGIA-PACIFIC PERSONNEL
Warren Richardson, general manager of the Leaf River mill, had on-site responsibility for its operation. Richardson had been at the mill since 1989. Acker Smith, manager of environmental affairs for the mill, had worked there since 1983. Both were named as defendants by the plaintiffs. Both testified as adverse witnesses and as witnesses on direct examination. Their testimony covered a number of areas as follows:
The Color Question The mill discharged approximately nineteen million gallons of effluent, or waste water, into the Leaf River daily. The mill had received a permit from the State of Mississippi which required it to control the color differential of the river from above the mill to below the mill. The color differential referred to the ability of light to be transferred through the water. The mill had performed no chemical color treatment on the Leaf River in 1991 until October, but both Richardson and Smith denied that this was related to the cost of the treatment. Smith agreed that the mill's effluent changed the color of the Leaf River but denied that *654 there was anything unnatural about the color change.
The Sludge Question Sludge is a solid waste product of the bleaching process. The Leaf River mill produced 75 to 100 tons of sludge per day. It was sold by the mill to the public for potting soil or to be spread on agricultural land. Warren Richardson agreed that the sludge sold by the mill had detectable levels of dioxin in it. He also agreed that a permit was required from the State before the sludge could be spread. Richardson denied that the mill was required to tell the farmers using the sludge that they should not graze cattle on that land for one year after use, saying that information was voluntarily disseminated by the mill. Acker Smith testified that the dioxin levels in the sludge were below that found to be a problem by the EPA, and there was no need to warn the farmers who purchased this material.
Reduction of Chlorine Use The paper mills' practice of bleaching their pulp product with chlorine caused dioxin to be generated as a by-product. Warren Richardson and Acker Smith both maintained that the Leaf River mill had made a concerted effort beginning in 1987 to reduce the mill's use of chlorine as the bleaching agent and to substitute in its place chlorine dioxide. Both testified that the mill had used no chlorine since July 1990. Due to this and other steps, Richardson stated that the mill had achieved non-detectable dioxin levels in its effluent since the summer of 1990. Richardson agreed that one of the advantages of using chlorine as a bleaching agent was its lower cost, and that the use of chlorine dioxide in the bleaching process was not new to the paper industry.
Donations to Mississippi Department of Environmental Quality Warren Richardson had in 1990 sent a check for $150,000.00 to the DEQ, along with an article taken from Business Quarterly, Fall 1990. The article dealt with allocation of resources, and Richardson had highlighted several portions dealing with expending large amounts of resources to save relatively few people. The donation was to be used to fund continuing fish studies, and Georgia-Pacific had entered into an agreement with DEQ to continue yearly contributions for this purpose.
Office Memoranda Plaintiffs Exhibit 286 was a Great Northern Paper inter-office memorandum from V.V. Lapinoja, director of research, to D.K. Phenicie, manager of environmental affairs, dated October 7, 1985. Exhibit 286 dealt with detection of dioxin in the sludge of certain paper mills in Maine. Warren Richardson testified that the memorandum gave him little concern because it did not involve the plant in which he was working at the time. Acker Smith denied that Exhibit 286 should have alerted him and others at the mill that dioxin could be going into the Leaf River via the effluent. Smith also denied that dioxin could have been detected in the effluent if the mill had tested for it at that time, considering the low amounts present and the technology existing at that time. Smith added that the dioxin levels at Leaf River were so much lower than those found in the Maine paper mills that he felt that there was no problem.
Plaintiffs' Exhibit 287 was a telefax dated September 30, 1987, from Peter Schmutzler, one of Leaf River's European agents, to R.C. Miller of the Leaf River mill, asking for certification on behalf of the Melitta Company that the pulp produced by the mill did not contain any dioxin. Melitta produced coffee filters with the pulp purchased from the mill. Someone had written across the bottom of the telefax, "not to be answered." Warren Richardson stated that the person to whom the telefax had been sent was not qualified to answer it. He added that the mill had subsequently developed a sampling program with Melitta.
Plaintiffs' Exhibit 289 was a Leaf River office memorandum dated October 14, 1988, from R.A. Venditti to D.R. Hubbard, entitled "Possible Effects of the Dioxin Issue at Leaf River Forest Products, Inc." A large portion of the memorandum dealt with costs for dealing with dioxin, and none of the memorandum dealt with possible health risks for those who might be exposed.
Plaintiffs' Exhibit 290 was a Leaf River office memorandum dated November 11, 1988, from D.R. Hubbard to various mill *655 personnel concerning sampling at the mill by the National Council on Air and Stream Improvement ("NCASI"), the scientific or technical branch of the American Paper Institute, as part of a twenty-five mill dioxin study. The memorandum summarized various operations procedures and suggested changes for these procedures during the actual sampling period. Warren Richardson testified that NCASI and EPA were aware of the steps being taken before the test sampling was done, and that these steps were being taken according to NCASI and EPA guidelines.
Plaintiffs' Exhibit 292 was a Leaf River office memorandum dated January 27, 1989, referring to an EPA study on dioxin levels of fish caught in the area. The memorandum stated that as to the testing protocol, Great Northern Nekoosa "has been denied confidentiality." Warren Richardson stated that he had not written the memorandum and was not yet working at the Leaf River mill when it was written. He agreed that he had received a copy of the memorandum but denied that it had any special meaning for him at the time. Richardson denied that the memorandum referred to an effort on the part of the mill to cover up the information about dioxin being found in the fish. He stated instead that Exhibit 292 referred to industrial confidentiality, or certain trade secrets the mill did not want to reveal to competitors despite its participation in the EPA study.
Press Releases Warren Richardson denied that the defendants had put out inaccurate, misleading press releases. He agreed that the press release of July 20, 1990, which mentioned the improved levels of dioxin in nine catfish caught in the Leaf River did not mention the actual dioxin levels of two other catfish, though the release did state that the catfish had "elevated levels." Richardson stated that the levels not reported were from a kind of catfish that had not been caught before, so there was nothing to compare them to. He added that the two fish did not represent a satisfactory sample of what people would catch or consume in that area.
Warren Richardson also drank a sample of water drawn from the holding pond at the Leaf River mill. The sample was presented to the jury so that they could smell it. Richardson denied that it had any smell.
APPELLANTS' EXPERTS
Lee M. Thomas had served as the Environmental Protection Agency's assistant administrator in charge of waste programs, such as the Superfund, from 1983-1985, and had served as administrator of the EPA from 1985 until 1989. Thomas was offered as an expert "on the topic of government regulation generally and specifically in EPA's regulation of dioxin." Thomas discussed the EPA's and the paper industry's efforts in conducting the five mill dioxin study in 1986 and the 25 and 104 mill studies in 1988 and 1989.[1] Thomas agreed that the paper industry had paid for the 104 mill study, and he also agreed that he had never recommended shutting down paper mills when it was discovered that they were sources of dioxin. Thomas denied that the Leaf River was the most polluted, in terms of dioxin, in the country, and denied that the paper industry had ever approached him about weakening dioxin regulations. He further denied that there was data showing dioxin to be a human carcinogen.
Dr. Kenneth Dickson served as a professor of aquatic ecology at the University of North Texas in Denton, Texas. He was accepted as an expert in the fields of aquatic ecology and aquatic biology. Dickson testified that he had examined several studies done concerning the Leaf and Pascagoula Rivers and offered the following conclusions: (1) the Leaf and Pascagoula Rivers were in good condition; (2) the rivers had made a remarkable recovery from pollution problems of the *656 1950's-60's; (3) there was "no impact on the ecological health of the aquatic communities downstream of the mill, compared to upstream of the mill." He stated that it was extremely unlikely that the mill's effluent could have any effect on aquatic life 100 to 125 miles below the mill. He also labeled as unlikely the effluent from the mill causing a color change in the river 100 miles down river.
James Davis, Jr. was called as an expert real estate appraiser. Davis denied that the Ferguson property had decreased in value due to alleged dioxin contamination or to the 1990 fishing advisory, saying that this had not been born out by comparable sales in the area.
Dr. Wood Hiatt, professor of psychiatry at the University of Mississippi, had reviewed Dr. Stanley's file and the tests that Dr. Stanley had administered to the Fergusons. Dr. Hiatt found it unacceptable that the Fergusons had been seen together by Dr. Stanley instead of being evaluated as individuals. Dr. Hiatt found that the Fergusons' fear of cancer was not reasonable, as they had refused to have themselves tested to determine if they had potentially dangerous levels of dioxin in their bodies.
Dr. John Doull, professor of toxicology and pharmacy at the University of Kansas, specialized in pesticides, which included work with dioxin. Dr. Doull agreed that dioxin had caused cancer in some animals at high doses but had decreased breast cancer in other animals at low doses. Doull stated that the United States had been much more conservative in setting dioxin standards than the other industrialized nations. He testified that the Fergusons, considering the distance they lived downriver from the mill, should have no basis for concern for their health. Doull labeled the State of Mississippi's standard on dioxin as very conservative and denied that the Fergusons had any increased risk of developing cancer.
Dr. Renate Kimbrough, a physician who had worked for several governmental agencies, including the Center for Disease Control, the Food and Drug Administration, and the Environmental Protection Agency, was accepted as an expert in public health and epidemiology. She was familiar with the ten to fifteen major studies done on dioxin exposure. Kimbrough testified that there had been no convincing study showing an excess of cancer in those exposed to many times the levels of dioxin alleged to be present in the Leaf and Pascagoula Rivers. She further stated that it would be important to test the blood of the plaintiffs to see whether they had been exposed at all, and to see whether their levels were any different than a normal person's. Dr. Kimbrough had suggested the blood testing protocol offered by the defendants and rejected by the plaintiffs. Kimbrough testified that, assuming dioxin levels of four parts per trillion in fish around the Leaf River mill, and assuming that the plaintiffs lived one hundred miles downriver, she would not expect the plaintiffs to have anything other than normal background exposure. She denied that eating fish from the Leaf or Pascagoula River would pose any health risk. Kimbrough agreed that people who ate large amounts of fish regularly would get higher exposure rates, but not necessarily increased risk.
OTHER WITNESSES
Noel Hillman, wildlife supervisor for the Mississippi Department of Wildlife, Fisheries and Parks in Hancock, Harrison, Jackson, Greene, Stone and George Counties, had lived in Greene County all of his life and was familiar with the Leaf/Pascagoula River systems. He testified for the Fergusons that there had been a color change in the water and sandbars of the river system since the Leaf River mill had been built. He also noticed a different smell from the river during the same time, though this had been south of the Ferguson property in the vicinity of the International Paper mill. Hillman stated that before the Leaf River mill was built one could see down into the Leaf River at dead low water, but this was no longer true. The color change was less marked the further down the Pascagoula one went. Hillman had not seen any change in the number, health or kinds of fish in the Leaf River. He had seen numerous fish with sores in several rivers besides the Leaf, particularly in the summer months.
*657 John Lambeth, outdoors editor for the Sun Herald newspaper, testified for the defendants that he had fished the Leaf, Pascagoula and Chickasawhay Rivers, as well as their tributaries, for 30 years. He had noticed the color and clarity of the Leaf and Pascagoula Rivers before and after the mill had opened, and could see no significant difference in the colors. According to Lambeth, the fish he had caught in these rivers were in better health than before the mill opened. Lambeth stated that he would eat catfish from the rivers, but that he had also abided by consumption limits posted by the State and had not fished during the ban.
Charles Chisolm served as director of the Office of Pollution Control for the Mississippi Department of Environmental Quality. He directed the Office's activities, including permitting, enforcement and oversight, and testified as a witness for the defendants. Chisolm agreed that the DEQ had been involved in dioxin studies in 1985 and 1988, and agreed that some of the studies had been funded by the paper mills. He acknowledged that the Leaf River mill had agreed to pay $150,000.00 in 1990 and $195,000.00 in 1991 to the DEQ, and that these payments were public knowledge. Chisolm agreed that the DEQ had issued one fish consumption advisory on the Pascagoula River in the latter part of 1990 for a period of two to three months. He said that the advisory was issued out of an abundance of caution because of one flathead catfish with a dioxin level of 42 parts per trillion which was caught near Merrill in August 1990. The DEQ had concluded since that time that there should be no health concerns about eating fish from the Pascagoula River. Chisolm testified that the Leaf River mill had a good compliance record with its discharge permit, that the mill's permit allowed a dioxin discharge limit of 40 parts per quadrillion, while the EPA standard would allow 160 parts per quadrillion. He further testified that the mill was complying with the schedule in its permit concerning color. The DEQ had investigated the reports of fish with sores, and had not found anything abnormal showing the mill to be the cause. Chisolm denied that the fishing ban was lifted because of pressure from the Governor's office, and in turn from Georgia-Pacific. He agreed that the DEQ had never fined the mill for discharge violations. Chisolm denied that the DEQ knew before the mill was built that the result would be pollution problems for the Leaf and Pascagoula Rivers.
After the defendants rested, plaintiffs called Admiral Elmo Zumwalt, Jr., retired, as a rebuttal witness. Motions for peremptory instructions were granted as to Acker Smith and Warren Richardson.
The jury found in favor of the defendants on the trespass count. As to nuisance, the jury found for the Fergusons, awarding $10,000.00 each. On the emotional distress count the jury found for the Fergusons, awarding $90,000.00 each. In addition, the jury awarded $3,000,000.00 in punitive damages to the Fergusons. The jury found against Louise H. Mitchell on all counts. Final judgment to this effect was entered on February 19, 1992.
Defendants filed a Motion for a Judgment N.O.V. or in the Alternative for a New Trial on February 28, 1992. After a hearing, the trial court entered its order denying the motion. Defendants timely filed their notice of appeal, raising six issues, each of which contain numerous subparts. Because we find that the judgment in favor of the appellees must be reversed and rendered in its entirety, we address only two of the issues.
I. WHETHER THE EMOTIONAL DISTRESS VERDICT BELOW MUST BE REVERSED, BECAUSE (A) THERE WAS NO EVIDENCE THAT PLAINTIFFS HAD BEEN EXPOSED TO ANY HARMFUL SUBSTANCE RELEASED BY DEFENDANTS; (B) PLAINTIFFS' CLAIM FOR FEAR OF FUTURE DISEASE IS NOT COMPENSABLE UNDER MISSISSIPPI LAW ABSENT A SHOWING OF LIKELIHOOD OF DISEASE OR ACTUAL ILLNESS; (C) THE JURY INSTRUCTIONS ON EMOTIONAL DISTRESS WERE IRRECONCILABLY CONFUSING AND CONFLICTING; (D) PLAINTIFFS' EVIDENCE OF WILLFUL MISCONDUCT WAS INSUFFICIENT AS A MATTER OF LAW.
Appellants argue both that the Fergusons failed to show that they were exposed to *658 dioxin and that the cause of action for fear of future disease does not exist or is not compensable. Assuming there is such a cause of action, appellants argue that there is insufficient evidence to show that appellees' fear is reasonable.
This state recognizes recovery for both negligently and intentionally inflicted emotional distress:
Where there is something about the defendant's conduct which evokes outrage or revulsion, done intentionally or even unintentionally yet the results being reasonably foreseeable Courts can in certain circumstances comfortably assess damages for mental and emotional stress, even though there has been no physical injury. In such instances, it is the nature of the act itself as opposed to the seriousness of the consequences which gives impetus to legal redress. Thus, our holdings in the above enumerated cases.
Also, in a case of simple, or ordinary "garden variety negligence," even in the absence of physical injury accompanying the negligent conduct, if there is a resulting physical illness or assault upon the mind, personality or nervous system of the plaintiff which is medically cognizable and which requires or necessitates treatment by the medical profession, this Court has followed the modern tendency and held a legal cause of action exists. This assumes, of course, the test of reasonable foreseeability is also satisfactorily met.
Sears, Roebuck & Co. v. Devers, 405 So. 2d 898, 900 (Miss. 1981); see also Jenkins v. City of Grenada, 813 F. Supp. 443 (N.D.Miss. 1993) (citing Devers).
It would be impossible to enumerate all the ways in which emotional distress could be inflicted. However, this Court has never allowed or affirmed a claim of emotional distress based on a fear of contracting a disease or illness in the future, however reasonable.
In this case, there is a lack of evidence proving exposure of the appellees to a dangerous or harmful agent and the record is devoid of any medical evidence pointing to possible or probable future illness. Certainly, if one is to recover for emotional distress predicated on potential future illness there must be substantial proof of exposure and medical evidence that would indicate possible future illness.
The appellees fail in their proof on both counts; therefore, this is not a case to allow recovery for emotional distress based on a fear of occurrences in the future. The Fergusons will be able to pursue a cause of action against the appellants if any disease caused by alleged exposure to dioxin manifests itself in the future. Owens-Illinois, Inc. v. Edwards, 573 So. 2d 704 (Miss. 1990). Their claim based on fear of future disease is at best, premature.
Appellants further argue that the emotional distress claim cannot be based on intentional, willful, wanton or grossly negligent conduct, as the record is devoid of proof in this area. They cite Sears v. Devers and Wirtz v. Switzer, 586 So. 2d 775 (Miss. 1991), as providing the proper standard. Appellants further rely on Jett Drilling Co. v. Jones, 251 Miss. 332, 169 So. 2d 463 (1964), which involved an oil drilling operation on one property which caused drainage and waste water to be deposited on the adjacent property. The adjacent property owners sued, and damages were awarded, though it is not clear whether punitive damages were allowed. On appeal, this Court found that a punitive damages instruction would be improper, as the manager of the drilling operation was informed about the problem and altered the operation in an attempt to solve it (albeit unsuccessfully). Jett Drilling, 251 Miss. at 339, 169 So.2d at 465.
Appellants also cite Laurel Equipment Co. v. Matthews, 218 Miss. 718, 67 So. 2d 258 (1953), which involved a nuisance caused by a paint shop. The adjacent property owners received actual and punitive damages. This Court found that there was proof that "the painting was done in accordance with approved methods, and that on the only occasion when a complaint was made to the responsible head of the business, he endeavored diligently to correct the trouble," and as a result the punitive damages award was reversed. Laurel Equipment, 218 Miss. at 722-23, 67 So.2d at 260.
*659 This Court has on a number of occasions considered the tort of intentional infliction of emotional distress. See Fuselier, Ott & McKee, P.A. v. Moeller, 507 So. 2d 63 (Miss. 1987) (firing of attorney, including changing of door locks to office, not sufficient conduct); T.G. Blackwell Chevrolet Co. v. Eshee, 261 So. 2d 481 (Miss. 1972) (forging of car buyer's name on finance contract, sufficient conduct); Lyons v. Zale Jewelry Co., 246 Miss. 139, 150 So. 2d 154 (1963) (abusive bill collection tactics amounted to sufficient conduct). As stated in Sears v. Devers and reiterated in these cases, the standard is whether the defendant's behavior is malicious, intentional, willful, wanton, grossly careless, indifferent or reckless. Appellants question the sufficiency of the evidence supporting the verdict in favor of the appellees. The applicable standard of review may be found in Munford, Inc. v. Fleming, 597 So. 2d 1282, 1284 (Miss. 1992), which states that this Court should
consider the evidence in the light most favorable to the appellee, giving that party the benefit of all favorable inference that may be reasonably 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.
Dioxin was discovered in sludge in paper mills in Maine in 1985. There is a reasonable inference that it was in the sludge of the Leaf River mill at that time as well. There was no testing of the mill's effluent until late 1988 or early 1989. The appellants state that it was present in such low levels that it could not have been found anyway with the technology available. Once the effluent was tested, dioxin was found. In 1989, when Warren Richardson came to the mill, dioxin was on the "front burner." The Pascagoula was closed to commercial fishing from October 1990 to January 1991. The jury heard evidence concerning appellants' public relations efforts; their efforts to find out the nature and extent of the dioxin problem; their concerns of economics versus safety; and their relationship with the state's regulatory agencies. With all favorable inferences going to the benefit of the appellees, the Court finds that the jury finding of intentional infliction of emotional distress based on the conduct of the appellants should be reversed and rendered.
Appellants further claim that this award is based in part on Fergusons' allegations that appellants failed to warn the public, or the Fergusons specifically, about the nature and danger of dioxin once they discovered it was being discharged into the river. There was evidence presented to this effect, though the jury was not specifically instructed on failure to warn. Appellants argue that their duty was to promptly inform the Office of Pollution Control of the Department of Environmental Quality. Miss. Code Ann. § 49-17-17 (Supp. 1990) provides that the Mississippi Commission on Environmental Quality, acting through the Office of Pollution Control, "shall have and may exercise the following powers and duties: ... (g) To collect and disseminate information relating to air and water quality and pollution and the prevention, control, supervision and abatement thereof; ..." There is no evidence in this record that appellants did not timely report to the DEQ the critical information concerning the scope of the dioxin problem. We find that, under the circumstances of this case, this was all the appellants were required to do.
In sum, the Court may someday recognize the tort of infliction of emotional distress based on fear of future disease. However, this day we find that the evidence is insufficient in this case to hold that the appellants may be liable for infliction of emotional distress based on intentional, willful, wanton or grossly negligent conduct. The common thread running through this issue is a lack of proof. The Fergusons failed to have their persons or their property tested for dioxin. They place before the jury evidence of the danger of dioxin, but then fail to show that dioxin is present on their land or in their body. They produce evidence of dioxin in *660 the area immediately south of the Mill and no evidence of dioxin in waters in the immediate area of their property. They have shown no physical or personal injury. Their claims are too remote as to real illness and as to proximity to the alleged source of their fears. They are afraid of what may happen in the future but have refused to take available steps that could alleviate or justify those fears. Appellants' conduct in the operation of the Leaf River Mill and their attempts to deal with the dioxin problem simply do not meet the necessary standard of intentional, willful, wanton, or grossly negligent. The circuit court's judgment based on emotional distress is reversed and rendered.
II. WHETHER THE NUISANCE VERDICT BELOW MUST BE REVERSED, BECAUSE (A) THERE WAS NO EVIDENCE OF ANY HARMFUL SUBSTANCES ON OR NEAR PLAINTIFFS' PROPERTIES; (B) PLAINTIFFS' EVIDENCE OF INJURY WAS BASED ON MERE "STIGMA," WHICH IS NOT COMPENSABLE UNDER MISSISSIPPI LAW; AND (C) EVIDENCE OF THE HEALTHY CONDITION OF THE RIVER NEAR PLAINTIFFS' PROPERTIES WAS IMPROPERLY EXCLUDED.
The appellees alleged, in their second amended complaint, that the appellants had discharged "into the waters of the Leaf River, and the East and West Pascagoula Rivers dark and foul smelling effluent in sufficient quantities that the color of the river is often altered as far downstream as waters adjacent to plaintiffs' property in Jackson County, Mississippi." The appellees further alleged that the appellants had created a public nuisance, a private nuisance, and a nuisance per se. The nuisance per se claim was eventually dropped by the appellees.
O.V. Stringer first noticed a change of color in the water and in the sandbars of the Pascagoula in 1990, calling it a dark tea or copper color. He stated that the darkening had affected his ability to maneuver his boats in the water. Kenneth McGuire stated that the Pascagoula turned an orange color in 1985 or 1986, and since the river had become darker it had developed a fibrous consistency. Thomas Ferguson testified both about the public stigma concerning dioxin on his land, and his observation of the river getting darker since 1986-87. Bonnie Ferguson first noticed that the river was darkening in 1985, to a "light coffee" color. Guy Blankinship, the appellees' appraiser, testified at length about the "stigma," or the "specter of the stigma," or the "pollution of the water" with respect to the Mitchell and Ferguson properties. Noel Hillman stated that the Leaf River's darkening color had some effect on the Pascagoula's color.
The jury found in favor of the Fergusons on their nuisance claim but in favor of the appellants on the claim for trespass. Whether this finding was under the theory of public or private nuisance is unknown, as the circuit court erroneously refused to require the appellees to specify which type(s) of nuisance they were alleging. Jury instruction D-7 dealt with public nuisance. Instructions P-10 and P-11 appear to contain some elements of private nuisance.
As a preliminary matter, appellants allege that the Fergusons' action is time-barred under Miss. Code Ann. § 95-3-29, which provides:
(1) In any nuisance action, public or private, against an agricultural operation, proof that said agricultural operation has existed for one (1) year or more is an absolute defense to such action, if the conditions or circumstances alleged to constitute a nuisance have existed substantially unchanged since the established date of operation.
(2) The following words and phrases as used in this section shall have the meanings given them in this section:
(a) "Agricultural operation" includes, without limitation, any facility for the production and processing of crops, livestock, farm-raised fish and fish products, livestock products, and poultry or poultry products for commercial or industrial purposes.
(b) "Established date of operation" means the date on which the agricultural operation commenced operation. If the physical *661 facilities of the agricultural operation are subsequently expanded, the established date of operation for each expansion is deemed to be a separate and independent "established date of operation" established as of the date of commencement of the expanded operation and the commencement of expanded operation shall not divest the agricultural operation of a previously established date of operation.
(3) The provisions of this section shall not be construed to affect any provision of the "Mississippi Air and Water Pollution Control Law."
(4) This section shall not affect actions commenced prior to July 1, 1980.
Miss. Code Ann. § 95-3-29 (Supp. 1993).
In Bowen v. Flaherty, 601 So. 2d 860 (Miss. 1992), Flaherty, a chronic asthmatic, purchased land in Pontotoc County in 1978. In 1980, the Bowens built and began to operate a cotton gin 300-400 feet from Flaherty's property. Flaherty filed suit in 1986, alleging that the gin constituted a private nuisance. The chancery court rejected the Bowens' statute of limitations defense based on § 95-3-29. This Court reversed and rendered, finding that the cotton gin was an agricultural operation within the meaning of § 95-3-29(2)(a). This Court further found that all of the functions listed under (2)(a) did not have to be included before the definition of "agricultural operation" was met. Bowen, 601 So.2d at 862-63.
Section 95-3-29 is a type of statute sometimes referred to as a "right to farm" statute. One of its purposes is to prevent homes or businesses from building in the vicinity of an established agricultural operation and then attempting to have the agricultural operation penalized as a nuisance because of odors, sounds and sights traditionally associated with such a business. See generally Margaret Rosso Grossman & Thomas G. Fischer, Protecting the Right to Farm: Statutory Limits on Nuisance Actions Against the Farmer, 1983 Wis.L.Rev. 95 (1983). Appellants argue that the mill is an "agricultural operation" which produces and processes a crop, timber. Appellants presented testimony concerning the mill's growing its own trees for use in the mill, as well as the process of turning wood into pulp. Appellants cite numerous authorities for the proposition that timber is a crop under the statute, including Tally v. Carter, 318 So. 2d 835, 839 (Miss. 1975) (prices for 25- and 35-year old timber "crop" provided); Miss. Code Ann. § 49-19-3(3) (... encourage ... "production of a wood crop"); Miss. Code Ann. § 73-34-3(l) ("Timberland" ... capable of producing, "timber as a crop"). We find that under the circumstances of this case, timber is a crop for the purposes of § 95-3-29.[2]
Several of the right to farm statutes adopted by other jurisdictions include language to the effect that limitations on nuisance actions do not prohibit actions involving pollution of streams or other bodies of water which may cross the plaintiff's property. See Ala. Code § 6-5-127(b) (1993); Ark. Code Ann. § 2-4-106 (Michie 1987); Mo. Ann. Stat. § 537.295(3) (Vernon Supp. 1993); Va. Code Ann. § 3.1-22.29(C) (Michie 1983). The corresponding section of § 95-3-29 is (3), which provides that provisions of the Mississippi Air and Water Pollution Control Law, §§ 49-17-1 through 49-17-43, apply in spite of § 95-3-29. Section 49-17-5(1)(a) defines water pollution as:
... such contamination, or other alteration of the physical, chemical or biological properties, of any waters of the state, including change in temperature, taste, color, turbidity, or odor of the waters, or such discharge of any liquid, gaseous, solid, radioactive, or other substance or leak into any waters of the state unless in compliance with a valid permit issued therefor by the permit board.
Section 49-17-29(2)(a) provides that:
[i]t shall be unlawful for any person (i) to cause pollution of any waters of the state or to place or cause to be placed any wastes in a location where they are likely to cause pollution of any waters of the state; (ii) to discharge any wastes into any *662 waters of the state which reduce the quality of such waters below the water quality standards established therefor by the commission; or (iii) to violate any applicable pretreatment standards or limitations, technology-based effluent limitations, toxic standards or any other limitations established by the commission. Any such action is hereby declared to be a public nuisance.
Section 49-17-43 allows the Commission to fine violators of the act.
There was a great deal of testimony concerning appellants' compliance with its permits and with state standards. The allegations made by the appellees in their complaint are very similar to the actions defined as violations of the Air and Water Pollution Act. Given the purpose of § 95-3-29, it should not be allowed to defeat a nuisance action on property one hundred miles downstream from the mill. In Herrin v. Opatut, 248 Ga. 140, 142, 281 S.E.2d 575, 578 (1981), the Georgia Supreme Court, in construing its "right to farm" statute, stated "that which may constitute a nuisance regardless of urban sprawl, such as polluting a stream, is never protected by the statute since such activity does not become a nuisance as a result of `changed conditions in the surrounding locality.'" Appellees' nuisance cause of action is not time-barred.
"A private nuisance is a nontrespassory invasion of another's interest in the use and enjoyment of his property. One landowner may not use his land so as to unreasonably annoy, inconvenience, or harm others." Bowen v. Flaherty, 601 So. 2d 860, 862 (Miss. 1992). The elements of private nuisance are outlined in Comet Delta, Inc. v. Pate Stevedore Co. of Pascagoula, Inc., 521 So. 2d 857 (Miss. 1988):
One is subject to liability for a private nuisance if, but only if, his conduct is a legal cause of an invasion of another's interest in the private use and enjoyment of land, and the invasion is either
(a) intentional and unreasonable, or
(b) unintentional and otherwise actionable under the rules controlling liability for negligent or reckless conduct, or for abnormally dangerous conditions or activities. Comet Delta, 521 So.2d at 859-60 (quoting Restatement (Second) of Torts § 822). An actual physical invasion of the property in question is not required for recovery for nuisance. Aesthetic considerations, including color changes, are relevant in consideration of whether a private nuisance exists. See Cooper Tire & Rubber Co. v. Johnston, 234 Miss. 432, 106 So. 2d 889 (1958) (emission of carbon black settled on plaintiff's property, resulting in nuisance); Laurel Equipment Co. v. Matthews, 218 Miss. 718, 67 So. 2d 258 (1953) (emission of paint fumes involved color and smell); Cook Industries, Inc. v. Carlson, 334 F. Supp. 809 (N.D.Miss. 1971) (offensive odors and pools of discolored water and greasy film left on ditch banks constituted private nuisance).
Appellants argue that the nuisance verdict cannot stand because (a) appellants failed to prove dioxin from the mill was actually on or near their property and (b) damage from stigma, or public perception alone, is not recoverable. Appellants rely first on Shutes v. Platte Chemical Co., 564 So. 2d 1382 (Miss. 1990). The Shutes alleged that Platte Chemical, immediately adjacent to the Shutes' property, had committed trespass and had caused a nuisance. The Shutes reported dying vegetation, and also stated that they could smell the plant, and that it made their eyes water and their noses run. The Shutes proved that linuron, a herbicide, was actually present in their soil. The only plant in the area producing linuron was that belonging to Platte. The trial court granted a directed verdict in favor of Platte. This Court reversed, finding that the Shutes had presented sufficient evidence to establish a jury question. Shutes, 564 So.2d at 1384. The differences between the proof offered in Shutes and in this case are manifest. The Shutes proved that the only entity in the vicinity of their property producing linuron was Platte Chemical, and that linuron was actually on their property. The Shutes testified as to the actual physical effect Platte Chemical had on their health and on their property. The Fergusons produced no proof of this type.
Appellants also cite Berry v. Armstrong Rubber Co., 989 F.2d 822 (5th Cir.1993), *663 which involved a suit by several Natchez residents against Armstrong, which had operated a tire manufacturing plant in Natchez from 1937 to 1987. "It is undisputed that from 1937 through the 1970s, Armstrong `dumped' waste materials from this plant into various sites around the Natchez area. It is also undisputed that several of these sites are located near the areas in which plaintiffs live. Plaintiffs claim that this dumping left hazardous chemicals on their land and in their groundwater." Berry, 989 F.2d at 824. Plaintiffs sued on several theories, including nuisance. The district court dismissed the claims on summary judgment, finding that the plaintiffs had never had their soil tested, and had not shown that toxic chemicals were actually on the property. Their expert on property damage testified only that the stigma, or public perception of the presence of hazardous chemicals, had damaged the plaintiffs' property values. The Fifth Circuit affirmed, saying:
Plaintiffs point to Phillips v. Davis Timber Co., Inc, 468 So. 2d 72 (Miss. 1985), to support their common law nuisance and trespass claims. In that case, the Mississippi Supreme Court held that a plaintiff could state a claim for nuisance even if the levels of toxins found on the land did not reach dangerous levels. However, a plaintiff must present evidence of an invasion by defendant in order to withstand summary judgment. Phillips, 468 So. 2d 72, 79. The Cooper and Berry plaintiffs failed to show such evidence of an "invasion" by Armstrong to withstand summary judgment.
A cause of action for public nuisance is predicated on a showing that the defendant's activities have injured a public right. See Comet Delta, Inc. v. Pate Stevedore Co. of Pascagoula, Inc., 521 So. 2d 857, 860 (Miss. 1988). The summary judgment record of testing by many agencies and organizations showed no threat to human health. Plaintiffs presented no evidence of test results showing a level of pollutants on plaintiffs' property that could endanger the public. The summary judgment dismissing the nuisance claim is affirmed.
.....
Plaintiffs' expert appraiser, William Upchurch, contended that the stigma attached to plaintiffs' property had significantly reduced its value. The district court concluded that even if this expert testimony was accepted as true, plaintiffs could not recover under Mississippi law for reduced market caused by a "stigma" absent some physical damage to plaintiffs' land caused by the defendant.
Plaintiffs point to two Mississippi cases to support the claim that a decrease in market value caused by a "stigma" is compensable. See Phillips v. Davis Timber Co., Inc., 468 So. 2d 72, 78 (Miss. 1985); Bynum v. Mandrel Industries, Inc., 241 So. 2d 629, 633 (Miss. 1970). In both these cases, the defendant physically damaged the plaintiff's property. Plaintiffs have cited no case, and the court has found none, holding that Mississippi common law allows recovery for a decrease in property value caused by a public perception without accompanying physical harm to the property.
Berry, 989 F.2d at 829; see also Adkins v. Thomas Solvent Co., 440 Mich. 293, 487 N.W.2d 715 (1992) (nuisance cause of action dismissed where damage and injury predicated on unfounded public fear or perception). As in Berry, the Fergusons presented no evidence of tests done on their property to show the possible levels of dioxin or any other pollutant.
Appellants also rely on Masonite Corporation v. Dennis, 175 Miss. 855, 168 So. 613 (1936). Dennis owned property on the Leaf River, approximately 40-50 miles downstream from a Masonite plant, which manufactured some kind of board or wood product. Dennis alleged that the wood fiber discharged into the river by Masonite had caused fish kills, offensive odors, and resulted in a harmful sediment being deposited on his property. The jury found for Dennis. This Court reversed and rendered, saying that Dennis had failed to prove causation. Dennis, 175 Miss. at 868, 168 So. at 616.
The Fergusons argue that their nuisance claim was based not only on "the dioxin problem, but is also based on the unsightly discoloration of the water, river banks, and *664 sand bars caused by Defendants' injection of the darkening effluent into the Leaf River." They cite Southland Co. v. Aaron, 221 Miss. 59, 72 So. 2d 161 (1954). Southland opened an oil refinery in 1946 approximately five-eighths of a mile from Aaron's land. Southland allowed its effluent to be emptied into a small tributary which eventually emptied into the Boguehoma Creek, which passed through Aaron's land. There had also been an oil spill of around 400 barrels in 1951, and there was evidence that the Boguehoma had a large amount of salt in it. After a verdict in favor of Aaron, this Court found that the issue of liability should be affirmed. In doing so the Court provided that the "riparian proprietor" had a right to use the water in question "in its natural purity, or in the condition in which he has been in the habit of using it," and that:
a riparian owner sustaining substantial injuries by reason of such an invasion of his rights may maintain an action without regard to the motive which prompts the invasion, and the pollution of a stream to the injury of a lower proprietor will not be justified by the importance of the business of the upper proprietor to either the public or the wrongdoer, or by the fact that the latter is conducting such business with care and in the only known practicable mode.
Southland, 221 Miss. at 72, 72 So.2d at 165 (quoting 56 Am.Jur. Waters § 405 (1947)).
The Fergusons also rely on Phillips v. Davis Timber Co., Inc., 468 So. 2d 72 (Miss. 1985), which was cited in Berry v. Armstrong Rubber. Phillips proved that pentachlorophenol (PCP) had polluted his lake because of the operation of Davis Timber Company. The trial court found that "the levels of PCP were sub-lethal and did not result in damage to the aquatic wildlife and to human beings," and denied relief. This Court reversed, finding that, under a nuisance theory, "a plaintiff may recover damage by a physical invasion of his property on a simple showing that the defendant was responsible for the physical invasion." Phillips, 468 So.2d at 78.
There was testimony that the Pascagoula had darkened, and river banks and sand bars had also been discolored. There was no testimony from O.V. Stringer or Kenneth McGuire as to the location of their properties in relation to the Ferguson property, or where they had seen the discoloration in the Pascagoula. There was no testimony that the Fergusons' property had been darkened, or that the river had left a dark residue on their land or their buildings. There was no testimony showing the appellants to be the cause of this color change except that the change had been noticed after the appellants began operation of the mill. Some of the appellees' witnesses noticed the color change around 1985; others did not until 1990. Guy Blankinship never mentioned any damage to the property except for the condition of the river and the resulting stigma. We find that the evidence presented is insufficient to constitute a significant interference with the Fergusons' use and enjoyment of their property. We further find that mere stigma, supported by tests showing dioxin contamination no closer than eighty river miles north of the alleged damage, is not sufficient evidence of compensable injury.
Comet Delta, 521 So.2d at 860, also provides the elements of public nuisance:
(1) A public nuisance is an unreasonable interference with a right common to the general public.
(2) Circumstances that may sustain a holding that an interference with a public right is unreasonable include the following:
(a) Whether the conduct involves a significant interference with the public health, the public safety, the public peace, the public comfort or the public convenience, or
(b) Whether the conduct is proscribed by a statute, ordinance or administrative regulation, or
(c) Whether the conduct is of a continuing nature or has produced a permanent or long lasting effect, and, as the actor knows or has reason to know, has a significant effect upon the public right.
(quoting Restatement (Second) of Torts, § 821B). "To recover damages [for public nuisance] the plaintiff usually must have sustained harm different in kind, rather than in *665 degree, than that suffered by the public at large." Comet Delta, 521 So.2d at 861; but see Ronald J. Rychlak,: The Role of Common-Law Remedies for Environmental Wrongs Private Nuisance, 59 Miss.L.J. 657, 659 n. 12 (1989) (public nuisance requirement of different kind of harm under attack as "relic"). If one were to assume that the darker water of the Pascagoula and stains on riverbanks and sandbars were enough to qualify as an unreasonable interference with those public rights listed in 2(a), (b) or (c), there is still the matter of a harm different from that suffered by the public at large which the Fergusons must have endured. A reduction of recreational or aesthetic use or enjoyment of the river is the same injury that the general public would suffer. Appellees argue that part of their emotional distress damages results from the diminution of value of their property and their inability to leave something of value to their son. This is a different kind of damage than that suffered by the general public which could be compensable as the result of a public nuisance. However, the verdict form showed that the jury awarded the Fergusons $10,000.00 each for nuisance damages. The jury awarded the Fergusons $90,000.00 each for emotional distress. Emotional distress may not serve as a component of the nuisance award where it was separately awarded. Because we find that the evidence is insufficient to support recovery under either public or private nuisance, we do not reach the question of whether certain evidence offered by the appellants was wrongfully excluded by the circuit court. As with their emotional distress claim, the Fergusons' nuisance claim cannot stand due to a failure of proof. The judgment of the Circuit Court of Jackson County in favor of the Fergusons and against Leaf River Forest Products, Inc., Great Northern Nekoosa Corporation and Georgia-Pacific Corporation is reversed and rendered in its entirety.
REVERSED AND RENDERED.
HAWKINS, C.J., DAN M. LEE and PRATHER, P.JJ., and SULLIVAN, BANKS, JAMES L. ROBERTS, Jr. and SMITH, JJ., concur.
McRAE, J., dissents with separate written opinion.
McRAE, Justice, dissenting:
The majority's ruling is contradictory to the long established principal of law in this state that physical impact or injury is not necessary to prove intentional, or even negligent infliction of emotional distress. First Nat'l Bank v. Langley, 314 So. 2d 324, 338-339 (Miss. 1975). This case should at least be remanded for a new trial under the majority's holding since a plaintiff was not required under existing law to prove physical impact in a claim for emotional distress.
In a claim based on emotional distress, one need only show that the emotional trauma claimed was a reasonably foreseeable consequence of the negligent or intentional act of another. Langley, 314 So.2d at 339; Lyons v. Zale Jewelry Co., 246 Miss. 139, 149-50, 150 So. 2d 154, 158 (1963). There is no requirement that the defendant have touched the body of the injured claimant. Langley, 314 So.2d at 339. The evidence found inadequate by the majority would merely be probative of the dioxin's physical impact on the plaintiffs in this action. The impact doctrine was abolished in Langley. A plaintiff does not have to prove physical impact to recover for intentional or negligent infliction of emotional distress.
Furthermore, a plaintiff in Mississippi "may recover damages for emotional distress due to willful or wanton acts in the absence of a simultaneous accompanying physical injury." Id. at 338. In other words, not only can a plaintiff recover damages for emotional distress without having been touched or impacted by the defendant, but he may recover damages in the absence of a physical manifestation of the injury when the conduct of the defendant involved intentional or grossly negligent acts likely to give rise to emotional distress. Id. at 336-37; Daniels v. Adkins Protective Service, 247 So. 2d 710, 711 (Miss. 1971); Lyons, 246 Miss. at 149-50, 150 So.2d at 158; Arnold v. Spears, 217 Miss. 209, 217-18, 63 So. 2d 850, 854 (1953); Saenger Theatres Corp. v. Herndon, 180 Miss. 791, 178 So. 86 (1938).
In concluding that the plaintiffs' fears are too remote, the majority incorrectly distinguished *666 the plaintiffs' fears from their emotional distress. The plaintiffs' emotional distress in this case is the fear that they will become sick in the future. The fear and the emotional distress are merely two different ways of describing the same injury. The fear of future illness is only a more specific way of characterizing the emotional distress suffered by the plaintiffs. The emotional distress in the present case is not "based on the fear of a future illness" as indicated by the majority. The emotional distress, or fear, is instead based on the fish kills, discoloration of the water, and foul odors among other things caused by the Leaf River pollution.
To determine the validity of an emotional distress claim, we look to the conduct of the defendant or the nature of the act to determine whether it intentionally, or with reasonable foreseeability, evokes outrage. Sears, Roebuck & Co. v. Devers, 405 So. 2d 898, 900 (Miss. 1981). The fear, or emotional distress, in the case at hand was not based on abstract fear, but was instead based upon concrete physical scientific evidence that the river was knowingly contaminated by and through the conduct of Leaf River. Since it is virtually impossible to produce physical scientific evidence that will prove the existence of abstract fear, a plaintiff's evidence of emotional distress will never be persuasive if the concepts of fear and emotional distress are considered separate injuries as in the case before us. The misinterpretation of the emotional distress claims before this Court has led the majority to reinstate the impact rule in an attempt to find some physical evidence proving abstract fear. The conclusion that the fear, or the emotional distress, was too remote is merely another way of stating that the plaintiff's fear of serious illness cannot be believed. However, the jury has already decided otherwise. Through the misinterpretation of the plaintiffs' claims, the majority likewise deviates from this Court's standard of review.
This Court generally accords great deference to jury verdicts. As the majority points out, when asked to review the sufficiency of the evidence, we
consider the evidence in a light most favorable to the appellee, giving that party the benefit of all favorable inferences that may be reasonably 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.
Munford, Inc. v. Fleming, 597 So. 2d 1282, 1284 (Miss. 1992). Keeping this standard of review in mind, the majority then enumerates the bulk of those facts which do, indeed, take into account all inferences which favor the Fergusons.
The facts demonstrated that the residents who lived on the river noticed the river gradually turn darker until it became coffee-colored. They testified that they noticed large quantities of dead mussels and that the catfish became unusually scarce. With these obvious physical changes, the individuals on the river knew that something was seriously wrong with the river. In fact, the evidence showed that the chemical contamination was so concentrated during this time that the Mississippi Department of Wildlife and Fisheries closed the river to commercial fishing for six months and issued consumption advisories for fish caught in the river. Leaf River even considered the contamination serious enough to warrant the need to undertake public relations efforts to rehabilitate itself.
The intention to cause emotional distress has been defined as follows:
An intention to cause severe emotional distress exists when the act is done ... with knowledge on the part of the actor that severe emotional distress is substantially certain to be produced by his conduct. If an act is done with the requisite intention, it is immaterial that the actor is not inspired by any personal hostility to the other.
*667 Lyons, 246 Miss. at 150-51, 150 So.2d at 158. Under this definition, the evidence also supported the inference that the conduct by Leaf River which caused the contamination was intentional, or at least grossly negligent. The residents testified that they noticed the changes in the river as early as 1985. For at least five years, the quality of the river rapidly and conspicuously deteriorated as they continued to live and fish on the river. Certainly it would be a reasonable inference to conclude that Leaf River was aware of this fact. There was no doubt that Leaf River knew the practice of bleaching its pulp product caused dioxin to be produced, and it is reasonable to assume that it knew it would flow downriver if emitted from the plant.
Additional evidence of their intentional behavior showed that Leaf River received an inter-office memorandum on October 7, 1985 about the detection of dioxin in paper mills in Maine which used the same technologies as the Leaf River mill. The majority agrees that the detection of dioxin in the Maine mills was enough to create a reasonable inference that dioxin was present in the Leaf River mill in 1985. Even so, the plaintiff produced more evidence of Leaf River's awareness. On October 14, 1988, an office memorandum was sent out at Leaf River about the costs of dealing with dioxin although the memo never discussed health risks. Another office memorandum was received on November 11, 1988 explaining the steps the Leaf River mill should take before it was tested in a dioxin study of twenty-five mills.
Giving the Fergusons the benefit of any inferences to be drawn from these facts, it was certainly reasonable for the jury to conclude that Leaf River knowingly contaminated the river, or at least that the factory remained willfully blind to the fact that it was doing so despite the health risks. It was also reasonable for the jury to have concluded that this conduct was outrageous enough to cause emotional distress, or stated another way, that Leaf River knew this type of conduct was substantially certain to produce some type of emotional distress in the lives of the people who lived and fished on the river. Leaf River's knowledge of the problem without any reaction constituted intentional, or at least, grossly negligent conduct. The plaintiffs testified that they were fearful of future illness, or emotionally distressed, and they produced scientific experts who testified that their emotional distress, or fear, was reasonable. In light of the facts before this Court, the majority has hardly given any deference to the jury's findings of fact. The majority contradicts its articulated standard of review by reversing the jury verdict and rendering judgment against the river residents.
Finally, punitive damages are permitted when the misconduct is a reckless disregard for the rights of others, intentional or grossly negligent. Langley, 314 So. 2d 324; Fowler Butane Gas Co. v. Varner, 244 Miss. 130, 141 So. 2d 226 (1962); see Jett Drilling Co. v. Jones & Shows, 251 Miss 332, 339, 169 So. 2d 463 (1964) (refusing punitive damages where evidence showed that steps were taken to alleviate problem after defendant received complaints).
The majority reverses the nuisance claim for lack of sufficient evidence demonstrating that the contamination existed as far downstream as the Ferguson property. Again, the majority fails to afford the Fergusons the benefit of all favorable inferences that may be reasonably drawn from the evidence. Noel Hillman, the wildlife supervisor, stated that the changes in color began after the Leaf River mill was built. Both Bonnie and Thomas Ferguson testified that the water changed color at the location of their property. Hillman even noticed these changes in locations that were south of and downstream from the Ferguson property. The wildlife consumption advisories and commercial fishing ban directly impacted the Ferguson property, and signs were posted to that effect both north and south of the property.
It was reasonable for the jury to conclude from this evidence that dioxin was present in the area of the Ferguson property despite the absence of scientific data specifically from the site of their property. Giving the plaintiffs the benefit of all favorable inferences to be drawn, as is required where the jury has returned a verdict for the plaintiffs, we must conclude that the evidence sufficiently established all of the elements of private nuisance. See Comet Delta Inc. v. Pate *668 Stevedore Co., 521 So. 2d 857, 859-60 (Miss. 1988).
Looking, as we must, at the evidence and all reasonable inferences that may be drawn therefrom, in a light most favorable to the Fergusons, a fair-minded jury could have found that Leaf River interfered with the Fergusons' private use and enjoyment of their property, and that it was reasonable that persons living downstream from the Leaf River mill could suffer some degree of emotional distress as a result of the mill's discharge of dioxin-tainted effluence into the river, the changes in the water and fish, and the adverse publicity surrounding these events. Alternatively, if we are going to reinstate the impact rule for claims of emotional distress, this Court should reverse and remand the case for a new trial in order that the plaintiffs may be permitted to attempt to prove their case under our new law. Accordingly, I dissent.
NOTES
[1] The five mill study was a joint study conducted by the EPA and the American Paper Institute. It included five paper mills and its results, released in 1987, showed that dioxin was linked to the bleaching process used in paper mills. The results of the five mill study led to another joint EPA-API study of 104 paper mills in the United States. The results of the second study, released in 1990, showed that the production of dioxin was linked to the use of chlorine as a bleaching agent. The 25 mill study was a more specific study undertaken by the paper industry in 1988 to determine where dioxin was being formed in the pulp making process and how the formation could be avoided. The Leaf River Mill was a participant in both the latter studies.
[2] We note that in 1994, Miss. Code Ann. § 95-3-29 was amended such that the definition of "agricultural operation" now includes a "facility for the production and processing of ... wood, timber or forest products, ..." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1757738/ | 584 S.W.2d 548 (1979)
The FIRST NATIONAL BANK OF FORT WORTH, a National Banking Association, Appellant,
v.
Bob BULLOCK, Comptroller of Public Accounts, State of Texas, et al., Appellees.
No. 12987.
Court of Civil Appeals of Texas, Austin.
July 11, 1979.
Rehearing Denied August 1, 1979.
*549 S. G. Johndroe, III, Cantey, Hanger, Gooch, Munn & Collins, Fort Worth, for appellant.
Mark White, Atty. Gen., Connie Ode, Asst. Atty. Gen., Austin, for appellees.
PHILLIPS, Chief Justice.
This is a sales tax case. Appellant seeks to recover certain sums paid to appellees under protest by virtue of the Limited Sales, Excise and Use Tax Act, Tex. Tax.-Gen.Ann. art. 20.01, et seq. (1969). Suit *550 was brought contending that appellees improperly levied taxes (1) on payments made by appellant to four computer software companies for the licensing of appellant to use certain information contained in tapes to be used in programming appellant's computer, and (2) on payments made by appellant to Canteen Corporation for providing a free food service to appellant's employees and guests at appellant's cafeteria located at its place of business.
Following trial to the court, the court held that appellant was not entitled to recover its tax payments under either of the situations noted above and rendered judgment for appellees. Appellant then perfected its appeal to this Court.
We reverse and render the judgment of the trial court in part and affirm in part.
I.
Appellant seeks recovery of taxes paid under protest on payments it made to four computer software companies for the licensing of appellant to use certain information. Appellant paid over $109,000.00 for four programs or sets of instructions ("computer software") which enabled appellant's computer to perform deposit and lending functions and process general accounting. The software was contained on magnetic tapes, probably four in number, but the testimony showed that the information could have been transmitted by keypunch cards, telephone or various other methods.
The law places a tax on a sale of tangible personal property. Tangible personal property is defined as "personal property which may be seen, weighed, measured, felt or touched, or which is in any other manner perceptible to the senses." Tex. Tax.-Gen.Ann. art. 20.01(P) (1969). To determine whether a sale is of tangible or intangible property, the courts apply the "essence of the transaction" test. Bullock v. Statistical Tabulating Corp., 549 S.W.2d 166 (Tex.1977). If the object or essence of the sale is intangible property, then the transaction is not taxable. We hold the essence of this transaction was not the four tapes, but, instead, the purchase of the computer process, an intangible.
An important factor to be considered in arriving at this determination is the fact that the desired information could have been transferred in several different ways. Id.; Williams and Lee Scouting Service, Inc. v. Calvert, 452 S.W.2d 789 (Tex.Civ. App.1970, writ ref'd). Some of the possible methods would not have involved a tangible object at all. For example, appellant's computer could have been programmed over the telephone or by hand.
In Statistical Tabulating, the Court held that processed data contained in a coded computer card was an intangible and not taxable. In Williams and Lee Scouting, statistical data on oil and gas well production was compiled and mailed to subscribers in printed reports each week. The sale was not taxed. The purchasers in both Williams and Lee Scouting and Statistical Tabulating were desirous of something beyond the tangible object involved in the transaction. Unlike a phonograph record or filmstrip, when the information on the tape, in the present case, is transferred to the computer, the tape is no longer of any value or importance to the user. State v. Central Computer Services, Inc., 349 So. 2d 1160 (Ala. 1977); Commerce Union Bank v. Tidwell, 538 S.W.2d 405 (Tenn.1976).
Appellee contends that this case is distinguishable from Statistical Tabulating in that the software in the latter case was "customized," because it was developed specially for the purchaser. The tapes in our case are "canned" programs, since they are standard items sold to numerous customers with only slight modifications to conform to each purchaser's use. Appellee argues that the service characteristic is present only with "customized" programs. We do not agree that this is a valid distinction. The test in each case is not whether the product is "customized" or "canned," but whether the object of the sale is tangible personal property. See District of Columbia v. Universal Computer Associates, Inc., 151 U.S. App.D.C. 30, 465 F.2d 615 (1972). See also Commerce Union Bank v. Tidwell, supra. *551 In Williams and Lee Scouting, the weekly report of oil and gas data was a "canned" publication in that the same information was mailed to many subscribers. There was no service performed for any of the customers that was different from that obtained by all the rest of the subscribers.
Any ambiguity which arises in a particular case must be resolved in favor of the taxpayer, because a taxing statute must be construed strictly against the taxing authority and liberally in favor of the person sought to be held. Bullock v. Statistical Tabulating Corp., supra; Wilson Communications, Inc. v. Calvert, 450 S.W.2d 842 (Tex.1970).
We hold that although tangible personal property, i. e., tapes, did change hands, the sale of a license for computer software to appellant was the sale of intangible property, and, therefore, not taxable. The judgment of the trial court is reversed and judgment here rendered that appellant recover the taxes levied on sale of computer software, together with interest as provided by law.
II.
With respect to the second question concerning payments made by appellant to Canteen Corporation, we hold that the tax in question was due and affirm the judgment of the trial court in this respect.
Appellant entered into an agreement with Canteen Corporation for it to prepare meals for appellant's employees and guests at appellant's place of business using appellant's cooking and serving equipment. These meals were to be furnished free to the employees and guests. Canteen Corporation purchases the food products and prepares and serves them.
Appellant contends that Canteen Corporation was its agent and that no sales tax was generated in a transaction in which appellant's employees were given meals without cost.
The trial court held that Canteen Corporation operated in all aspects of its relationship with appellant as an independent contractor, appellant having only limited control over Canteen's operation of appellant's cafeterias. The court also held that, consequently, the sum of money paid by appellant to Canteen Corporation in return for Canteen's preparation and serving of food to appellant's officers, employees, and guests constituted a sale at retail of tangible personal property, taxable pursuant to the Limited Sales, Excise and Use Tax Act. Tex. Tax.-Gen.Ann. art. 20.01, et seq. (1969). We affirm this holding.
The Act imposes a limited sales tax "on the receipts from the sale at retail of all taxable items within this state." Art. 20.02. In Article 20.01(I) a "sale at retail" is defined as "[a]ny sale of a taxable item." Article 20.01(K)(2) in turn defines "sale" so as to include "the furnishing, preparing or serving for a consideration of food, meals, or drinks." "Taxable items" means "tangible personal property." Art. 20.01(W). "`Receipts' means the total amount of the sale or lease or rental price ... of the retail sales of taxable items by retailers, valued in money, whether received in money or otherwise...." Art. 20.01(D)(1). In this case the tangible personal property consisted of food, meals and drinks, the sale of which consisted of the furnishing, preparing and serving of these items for a consideration. Automatic Canteen Co. v. State Board of Equalization, 238 Cal. App. 2d 372, 47 Cal. Rptr. 848 (1965).
The facts of this case do not support appellant's contention that Canteen Corporation was at once agent and independent contractor. Inasmuch as Canteen Corporation was engaged in a single enterprise: namely, the furnishing, preparing, and serving of food, meals and drinks to appellant's employees and guests; and, inasmuch as Canteen Corporation retained the day-to-day control over the enterprise, it was an independent contractor making sales at retail of tangible personal property. The Texas cases stress the right of control. Where one has the right to control the end sought to be accomplished but not the means and details of the accomplishment; that is, only what shall be done, not how it *552 shall be done, the person employed acts as an independent contractor and not as an agent. See Truck Insurance Exchange v. Cartmill, 385 S.W.2d 277 (Tex.Civ.App.1964, writ ref'd n. r. e.); W. D. Haden Co. v. Ryman, 362 S.W.2d 133 (Tex.Civ.App.1962, writ ref'd). An employer who exercises only such control over an independent contractor as is necessary to insure performance of the contract, in order to accomplish the results contemplated by the parties, does not thereby make the contractor an employee of the company. J. A. Robinson Sons, Inc. v. Ellis, 412 S.W.2d 728 (Tex.Civ. App.1967, writ ref'd n. r. e.). Even an occasional assertion of control by the employer does not destroy the settled relationship between the parties. Newspapers, Inc. v. Love, 380 S.W.2d 582 (Tex.1964).
The test in cases of an alleged disregard of a written contract that indicates on its face an employer-independent contractor relationship (as we have in the case at bar) is whether the employer in fact assumed and exercised such detailed control over the performance of the work so as to make the other party a servant. Mid-Continent Freight Lines, Inc. v. Carter Publications, Inc., 336 S.W.2d 885 (Tex.Civ.App.1960, writ ref'd).
Consistent with these tests, we hold that Canteen Corporation was an independent contractor and that the charge for its services is subject to the sales tax. Appellant offers as proof of an agency relationship the fact that Canteen Corporation was required by appellant to purchase some food products from customers of appellant. The contract between appellant and Canteen authorizes appellant to designate the hours of operation, and further states: "Canteen shall cooperate at all times with the owner in determining operating policies of the business conducted by Canteen hereunder, including wage scales, selling price of foods, portions, menus and recipes." (Emphasis added). Appellant owned the equipment used by Canteen.
The testimony also reflects that Canteen had control over the day-to-day details; Canteen hired all kitchen employees and paid them; Canteen purchased all necessary licenses; Canteen replaced any worn-out items; and that Canteen kept all day-to-day records.
We hold that the consideration paid by appellant to Canteen for furnishing, preparing and serving meals is taxable. Appellant relies on Szabo Food Service, Inc. v. State Board of Equalization, 46 Cal. App. 3d 268, 119 Cal. Rptr. 911 (1975). In Szabo, the employees paid for their meals, which were furnished by Szabo Food Service, Inc. The employer subsidized any losses of the caterer. The subsidies were held not taxable because they were not the consideration for the meals, but merely a guarantee of a reasonable profit. The only consideration was provided by the employees who paid for the meals. The present case is distinguishable in that the only consideration was provided by appellant.
The judgment of the trial court is reversed and rendered in part, and, in part, affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1768163/ | 588 So. 2d 192 (1991)
In the Matter of the ESTATE OF Ester Louie CHILDRESS, Deceased.
Dotsy C. NEWTON
v.
Rodney Wayne LONG.
No. 89-CA-0796.
Supreme Court of Mississippi.
September 18, 1991.
J.W. Kellum, Sumner, for appellant.
John W. Whitten, Jr., Breland & Hilburn, Sumner, for appellee.
EN BANC.
DAN M. LEE, Presiding Justice, for the Court:
This is an appeal by Ms. Dotsy C. Newton from the Tallahatchie County Chancery Court, Second Judicial District. In Ms. Newton's capacity as the executrix of the estate of her deceased father, Ester Louie Childress, an uncertainty arose over title to fifty-six acres of land located in Tallahatchie County.
In the Final Account and Petition to Close Estate, Ms. Newton indulged the court's assistance in determining ownership and quieting title to this property. Summonses were issued to several interested persons who might claim any interest in this land. Mr. Rodney Wayne Long, grandson of the decedent, filed an Answer to the Final Account and Petition acknowledging that he had no interest in the estate of Ester Louie Childress, but rather Mr. Long claimed that he owned a one-half interest in the fifty-six acres which should not be considered an asset of the estate. Ms. Newton filed an Answer and Cross Complaint in her individual capacity alleging that she was the sole owner of the entire fifty-six acres.
After a hearing on January 17, 1989, the chancellor entered a Final Decree which adjudged Rodney Wayne Long as the owner of an undivided one-half interest in this property. Being aggrieved by this judgment, Ms. Dotsy C. Newton in her individual capacity has appealed to this Court.
As the facts will reveal, this appeal requires this Court to answer a very specific question which has not been previously addressed in this factually analogous context.
I. DOES MISSISSIPPI REQUIRE A JOINT DEED BY BOTH HUSBAND AND WIFE OWNING PROPERTY AS TENANTS BY THE ENTIRETY IN ORDER TO SEVER THE ESTATE AND CREATE A REMAINDER INTEREST IN A THIRD PERSON; OR, CAN SEPARATE, INDIVIDUAL *193 DEEDS WHICH WERE EXECUTED, ACKNOWLEDGED AND RECORDED AT THE SAME TIME AND PLACE BE USED TO ACCOMPLISH THIS END?
We hold that separate deeds may be used to sever an estate in the entirety under a narrow range of circumstances whereby both spouses act in concert pursuant to a common purpose and without derogation of the other's right of survivorship. Therefore, we affirm the chancellor's decree adjudging Rodney Wayne Long as the owner of an undivided one-half interest to fifty-six acres of land in Tallahatchie County.
FACTS
Ester Louie and Florene Childress acquired approximately fifty-six acres of land in Tallahatchie County in 1944 as an estate in the entirety[1] with right of survivorship and not as tenants in common. The Childresses occupied this fifty-six acres as their homestead for a number of years. However, their marriage began to deteriorate, and Ester Louie moved away from the property, which had been their homestead, with no intention to return.[2] At some time prior to January 1971, Ester Louie and Florene reached an agreement whereby Florene would sue for divorce, and Ester Louie would relinquish his interest in this property. Furthermore, the couple agreed that Florene would have a life estate in the property, and upon her death, the estate would pass to their grandson, Rodney Wayne Long.
On January 15, 1971, Rodney Wayne Long drove Florene to the law office of Mr. John W. Whitten, Jr., in Sumner, where they met Ester Louie. The purpose of this meeting was to prepare the necessary deeds in order to give effect to the prior agreement that Ester Louie and Florene had reached. The grandson waited in the reception area while Ester Louie and Florene met with the attorney. According to Mr. Whitten's affidavit which is contained in this record, the agreement was that Florene was to have the undisturbed use and occupation of the fifty-six acre tract for her lifetime; and upon her death it was their wish that the entire fifty-six acres would succeed to their grandson, Rodney Wayne Long. Mr. Whitten concluded that the best way to accomplish this was by the execution of two separate warranty deeds.
The first warranty deed contained a conveyance of Ester Louie's interest to his wife for the term of her natural life with a remainder interest to the grandson.
I, ESTER LOUIE CHILDRESS do hereby sell, convey, warrant and deliver unto FLORENCE (sic) WALKER CHILDRESS, my wife, for the term of her natural life, with remainder as hereinafter recited, my undivided interest in and to the following described real property... .
* * * * * *
At the death of the said Florence (sic) Walker Childress, my said undivided interest ... shall go to my grandson, Rodney Wayne Long.
This deed was executed on the 15th day of January, 1971, and was recorded on January 25, 1971, at 1:50 p.m. The second *194 warranty deed was executed and acknowledged at the same time and bears a recordation time of five minutes later on January 25, 1971, at 1:55 p.m. This second deed was a conveyance by Florene Childress as grantor of an undivided one-half interest to Rodney Wayne Long but with a reservation of a life estate in the grantor.
I, Florence [sic] Walker Childress, do hereby convey, warrant and deliver unto my grandson, RODNEY WAYNE LONG, subject to the reservation of a life estate as hereinafter recited, my undivided one-half interest in and to the following described real property... .
* * * * * *
But reserving unto myself, the said Florence [sic] Walker Childress, a life estate in said property.
On the same day that the deeds were recorded, January 25, 1971, Florene filed her Bill for Divorce against Ester Louie who had since become a Florida resident. Therefore, the ownership arrangement regarding the property was clearly a division of the marital property in anticipation of the impending divorce. Ester Louie entered a waiver of process and did not contest the divorce action, and a divorce was granted approximately four months later on May 11, 1971.
The next key date in this scenario occurred eight years later on April 26, 1979, when the appellee, Rodney Wayne Long, executed a quitclaim deed of one-half of his remainderman interest in the fifty-six acres back to his grandfather.
I, ... Rodney Wayne Long, hereby remise, release and forever quit-claim to Ester Louie Childress one-half of my right, title and interest... .
Subsequent to his divorce from Florene in 1971, Ester Louie remarried and died testate on May 27, 1981. Ester Louie named his daughter, Dotsy Clark, appellant, as his executrix. Through a residuary clause in his will, Ester Louie named six devisees, all being his children, who would succeed to any interest that he still owned in this property at his death; Wilma Bledsoe, Hugh Allen Childress, Lacy Biles Childress, Stacy Giles Childress, Dotsy Clark Newton (appellant) and Louie Wesley Childress. Ester Louie's widow relinquished all of her right, title and claim to her deceased husband's estate by a quitclaim deed executed by her in February of 1988, to the six residuary devisees named in her husband's will.
Four years following the death of her ex-husband, Florene Childress quitclaimed all of her right, title and interest in the fifty-six acres to her daughter, Dotsy C. Newton. This deed was executed and recorded on July 30-31, 1985. Although the record is not developed on this fact, the briefs of counsel inform the Court that Florene Childress died in 1987. Upon Florene's death, any remainder interest that Rodney Wayne Long might own became present possessory subject to the rights of possible cotenants from the last will of Ester Louie Childress. Hence, Mr. Long's claim of a one-half interest in this property is in direct conflict with Ms. Newton's claim of complete ownership of the entire fifty-six acre estate.
DISCUSSION
The question raised on this appeal hinges on the validity of the two separate deeds executed by Mr. and Mrs. Childress in 1971, while husband and wife, in an attempt to sever the estate in the entirety. Specifically, the question before us is whether or not both spouses are required to sign as grantors in the same deed in order to sever an estate in the entirety; or can separate deeds by both spouses revealing mutual consent be used as a means to accomplish the same result. As an introduction to this discussion, a brief summary of the positions advanced by both parties is helpful.
Dotsy C. Newton argues that in order for a husband and wife to sever an estate in the entirety, both husband and wife must join in the same deed. This argument is rooted in the common law recognition that in an estate by the entirety, each spouse is seised of the whole or entirety and not a divisible part. 41 Am.Jur.2d Husband & Wife § 55 (1968). Thus, the *195 legal fiction is that there is but one estate held by only one "person" the marriage itself. Therefore, any conveyance to a third party interest by one spouse alone would fail for the absence of a necessary grantor, recognizing that the grantor must consist of both husband and wife. Since the Childresses executed separate deeds in 1971 to Rodney Wayne Long rather than a joint deed, Dotsy C. Newton contends that the estate in the entirety was never severed and that the execution of separate deeds was a nullity. This left the right of survivorship intact;[3] and when Florene Childress survived Ester Louie, she became possessed of the whole. Consequently, Dotsy C. Newton claims that she is the successor in interest to this property as grantee of a quitclaim deed from her mother in July of 1985.
The appellee, Rodney Wayne Long, has a simple response. He argues that it would be ridiculous and foolish to require Florene Childress to join in a deed to herself in order to sever the entirety. Mr. Long argues that an estate in the entirety can be severed by the consent of both spouses to terminate the relationship just as joint tenancies can be severed by mutual agreement or contract. 41 Am.Jur.2d Husband & Wife § 71 (1968). Mr. Long notes that the deeds were prepared by the same attorney at the same time and place and were recorded within five minutes of each other in full anticipation of a divorce. Mr. Long argues that all of these factors unequivocally reveal mutual consent to sever the entirety in what amounted to a single transaction, albeit the execution of separate deeds. If the execution of separate deeds successfully severed the entirety and conveyed a remainderman's interest to Mr. Long, then he would own an undivided one-half interest along with the devisees under Ester Louie's will who would own the remaining undivided one-half interest.
In an early case of Hemingway v. Scales, Mr. Scales died insolvent, and the probate court decreed that the estate be sold for the payment of his debts. Hemingway v. Scales, 42 Miss. 1 (1868).[4] In Hemingway, this Court described a tenancy by the entirety.
The husband and the wife are seized of the entirety, and the survivor takes the whole; and during their joint lives neither of them can alien so as to bind the other... . In such a case the wife has no separate estate, but is seized, with the husband, of the entirety. Neither of them having any separate or severable part or portion, but the two, as one in law, holding the entire estate, neither can sell without the consent of the other; and the survivor takes the whole.
Hemingway v. Scales, 42 Miss. 1, 17 (1868). (emphasis added).
In McDuff v. Beauchamp, Mr. and Mrs. McDuff owned an estate in the entirety which they alleged as having been obtained by the separate and exclusive funds of Mrs. McDuff. McDuff v. Beauchamp, 50 Miss. 531, 534 (1874). Mrs. McDuff's brother induced her and her husband to substitute their obligation and mortgage on this land in order to relieve a mortgage that the brother owed to the local school fund. 50 Miss. at 534. Foreclosure followed, and Mrs. McDuff argued that she alone was the equitable owner of this property, constituting a separate estate in her. Id. This Court ruled against Mrs. McDuff and upheld the decree of foreclosure. 50 Miss. at 539. The McDuff Court noted that while an estate in the entirety can be alienated by a joint deed, it stopped short of mandating a joint conveyance in all instances.
*196 Both being seized of the entirety, neither could alien without the consent of the other, and the survivor would take the whole... . One of the incidents of the estate is that it can only be alienated by the joint act of the husband and wife. We think that the mortgage made by them, to the trustee of the common school fund, is valid. A separate conveyance by the husband would pass no present interest to an alienee... . It would follow then that as at the common law an alienation of the estate of entirety could be made by husband and wife; it can be done here by a joint deed properly sealed and acknowledged.
McDuff v. Beauchamp, 50 Miss. 531, 535-36 (1874).
In the case of Cuevas v. Cuevas, Mr. Cuevas attempted to unilaterally transfer an estate held in the entirety to his girlfriend. Cuevas v. Cuevas, 191 So. 2d 843 (Miss. 1966). In Cuevas, we recognized the common law rule that an estate in the entirety may not be severed by the act of one tenant alone and noted that the reason for this rule is well justified as a means to protect the right of survivorship of one spouse from the improvidence of the other spousal tenant. Cuevas, 191 So.2d at 846-47. Additionally, we quoted from Thompson, Real Property.
While the marriage exists neither husband nor wife can sever this title so as to defeat or prejudice the right of survivorship in the other... . Ordinarily a conveyance executed by only one of the tenants in entirety is inoperative and ineffective to pass title.
Cuevas, 191 So.2d at 847 (quoting 4 Thompson, Real Property, § 1792 at 102 (1961)).
In a more recent visit to this issue, we again recognized the rule as a means to safeguard the right of survivorship.
An estate by entirety may exist only in a husband and wife and may not be terminated by the unilateral action of one of them because they take by the entireties and not by the moieties. While the marriage exists, neither husband nor wife can sever this title so as to defeat or prejudice the right of survivorship in the other, and a conveyance executed by only one of them does not pass title. [citations to Cuevas, McDuff and Hemingway omitted].
Ayers v. Petro, 417 So. 2d 912, 914 (Miss. 1982).
In Shepherd v. Shepherd, we held that, upon divorce, a husband and wife owning property as tenants by the entirety become joint tenants and not tenants in common. Shepherd v. Shepherd, 336 So. 2d 497, 499 (Miss. 1976). This was a strong minority position adopted by this Court. Ayers v. Petro, 417 So. 2d 912, 914 n. 2 (Miss. 1982). While Shepherd is not directly applicable to the case at bar, it further reveals a very protected and guarded position for the right of survivorship.
Mr. Long advances a Pennsylvania case as primary support for his argument. Runco v. Ostroski, 361 Pa. 593, 65 A.2d 399 (1949). John Gapinski conveyed to his wife, without joining her as grantor, his interest of an estate held in the entirety; and the question in Runco was whether real property held by the entireties could be partitioned by a conveyance from one spouse to the other who accepted it, paid consideration and recorded the deed. Runco, 65 A.2d at 399. The lower court in applying the common law rule held that the husband's attempted conveyance to his wife was ineffective to sever the entirety, but the Pennsylvania Supreme Court reversed and adopted a more pragmatic approach. Id. at 400-401. "Our cases show that the rigidity of the common law concept of tenancy by the entireties has yielded to the demands of modern life." Id. at 400.
An important consideration which the Pennsylvania Court recognized as significant was that the grantee spouse was benefitted by the transfer. Runco v. Ostroski, 361 Pa. 593, 65 A.2d 399, 401 (Pa. 1949) "[T]he conveyance by one spouse to the other is a fact supporting the inference that the grantee spouse assents to the act inuring to her benefit." 65 A.2d at 401. Furthermore, the facts of the case clearly showed that the wife consented to the termination of the entirety, and it would be *197 futile to require the wife to join in a deed to herself. Id.
The payment of consideration, delivery and recording of the deed constitute such joint action and mutual assent as are required by our cases to destroy the entirety. To require the formal joinder of the wife in conveying to herself would be wholly unnecessary.
Runco, 65 A.2d at 401.
North Carolina has applied the principle of estoppel in an analogous case. Where a husband had deeded property held in the entirety to his wife and then survived his wife, the husband and those in privity with him were estopped from claiming any interest in the property. Keel v. Bailey, 224 N.C. 447, 31 S.E.2d 362, 363 (1944). See Jones v. Lewis, 243 N.C. 259, 90 S.E.2d 547, 550 (1955) (conveyance from one spouse to other of estate held by entirety is valid as estoppel).
The Arkansas position is that one spouse can directly convey to the other his interest in an estate held by them as tenants by the entirety. Ryan v. Roop, 214 Ark. 699, 217 S.W.2d 916, 917 (1949). Also, a single conveyance by a husband to the wife and minor children was held valid where the wife accepted the property and took charge for the benefit of herself and the children. Moore v. Moore, 170 Ark. 1194, 281 S.W. 657, 660 (1926). Massachusetts allows one spouse to convey directly to the other without the necessity of a joint deed or straw person. Hale v. Hale, 332 Mass. 329, 125 N.E.2d 142, 144 (1955). Michigan holds that an estate in the entirety bars separate alienation by one spouse only, but the husband can release his full interest to his wife, thereby vesting her with complete title. Hearns v. Hearns, 333 Mich. 423, 53 N.W.2d 315, 320 (1952). In New Jersey, either spouse may sell the life interest to the other, but neither can dispose of the remainder without the consent or assent of the other. Craig v. Craig, 25 N.J. Super. 226, 95 A.2d 767, 768 (Sup.Ct.Chan.Div. N.J. 1953). See Donvito v. Criswell, 1 Ohio App. 3d 53, 439 N.E.2d 467, 473 (Ohio Ct. App. 1982) (entirety can be severed by mutual assent).
In the deed from Ester Louie to Florene, the former relinquished all of his present possessory interests in the estate to Florene. Florene was guaranteed sole, undisturbed possession of the estate for the remainder of her natural life. From a common sense, practical approach, this relinquishment of Ester Louie's present possessory rights benefitted Florene. She now owned the right to occupy the whole without interference from any other ownership interest during her lifetime. Her undisturbed possession of the estate would continue without regard to which tenant died first. Therefore, we conclude that the grantee spouse suffered no detriment to her right of survivorship in the case sub judice.
Further, we find the facts of the case at bar similar to the facts of Runco in that Florene clearly consented to the termination of the entirety. The separate deeds were prepared, executed and acknowledged at the same time and place; and the deeds were recorded ten days later within five minutes of each other when Florene filed her Bill for Divorce. Reading the instruments together as a single transaction, all parties fully contemplated and agreed that Ester Louie would relinquish his interest in the estate, Florene would have a life estate, and upon Florene's death the estate would pass to Rodney Wayne Long. This agreement regarding disposition of the property was further memorialized by the acceptance of deeds by Florene Childress and Rodney Wayne Long, the life tenant and remainderman, respectively. Additionally, the facts at bar have the added dimension that the parties executed the deeds in full anticipation of an impending divorce and the need to come to some agreement regarding the marital property.
We intimate no opinion whatsoever regarding the wisdom of executing separate deeds or the preferred approach to be taken by a couple desiring to sever an estate by the entirety. Furthermore, while we are reluctant to speculate or second guess the approach taken in this case, we find that a careful review of the record reveals that a major contributor to this dispute *198 rests in the mistaken view that spouses owning property in the entirety are seised of some undivided half interest. We caution that such a view is clearly contrary to an estate in the entirety where each spouse is seised of the whole estate and not an undivided half interest. We merely find that under the facts of this case, no violence is done to well settled law in this state which extends due regard to the right of survivorship and considerable protection against unilateral action by one tenant to the detriment of the other spousal tenant. Therefore, we conclude that the stringent requirements of the common law in this instance should give way to a practical application of a plan by two spouses to dispose of marital property incident to a divorce.
Accordingly, we affirm the decree of the Tallahatchie County Chancery Court, Second Judicial District, entered in this case on May 18, 1989.
AFFIRMED.
ROY NOBLE LEE, C.J., HAWKINS, P.J., and ROBERTSON, PITTMAN and McRAE, JJ., concur.
PRATHER, J., dissents by separate written opinion, joined by SULLIVAN, J.
ROBERTSON, J., concurs by separate written opinion, joined by PITTMAN and BANKS, JJ.
PRATHER, Justice, dissenting:
This case presents an analysis of a type of concurrent ownership of real property the tenancy by the entirety but more specifically a discussion of how such a tenancy may be terminated.
I.
At the outset, it is important that a historical perspective be given to the subject. At common law, the tenancy by the entirety was a peculiar kind of ownership of realty between husband and wife that resembled a joint tenancy, but was distinguishable from it. Ayers v. Petro, 417 So. 2d 912, 914 (Miss. 1982). Cornelius J. Moynihan in his treatise, Introduction to the Law of Real Property, West Publishing Company, Revised Edition, (1962), p. 229 described the distinctions thusly:
[J]oint tenants were seized of a share and of the whole ..., but tenants by the entirety were seized of the whole and not of a share... .
The footnote appended to this statement expresses our dismay with this statement and reads:
If you find this concept difficult to grasp, you are not alone. In his dissenting opinion in King v. Greene, 30 N.J. 395, 413, 153 A.2d 49, 60 (1959) Chief Justice Weintraub had this to say: "The estate by the entirety is a remnant of other times. It rests upon the fiction of a oneness of husband and wife. Neither owns a separate distinct interest in the fee; rather each and both as an entity own the entire interest. Neither takes anything by survivorship; there is nothing to pass because the survivor always had the entirety. To me the conception is quite incomprehensible."
One of the most important characteristics of this type of concurrent ownership was, not only the right of survivorship, but more importantly, an "indestructible" right of survivorship. Moynihan, Real Property at 229. Neither spouse alone could defeat the right of survivorship of the other spouse.
The common law concept of tenancy by the entirety has been met by various responses in the United States, with some states even abolishing this estate. Many other states, including Mississippi, have limited the entirety estate by statutory enactment to require language of sufficient specificity to evidence an intent to create an estate by the entirety. The Mississippi statute is as follows:
All conveyances or devises of land made to two or more persons, including conveyances or devises to husband and wife, shall be construed to create estates in common and not in joint tenancy or entirety, unless it manifestly appears from the tenor of the instrument that it was intended to create an estate in joint tenancy or entirety with the right *199 of survivorship. But an estate in joint tenancy or entirety with right of survivorship may be created by such conveyance from the owner or owners to himself, themselves or others, or to himself, themselves and others.
This section shall not apply to mortgages or devises or to conveyances made in trust.
Miss. Code Ann. § 89-1-7 (1972); Welborn v. Henry, 252 So. 2d 779 (Miss. 1971). The Mississippi judicial interpretations that have followed this enactment have maintained the concept of the "indestructible right of survivorship." Ayers v. Petro, 417 So.2d at 914 (a purported conveyance by only one spouse of an estate by the entirety is insufficient to pass title); Cuevas v. Cuevas, 191 So. 2d 843, 846-47 (Miss. 1966) (a tenancy by the entirety may not be severed or destroyed by the act of one of the tenants); McDuff v. Beauchamp, 50 Miss. 531 (1874); Hemingway v. Scales, 42 Miss. 1 (1868) (husband and wife are seized of the entirety; during their lives, neither can alienate it so as to bind the other).
The concept of the inalienability of the tenancy by the entirety has been logically incorporated into other statutory procedures as well. Involuntary partition of real property is not available to tenants by the entirety, as distinguished from joint tenants or tenants in common. Miss. Code Ann. § 11-21-3 (1972). Nor may one spouse validly convey homestead-exempted property unless signed by the other spouse, with certain exceptions. Miss. Code Ann. § 89-1-29 (Supp. 1990); Yazoo Lumber Co. v. Clark, 95 Miss. 244, 48 So. 516 (1909) (deed to homestead by husband alone is void).
II.
Termination of a tenancy by the entirety may be accomplished in several ways. The most obvious method of termination is by death of one of the spouses, and the property is vested in the survivor. 4 Thompson, Commentaries on the Modern Law of Real Property, § 1792, (1979); Burby, Handbook of the Law of Real Property, § 95, p. 227 (3d ed. 1965). The entirety passes by unity of the spouses, not by survivorship. Kahn v. Kahn, 43 N.Y.2d 203, 401 N.Y.S.2d 47, 371 N.E.2d 809 (1977). In DeGolyer v. Schutt, 40 A.D.2d 943, 339 N.Y.S.2d 240 (N.Y. App. Div. 1972), the Court held only death or divorce terminates entireties.
Divorce of the spouses is another method of termination of the entireties. Burby, supra, at 1792. In Mississippi, which does not follow the majority view, upon dissolution of a marriage by divorce, the owners become joint tenants with rights of survivorship, and not tenants in common. Shepherd v. Shepherd, 336 So. 2d 497, 499 (Miss. 1976).
The joint execution of a deed may terminate the tenancy. Losey v. Losey, 207 So. 2d 283, 284 (Fla. Dist. Ct. App. 1968); Bailey v. Smith, 89 Fla. 303, 103 So. 833 (1925); English v. English, 66 Fla. 427, 63 So. 822 (1913); contra Runco v. Ostroski, 361 Pa. 593, 65 A.2d 399 (1949), cited by the majority opinion. Mississippi has followed the rule that a unilateral action of one spouse may not terminate the entirety. Ayers, 417 So.2d at 914; Cuevas, 191 So.2d at 846 (citing authorities therein); Hemingway v. Scales, 42 Miss. 1 (1868); See also 4 Thompson, Real Property, § 1792 (1979).
It has also been suggested that Mississippi caselaw holds that the entirety may be terminated by contract or agreement of the tenants by the entirety. In Shepherd v. Shepherd, 336 So. 2d 497, 499 (Miss. 1976), this Court stated:
Appellant also argues that the parties intended that the estate by entirety be terminated. While it is true that a joint tenancy may be terminated by contract or agreement of the joint tenants as between themselves or may be deemed to have been terminated by implication when the parties enter into a valid contract containing provisions inconsistent with the continuance of the joint tenancy; however, there is no evidence in this case to support the claim the parties intended for the estate in entirety to be dissolved. (Emphasis added).
However, this case is no authority for the proposition that an entirety estate may be *200 terminated by contract or agreement. The above-quoted statement refers to joint tenants, not entirety tenants. No factual situation has been litigated and affirmed by this Court severing an entirety estate by contract or agreement in this jurisdiction, except by a joint deed of the tenants.
III.
This review of the common law and statutory history of tenancy by the entirety brings us to the issue in the case sub judice. A statement of the facts is set out in the majority opinion reciting that an agreement was reached between Ester Louie and Florene Childress regarding their entirety estate. According to the affidavit of their attorney, the Childresses agreed that (1) the wife was to have the undisturbed use and occupancy of the fifty-six (56) acres for her lifetime, and (2) the entire remainder interest was to go to their grandson, Rodney Wayne Long. It is my view that the majority opinion is inferring an intent to sever the tenancy from two separate documents on self-serving testimony of the attorney who prepared the deeds and now represents one of the parties in this litigation to uphold them.
Mississippi law has always held that a severance or transfer of an entirety estate must be by a joint deed. Our case law is clear and unequivocal; the procedure has been set forth over a century. The majority is abandoning well-established procedure in favor of the presumed intent of these deceased grantors.
The majority opinion is abandoning precedent, but without defined limits. This holding creates uncertainty as to the status of a tenancy by the entirety for the future. These two deeds were drawn by one attorney. What would this Court hold if two attorneys drew two separate deeds? Or if the deeds were executed two hours apart, or two days? What future effect will today's holding have upon homestead deeds? Will we abandon a joint deed of homestead property to transfer title in our next decision? The status of a tenancy by the entirety is made uncertain by the majority opinion and could also have "serious ramifications in other areas of the law, such as tax, bankruptcy, access by creditors, alienability, and divorce." Property-Tenancy By The Entirety-Effect Of Divorce On Tenancy By The Entirety In Mississippi, 48 Miss.L.J. 352, 359.
I am of the view that our well-established law on severance of a tenancy by the entirety for failure to execute a joint deed has been violated here. Neither do I agree that the facts support a mutual agreement or consent. For consistency and stability in land law, I would hold that the two 1971 deeds are void.
IV.
The second reason that I would reverse the chancellor's holding rests on the premise that the separate deeds purported to convey homestead property. Miss. Code Ann. § 89-1-29 (Supp. 1990), requires the joint conveyance of both owners of homestead property to transfer title. This Court has held a conveyance without joint signatures of both husband and wife is void. Hendry v. Hendry, 300 So. 2d 147, 149 (Miss. 1974).
The chancellor's findings of fact stated that "the parties were, in fact, not occupying the fifty-six (56) acre tract as their homestead on January 15, 1971; that they were living apart; that Florene was living on the place but that Louie had left and been separated from his wife for a period of more than a year." (Emphasis added).
The emphasized language indicates to me that the property was homestead-exempted property where the wife was living. The husband had separated from her (but not divorced) and the property was not their (as opposed to her) homestead. The finding of fact does not specifically address whether the land was subject to homestead exemption. In due deference to the chancellor, the parties stipulated the issue here to be the validity of the 1971 deeds. Homestead was not in issue. I suggest that there is serious doubt as to the validity of the deeds on the homestead question.
V.
I respectfully dissent and would hold that the two 1971 deeds were void. From *201 that holding, I would suggest that after the divorce of Mr. and Mrs. Childress, their ownership was converted by operation of law to a joint tenancy with rights of survivorship. Shepherd, 336 So.2d at 499. Upon the death of Mr. Childress in 1981, Florence, the survivor, was vested with the entire estate.
Dotsy Newton claims ownership of the entire property by virtue of a quitclaim deed from Florence to her in 1985. If my position were to have prevailed, I would have remanded the case to the Chancery Court for the purpose of determining the validity of this deed and of the defenses raised to it by all parties necessary for a just adjudication. For these reasons, I respectfully dissent from the majority opinion.
SULLIVAN, J., joins this opinion.
ROBERTSON, Justice, concurring:
A tenancy by the entirety is a facility our law has long afforded married persons to arrange, if they wish, the incidents of ownership of their real property so that each may simultaneously hold the whole. Justice Prather describes the history of the estate in her separate opinion in a way I find unexceptionable, as does Presiding Justice Dan M. Lee, speaking for the Court. That the estate by the entirety has been abolished elsewhere and may be one of those anachronisms that exists by "blind imitation of the past"[1] need not detain us, as no one today argues we can or should abolish it.
The point for the moment is that severance of an estate by the entirety is a matter that is and always been controlled by formalities. Death terminates the estate, but we are not concerned with that today. Divorce may sever it, as well, but Florene Walker Childress and Ester Louie Childress were not divorced on January 15, 1971, when they exchanged the deeds in issue. Past death and divorce, the only procedure our law accepts as effective to terminate a tenancy by the entirety is joint execution of a deed. Conversely, unilateral action of one spouse is without effect. Ayres v. Petro, 417 So. 2d 912, 914 (Miss. 1982). While Shepherd v. Shepherd, 336 So. 2d 497 (Miss. 1976) fuzzes things up a bit, the dicta today's majority cites from that case still seems to suggest each party must sign and deliver the same writing, albeit Shepherd refers to that writing as a "contract or agreement" rather than a "deed," Shepherd, 336 So.2d at 499. This is consistent with our long-standing rule.
The majority says it is clear the parties intended to sever the estate by the entirety, and no doubt this is so. The argument proves too much. A man may make a will and have it witnessed by only one person, and we may find that he intended the instrument as his will, but I doubt anyone would suggest we honor it, because it had not been made and subscribed according to the formalities the law demands. Miss. Code § 91-5-1 (Supp. 1991). Insistence upon such formalities will, from time to time, disappoint a person's preferences, but this is always true when the law prescribes a form for a person's achieving a desired end. The very reason we opt for such forms in contracts, deeds, wills, and otherwise is that they are thought necessary that the parties know what they have done and with what effect and that third parties and courts thereafter may be sure what they have done. They are like rules of evidence and as such are by their nature arbitrary, but this has never been seen a reason for non-enforcement. Cf. Williams v. Mason, 556 So. 2d 1045, 1048-49 (Miss. 1990); Bourke v. Callanan, 160 Mass. 195, 197, 35 N.E. 460, 461 (1893). Nor is it admissible ex post facto that we should have more intelligent formalities.
There is a narrower dimension, personal to the parties and their predecessors in interest. On May 11, 1981, the Chancery Court of the Second Judicial District of Tallahatchie County, Mississippi, decreed Florene Walker Childress and Ester Louie Childress divorced and the bonds of matrimony theretofore existing between them were held for naught. I do not doubt that from and after that date, May 12, 1971, to *202 be safe, the Childresses could have executed and delivered in exchange warranty deeds otherwise verbatim to those here before us with full effect. This should suggest an analogous principle familiar to all lawyers, to-wit: if a grantor having no title to land purports to convey it by a warranty deed, he will be estopped to show that at the time of the deed he had no title to convey. If he later acquires the title, his after-acquired title will pass to the grantee without further conveyance by way of estoppel. See Burby, The Law of Real Property, 320 (3d Ed. 1965). We call this principle estoppel by deed and have long accepted it in this state. Perkins v. Kerby, 308 So. 2d 914 (Miss. 1975).
On January 15, 1971, the Childresses had no legal power to destroy their estate by the entirety except they conform to the law's formalities. They nevertheless executed and delivered warranty deeds to each other which failed to satisfy the rule of joint execution. This they did contemplating divorce. Had they been divorced at the time, no one would argue these deeds should not be accepted and enforced according to their tenor, for the law finds spent at divorce the force of its formality. Divorce removes the rule requiring joint execution of a single instrument to sever an estate by the entirety.
I would hold that, once the Childresses were divorced on May 11, 1971, they had acquired a legal status which would have thereafter permitted them to execute and exchange the deeds in question and with full effect according to their tenor. I would hold that, upon their divorce, the Childresses satisfied the only condition standing between them and the effectiveness of their respective warranty deeds, and that each and his or her successors in interest became thereafter estopped to deny their respective deeds.
PITTMAN and BANKS, JJ., concur.
NOTES
[1] Conveyances or devises of land to two or more persons, including spouses, create tenancies in common unless it is clear from the instrument of conveyance or devise that a joint tenancy or tenancy by the entirety with right of survivorship was intended. Miss. Code Ann. § 89-1-7 (1972). In the instant case, Ester Louie and Florene Childress acquired this property as, "an estate in entirety, with the right of survivorship, and not as tenants in common... ." Record at 34.
[2] The question before the Court is strictly one of real property, and specifically we are concerned with severance of a tenancy by the entirety. The posture of this case makes it unnecessary that we consider the application of homestead laws to the facts presented on this appeal. However, one should be mindful that homestead laws will often carry considerable importance when spouses attempt to convey homestead property regardless of the type of tenancy between the spouses. See Miss. Code Ann. § 89-1-29 (Supp. 1990) (conveyance of homestead by spouses still living together not valid unless both spouses sign deed); see also Hendry v. Hendry, 300 So. 2d 147, 149 (Miss. 1974) (deed void where wife did not sign); Philan v. Turner, 195 Miss. 172, 13 So. 2d 819, 821 (1943) (spouse who abandons homestead has no veto power over conveyance by other spouse).
[3] Spouses owning property in the entirety become joint tenants upon divorce leaving the right of survivorship undisturbed. Shepherd v. Shepherd, 336 So. 2d 497, 499 (Miss. 1976).
[4] The cases cited in volume 42 Miss. were the opinions of a tribunal appointed by the military satrap and have no binding authority but must be regarded as res judicata. Lusby v. Kansas City, Memphis & Birmingham Railroad Co., 73 Miss. 360, 19 So. 239 (1896). However, the rationale of Hemingway which we rely upon in this case has received full endorsement by this Court on a number of occasions. See Ayers v. Petro, 417 So. 2d 912, 914 (Miss. 1982); Cuevas v. Cuevas, 191 So. 2d 843, 850 (Miss. 1966); McDuff v. Beauchamp, 50 Miss. 531, 535 (1874).
[1] Holmes, The Path of the Law, 10 Harv.L.Rev. 457, 469 (1897). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1776942/ | 535 So. 2d 918 (1988)
Ansel CHANEY d/b/a Chaney Media Brokers and Recardo A. Foy, Plaintiffs-Appellants,
v.
Wesley GODFREY, William Monroe Hilry Huckaby, III, Henry Cotton and Benton Broadcasting Corporation, Defendants-Appellees.
No. 19901-CA.
Court of Appeal of Louisiana, Second Circuit.
September 21, 1988.
*919 Pringle & Herzog by R. Perry Pringle, Shreveport, for plaintiffs-appellants.
Charles D. Jones, Monroe, for defendants-appellees.
Before MARVIN, SEXTON and NORRIS, JJ.
SEXTON, Judge.
Plaintiffs Recardo A. Foy and Ansel Chaney brought this suit against the Benton Broadcasting Corporation and its four shareholders for the breach of an alleged contract under which Foy was to acquire radio station KDKS which was owned by the corporation. The trial court rejected the plaintiffs' claim for specific performance and damages. We affirm.
FACTS
Defendants Wesley Godfrey, William Monroe, Hilry Huckaby, III, and Henry Cotton are the sole shareholders, sole directors and sole officers of Benton Broadcasting Corporation. At the time of the transaction in question, each owned twenty-five percent of the outstanding stock. In early 1985, they voted, three to one, to allow Huckaby to solicit a buyer for KDKS. They authorized him to list the property with American Media Brokers. Godfrey was the sole dissenter.
Prior to this time, in late 1984, Foy, a broadcaster from the northeast United States, learned that KDKS was for sale. He contacted Chaney, a media broker from Massachusetts, and asked him to submit a proposal to purchase the station.
In early 1985, Chaney contacted either Monroe or Huckaby. Chaney could not recall whether his initial contact was with Monroe or Huckaby. The evidence indicates that he dealt with both of them early in the negotiations.
After several letters and phone conversations with Huckaby in the last half of 1985, Chaney made an offer to buy the assets of the corporation for $1.3 million. The offer was made in a "letter of intent" or "offer to purchase" dated December 26, 1985, and was sent to all four shareholders.
On January 9, 1986, Monroe, Huckaby and Cotton signed the letter of intent (offer to purchase). Cotton drafted an asset purchase agreement (D-7) which he sent to Chaney the next day. This agreement provided that the closing date for the transaction was to be April 1, 1986. Along with this draft, he sent a cover letter to Chaney emphasizing that he was signing only if the deal could be closed on April 1, 1986. He also sent a copy of LSA-R.S. 12:131.[1] Although Chaney admits receiving Cotton's draft of an asset purchase agreement, he denies receiving the cover letter in which Cotton stated that the April 1st closing date was a term of the agreement.[2]
Sometime after the signing of the letter of intent, Cotton called a meeting of the shareholders to discuss the proposed sale to Foy. The meeting was held on April 9, 1986. The minutes of that meeting (D-4) reflect that while all four of the shareholders were present at the beginning of the meeting, Huckaby left the meeting shortly after it began. The three remaining shareholders voted not to sell the assets of the corporation to Foy. Cotton testified that he sent Chaney notice of the results of this meeting, but Chaney denied receiving it.
On April 10, 1986, Chaney sent a revised purchase and sale agreement (P-16) to all four directors. Huckaby signed as chairman of the board and sent the signature page back to Chaney. Despite the fact that he had just recently voted against the sale, Monroe signed the asset purchase agreement in his capacity as secretary and returned it to Chaney.
Chaney continued to try to get Cotton to sign the asset purchase agreement. On July 25, 1986, Cotton again informed the plaintiffs in a mailgram that he opposed a sale of the assets (P-18).
*920 Foy and Chaney then filed this suit for specific performance of the asset purchase agreement and for damages in the amount of $750,000 for the defendants' failure to sell. The defendants answered and filed a reconventional demand for $3 million for damages which allegedly resulted from the institution of this lawsuit. Huckaby was dismissed without prejudice shortly before trial. At trial, he was a witness for the plaintiffs.
The trial court denied the claim of the plaintiffs and the reconventional demand of the defendants. The trial court held that the corporation was not bound by the actions of Huckaby, Monroe and Cotton in signing the written letter of intent (P-8). Because that contract was for the assets rather than the stock of the corporation, the law provides that there must be a meeting of the shareholders for the purpose of considering the proposed action (LSA-R.S. 12:121) or all of the shareholders must have consented in writing to the corporate action (LSA-R.S. 12:76). The trial court found that there was no meeting to consider the contract prior to the signing of the agreement by three of the shareholders. Also, when a meeting was called in April, 1986, the shareholders presentMonroe, Cotton and Godfreyvoted against the sale.
The court also found that neither Huckaby nor Monroe had authority to sign for the corporation and that the shareholders had in fact already voted to reject the sale. As a result, the corporation was not bound by the actions of Huckaby and Monroe in signing the asset purchase agreement.
Only the plaintiffs have appealed.
EFFECT OF THE LETTER OF INTENT
The plaintiffs argue that the trial court erred in failing to hold that the letter of intent was a valid contract with the individual defendants who signed it. We find this argument without merit. LSA-R.S. 12:121 makes it clear that the voluntary transfer of corporate assets can be authorized only by the corporation through its shareholders.
The action of the three shareholders who signed the letter of intent did not constitute corporate action. As the trial court found, the transaction involved in this case was the transfer of the assets of the corporation, not the stock. LSA-R.S. 12:121 provides that a voluntary disposition of all the assets of a solvent corporation may be authorized only by a vote of two-thirds of the voting power present or by the proportion, not less than a majority, authorized by the articles of incorporation. This vote must be at a meeting noticed for this purpose. A meeting to consider corporate action which requires an affirmative vote of the shareholders, like a sale of the assets, is not necessary if there is consent in writing to such corporate action signed by all the shareholders having voting power on the particular question. LSA-R.S. 12:76. This article also provides that written consent by fewer than all the shareholders is sufficient if the articles contain a provision to that effect.
The articles of Benton Broadcasting Corporation do not contain a provision allowing fewer than all of the shareholders, in the absence of a meeting, to consent in writing to the corporate action. Thus, all of the shareholders would have had to consent in writing to the offer or a special meeting to consider the offer would have been necessary to render valid authorization by the shareholders for the sale of the corporate assets.
There is no error in the trial court's finding that there was no meeting of the shareholders called for the purpose of considering the letter of intent prior to the signing on January 9, 1986 by Cotton, Huckaby and Monroe. While Huckaby testified that he discussed Foy's offer with Cotton and Monroe before the letter of intent arrived, the overwhelming evidence is to the effect that there was no meeting. Cotton, Monroe and Godfrey testified that there was no meeting prior to the signing of the letter of intent. They also confirmed that there was only one meeting regarding the sale of the assets and that was in April, 1986, several months after the signing of the letter of intent.
*921 A corporation is not bound by an agreement of its shareholders unless the agreement is made in the form prescribed by law or by the articles of incorporation. Renauld v. Marine Specialty & Mill Supply Company, 172 La. 835, 135 So. 374 (1931). Because neither LSA-R.S. 12:76 nor LSA-R.S. 12:121 was followed, the action taken by the three shareholders did not constitute action taken by Benton Broadcasting Corporation, and does not entitle the plaintiff to the assets of that corporation.
PIERCING THE CORPORATE VEIL
The plaintiffs argue that the corporate veil should be pierced because of the failure of the shareholders to substantially comply with the legal requirements of a corporate entity.
In Cahn Electric Appliance Company v. Harper, 430 So. 2d 143 (La.App. 2d Cir. 1983), this court set forth the general principles governing the piercing of the corporate veil:
It is a well established legal principle that a corporation is a distinct legal entity, separate from the individuals who comprise it. La.C.C. Arts. 435; 437; La. R.S. 12:93. The law specifically authorizes the establishment of a corporation by a sole stockholder and individuals are specifically authorized to assume only limited liability by setting up a minimally capitalized corporation. Abraham v. Lake Forest, Inc., 377 So. 2d 465 (La.App. 4th Cir.1979). However, in a few limited situations, a litigant can reach an individual shareholder by "piercing the corporate veil," thereby rendering the individual liable for the debts incurred by the corporation. Liberto v. Villard, 386 So. 2d 930 (La.App. 3rd Cir.1980). The doctrine may be imposed even in the absence of fraud where there has been a disregard of the corporate entity to such an extent that the corporation is indistinguishable from the shareholders. Smith Hearron v. Frazier, Inc., 352 So. 2d 263 (La.App. 2d Cir.1977). However, when fraud or deceit is absent, other circumstances must be so strong as to clearly indicate that the corporation and shareholder operated as one. Kingsman Enterprises, Inc. v. Bakerfield Electric Company, Inc., 339 So. 2d 1280 (La.App. 1st Cir.1976.) Thus, it is clear that in Louisiana the concept of the corporation is felt to be beneficial and is disregarded only in exceptional circumstances. Liberto v. Villard, supra; Kingsman Enterprises v. Bakerfield Electric Co., supra.
Cahn Electric Appliance Company, supra at 144-145.
In deciding whether to pierce the corporate veil, the totality of the circumstances must be examined. Harris v. Best of America Inc., 466 So. 2d 1309 (La.App. 1st Cir.1985), writ denied, 470 So. 2d 121 (La. 1985). This determination is primarily a factual finding for the trial court to make. Smith-Hearron v. Frazier, Inc., 352 So. 2d 263 (La.App. 2d Cir.1977), writ denied, 353 So. 2d 1337 (La.1978); George A. Hormel & Company v. Ford, 486 So. 2d 927 (La.App. 1st Cir.1986). Circumstances which justify the imposition of the doctrine include: (1) commingling of the corporate and shareholder funds; (2) failure to follow statutory formalities required for a corporation and for the transaction of corporate affairs; (3) undercapitalization; (4) failure to provide separate bank accounts and bookkeeping records; and (5) failure to hold regular shareholder or director meetings. Smith-Hearron v. Frazier, Inc., supra; Harris v. Best of America Inc., supra.
Since the plaintiffs do not assert that the individual shareholders committed fraud, they have a heavy burden of proving that the shareholders disregarded the corporate entity to such an extent that it ceased to be distinguishable from themselves. American Bank of Welch v. Smith Aviation, Inc., 433 So. 2d 750 (La.App. 3rd Cir.1983).
The plaintiffs presented evidence that when three of the shareholders wanted to discuss business, they would often informally meet without sending out notice of a meeting, that minutes were not usually kept, and that resolutions were reduced to writing only when they were required by financial institutions.
*922 These circumstances, even if proven, are insufficient to clearly indicate that the shareholders and the corporation were acting as one. These circumstances are simply not so exceptional as to justify piercing the corporate veil. West Building Materials, Inc. v. Daley, 476 So. 2d 554 (La.App. 3rd Cir.1985).
APPARENT AUTHORITY
The plaintiffs argue that Huckaby and Monroe had apparent authority to contract for the defendant corporation for the sale of the assets when they executed the asset purchase agreement (P-16). The only comment the trial court made regarding Huckaby's and Monroe's authority was the statement that "[i]t is apparent that Mr. Huckaby and Mr. Monroe had no authority to sign P-16 for the corporation; the shareholders had already voted to reject the sale."
Apparent authority was fully discussed by this court in McCarty v. Panzico, 467 So. 2d 1229 (La.App. 2d Cir.1985):
The doctrine of apparent authority was created to protect parties dealing in good faith with corporate officials when the corporation has taken such action or inaction so as to justify a belief that the official has acted with authority. See Lilliedahl & Mitchel v. Avoyelles Trust and Sav., 352 So. 2d 781 (La.App. 3rd Cir.1977). The two requirements for imposition of the doctrine are that the principal must make some form of manifestation to an innocent third party and the third party must reasonably rely on the agent's purported authority as a result of the principal's manifestations.
McCarty, supra at 1234.
We find that the plaintiffs have failed to prove these requirements. Chaney received Monroe's and Huckaby's signed asset purchase agreements after the April 9th meeting in which three shareholders voted to reject Foy's offer. Cotton testified that in mid-April he informed Chaney in writing that the shareholders had voted not to sell the assets. Cotton identified D-5, an undated letter, as the letter which he sent to Chaney. He conceded that he did not send Chaney a copy of the rejection resolution. Chaney, on the other hand, contends that he did not know of the results of the April 9th meeting in which the shareholders voted not to sell.
If Chaney received notice of this meeting, then he knew that Huckaby and Monroe had no authority to execute the asset purchase agreement. Even if he did not receive notice of the meeting, it was still not reasonable for him to believe that Huckaby and Monroe had authority to act for the corporation. It is clear from the record that Chaney knew that a corporate resolution was needed to empower someone to act for the corporation. He admitted that he knew that Huckaby could act for the corporation only if a resolution to that effect had been passed. In addition, Chaney testified that he asked for a copy of such a resolution as a "condition precedent" to closing. In fact, the revised asset purchase agreement he sent to the four shareholders contained a provision calling for the production of the resolution as a "condition precedent" to closing.[3] He conceded that there could not have been a closing if a certificate attesting to the fact that the necessary resolutions had been passed was not forthcoming. He also conceded that he never received such a resolution.
Furthermore, under Louisiana law, a vote of two-thirds of the shareholders present at a meeting specifically called for such purpose is necessary to sell the assets of the corporation, unless all of the shareholders have consented in writing to the sale. LSA-R.S. 12:76, 12:121 and 12:131.
PERSONAL LIABILITY
The plaintiffs argue that they are entitled to a judgment for damages against Monroe for exceeding his corporate authority when he executed the asset purchase *923 agreement (P-16) as secretary for the corporation. We reject this contention. The plaintiffs knew that Louisiana law required a meeting of the shareholders for the approval of an asset sale and that there was no meeting for the execution of the asset purchase agreement. They knew that Monroe had no authority to execute the agreement and thus should not have relied on Monroe's signature.
Under these circumstances, we cannot find that personal liability attaches to the defendant Monroe. See H.B. "Buster" Hughes, Inc. v. Bernard, 318 So. 2d 9 (La. 1975); Donnelly v. Handy, 415 So. 2d 478 (La.App. 1st Cir.1982). But see Fryar v. Westside Habilitation Center, 479 So. 2d 883 (La.1985), criticized in Morris, Developments in the Law 1985-1986Business Associations, 47 La.L.Rev. 235 (1986); Scariano Brothers, Inc. v. Hammond Construction, Division of Scheyd-Brennan, Inc., 428 So. 2d 564 (La.App. 4th Cir. 1983).
For the reasons aforesaid, the judgment of the trial court is affirmed at appellants' costs.
AFFIRMED.
NOTES
[1] LSA-R.S. 12:131 deals with the rights of a shareholder who dissents from the sale, lease or exchange of corporate assets or from a merger.
[2] Cotton maintains that he told Chaney that the April 1 closing date was a requirement, while Chaney states that he told Cotton that that date was unrealistic.
[3] Chaney explained that although he had not received a copy of the resolution by the time Huckaby and Monroe signed the asset purchase agreement, he did not conclude that the corporate resolution had not been passed. As the resolution was not required until closing, there was still time to get the corporate resolution. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1728224/ | 372 So. 2d 1188 (1979)
SOUTHERN SHIPBUILDING CORPORATION and Continental Insurance Company
v.
Jeri Lynn RICHARDSON, Individually and in her capacity as natural tutrix of her minor children, Shaine Marie Richardson and Brandi Lynn Richardson, Milton Brener, John Robbert and Garon, Brener & McNeely.
No. 63662.
Supreme Court of Louisiana.
June 25, 1979.
Rehearing Denied July 27, 1979.[*]
*1189 Barry R. Geraghty, New Orleans, for defendants-applicants Jeri Lynn Richardson, Ind. and in her capacity as Natural Tutrix of her minor children, Shaine Marie Richardson and Brandi Lynn Richardson.
Milton E. Brener, New Orleans, for defendants-respondents John Robbert, Milton Brener and Garon, Brener & McNeely.
CALOGERO, Justice.
Mrs. Jeri Lynn Richardson individually and on behalf of her minor children Shaine Marie Richardson and Brandi Lynn Richardson had a claim against Southern Shipbuilding Corporation and its insurer arising out of the wrongful death of her husband Brand Richardson. Mrs. Richardson hired John Robbert, and his law firm, Garon, Brener & McNeely to represent her and her two children in connection with the claims. In due course the claims were settled prior to trial, for $275,000 ($91,000 for Mrs. Richardson and $92,000 for each of the two children). The dispute in this litigation concerns the amount of attorneys' fees which is due.[1]
The attorneys rely upon a contract signed by Mrs. Richardson at the outset of the representation by which she agreed to a one-third contingency fee in connection with the claims.[2] The contract was executed without prior court authorization. In fact Mrs. Richardson did not qualify as tutrix until settlement was agreed upon, at which time the insurer required that she do so and that she secure court authorization to settle the minors' claims.
While Mrs. Richardson presents several contentions, including among others the fact that there was never a mutual understanding or meeting of minds between her and the attorneys concerning the fee,[3] her principal contention, and the one which chiefly attracted our attention in the writ application, is that the contract which she entered into on behalf of her children before she qualified as natural tutrix was not binding upon the children because it was executed prior to her qualifying as natural tutrix and without prior court authorization.
Mrs. Richardson relies upon the Fourth Circuit Court of Appeal decision in Garden Hill Land Corp. v. Succession of Cambre, et al., 299 So. 2d 403 (La.App. 4th Cir. 1974) and certain language of this Court in its review in the same case, 306 So. 2d 718 (La.1975). In Garden Hill, where a parent who had by then been appointed tutrix executed a fifty percent attorney's fee contract for representation of her child's interest in a succession, the Fourth Circuit held that the tutrix was without authority to enter into that contract prior to securing court authorization. Of course, that Court of Appeal holding was not the concluding decision in that case for we granted writs. And in a decision in which we reversed the Court of Appeal and remanded for a determination of the reasonableness of the fee, we found it unnecessary to resolve that *1190 legal question.[4] We did, however, state, in dicta, that "[s]urely a strong argument can be made for requiring such approval." We further stated that "[t]he courts are charged with protecting and safeguarding the interests of minors. A contract disposing of an entire 50% interest of a minor's sizeable estate, where there is no real risk of non-recovery (she was a forced heir) would seem on its fact to be unreasonable." It is this language from our opinion in Garden Hill upon which respondents principally rely.
Our decision in Garden Hill is not dispositive of the issue presented here. We did not hold in that case that the tutrix was without authority to enter into a contingency fee contract without prior court authorization, and/or without first having qualified as tutrix. We merely alluded in dicta to the "strong argument" for requiring court approval of a contract disposing of an entire fifty percent interest of a minor's succession claim where there was no real risk of non-recovery.
In any event we are here concerned with a one-third contingency fee contract in connection with a claim for damages for wrongful death. Contracts of this nature are not unreasonable but in fact more the accustomed contract for legal representation. Plaintiff at trial presented expert testimony indicating that the customary fee in actions for personal injuries and/or wrongful death in the metropolitan New Orleans area is one-third of the amount recovered. We find this testimony which is uncontroverted in the record consistent with our own experience. For cases in which the one-third contingency fee contract is discussed with approval see McCally v. Hartford & Indemnity Co., 247 F. Supp. 444 (D.C.1965); Lytle v. Liberty Mutual Insurance Co., 285 So. 2d 293 (La.App. 3rd Cir. 1973).
Respondent relies upon Articles 4061[5] and 4171[6] of the Code of Civil Procedure as the basis for a contention that she had no authority to sign the contract because it was not preceded by her qualifying as tutrix.
The purpose of the requirement that a tutrix qualify (oath, inventory, legal mortgage, etc.) is to conserve a minor's estate which might otherwise be dissipated. That consideration is not prevalent where the estate consists of a mere claim for damages. Protection of the minor's estate in this situation can be accomplished by the tutrix's qualification prior to or coincident with petitioning the court to approve settlement of the minor's claims after a tentative settlement thereof has been agreed upon. As was stated in Cacibauda v. Gaiennie, 305 So. 2d 572 (La.App. 4th Cir. 1975) "The spirit of this [Code Civ.Pro. art. 4061] and other laws governing the rights of minors have for their purpose the conservation of the minor's estate and the establishment of a form of security from which he can be reimbursed if his assets have been dissipated before he attains majority."
Furthermore even the parent who refuses to accept the tutorship of minor children is bound to fulfill the duties of the tutor until a tutor has been appointed. La.Civ.Code art. 253. One such duty would be the employment *1191 of counsel on reasonable terms and institution of timely suit for her children's damages for wrongful death.
As the Court of Appeal in this case stated Mrs. Richardson's obligation to conserve the minor's estate should surely prevail over the technical requirements of the Code of Civil Procedure. Caruthers v. U. S. Safety Deposit & Savings Bank, 8 Orl.App. 93 (1910). Denying her the right to legally bind the estate of the minor children prior to qualification as natural tutrix could well impair performance of her obligation to recover on the damage claims for her children. As the court in Cacibauda stated "[the] obligation to [pre]serve the assets of the minor's estate is due first as a mother and administratrix, and then as natural tutrix, should she choose to qualify." It was for this reason that in Cacibauda it was held that prescription had not run on a minor's claim instituted on behalf of the minor within one year of an accident by his mother who had not been qualified as tutrix.
At least as persuasive as the reasons set forth above, and relative more specifically to the necessity for prior court authorization, is the fact that this Court has, in an admittedly old case, ruled on the very legal issue. In Husk v. Blancand, 155 La. 816, 99 So. 610 (1924) where the mother of a minor child entered into a contingency fee contract (it was verbal) in connection with the wrongful death of her husband, this Court stated:
"It is urged that Mrs. Husk, though competent to make such a contract for herself individually, could not bind her minor son, and that the minor's interest in the fund retained by the defendant should be recovered. It is true as a general rule that a tutor cannot, without the advice of a family meeting [the counterpart to our present requirement of court approval], make a contract that would be binding on the minor for an amount that would be in excess of the minor's revenue, but that rule we think cannot be invoked in a case like the present one. The widow could not have recovered for the death of her husband without engaging the services of an attorney, and, in making a contract for herself individually, it became her duty at the same time to have her minor son represented. She unquestionably had the authority to employ counsel to represent her minor son, and having such authority, she was authorized to contract on behalf of her minor son for the fee to be paid contingent on recovery."
We find that neither qualification as tutrix nor prior court authorization is a legal prerequisite to plaintiff's entering a legally binding contingency fee/attorney contract for the recovery of tort damages due her minor children for the wrongful death of their father. The only impediment to the binding nature of a contract entered before qualification of the tutrix and/or court authorization would be in the event that the contract were to be unreasonable. And in our opinion a one-third contingency fee contract in connection with a claim for damages for wrongful death whether for an adult or for a minor is not unreasonable. We therefore hold that the contract here at issue is legally binding.
Decree
For the foregoing reasons the judgment of the Court of Appeal is affirmed.
AFFIRMED.
DENNIS, J., concurs.
NOTES
[*] DENNIS, J., would grant a rehearing.
[1] Not until the attorney had achieved a settlement (after suit but before trial), one which Mrs. Richardson found acceptable, did the dispute arise concerning the amount of attorneys' fees. Southern Shipbuilding and its insurer later found it necessary to file a concursus petition in the Civil District Court in Orleans Parish and deposit the $275,000 in the registry of the court. By agreement between the parties, Mrs. Richardson was permitted to withdraw from the court's registry $182,597, the balance of the fund being the amount in dispute.
[2] Actually it was a letter written by Mr. Robbert setting forth that the representation would be on a one-third contingency basis, a copy of which Mrs. Richardson signed and returned to the attorney.
[3] On this issue we agree with the Court of Appeal's finding that despite whatever ambiguity there may have been in the letter which contained the contingency fee contract, Mrs. Richardson understood the substance of the agreement.
[4] The issue concerning whether a tutrix was without authority to enter the contingency fee contract before securing court authorization was not reached because this Court on review found that the court authorization there, even had it preceded entry of the contract, did not explicitly authorize the fifty percent contingency contract there at issue.
[5] Article 4061 of the Code of Civil Procedure provides:
"Before a natural tutor enters upon the performance of his official duties, he must take an oath to discharge faithfully the duties of his office, cause an inventory to be taken, and cause a legal mortgage in favor of the minor to be inscribed, or furnish security, in the manner provided by law."
[6] Article 4171 of the Code of Civil Procedure provides:
"Before the person appointed as tutor enters upon the performance of his official duties, he must take an oath to discharge faithfully the duties of his office. A natural tutor shall include in his oath a list of the parishes in which he owns immovable property." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1822462/ | 565 So. 2d 1012 (1990)
In re TUTORSHIP OF INGRAHAM. (Three Cases)
Nos. 89 CA 1319, 89 CW 2152 and 90 CA 0726.
Court of Appeal of Louisiana, First Circuit.
June 26, 1990.
*1013 C. David Schumacher, Carl J. Schumacher, Jr., and John E. Jackson, New Orleans, for Lindsay I. Daviddefendant-appellant.
David Paddison, Covington, and Darryl Tschirn, Metairie, for Brenda H. Ingrahamplaintiff-appellee.
Before CARTER and ALFORD, JJ., and DOHERTY,[*] J. Pro Tem.
CARTER, Judge.
These consolidated actions arise out of a tutorship proceeding.
FACTS
On March 19, 1987, Michael Richard Ingraham, II, died intestate as a result of a barge explosion on Lake Maurepas. Ingraham was survived by his wife, Brenda, and three children. At the time of Ingraham's death, Brenda was seven months pregnant with the couple's fourth child, who subsequently was born. Shortly after her husband's death, Brenda moved from the family's home in St. Tammany Parish and temporarily resided with Lindsay I. David, Ingraham's sister, in Pass Christian, Mississippi. While in Mississippi, *1014 David introduced Brenda to the Ingraham's family attorney, John E. Jackson, Jr.
On April 14, 1987, Jackson filed, in this tutorship proceeding, a petition for confirmation as natural tutrix and for appointment of an undertutrix, seeking to confirm Brenda as natural tutrix and to appoint David as undertutrix. By order, dated April 14, 1987, the trial judge confirmed Brenda as the natural tutrix of the minor children and appointed David as undertutrix.[1] On that same day, Brenda, individually, as administratrix of the succession of Ingraham, and as natural tutrix of the minor children, entered into a contract with Jackson for legal services in connection with the death of Ingraham.[2] David, as undertutrix, also concurred in and signed the agreement with Jackson. The agreement provided for a sliding scale fee, based upon the amount of recovery, and limited the attorney's fees to 25% of any pre-trial settlement.[3]
Thereafter, Jackson associated the Schumacher law firm to assist him in the representation of Brenda and the minor children in a federal court action against the owner of the barge which exploded and assigned 50% of his rights under the legal services agreement with Brenda to the Schumacher law firm. At the end of November, 1988, Brenda sent handwritten letters to Jackson and the Schumacher firm, advising that she was dismissing each as her attorney and had retained other counsel.[4] On November 27, 1988, Brenda, individually, as tutrix of the minor children, and as administratrix of the succession of Ingraham, entered into a retainer agreement with Randy J. Ungar. The Ungar retainer agreement provided for attorney's fees of 40% of any amounts collected in connection with the barge explosion and the death of Ingraham on March 19, 1987. Brenda subsequently notified Jackson by letter, dated December 2, 1988, that Darryl Tschirn would, from that point forward, be representing Brenda and her children and requested that Jackson relinquish the file to Tschirn.[5] The undertutrix did not concur in the dismissal of Jackson and the Schumacher firm, nor did she assent to the new contract with Ungar.[6]
On December 14, 1988, David filed a petition to set aside certain actions of the tutrix. Specifically, David opposed the dismissal of Jackson in that Brenda was without cause to terminate the contract and the actions were taken without the concurrence of the undertutrix.[7] Brenda denied the allegations *1015 of David's petition and filed a peremptory exception pleading the objections of no cause of action and no right of action on the grounds that Tschirn had withdrawn as counsel of record for the minor children.[8] On February 21, 1989, the trial judge signed an ex parte motion to dismiss the petition to set aside the actions of the tutrix for "no right or cause of action." Thereafter, David applied for writs of certiorari, prohibition, or mandamus with the First Circuit Court of Appeal, which were denied on June 14, 1988, under docket number 89 CW 0519. David then applied for writs with the Louisiana Supreme Court. On June 30, 1989, the Supreme Court granted David's application, stating:
The ruling of the district court is set aside, and the exception of no cause of action is overruled. The case is remanded to the district court for an immediate hearing on the undertutrix's motion.
On July 17, 1989, the trial court conducted a hearing pursuant to the remand and rendered judgment, dismissing David's petition to set aside the actions of the tutrix, on July 31, 1989. The trial court specifically determined that the tutrix's actions had no negative impact on the minor children and that David failed to carry her burden of proving malfeasance by the tutrix. From this adverse judgment, David appeals, under docket number 89 CA 1319, assigning the following specifications of error:
1. The trial court erred in failing to require the tutrix to set forth reasons in the minors' best interest in support of her desires to terminate the minors' contract with John E. Jackson, Jr. (La.C.C.P Arts 4265 and 4271).
2. Contrary to the manifestly erroneous conclusion of the trial court, the undertutrix demonstrated negative impact on the estate of the children by proof that the tutrix modified the obligations owed by the minors under the contingency fee contracts creating a large increase in the percentage of attorney fees owed, with an escalating cost to the children as the amount recovered is greater.
3. The trial court erroneously applied the burdens of proof and did not determine whether it was in the best interests of the minor children to modify the terms of the obligation owed by them under the contingency fee agreement with John E. Jackson law corporation.
On August 14, 1989, David filed motions for expedited appeal and to seal the record, both of which were denied on August 16, 1989. Thereafter, David applied for writs to the Louisiana Supreme Court, which were denied on August 18, 1989, under docket number 89-0C-1977.
On September 18, 1989, Brenda filed a rule to remove David as undertutrix and to appoint James Hammerstone as undertutor.[9] In response thereto, David filed a petition to have the tutrix comply with the laws of tutorship. Specifically, David alleged that on August 21, 1989, Brenda, individually and on behalf of the four minor children, entered into a settlement of the federal court action for the death of Ingraham. David requested information regarding the alleged $2 million settlement. David also filed an answer to Brenda's rule to remove her as undertutrix and to appoint Hammerstone in her stead.
A hearing on the rule to remove David as undertutrix and to appoint Hammerstone as undertutor and on the rule to disclose settlement details and to have the tutrix to comply with the law was held on October 25, 1989. The court then took the matter under advisement and ordered that the matter be refixed for argument on another *1016 day.[10] On November 15, 1989, the trial court signed the judgment, removing David as undertutrix, appointing Hammerstone as undertutor, and dismissing all other pending matters.
On November 10, 1989, David filed a motion for new trial under LSA-C.C.P. art. 1972(1) and (2). David alleged that, subsequent to the October 25, 1989, hearing, she received correspondence from counsel for the tutrix, seeking her concurrence on the settlement of the minor's claims. The trial court issued a rule to show cause order for December 6, 1989, as to why the November 15, 1989, judgment should not be set aside and a new trial ordered. The order on the rule to show cause was also signed on November 15, 1989.
On November 20, 1989, Brenda filed a petition for authority to compromise the action of the minors. Affixed to her petition was a concurrence by James Hammerstone in his capacity as undertutor. On that same day, the trial court signed a judgment authorizing the tutor to compromise the minors' actions.
On December 6, 1989, the trial court denied David's motion for new trial. David then requested written reasons for judgment on the November 15 and December 6 judgments, which was denied on December 19, 1989. Thereafter, David applied for supervisory writs with this court under docket number 89 CW 2152.[11] In her application for supervisory writs, David presented the following issues for review:
1. If the undertutor does not concur, and court approval has not been granted, can the law of tutorship be evaded by removal of the undertutor and replacement with a second undertutor who has agreed in advance to ratify the acts of the tutor? (C.C.P. Arts. 4265 and 4271)
2. Can a tutor settle a minor's claim without prior court approval? (C.C.P. Arts 4265 and 4271)
By order, dated February 20, 1990, this court granted David's writ application and consolidated the writ with the pending appeal.
On December 21, 1989, David filed another appeal, under docket number 90 CA 0726. In this appeal, David appeals the trial court judgment of November 20, 1989, authorizing the tutrix to compromise the minors' action.[12] Thereafter, pursuant to a request by this court and stipulation of the parties, the appeal under docket number 90 CA 0726 was consolidated with the appeal and supervisory writ under docket numbers 89 CA 1319 and 89 CW 2152, respectively.
We will not address each appeal and/or writ separately, nor will we discuss each assigned error individually. However, we have carefully examined each issue and, for purposes of clarity, have combined the discussion of these issues, whether raised by appeal or by writ.
LEGALITY OF TUTORSHIP
LSA-C.C.P. art. 4031 sets forth the proper venue for a tutorship proceeding for a minor domiciled in Louisiana, as follows:
A petition for the appointment of a tutor of a minor domiciled in the state shall be filed in the district court of the parish where the surviving parent is domiciled, if one parent is dead, or in the parish where the parent or other person awarded custody of the minor is domiciled, if the parents are divorced or judicially separated.
If the parents who are divorced or judicially separated are awarded joint custody of a minor, they shall petition jointly for appointment as cotutors in the district court of the parish in which the *1017 proceedings for divorce or judicial separation were instituted.
In all other cases, the petition shall be filed in the parish where the minor resides. (Emphasis added).
The comments to this article reveal that the venue in a tutorship proceeding is jurisdictional and that objections thereto may not be waived. All proceedings taken in a court of improper venue are absolute nullities.
LSA-C.C. art. 38 defines "domicile" as follows:
The domicile of each citizen is in the parish wherein he has his principal establishment.
The principal establishment is that in which he makes his habitual residence; if he resides alternately in several places, and nearly as much in one as in another, and has not declared his intention in the manner hereafter prescribed, any one of the said places where he resides may be considered as his principal establishment, at the option of the persons whose interests are thereby affected.
LSA-C.C. art. 41 deals with a change of domicile and provides as follows:
A change of domicile from one parish to another is produced by the act of residing in another parish, combined with the intention of making one's principal establishment there.
LSA-C.C. art. 42 provides a written method to express an intent to change domicile, and LSA-C.C. art. 43 states that if a written declaration is not made, "the proof of this intention shall depend upon circumstances."
It is clear under the jurisprudence of this state that residence and domicile are not synonymous. A person can have several residences, but only one domicile. Wilson v. Butler, 513 So. 2d 304 (La.App. 1st Cir.1987). A change in domicile occurs when there is a change in actual residence accompanied by an intention to make a new principal establishment or home. Wilson v. Butler, supra. Additionally, a domicile, once acquired, is presumed to continue. One alleging a change in domicile has the burden of proving it, and the presumption in favor of the original domicile prevails if there is any reasonable doubt as to the change. Brown v. Brown, 378 So. 2d 164 (La.App. 1st Cir.1979).
In the instant case, it is undisputed that, prior to Ingraham's death, he, Brenda, and their children were domiciled in Pearl River, St. Tammany Parish, Louisiana. Shortly after Ingraham's death, Brenda and her children temporarily resided with David in Pass Christian, Mississippi. The instant tutorship proceeding was filed in St. Tammany Parish, and the petition for confirmation states that Brenda is a domiciliary of St. Tammany Parish. The retainer agreement entered into with Jackson reveals that Brenda was residing in Mississippi at the time of the contract.
Brenda made no written declaration of domicile, therefore, we must look to the circumstances of this case to determine whether Brenda intended to make Mississippi her domicile. We have carefully reviewed the entire record and cannot say that Brenda manifested any intention to change her domicile. Brenda initially left her home in Pearl River after her husband's death. Thereafter, Brenda lived with members of his family for a short period of time and then lived in her own residence in Mississippi for four to five months. Thereafter, Brenda returned to Louisiana and has lived in Slidell since that time. The record is devoid of any evidence that, at the time the tutorship proceeding was filed, Brenda manifested any intention to change her domicile.[13]
Accordingly, we find that the tutorship was properly filed in the district court of the parish of the surviving parent's domicile, namely St. Tammany Parish.
AUTHORITY OF TUTRIX TO CHANGE AND/OR MODIFY THE CONTRACT FOR ATTORNEY SERVICES AND FEES
David contends that the tutrix was without authority to terminate Jackson and *1018 retain Ungar. David reasons that she, as undertutrix, did not approve the termination nor did she concur in the hiring of Ungar. David further contends that her concurrence or court approval is required for the tutor to modify any obligation of the minors, including a contract for attorney's fees. David reasons that, because the Jackson contract provided for 25% attorney's fees and the Ungar contract provided for 40% attorney's fees, the tutrix was required to obtain her concurrence or court approval prior to increasing the obligations of the minors.
LSA-C.C.P. art. 4265 provides that a tutor, with court approval as provided for in LSA-C.C.P. art. 4271, may "extend, renew, or in any manner modify the terms of an obligation owed by ... the minor." LSA-C.C.P. art. 4271 sets forth the procedure whereby court approval may be maintained.
Generally, there is no authority for forcing counsel on a party litigant. The right of self-representation has been recognized even in criminal cases. Faretta v. California, 422 U.S. 806, 95 S. Ct. 2525, 45 L. Ed. 2d 562 (1975). It follows that a litigant is privileged to discharge counsel almost at will, provided that it does not become a device for improper purposes such as gaining a continuance untimely and without good cause. Green v. Gary Memorial Hospital, 505 So. 2d 196 (La.App. 3rd Cir. 1987). Further, neither the Civil Code nor the Code of Civil Procedure contains any specific requirement that a natural tutor must obtain prior judicial approval of any contract, including those for attorney's services. Southern Shipbuilding Corporation v. Richardson, 363 So. 2d 1329 (La. App. 4th Cir.1978), affirmed, 372 So. 2d 1188 (La.1979).
In Garden Hill Land Corporation v. Succession of Cambre, 306 So. 2d 718 (La. 1975), the Louisiana Supreme Court noted that:
[S]ince Article 4265, Code of Civil Procedure requires court approval before compromise of a claim or lawsuit by or against a minor, it would seem that the court's approval of such compromise should coincidentally extend to approval of the fee of the attorney, so that the court might determine that both the compromise and the net effect on the minor's estate are reasonable and appropriate. [306 So.2d at 722].
Additionally, in Southern Shipbuilding Corporation v. Richardson, supra, the court held that there was no need for separate court approval of a contract for attorney's fees, since the court later approved the actual compromise as was required by LSA-C.C.P. art. 4271.
In the instant case, Brenda, as tutrix, entered into the contract for attorney's fees with John E. Jackson, and David, as undertutrix, concurred. The Jackson retainer agreement provided for attorney's fees of 25% and did not have separate court approval. Brenda subsequently, without the concurrence of the undertutrix or court approval, terminated the Jackson contract and entered into a retainer agreement with Randy J. Ungar. The Ungar retainer agreement provided for attorney's fees of 40%. Clearly, there was no separate approval for either contract for attorney's fees.
We find, however, that the tutrix did not require separate concurrence of the undertutrix or separate court approval to enter into a contract for attorney's services, to terminate a contract for attorney's services, or to modify the amount of attorney's fees, since the trial court, in approving any settlement of the minor's actions, would be required to approve or ratify any such agreements under LSA-C.C.P. art. 4271.
REMOVAL OF DAVID AS UNDERTUTRIX AND APPOINTMENT OF HAMMERSTONE AS NEW UNDERTUTOR
The grounds for disqualification, revocation, or removal of a tutor provided for in LSA-C.C.P. arts. 4231, 4232, and 4234, other than indebtedness to the minor, also apply to an undertutor. LSA-C.C.P. art. 4236.
LSA-C.C.P. art. 4231 provides for disqualification of a tutor as follows:
*1019 No person may be appointed tutor who is:
(1) Under eighteen years of age;
(2) Interdicted, or who, on contradictory hearing, is proved to be mentally incompetent;
(3) A convicted felon, under the laws of the United States or of any state or territory thereof;
(4) Indebted to the minor, unless he discharges the debt prior to the appointment;
(5) An adverse party to a suit to which the minor is a party; or
(6) A person who, on contradictory hearing, is proved to be incapable of performing the duties of the office, or to be otherwise unfit for appointment because of his physical or mental condition or bad moral character.
The provisions of paragraphs (1), (4), and (5) do not apply to the parent of the minor.
LSA-C.C.P. art. 4232 provides for the revocation of the appointment of a tutor as follows:
If a person who is not a parent of the minor is appointed tutor and fails to qualify for the office within ten days from his appointment, on its own motion or on motion of any interested person, the court may revoke the appointment and appoint another qualified person to the office forthwith.
The delay allowed in this article for qualification may be extended by the court for good cause shown.
LSA-C.C.P. art. 4234 provides for the removal of a tutor, in pertinent part, as follows:
The court may remove any tutor who is or has become disqualified; is a nonresident who has not appointed, or has left the state permanently without appointing, an agent to represent him as required by Article 4273; has become incapable of discharging the duties of his office; has mismanaged the minor's property; has failed to perform any duty imposed by law or by order of court; or if such removal would be in the best interests of the minor. (Emphasis added).
The last sentence, emphasized above, was added by Acts 1976, No. 429, which this court in In Re Redmond, 351 So. 2d 1256 (La.App. 1st Cir.1977), writ denied, 353 So. 2d 1341 (La.1978), interpreted to mean as follows:
In adopting the amendment, we think the legislature intended that in addition to the specific grounds for removal listed in the article the court should also be vested with a certain degree of discretion and that the interests of the interdict should be paramount.
[351 So.2d at 1257].
Nonresidency is not an enumerated ground for disqualification or removal of an undertutor; however, as set forth in LSA-C.C.P. art. 4232, a person not the parent of the minor, who fails to qualify for the office within ten days from his appointment, may have his appointment revoked. LSA-C.C.P. art. 4273 provides as follows:
A tutor who is a nonresident, or who is about to leave the state permanently, shall execute a power of attorney appointing a resident of this state to receive service of process in any action brought against him in his capacity as tutor; and may authorize this agent to represent him in all matters relating to the tutorship. A tutor who is domiciled in the state and who will be absent temporarily therefrom may similarly appoint such an agent for either or both of these purposes. In all cases, the power of attorney shall be filed in the tutorship proceeding. (Emphasis added).
In the instant case, it is undisputed that David was a nonresident. The record reveals that, although the tutorship proceeding was instituted and David was appointed undertutrix on April 14, 1987, David did not appoint an agent pursuant to LSA-C.C.P. art. 4273 until February 13, 1989. Clearly, under the applicable law, the trial judge, on his own motion or on the motion of any interested party, properly revoked the appointment of David and appointed a new undertutor for failure to comply with LSA-C.C.P. *1020 art. 4273 within the time frame provided.
AUTHORITY TO COMPROMISE
David contends that the judgment authorizing the tutrix to compromise the minors' cause of action for their father's death is manifestly erroneous. In addition to challenging the apportionment of the settlement proceeds among Brenda, the four minor children, and the attorneys, David contends that the authority to compromise was invalid because the motion for new trial on David's removal as undertutrix was pending at the time the judgment authorizing the compromise was signed. David reasons that, as such, the appointment of Hammerstone was not final at the time of his concurrence with the petition for authority to compromise and the judgment authorizing the compromise is invalid.
When a new trial is timely applied for, the judgment is not final, and this is all the more valid when the motion has been set for trial by order of the court. Kerr v. Kerr, 349 So. 2d 913 (La.App. 1st Cir.1977), writ denied, 351 So. 2d 157 (La.1977); Cooper v. Cooper, 158 So. 2d 248 (La.App. 1st Cir.1963), writ refused, 245 La. 632, 160 So. 2d 225 (1964). However, where a motion for new trial is filed before the signing of the final judgment, it is filed prematurely and has no effect. Roberts v. St. Joseph Academy School Board, 424 So. 2d 1241 (La.App. 1st Cir.1982); Deville v. Babineaux, 396 So. 2d 978 (La.App. 3rd Cir. 1981); Bordelon v. Dauzat, 389 So. 2d 820 (La.App. 3rd Cir.1980); Chamblee v. Chamblee, 340 So. 2d 378 (La.App. 4th Cir. 1976).
Furthermore, the Supreme Court of Louisiana held that any previously existing defect arising from a premature motion for appeal (i.e. one taken before the signing of the judgment) is cured once the final judgment has been signed. Overmier v. Traylor, 475 So. 2d 1094 (La.1985). This holding was analogized to a motion for new trial in Hanson v. Perkins, 484 So. 2d 705 (La.App. 1st Cir.1985). In Hanson, this court noted that the technical prematurity of the motion for new trial is cured by the signing of the judgment. See Harbour v. Normal Life of Louisiana, 454 So. 2d 1208 (La.App. 3rd Cir.1984). See also Harris v. Sears, Roebuck & Company, 485 So. 2d 965 (La. App. 5th Cir.1986), writ denied, 488 So. 2d 205 (La.1986).
In the instant case, the hearing on the rule to remove David and appoint Hammerstone was held on October 25, 1989, and argued on November 8, 1989. On November 8, 1989, the trial judge orally ruled on the motion, removing David as undertutrix and appointing Hammerstone in her stead. Thereafter, on November 10, 1989, David filed a motion for new trial. On November 15, 1989, the trial judge signed the judgment removing David and appointing Hammerstone. On that same day, the trial judge issued a show cause order for December 6, 1989, as to why the November 15 judgment should not be set aside and a new trial ordered. On November 20, 1989, Brenda and Hammerstone sought and obtained court authority to compromise the action of the minors. Thereafter, on December 6, 1989, the trial judge denied the motion for new trial previously filed.
While David's motion for new trial was filed prematurely, the technical prematurity of the motion for new trial was subsequently cured by the signing of the final judgment. However, the motion for new trial was subsequently denied, and the judgment removing David as undertutrix and then appointing Hammerstone as new undertutor was a final judgment. As a result, Hammerstone's appointment was proper.
Having determined that Hammerstone was the proper undertutor at the time the petition for authority to compromise was filed, we must determine whether the laws of tutorship were followed and whether the authority to compromise the actions of the minors granted by the trial judge was valid.
LSA-C.C.P. art. 4265 provides for the compromise of actions and modifications of obligations of a minor as follows:
With the approval of the court as provided in Article 4271, a tutor may compromise *1021 an action or right of action by or against the minor, or extend, renew, or in any manner modify the terms of an obligation owed by or to the minor.
LSA-C.C.P. art. 4271 provides as follows:
The tutor shall file a petition setting forth the subject matter to be determined affecting the minor's interest, with his recommendations and the reasons therefor, and with a written concurrence by the undertutor. If the court approves the recommendations, it shall render a judgment of homologation. The court may require evidence prior to approving the recommendations.
If the undertutor fails to concur in the tutor's recommendations, the tutor shall proceed by contradictory motion against him. After such hearing and evidence as the court may require, the court shall decide the issues summarily and render judgment.
In the instant case, on November 20, 1989, the tutrix filed a petition setting forth the proposed compromise of the wrongful death claim, her recommendations for the compromise, and the proposed apportionment of the settlement proceeds, together with a written concurrence by Hammerstone, recently appointed undertutor.[14] On that same day, the trial court rendered judgment, approving the compromise for $60,000.00 per minor to be placed in an educational trust and $40,000.00 per minor to be invested with the Hibernia National Bank Trust Department and distributed in accordance with the laws of tutorship.
After carefully reviewing the entire record in this matter, we find that the tutrix properly complied with the laws of tutorship and obtained the requisite judicial approval of the compromise. However, our inquiry does not end here. Although we find that the tutrix properly presented her *1022 proposal as to the distribution of the settlement proceeds, we must examine whether the trial judge correctly determined that the settlement proceeds were properly apportioned among Brenda, as surviving spouse, and the four minor children and whether the trial judge approved or ratified the attorney's fees contracts.
Apportionment of Settlement Proceeds
The record reveals that the claims of Brenda, as surviving spouse, and her minor children were compromised for the cash payment of $1,661,387.80 and the purchase of an annuity, paying Brenda $2,000.00 per month for life or for a minimum of thirty years. Additionally, Brenda would receive $300,000.00 in cash on October 2, 2019. The petition for authority to compromise shows that "after attorney's fees," Brenda and the four minor children would realize a cash payment of $861,387.80, plus the annuity. An educational trust of $60,000.00 would be established for each minor child, and $40,000.00 would be invested with Hibernia National Bank to be distributed by court order for each minor child.
We find that the trial court erred in approving this apportionment of the settlement proceeds. Of the $2,000,000.00 in total settlement proceeds, the four minor children collectively received only 20%. Clearly, the four minor children, most of whom were of a tender age at the time of their father's death and one of whom was born posthumously, were entitled to a larger portion of the settlement proceeds. We have carefully reviewed the entire record and find that the four minor children are entitled to a minimum of $200,000.00 each, subject to their portion of attorney's fees. Judicial Approval or Ratification of Attorney's Fees
The record reveals that Brenda and the minor children realized a cash payment of $861,387.80 from the settlement proceeds, which presumably revealed an attorney's fee of $800,000.00 or 40% of the total settlement proceeds. Because the contracts for attorney's fees (as concerns the minors) did not have separate judicial approval, they were required to be approved in the final judgment authorizing the compromise. However, the petition for authority to compromise, the actual compromise, and the judgment authorizing the compromise are silent as to specific delineation of the amount or percentage of attorney's fees.
We find, therefore, that the trial court erred in approving the substance of the compromise without addressing the reasonableness and appropriateness of the attorney's fees as concerns the minors. We have examined the entire record and find that the reasonable and appropriate attorney's fees attributable to the four minor children is 25%.[15]
CONCLUSION
For the above reasons, the trial court judgment of November 20, 1989, is amended to increase each minor child's portion of the settlement proceeds from $100,000.00 (after attorney's fees were deducted) to $200,000.00, subject to attorney's fees of 25%. In all other respects, the judgment of November 20, 1989, and all other judgments appealed from are affirmed. Additionally, the applications for writs are denied.
AMENDED AND, AS AMENDED, AFFIRMED.
WRIT DENIED.
NOTES
[*] Judge Lewis S. Doherty, III, retired, is serving as judge pro tem by special appointment of the Louisiana Supreme Court to fill the vacancy created by the temporary appointment of Judge Melvin A. Shortess to the Supreme Court.
[1] On February 13, 1989, David, who is a resident and domiciliary of Pass Christian, Mississippi, appointed William A. Ingraham, Jr., a domiciliary of St. Tammany Parish, as agent for service of process in her capacity as undertutrix pursuant to LSA-C.C.P. art. 4273.
[2] Jackson was also retained to represent Ingraham's brother, William, who was injured in the explosion which killed Ingraham.
[3] The contract provided, in pertinent part, as follows:
4. If the Law Firm recovers money for you, which is greater than your costs and expenses (see paragraph 3), you will pay the Law Firm a legal fee. The fee will be based on a percentage of the net recovery (the total recovered for all clients named in this Agreement, minus your costs and expenses.) The fee will be as follows:
33 1/3% of the first $250,000 net recovery; 25% of the next $250,000 net recovery; 20% of the next $500,000 net recovery;
Fee on net recoveries exceeding $1,000,000.00 will be determined by the court.
5. The legal fees will be reduced to 25% of the net recovery if this matter is settled without trial.
[4] The letters were postmarked November 26 and November 29, 1988, respectively.
[5] The record does not contain specific information regarding any assignment of Ungar to Tschirn; however, it is undisputed that Ungar associated Tschirn to assist in representing Brenda and the minor children in the federal court action. Tschirn also represented numerous other plaintiffs in the suit.
[6] On December 7, 1988, Jackson and the Schumacher firm withdrew as counsel of record in the federal court action.
[7] David's objections also sought to prohibit Tschirn from undertaking the representation of the minor children in that Tschirn represented another plaintiff, who alleged negligence on the part of Production Management in causing the explosion aboard the barge. David reasoned that, in so doing, Tschirn had a conflict of interest between the minor children and the other plaintiff because Ingraham was the senior representative of Production Management on the barge at the time of the explosion.
[8] On February 17, 1989, Tschirn withdrew as counsel of record for the estate of Ingraham and for the minor children, and Randy J. Ungar was named as counsel of record in Tschirn's place.
[9] Hammerstone is the maternal grandfather of the four minor children.
[10] On November 8, 1989, the parties presented oral argument and submitted the matter for decision.
[11] David actually applied for writs to the Louisiana Supreme Court, which transferred the matter to this court for action.
[12] The trial court denied David's petition for appeal on the grounds that David, having been removed as undertutrix, has no standing in this matter.
[13] We note, however, that in the complaint filed in the federal court action for damages for the death of Ingraham, Brenda alleged she was domiciled in Mississippi and obtained federal court jurisdiction based on diversity of citizenship.
[14] The petition for authority to compromise set forth the following pertinent provisions:
III.
The claim of petitioner, and her minor children, has been compromised by the payment of ONE MILLION SIX HUNDRED SIXTY ONE THOUSAND THREE HUNDRED EIGHTY SEVEN DOLLARS ($1,661,387.80) AND 80/100 Cash, and the purchase of an annuity, paying Brenda Ingraham $2,000.00 per month for life, guaranteed for 30 years or her life, whichever is longer, plus the sum of THREE HUNDRED THOUSAND ($300,000.00) DOLLARS in cash, payable to Brenda Ingraham on October 2, 2019 (30 years) said annuities are written by New York Life Insurance Company. The total cost of this annuity was $338,612.20.
IV.
After attorneys fees, petitioner and the minor children, realized a cash payment of $861,387.80, plus the annuity.
V.
Petitioner suggests that an educational trust be established on behalf of the minors with the Trust Department of the Hibernia National Bank of New Orleans, said trust stating that each of the minor children receive $60,000.00, cash, to be invested by the trust department of the Hibernia National Bank, payable to each of the children upon obtaining the age of 25, with the only withdrawals to be made for the purpose of educational tuition expenses for the children.
VI.
Petitioner further suggests that each child receive an additional $40,000.00 to be invested with the Hibernia National Bank Trust Department and distributed by Court Order in accordance with the laws of the tutorship with no other restrictions.
VII.
The explanation of the terms of the suggested trust agreement is as follows:
`The primary purposes of this trust are to provide the beneficiary with an education, to enable her to maintain a respectable, but not excessive, standard of living, to provide her with her medical needs, to provide any emergency assistance which she might need. To that end, the trustee is directed to disburse so much of the income, and if the income from the beneficiary's trust and from her funds from other sources are insufficient, then a sufficient amount of principal (1) to provide the beneficiary with a good education, including vocational training and/or an undergraduate college education, and also such advanced or graduate degrees as she may have the aptitude for and interest in pursuing, and to that end provide funs (sic) for tuition, living expenses, books and a reasonable amount of spending money in accordance with the standards of the school and the beneficiary's station in life, (2) to provide for her medical needs, (3) to provide for any emergencies, (4) to enable the beneficiary to maintain her standard of living.
The trust created herein can terminate upon the earlier of the death of the beneficiary or date upon which the beneficiary attains the age of 25 years. Beneficiary may elect to continue the trust beyond the age of 25 years.'
[15] We note that Brenda, in her contract for attorney's fees with Ungar, obligated herself for a 40% attorney's fee. The contract for attorney's fees insofar as it concerns Brenda is not an issue before this court. The dispute between Jackson and the Schumacher firm and Ungar as to the apportionment of attorney's fees among the attorneys is also not before this court on appeal or by writs, but is the subject of pending litigation in the United States District Court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1113091/ | 75 So. 2d 574 (1954)
B.J. MOUNTAIN, A.L. Anthony, T.W. Cobb and R.P. Hunt, Appellants,
v.
NATIONAL AIRLINES, Inc. and Airline Pilots Association International, Appellees.
Supreme Court of Florida. Division B.
October 19, 1954.
Rehearing Denied November 29, 1954.
Anderson & Nadeau, Miami, for appellants.
Loftin, Anderson, Scott, McCarthy & Preston and Hoffman, Kemper & Johnson, Miami, for appellees.
HOBSON, Justice.
Appellants filed an amended bill of complaint in the Circuit Court of the Eleventh Judicial Circuit in and for Dade County, Florida, in which they sought a declaratory decree and other relief.
In said complaint they alleged that they were employed as pilots by National Airlines, Inc. ("National") subsequent to a strike on the part of pilots of National who were members of Air Line Pilots Association International ("ALPA"). After the strike was settled the striking employees returned to work and appellants were released by National.
*575 It is further alleged that when the settlement was reached certain collective bargaining agreements, copies of which are attached to the amended complaint as Exhibits A, B and C, were entered into between National and ALPA, as the duly authorized bargaining agent under the Railway Labor Act of all of the pilots and copilots employed by National, and that under the terms of said agreement appellants retained their rights to be given employment in the future should the necessity arise.
They also assert in their amended complaint that National offered to re-employ the appellants and that appellants accepted said offer, but that when they showed up for work National informed them that they could not go to work because the defendant union had threatened National that if it should allow appellants to resume work with National, ALPA would refuse to allow its members to operate the airplanes of National, which would result in a stoppage of work and National would not be able to carry on its business, whereupon National did refuse to allow appellants to work.
As a predicate for a declaratory decree, appellants assert in their amended complaint that they are "in doubt as to their status and as to their rights under the aforesaid contracts, Exhibits A and B". The prayers in the amended complaint are that the court determine:
"First: What their status is with respect to National Airlines, Inc., that is to say, whether they were or were not employees, and
"Second: That if it finds that they were employees, that it determine whether or not the plaintiffs have to proceed to exhaust their remedies under Exhibits B and C, and
"Third: That if it finds that the plaintiffs are not employees but that they were unlawfully discharged as the result of the action of both defendants, or either of them, that it shall award the plaintiffs damages against National Airlines, Inc. for its wrongful act in respect to discharging the plaintiffs (or projecting the contract of re-employment), and also award the plaintiffs damages against the defendant, Airlines Pilots Association, International, for its wrongful acts with respect to interfering with the relations between the plaintiffs and National Airlines, Inc., or in causing National Airlines, Inc. to refuse to re-employ the plaintiffs, or, if it did re-employ them, for its wrongful act in causing them to be discharged."
Both National and ALPA filed motions to dismiss the amended complaint. On January 9, 1953 the circuit judge granted said motions and in a final decree dismissed the action. This appeal is from said final decree.
Counsel for appellants assert that in their opinion "the sole question for consideration is whether or not the case made by the complaint was one within the purview of the declaratory decree statute". However, in their reply brief they suggest that the amended complaint should not have been dismissed insofar as ALPA is concerned regardless of the correct answer to the foregoing query, because appellants made out a case against ALPA "for a tortious interference with the relations between plaintiffs and National Airlines." Apparently it is counsel's position that the amended complaint, insofar as it seeks a declaratory decree, may be disregarded and considered only as a complaint against ALPA for an award of damages for the alleged wrongful acts of ALPA with respect to interfering with the relations between appellants and National or in causing National "to refuse to re-employ the plaintiffs, or, if it did re-employ them, for its wrongful act in causing them to be discharged". We will first deal with the question whether the amended complaint contains sufficient allegations to entitle appellants to a declaratory decree.
As aforestated, appellants pray that the court declare their status with respect to National, meaning thereby, so it is alleged, for the court to determine whether they were or were not employees. It is quite *576 evident that there is no occasion for the court to determine whether appellants were, in fact, employees of National because the complaint clearly alleges that they were employed by National during the time that the pilots who were members of ALPA were on strike. Therefore there can be no question at all that they were in fact employees of National. We believe it to be obvious that what appellants really seek in the way of a declaratory decree is a declaration whether they, under the facts and circumstances outlined in the amended bill of complaint, were employees of National within the meaning of the term "employees" as it is used in the collective bargaining agreements, and particularly whether each of them is entitled to be designated as a third party beneficiary under the collective bargaining agreements, and especially under Exhibit A, Section 21, Paragraphs (c), (d) and (e) which provide certain rights and privileges of furloughed pilots and copilots when they return to work.
We have no difficulty in reaching the conclusion that the allegations of the amended complaint are insufficient to entitle appellants to a declaratory decree of the nature sought in and by said complaint. We have repeatedly held that the declaratory decree statute, F.S.A. § 87.01 et seq., cannot be used in a case wherein the decree prayed for would serve no useful purpose. Ready v. Safeway Rock Co., 1946, 157 Fla. 27, 24 So. 2d 808; Security Life & Trust Co. v. Odiorne, Fla. 1952, 59 So. 2d 35; Coral Gates Properties, Inc., v. Hodes, Fla. 1952, 59 So. 2d 630; Columbia Casualty Co. v. Zimmerman, Fla. 1953, 62 So. 2d 338; Halpert v. Olesky, Fla. 1953, 65 So. 2d 762; Stark v. Marshall, Fla. 1953, 67 So. 2d 235. Patently the answer to the query as posed by appellants in the first prayer of their amended complaint is not only affirmatively shown by the allegations to be known to them, i.e., that they were in fact employees of National, but clearly it would serve no useful purpose for the court to answer such question even if appellants did not show that they actually know the answer except perhaps to advise appellants what avenue they should travel to enforce their right. Here again our prior decisions block their path. In Deen v. Weaver, Fla. 1950, 47 So. 2d 539, 540, we said:
"After all is said, the question in this case is whether petitioner has a cause of action against Weaver or Farmer or both of them.
"The rule is settled that the Declaratory Judgments Statute cannot be employed to point out the procedure for an attorney to follow to litigate a case like this."
In Hotel & Restaurant Employees, etc., v. Boca Raton Club, Inc., Fla., 73 So. 2d 867, we said that improper demands in an action ostensibly for declaratory relief could be considered as surplusage and that factual allegations in the complaint should be carefully examined for sufficiency in connection with relief properly sought. The case now before us differs from Boca Raton, however, in that here, as will presently appear, the plaintiffs are charged with the duty of making an election of remedies, a duty which cannot be left to the trial court.
Section 204 of Title II of the Railway Labor Act, 45 U.S.C.A. § 184, makes applicable to air carriers the provisions of Section 3 of the Act, 45 U.S.C.A. § 153. The latter section "confers jurisdiction on the National Railway Adjustment Board to hold hearings, make findings, and enter awards in all disputes between carriers and their employees `growing out of grievances or out of the interpretation or application of agreements concerning rates of pay, rules, or working conditions * * *.'" Slocum v. Delaware, L. & W.R. Co., 1950, 339 U.S. 239, 240, 70 S. Ct. 577, 94 L. Ed. 795. Appellees suggest that jurisdiction of the Adjustment Board to make an initial interpretation of collective bargaining agreements such as the one here in question is exclusive, and therefore an allegation of exhaustion of administrative remedies is an indispensable element of suit. As we read the Slocum case, supra, and the cases of Transcontinental & West Air, Inc., v. Koppal, 1953, 345 U.S. 653, 73 S. Ct. 906, 97 L. Ed. 1325 and Moore v. *577 Illinois Central R. Co., 1941, 312 U.S. 630, 61 S. Ct. 754, 85 L. Ed. 1089, this proposition is unquestionably correct if the plaintiff, having been discharged, elects to challenge the validity of his discharge, seeking reinstatement and back pay. Instead of doing this, however, he may elect to accept the action which discharged him as final, thereby ceasing to be an employee, as was done in the Moore case, and bring suit claiming damages for breach of contract. In the Koppal case the court stated, 345 U.S. at page 661, 73 S.Ct. at page 910:
"`A common-law or statutory action for wrongful discharge differs from any remedy which the Board has power to provide, and does not involve questions of future relations between the railroad and its other employees. If a court in handling such a case must consider some provision of a collective-bargaining agreement, its interpretation would of course have no binding effect on future interpretations by the Board.'
"The result is that, whereas, under the Railway Labor Act, the Adjustment Board has exclusive jurisdiction to adjust grievances and jurisdictional disputes of the type involved in the Slocum case, that Board does not have like exclusive jurisdiction over the claim of an employee that he has been unlawfully discharged."
From the rules enunciated above, it is evident that the main difficulty in the instant case stemmed from the failure of plaintiff-appellants to make an election of remedies, since a study of the amended complaint fails to disclose the theory under which they are proceeding against National, but leads to the conclusion that they had delivered the problem of election of remedies intact to the trial court for its solution. Until the necessary election is made by the plaintiff-appellants, and a claim for relief in accordance therewith attempted to be stated, we can see no useful purpose in further consideration of the problem.
As against appellee ALPA, appellants contend, as we observed before, that the amended complaint states an actionable claim for wrongful interference with contractual relations. Again we find that this alleged claim is based upon a contingency, namely a declaration by the court which we have held to have been improperly demanded. Moreover, if this contingency were eliminated, the character of the contractual rights claimed to have been interfered with are by no means clear from the allegations of the amended complaint.
The final decree appealed from is affirmed, but without prejudice to plaintiff-appellants' rights, if any they have, to institute further proceedings as they may be advised.
ROBERTS, C.J., and THOMAS and DREW, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1126832/ | 637 So. 2d 1157 (1994)
Oliver BOSSE and Judith Bosse
v.
WESTINGHOUSE ELECTRIC, INC., et al.
No. 93-CA-1898.
Court of Appeal of Louisiana, Fourth Circuit.
May 17, 1994.
*1158 Glen A. Woods, Gauthier & Murphy, Metairie, for plaintiffs/appellants.
Laurie A. White, Asst. City Atty., Marie A. Bookman, Deputy City Atty., Bruce E. Naccari, Acting First Asst. City Atty., Kathy Lee Torregano, City Atty., New Orleans, for defendant/appellee.
Christopher J. Aubert, Aubert & Burglass, New Orleans, for defendant/appellee.
Before BYRNES, JONES and WALTZER, JJ.
BYRNES, Judge.
Oliver and Judith Bosse appeal the dismissal of the City of New Orleans (City) on motion for summary judgment, as well as the dismissal of plaintiffs' tort action against Westinghouse Electric Corporation (Westinghouse). We affirm.
On May 18, 1987 at approximately 6:45 a.m. Oliver Bosse slipped and fell when he stepped off of an elevator on the seventh floor in City Hall where he worked. Employed as a city inspector, Mr. Bosse's work shift began at 7:30 a.m. Mr. Bosse reported the accident to his employer, the City, and Mr. Bosse submitted an accident report to the State of Louisiana Office of Worker's Compensation Administration, and was paid approximately $20,692 in medical expenses and worker's compensation benefits of approximately $67,985 at the time of trial. Claiming that the elevator misleveled, causing Mr. Bosse to fall, Mr. and Mrs. Bosse filed this tort action against the owner of the elevator, the City, and Westinghouse, which was responsible for maintaining the elevator. On April 22, 1993 the trial court granted the City's motion for summary judgment. After trial on the merits, the trial court dismissed plaintiffs' claim against Westinghouse in its judgment dated May 3, 1993, based on jury interrogatories finding that Westinghouse was not at fault. Plaintiffs' appeal followed.
Plaintiffs present the following issues on appeal: (1) whether LSA-R.S. 23:1032 restricts the employee, Mr. Bosse, to worker's compensation benefits as his exclusive remedy against his employer; and (2) whether the trial court erred in refusing to allow the plaintiffs' witness to testify as an expert in the operation and maintenance of elevators.
Plaintiffs complain that the trial court erred in granting summary judgment to the City. Appellate courts review summary judgments de novo under the same criteria that governs the district court's consideration of the appropriateness of summary judgment. Schroeder v. Board of Sup'rs of Louisiana State University, 591 So. 2d 342 (La. 1991). The mover is entitled to summary judgment as a matter of law if the pleadings, depositions, answers to interrogatories and admissions on file, together with supporting affidavits, if any, show that there is no genuine issue of material fact. LSA-C.C.P. art. 966(B); Osborne v. Vulcan Foundry, Inc., 577 So. 2d 318 (La.App. 4th Cir.1991). Because the mover has the burden of establishing that no material factual issue exists, inferences to be drawn from the underlying facts contained in the record must be viewed in the light most favorable to the party opposing the motion. Brown v. Diversified Hospital Group, Inc., 600 So. 2d 902 (La.App. 4th Cir.1992).
Plaintiffs contend that Mr. Bosse's injury did not arise out of or during the course of his employment. An accident "arises out of" employment if the risk from which the injury resulted was greater for the employee than for a person not engaged in employment. Mundy v. Department of Health and Human Resources, 593 So. 2d 346 (La.1992). The "course of employment" test *1159 refers to time and place; the "scope of employment test" examines the employment-related risk of injury. Benoit v. Capitol Mfg. Co., 617 So. 2d 477 (La.1993). The "course of employment" and "arising out of employment" requirements cannot be considered in isolation from each other. A strong showing by the claimant with reference to the arise-out-of requirement may compensate for a relatively weak showing on the during-course-of requirement, or vice versa. Raybol v. Louisiana State University, 520 So. 2d 724 (La.1988). Acceptance of worker's compensation benefits does not by itself constitute an admission of employment status or work-related injury. Dye v. Ipik Door Company, Inc., 570 So. 2d 477 (La.App. 5th Cir.1990).
Plaintiffs argue that Mr. Bosse was not injured during the scope and course of employment based on Mundy, supra. In Mundy, a nurse sustained injuries while she was in an elevator in Charity Hospital on the way to work on the eleventh floor. An assailant who got on the elevator with the plaintiff on the first floor, attacked the plaintiff, stabbing her repeatedly when the elevator stopped on the second floor. The nurse had no work duties on the first or second floor. In the present case Oliver Bosse was injured getting off the elevator on the seventh floor where he worked.
In Mundy plaintiff's injuries were inflicted on her by the unpredictable, independent, random violent act of a third party stranger unrelated to her employment. Such a random act of violence could have occurred anywhere.
The determination of whether an accident arises out of employment focuses on the character or source of the risk which gives rise to the injury and on the relationship of the risk to the nature of the employment. Mundy, 593 So.2d at 349.
A physical defect in the premises of the employer is very different from an independent, random act of violence committed by an unrelated third party stranger. A random act of violence could occur anywhere, but a defect in the premises at the place of employment is "peculiar and distinctive" to that location. See Templet v. Intracoastal Truck Line, Inc., 255 La. 193, 230 So. 2d 74 (1969), cited with approval in Mundy, supra, 593 So.2d at 350.
In Mundy, the Louisiana Supreme Court stated:
Even if the risk which gave rise to the injury could be considered as a defect hazardous to the travelers immediately adjacent to the employer's premises, the risk was no more dangerous in the immediate vicinity of the employer's premises than elsewhere along her route of travel to work. Mundy, 593 So.2d at 351.
What the court is saying in Mundy is that the risk of random, violent crime is a risk that one encounters everywhere independent of location, i.e., in Mundy the risk was not from the elevator at the place of employment. In the present case the risk was intrinsic to the place of Mr. Bosse's employment. It was limited to that location and was only dangerous in that location. As an employee at that location, plaintiff must be presumed to "encounter" this risk "to a greater extent or frequency than by the general public." Mundy, 593 So.2d at 350. Mr. Bosse had a much greater probability of sustaining the injury posed by the work place risk because his employment required him to be exposed to that risk to a greater extent and frequency than the general public. This means that the risk to Mr. Bosse arose out of his employment. Having arrived at the seventh floor, it may also be considered within the course and scope of that employment.
Viewing the facts in the light most favorable to the plaintiffs who oppose the motion for summary judgment, and accepting plaintiffs' allegations as true for purposes of the issue of summary judgment, Mr. Bosse would not have been in the building if it were not for his employment. The extent and frequency of Mr. Bosse's exposure to the risk posed by the elevator was due to Mr. Bosse's employment. Although a member of the general public could also use the elevator, such a person would not be compelled by reason of his employment to expose himself to the risk posed by the elevator to the same extent and frequency as required of Mr. Bosse on a daily basis. The Mundy decision represents the extreme outer limits of the *1160 jurisprudence in this area of the law as established by the Louisiana Supreme Court. The Supreme Court has rendered no decision since Mundy urging the courts to apply Mundy liberally or to extend its scope. There are no cases allowing a plaintiff to pursue the employer in tort for a defect on the premises of employment. The 1989 amendment to LSA-R.S. 23:1032 applies retroactively so that an employer may not be held liable for damages under any contractual or "dual capacity" theory. Putzeys v. Schreiber, 576 So. 2d 563 (La.App. 4th Cir.), writ denied 578 So. 2d 932 (La.1991). Mr. Bosse's accident occurred arising out of and during the scope and course of his employment, and there is no genuine issue of material fact that the employee's sole remedy against his employer is limited to worker's compensation under LSA-R.S. 23:1023. The trial court properly granted the City's motion for summary judgment.
Plaintiffs also argue that because the trial court abused its discretion by disqualifying their expert witness, the jury did not find Westinghouse liable, and plaintiffs' claim was dismissed.
At issue at trial was whether Westinghouse was negligent in maintaining the elevator. When the trial court limited the capacity of the plaintiffs' expert, Robert Cosgrove, to testify as an expert having a degree in mechanical engineering, plaintiffs chose not to have Mr. Cosgrove testify. Plaintiffs assert that the trial court erred in failing to find that their witness, Mr. Cosgrove, was an expert in the operation and maintenance of elevators based on his 27 years of experience in his primary business of sales and services of elevators. Citing Adams v. Chevron U.S.A. Inc., 589 So. 2d 1219 (La.App. 4th Cir.1991), writ denied 592 So. 2d 414, 415 (La.1992), plaintiffs aver that formal education in the area of expertise is not required for a witness to be qualified as an expert, and experience is enough.
The question of whether a witness is an expert, the scope of his expertise, and the breadth of his opinion are within the discretion of the trial court. LSA-C.E. Art. 702; Dye v. Schwegmann Giant Super Markets, Inc., 599 So. 2d 412 (La.App. 4th Cir.), writ granted, judgement vacated on other grounds 607 So. 2d 564 (La.1992). The trial court has great discretion in deciding which witnesses are qualified as experts, and in limiting the breadth and scope of expert testimony. Armstrong v. Lorino, 580 So. 2d 528 (La.App. 4th Cir.1991), writ denied 584 So. 2d 1166 (La.1900).
The record shows that although Mr. Cosgrove qualified as an expert witness in several courts, Mr. Cosgrove was disqualified as an expert witness by at least two other courts. He stated that he had not worked in the elevator business for 21 years since 1972. He agreed that he did not work with tools, did not hold himself out as an elevator mechanic, and he was not a member of the elevator mechanic's union. He never designed or oversaw the design or manufacture of an elevator although he designed elevator systems and units. Although he testified in another matter that he spent a great extent of his time in sales, in the present matter he initially stated that he was not involved in sales to a great extent of his time in the elevator business, but Mr. Cosgrove qualified his statement, saying that he was involved in sales half of the time. Although he testified in another matter that he considered himself primarily a code expert, Mr. Cosgrove initially stated that he was not primarily a code expert in the present case. Although he admitted that he testified in another matter that he considered himself to be an expert in the field of barges, dredges and boats, in the present case he stated that he did not hold himself out to be an expert in that field. Considering the conflicting testimony concerning Mr. Cosgrove's expertise, the trial court did not abuse its broad discretion in limiting Mr. Cosgrove's qualification to having a degree in mechanical engineering.
Accordingly, the judgments of the trial court are affirmed.
AFFIRMED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/8326582/ | Tucker, Richard T., J.
This civil action arises out of plaintiff Edward Waszazak’s (Waszazak) injury result-*643tag from a fall from a ladder in a garage owned by the defendant, John Pauplis (Pauplis). Waszazak, at the time of the injury, was a tenant of Pauplis. Waszazak alleges that defendant John Pauplis is responsible for the plaintiffs elbow injury sustained in the fall from a ladder.
Waszazak filed a complaint asserting negligence in the maintenance of property claiming that Pauplis failed to maintain the ladder in question. Waszazak alleges that Pauplis failed to warn him of any ladder defects when Pauplis asked him to retrieve items for return to a former tenant. Waszazak alleges that the rubber friction feet on the base of the ladder are smooth and defective and that negligent maintenance by Pauplis resulted in his injury.
BACKGROUND
John Pauplis owns and manages the premises at 68 Hill Street in Leominster, MA. Waszazak rented the premises of 68 Hill Street in the fall of 2004. During his tenancy, Waszazak on several occasions used an eight-foot aluminum extension ladder that was stored in a shed on the property. Sometime during Waszazak’s tenancy, Pauplis requested that Waszazak personally retrieve items for a former tenant if he should return to the premises looking for his property. Pauplis was concerned about the former tenant tearing lighting fixtures from the walls.
On February 18, 2006, the former tenant arrived and asked Waszazak to retrieve several items; some of those items were in the “loft” of the garage of the premises. Waszazak used the eight-foot aluminum extension ladder to climb into and retrieve items from the loft. On a third or fourth trip on the ladder, the ladder fell and Waszazak sustained a serious injury to his left elbow. Waszazak intended to carry an outdoor chair down the ladder at the time of the incident and was apparently reaching sideways for the item, when the ladder “kicked out.”
APPLICABLE STANDARDS
Summary judgment shall be granted where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Cassesso v. Commissioner of Corrections, 390 Mass. 419, 422 (1983); Community Nat’l Bank v. Dawes, 369 Mass. 550, 553 (1976); Mass.R.Civ.P. 56(c). The moving party bears the burden of affirmatively demonstrating the absence of a triable issue. Pederson v. Time, Inc., 404 Mass. 14, 17 (1989). A party moving for summary judgment who does not have the burden of proof at trial may demonstrate the absence of a triable issue either by submitting affirmative evidence that negates an essential element of the opponent’s case or “by demonstrating that proof of that element is unlikely to be forthcoming at trial.” Flesner v. Technical Communications Corp., 410 Mass. 805, 809 (1991); Kourouvacilis v. General Motors Corp., 410 Mass. 706, 716 (1991). “If the moving party establishes the absence of a triable issue, the party opposing the motion must respond and allege specific facts which would establish the existence of a genuine issue of material fact in order to defeat [the] motion.” Pederson, 404 Mass. at 17. “(T]he opposing party cannot rest on his or her pleadings and mere assertions of disputed facts to defeat the motion for summary judgment.” LaLonde v. Eissner, 405 Mass. 207, 209 (1989).
DISCUSSION
In order to sustain a claim for negligent maintenance of property, Waszazak must affirmatively prove that the ladder was in the control of Pauplis, that the ladder is defective and that Pauplis knew or should have known of the defect and subsequently breached a duty to warn Waszazak of it. Additionally, to prevail on a negligence theory, the plaintiff must show that the breach of the duty of care, or defect to the ladder in this case, proximately caused his injury. Davis v. Westwood Group, 420 Mass. 739, 742 (1995). Evidence must also be forthcoming of the link between the negligence and the causation of injury. Lieberman v. Powers, 70 Mass.App.Ct. 238, 242-43 (2007).
In this case the plaintiff alleges that though not observable in photographs, the rubber friction feet on the bottom of the extension ladder are worn and smooth to the touch. Assuming the facts in the light most favorable to the plaintiff, at the very least since the supposed flaw is not readily apparent, the ladder would need to be viewed in use upon a surface in order to demonstrate the defect. As was stated in Gauld v. John Hancock Mut Life Ins. Co., 329 Mass. 724, 727 (1953), “... the ladder itself does not suffice to establish that there was a defect... which would have been discoverable upon reasonable examination.” Simply alleging that the feet are “smooth” is not sufficient to establish the existence of a defect. See Winer v. Boston & M.R.R., 336 Mass. 757 (1957) (holding that a step that was said to be worn shiny and smooth could not stand alone as sufficient evidence of defective condition); Grace v. Boston Elevated Ry., 322 Mass. 224, 227 (1948) (holding that testimony of a smooth walking surface was not evidence of a defect); see also Foley v. Boston & M.R.R., 193 Mass. 332, 335 (1907) (noting that mere declamatory words unaccompanied by evidence are of no assistance in determining the character of the defect). Additional evidence is necessary to prove the existence of a defect, beyond the bare assertion that the friction feet are smooth. Here there is a complete absence of such evidence, expert or otherwise. Furthermore, this being an alleged defect that would not be discoverable upon inspection of the ladder by itself, it is difficult to say that this defect could have been known or readily discovered by Pauplis, and furthermore that any duty to warn Waszazak of this defect existed.
Assuming that the friction feet were smooth as the plaintiff alleges and that such a smoothness constitutes a defect, there is a complete void of evidence that *644establishes the fall was proximately caused by the defect. In his own deposition Waszazak, when asked if he knew why the ladder slipped out, responded, “I do not know.” See Waszazak dep. at 61-64. Waszazak goes on to say that in fact he would describe the ladder slipping as an “act of god.” Id. Additionally in the deposition of Michael Keddie, the only witness to the accident other than the defendant, Keddie stated that he also did not know the reason the ladder had “kicked out” and also stated that the ladder did not slide, but instead it had “kicked out” to the side. See Keddie dep. at 65-71. There is no evidence presented to the court by the plaintiff that proves a causal relationship between the alleged defect and the subsequent accident. See Glidden v. Maglio, 430 Mass. 694, 696 (2000) (summary judgment proper when workers injured in scaffolding accident could present no evidence as to reason for collapse). Those present at the accident are unable to determine or even hypothesize as to why the ladder “kicked” out. The jury cannot draw a causal link for which there has been no evidence produced. There is no testimony from individuals who witnessed the accident, no testimony from experts as to the cause of the ladder slipping and finally no visible evidence of any defect or causation provided.1
ORDER
For the foregoing reasons, Pauplis’s Motion for Summary Judgment is ALLOWED.
During argument at the motion hearing, plaintiffs counsel indicated that no expert testimony regarding the nature of the defect was to be presented at trial. While admitting that the photos submitted of the rubber foot pads of the ladder didn’t readily disclose a defect, counsel argued that jurors would be able to determine the nature of the defect themselves by sense of touch. The court renders no opinion whether this would constitute admissible evidence at trial. The court does state that this tactile evidence has not been presented in opposition to this motion. | 01-03-2023 | 10-17-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/1381616/ | 646 P.2d 1269 (1982)
STATE of Oklahoma ex rel. William F. "Bill" POULOS, Petitioner,
v.
STATE BOARD OF EQUALIZATION FOR THE STATE OF OKLAHOMA, The Honorable George Nigh, Chairman, The Honorable Spencer Bernard, Member, The Honorable Leo Winters, Member, The Honorable Jack Craig, Member; and The Oklahoma Tax Commission, Respondents.
No. 57218.
Supreme Court of Oklahoma.
May 25, 1982.
As Corrected June 14, 1982.
Buford & Percival, Manville T. Buford, John F. Percival, Oklahoma City, for petitioner.
Charles Elder, Elder, Mantooth & Haxel, Purcell, for respondent, State Bd. of Equalization.
Marjorie Patmon, Gen. Counsel, Donna E. Cox, Oklahoma City, for respondent, Oklahoma Tax Com'n.
Russell Fletcher, Oklahoma City, for intervenor, Tax Equality Committee.
Cathy Stocker, Jones & Gungoll, Enid, for amicus curiae, League of Women Voters of Oklahoma.
*1270 LAVENDER, Justice:
Original jurisdiction of this Court is sought to be invoked under authority of Art. 7, § 4 of the Oklahoma Constitution, which provides:
"The original jurisdiction of the Supreme Court shall extend to a general superintending control over all inferior courts and all Agencies, Commissions and Boards created by law."
The parties designated as Respondents are the State Board of Equalization for The State of Oklahoma (Board), its members, and The Oklahoma Tax Commission (Commission).
Petitioner brings this action in his capacity as a citizen, resident, and taxpayer. At issue is the constitutionality of the system *1271 of ad valorem property taxation as implemented by the State Board of Equalization for the State of Oklahoma, and the Oklahoma Tax Commission, as the same affects the valuation and assessment of property taxes in all of the 77 counties in Oklahoma.
Frequent reference will be made herein to State ex rel. Poulos v. State Board of Equalization, Okl., 552 P.2d 1134 (1975), State ex rel. Poulos v. State Board of Equalization, Okl., 552 P.2d 1138 (1976), to the case now pending before us, and to Cantrell v. Sanders, Okl., 610 P.2d 227 (1980). For brevity, these cases will be referred to respectively as Poulos I, Poulos II, Poulos III, and Cantrell.
In Poulos I, we held that "the matter presented is publici juris, and of immediate concern to all taxpayers." We assume original jurisdiction and proceed to consider the case on the merits.
The exhibits filed with this Court have, as reconciled, been acknowledged by the parties to be true and correct copies of what they purport to be, and are factually correct as to the studies and findings therein set forth.
In Poulos I, this Court in unequivocal language pointed out that it is the mandatory duty of the Board to adjust and equalize the valuation of real and personal property of the several counties in the State; that a system which does not equalize ad valorem assessments throughout the state is unfair and invidiously discriminatory; and that it is the manifest intention of the Oklahoma Legislature to equalize ad valorem assessments so that every parcel and item of taxable property in the state will be assessed at the same percentage of its value.
In Poulos II, this Court rejected a proposed "Plan of Compliance" because of a variance between 8% and 17.91% which permits inequality of valuation among the counties of this state. The Court directed by writ of mandamus that the Board satisfy its constitutional and statutory duty as set forth in Poulos I "by setting a definite percentile equality applicable to all counties..." with permissible interim variations not to exceed three percentage points above or below the assessment rate, but with complete uniformity to be achieved by the Board within the three year period following the Poulos II decision.
In Cantrell, we held that it is the statutory duty of the county assessor to set an assessment percentage uniformly applicable to all real property within the county. The basis for our conclusion was all real property within the county constitutes but one "class of subjects," and the mandate of Art. 10, § 5 of the Oklahoma Constitution that taxes be "uniform upon the same class of subjects" must be followed.
Cantrell further held that Art. 10, § 8 of the Oklahoma Constitution, as it was amended in 1972, changed the method of valuing real property for tax assessment by prescribing that all property taxable ad valorem must be valued at its "fair cash value" that is, its market value, EXCEPT:
1. No real property shall be assessed for ad valorem taxation at more than 35% of its use value, as opposed to its market value, that is, the tax value is to be determined by the value of the real property as actually used, or was previously classified for use during the calendar year next preceding the first day of January on which the assessment is made, and not in excess of 35% of said use value.
2. A transfer of property without a change in its use classification shall not require a reassessment based exclusively upon the sale value of such property.
We further said in Cantrell: "In order to value property according to its use, it is necessary to classify property according to its use. Entirely different procedures are used for the valuation of residential, commercial, industrial, and agricultural properties, and uniform standards of classification of property in order to facilitate the application of uniform procedures would be desirable."
Following the rendition of the decision in Cantrell (Rehearing Denied April 28, 1980) and up to the time of filing of Poulos III (this case), the wide diversity of assessment *1272 percentages applied by the various county assessors to real property assessments within the counties has (according to the exhibits) continued to proliferate.
Dividing the real property into three classes, residential, commercial-industrial, and agricultural, the average mean assessment ratios range from 6.40% assessment in Adair County to 13.58% in Oklahoma County. The average "mean" assessment ratio in Oklahoma County exceeds 212% of the average mean assessment in Adair County. The wide disparity in assessment ratios as applied in the various counties is illustrated by the following:
HIGHEST AVERAGE LOWEST AVERAGE
MEAN ASSESSMENT MEAN ASSESSMENT
RATIOS BY COUNTY RATIOS BY COUNTY
Oklahoma 13.58% McCurtain 6.60%
Harmon 13.08% Adair 6.40%
Canadian 12.92% Choctaw 6.66%
Greer 12.37% Cherokee 7.14%
with wide variations between the extremes.
The disparity in the assessment ratios applied to property within the use classifications is even greater. For example, with reference to agricultural land, the ratio applied in McCurtain County of 2.71% as compared with Oklahoma County which is 666% greater.
On June 20, 1981, the Commission in accordance with 68 O.S. 1971, § 2462 and Enrolled Senate Concurrent Resolution No. 54 of the 37th Oklahoma Legislature (O.S.L. 1980) transmitted to the Board "Techniques, Guidelines and Definitions for Determining Use Value of Real Property for Ad Valorem Tax Purposes," and "1981 Comprehensive Ratio Study Report" along with "Recommendations of the Oklahoma Tax Commission for Statewide Equalization." The Commission found and determined, based upon its studies and research, that "a single assessment ratio has not been applied to determine assessed valuation of all real property within each county and that the assessed valuations of real property are not equalized among the various counties pursuant to this Board's adopted guideline setting the definite assessment ratio at 12%."
The Commission made the following recommendations to the Board:
1. That, the State Board of Equalization act upon the submitted techniques, guidelines and definitions by approval thereof.
2. That, the State Board of Equalization increase or decrease, as the case may be, the assessment valuations of the classifications of real property within each county so that a single assessment ratio is applied to the valuation of all real property within each county to determine assessed valuation, in accordance with the Recommendations of the Oklahoma Tax Commission for Statewide Equalization.
3. That, the State Board of Equalization increase or decrease, as the case may be, the assessment valuations of real property so that the assessment ratio of each county is within the permissible three point deviation of the 12% ratio rate set by this Board, in accordance with the Recommendations of the Oklahoma Tax Commission for Statewide Equalization submitted herewith.
At a meeting held on July 21, 1981, the State Board of Equalization did the following:
1. Accepted and approved the abstracts of assessments submitted by the respective County Assessors.
2. Set aside the ratio study conducted by the Oklahoma Tax Commission and the findings therein contained, "although conducted in good faith, due to the brevity in time following the Supreme Court decision in Cantrell v. Sanders (supra) and the Attorney General's Opinion No. 80-253 issued January 29, 1981, it was not possible for the State Board of Equalization and the Oklahoma Tax Commission to develop and distribute to the County Assessors techniques, guidelines and definitions for determining the use value of real property for ad valorem tax purposes as directed by the foregoing Supreme Court decision, Senate Resolution and Attorney General's opinion, thereby creating an apparent disparity between the methods employed by the County Assessors of the State of Oklahoma and the methods employed by the Oklahoma Tax Commission in conducting the use value/assessment *1273 ratio study of said counties of the State of Oklahoma."
3. Adopted and approved the Techniques, Guidelines and Definitions for Determining Use Value of Real Property for Ad Valorem Tax Purposes, as revised by a County Assessors' Committee and a Committee of Tax Commission officials, to be used in the 1982 tax assessments.
The Techniques, Guidelines and Definitions for Determining Use Value of Real Property for Ad Valorem Purposes as adopted was transmitted to the various county assessors on August 4, 1981.
The Board failed to perform the duty imposed upon it by law when it failed without any excuse to adopt and apply a standard ratio of 12% with permissible inter-county deviations of not more than 3% above or below the mean as recommended by the Commission in determining the adjusted percentile to be applied to all real property within the state, regardless of its classification. While we held in Cantrell that it is the statutory duty of the county assessor to initially set the assessment percentage on all property within the county, as we have heretofore pointed out, it was the overriding constitutional and statutory duty of the Board to make such adjustments as will achieve uniformity and equality of taxation on a statewide basis, pursuant to 68 O.S.Supp. 1979, § 2463 and Art. 10, § 21 of the Oklahoma Constitution.
There being no valid reason shown for not adopting the 12% ratio, as recommended by the Commission, we hereby determine by judicial decree that all property within the State of Oklahoma subject to ad valorem taxes shall be assessed at 12% of its taxable value with permissible inter-county deviations of not more than 3% above or below the mean, and that said percentage shall apply to the 1982 tax year and thereafter until such time as the same shall be changed by the recommendation of the Commission and the determination by the Board based upon good and sufficient valid, legal grounds as provided in 68 O.S. 1971, § 2463.
As we said in Poulos I, supra, (at p. 1137):
"Although a precise uniformity is not required [see Board of County Commissioners of Canadian County v. State Board of Equalization, 363 P.2d 242 (Okl. 1961)], a rate which is inherently and basically fair to all citizens is mandated by the Constitutions of the United States and the State of Oklahoma. It is patently clear that to meet the standards of the Constitution and of the statutes, the adjustment and equalization of the valuation of real and personal properties of all the several counties of this state must be made on an annual and uniform basis."
And as this Court realistically observed in Appeal of McNeal, 35 Okl. 17, 128 P. 285 (1912):
"Necessarily, in Oklahoma, as in every other state, an exact and equal distribution of the burden of taxation is not effected. It has never been since government was instituted, and probably never will be. There will never come a time when some of the taxpayers do not pay more than they should, and when others do not pay less."
We believe the 12% ratio with the permissible deviations of not more than 3% above or below as between and among the various counties of the state is basically fair and reasonable, and allows for individual county adjustments which may be determined to be appropriate by reason of a particular county's needs.
Having so determined, we hereby modify our holding in Poulos II in that we do not now require the implementation of precise mathematical uniformity and hold that the permissible variations herein authorized are in compliance with Art. 10, § 5 of the Oklahoma Constitution requiring that "taxes shall be uniform upon the same class of subjects."
We have reviewed the Techniques, Guidelines, and Definitions for Determining Use Value of Real Property for Ad Valorem Tax Purposes as revised by a committee of County Assessors and a committee of Tax Commission officials and approved by the Board in its meeting held on July 21, 1981, *1274 and find the same to be in compliance with the requirements with Art. 10, § 5 and § 8 of the Oklahoma Constitution, and we determine by judicial decree that the three classifications of real property, i.e., residential, commercial-industrial, and agricultural, and the methodology for determining the value of real property of each class shall apply in determining tax assessments for the tax year 1982, and thereafter until such time as the same shall be changed by the recommendation of the Commission and the determination by the Board based upon good and sufficient valid, legal grounds, or until changed by Acts by the Legislature adopted pursuant to Art. 10, § 8 of the Oklahoma Constitution.
The view has been expressed that this Court should not determine the percentage ratio by which all real property is to be taxed because that is a duty imposed by the Constitution upon the Board and that the Court should instead issue another writ of mandamus compelling the Board to do its duty. That is what the Court did in Poulos II (and refrained from doing in Poulos I in the expectation the Board would perform its duty). That writ of mandamus issued in 1976 has not been followed. It would apparently be a vain and useless thing to issue another. While it is of course vitally important to recognize and maintain the separation of functions between the three branches of the state's government, that doctrine is not so inflexible that it would render this Court impotent to enter its decree judicially determining a percentage ratio that would, in view of the record before us, satisfy the commands of the Constitution, at least until the Board takes action to carry out its Constitutional duty. The command that taxes be uniform was thought by the people important enough to place in the Constitution. It is therefore important enough to invoke the authority of this Court. Except for the current tax year, there is nothing in this opinion to prevent the Board from fulfilling its duty by setting a different percentage ratio in the future.
Petitioner urges that this Court should award him a reasonable attorney fee and costs of these proceedings. Petitioner points out that this action is public interest litigation and that the same was instituted by him and his attorney for no personal benefit other than that shared in common by property owners generally within the state, and that the case has been undertaken by him without "significant financial support from any interest group." While we are mindful of these considerations, and of the adage that "virtue is its own reward," we are well aware such "virtue" does not pay the office overhead or reimburse for out-of-pocket expenses attendant with such a case as is here before us. However, we find no basis, and none has been pointed out to us, whereby, under the law, this Court can award Petitioner an attorney fee.
As a general rule, and one to which this Court is committed, attorney fees to a prevailing party are not recoverable in the absence of a statute or an enforceable contract. City Nat. Bank & Trust Co. v. Owens, Okl., 565 P.2d 4 (1977).
An exception to the rule was recognized in State ex rel. Burk v. Oklahoma City, Okl., 522 P.2d 612 (1973), later app. 556 P.2d 691. In Burk, it was held that the vacation of a public street was void and the owners of a building erected thereon were liable for lease payments to the city. But in that case there was the creation of a common fund over which the Court had a degree of control, and there we awarded the successful protagonist an attorney fee to be paid out of the lease payments. (State ex rel. Burk v. City of Oklahoma City, Okl., 598 P.2d 659 (1979).)
Again in City Nat. Bank & Trust Co. v. Owens, supra, we recognized a second exception. There we held that where a party to a lawsuit has acted in bad faith, vexatiously, wantonly, or for oppressive reasons, such overriding considerations justify an award of attorney fees and costs incurred directly as a result of such misconduct. In Owens, we carefully delineated between the costs and attorney fees incurred as a direct *1275 result of the other party's misconduct, and an award of costs and attorney fees for the entire litigation, awarding the former, not the latter.
In the case before us (Poulos III), there is no creation of a common fund as a result of the litigation which is under the control of this Court, out of which this Court can order attorney fees to be paid, and neither do we find that Respondents have acted "in bad faith, vexatiously, wantonly, or for oppressive reasons" to such a degree as to constitute "overriding considerations" indicative of a need for such a recovery. Equality of taxation is not only a laudable objective, it is a constitutionally mandated imperative. As in the case of all lofty ideals, a struggle for attainment precedes realization of the goal. Whatever the shortcomings of the Respondents, or any of them, may be, there is nothing in this record which impugns their good faith or their motives, or which impels this Court to find and determine that this case falls within any recognized exception to the general rule. It is therefore ordered that each party pay his own costs and attorney fees.
IRWIN, C.J., BARNES, V.C.J., and DOOLIN, OPALA and WILSON, JJ., concur.
HODGES, J., concurs in part and dissents in part.
SIMMS and HARGRAVE, JJ., dissent.
HODGES, Justice, concurring in part and dissenting in part.
I am in full concurrence with the majority opinion in its address of the issues of the methodology for determining the value of real property and in the denial of attorney fees.
However, I must respectfully dissent to the imposition by judicial legislation of a standard 12% ratio to be used in determining the adjusted percentile to be applied to all real property within the state. The setting of a numerical percentile is the constitutional duty of the Board of Equalization pursuant to the Okla.Const. art. 10, § 21. I would grant the writ of mandamus and instruct the Board to perform its constitutional duty.
SIMMS, Justice, dissenting:
When members of one branch of government fail or refuse to do their duty, the problems are not cured by the Court simply doing it for them. This only creates new and larger problems in addition to those still left unresolved. More extensive discussion on this subject can be found in the minority opinions in State, ex rel., Poulos v. State Board of Equalization, Okl., 552 P.2d 1134, 1138 (1975) and State, ex rel., Poulos v. State Board of Equalization, Okl., 552 P.2d 1138, 1139 (1976).
It is not a proper function of this Court to legislate a system of property assessment to equalize taxation. That job is given to the Board of Equalization by the Constitution and statutes.
It is, however, a proper function of the judiciary to enforce compliance with the law and orders of a court. There are various proceedings which can be instituted to obtain constitutionally permissible remedies. If and when those remedies are pursued, we should entertain the action. Meanwhile, I am opposed to this Court performing the legislative functions assigned to the Board of Equalization.
I am authorized to state that Justice HARGRAVE joins me in this dissent. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1711337/ | 948 S.W.2d 532 (1997)
TEXAS FARMERS INSURANCE COMPANY, Appellant,
v.
Carla SEALS, Appellee.
No. 2-96-126-CV.
Court of Appeals of Texas, Fort Worth.
July 3, 1997.
Vince Cruz, Jr., Cruz & Malanga, L.L.P., Fort Worth, for Appellant.
Adam R. Hardison, Law Offices of Adam R. Hardison, Arlington, for Appellee.
Before CAYCE, C.J., and DAY and BRIGHAM, JJ.
OPINION
BRIGHAM, Justice.
This is an appeal from a summary judgment against appellant Texas Farmers Insurance Company (TFIC) awarding attorney's fees to appellee/cross-appellant Carla Seals in an amount equal to one-third of TFIC's subrogation interest in Seals's recovery against a third party on a personal injury claim. The issue we must decide is whether Seals is entitled to recover the attorney's fees from TFIC under the "common fund" doctrine. We hold that she is, and affirm the judgment of the trial court.
On or about May 31, 1991, Seals was injured in a motor vehicle collision with Toyofumi Noguchi, who was insured by Empire Fire and Marine Insurance Company. Seals was insured by TFIC. TFIC paid Seals $8,675.01 in medical benefits under the provisions of her automobile insurance policy. It is undisputed that TFIC had a valid subrogation interest for this amount.
*533 Seals retained an attorney to pursue her claim against Noguchi and entered into a one-third contingency fee contract with the attorney. The attorney eventually negotiated a $34,500 settlement with Empire. Although TFIC knew of Seals's efforts to recover against Noguchi, TFIC did nothing to assist Seals in her efforts. TFIC advised Empire of its subrogation interest in Seals's claim, but made no attempt to recover its subrogation interest from Empire.
After settling with Empire, Seals attempted to settle TFIC's subrogation interest. When TFIC refused to settle, Seals tendered TFIC the full amount of its subrogation interest. Seals then pursued the underlying action for declaratory judgment against TFIC for reimbursement of its pro rata share of her attorney's fees. Upon considering Seals's and TFIC's competing motions for summary judgment, the trial court rendered judgment against TFIC for $2,891.67, which represents one-third of TFIC's undisputed subrogation interest.
In points of error one and two, TFIC contends that the trial court erred in granting Seals's motion for summary judgment and denying its motion for summary judgment because the "common fund" doctrine does not apply to the facts of this case as a matter of law. The question before us is whether an insurer who benefits from the efforts of an insured's attorney gives rise to an equitable obligation on the part of the insurer to pay its pro rata share of the attorney's fees. We conclude that it does.
TFIC contends the question presented is one of first impression; however, Texas has long recognized that an insurer who does not aid in the collection of damages from a third party must pay its share of the attorney's fees and costs incurred by its insured. See Camden Fire Ins. Ass'n. v. Missouri, K. & T. Ry., 175 S.W. 816, 821 (Tex. Civ.App.Dallas 1915, no writ) (holding insured entitled to have expenses incurred by him in the prosecution of his suit against third-party deducted from subrogation award); Ortiz v. Great S. Fire & Cas. Ins. Co., 597 S.W.2d 342, 343 (Tex.1980) (explaining that determination of full compensation includes costs and expenses of collection); Lancer Corp. v. Murillo, 909 S.W.2d 122, 126 n. 3 (Tex.App.San Antonio 1995, no writ) (recognizing Texas has allowed the award of attorney's fees under the "common fund" doctrine in insurance subrogation cases); State Farm Mut. Auto. Ins. Co. v. Elkins, 451 S.W.2d 528, 531 (Tex.Civ.App.Tyler 1970, no writ) (acknowledging that where insurer has recovered against the insured, the pro rata cost and expenses incurred by insured in obtaining the money are borne by insurer). This principle is commonly referred to as the "common fund" doctrine and originates in equity, with the purpose of preventing unjust enrichment.[1] The common fund doctrine was formally adopted in Texas in Knebel v. Capital Nat'l Bank in Austin, 518 S.W.2d 795, 799 (Tex.1974), wherein the Texas Supreme Court stated that "one who preserves or protects a common fund works for others as well as for himself, and the others so benefited should bear their just share of the expenses, including a reasonable attorney's fee." Id. The court later alluded to this equitable doctrine in a subrogation setting in Ortiz. In that case, an insurer sought to satisfy its entire subrogation interest from the fund recovered by and at the expense of its insured. In its decision, the court quoted the long-standing rule of subrogation as set forth in Camden that "[an insured] should not be required to account for more than the surplus which remained in his hands after satisfying his own excess of loss in full and his reasonable expenses incurred in its recovery." Ortiz, 597 S.W.2d at 343 (quoting Camden, 175 S.W. at 821) (emphasis added). After considering the question of whether the insured had been fully compensated and thus whether a right to *534 subrogation had arisen, the court stated in dicta that "when an insurer does not assist in the collection of damages from the third party tortfeasor, it must pay its share of the costs and expenses incurred in obtaining recovery from the third party, including attorney fees." Id. at 344 (citing Elkins, 451 S.W.2d at 531-32).
We find that the common fund doctrine is applicable to the facts in this case. Seals presented uncontroverted summary judgment evidence that she, at her expense, recovered a common settlement fund through which TFIC satisfied its subrogation interest. TFIC took no action to assist Seals with her efforts to recover this fund or to resolve its subrogation interest directly with Empire. Instead, TFIC relied on Seals to incur the expense necessary for its recovery. From the summary judgment record, we find that there was no genuine issue as to any material fact.[2] The trial court properly applied the principles of the common fund doctrine and did not abuse its discretion in apportioning the attorney's fees between Seals and TFIC.
TFIC argues that this case is controlled by Bashara v. Baptist Mem'l Hosp. Sys., 685 S.W.2d 307 (Tex.1985). We find the application of Bashara inept. In Bashara, the court held that a plaintiff's attorney who obtains recovery on behalf of its client can not recover attorney's fees under the theory of quantum meruit or the common fund doctrine when the proceeds obtained through the attorney's efforts were used to discharge a hospital lien. See id. at 310-11; see also Tex. Prop.Code Ann. § 55.002 (Vernon 1995). The court explained that the purpose of the hospital lien statute "is to provide hospitals an additional method of securing payment for medical services, thus encouraging the prompt and adequate treatment of accident victims." Bashara, 685 S.W.2d at 309. The court noted that "while not conclusive, the language and intent of the statute militate strongly against permitting recovery of a patient's attorney's fees from the corpus of the hospital lien." Id. When addressing appellant's common fund argument, the court expressly declined to expand the common fund doctrine to debtor-creditor relationships on the theory that the creditor's interest is not coequal with the debtor's claim to the settlement proceeds. This case does not involve a debtor-creditor situation or a quantum meruit claim. Moreover, it does not carry the same policy concerns attendant to hospital liens. Unlike the lien holder in Bashara, TFIC, as subrogor, "stands in the shoes" of Seals with respect to the subrogated amount, and its rights to the proceeds Seals recovered from Empire were equal to Seals's rights.
Points of error one and two are overruled.
In points of error three and four, TFIC claims the trial court abused its discretion by imposing judgment for attorney's fees because such award was "without common law or statutory authority." TFIC does not attack the propriety of the court's specific award nor does it challenge the evidence in support of the award of attorney's fees. Instead, TFIC merely raises additional arguments as to why the common fund doctrine does not apply to the facts of this case. We have held that the common fund doctrine does apply and are not bound nor persuaded by the authorities TFIC cites. Because TFIC has not briefed why the actual award was improper, we will not address that contention. See TEX.R.APP. P. 74(f).
Points of error three and four are overruled.
In a cross-point, Seals contends that the trial court erred in denying her claim for additional attorney's fees under section 37.009 of the Texas Uniform Declaratory Judgments Act. The recovery of attorney's fees under section 37.009 is discretionary with the court. See TEX. CIV. PRAC. & REM. CODE ANN. § 37.009 (Vernon 1997); Estopar Holdings, Inc. v. Advanced Metallurgical Technology, Inc., 876 S.W.2d 205, 210 (Tex. App.Fort Worth 1994, no writ). Seals has *535 offered no reason why the trial court abused its discretion in denying her claim for additional attorney's fees. The cross-point is overruled.
The judgment of the trial court is affirmed.
NOTES
[1] The doctrine is an exception to the general rule that absent a statutory or contractual basis for an award of attorney's fees, each litigant must bear his own expenses. It allows recovery of reasonable attorney's fees to a party who, at his expense, has maintained a suit that creates a benefit to others as well as himself. See Trustees v. Greenough, 105 U.S. 527, 532-37, 26 L.Ed. 1157 (1881). As noted in Lancer, Texas courts have applied the doctrine to various types of litigation including shareholder derivative suits, class action suits, and insurance subrogation suits. See Lancer, 909 S.W.2d at 126.
[2] The trial court, in its discretion, may grant summary judgment in an equitable action where the summary judgment evidence affirmatively shows that there is no genuine issue as to a material fact. See TEX.R.CIV.P. 166a(c); Fleetwood v. Med Center Bank, 786 S.W.2d 550, 556 (Tex.App.Austin 1990, writ denied); Elias v. Manis, 292 S.W.2d 836 (Tex.Civ.App.Beaumont 1956, writ ref'd). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2062010/ | 531 Pa. 272 (1992)
612 A.2d 426
COMMONWEALTH of Pennsylvania, Appellant,
v.
Guy H. DAVIS, Appellee.
Supreme Court of Pennsylvania.
Argued March 12, 1992.
Decided June 17, 1992.
*273 David J. Flower, Dist. Atty., Somerset, for appellant.
Julianne Keri, Somerset, for appellee.
Before NIX, C.J., and LARSEN, FLAHERTY, McDERMOTT, ZAPPALA, PAPADAKOS and CAPPY, JJ.
OPINION ANNOUNCING THE JUDGMENT OF THE COURT
PAPADAKOS, Justice.
In 1983 and 1984, Appellee, Guy H. Davis, the Sheriff of Somerset County and Warden of the Somerset County Jail, *274 engaged in numerous incidents of homosexual conduct with various inmates at the Somerset County Jail, who were cajoled into these liaisons by threats, or promises of favorable treatment from Davis in his official capacity as supervisor of the local penal system. As a result of these acts, Davis was charged by the Attorney General's Office with one count of involuntary deviate sexual intercourse (18 Pa.C.S. § 3128); six counts of indecent assault (18 Pa.C.S. § 3126); six counts of indecent exposure (18 Pa.C.S. § 3127); and six counts of official oppression (18 Pa.C.S. § 5301).
In a plea bargain arrangement, Appellee pled guilty but mentally ill to the six counts of official oppression before the Honorable Daniel J. Ackerman who was specially appointed to preside over the case. The remaining charges were "nolle prossed," that is, not further prosecuted.
On October 24, 1985, Davis was sentenced by Judge Ackerman to a lenient ten (10) year probationary sentence. As a condition of his probation, he was also required to: 1) immediately resign the position of Sheriff and Warden at Somerset County; 2) hold no position for compensation or otherwise in law enforcement or any other position that would place him in custody or control of prisoners, children or incompetent adults; and 3) undergo and continue appropriate psychiatric and mental health evaluation and treatment as necessary.
Appellee violated this probation on September 28 and September 30, 1988, when he transported a 13-year-old male to the State of Ohio for the purpose of engaging in homosexual relations. For this crime, Appellee was prosecuted under the Mann Act, 18 U.S.C. §§ 2421 and 2423, in the United States District Court for the Western District of Pennsylvania. He pled guilty to these federal charges.
The Appellee's state probation was revoked by the Honorable Eugene E. Fike, II, of the Somerset County Court of Common Pleas on January 9, 1989, based on the federal charges and the admitted illicit conduct of the Appellee.
Judge Fike re-sentenced Appellee on July 21, 1989, to a sentence of fifty (50) months to one hundred twenty (120) *275 months to run consecutively to any federal sentence. In this re-sentencing proceeding, as in the original sentencing proceeding, no hearing was held as is mandated by 42 Pa.C.S. § 9727 to determine if Appellee was in need of treatment pursuant to the Mental Health Procedures Act, 50 P.S. § 7101, et seq.
Appellee then filed a Motion for Modification which was heard on August 18, 1989. In the hearing on the motion, Judge Fike stated that he was incorporating into the resentencing proceeding the record of the original sentencing proceeding and made specific reference to the mental health evaluation done on the Appellee while he was in federal custody. Judge Fike also noted that the Appellee had no additional evidence to present concerning his mental status. Judge Fike made a specific finding that the court could not find that the defendant was severely mentally disabled under the Mental Health Procedures Act. The Motion for Modification was denied and the sentence was unchanged. Appellee appealed to the Superior Court.
The Superior Court, in a 2-1 memorandum decision (with Judge Ford-Elliott dissenting), held that the sentencing court had violated the clear mandate of 42 Pa.C.S. § 9727(a), by neglecting to take testimony and make a finding on the issue of whether Appellee, at the time of re-sentencing, was severely mentally disabled and in need of treatment. The Superior Court ordered the judgment of sentence vacated and remanded the case for further proceedings. 402 Pa.Super. 653, 578 A.2d 36.
Section 9727(a) of the Sentencing Code provides, in pertinent part, as follows:
A defendant found guilty but mentally ill or whose plea of guilty but mentally ill is accepted under the provisions of 18 Pa.C.S. Section 314 (relating to guilty but mentally ill) may have any sentence imposed on him which may lawfully be imposed on any defendant convicted of the same offense. Before imposing sentence, the court shall hear testimony and make a finding on the issue of whether the defendant at the time of sentencing is severely mentally disabled and in *276 need of treatment pursuant to the provisions of the act of July 9, 1976 (P.L. 817, No. 143) known as the "Mental Health Procedures Act." (Emphasis added).
The Superior Court panel held that the language of § 9727(a) "the court shall hear testimony and make a finding on the issue of whether the defendant at the time of sentencing is severely mentally disabled . . ." is mandatory. That court thus concluded that: "The sentencing court, in neglecting to take testimony and make a finding `on the issue of whether the defendant at the time of sentencing [was] severely mentally disabled and in need of treatment pursuant to the provisions of the [Mental Health Procedures Act]' . . ., violated the clear mandate of the statute." The Superior Court majority, acknowledging that § 9727(a), by its terms, applies to the sentencing of a defendant who is found guilty but mentally ill or whose plea of guilty but mentally ill is accepted, held that the requirement to take testimony and make a finding on the issue of mental disability at the time of sentencing was applicable to the re-sentencing of Appellee. We find this necessarily so, especially when no such hearing was held during the initial sentencing. The Superior Court reached this conclusion even though that portion of the statute (§ 9727(f)) dealing with probation and the revocation of probation does not specifically require such a hearing on re-sentencing, and even though Appellee waived his right to a presentence investigation at the time of his original sentence.
The Commonwealth contends that such an interpretation ignores the clear language of the statute which relates to sentencing and not re-sentencing. This argument is unpersuasive. The Superior Court majority properly relied upon Commonwealth v. Pierce, 497 Pa. 437, 441 A.2d 1218 (1982), which governs this case, and where we held, in an opinion by Mr. Justice Larsen, that under 18 P.S. § 1371(b), "upon revocation of probation, the court possesses the same sentencing alternatives that it had at the time of the initial sentencing." 497 Pa. at 440, 441 A.2d 1218. The same rights or powers give rise to the same duties! We think that under the mandatory language of § 9727(a), as well as our own case law, *277 the mental health hearing described in the statute was obligatory upon revocation of probation and re-sentencing where no such hearing was held at sentencing itself.
Also, the Commonwealth argues that, assuming that the Superior Court is correct that 42 Pa.C.S. § 9727(a) applies to re-sentencing proceedings, the Superior Court erred insofar as it failed to recognize that the conduct of the re-sentencing court was harmless error given the evidence presented and findings the court made. This argument, too, is unpersuasive. Section 9727(a) is mandatory. It requires a hearing. What the trial court did at re-sentencing was to accept into the record a mental health report from the federal proceedings. It was not a hearing, at which each side could present evidence upon which to evaluate Appellee's mental health. The trial court merely referred to, and relied upon, the mental health evaluation done by the federal authorities, and in doing so abdicated its serious responsibility to conduct an independent and meaningful procedure to fully evaluate Appellee's mental health not only for Appellee's benefit but for the ultimate benefit of society as well, as further discussed below.
We have held in the past, and we do so again, that a hearing intends a judgment bench attended by judges or officials sitting in a judicial capacity, prepared to listen to both sides of the dispute and to consider deeply, reflect broadly, and decide impartially, and the mere consideration of a report moving across one's desk, is not a hearing. Unora v. Glen Alden Coal Co., 377 Pa. 7, 104 A.2d 104 (1954).
Finally, the Commonwealth argues that the Appellee waived the issue of the lack of conformity to 42 Pa.C.S. § 9727(a) when Appellee failed to raise the issue after the original sentencing on October 24, 1985. This argument, too, must fail. Initially, it must be observed that the crucial question before us, given our conclusion that a Section 9727(a) hearing is mandatory, is not whether Appellee validly waived such a hearing at the time of sentencing, but whether he could validly waive such a hearing at re-sentencing. We conclude that he could not. The Section 9727(a) hearing cannot be *278 waived or ignored. By express statutory terms, it is mandatory.
This conclusion is supported by sound public policy. While we do not dispute the fact that § 9727(a) ultimately confers a right to a hearing and to treatment upon criminal defendants, it is also designed to protect the interests of society. If Appellee had received a full mental health hearing prior to his original sentencing, he might have been either adequately punished for his crimes or obligated to receive effective psychological treatment, thus avoiding the tragedy that subsequently occurred. More than likely, Appellee, along with many others in his position, will someday be returned to society. It is incumbent that those in his position, who can be treated, be effectively treated while in custody. The courts must, to some degree, supervise this process and bear responsibility for the same. The legislature intended that procedures like § 9727(a) must be carefully adhered to, and followed meticulously, in order not only to rehabilitate defendants but to safeguard society's interests as well. In the last twenty years or so, we have witnessed the deplorable breakdown of mental health care in this country, and the consequent scandal of having hordes of mentally ill homeless roaming the streets and byways of our major cities, some of whom commit crimes. This court will not contribute to that trend.[1] The instant procedures designed to promote mental health treatment must be scrupulously followed, and cannot be waived or circumvented.
Accordingly, the decision of the Superior Court is affirmed.
McDERMOTT, ZAPPALA and CAPPY, JJ., concur in the result.
LARSEN, J., notes his dissent.
NOTES
[1] See, R.J. Isaac and V.C. Armat, Madness in the Streets, (The Free Press: N.Y., 1990). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2123135/ | 78 Ill.2d 308 (1980)
399 N.E.2d 1302
STANLEY MAKOWICZ, Appellant,
v.
THE COUNTY OF MACON, Appellee.
No. 51841.
Supreme Court of Illinois.
Opinion filed January 23, 1980.
*309 Vernon H. Houchen, Special Assistant State's Attorney, of Decatur, for appellant.
Patrick M. Walsh, State's Attorney, of Decatur, for appellee.
Appellate court reversed; circuit court affirmed.
MR. JUSTICE WARD delivered the opinion of the court:
In protest of her discharge as a secretary in the office of the Veterans Assistance Commission of Macon County (Commission) by Stanley Macowicz, the Commission's superintendent, Mrs. Brad Collins filed a complaint with the county board of Macon County (Board) claiming that the Commission had no authority to discharge her. When the Board decided that it alone had the authority to dismiss Mrs. Collins, Stanley Makowicz, the plaintiff here, brought a complaint for declaratory judgment in the circuit court of Macon County on September 8, 1977, claiming authority to appoint and discharge employees of the Commission under the provisions of "An Act to regulate the granting of assistance to indigent war veterans * * *" (Ill. Rev. Stat. 1977, ch. 23, pars. 3081 through 3090). The trial court held that persons appointed or hired by the Commission were to be considered its employees and subject to its employment procedures and *310 not to those of the Board. The appellate court reversed, with one judge dissenting. (68 Ill. App.3d 322.) Though the court judged that the superintendent's express right to hire under the statute included an implied authority to discharge, it held that the appointment of the superintendent by the Commission, which the court considered to be a private body, was unconstitutional. We granted the Commission's petition for leave to appeal.
The statute here, commonly known as the Bogardus Act, was enacted in 1907 and authorizes the establishment of county veterans' assistance commissions in counties where there are two or more recognized veterans' associations (Ill. Rev. Stat. 1977, ch. 23, par. 3089). Delegates to a commission are designated by the various veterans' organizations, and they "elect" or appoint a superintendent for the commission. The commission and the county board are to have "general oversight of the distribution of all moneys and supplies appropriated by the county for the benefit of the indigent veterans * * *." (Ill. Rev. Stat. 1977, ch. 23, par. 3089.) The decision as to the monies to be spent and to whom they should be distributed are based upon recommendations made by the local veterans' organizations. (Ill. Rev. Stat. 1977, ch. 23, par. 3082). The Act also provides that the commission shall recommend to the county board what salaries should be paid the superintendent and employees of the commission. (Ill. Rev. Stat. 1977, ch. 23, par. 3090). The actual decision as to the funds to be expended following recommendations of the commission is made by the county board. Ill. Rev. Stat. 1977, ch. 23, par. 3082, 3090. See also Ickes v. Board of Supervisors (1953), 415 Ill. 557.
The superintendent, in addition to directing the operation of the commission, is authorized to appoint a secretary to the commission and other employees, if necessary, and to maintain an office. The office is to be provided by the county, along with necessary supplies, telephone, stationery, printing and postage. (Ill. Rev. *311 Stat. 1977, ch. 23, par. 3090.) Should the county board fail to appropriate "just and necessary" funds for aid to the indigent veterans, the superintendent may petition the circuit court for a writ of mandamus ordering the county to provide such funds. (Ill. Rev. Stat. 1977, ch. 23, par. 3082.) The Act specifically provides that employees of the commission, including the superintendent, shall be exempt from the provisions of any civil service act or laws of the State of Illinois. Ill. Rev. Stat. 1977, ch. 23, par. 3090.
We must decide whether the appellate court was correct in holding that the appointment of the plaintiff as superintendent of the commission was an appointment, as the appellate court held, by a private body and invalid, and whether the discharge of a secretary of the Commission was to be governed by rules or guidelines of the Commission or of the Board.
The Act was enacted in 1907, and the commission here has operated in Macon County since 1949. The plaintiff invites attention to this court's holding in People ex rel. Schlaeger v. Jarmuth (1947), 398 Ill. 66, 76, where it was said that "[w]hile the passage of time is not conclusive as to the validity and constitutionality of the statute, it creates a strong presumption against its invalidity." (See also People v. Avery (1977), 67 Ill.2d 182; Laffoon v. Bell & Zoller Coal Co. (1976), 65 Ill.2d 437.) The constitutional challenge here has not heretofore been raised. No other constitutional challenges to this statute have been reported, save for the question raised in Ickes v. Board of Supervisors (1953), 415 Ill. 557.
We cannot accept the Commission's argument that under the decision in Ickes we should consider as res judicata the question now presented as to the Act's constitutionality. The provisions and questions examined there were entirely different from those here. Though this court in Ickes did by way of broad, general description state that the case "involv[es] the construction, *312 interpretation and constitutionality of the Indigent War Veterans Act * * *" 415 Ill. 557, 558), the question for decision was whether the county board had any discretion in the setting of salaries recommended to it by the commission. The court held that the county board did have discretion, stating:
"The act does not say that the appropriation must be in the amounts recommended by the commission. It states purely and simply that the board shall appropriate such amounts as may be deemed necessary to properly compensate employees. What is proper compensation is certainly within the discretion of the board." 415 Ill. 557, 562.
Citing People ex rel. Rudman v. Rini (1976), 64 Ill.2d 321, the Board says the statute here is unconstitutional, as it would grant the power to appoint the superintendent to a private body or group. The reliance on the holding in Rudman, however, is misplaced.
The plaintiff has asserted that the Commission is not a private body but is a local governmental unit, and to that the Board has not responded. The plaintiff points out that in section 2-14 of the Illinois Public Aid Code (Ill. Rev. Stat. 1977, ch. 23, par. 2-14) county veterans' assistance commissions providing general assistance to indigent war veterans and their families under section 12-21.13 of the Illinois Public Aid Code (Ill. Rev. Stat. 1977, ch. 23, par. 12-21.13) are identified as local governmental units. (Section 12-21.13 provides for the levying for assistance to indigent war veterans and their families by counties of less than 3 million population having county veterans' assistance commissions.) Those sections referring to county veterans' assistance commissions and local governmental units antedate our constitution of 1970, but it is to be noted that the local government article of our constitution, that is, article VII, provides in section 1 for "units of local government," an almost *313 identical term. Section 1 states:
"`Municipalities' means cities, villages and incorporated towns. `Units of local government' means counties, municipalities, townships, special districts, and units, designated as units of local government by law, which exercise limited governmental powers or powers in respect to limited governmental subjects, but does not include school districts."
Section 8 of article VII of the 1970 Illinois Constitution states that the General Assembly shall provide for the selection of officers of units of local government.
It may be that the Commission, identified by statute as a "local governmental unit," is to be considered a unit of local government exercising limited governmental powers in respect to limited governmental subjects. It will not be necessary, however, for us to make that specific determination, because it is obvious that in any event the Commission is not a private body or group as the Board and the appellate court regarded it. We consider that the General Assembly did not exceed constitutional limitations in granting the Commission authority to select the superintendent. The method of appointment provided for here was within the discretion of the legislature. (Zisook v. Maryland-Drexel Neighborhood Redevelopment Corp. (1954), 3 Ill.2d 570. See also Betts v. Village of Calumet Park (1960), 20 Ill.2d 524; People ex rel. Gutknecht v. Chicago Regional Port District (1954), 4 Ill.2d 363; People v. Chicago Transit Authority (1945), 392 Ill. 77.) And this authority is apart from that conferred in section 8 of article VII on the General Assembly to provide for the selection of officers of units of local government.
We would parenthetically observe that it is not necessary to consider here whether there may be exceptions to what this court said in People ex rel. Rudman v. Rini (1976), 64 Ill.2d 321, regarding the invalidity of delegations of power, including grants of authority to appoint, to private parties. See Freedman, Delegation of Power and *314 Institutional Competence, 43 U. Chi. L. Rev. 307 (1976); Annot.; 97 A.L.R.2d 361 (1964); Davis, Administrative Law Treatise sec. 2.14 (1958); Davis, Administrative Law of the 70's sec. 2.14 (1976).
The Board argues that even if the Act is to be considered constitutional, employees of the Commission, other than the superintendent, must be discharged from employment according to the personnel practices of the Board and not those of the Commission. The Board says that Ickes, in declaring that the county board had discretion to determine the amount of funds to be distributed as salaries for commission employees, was in effect a recognition that the county board could "discharge" employees by simply failing to provide funds for the positions involved. The Board argues too that the fact that the Act gives the superintendent the power to appoint a secretary and other employees does not necessarily mean he has the power to discharge employees.
The conclusion the Board would reach from the decision in Ickes is unwarranted. The holding there was simply that the county board had discretion to accept or modify salary recommendations made to it by the Commission. There was in fact an observation by the court contrary to the contention the Board makes here. 415 Ill. 557, 562.
We are not persuaded by the Board's contention that the superintendent's power to hire the Commission's secretary does not include the implied power to discharge.
Section 10 of the Act specifically provides that the "[s]uperintendents, subject to rules formulated by the commission, shall select * * * secretaries and other employees * * * and the secretary of the commission shall be appointed by the superintendent." (Ill. Rev. Stat. 1977, ch. 23, par. 3090.) This section seems to make it clear that persons employed by the Commission were to be employees of the Commission and not of the Board. *315 No portion of the Act provides or suggests that the employees of the Commission were to be subject to the employment procedures of the Board. One must conclude that the superintendent had authority to discharge Mrs. Collins. This conclusion is supported by section 10 of the Act which, as noted earlier, exempts all commission employees from any civil service act or laws of the State of Illinois. On the record here it cannot be said whether there were proper grounds for the secretary's discharge and whether Commission guidelines, if any, were followed. We answer only the question presented, viz., whether the superintendent has the authority to discharge, as well as to appoint, the secretary for the Commission. The cases the Board offers in opposition to the claim of a power to discharge (Bovinette v. City of Mascoutah (1973), 55 Ill.2d 129; People ex rel. Wojcik v. Village of Harwood Heights (1974), 17 Ill. App.3d 477) are plainly distinguishable.
For the reasons given, the judgment of the appellate court, reversing the circuit court of Macon County, is reversed. The judgment of the circuit court is affirmed.
Appellate court reversed; circuit court affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1963825/ | 366 A.2d 786 (1976)
Dorothy McQUEEN, Petitioner,
v.
NATIONAL CAPITAL HOUSING AUTHORITY, Respondent.
No. 9255.
District of Columbia Court of Appeals.
Argued October 15, 1975.
Decided December 1, 1976.
*787 Courtenay Ellis, Washington, D.C., with whom David J. Cynamon, Washington, D. C., was on the brief for petitioner.
Julian Karpoff, Washington, D.C., with whom Annice R. McBryde and James McDaniel, Washington, D.C., were on the brief for respondent. James A. Price, Washington, D.C., also entered an appearance for respondent.
Before KERN, Associate Judge, REILLEY, Chief Judge, Retired, and HYDE, Associate Judge, Superior Court of the District of Columbia.[*]
*788 HYDE, Associate Judge:
This is an appeal from a ruling by the National Capital Housing Authority (NCHA) denying petitioner's admission to a low-income homeownership program. Petitioner's original application was turned down, but that action was reversed by a Hearing Examiner; NCHA reversed the Hearing Examiner.
On August 21, 1973, petitioner Dorothy McQueen applied for admission to the Homeownership Opportunity Program D. C. 1-73 (hereinafter D.C. 1-73). The D.C. 1-73 program is administered by NCHA under a national program run by the Department of Housing and Urban Development (HUD) entitled "Low-Rent Housing Homeownership Opportunities" and is more commonly known as the Turnkey III Program (hereinafter Turnkey III). The Turnkey III program allows local housing authorities such as NCHA to provide low-income families with an opportunity to become homeowners through federal assistance taking the form of annual contributions to the various local housing authorities. D.C. 1-73 is designed to enable an individual to eventually purchase a home that he or she initially rents. NCHA acquires the housing project with assistance from HUD and owns all the homes until title is actually transferred to a "home buyer".
The purchase of a home is accomplished by having the home buyer make monthly payments to NCHA which in essence constitutes rent. Each home buyer is also required to pay his or her own utilities every month and perform routine maintenance work. From this monthly payment, NCHA sets up two separate accounts for the home buyer. The first is called the Earned Home Payments Account (EHPA)[1] and the second is the Non-Routine Maintenance Reserve (NRMR).[2] A portion of each monthly payment made by the home buyer is set aside in each of these accounts. The remainder of the required monthly payment goes toward the monthly operating expenses of the project. After the home buyer's EHPA achieves a credit of $200, the home buyer can exercise an option to buy the home he or she occupies. Until the EHPA reaches this amount, the home buyer has the status of a lessee of NCHA with an obligation to build up the necessary balance. In any event, for the purposes of convenience, the occupant is referred to as a home buyer during his status as a lessee.
The amount of a home buyer's required monthly payment, based upon a percentage of the family's income, is set by NCHA. The required monthly payment, plus a monthly allowance for utilities that the home buyer pays directly, has been initially set at an amount equal to 22.5% of "Family Income" as defined by NCHA.[3] Although this figure is adjustable, in no case may it exceed 25% of "Family Income."[4]
*789 The Turnkey III Program is different from an ordinary rental project in that it is a homeownership program designed to be self-liquidating. It is for this reason that the program is structured in such a way that the monthly payments made by all the families in the project must be 10% greater than the "break-even amount".[5] However, NCHA may select home buyers whose monthly payments by themselves will be less than the break-even amount, provided the over-all average is maintained.[6] NCHA has computed the necessary average monthly payment of all the families in the project to be $90 in order to maintain financial feasibility.
The process of determining eligibility for the program involves several steps. First, the family applying must be determined to be within the maximum income level established for the program.[7] Second, a determination is made of whether the family has "potential for homeownership". In order to have "potential for homeownership" a family must be said to have sufficient income to equal the EHPA, the NRMR, and the cost of utilities from its monthly payment. Additionally, at least one member of the family must be gainfully employed or have an established source of continuing income.[8] The final step in the process is to select the actual home buyers from those said to have "potential for homeownership" because they meet the above standards.
NCHA, pursuant to HUD regulations,[9] sets forth specific dollar amounts for home buyer eligibility in its "income qualifications" statement.[10] This statement says that there is no minimum income requirement for individual acceptance into the program. The minimum monthly payment plus the monthly utility cost for each unit, which is approximately $30, is restricted by law to 25% of family income. For the purposes of this program, however, NCHA set that figure at 22.5% of family income.[11]
Petitioner's application for admission to the Homeownership Opportunities Program was denied by the NCHA Selection Committee. Mrs. McQueen's minimum monthly payment was set at $35. In a letter dated October 15, 1973, she was told by the Selection Committee that she was not eligible for the program under federal guidelines because she was unable to meet the required minimum monthly payment of $35 from 22.5% of her net income. The letter also said that neither she nor her spouse was working and that federal regulations required that one of the adult members of the family be either gainfully employed or have an established source of continuing income.
Since March 1971, Mrs. McQueen's sole source of income has been a monthly welfare check in the amount of $384.80. The Selection Committee calculated her net income by multiplying her monthly public assistance check of $384.80 by twelve, thereby arriving at a gross annual income of $4,617.60. This amount was then adjusted by 5% plus another $1,800 for six dependents, *790 as required by federal law.[12] This left Mrs. McQueen with a net income of $2,586.72; 22.5% of that figure, which is the maximum NCHA felt it could charge for rent, is equal to $582.01. Dividing that figure by the twelve months of the year comes to approximately $49 per month which Mrs. McQueen had available for shelter costs. Since her utility bills were approximately $31 per month, this left only $18 with which to make the $35 monthly payment. Therefore, she was $17 short.
Until the time she applied for admission to the Turnkey III program, petitioner rented premises from a private landlord. She paid $128 a month for rent, plus utilities ranging from $20 to $24 a month, and petitioner alleges that she was never in arrears on the rent.
Mrs. McQueen also receives food stamps every month worth $218, for which she pays $107, resulting in a net benefit of $111 per month. The value of these food stamps was not considered by the Selection Committee in computing her monthly income in order to determine her eligibility for admission to Turnkey III. This is an important point which will be referred to later.
Subsequent to the rejection of her application for admission to the Turnkey III program, petitioner requested that her application be re-evaluated and asked for a hearing by letter dated December 6, 1973. That request was acknowledged by NCHA, and a hearing was held before a Hearing Examiner on March 14, 1974. On July 11, 1974, the Hearing Examiner reversed the denial of petitioner's application and ordered that she be given first priority for admission to any vacancies in the project.
In overruling the Selection Committee decision, the Hearing Examiner was of the opinion that petitioner's food stamp benefits should be considered income for purposes of eligibility and that failure to take this benefit into account in calculating her income was error. He also found that the 22.5% minimum income requirement violated NCHA guidelines, the National Housing Act, federal case law, and HUD regulations.
NCHA subsequently set the Hearing Examiner's decision aside. In doing so, NCHA stated that the Homeownership Program is essentially different from traditional public housing rental projects, and for this reason it is permissible and appropriate to require an applicant to meet certain minimum income limits. It also overruled the Hearing Examiner's finding that the value of food stamps must be considered in determining family income and further found that the Hearing Examiner had no authority to order that petitioner be given first admission to any vacancies occurring in the project. NCHA held such an order to be an impermissible preference over other applicants who might be more qualified for admission.
Petitioner puts forth two main contentions in arguing that the decision of the National Capital Housing Authority is erroneous. First, she argues that NCHA relied on a minimum income limit in determining her eligibility and that such a minimum income limit is violative of and finds no basis in the United States Housing Act or HUD's regulations governing Turnkey III. Second, appellant argues that even if a minimum income requirement is valid, her right of due process was violated because she was judged ineligible for the program on the basis of an automatic presumption rather than being judged on the merits of her particular case.
Conversely, NCHA argues that its income requirement is not inconsistent with any United States law or HUD regulation. Furthermore, it claims that its concern over the solvency of Turnkey III is a proper justification for a minimum income requirement and that because homeownership is not a constitutional right, each applicant *791 need not be judged on the unique aspects of every particular case. We agree.
The court will first address itself to the validity of the 22.5% income requirement. In its D.C. 1-73 manual, NCHA specifically says that no minimum income requirement is used in selecting home buyers for Turnkey III. In spite of what the NCHA manual says, this court believes that the effect of the 22.5% income requirement is such that it actually is a minimum income requirement that restricts admission into the program. This is so because there are people with incomes so low that 22.5% thereof is not sufficient to meet the monthly payment necessary to obtain entry into the Turnkey III program. Thus, to view the 22.5% figure as anything but a minimum income requirement is contrary to the facts. The questions we must resolve, then, are whether or not this minimum income requirement is valid per se and if so, is it valid in its application by NCHA.
NCHA does not cite any law that requires it to limit the amount of a family's rent to 25% of its income; the only such law pointed out to the court is 42 U.S.C. § 1402, more commonly known as the Brooke Amendment. To determine the validity of NCHA's income requirement, we must determine if the Brooke Amendment is applicable to the Turnkey III program. Though more exhaustive treatments of the subject have been done elsewhere,[13] a concise history of the circumstances surrounding the passage of the Brooke Amendment and the U. S. Housing Act is necessary here to understand their relevancy in this case.
I. THE BROOKE AMENDMENT
The United States Housing Act of 1937[14] established a program of federal aid to local agencies in order to provide decent housing to those who could not obtain it privately. The purpose of the Act was to assist the various states to remedy unsafe, unclean conditions and an acute shortage of decent dwellings for low-income families.
In the 1960's, contracts between the federal government and local housing authorities, under which federal subsidies were given to the local housing authorities to build housing projects, generally provided that the housing projects themselves should be self-supporting. Operating expenses were to be paid from the income of each project. Any operating deficits were to be made up from past surpluses accumulated during prior successful years of operation. By 1969, NCHA had a large operating deficit and applied to HUD for additional money to meet the anticipated deficits of the 1970's. In order to receive help, NCHA was told it would have to devise a rent schedule that would produce enough income in its projects so that they would attain financial feasibility in a few years. Under the proposed rent schedule, minimum rentals would come out to figures which in some cases would be over 40% of a family's income.
Congress had a deep concern that families of very low income would be squeezed out of the competition for public housing. In December of 1969, Congress passed the Brooke Amendment which limited the amount of rent that local agencies could charge a family to one-fourth of its income. Congress' intent in passing this amendment was to make sure that the extremely poor families were not shut out from being able to obtain public housing. In order to compensate for the loss of income that was previously available in the form of higher rentals from tenants, Congress authorized HUD to pay the local housing authorities the difference between *792 operating expenses and the income they received from rents. This allowed the local housing authorities to make up the amount of money attributable to maintenance and operating expenses that exceeded 25% of their tenants' income.
The language of 42 U.S.C. § 1401 and § 1402 makes it abundantly clear that a prime feature of public housing programs today is rent limitation and that the purpose of public housing is to make decent, safe and sanitary dwellings available to low-income families. The legislative history of P.L. 91-152, officially known as the Housing and Urban Development Act of 1969, bears this out. Senate Report 91-392 stated that:
Section 211 of the bill would amend the U. S. Housing Act of 1937 to add a new section 24 which would provide an additional assistance program in behalf of very low-income tenants of public housing projects.
This section would authorize rental assistance payments with respect to units in low-rent housing projects, including low-rent housing in private accommodations, to enable families of very low income to afford rentals with no more than 25% of their incomes. (Emphasis added). Assistance would be in the form of annual payments by the Secretary to public housing agencies pursuant to contracts entered into with the local agencies. Existing as well as new units would qualify for assistance and assistance could be continued for the life of the project so long as it served low-income tenants.
At the present time, annual contribution payments by the Federal Government to local agencies cover the debt service on private borrowings financing the development or acquisition costs of the projects. Operating and maintenance expenses are payable out of rentals paid by the low-income tenants. . . . [The] costs are too high for the very poor to bear. . . . Local housing agencies have attempted to meet this problem by charging minimum rents for some units below the operating costs attributable to the units, with the higher income tenants making up the difference. This has helped somewhat but not enough. For the most part the neediest families have been excluded from the public housing program.
This section would enable families, regardless of how low their incomes are, to afford the rentals necessary to support project operating costs with no more than 25 percent of their income. S.Rep.No.91-392, 91st Cong., 1st Sess. 1451-1452 (1969), U.S.Code Cong. & Admin.News 1969, pp. 1524, 1541.
The House Senate Conference Report 91-74 retained the same basic concept of Section 211 of the Senate bill. It did this by generally limiting rents that may be charged public housing tenants to no more than 25% of their income, provided federal funds are available to cover the amount by which the appropriate rental charges exceed 25% of the income of the tenant and to cover the cost of adequate operating and maintenance services.
II. THE BROOKE AMENDMENT APPLICABILITY TO TURNKEY III
Petitioner argues that under the Brooke Amendment NCHA is not only limited to charging no more than 25% of a family's income for rent, but may not bar an applicant if his income is so low that 25% of it will not meet the required payments. In our judgment, this application of the Brooke Amendment to the Turnkey III project was not intended by Congress.
In view of the circumstances around which the Brooke Amendment was passed and its legislative history, we can safely conclude that it was intended to apply only to conventional public housing rental projects where maintenance and operating costs are federally subsidized. This court *793 is aware that the 25% income requirement is being used as a minimum limit or a floor in this case, even though Congress meant the Brooke Amendment to be used as a ceiling on rents when it was passed. The key to this case, however, is the crucial difference between the way a conventional public housing project is run and the way the Turnkey III program is run.
Petitioner's argument would have more validity in a typical rental public housing project. Congress has by statute created an entitlement to a decent, safe and sanitary dwelling for everyone.[15] Federal subsidies make this possible, and the Brooke Amendment makes it possible to extend this benefit to even the poorest low-income families by providing for the additional subsidies that make up the difference between income from rents and operating expenses. The purpose of the relevant statute though, is not to provide everyone with the opportunity to own a home, but merely to provide people with a place to live. The language of the statute itself speaks of "dwelling" and does not use the word "home" in the sense of ownership. There is no statutory or constitutional right to homeownership.
The Turnkey III program, on the other hand, enables local housing authorities to provide selected low-income families with an opportunity to actually own their own homes. This enables those families selected to attain something more than they are entitled to by law.
Turnkey III projects are meant to be self-liquidating; additional subsidies to cover operating and maintenance expenses are not available. Money for those things comes from the participants themselves and is put into the EHPA or the NRMR in the form of part of the home buyer's monthly payment.[16] HUD's intent to make the project self-liquidating is reflected in the language of regulation § 1270.104(f) (2)[17] which requires that the incomes of all selected home buyers result in a required average monthly payment of at least 10% more than the break-even amount for the project.[18] In light of the purpose of Turnkey III and the way it is administered, it is quite rational for NCHA to use the 25% figure as a floor instead of a ceiling.
To use the 25% figure as a floor in a conventional public housing project would be to deny those who could not pay rent from that portion of their income a right which Congress has conferred on them by statute. To deny persons entrance into the Turnkey III program because they cannot meet monthly payments from a certain portion of their income does not deny them anything that they are entitled to by statute or otherwise. Consequently, in the court's view, the 22.5% minimum income requirement does not violate the United States Housing Act or any of the concepts embodied therein.
III. DOES APPLICATION OF THE 25% OF INCOME IN TURNKEY III VIOLATE HUD REGULATIONS?
Likewise, the 22.5% income requirement is not in contravention of any of the HUD regulations governing the operation of Turnkey III, nor are those regulations themselves in violation of any statute *794 or the Constitution. The court recognizes, as petitioner claims, citing §§ 1270.104(b) (1) and (2) and 1270.104(f) (2), that the regulations contain a preference for low-income people. However, recognition of that preference does not necessitate declaring the 22.5% income requirement invalid.
Section 1270.104(b)(1) of HUD's regulations reads as follows:
(b) Eligibility and standards for admission.
(1) Homebuyers shall be low-income families as determined in accordance with the income definitions and limits established by the LHA and approved by HUD. The HUD-approved standards for admission to low-rent housing, including the LHA's established priorities and preferences and the requirements for administration of low-rent housing under . . . 42 U.S.C. 2000(d), shall be applicable except that the procedures used for homebuyer selection under Turnkey III shall be those set forth in this section. In carrying out these procedures the aim shall be to provide for equal housing opportunity in such a way as to prevent segregation or other discrimination on the basis of race, creed, color or national origin, in accordance with the Civil Rights Act of 1964. (Citations omitted).
What this language means is that home buyers must be picked from within the broad class of people who are considered low-income in accordance with limits established by the LHA and approved by HUD. A home buyer has to be from that class of persons whose income ranges from the lowest that one can have and be entitled to participate in a conventional public housing project to those who have the maximum income that one can have and be able to participate in a public housing project. As long as the home buyer is among this class of people, he is within HUD approved standards for admission, and HUD standards, priorities and preferences are applicable to this extent. However, § 1270.104(b) (1) also says that the actual procedures used for selecting a home buyer shall be those set forth in the section.
Subsection (b) (2) allows the local housing authority to establish income limits for Turnkey III which are different from conventional programs, provided they are in accord with applicable statutory and administrative requirements and approved by HUD.[19] Therefore, the income limits set for Turnkey III are valid as long as the eventual home buyer is from the class just discussed.
Petitioner also relies on § 1270.104(f) (2) of the regulations in her argument regarding a preference for low-income people. That section provides that if there is an applicant who has potential for homeownership but his required monthly payment would be less than the break-even amount, he may be selected as a home buyer as long as the income of all selected home buyers is at least 10% more than the break-even amount for the project.[20] Although this particular section of the regulations allows the local housing authority to select particular home buyers whose monthly payments do not meet the break-even point for their particular unit, to do this HUD must balance any deficiencies by selecting as home buyers those whose monthly payment for their particular unit is in excess of the break-even point. Just because the local housing authority does not do this in a particular case, or any case, does not mean they are ignoring a preference for low-income families because in any event, it is only low-income families who are accepted into the program. The overriding consideration of this section of the regulations, and indeed the whole Turnkey III program, is that the financial solvency of the project must be maintained.
*795 This brings us to the question of whether or not NCHA's desire to maintain the financial solvency of Turnkey III justifies the establishment of a minimum income limit. This court is aware of public housing cases in which other courts, including one in this jurisdiction, have either said outright or indicated that trying to maintain the financial solvency of a particular housing project did not justify such things as rent ranges and minimum income requirements.[21] However, this court does not feel that these cases are dispositive of the issue here. One glaring difference makes it impossible to apply the same reasoning. Other courts were dealing with situations where the litigants were entitled to public housing by statute.[22] Here, however, as we previously indicated, there is no entitlement, statutory or otherwise, to homeownership. Having a minimum income requirement for acceptance into the Turnkey III program is not only reasonable in light of its concern with financial solvency, but it does not exclude anyone from obtaining a right to which an individual is legally entitled.
Petitioner argues that the admission procedures of Turnkey III violate the regulations of HUD because they automatically deny admission to a particular class. This is erroneous. Section 1270.104(f)(1) of the regulations, which petitioner relies on to support this argument, is taken out of context. It reads as follows:
(f) Selection of Homebuyers. Homebuyers shall be selected from those families determined to have potential for homeownership. Such selection shall be made in sequence from the waiting list established in accordance with this section, provided that the following shall be assured:
(1) Selection procedures that do not automatically deny admission to a particular class; that ensure selection on a non-discriminatory and non-segregated basis. . . .
Petitioner reads this section to mean that NCHA cannot automatically deny admission to any particular class, including that class of people whose income multiplied by 22.5% is not sufficient to meet the minimum monthly payment. That is not what the section says. It says that home buyers are to be those who have been determined to have potential for homeownership. That means that home buyers shall be selected from those families who meet all of the standards set out in § 1270.104(e)(2) relating to potential homeowners. The pertinent part of that section relating to monthly payments is as follows:
(2) Potential for Homeownership. In order to be considered for selection, a family must be determined to meet at least all of the following standards of potential for homeownership:
(i) Income sufficient to result in a required monthly payment which is not less than the sum of the amounts necessary to pay the EHPA, the NRMR, and the estimated average monthly cost of utilities attributable to the home. . . .
Reading the two sections in conjunction with one another, we see that NCHA cannot deny selection to a particular class when selecting those who are to become home buyers from those who have already been determined to have homeownership potential. Section 1270.104(f)(2) does not, however, prohibit excluding for lack of homeownership potential that class of people whose income is not sufficient to meet the minimum requirement. In order for petitioner to rely on Section 1270.104(f) (2) for the proposition that NCHA is automatically denying admission to her because she *796 belongs to a particular class, she would have had to first qualify under Section 1270.104(e) (2) as having been one of those persons said to have homeownership potential. Since she does not, the argument that the admission procedures discriminate against the particular class she belongs to has no merit.
This section must also be read in conjunction with Section 1270.104(b) (1) and (2). Doing so leads to the conclusion that the concern evidenced by the language regarding discriminating against a class was in regard to discrimination on the basis of race, creed, color or national origin.[23]
Consequently, the court finds as a matter of law that NCHA's 22.5% minimum income requirement is valid and does not violate the HUD regulations.
IV. IS THE 22.5% OF INCOME REQUIREMENT A CONCLUSIVE PRESUMPTION THAT IS UNCONSTITUTIONAL?
We must now turn to the question of whether or not NCHA can use the 22.5% income requirement as a line-drawing procedure, or must it consider each case on an individual basis. Petitioner, relying on several cases, argues that not to look at each case on an individual basis is to apply a conclusive presumption that is unconstitutional.
Mandina v. Lynn, 357 F. Supp. 269 (W. D.Mo.1973), was a case brought by a prospective tenant challenging his exclusion as a low-income applicant to public housing. In that case, a tenant had to be able to pay the "basic rent" with not more than 35% of his adjusted income. The basic rent is computed by HUD included utilities and estimated repair and redecoration costs, resulting in a figure of $129. Based on these figures, 37.83% of the applicant's income would be required to pay the "basic rent". If the actual rent, excluding repairs, utilities, etc., had been used in figuring out the rent to income ratio, only 30.8% of the applicant's income would have been required, placing the applicant within the 35% limit. The court held that on the basis of the applicable statutory provision the "basic rent" was the amount required to operate the project and that it could not legally include the amount estimated for utilities, repairs and periodic redecoration. The court went on to say in the form of dicta that the circular providing for the 35% figure was a violation of the Fifth Amendment in that it creates a conclusive presumption that a tenant cannot afford to pay the required rent, regardless of the tenant's actual ability to pay. Its effect is to exclude applicants who have proved to landlords and who are willing to prove to HUD that they have the ability to pay the required rent.
The court in Mandina said at 278-79:
Doubtless it is far easier for HUD to use conclusive presumption to dismiss the plaintiff's contentions that he can afford to pay his rent than to evaluate his claims in light of the actual facts. But this is what due process forbids. A conclusive presumption which operates to deny private parties the opportunity to establish a statutory entitlement such as that at issue herein has long been deemed unconstitutional. (Emphasis added; citations omitted).
Petitioner also relies on the case of Findrilakis v. Secretary of Department of Housing and Urban Development, 357 F. Supp. 547 (N.D.Cal.1973). That case was an action by applicants for tenancy in housing projects and of a non-profit sponsor to have a circular issued by HUD declared unconstitutional. The circular set forth as a mandatory requirement for eligibility in a rental housing project that a prospective tenant's rent to adjusted income ratio be less than 35%. The court held that the circular was not a reasonable attempt *797 to define lowest income practicable. Rather, it excluded from eligibility in projects the very people Congress mandated a preference be accorded to and was inconsistent with the National Housing Act. Plaintiffs in that case were welfare recipients who the court said demonstrated an ability to pay consistently comparable rents to those required in the projects. The court said the adjusted income summary used distorted the true economic picture of an applicant's financial status, so that it had no relation to ability to pay rent. The court determined that the purpose of the adjusted income summary was to help determine if a complainant exceeds the maximum level of eligibility prescribed in the statute, but that the effect of using such an adjusted income is to ignore a statutory preference for low-income families, because using the adjusted summary as a minimum limit restricts eligibility.
Finally, petitioner relies on the case of Rodway v. U. S. Department of Agriculture, 168 U.S.App.D.C. 387, 514 F.2d 809 (1975). That case was a suit by low-income households challenging the coupon allotment system of the food stamp program. The allotment system at that time was based on a hypothetical family of four persons. The purpose of the program was to provide recipients with "an opportunity to obtain a nutritionally adequate diet."
Plaintiffs, inter alia, claimed that because the allotment system was based on an average family and on average food prices and preferences, and because it did not continually reflect the current cost of food, it did not provide all recipients of food stamps the opportunity to purchase even the least costly of the food plans developed by the United States Department of Agriculture. The court in that case found that the purpose of the Food Stamp Act was to guarantee an adequate diet. Therefore, it said, administrative convenience does not automatically justify ignoring generalized, easily quantified and vertified differences among recipients under the rubric of administrative necessity because the goals of the Act (health and well-being of the populace) are too important. The averaging system, the court said, could be retained only if the Secretary can show such a system will deliver enough coupons to substantially enable all recipients to buy a nutritionally adequate diet.
The one thing, however, that all these cases have in common which distinguishes them from the case at hand is that in all these cases the plaintiffs were suing over some right that they were entitled to by statute. In Rodway, it was the statutory right of those eligible to receive food stamps. In the other cases, it was a statutory right to be admitted into certain rental public housing programs. The crucial and deciding factor that separates those cases from the case at hand is that the petitioner, Mrs. McQueen, has no property right at stake here given to her either by the United States Constitution or by state or federal statute. Such an opportunity is a privilege and not a right.
In Lindsey v. Normet, 405 U.S. 56, 92 S. Ct. 862, 31 L. Ed. 2d 36 (1972), a Supreme Court case involving inter alia, an equal protection challenge to an Oregon statute's procedures for possessory actions, the Supreme Court, with respect to the equal protection challenge, said:
We do not denigrate the importance of decent, safe, and sanitary housing. But the Constitution does not provide judicial remedies for every social and economic ill. We are unable to perceive in that document any constitutional guarantee of access to dwellings of a particular quality. . . . Absent constitutional mandate, the assurance of adequate housing and the definition of landlord-tenant relationships are legislative, not judicial functions. Lindsey v. Normet, supra at 74-75, 92 S. Ct. at 874.
This passage has been previously cited in the case of McNeal v. Habib, D.C.App., 346 A.2d 508 (1975).
*798 Lindsey supports the proposition that, as we have stated several times, there is no statutory entitlement applicable to this case that petitioner has shown. Any argument regarding the constitutionality of conclusive presumptions and that petitioner was denied the right to be admitted into a program entitling her to own her own home holds no weight. The injury which petitioner is alleged to suffer by not being admitted to the Turnkey III program is not a substantial deprivation of any right. It is merely the result of her apparent inability to make the necessary monthly payments, weighted against the opportunity of getting into some other type of housing. If petitioner meets the eligibility requirements of a conventional public housing project, this court foresees no reason why she should not be able to get into such a project.
Any argument based on the theory of a due process violation is not applicable to this case. The Supreme Court has said the requirements of procedural due process apply only to deprivation of interests encompassed by the Fourteenth Amendment's protection of liberty and property. Board of Regents v. Roth, 408 U.S. 564, 92 S. Ct. 2701, 33 L. Ed. 2d 548 (1972). Parenthetically, the Fifth Amendment is directly applicable to the District of Columbia, unlike the situation in the states, where its guarantees must be applied through the Fourteenth Amendment.
To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it. It is a purpose of the ancient institution of property to protect those claims upon which people rely on their daily lives, reliance that must not be arbitrarily undermined. It is a purpose of the constitutional right to a hearing to provide an opportunity for a person to vindicate those claims.
Property interests, of course, are not created by the Constitution. Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state lawrules or understandings that secure certain benefits and that support claims of entitlement to those benefits. Thus, the welfare recipients in Goldberg v. Kelly, supra, had a claim of entitlement to welfare payments that was grounded in the statute defining eligibility for them. The recipients had not yet shown that they were, in fact, within the statutory terms of eligibility, But we held that they had a right to a hearing at which they might attempt to do so. 408 U.S. at 577, 92 S.Ct. at 2709.
In order to test whether there has been some deprivation of a right under the due process clause, there must be some right given by law, and there is none in this case that would entitle petitioner to have her case looked at on an individual basis to assure that she was being given the opportunity to establish something she had a right to.
We must consider petitioner's claim that she was entitled to have the financial benefit from her food stamps credited to total income. Ostensibly, with that increase in her income, petitioner's application may have been accepted. We find NCHA was correct in not including this benefit in computing her income.
The Findrilakis case which was cited by petitioner to support such a proposition came from a case which did not, in fact, stand for such a proposition. In talking about adjusted income, in Findrilakis the court stated that no provision is allowed for non-cash income such as food stamps, which may increase actual income as much as 18% and that the refusal to consider this availability of additional government subsidies in appraising a welfare recipient's *799 ability to pay has been declared unconstitutional.
In making the statement that the refusal to consider additional government subsidies such as food stamps is unconstitutional, the court directly cited the case of Male v. Crossroads Associates, 469 F.2d 616 (2d Cir. 1972), for support. The court in that case held that where supplemental shelter allowances were available to welfare recipients and were routinely granted, the refusal of rental agents to consider welfare recipients as applicants for apartment vacancies on the ground that their base shelter allowance was insufficient to pay rent was a denial of equal protection. This case, relied on in Findrilakis for the proposition that food stamps should be included in considering income, does not support that proposition.
In the situation in Male v. Crossroads, special supplementary shelter allowances were available; benefits from food stamps were not in issue. That differs from the idea apparently proposed in Findrilakis of taking food stamp benefits and including them in income in order to apply the food stamp benefits to the question of ability to pay rent. This was not the purpose of the Food Stamp Act, as food stamps were supposed to be used for the purchase of food only. Therefore, the Findrilakis court was wrong in stating that it was unconstitutional not to include government food subsidies in determining one's ability to pay rent.
Furthermore, the NCHA statement of policies specifically excludes any excess value from allotments of food stamps in computing family income.[24] That section of the manual relies for authority on the food stamp statute itself which reads in pertinent part as follows:
The value of the coupon allotment provided to any eligible household which is in excess of the amount charged such households for such allotment shall not be considered to be income or resources for any purpose under any Federal or State laws including, but not limited to, laws relating to taxes, welfare, and public assistance programs. 7 U.S.C. § 2016(c) (1970).
Finally, having resolved all the issues in this case in favor of NCHA, it is unnecessary to decide the question of whether the petitioner can be given priority on a list of applicants for admission to the Turnkey III program.
Affirmed.
NOTES
[*] Sitting by designation pursuant to D.C.Code 1973, § 11-707(a).
[1] Since the home buyer is responsible for maintaining his home, a portion of his required monthly payment equal to NCHA's estimate of the cost of routine maintenance is set aside in the EHPA. If for any reason the home buyer cannot or fails to perform the routine maintenance, NCHA arranges to have the work done and charges the cost to the home buyer's EHPA. There are other ways for the home buyer to build up his EHPA, but we need not concern ourselves with them in this case. Homeownership Opportunity Program D.C. 1-73, § IX, Home Buyer's Monthly Payment, at 22-23 (Aug. 1973).
[2] The purpose of the NRMR is to provide funds for infrequent but costly items of maintenance and replacement of equipment which may be required over a period of years. Such items include replacing refrigerators, ranges, major repairs to plumbing and electrical systems, etc. Id. at 24.
[3] For our purposes, it is not necessary to go into the technical definitions of "Family Income" because we are given the fact that Mrs. McQueen's family income is $384.80 per month. The technical definition can be found in D.C. 1-73 supra, note 1, at § IV, Income Qualifications, at 7.
[4] Id.
[5] Turnkey III Reg. B, 24 C.F.R. § 1270.108 (1975).
[6] Id. at § 1270.104(f) (2).
[7] Id. at § 1270.104(c).
[8] Id. at § 1270.104(e) (2).
[9] Id. at § 1270.104(b) and (c).
[10] D.C. 1-73 supra, note 1, at § IV, Income Qualifications, at 7.
[11] The maximum amount that a local housing authority can charge an occupant for rent is limited by statute to one-fourth of family income. However, that does not prevent the National Capital Housing Authority in this case from charging a home buyer less than one-fourth of family income. For reasons known only to itself, NCHA has chosen to use the figure 22.5% of family income in determining eligibility for Turnkey III. Henceforth, when we talk about 25% of family income, it is in connection with the applicable federal statute, and when we talk about 22.5% of family income, it is in connection with the figure chosen by NCHA for purposes of the Turnkey III program.
[12] 42 U.S.C. § 1402(1)(B) (1975).
[13] Fletcher v. Housing Authority of Louisville, 491 F.2d 793 (6th Cir. 1974); Thompson v. Washington, 162 U.S.App.D.C. 39, 497 F.2d 626 (1973).
[14] 42 U.S.C. § 1401 et seq. (1937).
[15] Congress' declaration of policy is contained in 42 U.S.C. § 1401 (1975). This section declares it to be the policy of the United States "to assist the several States and their political subdivisions" inter alia "to remedy the unsafe and insanitary housing conditions and the acute shortage of decent, safe, and sanitary dwellings for families of low income . . . ." (Emphasis added).
[16] Supra, notes 1 and 2.
[17] Turnkey III Reg. B, 24 C.F.R. § 1270.104 (f)(2).
[18] Id. at § 1270.108 illustrates that the break-even amount means the minimum average monthly amount required to provide funds for items, including such things as administration, project-supplied utilities, protective services, and so forth.
[19] Id. at § 1270.104(b) (2).
[20] Id. at § 1270.104(f) (2).
[21] Barber v. White, 351 F. Supp. 1091 (D. Conn.1972); National Ten. Or., Inc. v. Dept. of H. & Urban Dev., 358 F. Supp. 312 (D. D.C.1973).
[22] 42 U.S.C. §§ 1401, 1402 (1970).
[23] Turnkey III Reg. B, 24 C.F.R. 104(b) (1) and (2).
[24] NCHA Manual, § X(L)(2)(D) (Jan. 2, 1974). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2191521/ | 440 Mich. 293 (1992)
487 N.W.2d 715
ADKINS
v.
THOMAS SOLVENT COMPANY
Docket No. 88897, (Calendar No. 13).
Supreme Court of Michigan.
Argued October 8, 1991.
Decided July 28, 1992.
James B. Brown & Associates (by James B. Brown), Allen, Lippes & Shonn (by Richard J. Lippes, pro hac vice), and Cohen, Milstein, Hausfeld & Toll (by Jerry S. Cohen) for the plaintiffs.
Foster, Swift, Collins & Smith, P.C. (by John L. Collins, Charles E. Barbieri, Michael S. Wellman), for the defendants.
Amici Curiae:
McGinty, Brown, Jakubiak, Frankland, Hitch & *297 Henderson (by Kenneth P. Frankland); Wiley, Rein & Fielding, of counsel (by Thomas W. Brunner, Laura A. Foggan, and Francis M. Gaffney), for American Insurance Association.
Braun, Kendrick, Finkbeiner, Schafer & Murphy (by Bruce L. Dalrymple and Scott C. Strattard) for Michigan Defense Trial Council.
Clark, Klein & Beaumont (by Dwight H. Vincent, Susan J. Sadler, Rachelle G. Silberberg, and Daniel J. Kim) for Michigan Manufacturers Association.
Diane J. Britt and Jonathan Pierce for Sierra Club Mackinac Chapter.
BOYLE, J.
The question before us is whether a claim for relief may be maintained by plaintiffs who claim the right to damages in nuisance for property depreciation caused by environmental contamination of ground water despite testimony by both plaintiffs' and defendants' experts that their properties were not and would never be subject to ground water contamination emanating from the defendants' property.
The trial court dismissed these plaintiffs' claims on the basis that it found no support for recovery in Michigan law. The Court of Appeals reversed the decision of the trial court, rejecting its conclusion that the facts presented no cognizable claim for nuisance.
We are persuaded that the boundaries of a traditional nuisance claim should not be relaxed to permit recovery on these facts. Compensation for a decline in property value caused by unfounded perception of underground contamination is inextricably entwined with complex policy questions *298 regarding environmental protection that are more suitably resolved through the legislative process.
We reverse the decision of the Court of Appeals, reinstate the trial court's judgment in favor of defendants, and remand to the trial court for a continuation of proceedings as to the remaining plaintiffs.
I
In 1984, the plaintiffs sued the Thomas Solvent Company in the Calhoun Circuit Court for damages and injunctive relief from injuries allegedly resulting from the improper handling of chemicals and industrial waste. Claiming that the Thomas Solvent Company's and other defendants' improper handling and storage of toxic chemicals and industrial waste had contaminated the ground water, the plaintiffs brought claims sounding in negligence, continuing nuisance, continuing trespass, strict liability, and ultrahazardous activities.
Originally, approximately fifty plaintiffs brought suit against the Thomas Solvent defendants,[1] the Grand Trunk Railroad defendants,[2] Wesley E. Carter, a private individual doing business as Raymond *299 Road Landfill and O.K. Wrecking Company, and Hannah's Cement Products, Inc., the lessor of the land used as Raymond Road Landfill. The plaintiffs claimed that toxic chemicals and industrial wastes were released accidentally or intentionally at sites owned by the defendants. The plaintiffs complained of contaminants emanating from two sites owned or operated by the Thomas Solvent defendants. The plaintiffs alleged that contamination issued from a facility on Raymond Road which included an office building, a warehouse, a dock for storing drums, and twenty-one underground bulk storage tanks. In addition, the plaintiffs complained that contamination stemmed from a facility on Emmett Street, which the Thomas Solvent defendants allegedly leased from Grand Trunk Western Railroad. The Emmett Street facility included two underground bulk storage tanks, one aboveground tank, and a loading dock adjacent to a railroad spur. The plaintiffs also complained that contamination originated at the Raymond Road Landfill.
In 1985, the complaint was amended and approximately nineteen plaintiffs were added. Discovery continued, and various motions for summary disposition were brought as the parties and the court sought to sharpen and narrow the issues. As discovery continued, it became clear that contaminants allegedly discharged into the ground water by the defendants never reached these plaintiffs' property. The plaintiffs' expert, Yaron Sternberg, concluded that a ground water divide separated the flow of ground water in the area, with water on the north side of the divide flowing generally north or northwesterly and the water on the south side of the divide flowing in a westerly direction. He testified that no contaminants from the Thomas Solvent facilities had any effect on the *300 properties of these plaintiffs, which were located south of the divide.
This appeal involves the claims of twenty-two plaintiffs who live over 2000 feet south and east from the Thomas Solvent facilities and whose claims were eventually dismissed by the trial court. The Grand Trunk Railroad defendants filed a motion for summary disposition, seeking to dismiss the claims of those plaintiffs whose property was not affected by the contaminants allegedly released by Grand Trunk. The Thomas Solvent defendants joined in the motion.[3] The plaintiffs filed a responsive brief and stipulated that the claims of these twenty-two litigants be dismissed except to the extent that they claimed damages for property depreciation. On June 16, 1987, the trial court heard oral arguments on the motion. The plaintiffs argued that a tortious event and a range of damages occurred when toxic substances left the defendants' property. They conceded that no contaminants ever reached these twenty-two plaintiffs' property, but urged the court to impose liability on the defendants for any loss in property values due to public concern about the contaminants in the general area. Concluding that any damages that these plaintiffs suffered resulted from unfounded public perception that their ground water was contaminated, the trial court dismissed their claims. On June 29, 1987, an order was entered, dismissing the property depreciation claims of these twenty-two plaintiffs against the Thomas Solvent defendants and concluding that no reason existed for delay and that a final judgment should enter in favor of the Thomas Solvent *301 defendants. The plaintiffs moved for reconsideration and to amend their complaint to add claims regarding contamination of municipal well water. The trial court denied these motions.[4]
The plaintiffs claimed an appeal as of right from the trial court's summary disposition order. The Court of Appeals reversed the trial court's order and remanded the case to the trial court for further proceedings. Recognizing that no contamination had reached or would reach the well water of the plaintiffs, the Court of Appeals nevertheless concluded that the trial court had erred in finding that the plaintiffs had not shown some damage "and in summarily dismissing plaintiffs' claims merely because the ground water beneath their properties had not been contaminated." 184 Mich. App. 693, 696; 459 NW2d 22 (1990). Emphasizing that to recover damages for nuisance, a litigant need not show physical intrusion onto the land, and distinguishing nuisance from trespass, the Court of Appeals relied on this Court's opinions in Whittemore v Baxter Laundry Co, 181 Mich. 564; 148 N.W. 437 (1914), and Hadfield v Oakland Co Drain Comm'r, 430 Mich. 139, 151; 422 NW2d 205 (1988), citing Prosser & Keeton, Torts (5th ed), § 87, p 622.
This Court granted the defendants' application for leave to appeal to consider whether the Court *302 of Appeals erred when it reversed the trial court's summary disposition order. 437 Mich. 929 (1991).
II
The trial court granted the defendants' motion for summary disposition pursuant to MCR 2.116(C)(10). The parties had agreed, both in a stipulation filed with the court and during oral argument on the motion, that no ground water contamination from the defendants' property ever reached the plaintiffs' property because of a ground water divide which acted as a hydrogeological barrier that precluded the possibility of migration of any contaminants from defendants' property. The trial court concluded that the defendants would be entitled to judgment as a matter of law. General Motors Corp v Detroit, 372 Mich. 234; 126 NW2d 108 (1964), cert den 377 U.S. 977 (1964). For a summary disposition to be upheld on appeal, the Court must review the record to ascertain whether the defendants would have been entitled to the judgment as a matter of law. American Employers' Ins Co v Christman & Bros Co, 284 Mich. 36; 278 N.W. 750 (1938).
The Court of Appeals held that because a physical intrusion or physical effect is not required to sustain a claim for nuisance, the trial court erred in dismissing the plaintiffs' claims. For the reasons that follow, we find that the trial court did not err in dismissing the claims.
III
Historically, Michigan has recognized two distinct versions of nuisance, public nuisance and private nuisance. Hadfield, supra, p 205. A private nuisance is a nontrespassory invasion of another's interest in the private use and enjoyment of land. *303 4 Restatement Torts, 2d, § 821D, p 100. It evolved as a doctrine to resolve conflicts between neighboring land uses.[5] Because nuisance covers so many types of harm, it is difficult to articulate an encompassing definition. Imprecision in defining nuisance leads to confusion regarding the interest it is designed to protect.[6] Nevertheless, the gist of a private nuisance action is an interference with the occupation or use of land or an interference with servitudes relating to land.[7] There are countless ways to interfere with the use and enjoyment of land including interference with the physical condition of the land itself, disturbance in the comfort or conveniences of the occupant including his peace of mind, and threat of future injury that is a present menace and interference with enjoyment. The essence of private nuisance is the protection of a property owner's or occupier's reasonable comfort in occupation of the land in question. Prosser & Keeton, supra, p 619. It involves "not only a defect, but threatening or impending danger ... to the property rights or health of persons sustaining peculiar relations to the same...." Kilts v Kent Co Supervisors, 162 *304 Mich 646, 651; 127 N.W. 821 (1910).[8] The pollution of ground water may constitute a public or private nuisance. 4 Restatement Torts, 2d, § 832, p 142.
According to the Restatement, an actor is subject to liability for private nuisance for a nontrespassory invasion of another's interest in the private use and enjoyment of land if (a) the other has property rights and privileges in respect to the use or enjoyment interfered with, (b) the invasion results in significant harm (c) the actor's conduct is the legal cause of the invasion, and (d) the invasion is either (i) intentional and unreasonable, or (ii) unintentional and otherwise actionable under the rules governing liability for negligent, reckless, or ultrahazardous conduct. 4 Restatement Torts, 2d, §§ 821D-F, 822, pp 100-115.
Prosser & Keeton's enumeration of the requirements to recover on a private nuisance theory is similar. They set forth the following requirements:
(1) The defendant acted with the intent of interfering with the use and enjoyment of the land by those entitled to that use;
(2) There was some interference with the use and enjoyment of the land of the kind intended, although the amount and extent of that interference may not have been anticipated or intended;
(3) The interference that resulted and the physical harm, if any, from that interference proved to be substantial. It is this requirement and the next that is most important in distinguishing between trespassory-type invasions from those that are actionable on a nuisance theory. Any intentional and unprivileged entry on land is a trespass without a showing of damage, since those who own land have an exclusive right to its use; but an act *305 that interferes with use but is not in itself a use is not actionable without damage. The substantial interference requirement is to satisfy the need for a showing that the land is reduced in value because of the defendant's conduct;
(4) The interference that came about under such circumstances was of such a nature, duration or amount as to constitute unreasonable interference with the use and enjoyment of the land. This does not mean that the defendant's conduct must be unreasonable. It only means that the interference must be unreasonable and this requires elaboration.[9] [Prosser & Keeton, supra, pp 622-623.]
Once these general definitions have been stated, application to any given set of facts is, nevertheless, problematic. Despite almost a century during which this Court has repeatedly recognized the difficulty in defining the concept of nuisance,[10] Michigan jurisprudence has focused on delineating the contours of various defenses, but has seldom elaborated the elements and proofs necessary to sustain a claim in nuisance absent special defenses. In this case, the Court considers whether property depreciation based on unfounded fears falls within the boundaries of an action for private nuisance in Michigan.
The plaintiffs alleged that the defendants' improper handling and storage of toxic chemicals and hazardous waste contaminated underground water in the area, thus supporting their recovery of money damages for nuisance. Although the plaintiffs' first amended complaint failed to specify whether their claims were founded on public or private nuisance, the parties have argued, and the *306 case was considered in the lower courts pursuant to, a theory of private nuisance.[11]
The Court of Appeals focused upon the lack of any physical intrusion onto plaintiffs' land, stressing that an interference with the use and enjoyment of land need not involve a physical or tangible intrusion. We do not disagree with this rule of law.[12] Nevertheless, we conclude that the trial court properly found that the plaintiffs failed to trace any significant interference with the use and enjoyment of land to an action of the defendants.
The crux of the plaintiffs' complaint is that publicity concerning the contamination of ground water in the area (although concededly not their ground water) caused diminution in the value of the plaintiffs' property. This theory cannot form the basis for recovery because negative publicity resulting in unfounded fear about dangers in the vicinity of the property does not constitute a significant interference with the use and enjoyment of land.[13]
*307 Examination of the historic development of nuisance law helps to clarify the fallacy underlying plaintiffs' theory of recovery. Initially, the assize of novel disseisin was available for a complainant whose enjoyment of his free tenement was disturbed by the defendant. The tort of trespass later developed to remedy this situation in which the defendant interfered with the complainant's interest in land. The source of the injury was always on the complainant's land.[14] Later, the assize of nuisance arose to redress injury due to an act of the defendant that interfered with the complainant's interest, although the injury did not involve an entry onto the complainant's land.[15] Eventually, the action for trespass upon the case for nuisance developed. The appeal of this form of action was its remedy, damages, rather than abatement.[16]
The doctrine of nuisance traditionally encompassed geographic, temporal, and proprietary aspects. In geographic terms, nuisance arose when occupants of neighboring land had a dispute, typically over the proper use of the defendant's land.[17]*308 This Court articulated a geographic component to liability for nuisance in Kilts, supra, p 650. The Kilts Court differentiated between a weak structure on a private person's land "so far from the street and other's property" that it would not constitute a nuisance and a structure that "was adjacent to an adjoining proprietor's land so that it was a menace to his property, or to his person in the use of his land...." Id.
In temporal terms, nuisance normally required some degree of permanence. If the asserted interference was "temporary and evanescent," there was no actionable nuisance.[18] This requirement is normally subsumed in the question whether the interference with the use and enjoyment of property is substantial. In proprietary terms, nuisance required that the plaintiff have some interest in the land that was interfered with. Unlike the early assize of novel disseisin, nuisance did not limit suit to freeholders, but permitted lessees and then occupants to sue.[19]
As the doctrine of trespass was gradually transmuted into the action upon the case for nuisance, the requirement that the injury involve entry onto the complainant's land was eliminated.[20] To limit *309 the broader action on the case for nuisance, courts added the requirement that a litigant seeking to recover for nuisance must show a legally cognizable injury, requiring proof of a significant interference with the use and enjoyment of land.[21] Although much confusion has arisen because of the failure to discern that injury and damage are different concepts, an interference that is not substantial and unreasonable does not give rise to an action for damages against the person causing it, damnum absque injuria.[22] Stated otherwise, while nuisance may be predicated on conduct of a defendant that causes mental annoyance, it will not amount to a substantial injury unless the annoyance is significant and the interference is unreasonable *310 in the sense that it would be unreasonable to permit the defendant to cause such an amount of harm without paying for it.[23]
Nuisance on the case thus involved the common law's attempt to ensure accommodation between conflicting uses of adjoining property. An early opinion from this Court explains:
As a rule, the owner may make such use of his premises as his business or taste may dictate, and the only limitation upon his right is that he must so use his property as not to cause injury to the property or rights of those owning property in the vicinity. [McMorran v Fitzgerald, 106 Mich. 649, 652; 64 N.W. 569 (1895).]
Because the doctrine sought to acknowledge the right of both the property owner to carry out a particular use and the neighbor whose property or use and enjoyment of property might be injured by the use, de minimus annoyances were not actionable. Only for a substantial interference with the use and enjoyment of property would an action lie. As a part of this scheme, courts frequently concluded that diminution in property values alone constitutes damnum absque injuria.[24]
The reasoning in Gunther v EI DuPont de *311 Nemours & Co, 157 F Supp 25 (ND W Va, 1957), app dis 255 F2d 710 (CA 4, 1958), exemplifies this reluctance to find a nuisance for mere diminution of property value on the basis of unfounded beliefs or fear of injury. In Gunther, the plaintiffs unsuccessfully sought damages and injunctive relief for claimed injuries to their property and person from test explosions conducted by the defendant in the vicinity of their property. The court refused to find nuisance, reasoning:
The Court believes it a fair inference from the evidence that the Gunthers' enjoyment of their property was lessened because they believed that the test blasting had injured them. If such belief is unfounded, what is left other than depreciation in value? Mere diminution of the value of property because of the use to which adjoining or nearby premises is devoted, if unaccompanied with other ill results, is damnum absque injuria a loss without injury, in the legal sense. [Id., p 33. Emphasis in original.]
That same reasoning applies to this case. Plaintiffs have stipulated the dismissal of all claims except those predicated upon an alleged depreciation in the market value of the property because of the unfounded fears of purchasers. The fact, as the dissent recognizes, that plaintiffs make no claim for "relief arising out of their own `fears,'" post, p 362, illustrates the point that defendants' activities have not interfered with their use and enjoyment of property.[25]
This Court has held that property depreciation alone is insufficient to constitute a nuisance. Plassey v S Loewenstein & Son, 330 Mich. 525, 530; 48 *312 NW2d 126 (1951); Warren Twp School Dist v Detroit, 308 Mich. 460, 469-470; 14 NW2d 134 (1944); Garfield Twp v Young, 348 Mich. 337; 82 NW2d 876 (1957). Although there is early authority to the contrary involving circumstances largely subsumed in zoning regulations,[26] most recently this Court has held that a cause of action for nuisance may not be based on unfounded fears.[27]Smith v Western Wayne Co Conservation Ass'n, 380 Mich. 526, 543; 158 NW2d 463 (1968). In Smith, the plaintiffs sought to have a gun range declared a nuisance, contending that it created fear of injuries, thus decreasing their property values. Adopting the trial court's opinion that "no real or actual danger" existed from the use of the gun range, the Court further held that, even assuming a decrease in property values, this was not "in itself sufficient to constitute a nuisance." Id., pp 542-543.[28]
Just as the development of nuisance on the case responded to the limitations of trespass by recognizing a cause of action when there was damage, but not injury amounting to use, the modern formulation of nuisance in fact, acknowledges changing conditions by declining to recognize a cause of action where damage and injury are both predicated on unfounded fear of third parties that depreciates property values. The rationale may be *313 expressed by observing that reasonable minds cannot differ that diminished property value based on unfounded fear is not a substantial interference in and of itself. Thus, in rejecting a claim that tort liability could be based on the creation of fear that depreciates property values, one federal district court observed that the theory was based on "a public reaction which is conjectural, transitory and ephemeral." Good Fund, Ltd 1972 v Church, 540 F Supp 519, 534 (D Colo, 1982), rev'd on other grounds sub nom McKay v United States, 703 F2d 464 (CA 10, 1983).[29]
This response also corresponds with the historical premise underlying tort liability for nuisance in fact, i.e., that when some significant interference with the use and enjoyment of land causes the property value loss, courts of law accommodate conflicting interests by recognizing claims designed to shift the loss.[30] However, on the present state of the record, plaintiffs do not contend that the condition *314 created by the defendant causes them fear or anxiety. Thus, not only have these plaintiffs not alleged significant interference with their use and enjoyment of property, they do not here posit any interference at all.
Plaintiffs correctly observe that property depreciation is a traditional element of damages in a nuisance action. See, e.g., Prosser, supra, § 89, pp 637-640. We are not persuaded, however, and the dissent has not cited authority to the contrary, that an allegation of property depreciation alone sets forth a cognizable claim in private nuisance of significant interference with the use and enjoyment of a person's property. Diminution in property values caused by negative publicity is, on these facts, damnum absque injuria a loss without an injury in the legal sense.
Contrary to the dissent's observation, neither Garfield Twp, Smith, Plassey, nor Warren Twp School Dist stand for the proposition that plaintiffs in this case have a cognizable claim of nuisance. Defendant's business is a lawful business, and the fact that violations of the law may have occurred on the property does not make the conduct of the business a nuisance in fact. Indeed, Garfield Twp rejects the precise argument upon which the dissent relies.[31]
*315 Nor can we accept the dissent's suggestion that because some authorities relied on here involve claims for equitable relief, they do not support a damage award in this case. We agree that different considerations apply to the remedies appropriate, and that injunctive relief is sometimes available when a tort is merely threatened or denied on the basis that damage is the more appropriate relief. In both law and equity, however, there must be a cognizable claim of a substantive interest invaded or threatened. Thus the dissent misperceives the use of authority holding that equitable relief is not available to address unfounded fears. Our point is that unfounded fears cannot constitute an allegation of a nuisance in fact with regard to these plaintiffs.[32]
We are thus unpersuaded by the dissent's attempt to avoid the stipulation of the parties by referring throughout the opinion to facts and counts that are not before us. Nor do we find convincing the dissent's disparagement of the 600-year provenance of the concept of damage without injury, or the assertion that the assumption on which we proceed "presents an abstract, desiccated *316 question of law...." (Post, p 328.) Unlike the dissent, we proceed on the assumption the parties presented to us. We do not know why counsel chose not to assert claims of personal discomfort or annoyance as he did with regard to other plaintiffs, or to appeal from the trial court's order denying leave to amend. These were probably strategy decisions based on his clients' responses in discovery. We are entitled to assume that counsel's present posture is motivated by legitimate interest in securing an appellate court decision that diminution in value is recoverable without a showing of substantial interference with use or enjoyment of property. In that event, these plaintiffs could become judgment creditors in the bankruptcy action. So viewed, the structuring of this lawsuit involves not a hypertechnical issue, but an issue of considerable significance to these plaintiffs, to litigants similarly situated, and to the jurisprudence.
In short, we do not agree with the dissent's suggestion that wholly unfounded fears of third parties regarding the conduct of a lawful business satisfy the requirement for a legally cognizable injury as long as property values decline. Indeed, we would think it not only "odd" (LEVIN, J., post, p 349), but anachronistic that a claim of nuisance in fact could be based on unfounded fears regarding persons with AIDS moving into a neighborhood, the establishment of otherwise lawful group homes for the disabled, or unrelated persons living together,[33] merely because the fears experienced by third parties would cause a decline in property values.[34]
*317 When appropriate, we have not hesitated to examine common-law doctrines in view of changes in society's mores, institutions, and problems, and to alter those doctrines where necessary. Myers v Genesee Co Auditor, 375 Mich. 1, 7; 133 NW2d 190 (1965); Gruskin v Fisher, 405 Mich. 54, 58; 273 NW2d 893 (1979); Placek v Sterling Heights, 405 Mich. 638, 656-657; 275 NW2d 511 (1979); People v Aaron, 409 Mich. 672, 722-723; 299 NW2d 304 (1980); Falcon v Memorial Hosp, 436 Mich. 443, 472-473; 462 NW2d 44 (1990).[35] In a given case, the dangers posed by environmental contamination may not be adequately addressed by statutorily created private actions or by traditional rules adopted prior to the existence of these problems.[36] This case does not present that situation. We do not deal with a situation here in which plaintiffs have alleged that "the character of the neighborhood has changed for the worse." (Post, p 328.) Nor have plaintiffs asserted that "an unusual number of abandoned, neglected, and otherwise depressed *318 properties in the neighborhood" interfered with their use and enjoyment of land. (Post, p 328.) After defendants moved for summary disposition against any claims by plaintiffs who failed to show that their properties or persons were contaminated by exposure to chemicals emanating from the defendants, counsel stipulated to dismiss all claims of this group of plaintiffs except those based upon property depreciation. Thus, we are not presented with plaintiffs who allege an increased risk of illness, threat to safety, or lack of a habitable dwelling caused by contaminants released by the defendants.
The plaintiffs concede that a ground water divide prevented the migration of contaminated water to their property. Nevertheless, the plaintiffs seek to recover for damages because the defendants allegedly contaminated property in the general area. Under such a theory, a cause of action could be stated on behalf of any individual who could demonstrate an effect on property values even if the polluted ground water had neither strayed from defendants' own property, nor disturbed a plaintiff's enjoyment by the fear that it would do so.
If any property owner in the vicinity of the numerous hazardous waste sites that have been identified[37] can advance a claim seeking damages when unfounded public fears of exposure cause property depreciation, the ultimate effect might be a reordering of a polluter's resources for the benefit of persons who have suffered no cognizable *319 harm at the expense of those claimants who have been subjected to a substantial and unreasonable interference in the use and enjoyment of property.[38] Thus, while we acknowledge that the line drawn today is not necessarily dictated by the spectral permutations of nuisance jurisprudence, if the line is to be drawn elsewhere, the significant interests involved appear to be within the realm of those more appropriate for resolution by the Legislature.[39] Crampton & Boyer, Citizen suits in the environmental field: Peril or promise?, 2 Ecol L Q 407, 412 (1972).
IV
For these reasons, we conclude that the Court of Appeals erred when it reversed the trial court's grant of the defendants' summary disposition motion. We reverse the decision of the Court of Appeals, reinstate the trial court's judgment granting summary disposition in favor of the defendants, and remand to the trial court for a *320 continuation of proceedings with regard to the remaining plaintiffs.
BRICKLEY, GRIFFIN, and MALLETT, JJ., concurred with BOYLE, J.
RILEY, J. (concurring).
While I agree with the result reached by the majority, I disagree with certain statements made by the majority that suggest that this Court will not hesitate to expand the traditional common-law view or to even abandon such view if it is decided that some policy reason suggests doing so. Ante, p 317. I believe that such broad speculation concerning the future treatment by this Court of traditional common-law doctrine is unwarranted.
LEVIN, J. (dissenting).
Plaintiffs, a group of Battle Creek homeowners, claim that the Thomas Solvent defendants contaminated soil and ground water in the vicinity of their homes through negligent or intentional discharge of toxic chemicals and industrial wastes. The contamination has not reached and will not reach plaintiffs' land. Plaintiffs nevertheless claim that the contamination of neighboring land has adversely affected the value of their homes.
A
The majority holds, as a matter of law, that because "diminution in property values alone constitutes damnum absque injuria,"[1] and the instant plaintiffs, whose land was not contaminated, do not seek to recover damages other than for a reduction in the market value of their homes, plaintiffs may not maintain a nuisance action.
*321 Plaintiffs should, in our opinion, be allowed to recover damages in nuisance on proofs introduced at a trial tending to show that the defendants actually contaminated soil and ground water in the neighborhood of plaintiffs' homes with toxic chemicals and industrial wastes, that the market perception of the value of plaintiffs' homes was actually adversely affected by the contamination of the neighborhood, and thus that plaintiffs' loss was causally related to defendants' conduct.
Preservation of property value is, in itself, a legally cognizable interest in this setting, whether any structure on the land is a home or rental[2] or other commercial or industrial property.
A condition, tortiously or intentionally created or maintained on neighboring property, that is a substantial and unreasonable nontrespassory interference with the use and enjoyment of property, may constitute a nuisance.[3] Such a condition may cause personal injury, property damage, or a reduction in the market value of property. The condition may be reflected in a reduction of the market value of a home although no personal injury or other property damage is suffered by the homeowner.
We would hold that a homeowner may maintain a nuisance action to recover damages for a decline in the market value of his home that reflects interference with the use and enjoyment of his home by a condition tortiously created or maintained by the defendant on neighboring property, and that the homeowner may do so without demonstrating interference with use or enjoyment that *322 might result in further, separately compensable injuries to persons or property.
B
The majority asserts, factually, that "unfounded fears of third parties,"[4] rather than the conduct of defendants, were responsible for any reduction in the value of plaintiffs' property.
In finding as a fact, without a trial on the merits, that any decline in the value of plaintiffs' homes was attributable to unfounded fears, the majority proceeds on the assumption without requiring defendants to evidentially support, or providing plaintiffs an opportunity to evidentially refute that assumption that none of the reduction in value was attributable to well-founded concern about contamination by the defendants of soil and water supply in the neighborhood.
It appears contrary to the majority's "unfounded" fear characterization that the claimed reduction in the value of plaintiffs' homes was attributable both to factually well-founded concern about contamination of the soil and water supply in the neighborhood, and unfounded concern of soil and water supply contamination respecting plaintiffs' homes.
If the majority were to allow plaintiff homeowners their day in court, plaintiffs might establish that the claimed decline in the value of their homes was in fact partly attributable to well-founded concern of potential buyers about contamination of soil and water supply in the neighborhood, although also in part attributable to unfounded concern about contamination of the soil and water supply for plaintiffs' homes.
Even if potential buyers were to be made aware *323 that the soil and water supply for plaintiffs' homes is not contaminated, and thus were unfettered by "unfounded fear," they nonetheless would pay no more for plaintiffs' homes than the claimed reduced market value. Thus, to the extent that the value of plaintiffs' homes has declined because of well-founded concern about the contamination of soil and ground water in the neighborhood, educating potential buyers that plaintiffs' homes are not in fact contaminated would not necessarily rectify damage suffered by plaintiffs because of the contamination.
At a trial, defendants would have an opportunity to show, if they can, that any decline in the market value was temporary, and that fully informed buyers later offered to pay prices for plaintiffs' homes that fully rectified any decline in the market value attributable to well-founded concerns that defendants had contaminated soil and ground water in the neighborhood.
C
This does not appear to be a case where the plaintiffs seek to recover damages for a decline in value that is attributable to mass hysteria without any unlawful or tortious misconduct on the part of defendants.
The plaintiffs seek only an opportunity to produce evidence in a court of law tending to show that the negligence or intentional misconduct of the Thomas Solvent defendants did in fact contaminate soil and ground water in the neighborhood and caused plaintiffs economic loss in the form of a decline in the market value of their homes.[5]
*324 D
The general rule is that where there are multiple causes here, well-founded fears concerning contamination of soil and water supply in the neighborhood and unfounded fears that soil and water supply for plaintiffs' homes were contaminated the tort-feasor is subject to liability as long as his misconduct is a cause of the decline in market value; it need not be the sole cause of plaintiffs' loss.
It would be to announce an essentially unprecedented but nevertheless somewhat trendy exception.[6] to this general rule for this Court to direct that in a nuisance action a jury should apportion damages on the basis of the jury's assessment of the proportions of plaintiffs' loss attributable to well-founded and unfounded perceptions of contamination. But the majority does not even allow the plaintiffs that much.
I
The Thomas Solvent defendants[7] owned or operated two sites in Battle Creek where toxic chemicals and industrial wastes were stored.[8] Plaintiffs *325 claim that in late 1981 public health officials detected contamination of Battle Creek Municipal water supply wells by toxic chemicals and industrial waste. Similar contaminants were found in private residential wells in the vicinity of defendants' facilities, all involving the same aquifer system.[9]
It does not appear on the record by what means this news was disseminated, whether plaintiffs were told by governmental agencies not to drink well water, or whether plaintiffs were supplied with or obtained bottled water. Plaintiffs argue in this Court that "the neighborhood was told not to drink their water, and bottled water was supplied by government agencies."
During the course of discovery, it became apparent that the property of the twenty-two plaintiffs who are parties to this appeal had not been and never would be contaminated by any toxic substances migrating from defendants' facilities. A feature of the underground landscape known as a hydrogeological divide prevented ground water *326 flowing from the direction of defendants' property from reaching the property of these plaintiffs.
The Thomas Solvent defendants, claiming that there was no genuine issue of material fact, moved for summary disposition with respect to all claims of the instant plaintiffs, whose properties are located over 2,000 feet south and east of the Thomas Solvent facilities.
Plaintiffs stipulated to dismissal of their claims against defendants except to the extent that plaintiffs claimed damages for reduction in the market value of their homes. Defendants' brief asserts that, by entering into the stipulation, plaintiffs have "abandoned any claims for loss of use and enjoyment of their property," including any right to rely on allegations of altered conduct in response to the publicized contamination.[10]
The circuit court concluded that any reduction in value should be attributed to unfounded public perception of contamination, and not to the claimed conduct of defendants, and dismissed plaintiffs' remaining claims against the Thomas Solvent defendants.
The Court of Appeals reversed and remanded for trial, stating that "[p]laintiffs are not precluded *327 from bringing a nuisance cause of action, even assuming that their only damages are a decrease in property values."[11]
II
The majority acknowledges that "property depreciation is a traditional element of damages in a nuisance action." The majority asserts, however, that "an allegation of property depreciation alone" does not set forth "a cognizable claim in private nuisance of significant interference with the use and enjoyment of a person's property."[12] The majority continues that "[d]iminution in property values caused by negative publicity is, on these facts, damnum absque injuria a loss without an injury in the legal sense."[13]
A
In stating that the "issue [is] whether plaintiffs may proceed with their nuisance in fact claims solely on the basis of property depreciation due to public concern about contaminants in the general *328 area,"[14] the majority proceeds on the assumption that this case presents an abstract, desiccated question of law, divorced from actual conditions that may face residents and prospective residents of plaintiffs' neighborhood. This approach likens the instant plaintiffs' claims to the effect of a psychical neutron bomb, that deleteriously affects life in the neighborhood while leaving the physical condition of the property itself eerily untouched.
There is no basis in the record for assuming, without factual support, that the only change caused to plaintiffs' neighborhood by the contamination of property in the area is an attitudinal shift in the community or a statistical shift in the value of homes and other property in the neighborhood.
Were this case to be remanded for trial, it might appear indeed, it seems far more probable that it would appear that the character of the neighborhood has changed for the worse. If, as plaintiffs have alleged, the conduct of defendants contaminated soil and ground water in the neighborhood with toxic chemicals and industrial wastes, efforts to "mop up" the contamination might be of limited efficacy, resulting in an unusual number of abandoned, neglected, and otherwise depressed properties in the neighborhood, with inimical effect on the market value of all property in the vicinity.
B
An award of damages for a reduction in the value of uncontaminated land was affirmed in Exxon Corp v Yarema, 69 Md App 124; 516 A2d 990 (1986). Exxon operated a service station with leaking underground gasoline storage tanks. Contamination reached property owned by some but *329 not all the plaintiffs. The court held that no rule of law prevented an award of damages simply because there was "no tangible or physical impact on plaintiff's property":
According to the general view, there must be a substantial interference with the plaintiff's reasonable use and enjoyment of its property. We believe that our conclusion does not violate the established rule that the mere diminution of property value, absent such tortious interference, is not sufficient basis for recovery.[15]
The plaintiffs, here as in Exxon, complain of "tortious interference."[16]
The Maryland appellate court explained that its *330 holding "does not mean that plaintiffs may recover for diminution of property value without proof of harm to their property but rather that harm to property should be construed broadly to include intangible tortious interferences" with the use and enjoyment thereof.[17] The court observed that
Exxon has interfered with [the plaintiffs'] use and enjoyment of their land. Gasoline contamination of ground water imposed crippling restrictions not only on the contaminated land but on all the property adjacent to that land. The Baltimore County Health Department forbade plaintiffs from using their ground water, building houses on their land or selling the land even at a reduced price. These are injuries for which the plaintiffs are entitled to recover if the jury believed that they were caused by Exxon's tortious interference with their property rights. The fact that the reputation of the plaintiffs' land is inextricably interwoven in the assessment of damages is not reason to avoid an award.[[18]]
The instant plaintiffs similarly allege that they were told not to drink their well water and were unable to sell their property after adverse information was disseminated through governmental agencies.
Plaintiffs do not allege that the sale of their property was prohibited outright. Were this case remanded for trial, however, plaintiffs might be able to show that they have been unable to sell their property at any but a significantly reduced, *331 or a ruinously low, price.[19] "These are injuries for which the plaintiffs are entitled to recover if the jury believe[s] that they were caused by [the defendant's] tortious interference with their property rights."[20]
The majority distinguishes Exxon on the ground that the instant case presents "no claim of contaminated well water or the preclusion of sale. This case comes to us singularly on the issue whether plaintiffs may proceed with their nuisance in fact claims solely on the basis of property depreciation due to public concern about contaminants in the general area."[21]
The majority misapprehends plaintiffs' remaining claim for relief as a bare assertion that popular fears of contamination should subject defendants to liability for property depreciation. The complaint sought compensation for personal injury and property damage.[22]
Plaintiffs' factual allegations are broader than their remaining claim for a specific element of damages. They have alleged a range of facts amounting to an interference with interests in the use and enjoyment of property beyond "mere" reduction in the market value of their homes.[23]*332 Such indicia of interference with use and enjoyment remain relevant to the question whether property depreciation was caused by defendants' conduct, and to the broader question whether defendants' conduct substantially interfered with plaintiffs' interests in the use and enjoyment of property.
Although plaintiffs have stipulated to relinquish the right to seek damages for interference with their use and enjoyment of property in forms distinct from depreciation, the disposition of this case should not depend on whether they so stipulated rather than continuing to insist on seeking to recover damages for personal injury as well as for a decline in market value. To rely on plaintiffs' decision not further to seek damages for personal injury, a narrow point without legal foundation until today's decision, reduces the jurisprudential significance of this case to a hypertechnicality, and encourages parties generally to give no quarter in litigation, lest the trial or an appellate court find against the stipulating party on a hypertechnicality.
C
According to the majority, "[t]his Court has held that property depreciation alone is insufficient to constitute a nuisance."[24]
*333 The majority relies largely on decisions of this Court denying injunctive relief to plaintiffs who claimed that the establishment or maintenance of a business would constitute a nuisance. This Court, in Warren Twp School Dist v Detroit, 308 Mich. 460; 14 NW2d 134 (1944), and Plassey v S Loewenstein & Son, 330 Mich. 525; 48 NW2d 126 (1951), held that the potential for property depreciation, without more, does not justify enjoining the establishment of a lawful business on neighboring property.[25]
Plaintiffs here, in contrast, assert a damage claim for actual, not potential, diminution of value, arising out of defendants' past, allegedly unlawful activity.
In Warren Twp, the plaintiffs sought to prevent condemnation of a site for a proposed airport. In declining to enjoin condemnation to preclude potential damage to the plaintiffs' property, the Court said that the plaintiffs would have a cause of action for damages "if conditions they now claim are threatened should hereafter arise."[26]
In Plassey, the Court reaffirmed the rule that equity "`will not interfere in advance of the creation of a nuisance where the injury is doubtful or contingent, and anticipated merely from the use to which the property is to be put.'"[27] The conduct *334 complained of in the instant case intentional, negligent, or accidental discharge of toxic chemicals and industrial wastes was not, in contrast with the slaughterhouse and rendering plant at issue in Plassey, a "lawful business" free from violations of "applicable law."[28]
D
Decisions denying injunctive relief in nuisance cases do not necessarily justify dismissal of an action for damages, because a judgment denying injunctive relief may turn on application of rules relating to equitable remedies.
The usual rule of equity applies to the instant plaintiffs' claim for property depreciation; before an injunction will issue,
there must be such an injury as from its nature is not susceptible of being adequately compensated by damages at law, or such as from its continuance or permanent mischief must occasion a constantly recurring grievance, which cannot be otherwise prevented but by an injunction.... So a mere diminution of the value of property by the nuisance without irreparable mischief will not *335 furnish any foundation for equitable relief. [2 Story, Equity Jurisprudence, § 1253, p 602 (14th ed, 1918). Emphasis added.]
This Court has recognized that refusal to enjoin a lawful business as a nuisance does not preclude a damage recovery for property depreciation, stating that "[a]s to such injury, if any, complainants have an adequate remedy at law." Ballentine v Webb, 84 Mich. 38, 45; 47 N.W. 485; 13 LRA 321 (1890) (emphasis added).[29]
Decisions granting injunctive relief against an alleged prospective nuisance, however, generally support damage awards in factual settings in which the harm has already occurred, because an injunction will not issue absent evidence of a significant interference with the use and enjoyment of property.[30]
*336 E
The Second Restatement of Torts explains that "[a] potent cause of confusion" in private nuisance is the citation of cases in equity "as precedents in actions at law without regard to their differences." The Restatement observes that "[C]onsiderations enter into the determination of the right to an injunction that are inapplicable or have less weight in determining the right to damages":
An injunction may be obtained in a proper case against a threatened private nuisance, but an action cannot be maintained at law unless harm already has been suffered. Even when there is present harm, it is one thing to say that a defendant should pay damages for the harm his factory is causing but it is a different thing to say that he must close his factory if the harm cannot be stopped.[31]
*337 An order enjoining operation of a lawful business, unlike the damage remedy, is not generally available unless the gravity of the harm to the plaintiff outweighs the utility of the defendant's conduct.[32]
The majority acknowledges these considerations, but disposes of them by stating that, "[i]n both law and equity, ... unfounded fears cannot constitute an allegation of a nuisance in fact with regard to these plaintiffs."[33] Rules of law that modulate outcomes in equitable and legal actions are not, however, rendered inoperative simply because fears, either factually founded or unfounded, are involved.
F
Warren Twp and similar cases[34] hold that where the plaintiff failed to establish that the proposed operation of an airport would constitute a nuisance *338 per se, the court will not enjoin construction merely on a showing that airport operation may reduce the value of neighboring property.[35]
The business at issue in these cases, unlike defendants' conduct in the instant case, was not only "lawful," but was regarded as an essential public service. All the cases relied on by Warren Twp characterize aviation as crucial to modern *339 commercial development. All devote considerable attention to public policy pronouncements, stressing the need for expanded air-travel capacity, lest the community fall behind the times.
Protecting polluters of the water supply against the consequences of their conduct is not, in contrast with facilitating airport development and operation, an interest deserving of judicial indulgence.
G
Where the plaintiff's primary claim of loss is property depreciation, courts have traditionally been reluctant to enjoin the operation of a lawful business as a nuisance. This reluctance derived in large measure from recognition of the adequacy and appropriateness of the damage remedy.[36] Where the plaintiff complains of property depreciation, rather than other interferences with the use and enjoyment of property, damages are readily ascertainable and suffice to make the plaintiff whole.[37]
The law of nuisance has recognized that property depreciation, in itself, may constitute an interference with an interest in the use and enjoyment *340 of property.[38] In Conway v Gampel, 235 Mich. 511, 514; 209 N.W. 562 (1926), this Court affirmed an injunction against operation of a slaughterhouse in a residential neighborhood, and said:
There is evidence that the claimed nuisance has depreciated the value of the property of some of the plaintiffs. For this element alone there may be an adequate remedy at law. (Ballentine v Webb, 84 Mich. 38 [13 LRA 321]), but the evidence may be considered as regards the fact of nuisance. [Emphasis added; citations omitted.][39]
As the majority's historical survey suggests, the remedy of damages for property depreciation is at the core of the nuisance action;[40] only comparatively recently have courts recognized other interferences with use and enjoyment, including annoyance and discomfort, as separately compensable in damages.
Injuries to property value and to a plaintiff's peace of mind are aspects of the same general kind of harm in nuisance actions; both flow from the relationship of a plaintiff to the land.[41] Damages *341 for property depreciation may be awarded separately from damages for other interferences with interests in the use and enjoyment of the affected property, even where the factual predicates for both types of damages are closely related.[42]
III
After repeatedly adverting to the business of the instant defendants as "lawful,"[43] the majority states: "[T]he fact that violations of the law may have occurred on the [defendants'] property does not make the conduct of the business a nuisance in fact. Indeed, Garfield Twp [v Young, 348 Mich. 337; 82 NW2d 876 (1957),] rejects the precise argument upon which the dissent relies."[44]
Garfield Twp held that operation of an otherwise lawfully conducted junkyard could not be enjoined as a nuisance per se merely because the owner had flouted a local ordinance requiring that such businesses be licensed.[45] Similarly, Village of St Johns v McFarlan, 33 Mich. 72; 20 Am Rep 671 (1875), on which this Court largely relied in Garfield, and which the majority quotes in support of the broad proposition that "illegal conduct alone [is] not *342 enough" to "prove nuisance,"[46] held that "a court in chancery" had "no jurisdiction to restrain the threatened violation of a village ordinance, unless the act threatened to be done, if carried out, would be a nuisance."[47]
Such holdings do not suggest that as long as the "[d]efendant's business is a lawful business,"[48] as distinct, presumably, from a brothel or gambling casino, which might be a public nuisance per se, defendant's unlawful use of land is of no consequence in determining whether a plaintiff may recover damages in nuisance.[49]
Rather, as set forth in the Second Restatement formulation, because recovery for unintentional nuisance may be predicated on a showing that the defendant's conduct is independently actionable in tort:
[A]n actor is subject to liability for private nuisance for a nontrespassory invasion of another's interest in the private use and enjoyment of land if... the invasion is either (i) intentional and unreasonable, or (ii) unintentional and otherwise actionable under the rules governing liability for negligent, reckless, or ultrahazardous conduct.[50]
Plaintiffs in the instant case have alleged that defendants' discharge of toxic chemicals and hazardous waste, even if unintentional, was "otherwise actionable under the rules governing liability *343 for negligent, reckless, or ultrahazardous conduct." In contrast, violation of the local ordinance involved in Garfield Twp was not "otherwise actionable" by a private party claiming to be aggrieved thereby, because "a penalty, only, [was] imposed for failure to comply with its provisions."[51]
This Court has also recognized not only that violations of "applicable law or restrictions" may be pertinent to a finding of nuisance, but that even in the absence of such a violation a lawful business may be enjoined as a nuisance if circumstances otherwise warrant.[52]
The majority's other references to cases involving claimed property depreciation in the context of siting of business operations cast no light on the instant case.[53]
*344 IV
Similarly unpersuasive is the majority's statement adverting to an unrelated passage of the dissent as follows:
[W]e would think it not only "odd," but anachronistic that a claim of nuisance in fact could be based on unfounded fears regarding persons with AIDS moving into a neighborhood, the establishment of otherwise lawful group homes for the disabled, or unrelated persons living together, merely because the fears experienced by third parties would cause a decline in property values.[54]
The "conditions" on adjoining property enumerated *345 by the majority are not only "lawful," but may be accorded special legal protection on constitutional or statutory grounds.[55] No constitutional or statutory protection attaches to the condition the instant defendants are alleged to have created or maintained on their property.
To the extent that the majority's illustration has any bearing at all on the instant case, it is contrary to the principle that an interference with use and enjoyment of property will not constitute actionable nuisance unless it affects
the ordinary comfort of human existence as understood by the American people in their present state of enlightenment. The theories and dogmas of scientific men, though provable by scientific reference, cannot be held to be controlling unless shared by the people generally. [Everett v Paschall, 61 Wash 47, 52; 111 P. 879; 31 LRA (NS) 827 (1910). Emphasis added, citations omitted.]
Although it would undoubtedly be considered "anachronistic" to enjoin the placement of a woman with leprosy in a residential district in 1992, the public understanding, or misunderstanding, of leprosy in 1898 justified such action.[56] The court reaching that conclusion expatiated on
the popular belief of [leprosy's] perils founded on the Biblical narrative, on the stringent provisions of the Mosaic law that show how dreadful were its ravages and how great the terror which it excited, and an almost universal sentiment, the result of a common concurrence of thought for centuries, *346 [that] cannot in this day be shaken or dispelled by mere scientific asseveration or conjecture.[[57]]
If equally overpowering fears now grip the public with regard to toxic waste, radioactive contamination, or similar modern perils, this Court may not properly dismiss such fears out of hand.
V
The majority's analysis implicitly assumes that resolution of this case is governed by the doctrine that mere apprehension of injury, based on an unfounded perception of danger, is not actionable in tort. In general, this proposition is indisputable as applied to the wholly unreasonable fears of a plaintiff. However, even fears without factual foundation may permit of recovery in nuisance if the fears are of a kind to be expected from a normal member of the affected community.[58]
Further, the instant case does not present a claim based on plaintiffs' own apprehension of injury or perception of danger. Plaintiffs assert, rather, that the normal fears of potential buyers, both factually founded and unfounded, precipitated a decline in the value of plaintiffs' property.
A
The majority declares:
Diminution in property values caused by negative publicity is, on these facts, damnum absque injuria a loss without an injury in the legal sense.[[59]]
*347 Fear-inspired property depreciation will support a nuisance action where (a) the fears are such as would ordinarily be experienced by a person confronting the activity conducted, or the condition created or maintained, on neighboring property,[60] and (b) competent evidence establishes that the fears manifested themselves in a decline in the value of plaintiffs' property.
Rockenbach v Apostle, 330 Mich. 338; 47 NW2d 636 (1951),[61] concerned the proposed operation of a funeral home in a residential district. The plaintiffs, neighboring homeowners, sought to enjoin establishment of the business as a nuisance. The Court, finding that the mortuary "would have a depressing influence upon [the plaintiffs],"[62] and that potential purchasers of the plaintiffs' property would likely react the same way,[63] granted an injunction.[64] The Court concluded that the fear or dread evoked by the proximity of a mortuary *348 "`not well founded, as we have seen, but nevertheless present in the mind of the normal layman'" tended to have an adverse effect on market values.[65]
In Dillon v Moran, 237 Mich. 130, 131; 211 N.W. 67 (1926), this Court enjoined as a nuisance the proposed establishment of a funeral home in a residential district on the sole ground that "plaintiff would suffer material pecuniary loss" if defendant's plans were carried out. (Emphasis added.) The plaintiff's property was adjacent to the proposed site. The Court cited no interference with an interest in the use and enjoyment of property, and no inconvenience that might be suffered by the plaintiff, except "pecuniary loss."[66]
Dillon makes clear that "diminution in property values alone" is not always "damnum absque injuria,"[67] and the absence of other interferences with the use and enjoyment of property does not automatically preclude maintenance of a nuisance action.[68] Similarly, Rockenbach echoed Kundinger v Bagnasco, 298 Mich. 15; 298 N.W. 386 (1941), in stressing that, to recover in nuisance, plaintiffs need not demonstrate that they were threatened by a traditionally recognized intrusion on their enjoyment of land, such as offensive odors:
*349 The evidence in this case would not support a finding that the establishment proposed by the defendants will in its operation become a nuisance by reason of noises, odors, fumes, flies, or dissemination of disease. In fact, plaintiffs have abandoned such claims, and there is no probative value in any testimony to show that a parking problem or traffic congestion will necessarily arise.[[69]]
It is odd to assert that although relief is available against a defendant conducting a lawful business and committing no independently actionable wrong, it is unavailable where plaintiffs' allegations, if proved, render defendants at least subject to liability to numerous property owners in plaintiffs' immediate neighborhood.
Further, if the proposed establishment of a lawful business may be enjoined as a nuisance in fact, a damage remedy should be available to compensate for pecuniary harm already suffered as the result of unlawful or tortious conduct.
B
This Court has on other occasions held that the prospect of residential property depreciation, even when based on the unfounded fears of the community constituting the market for such property, is *350 evidence of a threatened nuisance and supports an injunction.
In Birchard v Lansing Bd of Health, 204 Mich. 284; 169 N.W. 901 (1918), this Court enjoined the establishment of a "pesthouse" (hospital for contagious diseases) that was to be operated by the city pursuant to its charter. The Court followed Barth v Christian Psychopathic Hosp Ass'n, 196 Mich. 642; 163 N.W. 62 (1917),[70] and Saier v Joy, 198 Mich. 295; 164 N.W. 507 (1917); here, as in those cases,
there might be no actual danger if properly conducted, but ... maintenance [of the facilities] in close proximity to the home would create ... dread and fear in the mind of the normal person ... [thus] reducing the value of the property so situated.... [A] pesthouse may be so conducted, and well-regulated ones are, as to cause no actual danger to nearby residents. But substantially all the experts who testify to this effect agree that their opinion is not shared by the general public, and that the normal person has a horror and dread of a pesthouse, and a fear of infection from proximity to it.[[71]]
*351 The normal and emotionally justified but factually unfounded fears of third parties cannot properly be dismissed as "conjectural, transitory and ephemeral."[72] Nor should plaintiffs who can establish at trial that their property has declined in value through the agency of such fear be required to await beneficent market forces that might ameliorate their losses.[73]
We again emphasize that the claimed decline in the value of the instant plaintiffs' homes appears to be attributable to factually founded as well as unfounded fear.[74]
C
Courts in other jurisdictions addressing the *352 effect of fear on property values in nuisance actions have also recognized that the relevant inquiry is not whether a fear is factually founded, but whether it is the normal consequence of the defendants' conduct.[75] In Everett v Paschall, supra,[76] much as in the instant case, the trial court had agreed with the defendants
that there is no real danger; that the fear or dread of the disease is, in the light of scientific investigation, *353 unfounded, imaginary, and fanciful; and that the injury, if any, is damnum absque injuria.[77]
The Washington Supreme Court, focusing on emotional reaction as a factual reality of the case, concluded that the hospital would interfere with "the comfortable enjoyment of the property"[78] to which the plaintiffs were entitled. The court rejected the argument that, because the fear was "unfounded and unsustained by science, a demon of the imagination the courts will take no account of it...." The court said:
[W]e question our right to say that the fear is unfounded or unreasonable, when it is shared by the whole public to such an extent that property values are diminished. The question is, not whether the fear is founded in science, but whether it exists; not whether it is imaginary, but whether it is real, in that it affects the movements and conduct of men. Such fears are actual, and must be recognized by the courts as other emotions of the human mind.[[79]]
*354 D
The majority of jurisdictions addressing the question holds that when property owners are awarded damages in compensation for diminution of property value attributable to easements for power lines, gas or oil pipe lines, or related structures, the elements and measure of compensation include potential purchasers' fear or apprehension of danger. Most of these authorities hold that because such fears in fact materially affect property values, they should be included in the calculus of damage.[80]
The court in Texas Electric Service Co v Nelon, 546 S.W.2d 864, 868 (Tex Civ App, 1977), adopted a typical formulation addressing normal fear that depresses the value of the subject property:
"[To determine market value after a taking, fear is relevant if] there is a basis in reason or experience for the fear; [the] fear enters into the calculations of persons who deal in the buying and selling of similar property; and ... [d]epreciation of market value because of the existence of such fear." [Emphasis added.]
Like Everett v Paschall, supra, condemnation cases illustrate that the relevant "truth" is not whether there is actual danger, but whether the *355 average person interested in the plaintiff's property believes there is danger. The market, of course, behaves accordingly, and the fortunes of property owners follow. As the court in one easement case observed:
The argument ... that there is no real danger or reason for such fear has no force against the fact that the fear exists and is unavoidable. The fear of danger in some cases is as bad as the danger itself it is a condition not a theory.[[81]]
E
Plaintiffs have not alleged the existence of a condition that no reasonable person of ordinary sensibilities could find worrisome or offensive.[82]
A particular use of neighboring land may be offensive to some persons and not to others. Accordingly, for both hypersensitive and insensitive property owners, "[r]ights and privileges as to the use and enjoyment of land are based on the general standards of normal persons in the community and not on the standards of the individuals who happen to be there at the time."[83] The Restatement explains that a hypersensitive invalid
cannot found an action for a private nuisance upon the normal ringing of a church bell across the street from his house, on the ground that the noise ... throws him into convulsions and threatens his health or even his life, if a normal member of the community would regard the sound as unobjectionable or at most a petty annoyance....
*356 On the other hand, when the invasion is of a kind that the normal individual in the community would find definitely annoying or offensive, the fact that those who live in the neighborhood are hardened to it and have no objection will not prevent the plaintiff from maintaining his action. For example, the noise of a boiler factory next door may be a private nuisance even though the plaintiff and others who live in the vicinity are stone deaf and cannot hear it. The deafness of the plaintiff himself will affect the damages that he can recover, but it does not prevent the existence of a genuine interference with the use and enjoyment of his land as, for example, for the purpose of entertaining guests.[[84]]
The instant plaintiffs, by virtue of superior knowledge and the lapse of time, might be inured to any fears manifesting themselves in property depreciation in their neighborhood. Nonetheless, just as a deaf plaintiff suffers a "genuine interference with the use and enjoyment of his land" when the use of neighboring property reduces the willingness of other persons to visit his property, plaintiffs here should be able to recover damages for a "genuine interference with the use and enjoyment of [their] land" if defendants' use of neighboring property reduces the willingness of potential purchasers to occupy property in the neighborhood, substantially and adversely affecting the value of plaintiffs' property.
F
The majority rejects plaintiffs' claim that the conduct of defendants, rather than negative publicity or the "unfounded fears of third parties,"[85]*357 caused an interference with plaintiffs' interest in the use and enjoyment of property.[86]
One might hypothesize a category of cases in which "negative publicity" only remotely connected with the defendant's conduct adversely affects the value of the plaintiff's property, but defendants have not established that the instant case belongs in such a category.[87] Notwithstanding the majority's concerns, plaintiffs have not asked to be excused from the "requirement that a litigant seeking to recover for nuisance must show ... a significant interference with the use and enjoyment of land."[88] It is rather the majority that, by deciding this case on its own factual assumptions and barring remand for trial, has prevented plaintiffs from making such a showing.
G
Manifesting greater concern about the diffusion of liability than the instant defendants are alleged to have shown for the diffusion of hazardous waste, the majority sounds an alarm:
Under [plaintiffs'] theory, a cause of action could be stated on behalf of any individual who could demonstrate an effect on property values even if the polluted ground water had neither strayed from defendants' own property, nor disturbed a plaintiff's enjoyment by the fear that it would do so.[[89]]
The majority's hypothetical case, in which contamination *358 never "strayed from defendants' own property,"[90] is counterfactual; plaintiffs allege that contamination "strayed" from defendants' facilities, and rendered homes in the neighborhood unsafe to inhabit.[91]
VI
The majority concludes by animadverting upon a claim that recognition of the instant plaintiffs' cause of action might lead to "reordering of a polluter's resources for the benefit of persons who have suffered no cognizable harm at the expense of those claimants who have been subjected to a substantial and unreasonable interference in the *359 use and enjoyment of property."[92] The majority observes that polluters sometimes seek refuge in the bankruptcy courts "as a result of clean-up costs required under various statutes and private litigation seeking money damages for injuries due to the contamination," and that Thomas Solvent Company did so in 1984.[93]
The majority's fears are unfounded possibly the only truly unfounded fears in this case. We doubt that actions of the kind before us today would even ripple the surface of the sea of troubles that engulfed the instant defendants as a result of their handling of toxic waste.[94] In any event, we are not swayed by the suggestion that to permit the instant plaintiffs to proceed to trial is to threaten the rightful recoveries of individuals stricken with disease of environmental etiology, or of communities blighted by toxic waste. Again, trial courts possess sufficient discernment to resolve the problems of proof presented by the instant case.
*360 We would affirm the judgment of the Court of Appeals and remand to the trial court for further proceedings.
CAVANAGH, C.J., concurred with LEVIN, J.
APPENDIX
We here further respond to observations in the majority opinion concerning Smith v Western Wayne Co Conservation Ass'n, 380 Mich. 526, 543; 158 NW2d 463 (1968), and Gunther v E I DuPont de Nemours & Co, 157 F Supp 25 (ND W Va, 1957).
A
The majority cites Smith for the proposition that "a cause of action for nuisance may not be based on unfounded fears."[95]
The Smith plaintiffs asserted that operation of a gun range in the neighborhood adversely affected the value of their property, supporting this claim with evidence of the noise of the gun range.[96] The *361 plaintiffs did not, however, claim that "fear of injuries" from operation of the gun range "decreas[ed] their property values,"[97] but rather "`that the range ... endangers the lives and property of persons living in the area; and that even if found safe, the fears in the minds of the residents resulting from its operation and use render it a nuisance.'"[98] The plaintiffs in Smith sought to enjoin operation of the gun range as a nuisance in fact; evidence relating to property values was offered in support of this plea, but, as in Warren Twp and Plassey, damages for lost value formed no part of the relief requested.
The primary focus of the opinion in Smith was not safety, but noise. The trial court reviewed testimonial and demonstrative evidence of the degree of disturbance caused by operation of the range, and found that the noise was not "`such as would shock a person of ordinary sensibilities or cause actual physical discomfort.'"[99] The trial court declared itself "`convinced that no real or actual danger exists from the use of defendants' range,'"[100] and said that relief cannot
"be granted to plaintiffs merely on the claim that *362 there `exists' a fear in their minds, even though there is no actual danger. Mere apprehension is insufficient to grant injunctive relief against a claimed nuisance."[[101]]
The instant plaintiffs do not seek an injunction, and assert no claim for any kind of relief arising out of their own "fears" (founded or not).[102]
B
Gunther said by the majority to "exemplif[y] *363 this reluctance to find a nuisance for mere diminution of property value on the basis of unfounded beliefs or fear of injury,"[103] is similar to Smith. The plaintiffs' home was located approximately two miles from a site used by the defendant for testing explosives.[104] The court refused "the extraordinary remedy of injunction,"[105] not damages, where the plaintiffs had failed to show any cognizable interference with their use or enjoyment of property.[106]
The plaintiffs presented no evidence of property depreciation and did not request damages therefor. The court declined to enjoin the defendant's business on the basis of the plaintiffs' "unfounded" belief "that the test blasting had injured them"[107] only after expressly finding that none of their underlying allegations were supported by the evidence.
The jury in Gunther found, in response to questions submitted by the court, that the testing operations had not caused physical damage to the *364 plaintiffs' property[108] or personal injury to Mrs. Gunther.[109]
Thus, in the words of the majority, "not only ha[d] these plaintiffs not alleged significant interference with their use and enjoyment of property, they do not here posit any interference at all."[110]
The court in Gunther held that characterization of noise as a nuisance "depends on its effect on a person of ordinary sensibilities, not the effect on a particular individual."[111] Testimony of local residents did not establish that the noise of the defendant's business met this standard. Addressing one of the plaintiffs' claims of personal injury, the court said:
Mrs. Gunther stated that she was frightened by each test explosion and became nervous and upset. However, she admitted that she was quite nervous *365 over the pending litigation and that she became nervous when she drove a car in traffic or went shopping. The evidence disclosed that Mrs. Gunther has suffered from a nervous disorder almost all of her adult life.[[112]]
The court declined to enjoin the defendant's testing operations, an aspect of a lawful business carried on without negligence, because the plaintiffs had shown no cognizable tangible or intangible injury to their property or their persons.[113] In particular, the court did not credit the plaintiffs' only remaining basis for injunction, property depreciation, because the only evidence was a subjective account of Mrs. Gunther's personal belief in harm, not supported by the experience of normal members of the affected community.[114]
In contrast, it is precisely the claim of the instant plaintiffs that normal members of the community in which they live were alarmed by *366 the prospect of occupying property in the vicinity of contaminated soil or ground water, and were therefore unwilling to pay the former market price for any property in the vicinity.[115]
NOTES
[1] Thomas Solvent Company is a Michigan corporation which owns and controls Thermo-Chem, Inc., TSC Transportation Company, Thomas Development Company/Thomas Transportation Company, Thomas Solvent Company of Detroit, Inc., Thomas Solvent Company of Muskegon, Inc., and Thomas Solvent, Inc. of Indiana. Richard Thomas is an individual who is or was an employee, officer or sole shareholder of Thermo-Chem, Inc., Thomas Solvent Company of Muskegon, Inc., Thomas Solvent Inc. of Indiana, Thomas Solvent Company of Detroit, Inc., Thomas Development Company/Thomas Transportation Company, and TSC Transportation Company.
[2] Grand Trunk Western Railroad Corporation allegedly owned and operated a number of sites at which contaminants were improperly handled. Grand Trunk Corporation is the corporation which owns Grand Trunk Western Railroad. Both Grand Trunk Western Railroad and Grand Trunk Corporation are owned and operated by Canadian National Railways Company Limited.
[3] The plaintiffs subsequently withdrew their appeal in the Court of Appeals regarding the trial court's dismissal of their claims against the Grand Trunk Railroad defendants. Only the Thomas Solvent defendants are parties to this appeal.
[4] With these motions, the plaintiffs sought relief from the trial court's conclusion that no claims regarding contamination of municipal well water had been preserved by the stipulation. The trial court also concluded that the first amended complaint did not encompass claims based on purported contamination of municipal water. The trial court further refused to permit the amendment of the complaint because the plaintiffs had been aware of these potential claims and failed to raise them earlier. To the extent that the plaintiffs seek to rely on contamination of municipal water in support of their nuisance claims, those allegations are not properly before us since the plaintiffs failed to appeal from the trial court's order denying leave to amend their complaint.
[5] Pfennigstorf, Environment, damages, and compensation, 1979 Am B Found Res J 347, 386. See, generally, Calabresi & Melamed, Property rules, liability rules, and inalienability: One view of the cathedral, 85 Harv L R 1089 (1972).
[6] One commentator pointed out that Blackstone's definition was so broad it could encompass not only all nuisances, but all wrongs. McClintock, Principles of Equity (2d ed), p 363 quoting 3 Blackstone, Commentaries, c 11 (Chase's 3d ed, 1892), p 738. Blackstone's definition of nuisance was "`anything that worketh hurt, inconvenience or damage.'" Id.
[7] Paton, Liability for nuisance, 37 Ill LR 1, 8-9 (1942). See also Newark, The boundaries of nuisance, 65 LQR 480, 487-488 (1949). Newark explains the early common-law origins of the tort in the assize of nuisance, a remedy available for harm to the plaintiff's enjoyment of rights over land. Gradually, the action upon the case for nuisance became the sole common-law remedy over the assize of nuisance. Winfield, Nuisance as a tort, 4 Cambridge LJ 189, 190-191 (1931). The action upon the case, the forerunner of today's nuisance action, was available only for damages, not abatement. Id. at 192.
[8] A public nuisance involves the unreasonable interference with a right common to all members of the general public. Garfield Twp v Young, 348 Mich. 337, 342; 82 NW2d 876 (1957); 4 Restatement Torts, 2d, § 821B, p 87.
[9] We are not presented in this case with the occasion to consider the distinctions between the two definitions.
[10] See, e.g., Kilts, supra, p 651; Awad v McColgan, 357 Mich. 386, 389-390; 98 NW2d 571 (1959); Rosario v Lansing, 403 Mich. 124, 131; 268 NW2d 230 (1978); Hadfield, supra, p 150.
[11] Even if the plaintiffs had argued the case on a public nuisance theory, recovery would be unavailable. Although the contamination of ground water may give rise to an action for public nuisance, the plaintiffs must show harm of a kind different from that suffered by other members of the general public exercising the right common to the general public that was the subject of interference. 4 Restatement Torts, 2d, § 821C, p 94. See, e.g., Philadelphia Electric Co v Hercules, Inc, 762 F2d 303 (CA 3, 1985). These plaintiffs concede that no contamination reached the ground water underlying their properties. Thus, there exists no evidence of harm of a different kind than that suffered by members of the general public.
[12] Both Prosser and Keeton's definition of nuisance and the definition provided by the Restatement of Torts specifies that an action for nuisance involves a nontrespassory invasion of property rights. 4 Restatement Torts, 2d, § 821D, p 100. Thus, it is clear that a tangible physical intrusion is not necessary.
[13] Contrary to the approach of the dissent (see post, § v, parts D and E, and Appendix, p 365, n 114), we do not deal here with fear that depresses property values as an element of damages where a basis for liability is otherwise established. Nor do we deal with the issue of the hypersensitive individual. The Restatement example referenced (post, pp 355-356), illustrates the defect in the plaintiffs' theory. The deafness of the plaintiff does not prevent the existence of genuine interference, i.e., the enjoyment of entertaining guests. The Restatement does not suggest that absent an interference with the use and enjoyment of land, the deaf person could recover on the basis that hearing persons would not pay as much for his house. That is the appropriate analogy to the facts of this case. Likewise, according to the Restatement, a cognizable claim of nuisance will lie where conduct is otherwise actionable under the rules governing liability for negligent, reckless, or ultrahazardous conduct, provided there is a nontrespassory invasion of another's interest in the use and enjoyment of land. (Post, § III, pp 341-343.)
[14] McRae, The development of nuisance in the early common law, 1 U Fla L R 27, 29-30 (1948).
[15] Winfield, Nuisance as a tort, n 7 supra, pp 190-191. Prosser & Keeton agree that the assize of nuisance originated as a writ designed to "cover invasions of the plaintiff's land due to conduct wholly on the land of the defendant." Prosser & Keeton, supra, § 86, p 617.
[16] Winfield, n 7 supra, pp 191-192, 201-203.
[17] The geographic aspect of nuisance law limits claims in two areas. First, courts have typically refused to allow a successor landowner to seek damages under a nuisance theory because the landowner's claim does not involve an interference with adjoining land. See, e.g., Amland Properties Corp v ALCOA, 711 F Supp 784; 29 ERC 1538 (D NJ, 1989). Second, courts have typically rejected liability where a litigant failed to establish proximity between the asserted interference and the litigant's property. See, e.g., Renaud v Martin Marietta Corp, 749 F Supp 1545; 32 ERC 1721 (D Colo, 1990).
[18] Newark, n 7 supra, p 489.
[19] McRae, n 14 supra, pp 40-41. Although recently courts in some jurisdictions have considered whether to expand this proprietary rights aspect to include various successor interests, the rationale employed even under this expanded approach, continues to rely upon the notion that nuisance is intended to protect against interference with the use and enjoyment of land. See, e.g., Amland, n 17 supra, pp 807-808.
[20] See McRae, n 14 supra, pp 37-38.
[21] Early cases rejecting liability because there was damnum absque injuria were discussed by McRae, n 14 supra. As early as 1332, an English court held that damages alone were not enough. McRae explains that "if a man erected a mill upon his land and so subtracted customers from his neighbor's mill, his neighbor suffered damnum but there might be no injuria." Id., p 38, citing YB 7 Edw III, Mich, pl 27 (1332). McRae mentions an additional example in which recovery was denied where the complainants sought to recover for a loss of income because of the defendant's establishment of a rival school. Id., citing Gloucester Grammar School Case, YB 11 Hy IV, Mich, pl 21 (1409).
[22] Smith, Reasonable use of one's own property as a justification for damage to a neighbor, 17 Colum L R 383, 386-390 (1917). Likewise, McRae explains that the "common factor in all of these cases [actions on the case for nuisance] is that defendant's act was in each case a misfeasance, a misfeasance of a type which would not sustain trespass, and which was damnum and injuria." McRae, n 14 supra, p 39. (Emphasis in original.) Early Michigan authorities discussed this concept as well. See Grand Rapids & Indiana RR Co v Heisel, 38 Mich. 62; 31 Am Rep 306 (1878). There, the Court concluded that a railroad's use of a public highway to lay railroad tracks could not be deemed a nuisance with respect to the litigant until the use of the street unreasonably interfered with his property. The Court noted that a lot owner with proprietary rights in the street might sue for the wrongful encumbrance upon his property and recover for diminished market value or decreased rental value. However, because this litigant lacked proprietary rights in the street, the Court concluded that "diminution ... occasioned by the placing of the track in the street" was damnum absque injuria with regard to him until the railroad's use of the tracks resulted in unnecessary noise or other legal grievance affecting his property. Id., p 71.
[23] Prosser & Keeton, supra, § 88, p 626. The common-law development of trespass, like nuisance, is also illustrative of a need to limit recovery to a proper case. In Bradley v American Smelting & Refining Co, 104 Wash 2d 677, 690-691; 709 P2d 782 (1985), the court discussed the modern view of trespass, which allowed recovery for indirect invasions of property such as those caused by smoke or air particles. Airborne particles might also give rise to an action in nuisance. To avoid "sanctioning actions in trespass by every landowner within a hundred miles of a manufacturing plant," the court interposed the actual and substantial damages requirement. Id., p 692. The substantial interference doctrine achieves the same purpose in nuisance law.
[24] The Iowa Supreme Court explained that absent a nuisance, a "use cannot be enjoined because of, or damages recovered for, the diminution in value of neighboring properties resulting therefrom." Bader v Iowa Metropolitan Sewer Co, 178 NW2d 305, 307 (Iowa, 1970).
[25] See also Winget v Winn-Dixie Stores, Inc, 242 SC 152; 130 SE2d 363 (1963) (absent proof of a nuisance, no recovery of damages can be allowed for the diminution in value because of the lawful use of property made by a nearby owner).
[26] See, e.g., Prosser & Keeton, supra, § 87, p 620, ns 18 and 19.
[27] Plaintiffs successfully argued in the Court of Appeals that Smith was distinguishable on the basis that it involved a suit for injunctive relief, not damages. While the observation is correct, it is a non sequitur. The issue here is whether an action in damage for nuisance in fact can be predicated upon unfounded fears of ground water contamination. See Exxon Corp v Yarema, 69 Md App 124, 151, n 5; 516 A2d 990 (1986) (concluding that one standard applies to nuisance actions in law and in equity).
[28] See also Henkel v Detroit, 49 Mich. 249; 13 N.W. 611 (1882) (even if the value of property was diminished by the city's market regulations that increased market wagons and traffic to the detriment of the plaintiff's property value, the complainant has suffered no compensable injury).
[29] See McCaw v Harrison, 259 S.W.2d 457, 458 (Ky, 1953) (no actual danger of contamination of ground water from a cemetery and depreciation of property values alone was not enough to support a claim in nuisance); Miller v Cudahy Co, 567 F Supp 892, 897-898 (D Kan, 1983), aff'd in part and rev'd in part on other grounds 858 F2d 1449 (CA 10, 1988) (salt allegedly polluted area ground water but partial summary disposition was appropriate with regard to those sites outside the aquifer and those which the plaintiffs failed to show that the pollution reached); cf. O'Donnell v Oliver Iron Mining Co, 273 Mich. 27; 262 N.W. 728 (1935) (refusing damages for property depreciation caused by fear of damage to property absent actual damage in a negligence action).
[30] Although some commentators analyzing the availability of nuisance actions to solve problems arising from environmental contamination have deplored the difficulties of showing that a significant interference exits, it is generally accepted that some interference with a use is required for recovery. See, generally, Reitze, Private remedies for environmental wrongs, 5 Suffolk U L R 779, 800 (1971); comment, A private nuisance approach to hazardous waste disposal sites, 7 Ohio N U L R 86, 100-101 (1980); comment, Groundwater pollution in the western states Private remedies and federal and state legislation, 8 Land & Water L R 537, 539-544 (1973); comment, The environmental lawsuit: Traditional doctrines and evolving theories to control pollution, 16 Wayne L R 1085, 1109-1114 (1970).
[31] In Garfield Twp, the township sought to enjoin a junkyard operating in violation of a licensing ordinance. Rejecting the township's argument that the operation of the junkyard without a license rendered it a nuisance per se, the Court ruled that factual support was required to prove nuisance; illegal conduct alone was not enough. The Garfield Court relied on an opinion issued in 1875, which explained:
The erection of a wooden building within the limits of a city or village is not in and of itself a nuisance. Neither does the fact that the erection of such is prohibited by ordinance make it a nuisance. If this were so, then the doing of any act prohibited by law would, upon the same reasoning, be a nuisance. The act, if prohibited, would be illegal; but something more than mere illegality is required to give this court jurisdiction. [Village of St Johns v McFarlan, 33 Mich. 72, 74; 20 Am Rep 671 (1875).]
[32] For similar reasons, the cases involving fears of the owners of property as constituting nuisance in fact, or prima facie nuisance, such as the slaughterhouse in Conway v Gampel, 235 Mich. 511; 209 N.W. 562 (1926), or businesses moving into otherwise long-established residential neighborhoods, do not establish that property depreciation on the basis of unfounded fear of third parties makes out a compensable allegation of nuisance in fact. Indeed, Kundinger v Bagnasco, 298 Mich. 15; 298 N.W. 386 (1941), upon which the dissent relies, while rejecting the notion that it was necessary to show danger from disease or unpleasantness of odors, itself points to the need to show invasion of a legally cognizable interest, i.e., a nuisance in fact. "Emotions ... are more acute in their painfulness, in many cases, than suffering perceived through the senses; and mental pain and suffering are elements of damage, in the eyes of the law." Id., p 17.
[33] See, e.g., Nicholson v Connecticut Half-Way House, Inc, 153 Conn 507; 218 A2d 383 (1966).
[34] Finally, with respect to Exxon Corp v Yarema, n 27 supra, the case is factually distinguishable. We have no claim of contaminated well water or the preclusion of sale. This case comes to us singularly on the issue whether plaintiffs may proceed with their nuisance in fact claims solely on the basis of property depreciation due to public concern about contaminants in the general area. Exxon confirms that they could not. Id., pp 151-152.
[35] The authority to modify the common law is embodied in Const 1963, art 3, § 7:
The common law and the statute laws now in force, not repugnant to this constitution, shall remain in force until they expire by their own limitations, or are changed, amended or repealed.
[36] Both state and federal statutes exist which provide for potential remedies including a private cause of action for various forms of pollution. See, e.g., The Comprehensive Environmental Response, Compensation & Liability Act (CERCLA), 42 USC 9601 et seq.; the Solid Waste Disposal Act, 42 USC 6901 et seq.; the Environmental Response Act, MCL 299.601 et seq.; MSA 13.32(1) et seq.; the Environmental Protection Act, MCL 691.1201 et seq.; MSA 14.528(201) et seq.; the Hazardous Waste Management Act, MCL 299.501 et seq.; MSA 13.30(1) et seq., the Solid Waste Management Act, MCL 299.401 et seq.; MSA 13.29(1) et seq.
[37] Seventy-seven Michigan hazardous waste sites are on the National Priorities List. 56 Fed Reg 5606-5627 (February 11, 1991); 40 CFR 300 App B (1992). In addition, the Department of Natural Resources, pursuant to the Environmental Response Act, 1982 PA 307, MCL 299.601 et seq.; MSA 13.32(1) et seq., has identified approximately 2,837 sites of environmental contamination throughout the state. Department of Natural Resources, Michigan Sites of Environmental Contamination, Act 307 (March, 1991), p 9.
[38] It is not uncommon for a corporation engaged in conduct causing environmental contamination to seek protection in bankruptcy court as a result of clean-up costs required under various statutes and private litigation seeking money damages for injuries due to the contamination. In this case, Thomas Solvent Company sought protection in bankruptcy court in 1984. In re Thomas Solvent Co, unpublished opinion of the United States Bankruptcy Court for the Western District of Michigan, decided April 6, 1984 (Docket No. 84-00843).
[39] Numerous federal and state statutes exist that provide various remedies for environment damage. See p 317, n 36. One federal district court rejected a tort claim under the Federal Tort Claims Act in the face of the plaintiff's argument by analogy to CERCLA, 42 USC 9611. Charles Burton Builders, Inc v United States, 768 F Supp 160 (D Md, 1991). The plaintiff, a property owner, had feared damage to its property from the illegal dumping of hazardous waste in the vicinity. Because tests showed no injury within the meaning of the Federal Tort Claims Act, 28 USC 1346(b), summary judgment was properly granted. The court reasoned that "if reference to CERCLA is pertinent at all, it tends to support the position that Congress recognized there to be a need for a specific cause of action for `reaction expenses' or `response costs' due to the absence of a right to recover under the existing law." 768 F Supp 163.
[1] Ante, p 310.
[2] The diminution in value of rental property would, absent a long-term lease, be reflected in a reduction of rental income, and thus be more readily and immediately apparent than where the property is not rented.
[3] See 4 Restatement Torts, 2d, §§ 821D, 821F-822, pp 100-102, 105-115; Prosser & Keeton, Torts (5th ed), § 87, pp 622-623.
[4] Ante, p 316.
[5] Even wholly irrational popular fear, if caused by a condition intentionally or tortiously created by defendants, may justify a damage recovery for a reduction in market value as long as the fear is of a kind experienced by normal persons in plaintiffs' community. See part IV.
[6] See 1986 PA 178, amending the Revised Judicature Act § 2925b (MCL 600.2925b; MSA 27A.2925[2]) concerning the determination of the pro-rata shares of tort-feasers, and to add § 6304 (MCL 600.6304; MSA 27A.6304) providing that in a personal injury action involving fault of more than one party to the action, the percentage of the total fault of each party shall be determined, and for the reallocation of uncollectible amounts.
[7] The complaint originally named as defendants Grand Trunk Western Railroad Corporation and other persons. Rulings and stipulations in the lower courts have left only the Thomas Solvent defendants as parties to this appeal.
[8] The principal place of business of the Thomas Solvent defendants, a facility located on Raymond Road, included a drum storage dock, a warehouse used to store chemicals, and twenty-one underground bulk storage tanks. The Thomas Solvent defendants also leased a facility on Emmett Street, which included a loading dock, two underground bulk storage tanks, and one aboveground tank.
[9] These discoveries allegedly culminated a period of over thirty years during which the Calhoun County Health Department had received numerous complaints concerning the taste, color, odor, and health effects of consumption of water from the vicinity of defendants' facilities. Toxic substances emanating from the sites had allegedly migrated through the aquifer system and contaminated plaintiffs' wells, making the water unsafe to drink and obliging plaintiffs to seek alternative water supplies.
Plaintiffs also alleged that, from 1970 to 1981, the Thomas Solvent defendants were licensed by the Department of Natural Resources to haul liquid industrial waste, that the DNR had initiated administrative proceedings seeking revocation of Thomas Solvent's 1981 license and denial of its 1982 and 1983 license applications, and that the DNR had also denied Thomas Solvent's application for a license to transport hazardous waste under 1979 PA 64, MCL 299.501 et seq.; MSA 13.30(1) et seq. Federal and state investigations of ground water and soil in the vicinity allegedly disclosed high levels of contamination.
[10] Plaintiffs' brief characterizes the stipulation as dismissal of "claims in negligence, trespass and strict liability, and for any damages that required that [plaintiffs] be exposed to the chemical contamination."
Alleging negligence, continuing nuisance and trespass, ultrahazardous activities, and that defendants should be held strictly liable, plaintiffs commenced this action, seeking compensation for personal injury and property damage, and injunctive relief to restore the contaminated soil and water to their original condition and to prevent further contamination.
A separate count of the complaint sought recovery for loss of property value due to the migration of hazardous chemicals "to the surrounding area, including the properties owned or occupied by Plaintiffs," allegedly causing such properties "to lose value, to become unsaleable, uninhabitable, and worthless with a loss of the normal use and enjoyment thereof."
[11] Reporter's syllabus, 184 Mich. App. 693; 459 NW2d 22 (1990).
[12] Ante, p 314.
[13] Id. The majority's invocation of the sonorous Latin expression, damnum absque injuria, puts one in mind of Justice FITZGERALD'S early effort in Rice v Jackson, 1 Mich. App. 105, 110; 134 NW2d 366 (1965), quoting a passage from an article on res gestae:
"The marvelous capacity of a Latin phrase to serve as a substitute for reasoning, and the confusion of thought inevitably accompanying the use of inaccurate terminology, are nowhere better illustrated than in the decisions dealing with the admissibility of evidence as `res gestae.' It is probable that this troublesome expression owes its existence and persistence in our law of evidence to an inclination of judges and lawyers to avoid the toilsome exertion of exact analysis and precise thinking." [Morgan, A suggested classification of utterances admissible as res gestae, 31 Yale L J 229 (1922).]
[14] Ante, p 316, n 34 (emphasis added).
[15] 69 Md App 151 (emphasis added).
[16] Exxon distinguished McCaw v Harrison, 259 S.W.2d 457, 458 (Ky, 1953), in which "[t]he plaintiffs could sell the property whenever they chose; they were not precluded from building on their land; and they were not prevented from using water from their wells." Exxon, 69 Md App 153.
Quoting 10 Am Jur, Cemeteries, § 16, p 498, McCaw held that, where there was no actual danger of ground water contamination, the operation of a cemetery would not be enjoined as a nuisance "merely because it is a constant reminder of death and has a depressing influence on the minds of persons who observe it, or because it tends to depreciate the value of property in the neighborhood, or is offensive to the aesthetic sense of an adjoining proprietor." (Emphasis added.)
The majority cites McCaw for the proposition that property depreciation caused by unfounded fears does not constitute a nuisance, ante, p 313, n 29. In addition to the analysis offered by the Maryland appellate court, McCaw is distinguishable from the instant case on other grounds. First, McCaw involved denial of injunctive relief (see subpart c). Second, it followed the almost universal rule against characterization of cemeteries as nuisances. See 14 Am Jur 2d, Cemeteries, § 12, pp 714-715. Finally, the case was decided under Kentucky law, which is peculiarly resistant to nuisance claims of this kind. Kentucky, unlike Michigan, is one of the few jurisdictions refusing to enjoin as a private nuisance the operation of a funeral home in a residential district. See LD Pearson & Son v Bonnie, 209 Ky 307; 272 S.W. 375; 8 ALR4th 324, 335 (1925), holding that potential depreciation and "sentimental" aversion to mortuaries did not amount to a substantial and material interference with the use and enjoyment of neighboring property. Cf. anno: Funeral home as private nuisance, 8 ALR4th 324, discussed in n 64.
[17] 69 Md App 152 (emphasis added).
The court's construction of "harm to property" comports with the Restatement view of private nuisance as a "nontrespassory invasion of another's interest in the private use and enjoyment of land." 4 Restatement Torts, 2d, ch 40 (Nuisance), § 821D, p 100 (emphasis added). See comment b, p 101, and also ch 1 (Definitions), § 1, pp 2-4, which broadly defines "interest."
[18] Id., p 153 (emphasis added).
[19] Although plaintiffs do not allege that they were prevented from building on their land, it might appear at trial that plaintiffs have been unable to secure financing for construction, or may have found construction untenable because of the depressed market for their property.
[20] Exxon, 69 Md App 153.
[21] Ante, p 316, n 34 (emphasis added).
[22] See n 10.
[23] The parties dispute the status, before this Court, of allegations that plaintiffs were subjected to interference with particular interests in the use and enjoyment of property other than property depreciation. Such interferences may include contamination of municipal or private well water, and plaintiffs' adoption of alternative water supplies in response to the contamination of the neighborhood. See text following n 18.
Plaintiffs argue that the stipulation striking other elements of damages "does not mean that the facts leading up to the tort can not be entered into evidence, and indeed, such facts would be presented to a jury to support the reasons for the property being devalued."
The majority asserts that plaintiffs' allegations regarding "contamination of municipal water ... are not properly before us since the plaintiffs failed to appeal from the trial court's order denying leave to amend their complaint" to reflect such claims. Ante, p 301, n 4. In their complaint, however, plaintiffs alleged facts tending to support the conclusion that defendants' conduct had led to contamination of municipal well water.
[24] Ante, p 311, citing Warren Twp School Dist v Detroit, 308 Mich. 460, 469-470; 14 NW2d 134 (1944), Plassey v S Loewenstein & Son, 330 Mich. 525, 530; 48 NW2d 126 (1951), and Garfield Twp v Young, 348 Mich. 337; 82 NW2d 876 (1957).
At ante, p 312, n 28, the majority also cites Henkel v Detroit, 49 Mich. 249; 13 N.W. 611 (1882), discussed in n 53.
[25] Garfield Twp v Young, n 24 supra, extends the Plassey holding to a business already in operation. Warren Twp was cited by Plassey, which in turn is the sole authority for the relevant passage of Garfield Twp.
[26] Id., p 466. The Court affirmed dismissal of the complaints "without prejudice to the rights of plaintiffs ... to seek injunctive or other relief should the airport be built and its operation ... result in a nuisance or continuing trespass." Id., p 479 (emphasis added).
[27] Plassey, 330 Mich. 529, quoting Briggs v Grand Rapids, 261 Mich. 11, 15; 245 N.W. 555 (1932) (emphasis added). Plassey dealt with efforts to enjoin as a nuisance the proposed construction of a slaughterhouse and rendering plant.
The Court noted, however, that if a proposed use of neighboring land "would unquestionably result in a nuisance affecting the rights of individuals," a cause of action in private nuisance would accrue, potentially justifying an injunction. Id., p 530.
[28] The Court observed:
[I]n the absence of violation of applicable law or restrictions, one may construct on his property a building in which to carry on a lawful business, and the mere fact that doing so may lessen the value of other property in the locality does not constitute the erection of the building a nuisance. [Id. Emphasis added.]
See part III.
[29] The United States Supreme Court has held that damages are recoverable although the plaintiff is unable to demonstrate that a particular private nuisance justifies issuance of an injunction. See Parker v Winnipiseogee Lake Cotton & Woollen Co, 67 U.S. 545, 551; 17 L. Ed. 333 (1862). Courts of other jurisdictions have acted on this principle by permitting actions for damages to proceed in factual situations not justifying injunctive relief. See, e.g., Lyons v McKay, 313 P2d 527, 528-529 (Okla, 1957); King v Columbian Carbon Co, 152 F2d 636, 641-642 (CA 5, 1945) (applying Texas law); Ruggiero v Lockstrip Mfg Corp, 254 AD 783; 4 NYS2d 824 (1938); De Blois v Bowers, 44 F2d 621, 624 (D Mass, 1930); Haggart v Stehlin, 137 Ind 43, 55-56; 35 N.E. 997 (1893).
See also Conway v Gampel, 235 Mich. 511, 514; 209 N.W. 562 (1926), similarly acknowledging the propriety of a damage remedy as an alternative to injunctive relief in a private nuisance action involving property depreciation; Rohan v Detroit Racing Ass'n, 314 Mich. 326, 360-361; 22 NW2d 433 (1946) (a court of equity will abate nuisance "`only in cases where an action at law would afford no adequate redress'") (quoting Adams v Kalamazoo Ice & Fuel Co, 245 Mich. 261; 222 N.W. 86 [1928]); Turner v Hart, 71 Mich. 128, 139; 38 N.W. 890 (1888) ("It is not always a matter of course to grant relief in [private nuisance] cases, in a court of equity, when the law side of the court is open for legal redress").
[30] In affirming a damage award for depreciation of uncontaminated land, the court in Exxon cited actions for injunction as precedent. The defendant sought to distinguish such cases, but the court asserted that nuisance claims for injunctions and damages were analyzed under the same standard, differing only with respect to adequacy of the remedy. 69 Md App 151, n 5.
The Court of Appeals in the instant case distinguished Smith v Western Wayne Co Conservation Ass'n, 380 Mich. 526, 543; 158 NW2d 463 (1968) (see Appendix, part A), on the ground that Smith involved an injunction. The majority, citing Exxon, p 151, n 5, rejects this distinction as a "non sequitur," apparently concluding that the remedy sought is not material to the question "whether an action in damage for nuisance in fact can be predicated upon unfounded fears of ground water contamination." Ante, p 312, n 27 (emphasis added). While the proposition expressed in n 5 of Exxon is correct as applied to Exxon itself, it is overbroad if applied to demolish the distinction between Smith and the instant case.
[31] 4 Restatement Torts, 2d, § 822, comment d, p 111 (emphasis added).
In sum, "denial of relief by way of injunction is not always a precedent for denial of relief by way of damages. Consequently, liability for damages should be treated independently...." Id.
The Restatement notes that in damage actions,
an invasion may be regarded as unreasonable even though the utility of the conduct is great and the amount of harm is relatively small.... But for the purpose of determining whether the conduct producing the invasion should be enjoined, additional factors must be considered. It may be reasonable to continue an important activity if payment is made for the harm it is causing but unreasonable to initiate or continue it without paying. [Id. Emphasis added.]
Accordingly, damages may also be available if the defendant's use of property is negligent or otherwise unlawful, as plaintiffs here allege.
[32] See, generally, id., §§ 826-828, pp 119-133.
Gunther v E I DuPont de Nemours & Co, 157 F Supp 25 (ND W Va, 1957) (see Appendix, part B), cited by the majority at ante, pp 310-311, illustrates this principle. Even if the plaintiffs in that case had offered evidence "sufficient in law to show that a nuisance does exist," the court concluded, "it does not necessarily follow that an injunction order, abating the nuisance, must be issued." 157 F Supp 33. Stressing the economic importance to the defendant, and to the entire community, of continued testing, id., pp 27, 34, the court explained that the "comparative hardship" to the defendant outweighed any inconvenience the Gunthers could adduce. Id., p 33.
[33] Ante, p 315.
[34] The portion of Warren Twp cited by the majority, pp 469-470, adverts to Batcheller v Commonwealth, 176 Va 109; 10 SE2d 529 (1940), quoting in part from Thrasher v City of Atlanta, 178 Ga 514; 173 S.E. 117; 99 A.L.R. 158 (1934), and Swetland v Curtiss Airports Corp, 41 F2d 929 (ND Ohio, 1930).
[35] The majority states that because courts have traditionally eschewed harsh curtailment of productive activity on private property and did not accord "de minimis annoyances" the status of legally compensable injuries, "courts frequently concluded that diminution in property values alone constitutes damnum absque injuria." Ante, p 310.
Plaintiffs' claim for relief cannot be so characterized. Although the majority repeatedly intones "damnum absque injuria" as if it were the irrefragable conclusion of a legal syllogism, it appears as a free-floating conclusion of law, expressing assumption of the very issue to be decided. Thus, neither this "rule" nor the authorities cited by the majority justify denial of relief.
Judicial opinions that have characterized property depreciation as damnum absque injuria have generally predicated the holding on the absence of nuisance. See, e.g., Grand Rapids & Indiana R Co v Heisel, 38 Mich. 62; 31 Am Rep 306 (1878), cited by the majority ante, p 309, n 22 (because the plaintiff lacked proprietary rights in the street, the mere placing of railroad tracks, an activity in furtherance of a lawful business and not a nuisance in itself, was damnum absque injuria with regard to her insofar as it affected only the value of her property; noise or other legal grievances constituted actionable nuisance to the extent they resulted from improper conduct of the railroad, although property depreciation was an inappropriate measure of damages, because the harm suffered was not permanent); Winget v Winn-Dixie Stores, Inc, 242 SC 152, 159-162; 130 SE2d 363 (1963), cited by the majority ante, p 311, n 25 (an action for damages arising out of the operation of a supermarket on the edge of the plaintiffs' residential neighborhood; because the establishment was "a lawful one" and was sited in an appropriately zoned district, location alone could not make it a nuisance, but property depreciation arising out of operation of the business was compensable where the interferences with the plaintiffs' rights were "not normal or necessary incidents of" operation); Bader v Iowa Metropolitan Sewer Co, 178 NW2d 305, 307 (Iowa, 1970), cited by the majority ante, p 310, n 24, where the court refused to enjoin a sewage treatment lagoon and stated that a "lawful use" of property that does not create a public or private nuisance (the "[p]laintiff's evidence of a nuisance resulting from odors emitting from the lagoons was not satisfactory") "cannot be enjoined because of, or damages recovered for, the diminution in value of neighboring properties resulting therefrom."
[36] Conway v Gampel, n 29 supra; Ballentine v Webb, text accompanying n 29.
[37] As the majority observes, the court in Bader, n 35 supra, stated that "absent a nuisance, a `use cannot be enjoined because of, or damages recovered for, the diminution in value of neighboring properties resulting therefrom.'" Ante, p 310, n 24 (emphasis added). The court characterized such property depreciation as damnum absque injuria.
In making this assertion, however, the court in Bader invoked Gunther, and cited other authorities rendering similar holdings relating to enjoining a lawful business. In modern nuisance actions, the phrase damnum absque injuria, which, in the majority's words, means "a loss without an injury in the legal sense," ante, p 314, is almost invariably invoked in cases involving requests for injunctive relief.
[38] substantial interference requirement is to satisfy the need for a showing that the land is reduced in value because of the defendant's conduct...." [Prosser & Keeton, Torts (5th ed), § 87, p 622, quoted by the majority, ante, p 305. Emphasis added.]
[39] The Court thus cited Ballentine for the proposition that property depreciation was compensable at law in a nuisance action even where equitable relief was unavailable.
[40] Ante, p 307.
[41] This does not mean that interferences with other interests in the use and enjoyment of property are peripheral or unimportant, but does refute the majority's insistence that plaintiffs must seek to recover damages for an interference beyond property depreciation.
According to 4 Restatement Torts, 2d, § 821D, comment b, p 101, the "[i]nterest in use and enjoyment" encompasses "freedom from annoyance and discomfort," which is distinct not only from "freedom from detrimental change in the physical condition of the land itself," but also from the personalty "interest in freedom from emotional distress." Freedom from discomfort and annoyance "is essentially an interest in the usability of land and, although it involves an element of personal tastes and sensibilities, it receives much greater legal protection." (Emphasis added).
[42] See, e.g., Spencer Creek Pollution Control Ass'n v Organic Fertilizer Co, 264 Or 557; 505 P2d 919 (1973); Padilla v Lawrence, 101 NM 556; 685 P2d 964 (1984); Widmer v Fretti, 95 Ohio App 7; 116 NE2d 728 (1952); Miller v Carnation Co, 39 Colo App 1; 564 P2d 127 (1977).
[43] See e.g., ante, p 314.
[44] Ante, p 314 (emphasis added).
[45] 348 Mich. 340-341. The court rejected the township's claim that "the resolution regulates a business affecting public health, welfare and morals, and therefore its violation is a nuisance per se." Id., p 340.
[46] Ante, p 314, n 31.
[47] 33 Mich. 73 (emphasis added).
[48] Ante, p 314.
[49] Id.
The instant plaintiffs have alleged that defendants' use of their facilities violated applicable laws regulating the storage and shipment of hazardous waste. Such violations of law are not comparable with the violations of licensing and zoning ordinances discussed in Garfield Twp.
[50] Ante, p 304 (emphasis added).
[51] 348 Mich. 340.
[52] In Plassey, cited by the majority at 311-312, the Court declined to enjoin a lawful business as a nuisance "in the absence of violation of applicable law or restrictions...." 330 Mich. 530.
In Rockenbach v Apostle, 330 Mich. 338, 344; 47 NW2d 636 (1951), the Court held that an ordinance allowing the maintenance of a funeral home in a district zoned for residential or commercial purposes "is permissive only, and not controlling as to whether [the] establishment would constitute a nuisance which might be enjoined by an equity court.... A nuisance will not be upheld solely on the ground that it has been permitted by municipal ordinance." (Citations omitted.)
[53] The majority cites Henkel v Detroit, n 24 supra, as follows: "[E]ven if the value of property was diminished by the city's market regulations that increased market wagons and traffic to the detriment of the plaintiff's property value, the complainant has suffered no compensable injury." Ante, p 312, n 28.
In Henkel, this Court denied both injunctive relief and damages for property depreciation when customers' access to the plaintiff's pork packing business was impeded by the expansion of a public market. The plaintiff had "come to the nuisance" by establishing his business on the site in the knowledge of its use for the market. The Court enumerated the public benefits derived from operation of the market, which was situated and conducted pursuant to validly enacted city regulations, and concluded:
Every person is supposed to calculate upon the probability of his interests being affected by such matters when he buys his property or locates his business, and he gains or loses according as his judgment is verified or is disproved by events.... What the city has done it has the discretion to do, and we find no abuse of discretion made out. The whole matter is one of market regulation[,] and we could not, if we would, supervise the municipal action. [Henkel, 49 Mich. 261-262. Citations omitted.]
Ground water contamination is not "market regulation." The instant plaintiffs should not be deprived of a damage remedy for property depreciation triggered by defendant's allegedly unauthorized acts on the theory that all property owners are "supposed to calculate upon the probability of [their] interests being affected" by unlawful discharge of toxic chemicals and hazardous waste on nearby property. Id.
The old English decisions discussed ante, p 309, n 21, such as the Gloucester Grammar School Case, YB 11 Hy IV, Mich, pl 21 (1409), found no injuria and denied recovery for lost income when neighboring properties were given over to the establishment of businesses competing directly with those of the plaintiffs. These cases establish nothing more than that the operation of a business on neighboring property cannot be held to be a nuisance simply because it competes with the business on the plaintiff's property.
See also McMorran v Fitzgerald, 106 Mich. 649, 652; 64 N.W. 569 (1895), cited by the majority at 310, in which this Court enjoined operation of a boat repair business in a residential neighborhood. The Court observed that the defendants "could look at the matter only from the standpoint of business, to which all other interests should yield, a sentiment which is not uncommon, but one which the law does not sanction." Id., p 653 (emphasis added).
[54] Ante, p 316.
[55] See City of Cleburne, Texas v Cleburne Living Center, 473 U.S. 432; 105 S. Ct. 3249; 87 L. Ed. 2d 313 (1985); Moore v East Cleveland, 431 U.S. 494; 97 S. Ct. 1932; 52 L. Ed. 2d 531 (1977).
[56] Baltimore v Fairfield Improvement Co, 87 Md 352; 39 A 1081; 40 LRA 494 (1898), discussed in n 79.
[57] 87 Md 365.
[58] See 4 Restatement Torts, 2d, § 821F, comment f, p 107, set forth in n 102 and accompanying text.
[59] Ante, p 314.
[60] See 4 Restatement Torts, 2d, § 821F, comment f, p 107, n 102, addressing "[n]ormal mental reactions." In this setting, the relevant fears are experienced by the community at large rather than the plaintiffs.
[61] Rockenbach relied on Saier v Joy, 198 Mich. 295; 164 N.W. 507 (1917), Dillon v Moran, 237 Mich. 130; 211 N.W. 67 (1926), and Kundinger v Bagnasco, 298 Mich. 15; 298 N.W. 386 (1941).
These cases concerned actions for injunctive relief, and demonstrate that evidence of property depreciation may support a nuisance action even in equity.
[62] Id., p 344.
[63] values would be substantially depressed for residential purposes by the proposed establishment of the funeral home. [Id., p 346.]
[64] This decision is in accord with the clear majority rule among the States. See anno: Funeral home as private nuisance, 8 ALR4th 324, 328.
Courts addressing anticipated psychic effects of nearby businesses have not always sharply distinguished the apprehensions of the plaintiffs from the apprehensions of other persons forming a potential market for residential property in the neighborhood. The focus on market value, however, manifests judicial recognition that property depreciation, if proved, supports a cause of action in nuisance on these facts.
[65] Rockenbach, 330 Mich. 349, quoting Saier v Joy, 198 Mich. 300 (emphasis added).
[66] See also Kundinger v Bagnasco, n 61 supra, similarly emphasizing the effect of unfounded fears on the use and enjoyment of property, and holding that "[i] t is not necessary to show danger from disease or unpleasantness of odors arising from the maintenance of such a business in order to enjoin it." Rockenbach, 330 Mich. 349-350 (emphasis added).
[67] Ante, p 310.
[68] The dispute in Dillon concerned the character of the neighborhood. "In the main, defendant's testimony was directed towards combating the plaintiff's claim that the district is a residential one." 237 Mich. 131. This Court's determination that the neighborhood was indeed residential, id., p 132, was essential to the grant of injunctive relief.
[69] Rockenbach, 330 Mich. 352, distinguishing, inter alia, Warren Twp (emphasis added).
The majority asserts that such cases "do not establish that property depreciation on the basis of unfounded fear of third parties makes out a compensable allegation of nuisance in fact. Indeed, Kundinger ... itself points to the need to show invasion of a legally cognizable interest," such as emotional distress. Ante, p 315, n 32.
The preservation of property value is itself a "legally cognizable interest" protected against unreasonable interference by the law of nuisance. The instant plaintiffs need not have "allege[d] an increased risk of illness, threat to safety, or lack of a habitable dwelling caused by contaminants released by the defendants," ante, p 318, to recover in nuisance for diminution of property value.
[70] In Barth, pp 646-647, a psychiatric hospital was proposed in a residential neighborhood. The trial court refused to hear testimony relating to "fear and danger of violence from escaping inmates" or "danger and fear of infection from disease." This Court enjoined the hospital, finding, despite the lack of a factual record, that it "would destroy the comfort, the well-being, and the property rights of the plaintiffs."
[71] Birchard, 204 Mich. 286 (emphasis added).
See Brink v Shepard, 215 Mich. 390, 392; 184 N.W. 404 (1921), addressing a tuberculosis sanitarium in a residential district:
In [Barth] the trial judge dismissed the bill without taking the testimony, but in [Saier and Birchard] the testimony was quite persuasive, as it is in the instant case, that the institution if properly conducted would cause no actual danger to nearby residents, that there was little or no danger of communicating disease such a distance as intervened between the plaintiffs' residences and the defendant's institution, but as in those cases the fear of the disease being communicated is present. [Emphasis added.]
The Court enjoined maintenance of the facility partly on the basis of the plaintiffs' financial loss: "[P]roperty values in this locality are at least 25 per cent. lower with the sanatorium there than they would be without it." Id., p 393.
See also Falkner v Brookfield, 368 Mich. 17, 22-25; 117 NW2d 125 (1962), reaffirming the rule of Saier and Rockenbach. In Falkner, this Court reversed dismissal of the claim that operation of an automobile junkyard constituted an enjoinable nuisance. The holding was based in part upon plaintiffs' claim that proximity to the operation would be depressing, elicit fear in the minds of local residents, and reduce property values in the neighborhood.
[72] Good Fund, Ltd 1992 v Church, 540 F Supp 519, 534 (D Colo, 1982), quoted by the majority, ante, p 313.
[73] At ante, p 308, the majority touches on the "temporal" aspect of the traditional nuisance action, stating that "nuisance normally required some degree of permanence. If the asserted interference was `temporary and evanescent,' there was no actionable nuisance. This requirement is normally subsumed in the question whether the interference with the use and enjoyment of property is substantial." (Citation omitted.)
Plaintiffs may recover damages for property depreciation only insofar as they are able to prove at trial that the damage to their property is permanent, as would be demonstrated by sale or appraisal. Transient or temporary diminution of value, by contrast, is compensable by reference to the disparity in equivalent rental value for the period during which the property was deleteriously affected by defendants' conduct. 66 CJS, Nuisances, § 175, pp 978-979.
[74] The majority finds "cases involving ... businesses moving into otherwise long-established residential neighborhoods" an inappropriate basis on which to permit the instant plaintiffs to proceed to trial. Ante, p 315, n 32. Defendants similarly distinguish Brink, n 71 supra, in part on the ground that Brink involved an exclusively residential neighborhood in which a sanitarium would be inappropriate, while the instant plaintiffs' homes are situated near a district containing some industrial property.
Plaintiffs allege that defendants negligently or intentionally permitted toxic chemicals and industrial waste to contaminate ground water that supplies private residences. Such activity is inappropriate to any neighborhood, whether or not exclusively residential. Further, although the "character of the locality" is always relevant to a finding of nuisance, see 4 Restatement Torts, 2d, § 827, comment g, pp 127-128, it is particularly important in actions for injunction.
[75] Particularly in pollution cases, third parties' contributions to a nuisance do not exonerate the defendant. See 4 Restatement Torts, 2d, § 840E, p 177. Like the defendants in Exxon, n 16 supra, and Good Fund, n 72 supra, the Thomas Solvent defendants urge that they are not responsible for the fears of third parties forming the potential market for plaintiffs' property. Because the instant defendants would remain liable even if the third parties' conduct were tortious, the intermediation of wholly innocent third parties does not relieve defendants of liability, especially where, as here, the apprehensions of such parties are foreseeable.
Similarly, the portion of the Restatement addressing liability in nuisance states, in a comment on causation:
In some cases the physical condition created is not of itself harmful, but becomes so upon the intervention of some other force the act of another person or force of nature. In these cases the liability of the person whose activity created the physical condition depends upon the determination that his activity was a substantial factor in causing the harm, and that the intervening force was not a superseding cause. [Id., § 834, comment f, p 151. Emphasis added.]
[76] In Everett, the court held that maintenance of a tuberculosis sanitarium in a residential district, leading to depreciation in property values ranging from thirty-three to fifty percent, was an enjoinable private nuisance even though the popular fears leading to the depreciation were scientifically unfounded.
[77] Id., 61 Wash 50 (emphasis added).
[78] Id., pp 50-51.
[79] Id., p 51 (emphasis added).
The court similarly honored common but scientifically dubious fears in a nuisance action for injunction, Ferry v Seattle (On Rehearing), 116 Wash 648; 203 P. 40 (1922) (reservoir eliciting fear of disaster and loss of life), and a nuisance action for damages, including property depreciation, Champa v Washington Compressed Gas Co, 146 Wash 190; 262 P. 228 (1927) (gas plant eliciting fear of personal injury and property damage).
See also Baltimore v Fairfield Improvement Co, n 56 supra, enjoining the placement of a woman with leprosy in a residential district. The City of Baltimore was held to be committing a public nuisance with respect to adjoining properties. Irrespective of the actual risk of contagion, the public was terrified of lepers, with resulting injury to neighbors' property values and sense of well-being. The court said:
It is not, in this case, so much a mere academic inquiry as to whether the disease is in fact highly or remotely contagious; but the question is whether, viewed as it is by the people generally, its introduction into a neighborhood is calculated to do a serious injury to the property of the plaintiff there located. [Id., 87 Md 365. Emphasis added.]
[80] See anno: Fear of powerline, gas or oil pipeline, or related structure as element of damages in easement condemnation proceeding, 23 ALR4th 631, §§ 2[a], 5, 6.
A number of jurisdictions require that fears, to be compensable, must be reasonable. Reasonableness is variously defined; it may refer to fears experienced by ordinary persons whether or not grounded in fact, or, more stringently, to fears "grounded in scientific observation." All jurisdictions holding that fears of prospective purchasers are compensable require the property owner to demonstrate that such fears in fact adversely affected property value. Id.
[81] Texas Pipe Line Co v Nat'l Gasoline Co, 203 La 787, 794; 14 So 2d 636 (1943) (emphasis added).
[82] The majority declares that "reasonable minds cannot differ that diminished property value based on unfounded fear is not a substantial interference in and of itself." Ante, p 313 (emphasis added).
[83] 4 Restatement Torts, 2d, ch 40 (Nuisance), § 821F, comment d, p 106.
[84] Id. (emphasis added).
[85] Ante, p 316.
[86] Id., pp 297, 306.
[87] There is no need for concern about "`sanctioning actions in [nuisance] by every landowner within a hundred miles of a manufacturing plant'" or other source of ground water contamination. See majority opinion, ante, p 310, n 23, discussing Bradley v American Smelting & Refining, 104 Wash 2d 677; 709 P2d 782 (1985).
[88] Ante, p 309.
[89] Id., p 318.
[90] Id.
[91] The majority's hypothetical case is also unenlightening, because plaintiffs' claim seeking damages for property depreciation caused by defendants' conduct does not depend on migration of pollution from the defendants' property to plaintiffs' property.
The majority states that "courts have typically rejected liability where a litigant failed to establish proximity between the asserted interference and the litigant's property. See, e.g., Renaud v Martin Marietta Corp, 749 F Supp 1545; 32 ERC 1721 (D Colo, 1990)." Id., p 308, n 17 (emphasis added).
Renaud turned on the question whether the plaintiffs adequately demonstrated a chain of causation involving the health effects of contaminants originating on property of the defendants. The court in Renaud granted summary judgment in favor of the defendants because the plaintiffs had failed to make out a "prima facie case of causation." Renaud, 749 F Supp 1555. The plaintiffs, a group of community members, alleged that they had been physically injured by contamination present in a water treatment plant located downhill and downstream from a Martin Marietta facility generating large quantities of toxic waste. The court held that, having failed to refute the defendants' epidemiological evidence or to present appropriate epidemiological findings of their own, the plaintiffs had not sustained their burden of demonstrating exposure to the contaminants at levels sufficient to cause the claimed injuries.
The instant case presents no dispute whether contamination has migrated from defendants' to plaintiffs' property or has adversely affected plaintiffs' health. Rather, plaintiffs seek an opportunity to prove that the value of their property has been diminished as a result of the contamination of neighboring land. Plaintiffs (whose property was not contaminated) and their neighbors (whose property was contaminated) may have suffered distinct and independent injuries to their respective property rights by the same conduct of defendants.
[92] Ante, pp 318-319.
[93] Id., p 319, n 38.
Plaintiffs amended their complaint in 1985 to add a fraudulent conveyance claim, alleging that the Thomas Solvent corporate defendants had been reorganized, and their assets shifted, on the eve of the April 1984 filing of a Chapter 11 petition. See In re Thomas Solvent Co, unpublished ruling of the United States Bankruptcy Court (WD, Mich), decided April 6, 1984 (Docket No. 84-00843). Under bankruptcy law, 11 USC 101 et seq., and the law of fraudulent conveyance, MCL 566.11 et seq.; MSA 26.881 et seq., plaintiffs were "creditors" of the Thomas Solvent corporate defendants by virtue of plaintiffs' claims against such defendants. Plaintiffs alleged that the reorganization and transfer of assets unlawfully hindered plaintiffs' ability to recover damages from the Thomas Solvent corporate defendants.
[94] In addition to the action underlying the instant appeal, at least two other actions have been commenced against the Thomas Solvent defendants, each involving a number of plaintiffs and similar claims. See Allen v Thomas Solvent Co, No. 84-3331 (Calhoun Circuit Court), and Anthony v Thomas Solvent Co, No. 88-660 (Calhoun Circuit Court). Plaintiffs in the instant case and the Allen case have alleged that certain Thomas Solvent defendants entered bankruptcy as a preemptive maneuver with respect to such actions.
[95] Ante, p 312. The majority states:
In Smith, the plaintiffs sought to have a gun range declared a nuisance, contending that it created fear of injuries, thus decreasing their property values. Adopting the trial court's opinion that "no real or actual danger" existed from the use of the gun range, the Court further held that, even assuming a decrease in property values, this was not "in itself sufficient to constitute a nuisance." Id., pp 542-543. [Emphasis added.]
[96] The trial court said:
"In brief, it is the claim of plaintiffs that the noise from the use of defendants' range is so deafening that it impairs their rights `to the peace, rest and comfort of their homes'; and that unless such use is abated, it will soon drive them out of their homes and result in irreparable damage to the owners of the trailer court, who will lose their tenants and be prevented from obtaining new tenants." [Id., p 536. Emphasis added.]
For rental properties such as the trailer court, market value is directly dependent on rent and occupancy levels.
[97] Ante, p 312.
[98] Smith, supra, p 541.
[99] Id., p 541. In holding that the noise was therefore not a nuisance subject to abatement, the trial court took into account "`the character of the area,'" which was "`undeveloped, open agricultural country'" with "`"no residential or industrial development"'" except for the trailer court occupied by the plaintiffs. Id., pp 543, 542, and 531 (quoting Smith v Plymouth Twp Bldg Inspector, 346 Mich. 57, 60-61; 77 NW2d 332 [1956]).
[100] Id., p 542.
[101] Id., p 543 (emphasis added).
The trial court in Smith also said:
"Whether the presence of the range affects the market value of surrounding properties is disputed between the parties.... Assuming, however, that some decrease in value would result, this is not in itself sufficient to constitute a nuisance. Warren Twp School Dist v City of Detroit, supra." [380 Mich. 543.]
This assertion of the trial court is independent of the assertion in the paragraph previously quoted; because the two rulings appear in a seriatim discussion of the plaintiffs' arguments for an injunction, no logical or doctrinal connection between property values and the alleged nuisance created by the plaintiffs' fear was implied.
Warren Twp constitutes the sole authority for this portion of Smith. The holding goes no further than Warren Twp itself: Prospective operation of a lawful business, not shown to be a nuisance, is not transformed into an enjoinable nuisance merely by evidence that neighboring property values may decline, particularly where, as in Smith, the evidence of such decline is speculative and equivocal.
[102] The Restatement explains:
In determining whether the harm would be suffered by a normal member of the community, fears and other mental reactions common to the community are to be taken into account, even though they may be without scientific foundation or other support in fact. Thus the presence of a leprosy sanitarium in the vicinity of a group of private residences may seriously interfere with the use and enjoyment of land because of the normal fear that it creates of possible contagion, even though leprosy is in fact so rarely transmitted through normal contacts that there is no practical possibility of communication of the disease. [4 Restatement Torts, 2d, § 821F, comment f, p 107. Emphasis added.]
[103] Ante, p 311.
[104] The area of the test site, near a state forest, was "devoted largely to timbering and agricultural pursuits" and also included coal mines. Gunther, 157 F Supp 27.
[105] Gunther, 157 F Supp 33.
[106] The court determined that there had been no showing of negligence by the defendant. The court's opinion addressed the availability of compensation for property damage and for personal injuries to Mrs. Gunther, and the propriety of enjoining the testing activity as a private nuisance. The plaintiffs alleged property damage, property depreciation, and personal injury in support of their request for injunction.
[107] Id. (emphasis added).
Plaintiffs' subjective belief that they had been harmed by the defendant's activity was "unfounded" because it conflicted not simply with scientific inquiry, but with the standard for actionable nuisance: The court found that, unlike the plaintiffs, ordinary members of the affected community did not find the sound of the testing to interfere with their enjoyment of property. 157 F Supp 32.
[108] The plaintiffs claimed that the testing operations had produced cracks in the structure of their home and other ill effects. Neighborhood residents testified with regard to whether vibration had damaged their properties since testing began. The court found that the conflicting nature of this testimony, the expert structural and seismological evidence offered by the defendant, and the existence of alternative theories that could explain the injury to the Gunthers' property, justified the jury's conclusion that the testing had not caused any property damage.
[109] The court had propounded two further questions to guide it in determining whether the testing operations "constitute a private nuisance, and if so, whether such operations should be enjoined." Gunther, 157 F Supp 30. The jury answered negatively a question whether the defendant's operations were an unreasonable use of the testing site. The question whether the defendant's operations "interfere with, interrupt or adversely affect the reasonable, proper and safe use and enjoyment" of the plaintiffs' properties, id., p 29, was withdrawn from the jury's consideration before an answer was reached.
[110] Ante, p 314.
The jury in Gunther had found that the defendant was not using the testing site unreasonably; the court observed that "[t]he testing operations, in themselves, are not unlawful in any particular...." 157 F Supp 33. Although the jury was not permitted to address the explicit question whose answer would have been weighed against this determination, the evidence showed no "interference with ... sleep, social life or other usual home activities" except to the extent experienced by a plaintiff whose hypersensitivity was apparently not disputed. Id.
[111] Gunther, 157 F Supp 32 (emphasis in original).
[112] Id.
[113] The plaintiffs failed to show a tangible injury to property or person, and also failed to demonstrate a cognizable intangible injury, such as disturbance of the use of the plaintiffs' home, or property depreciation traced to unlawful conduct of the defendant that made normal members of the community reluctant to occupy or purchase the plaintiffs' property.
It was in this context that the court reasoned that the plaintiff's "enjoyment of the property [had not] been lessened, in the sense that a court should or will grant injunctive relief," Gunther, 157 F Supp 33 (emphasis added), except insofar as "they believed that the test blasting had injured them. If such belief is unfounded, what is left other than depreciation in value? Mere diminution of the value of property because of the use to which adjoining or nearby premises is devoted, if unaccompanied with other ill results, is damnum absque injuria ...." Id.
[114] Apparently relying on Gunther and Winget, n 35 supra, the majority contends that because "plaintiffs make no claim for relief arising out of their own `fears'" but instead seek damages for property depreciation reflecting popular fears, "defendants' activities have not interfered with [plaintiffs'] use and enjoyment of property." Ante, p 311 and n 25. The law of nuisance does not, however, condition an award of damages for property depreciation on the degree to which the plaintiff shared the sensibilities of the community.
[115] At ante, p 313, n 29, the majority also cites McCaw v Harrison, 259 S.W.2d 457, 458 (Ky, 1953), Miller v Cudahy Co, 567 F Supp 892, 897-898 (D Kan, 1983), and O'Donnell v Oliver Iron Mining Co, 273 Mich. 27; 262 N.W. 728 (1935).
O'Donnell, a negligence action, addressed speculative future harm only. The result turned on application of damage rules peculiar to subsidence cases. The plaintiff alleged no interference with the use and enjoyment of property, but claimed as an element of damages that his property would be devalued if prospective purchasers were concerned about future subsidence due to the withdrawal of lateral support. The Court disclaimed any ruling "for the case in which it clearly appears beyond any question that the damages, although in futuro, are bound to occur." Id., 273 Mich. 40. The Court applied an English rule not generally adopted by United States jurisdictions, governing damages in subsidence actions, where the focus is on ascertainable completed physical harm to the property: "[P]rospective damages may not be recovered in such an action and... a new action must be brought each time a new damage occurs...." Id., pp 41-42. See, generally, 4 Restatement Torts, 2d, ch 39 (Interests in the support of land), pp 62-82; McCormick, Damages, § 127, pp 500-515.
In Miller, the plaintiffs offered to demonstrate that pollution would reach their property in the future (cf. O'Donnell), but apparently did not offer evidence of current property depreciation.
McCaw is discussed in n 16. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2455833/ | 876 S.W.2d 388 (1994)
Armando Reyes CHAVARRIA, Appellant,
v.
The STATE of Texas, Appellee.
No. 08-93-00063-CR.
Court of Appeals of Texas, El Paso.
January 12, 1994.
Rehearing Overruled February 9, 1994.
*389 Joe E. Boaz, El Paso, for appellant.
Jaime E. Esparza, Dist. Atty., El Paso, for State/appellee.
Before KOEHLER, BARAJAS and LARSEN, JJ.
OPINION
BARAJAS, Justice.
This is an appeal from a conviction for the offense of possession of marijuana in an amount in excess of 50 pounds. Trial was to the court upon a plea of guilty. Upon conviction, the trial court assessed punishment at confinement in the Institutional Division of the Texas Department of Criminal Justice for a term of eight years, probated. In two points of error, Appellant asserts that the trial court erred in overruling his motion to suppress evidence. We affirm the judgment of the trial court.
I. SUMMARY OF THE EVIDENCE
The record shows that Jesus Placencia, an officer with the United States Immigration and Naturalization Service, testified that in November of 1991 he received a telephone call from an unidentified woman concerning the alleged trafficking of marijuana by an individual later identified as Appellant. The woman advised Officer Placencia that Appellant, driving a charcoal grey Ford Taurus, with temporary license tags belonging to Hills Auto Sales, would be crossing the Port of Entry. The following day, the same woman called Officer Placencia and advised him that the vehicle, destined for Wichita Falls, Texas, had made it across the border with 200 pounds of marijuana hidden in a compartment behind the seat. Appellant had been arrested by a Special Agent of the Immigration and Naturalization Service in Wichita Falls for possession of marijuana. Subsequently, in January of 1992, Officer Placencia received a phone call from the same unidentified woman concerning yet another attempt to cross marijuana into the United States. The vehicle would be driven *390 by a male subject later identified as Appellant.[1] The woman advised Officer Placencia that Appellant would be crossing the border during the night driving a brown Mercury Marquis with the marijuana stored in a compartment in the trunk. She further stated that Appellant would be taking the marijuana to a specific address on Camino de Tierra Street in El Paso. The following day, the same woman telephoned Officer Placencia and advised him that Appellant had made it across the border and that the vehicle was parked at the Camino de Tierra address with another vehicle and a Suburban. She advised him that the marijuana was stored in a hole dug in the ground next to the carport located at the above address. In addition, the unidentified female gave Officer Placencia the telephone number for the residence where the marijuana was buried. Officer Placencia testified that all the above information was forwarded to Edward Frausto, a Special Agent with the Immigration and Naturalization Service. Special Agent Frausto testified as to the specificity of the details given to him by Officer Placencia, including the exact address, description of the cars to be found on the premises and the underground storage hole near the carport. He then testified that after locating the residence at Camino de Tierra, the premises appeared as Officer Placencia had described.
Agent Frausto further testified that on January 28, 1992, he and his partner, Special Agent Manny Figueroa, conducted surveillance of the above residence from a vantage point approximately a third of a mile from the house. While watching the house, Agent Frausto testified that he made a phone call to the house with his cellular phone and requested to speak with Appellant, Armando Chavarria. When the male voice came on the phone, Agent Frausto addressed him by name, i.e., "Armando," and told him, "The police are going to be going over to the house to execute a search warrant for the merchandise that you have."[2] The male voice then thanked him and hung up. A minute later, Appellant was seen exiting the house in a hurried manner, still dressing, and began digging in the ground near the carport. Appellant was seen taking an unidentifiable article out of the ground and placing it in the pickup. Appellant then quickly drove the pickup off the premises onto a dirt road headed toward where the agents were situated. At that point, the agents became concerned with Appellant's possible attempt to hide or destroy evidence and therefore followed him and stopped him. Agent Frausto stated that they had reason to believe that Appellant had marijuana in the pickup and that he was going to a location where he would dispose or hide it. Agent Frausto further stated the sole reason for stopping Appellant's vehicle at this point was to "check what he had in the back of the pickup."
Once stopped, Appellant was asked to get out of the vehicle, and effectively was put in custody. Appellant said, "Take it easy, you have me." Detective Figueroa asked Appellant, "Where is it?" to which Appellant, gesturing to the bed of the pickup truck replied, "It's in the back." Agent Frausto testified that Detective Figueroa spoke to Appellant about searching the vehicle to which Appellant consented.[3] A written consent form was produced and translated for Appellant's benefit by Agent Frausto. Appellant was read his Miranda[4] rights and asked to sign the consent form that authorized the search of the pickup truck that he was driving, the brown Mercury Marquis, the Suburban located at 15455 Camino de Tierra, and the residence itself. The evidence shows that the consent to search form was executed prior to the officers searching the vehicles at the residence as well as the residence itself. The written consent to search further asserts that *391 Appellant was not threatened, nor forced in any way and that the consent to search was freely given. Search of the covered portion of Appellant's pickup truck revealed the existence of scales and several large bundles. The large bundles later proved to be approximately 50 pounds of marijuana.
II. DISCUSSION
In two points of error, Appellant contends that the trial court erred in overruling his motion to suppress evidence that was allegedly seized as a result of a warrantless search. Specifically, Appellant maintains that any consent to search was coerced or, in the alternative, that any such search was conducted after an illegal stop.
A. Standard of Review
A trial court has broad discretion in determining the admissibility of the evidence, and this Court will not reverse unless a clear abuse of discretion is shown. Allridge v. State, 850 S.W.2d 471, 492 (Tex.Crim.App. 1991); Williams v. State, 535 S.W.2d 637 (Tex.Crim.App.1976). The trial judge is the sole fact finder at a hearing on a motion to suppress evidence obtained in a search, and thus judges the witness's credibility and the weight of their testimony. Romero v. State, 800 S.W.2d 539, 543 (Tex.Crim.App.1990); Cannon v. State, 691 S.W.2d 664 (Tex.Crim. App.1985), cert. denied, 474 U.S. 1110, 106 S. Ct. 897, 88 L. Ed. 2d 931 (1986); Hawkins v. State, 628 S.W.2d 71 (Tex.Crim.App.1982); Green v. State, 615 S.W.2d 700 (Tex.Crim. App.1980), cert. denied, 454 U.S. 952, 102 S. Ct. 490, 70 L. Ed. 2d 258 (1981). In that regard, the trial court may choose to believe or disbelieve any or all of a witness's testimony. Clark v. State, 548 S.W.2d 888, 889 (Tex.Crim.App.1977).
On appeal, this Court will consider the totality of the circumstances in determining whether the trial court's findings, either expressed or implied, are supported by the record, and the findings will not be disturbed absent a clear abuse of discretion. Dancy v. State, 728 S.W.2d 772, 777 (Tex.Crim.App.), cert. denied, 484 U.S. 975, 108 S. Ct. 485, 98 L. Ed. 2d 484 (1987). If the findings of fact are supported by the record, this Court is not at liberty to disturb them and, on review, we address only the question of whether the trial court improperly applied the law to the facts. Romero v. State, 800 S.W.2d at 543; Self v. State, 709 S.W.2d 662 (Tex.Crim.App. 1986); Johnson v. State, 698 S.W.2d 154, 159 (Tex.Crim.App.1985), cert. denied, 479 U.S. 870, 107 S. Ct. 239, 93 L. Ed. 2d 164 (1986).
B. Burden of Proof Applicable in Motion to Suppress Physical Evidence
When a defendant seeks to suppress evidence on the basis of a Fourth Amendment violation, the burden of proof is initially on the defendant. Russell v. State, 717 S.W.2d 7, 9 (Tex.Crim.App.1986); Mattei v. State, 455 S.W.2d 761, 765-66 (Tex.Crim. App.1970); see also State v. Wood, 828 S.W.2d 471, 474 (Tex.App.El Paso 1992, no pet.). As the movant in a motion to suppress evidence, a defendant must produce evidence that defeats the presumption of proper police conduct and therefore shifts the burden of proof to the State. Russell v. State, 717 S.W.2d at 9; Mattei v. State, 455 S.W.2d at 765-66, relying upon United States v. Thompson, 421 F.2d 373, 377 (5th Cir.1970) and Rogers v. United States, 330 F.2d 535 (5th Cir.), cert. denied, 379 U.S. 916, 85 S. Ct. 265, 13 L. Ed. 2d 186 (1964). In order to defeat that presumption of such proper conduct, the defendant has the initial burden of producing evidence to establish the following:
(1) that a search or seizure occurred; and
(2) that the search or seizure occurred without a warrant or without valid consent.
Once the defendant has met his burden of production, then the burden shifts to the State to establish one of the following:
(1) that the search or seizure was pursuant to a warrant which is valid on its face, in which case the State must produce both the warrant and the supporting affidavit for inspection of the trial court for determination of its sufficiency. See Russell, 717 S.W.2d at 10, citing Rumsey v. State, 675 S.W.2d 517 (Tex.Crim.App.1984), overruled in part in Miller v. State, 736 S.W.2d 643 (Tex.Crim.App.1987).
*392 (2) if the search or arrest was effected without a warrant, or if the State is unable to otherwise produce a warrant, the State must prove the reasonableness of the search or seizure by a preponderance of the evidence. See Russell, 717 S.W.2d at 10, citing Lalande v. State, 676 S.W.2d 115 (Tex.Crim.App.1984); Wood, 828 S.W.2d at 471, 475.
(3) if the search is allegedly consensual in nature, the State must establish by clear and convincing evidence that the defendant's consent was freely and voluntarily given. Schneckloth v. Bustamonte, 412 U.S. 218, 93 S. Ct. 2041, 36 L. Ed. 2d 854 (1973); Dickey v. State, 716 S.W.2d 499 (Tex.Crim.App.1986).
In the instant case, it is undisputed that a search was conducted and marijuana was seized. Thus, Appellant met his initial burden of producing evidence of the occurrence of a search and seizure. The burden of proof then shifted to the State to produce evidence of a warrant to support the seizure of the marijuana, or in the instant case, evidence of valid consent to search. See Russell, 717 S.W.2d at 10.
It is well settled that when the State relies on a consent to search, the burden of proof is on the prosecution to show by clear and convincing evidence that the consent was freely and voluntarily given. Allridge v. State, 850 S.W.2d 471, 493 (Tex. Crim.App.1991); Johnson v. State, 803 S.W.2d 272 (Tex.Crim.App.1990), cert. denied, ___ U.S. ___, 111 S. Ct. 2914, 115 L. Ed. 2d 1078; Paulus v. State, 633 S.W.2d 827, 850 (Tex.Crim.App.1981); see also Schneckloth v. Bustamonte, 412 U.S. 218, 93 S. Ct. 2041. The question of whether a consent to search was "voluntary" is a question of fact to be determined from the totality of the circumstances. Schneckloth v. Bustamonte, 412 U.S. 218, 93 S. Ct. 2041; Juarez v. State, 758 S.W.2d 772, 775 (Tex.Crim.App. 1988); Meeks v. State, 692 S.W.2d 504, 510 (Tex.Crim.App.1985). The prosecution must show the consent given was positive and unequivocal, and there must not be duress or coercion, actual or implied. Paulus v. State, 633 S.W.2d at 850. The burden is not discharged if the prosecution does not show more than an acquiescence to a claim of lawful authority. Id. Consent must be voluntary and neither physically or psychologically coerced. Juarez, 758 S.W.2d at 772, 775. However, simply because a person is under arrest does not inherently preclude free and voluntary consent. Id.; Meeks, 692 S.W.2d at 504.
In the instant case, the State presented uncontradicted evidence that the Miranda warnings were given to Appellant before he signed a consent to search. The contents of the consent to search form were translated from English into Appellant's native tongue, i.e., Spanish, read and signed. The State produced "State's Exhibit 1," the consent to search form, which affirmatively states that Appellant was not coerced or otherwise threatened to give the request consent and, further, that Appellant's consent was freely given.
At the hearing on his motions to suppress evidence, Appellant elected not to present any evidence. We find that Appellant, by his failure to introduce any evidence, failed to contradict the State's case that the marijuana was seized pursuant to a valid consent to search. We find that the trial court did not abuse its discretion in denying Appellant's motion to suppress evidence, given the failure of Appellant to produce any evidence at said hearing that any such consent was coerced, unknowing, or otherwise involuntary. Thus, we find sufficient evidence in the record to support the trial court's implied decision that Appellant was not coerced or threatened into giving his consent. Accordingly, Appellant's Point of Error No. One is overruled.
In Point of Error No. Two, Appellant contends that the trial court erred by denying his motion to suppress evidence which should have otherwise been suppressed as fruits of the poisonous tree. Wong Sun v. United States, 371 U.S. 471, 83 S. Ct. 407, 9 L. Ed. 2d 441 (1963). Specifically, Appellant asserts that Special Agent Frausto's telephone call to Appellant's residence, *393 made for the purpose of "flushing" him out, constituted illegal police activity.[5]
While Appellant was immediately and directly influenced by Special Agent Frausto's claim that law enforcement officials were about to descend upon his home and family, Appellant has cited no authority in support of his claim of illegality. No deception was used to gain entry or access to property over which Appellant enjoyed Fourth Amendment protections. No ruse or subterfuge was utilized to permit law enforcement officers to make a visual inspection of any property otherwise protected by constitutional safeguards. The actions of the law enforcement officers were not intrusive in nature. Appellant's Point of Error No. Two is overruled.
Having overruled Appellant's Points of Error Nos. One and Two, the judgment of the trial court is affirmed.
LARSEN, Justice, concurring.
I agree with the majority that a valid consent to search occurred, and therefore the trial court properly refused to suppress the contraband here. I write, however, to emphasize that our decision does not rest upon the State's argument that exigent circumstances justified Appellant's arrest and search here.
To prove exigent circumstances justifying a warrantless arrest and search, the State must meet a three pronged test: (1) that the police had objectively reasonable grounds to believe that there was an immediate need for action to protect life or property; (2) that the police were not primarily motivated by a desire to arrest a person or seize evidence; and (3) that a reasonable basis, approximating probable cause, existed to associate the emergency with the area searched or person arrested. Janicek v. State, 634 S.W.2d 687, 691 (Tex.Crim.App.1982); Foster v. State, 767 S.W.2d 909, 913 (Tex.App.Dallas 1989, pet. ref.). Here, the INS agents themselves created the exigent circumstance by alerting Appellant of his imminent arrest. Thus, the second prong of the exigent circumstance test failed as a matter of law. The situation here, manufactured solely to evade the mandates of the Fourth Amendment, cannot justify a warrantless search or arrest. Nothing here prevented the agents from first obtaining a warrant, then doing what they felt was reasonably necessary to safely execute it.
Nevertheless, I believe the trial court's ruling is sustainable because Appellant voluntarily and knowingly consented to this search. I concur with the majority.
NOTES
[1] The unidentified woman gave Officer Placencia the complete name of Appellant as well as his exact date of birth. The information was verified through the United States Customs computer system.
[2] The evidence shows that the telephone call was made to Appellant's residence for the purpose of "flushing" him out.
[3] Agents did not advise Appellant that he had the right not to give consent.
[4] Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966).
[5] Appellant maintains that Special Agents Frausto and Figueroa violated the law in order to conduct the stop and search of Appellant in that the officers, as public servants, intentionally denied or impeded him in the exercise or enjoyment of his right to hold and occupy a dwelling. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2597257/ | 902 F. Supp. 245 (1995)
Barrington D. HENRY, Plaintiff,
v.
GUEST SERVICES, INC., Defendant.
Civ. A. No. 94-2563.
United States District Court, District of Columbia.
October 12, 1995.
*246 *247 *248 David M. Melnick, Rockville, MD, for plaintiff.
Stephen Bruce Forman, Arent, Fox, Kintner, Plotkin & Kahn, Washington, DC, Leonard Paul Buscemi, Arlington, VA, for defendant.
MEMORANDUM OPINION
SPORKIN, District Judge.
This matter comes before the Court on Defendant's motion for summary judgment. The Plaintiff brought this case under the Americans with Disabilities Act of 1990 ("ADA"), 42 U.S.C. § 12101-§ 12213, alleging in count I that the Defendant discriminated against him because of his disability (depression) by denying him emergency medical leave benefits, harassing him, and terminating him. In count II, Plaintiff alleges that the Defendant harassed and ultimately fired him in retaliation for filing complaints with the Fairfax County Human Rights Commission (FCHRC) and the Equal Employment Opportunity Commission (EEOC).
Defendant denies the charges and maintains that it fired Plaintiff for poor work performance. More specifically, Defendant contends that Plaintiff cannot establish a prima facie case of discrimination or retaliation. Further, even if Plaintiff can meet its initial burden, Defendant claims it has articulated legitimate, non-discriminatory reasons for its challenged conduct, which the Plaintiff has been unable to show are pretextual.
BACKGROUND
Plaintiff, Henry, was employed by Defendant, Guest Services, Inc., from November 1985 until he was terminated on May 5, 1995. During this time, Plaintiff worked as a food services manager at facilities managed by Defendant at the National Gallery of Art and the Smithsonian Institution National Air and Space Museum.
Over the course of several years, Plaintiff struggled with depression, for which he first sought treatment in 1990. In July, 1991, Plaintiff missed approximately one month of work due to his depression. Plaintiff, who was experiencing marital troubles and receiving counselling from Defendant regarding his poor work performance, became increasingly depressed. In early May, 1992, he attempted to kill himself.
Following his suicide attempt, Plaintiff was absent from work from May 6, 1992, until November 17, 1992. At the time, Plaintiff requested 90 days of emergency medical leave. In September, 1992, while the request was pending and Defendant had not paid any benefits,[1] Plaintiff filed a complaint with the Fairfax County Human Rights Commission (FCHRC). The complaint alleges that Defendant's *249 failure to pay him emergency medical leave entitlements constituted disability discrimination. In late November, 1992, shortly after Plaintiff returned to work, Defendant paid the emergency medical leave entitlements.
Upon his return to work, the Plaintiff was assigned to the National Air & Space Museum. About five months later, in mid-April, 1993, Plaintiff filed a discrimination charge with the EEOC, alleging that he had been harassed due to his disability,[2] and reiterating his FCHRC charge of discriminatory delay in payment of emergency medical leave. Plaintiff also dismissed his FCHRC complaint.
During the course of his employment, Plaintiff's performance evaluations continuously and consistently declined. From a high of 89.9 in April, 1987, Plaintiff's reviews steadily slipped to a low of 64.49 in July, 1993. Despite his unsatisfactory performance, Defendant did not terminate Plaintiff, but instead encouraged him to improve his work performance. By September, 1993, Plaintiff had brought his performance back up to 71.3, slightly above the unsatisfactory level.
In February, 1994, Plaintiff was responsible for overseeing the cleaning of the restaurant at the National Gallery of Art, which had been closed 11 days for repair. As part of this responsibility, Plaintiff supervised a cleaning crew, which was at reduced strength since several employees had not shown up for work. Following the cleaning, the Administrator of the National Gallery of Art conducted a walk-through and was dismayed by the lack of cleanliness in the area which Plaintiff had supervised. The Administrator was particularly upset over the ovens, which still contained food left from before the restaurant was closed. The Administrator informed Defendant of her dissatisfaction. The following day, Defendant terminated Plaintiff.
On about February 24, 1994, the Plaintiff filed another charge with the EEOC. The complaint alleged that Defendant retaliated against the Plaintiff for his earlier filing of his EEO complaint by harassing and eventually terminating him. On September 2, 1994, the EEOC issued right-to-sue notices. Shortly thereafter, Plaintiff commenced this lawsuit.
SUMMARY JUDGMENT STANDARDS
Pursuant to Federal Rule of Civil Procedure 56(c), summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with 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." Mere allegations or denials of the adverse party's pleadings are not enough to prevent issuance of summary judgment. The adverse party's response to the summary judgment motion must "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.Pro. 56(e).
The Supreme Court set forth the governing standards for issuance of summary judgment in Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). In Celotex, the Supreme Court recognized the vital need for summary judgment motions to the fair and efficient functioning of the justice system:
Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed "to secure the just, speedy and inexpensive determination of every action." Fed.Rule Civ.Proc. 1....
Rule 56 must be construed with due regard not only for the rights of persons asserting claims and defenses that are adequately based in fact to have those claims and defenses tried to a jury, but also for the rights of persons opposing such claims *250 and defenses to demonstrate in the manner provided by the Rule, prior to trial, that the claims and defenses have no factual basis.
Id. at 327, 106 S. Ct. at 2555. (citation omitted).
The plaintiff, as the non-moving party, is "required to provide evidence that would permit a reasonable jury to find" in his favor. Laningham v. U.S. Navy, 813 F.2d 1236, 1242 (D.C.Cir.1987) (per curiam) (citing Celotex, supra). The moving party is entitled to summary judgment where "the non-moving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex 477 U.S. at 323, 106 S. Ct. at 2553. Any factual assertions contained in affidavits and other evidence in support of the moving party's motion for summary judgment shall be accepted as true unless the facts are controverted by the non-moving party through affidavits or other documentary evidence. See Local Rule 108(h).
In resolving the summary judgment motion, all reasonable inferences that may be drawn from the facts placed before the Court must be drawn in favor of the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 2514, 91 L. Ed. 2d 202. The inferences, however, must be reasonable, and the non-moving party can only defeat a motion for summary judgment by responding with some factual showing to create a genuine issue of material fact. Harding v. Gray, 9 F.3d 150, 154 (D.C.Cir.1993).
ANALYSIS AND DECISION
I. BURDENS AND ORDER OF PROOF IN ADA CASES
Courts addressing the issue of burdens and orders of proof in ADA cases uniformly have looked for guidance to Title VII case law. Newman v. GHS Osteopathic, Inc., 60 F.3d 153, 157 (3rd Cir.1995) (citations omitted). Indeed, the ADA itself incorporates the enforcement provisions of Title VII and recognizes that Title VII procedures apply to ADA cases. 42 U.S.C. § 12117(a). The order and burden of proof in Title VII cases is as follows:
First, the plaintiff has the burden of proving by a preponderance of the evidence a prima facie case of discrimination. Second, if the plaintiff succeeds in proving the prima facie case, the burden shifts to the defendant "to articulate some legitimate, nondiscriminatory reason for the employee's rejection." Third, should the defendant carry this burden, the plaintiff must then have an opportunity to prove by a preponderance of the evidence that the legitimate reasons offered by the defendant were not its true reason but were a pretext for discrimination.
Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 252-53, 101 S. Ct. 1089, 1093, 67 L. Ed. 2d 207 (1981), citing McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973). Thus, in analyzing plaintiff's claim of discrimination and retaliation in violation of the ADA, we must first look to whether the Plaintiff can establish a prima facie case.
II. THE DISCRIMINATION CLAIM
Count I of the Plaintiff's complaint avers various ways in which Defendant engaged in disability discrimination.[3] However, with respect to these claims, Plaintiff opposed summary judgment only on the claim that the Defendant discriminated against him by delaying payment of emergency medical leave to the plaintiff.[4] Therefore, the only discrimination issue currently before the Court is whether the Defendant's delayed payment of the emergency medical leave benefits constitutes impermissible discrimination in violation of the ADA.[5]
*251 To make out a prima facie case of discriminatory denial of benefits, a plaintiff must prove: (1) that he has a disability, as defined by the ADA; (2) that he is otherwise qualified for the benefit in question; and (3) that the benefit was denied under circumstances which suggest the denial was due to discrimination solely on the basis of the disability. Doe v. University of Maryland Medical System Corp., 50 F.3d 1261, 1265 (4th Cir.1995).
The Court assumes, for purposes of argument only, that Plaintiff's depression does render him disabled within the meaning of the ADA.[6] In addition, the Defendant appears to concede that the Plaintiff ultimately was qualified for the benefit in question since the Defendant did in fact pay the benefit.
The question which remains is whether Defendant's delay in paying the benefits was motivated by discriminatory intent based on Plaintiff's disability. Plaintiff asserts that the delay was caused by the Defendant's refusal to recognize that depression was a real illness which merited payment of the emergency medical leave.
Plaintiff has presented no credible evidence that Defendant's processing of Plaintiff's request for benefits in any way constituted disparate treatment from that provided to nonimpaired employees. The mere assertion of discriminatory intent is not, by itself, sufficient evidence to establish a prima facie case of disability discrimination. The evidence before the Court does not support an inference that Defendant's conduct was discriminatory.[7] Accordingly, the Court grants Defendant's motion for summary judgment on count I.
III. THE RETALIATION CLAIM
In count II, Plaintiff asserts a retaliation claim.[8] To establish a prima facie case of retaliation, an employee must show the following:
(1) that he or she engaged in activity protected by the statute; (2) that the employer ... engaged in conduct having an adverse impact on the plaintiff; and (3) that the adverse action was causally related to the plaintiff's exercise of protected rights.
Passer v. American Chemical Society, 935 F.2d 322, 331 (D.C.Cir.1991) (citations omitted). The burden shifting scheme set forth in McDonnell Douglas applies in a Title VII retaliation claim. McKenna v. Weinberger, 729 F.2d 783 (D.C.Cir.1984).
The Defendant appears to concede that Plaintiff was engaged in a protected activity: filing of FCHRC and EEOC complaints alleging discrimination based on disability. With respect to the remaining two prongs of a prima facie case, Defendant's responds differently to the various factual allegations made by Plaintiff.
Plaintiff alleges that the Defendant impermissibly retaliated against him based on his filing complaints with FCHRC and the EEOC by (1) harassing him and, ultimately, (2) terminating his employment. The Court addresses each claim separately.
A. Alleged Harassment of Plaintiff.
Management Jokes. Plaintiff makes various allegations of harassment. First, Plaintiff alleges that, following his return to work in November, 1992, he was subjected to jokes by management personnel concerning his depression. *252 The only evidence Plaintiff offers to support this claim is his statement that he found a "Peanuts" cartoon in his mailbox which made light of the condition of depression and that he overheard a coworker say "[T]hey shouldn't have done that. They shouldn't have put it in his box."
Even assuming, as we must, these facts to be true, they do not state a claim under the ADA. Plaintiff has presented no evidence to show that management was responsible for placing the cartoon in his mailbox. Nor has Plaintiff shown that management personnel knew that Plaintiff's coworkers were harassing him, yet failed to take remedial action.
For comments to rise to the level of adverse employment action, the conduct must be so egregious as to "alter the conditions of employment." See Patterson v. McLean Credit Union, 491 U.S. 164, 180, 109 S. Ct. 2363, 2374, 105 L. Ed. 2d 132 (1989).[9] As offensive as it must have been for the Plaintiff to discover a cartoon poking fun at his disability, Plaintiff has presented no evidence that such conduct was so severe or pervasive as to alter the conditions of his employment.
Intensive Supervisory Scrutiny and Arbitrary Scheduling Changes. Plaintiff has also alleged that he underwent intensive supervisory scrutiny, was denied vacation day requests and was subjected to arbitrary changes in his daily schedule. Except as to denial of vacation day requests, Plaintiff has presented absolutely no evidence that he was treated any differently than other employees,[10] and thus has failed to establish a prima facie case of discriminatory retaliation.
Denial of Vacation Day Requests. As to his claim that Defendant denied Plaintiff's request for vacation based on his disability, Plaintiff does meet his initial burden. As noted above, Defendant concedes the first prong of the Plaintiff's prima facie case, that Plaintiff is in a protected class. With respect to the second element action constituting an adverse impact the denial of requested leave which an employee has earned clearly has an adverse impact on that employee. Plaintiff has also met the third prong of his prima facie case. Defendant has conceded that it granted leave to another manager on some of the same dates that it denied leave to Plaintiff. Such disparate treatment suggests that the denial may have been motivated by discriminatory intent.
Despite having met his initial burden on the issue of denial of vacation days, Plaintiff still can not prevail. Under the burden shifting rules of McDonnell Douglas, once the Plaintiff has met his initial proof, the burden shifts to the employer, who can prevail only by articulating a legitimate reason for its action. Should the employer do so, the burden shifts back to the Plaintiff to show that the reason is a mere pretext.
Defendant explained that it granted the other manager's request, while denying Plaintiff's request, because the manager had expressed a special need and had put in his request before Plaintiff's. Defendant further *253 explained that it could not grant both requests because the requests were made for holiday weekends, when the facility is particularly busy. Because Plaintiff has proffered no evidence to suggest that this reason was pretextual, his claim must fail as a matter of law.
In sum, the Court grants Defendant's motion for summary judgment with respect to retaliatory harassment. On all issues, Plaintiff has either failed to make a prima facie case, or been unable to rebut Defendant's proffered legitimate, nonretaliatory reasons.
B. Termination.
In order to set forth a prima facie case of retaliatory termination under Title VII, a plaintiff must demonstrate the following four elements: (1) plaintiff is a member of a protected class; (2) plaintiff was qualified for continued employment and was satisfying the normal requirements of his job; (3) plaintiff was terminated; and (4) plaintiff was either replaced by a person not in the protected class, or such a person with comparable qualifications and work records was not terminated. Klein v. Derwinski, 869 F. Supp. 4, 7 (D.D.C.1994). Accord, Neuren v. Adduci, Mastriani, Meeks & Schill, 43 F.3d 1507, 1512 (D.C.Cir.1995).
The first and third elements are not disputed. Plaintiff, by virtue of filing an EEO complaint, clearly was in a protected class, and both sides agree that he was terminated. Thus, to establish a prima facie case, Plaintiff also must show that he was qualified and performing satisfactorily, and that his replacement was not in the protected class. The Court does not even reach the issue of Plaintiff's replacement since Plaintiff cannot show that he was qualified for the job.
The undisputed facts show that Plaintiff's performance was poor and steadily declining. In fact, it had temporarily dipped below the satisfactory level, rebounding only slightly by the time of his termination. Over the six years preceding his termination, Plaintiff had received repeated counseling and clear exhortations of the need for improvement.[11]
Despite these counseling sessions, Plaintiff's performance continued to deteriorate. The record is replete with warnings to the Plaintiff about his inadequate job performance and poor attitude. Moreover, it is apparent from Plaintiff's comments to medical personnel that he knew his performance was wanting. In short, the record is exceedingly clear that Plaintiff was not performing satisfactorily and was not qualified for the job.
When the administrator of the National Art Gallery expressed dismay over the cleanliness of the ovens for which Plaintiff was admittedly responsible, her criticism combined with Plaintiff's long history of poor job performance to give Defendant just cause for termination. Thus, Plaintiff has not, and can not, establish a prima facie case of retaliatory termination.
The record is clear that Defendant had a legitimate, nondiscriminatory cause to discharge the Defendant. The facts simply do not support a claim of retaliation. Plaintiff's performance woes began well before he first was diagnosed with depression and substantially in advance of filing his first complaint. Additionally, more than two years elapsed between Plaintiff's filing of his EEOC complaint and his subsequent discharge. In short, Plaintiff's filing of discrimination complaints seems entirely unrelated to his negative performance evaluations and subsequent termination. Given Plaintiff's dismal job performance, his discharge would have been entirely unremarkable had he not earlier filed an EEO complaint. As the Plaintiff has failed to establish a prima facie case of retaliation, the Court grants Defendant's motion for summary judgment on the issue of retaliatory termination.
Retaliatory discharge is both deplorable and unlawful, and cannot be countenanced. However, an employee whose performance is truly inadequate cannot be allowed to use the vehicle of an EEO complaint *254 to interfere with an employer's right to discharge a nonperforming employee. To allow the antidiscrimination laws to be used by poorly performing employees will eventually work to the detriment of those who have a legitimate need for the protection of the laws. What is more, if employers have to keep on their payrolls poorly performing employees, this nation's business community will be unable to compete in the global marketplace. The purpose of the antidiscrimination laws was not to create a bloated private bureaucracy and thereby undermine our finely tuned free enterprise system.
CONCLUSION
For all of the foregoing reasons, the Court finds summary judgment should be issued for the Defendant. An appropriate order accompanies this memorandum opinion.
ORDER
This matter comes before the Court on Defendant's motion for summary judgment. Defendant is entitled to judgment as a matter of law. Accordingly, the Court hereby ORDERS that Defendant's motion for summary judgment be GRANTED.
NOTES
[1] Defendant alleges it did not make immediate payment because it was awaiting medical confirmation of Plaintiff's diagnoses, prognoses, and date of expected return to work.
[2] The Plaintiff alleges that, upon his return to work after filing the FCHRC complaint, he was subjected to more intensive supervision than similarly situated managers (including being followed and clocked in the restroom), was denied vacation days and had his schedule changed arbitrarily. Plaintiff also alleged he was subject to jokes by management personnel concerning his mental condition and, on one occasion, found a cartoon in his mailbox joking about depression.
[3] The complaint alleges that the Defendant discriminated against Plaintiff by denying him emergency sick leave benefits, harassing him and terminating his employment.
[4] At oral argument, Plaintiff conceded that his claim of harassment is essentially one of retaliation rather than discrimination. Therefore, the Court deals with this claim under Count II.
[5] The ADA prohibits discrimination "against a qualified individual with a disability because of the disability of such individual in regard to job application procedures, the hiring, advancement, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment." 42 § 12112(a).
[6] Under the ADA, a disability is: "(a) a physical or mental impairment that substantially limits one or more of the major life activities of such individual; (b) a record of such impairment; or (c) being regarded as having such an impairment." 42 § 12102(2).
[7] Despite the fact that it was not required to do so, Defendant did assert a legitimate, nondiscriminatory reason for the delay. Defendant contends it did not immediately issue payment because it was awaiting medical opinion documentation of Plaintiff's condition. Plaintiff has not shown this reason was pretextual. Thus, even if the Plaintiff had established a prima facie case, he still could not prevail.
[8] Under the ADA, "[n]o person shall discriminate against any individual because such individual has opposed any act or practice made unlawful by this chapter or because such individual made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this chapter." 42 U.S.C. § 12203(a).
[9] Most of the case law on harassment deals with harassment based on gender rather than disability. However, the few courts addressing harassment claims under the ADA have applied the standards utilized in Title VII hostile work environment cases. See Haysman v. Food Lion, Inc., 893 F. Supp. 1092, 1995 U.S.Dist. LEXIS 10235 (S.D.Ga.1995); see also Mannell v. American Tobacco Co., 871 F. Supp. 854 (E.D.Va.1994). This Court accepts that the Title VII standard harassment so severe or pervasive as to alter the conditions of employment and create an abusive working environment is applicable to harassment allegations made under the ADA. The rationale in each case is the same: to promote equality in the work place. Moreover, the Court finds persuasive the reasoning that any lesser standard of liability, "couched in terms of conduct that sporadically wounds or offends but does not hinder" an employee's performance, would not serve the goals of equality. DeAngelis v. El Paso Mun. Police Officers Ass'n, 51 F.3d 591, 593 (5th Cir.1995), petition for cert. filed, (U.S. Aug. 7, 1995; Sept. 6, 1995) (involving alleged harassment in Title VII discrimination suit based on gender).
[10] Some of Plaintiff's allegations clearly cannot support a claim of discrimination. For example, Plaintiff alleges that Defendant changed the daily managers' meeting from 8:30 a.m. to 9:30 a.m. in order to prevent him from taking his medication, which he routinely took at 9:30 a.m. Plaintiff admitted, however, that no one told him he could not take his medicine at the meeting. Further, Plaintiff proffered no reason why he could not take his medicine just a few minutes earlier, before the meeting began.
[11] For example, as early as 1989, Plaintiff was told that he needed to show "immediate and lasting improvement" in certain, identified job areas, and that his job performance was "currently below standard and cannot continue." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2283805/ | 542 F. Supp. 23 (1982)
Stephen LAGA, M.D., Plaintiff,
v.
UNIVERSITY OF HEALTH SCIENCES/ THE CHICAGO MEDICAL SCHOOL, et al., Defendants.
No. 82 C 1013.
United States District Court, N. D. Illinois, E. D.
May 12, 1982.
*24 Joseph A. Terc, Kenneth Ingram Goldman, Chicago, Ill., for plaintiff.
Eric A. Oesterle, Alan S. Gilbert, Sonnenschein, Carlin, Nath & Rosenthal, Chicago, Ill., for defendants.
MEMORANDUM ORDER
SHADUR, District Judge.
Doctor Stephen Laga ("Laga") has sued University of Health Sciences/The Chicago Medical School and Dr. William Schumer in a five-count complaint, the first four counts of which assert state claims and the fifth of which claims under 42 U.S.C. § 1983 ("Section 1983"). Because of the Section 1983 claim defendants removed the action from the Circuit Court of Cook County (where Laga had filed suit) to this Court. Laga now seeks leave to dismiss Count V with prejudice, and defendants object.
No reason has been advanced by defendants for not permitting Laga to shape his own lawsuit. This case is in its earliest stages, and no considerations of judicial economy or any other cogent public policy require denial of Laga's motion.
That issue behind us, the question becomes what to do with the action itself. It is obvious that Laga's motion is intended to eliminate the one predicate for jurisdiction in this Court a forum not chosen by him. Defendants respond by pointing to authorities that hold a plaintiff cannot force a remand of a properly-removed case by a tactical dismissal of the federal claims in a multi-claim action. In re Greyhound Lines, Inc., 598 F.2d 883, 884 (5th Cir. 1979); Hazel Bishop, Inc. v. Perfemme, Inc., 314 F.2d 399, 403-04 (2d Cir. 1963); Brown v. Eastern States Corp., 181 F.2d 26, 28-29 (4th Cir.), cert. denied, 340 U.S. 864, 71 S. Ct. 88, 95 L. Ed. 631 (1950).
Those cases (and the other authorities advanced by defendants) deal however only with the non-destruction of this Court's jurisdiction by elimination of the federal claim that served as the original predicate for acquiring such jurisdiction. After all, 28 U.S.C. § 1447(c) states limited grounds for remand ("removed improvidently and without jurisdiction"), and such elimination of federal claims is not one of them.
But what defendants fail or refuse to recognize is that this Court has the right to view the case in its modified posture to determine whether admitted jurisdiction power should be exercised over the pendent claims that are left. That is the teaching of United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S. Ct. 1130, 1139, 16 L. Ed. 2d 218 (1966), which after stating "That power need not be exercised in every case in which it is found to exist," went on to say in language that might have been written for this case:
Certainly, if the federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed as well. Similarly, if it appears that the state issues substantially predominate, whether in terms of proof, of the scope of the issues raised, or of the comprehensiveness of the remedy sought, the state claims may be dismissed without prejudice and left for resolution to state tribunals.
Indeed the most recent case cited by defendants themselves, In re Carter, 618 F.2d 1093, 1104-05 (5th Cir. 1980), cert. denied, 450 U.S. 949, 101 S. Ct. 1410, 67 L. Ed. 2d 378 (1981) makes that precise point.
This Court exercises its discretion under Gibbs by dismissing the entire action (after elimination of Count V) without prejudice. It thus permits Laga to start again in the Circuit Court of Cook County, where he always expected to be, and where the state court can deal with wholly state-based claims.
Defendants argue that if this Court orders dismissal, it should impose as a condition Laga's payment of defendants' attorneys' fees. That contention is grounded on the notion that the removal papers and the federal pleadings they have filed will have to be superseded by state court pleadings, involving them in duplicative work. As this Court stated when that argument was first presented orally, it is totally unpersuasive, much like the apocryphal defendant, *25 charged with murdering his parents, who asked for mercy because he was an orphan.[1]
Count V is dismissed with prejudice, and the balance of this action is dismissed in its entirety without prejudice. Defendants' oral motion for the imposition of conditions on such dismissal is denied.
NOTES
[1] Laga's willingness to eliminate the federal claim confirms its low priority initially indicated by its inclusion as the final count in the Complaint. Indeed, were the situation reversed with a plaintiff asserting a highly questionable federal claim as the basis for bringing dominant pendent claims into the federal court this Court would have no hesitation in rejecting the pendent claims once the federal count had been disposed of as less than colorable. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/4517116/ | IN THE SUPREME COURT OF PENNSYLVANIA
MIDDLE DISTRICT
COMMONWEALTH OF PENNSYLVANIA, : No. 129 MM 2019
:
Respondent :
:
:
v. :
:
:
TORRENCE JUDE MCCARTHY, :
:
Petitioner :
ORDER
PER CURIAM
AND NOW, this 17th day of March, 2020, the Application for Leave to File Original
Process is GRANTED, and the “Application for Relief in the Nature of Habeas Corpus” is
DENIED. | 01-03-2023 | 03-17-2020 |
https://www.courtlistener.com/api/rest/v3/opinions/2345778/ | 695 F. Supp. 165 (1988)
ATLANTIC MUTUAL INSURANCE COMPANIES, Plaintiff,
v.
M/V "BALSA 38", her engines, boilers, etc., and Tsacaba Co. Ltd., and Kersten Shipping Agency, Inc., Defendant.
DOWA LINE COMPANY, LTD., and Tsacaba Shipping Co., Ltd., Defendants and Third-Party Plaintiffs,
v.
KIM-SAIL, LTD., Third-Party Defendants.
No. 88 Civ. 0364 (CSH).
United States District Court, S.D. New York.
September 23, 1988.
As Amended November 28, 1988.
*166 Purrington, McConnell & Agus, New York City (Stephen A. Agus, of counsel), for plaintiff Atlantic Mut. Ins. Companies.
Standard, Weisberg, Heckerling & Rosow, New York City (Lewis Herman, of counsel), for defendants Kersten Shipping Co. Ltd. and Kim-Sail Co. Ltd.
Walker & Corsa, New York City (Leroy S. Corsa, Kirk M. Lyons, of counsel), for defendants Dowa Line Co., Ltd. and Tsacaba Shipping Co., Ltd.
AMENDED MEMORANDUM OPINION AND ORDER
HAIGHT, District Judge:
In this admiralty action for cargo and shortage, defendants move to dismiss the complaint as time-barred.
BACKGROUND
Plaintiff Atlantic Mutual Insurance Co. sues as insurer and subrogee of Universal Cooperatives, Inc. Universal, a Minnesota Corporation, was the consignee and receiver of bales of twine covered by six separate bills of lading which were transported on board the M/V BALSA 38 from Salvador, Brazil to Richmond, Virginia. The vessel arrived at Richmond and docked on January 5, 1987. Defendant Tsacaba Shipping Co., Ltd. is the registered owner of the BALSA 38. Defendant Dowa Line Co., Ltd. was the time charterer. Third-party defendant Kim-Sail Ltd. was the sub-time charterer from Dowa. Defendant Kersten Shipping Agency, Inc., acted as agent for Kim-Sail.
The bales of twine were loaded into the vessel at Salvador stowed on a total of 1,600 wooden pallets. The bales of twine comprising the total shipment were neither identical nor indistinguishable. That appears from the faces of the six bills of lading. There were different quality marks: Gold Label Baler, Gold Label Binder, and Diamond Baler. Lots of different length and weight were included in the total shipment: Gold Label Baler in 9,000, 10,000 and 16,000 foot lengths; Gold Label Binder in 600 foot lengths; and Diamond Baler in 9,000 and 10,000 foot lengths. The weight of the bags differed: the Gold Label Binder had a weight of 50 lbs. per bag, while the rest of the shipment was in bags of 40 lbs.
The cargo receivers appointed Captain C.G. Porter, a cargo surveyor from Duluth, Minnesota, to attend to the discharge of the 1,600 pallets of baler twine from the BALSA 38 at Richmond. Captain Porter has attached a copy of his survey report of January 30, 1987 to his affidavit. The survey, whose accuracy defendants do not challenge, recites that Captain Porter attended to the discharge on January 5 and 6, 1987, and also oversaw sorting of damaged twine on January 7, 8, 9, 12, 13, 14, 23, and 24. On the last date, a joint survey was conducted with a surveyor representing Kersten.
*167 The Porter survey recites that on opening of the hatches, the pallets "on top were in some disarray." Damage to some of the pallets occurred as the stevedores discharged them from the holds with forklifts. The survey advises:
"Pallets re-stacked in the hold often had three B/L's on the same pallet, with no attempt made to keep separation of B/L's, damaged from good twine, or consistent count on each pallet. As a result by time pallets were at rest in warehouse, approximately one half had damage or were broken down on non-uniform pallet loads. A count was impossible. On 6 January, sent Telex to Kersten of intention to file damage claim."
Captain Porter expands upon these circumstances, and the difficulties they caused, in his affidavit at ¶¶ 5 and 6:
"5. Some difficulty was experienced in the wings and with overstowed pallets. In result, pallets restacked in the hold often had three Bills of Lading on the same pallet, with no attempt made to keep a separation for Bills of Lading, damaged from good twine, or any consistent count on each pallet. A complete copy of my report is annexed hereto as Exhibit `A'.
6. Owing to the aforementioned circumstances, by the time pallets were placed at rest approximately one-half had damage or were broken down on non-uniform pallet loads in multiple locations. This non-uniform stowage resulted in a count being impossible and as such the cargo could not be allocated to the respective Bills of Lading until after sorting which was accomplished after January 7th and not completed until January 24th."
Plaintiff filed this action on January 19, 1988.
DISCUSSION
The shipments evidenced by these bills of lading are covered by the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. App. §§ 1300 et seq. COGSA contains a one-year statute of limitations. § 1303(6). The case at bar turns upon this particular provision in § 1303(6):
"In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered: ..."
The parties dispute the meaning for COGSA purposes of the term "delivery." Defendants say that delivery of the cargo took place on or before January 7, 1987, when the cargo had been discharged from the vessel and the consignee given an opportunity to retrieve it. Plaintiff says that delivery did not occur until its representatives had not only an opportunity to retrieve its cargo in the warehouse, but also a reasonable opportunity to sort out the intermingled pallets and bales, and allocate them among the six bills of lading.
Preliminarily, I reject plaintiff's contention that the issue is governed by the Harter Act, 46 U.S.C.App. §§ 190-195. Plaintiff says COGSA only partially supersedes the Harter Act, and that the latter statute still applies following discharge from the vessel until proper delivery to the consignee is effected. But I need not consider whether the statutory concepts of "delivery" differ because, as Judge Lasker held in Lithotip, C.A. v. S.S. Guarico, 569 F. Supp. 837, 838-39 (S.D.N.Y.1983), a distinction exists between determining when a carrier's responsibility for damage to cargo terminates, and when a consignee's cause of action accrues for purposes of a statute of limitations. The Harter Act may have an office to perform in the first of these considerations, but COGSA governs the second.
Thus the question becomes when "delivery" occurs under COGSA. There is no statutory definition, no legislative history, little case law, and no Supreme Court or Second Circuit authority directly on point. Each of the relatively few cases turns on its own circumstances.
That is illustrated by Lithotip, supra, upon which defendants place a not wholly justified reliance. Judge Lasker supplemented his opinion at 592 F. Supp. 1280 (S.D.N.Y.1984). Reading the two decisions *168 together, it appears that the shipment in suit consisted of "523 large rolls of printing paper" or "newsprint." 592 F. Supp. at 1281. There is no indication that there were multiple bills of lading; on the contrary, the court refers to "the Bill of Lading." 569 F. Supp. at 839. There is no indication that the rolls of printing paper were anything other than uniform in dimension and other physical properties.
In these circumstances, Judge Lasker held the consignee's suit for damage and shortage time-barred where the consignee learned of the cargo's arrival on May 4, 1981; received a port authority permit to retrieve the cargo on May 14; took physical delivery between May 18 and May 25; and sued on May 18, 1982. Judge Lasker concluded that COGSA "delivery" occurred on May 14, 1981, so that the complaint fell outside the one-year limitation period. 592 F. Supp. at 1281.
Citing American Hoesch, Inc. v. Steam-C.1970), Judge Lasker said in his first opinion at 569 F. Supp. 839:
"[A] principal distinction between `discharge' and `delivery' is that delivery implies an opportunity for the consignee or his agent to observe defects."
Having quoted that language, from his initial opinion in Lithotip, Judge Lasker continued in his second opinion at 592 F. Supp. 1281:
"While this passage makes clear that the `opportunity to retrieve' requirement for accrual of the COGSA statute of limitations is intended to give consignees the chance to make inspections of cargo condition, there is no suggestion, either in the opinion or in any other COGSA case, that the statute does not begin to run until an actual inspection takes place. See, e.g., National Packaging Corp. v. Nippon Yusen Kaisha, 354 F. Supp. 986, 987 (N.D.Ca.1972); American Hoesch, supra, 316 F.Supp. at 1196. Although circumstances can be envisioned in which a consignee would be entitled to a reasonable amount of time to make a cargo inspection, plaintiff has offered no evidence to support its claim that in this case the statute should not be held to have commenced to run on the day on which plaintiff was given the opportunity to retrieve the cargo.
As revealed in the survey report conducted on June 15, 1981 and attached to the affidavit of plaintiff's counsel, of the 523 rolls of newsprint that were to be delivered by defendant to plaintiff, 62 rolls were short-delivered and 106 were delivered with cuts and gashes. Plaintiff's counsel does not allege that a survey of the cargo's condition could not have been made on May 14 when the cargo was released to Lithotip or that such a survey would have required several days. Indeed, it would seem that comparatively little time would have been required for plaintiff or its agent to complete a survey given that the cargo consisted of large rolls of printing paper."
By way of contrast, the case at bar involves six separate bills of lading; each bill of lading covered a different number of pallets and different numbers of bales; and the bales covered by the bills had different physical properties. Captain Porter says that it was impossible to allocate the bales to the bills of lading when they were first discharged to the warehouse. Given the condition in which the vessel loaded, stowed, and discharged the cargo, that is hardly surprising. Implicit in Porter's affidavit and survey is the statement that the sorting and allocation process could not be completed with the joint survey on January 24, 1987. Defendants do not suggest otherwise; and plaintiff submits a certification of the terminal operator that sorting of the twine required 13 eight-hour working days. Rather, defendants insist that the consignee had a reasonable opportunity of retrieval as of January 7, when "delivery" occurred and the cause of action accrued; they characterize the subsequent sorting as carried out at the consignee's own time and expense, and for its own convenience.
Plaintiff cites two COGSA "delivery" cases: Nissho Iwai American Corp. v. M/V Ocean Lilly, 1982 A.M.C. 1301 (S.D. N.Y.1981) (not officially reported); and Loeb v. The S.S. Washington Mail, 150 F. Supp. 207 (S.D.N.Y.1956).
*169 In Nissho Iwai, District Judge Pierce (as he then was) described the facts as follows:
"This is an action to recover money damages for a shipment of coils of galvanized iron, which allegedly were damaged during shipment from Kimitsu, Japan to Mobile, Alabama, on the defendant ship, the M/V Ocean Lilly. The shipment was sent under four bills of lading (KMMB2, 3, 4, and 5) and was unloaded in Mobile over the nine day period from January 21, 1980 through January 29, 1980. The coils unloaded on January 21 through January 24 were attributed to bills of lading KMMB 2, 3, and 4; the coils unloaded on January 25 were attributed to KMMB 4; and the coils unloaded on January 28 and 29 were attributed to bills of lading KMMB 3, 4, and 5." 1982 A.M.C. at 1301.
Plaintiff filed its complaint on January 28, 1981. The ship owner said the action was time-barred under COGSA. Judge Pierce analyzed the issue at 1303:
"The question as to whether or not all or part of this action was time barred at the time it was filed therefore would appear to turn on whether the coils attributable to each bill of lading were segregated and separately delivered under the bills of lading to which they were specifically referable. If so, each bill of lading should be considered separately and a separate cause of action can be validly based on each. If, on the other hand, all of the coils were identical and were indiscriminately attributed to any one of the four bills of lading during unloading, delivery of the whole lot would constitute one ongoing act which gives rise to only one cause of action."
Because resolution of that issue presented issues of fact which the motion papers did not resolve, Judge Pierce denied defendant's motion to dismiss the complaint.
In Loeb, Judge Knox dealt with a shipment of 224 bales of rubber which formed a part of the carrying vessel's general cargo. According to the bill of lading, the bales of rubber were to be carried from Penang to San Francisco. However, owing to dock conditions prevailing at that port, the vessel first proceeded to Los Angeles discharging about one-half of her cargo, and thence to San Diego, where the vessel completed her discharge to the pier on October 8. On October 11 the consignee received 186 bales of its original consignment. The last delivery of the vessel's cargo discharged at San Diego occurred on October 31. The balance of the consignee's 38 bales was never delivered. The consignee filed suit on October 14, 1952. Judge Knox rejected the shipowner's contention that the latest day on which the limitation began to run was October 11, 1951. He stated at 150 F. Supp. 210:
"When libelants received 186 bales of their goods on October 11th, they had a right to believe that the vessel, by its admission in the bill of lading, had taken on board the entire shipment that was made at Penang. See: American Trading Co., Inc. v. The Harry Culbreath, 2 Cir., 187 F.2d 310, and Karabagui v. Shickshinny, D.C., 123 F. Supp. 99, 102. There was no reason to think otherwise. Consequently, on receiving a partial delivery of their goods, libelants naturally could, and would, assume that the missing bales had been discharged from the vessel, and that due to the hustle and bustle, and perhaps, confusion, that prevailed upon the pier, had merely been mislaid; and, further, that in the course of handling the mass of some 30,000 bundles of like cargo, the missing bales would be located and delivered."
On the basis of this analysis, the Court concluded that the statute of limitations did not begin prior to October 31, 1951.
Neither case is squarely in point. In Nissho Iwai, while Judge Pierce denied the shipowner's time-bar motion, he did so only in order that the underlying facts might be resolved at trial.
In Loeb the vessel departed from her contracted-for voyage to a single port, and discharged her cargo (including plaintiff's shipment) at two other ports.
But these cases indicate generally that practical circumstances play a part in determining when "delivery" of cargo occurs. Judge Pierce factored into his equation the *170 physical characteristics of the coils and the manner of their attribution to the several bills of lading. Judge Knox considered that the consignee could not reasonably establish a short delivery until all the vessel's cargo had been claimed at the second discharge port. Similar considerations informed Judge Lasker's opinions in Lithotip.
The parties cite other cases construing "delivery" of ocean cargo: some COGSA cases, others Harter Act cases, others arising from the general maritime law, and one from the regulatory field. Some of the cases have nothing to do with accrual of causes of action for limitation purposes. But I need not extend the discussion further, since "delivery" does not exist in a vacuum, and the circumstances of each case dictate the result. It is at heart a question of common sense.
In the case at bar, and viewing the evidence for purposes of this motion only in the light most favorable to plaintiff, I conclude that where an ocean carrier accepts for carriage palletized bales of twine of different markings and physical characteristics, issues separate bills of lading (and hence separate contracts of ocean carriage) which recite and conform to those different markings and physical characteristics, and then in the course of loading, stowage, transportation or discharge of the cargo creates chaos out of order in respect of the six bills of lading issued, the carrier does not make effective "delivery" of the cargo to the consignee under COGSA by simply dumping the mess onto a pier for the consignee to sort out. In these circumstances, effective delivery does not occur until the consignee has had a reasonable time to restore order from chaos, so that the fact of damage or loss under each separate bill of lading, covering items of differing marks and characteristics, may be established, and their amounts quantified.
In short, I find in this case the existence of those circumstances and proof which Judge Lasker foresaw in Lithotip, supra.
Defendant's motion to dismiss the complaint as time barred is denied.
OTHER MOTIONS
The motion papers present two other issues which are essentially non-controversial, and may be dealt with summarily.
Kersten Shipping, Inc. moves to dismiss the complaint as to it because it acted as an agent for a disclosed principal. Plaintiff does not resist that motion. Brief at 12. Accordingly the complaint against Kersten will be dismissed.
Third-party defendant Kim-Sail moves to stay the third-party complaint of Dowa on the ground that the sub-time charter party between Dowa and Kim-Sail contains an arbitration clause requiring arbitration of disputes between those parties. Plaintiff furiously opposes a stay of proceedings pending arbitration, on the ground that the consignee is not bound by the arbitration clause. But I do not understand Kim-Sail to be arguing that the plaintiff is so bound. Its motion, as I understand it, runs only against Dowa; and, as to that party, the breadth of the arbitration clause entitles Kim-Sail to a stay of the third-party complaint pending arbitration. United States Arbitration Act, 9 U.S.C. §§ 1, 3.
CONCLUSION
For the foregoing reasons, the several motions are adjudicated as follows:
1. Defendants' motion to dismiss the complaint as time-barred is denied.
2. The motion of third-party defendant Kim-Sail, Ltd. to stay the third-party complaint against it pending arbitration is granted.
3. The complaint against defendant Kersten Shipping Agency, Inc. is dismissed with prejudice and without costs.
It is SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2985045/ | January 14, 2014
JUDGMENT
The Fourteenth Court of Appeals
KEITH JULIUS JACKSON, Appellant
NO. 14-12-01012-CR V.
THE STATE OF TEXAS, Appellee
________________________________
This cause was heard on the transcript of the record of the court below.
Having considered the record, this Court holds that there was no error in the
judgment. The Court orders the judgment AFFIRMED.
We further order this decision certified below for observance. | 01-03-2023 | 09-22-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2478588/ | 366 F. Supp. 2d 1119 (2005)
Leroy NUNNALLY Jr., et al., Plaintiffs,
v.
EQUIFAX INFORMATION SERVICES LLC, Defendants.
No. CIV.A. CV04PT2890E.
United States District Court, N.D. Alabama, Eastern Division.
February 4, 2005.
*1120 David R. Donaldson, Tammy McClendon Stokes, Birmingham, AL, Earl P. Underwood, Jr., James Donnie Patterson, Fairhope, AL, for Plaintiffs.
J. Anthony Love, Mara Mcrae, Cindy D. Hanson, Atlanta, GA, William H. King, III, David R. Pruet, III, North Birmingham, AL, for Defendants.
MEMORANDUM OPINION
PROPST, Senior District Judge.
This cause comes on to be heard upon defendant Equifax Information Services LLC's Motion to Dismiss, filed on December 7, 2004.
FACTS AND PROCEDURAL HISTORY[1]
Plaintiffs Leroy Nunnally, Jr. and Gladys Nunnally ("Nunnallys") are residents and citizens of Calhoun County, Alabama. (Cmpt.¶ 2). Plaintiff Arlene M. Rhodes, f/k/a Arlene M. Cook ("Rhodes") is a resident and citizen of Hale County, Alabama. (Id. at ¶ 3). Defendant Equifax Information Services LLC ("Equifax") is a non-Alabama corporation with its principal place of business in Georgia. (Id. at ¶ 4). Equifax, which is licensed to transact business in Alabama, is a consumer reporting agency which assembles and disperses credit reports to third parties in exchange for compensation. (Id. at ¶¶ 4-6). Equifax is one of the three largest credit reporting agencies in the United States and one of the largest national repositories of consumer financial data. (Id. at ¶ 18).
The Nunnallys examined their consumer reports from Equifax on or about September 6, 2002 and found that the reports contained false information. (Cmpt.¶ 25). Equifax was falsely reporting that each of the Nunnallys had a First USA Bank account and a JC Penny/Monogram account. (Id. at ¶¶ 26-27). In 2002, the Nunnallys advised Equifax by phone and first class mail of these inaccuracies and asked that they be reinvestigated. (Id. at ¶ 28). Equifax never reported the results of the reinvestigation to the Nunnallys, and the Nunnallys believe that Equifax never performed *1121 a proper investigation as they requested. (Id. at ¶ 29).[2]
On or about March 30, 2004, the Nunnallys again ordered their consumer reports from Equifax. (Cmpt.¶ 30). The Nunnallys found that the new reports sent by Equifax still falsely reported that each of them had First USA Bank and JC Penny/Monogram accounts. (Id.) In or about May 2004, the Nunnallys again advised Equifax by written correspondence of the errors on their reports and asked for a reinvestigation of the inaccurately published information. (Id. at ¶¶ 31-32). On or about July 2, 2004, Equifax reported the results of the reinvestigation of Leroy Nunnally's report. (Id. at ¶ 33). Equifax sent a one-page document to Leroy Nunnally indicating that the JC Penny/Monogram account had been removed from his consumer file and that the other disputed account was not currently reporting. (Id.) Equifax reported the results of the reinvestigation regarding Gladys Nunnally's file to her on or about July 9, 2004. (Id. at ¶ 34). In a one-page document, Equifax reported that both the JC Penny/Monogram and the First USA Bank account had been deleted from her consumer file. (Id.)
In August 2004, the Nunnallys ordered and paid for copies of their entire credit files from Equifax. (Cmpt.¶ 35). Both the Nunnallys received copies of their reports on or about August 13, 2004, and both reports were free of inaccurate information. (Id. at ¶¶ 36-67). Leroy Nunnally's report was 14 pages and Gladys Nunnally's was 12 pages. (Id.)
Rhodes viewed her consumer report from Equifax on March 18, 2004. (Cmpt.¶ 38). The report inaccurately reported that Rhodes had account balances owing to CBS Collection Division and Homecomings Financial Network, when those accounts had actually been paid in full. (Id. at ¶ 39). The report also falsely reported that Rhodes had accounts with Merchants & Farmers and Discover Financial Services. (Id.) Finally, the report listed Rhodes' surname as Cook, a name she had used prior to her divorce. (Id.)
In or about March 2004, Rhodes notified Equifax of those inaccuracies by filling out Equifax's Research Request Form. (Cmpt.¶ 40). On September 14, 2004, Equifax sent Rhodes a two-page document reporting the results of its reinvestigation of her consumer report. (Id. at ¶ 41). This document informed Rhodes of the following changes to her file: the CBS Collection Division account had been deleted; her name had been updated, the Homecoming Financial Network account was reported as closed; and the Merchants & Farmers account was listed as paid as agreed. (Id.) Equifax failed to report whether it had reinvestigated Rhodes dispute regarding the Discover Financial Services account. (Id.) Rhodes reordered and paid for her Equifax file on September 17, 2004. (Id. at ¶ 42). On September 17, 2004, Rhodes received her 29-page report, which still inaccurately reported the Discover Financial Services account and which listed her name as Arlene "Phodes." (Id. at ¶ 43).
The Nunnallys and Rhodes filed this action on October 1, 2004 alleging that they have suffered damages as a result of Equifax's publication of false, adverse credit information on their consumer reports.[3] The complaint contained one count *1122 alleging that Equifax failed to comply with 15 U.S.C. § 1681i(a)(6) of the Fair Credit Reporting Act ("FCRA").[4]
RULE 12(b)(6) STANDARD
Rule 12(b)(6) tests the legal sufficiency of a complaint. When considering a Rule 12(b)(6) motion, the court assumes that all factual allegations pled in the complaint are true. United States v. Gaubert, 499 U.S. 315, 327, 111 S. Ct. 1267, 113 L. Ed. 2d 335 (1991). All factual allegations are to be construed in the light most favorable to the plaintiff. Brower v. County of Inyo, 489 U.S. 593, 598, 109 S. Ct. 1378, 103 L. Ed. 2d 628 (1989). Dismissal under Rule 12(b)(6) is appropriate "`only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations' of the complaint." Rendon v. Valleycrest Prods., Ltd., 294 F.3d 1279, 1282 (11th Cir.2002) (citing Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S. Ct. 2229, 81 L. Ed. 2d 59 (1984)).
ARGUMENTS[5]
I. Defendant's Motion to Dismiss.
A. The FCRA Differentiates Between a "Consumer Report" and a "File."
Defendant maintains that plaintiffs' claims are premised on a misreading of the key statutory provisions of the FCRA. Defendant notes that the FCRA contains a detailed definition of the phrase "consumer report":
The term "consumer report" means any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for *1123 (A) credit or insurance to be used primarily for personal, family, or household purposes;
(B) employment purposes; or
(C) any other purpose authorized under section 1681b of this title.
15 U.S.C. § 1681a(d). See also Yang v. Government Employees Ins. Co., 146 F.3d 1320, 1323-24 (11th Cir.1998) (analyzing definition of "consumer report" under FCRA). Given this definition, defendant argues, the phrase "consumer report" encompasses any communication of credit-related information by a credit reporting agency, no matter how brief (such as an instant "yes" or "no" credit approval or a three-digit score). See also FTC Statement of General Policy or Interpretations under the FCRA, 16 C.F.R. Pt. 600, App. (finding that a list of names can constitute a "consumer report" if complied based on credit-worthiness).
In contrast to a "consumer report," defendant points out, a consumer's "file" includes all information the consumer reporting agency has with respect to the particular consumer:
The term "file", when used in connection with information on any consumer, means all of the information on that consumer recorded and retained by a consumer reporting agency regardless of how the information is stored.
15 U.S.C. 1681a(g). Thus, defendant asserts, whereas the consumer's "file" represents the entire body of information collected by a credit reporting agency as to a consumer, a "report" reflects any communication based upon that file that is less than a full disclosure of the file.
B. The FCRA Provisions Authorizing Consumers to Receive Complete Disclosure of the Entirety of Their Credit File.
According to defendant, the FCRA clearly indicates when a credit reporting agency must disclose all of the information in a consumer's "file" rather than merely provide a "consumer report" communicating some credit information about a consumer. Defendant notes that the provision governing "[d]isclosures to consumers" upon request, for example, obliges a credit reporting agency to respond to a request from a consumer with a full disclosure of "[a]ll information in the consumer's file at the time of the request." 15 U.S.C. § 1681g(a)(1).
Defendant asserts that other provisions of the FCRA cross-reference this unambiguous reference to a disclosure of "[a]ll information in the consumer's file ..." (as opposed to a mere "consumer report"). Defendant points out that the provision requiring credit reporting agencies to provide each consumer with one "[f]ree annual disclosure," for example, directly references § 1681g:
All consumer reporting agencies described in subsections (p) and (w) of section 603 [15 USCS § 1681a] shall make all disclosures pursuant to section 609 [15 USCS § 1681g] once during any 12-month period upon request of the consumer and without charge to the consumer.
15 U.S.C. § 1681j(a). Other provisions requiring credit reporting agencies to provide free disclosures under certain other circumstances also directly reference § 1681g. Such circumstances include: when a consumer has received a notice of adverse action by a creditor, 15 U.S.C. § 1681j(b); when a consumer certifies that he or she is unemployed or on welfare, 15 U.S.C. § 1681j(c)(1)-(2); or when credit fraud may have occurred, 15 U.S.C. § 1681j(c)(3). Defendant asserts that when a consumer requests a full disclosure that is not addressed by these provisions for free disclosures, "a consumer reporting *1124 agency may impose a reasonable charge on a consumer." 15 U.S.C. § 1681j(f)(1).
C. A Credit Reporting Agency's Reinvestigation Reporting Duties.
According to defendant, plaintiffs make no claim that they did not receive the free "disclosure" required under the various provisions of § 1681j. Nor, defendant asserts, do they cite a provision referring to § 1681g's required disclosure of "[a]ll information in the consumer's file." Instead, defendant argues, the provision on which plaintiffs base their claims mandates specific, but very limited, information.
Defendant points to 15 U.S.C. § 1681i, and states that the FCRA has a detailed procedure governing a consumer's disputes as to the accuracy of credit information in his or her file. If a consumer disputes the "accuracy of any item of information contained in a consumer's file," then the consumer reporting agency is obliged to conduct a reasonable reinvestigation "free of charge." 15 U.S.C. § 1681i(a)(1)(A). Defendant notes that, upon completing this reinvestigation, the agency must give the consumer very specific written notice of the results:
(A) In general. A consumer reporting agency shall provide written notice to a consumer of the results of a reinvestigation under this subsection not later than 5 business days after the completion of the reinvestigation, by mail or, if authorized by the consumer for that purpose, by other means available to the agency.
(B) Contents. As part of, or in addition to, the notice under subparagraph (A), a consumer reporting agency shall provide to a consumer in writing before the expiration of the 5-day period referred to in subparagraph (A)
(i) a statement that the reinvestigation is completed;
(ii) a consumer report that is based upon the consumer's file as that file is revised as a result of the reinvestigation;
(iii) a notice that, if requested by the consumer, a description of the procedure used to determine the accuracy and completeness of the information shall be provided to the consumer by the agency, including the business name and address of any furnisher of information contacted in connection with such information and the telephone number of such furnisher, if reasonably available;
(iv) a notice that the consumer has the right to add a statement to the consumer's file disputing the accuracy or completeness of the information; and
(v) a notice that the consumer has the right to request under subsection (d) of this section that the consumer reporting agency furnish notifications under that subsection.
15 U.S.C.A. § 1681i(a)(6) (emphasis added). Defendant argues that the highlighted portion "a consumer report that is based upon the consumer's file as that file is revised as a result of the reinvestigation" is the focus of the plaintiffs' claims here. According to defendant, there is no allegation that the summary consumer reports provided by Equifax failed to comply with any of the other notice requirements of § 1681i(a)(6).
Although plaintiffs do not specify their exact theory of statutory construction, defendant argues, they appear to be focusing on and misunderstanding the reference to a "consumer report." However, defendant contends, a "consumer report" is not the same thing as a "disclosure" of "all information in a consumer's file." To the contrary, defendant asserts, a "consumer report" is any communication reflecting *1125 information that bears upon a consumer's credit-worthiness, which clearly includes the reinvestigation reports provided by Equifax to plaintiffs here.[6]
Defendant maintains that the statute unambiguously refers to a "consumer report" that is "based upon the consumer's file." According to defendant, a report is not "based upon" the consumer's file if it discloses the entire file. Defendant contends that to equate the referenced "consumer report" to a complete disclosure of the "consumer's file" improperly would render the phrase "based upon" meaningless and nugatory. See Rake v. Wade, 508 U.S. 464, 471, 113 S. Ct. 2187, 124 L. Ed. 2d 424 (1993) ("To avoid deny[ing] effect to a part of a statute, we accord significance and effect ... to every word") (internal quotations and citation omitted). Further, defendant argues, the report must be "based upon" the file "as that file is revised," meaning that those portions of the file that were not revised as a result of the investigation need not be disclosed again to the consumer.
Defendant argues that plaintiff's construction of "consumer report" to mean "credit file" renders all the language in this subsection after the phrase "consumer report" completely superfluous: if plaintiffs' interpretation were correct, and "consumer report" meant the same thing as "credit file," then subsection (B)(ii) would simply require a "consumer report" and nothing more.[7]
Defendant points out that other provisions of the FCRA confirm that Congress knows how to mandate disclosure of the full contents of a consumer's file when it intends to require such disclosure. See, e.g., Barnhart v. Sigmon Coal Co., Inc., 534 U.S. 438, 452, 122 S. Ct. 941, 151 L. Ed. 2d 908 (2002) (stating, "when Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion") (internal quotation marks and citation omitted). Here, defendant argues, Congress unambiguously mandated full disclosure of a consumer's file in § 1681g and cross-referenced this full disclosure requirement in other FCRA provisions. Had Congress intended for a consumer to receive the same complete file disclosure after a reinvestigation, defendant asserts, it easily could have said so, either directly or through another cross-reference to § 1681g.
Finally, defendant argues, its construction of the statute accords with commons sense. According to defendant, it makes sense for Congress to require a complete disclosure of a consumer's file initially, so that any potential issues can be identified and brought to the credit reporting agency's attention. Once the agency has conducted a reinvestigation, defendant maintains, the better course is a summary of results of the investigation, so that the consumer can understand immediately what changes to his or her file have occurred as a result of the reinvestigation. Defendant argues that, particularly where a complete file disclosure runs more than a dozen pages (as is the case with each of the named plaintiffs here), producing a full file disclosure is an ineffective means of conveying the reinvestigation revisions. This is so, defendant asserts, because a *1126 consumer would be forced to wade through the entire disclosure and systematically compare each of the disputed items in the two disclosures. Indeed, defendant maintains, if a consumer did not immediately discover a reinvestigation error in the full disclosure, that consumer might accuse the credit reporting agency of "burying" the error by producing the full file disclosure.
II. Plaintiff's Response.
Plaintiffs dispute Equifax's contention that the notices it sent plaintiffs after its reinvestigations were themselves "consumer reports" and, therefore, complied with § 611 of the FCRA. Further, plaintiffs assert that defendant's argument is merits-based and cannot be addressed in a motion to dismiss.[8] According to plaintiffs, they have alleged that defendant did not send them a consumer report as required by § 611, and their allegations must be accepted as true for purposes of this motion. See Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1273 n. 1 (11th Cir.1999) (stating, "[a]t the motion to dismiss stage, all well-pleaded facts are accepted as true, and the reasonable inferences therefrom are construed in the light most favorable to the plaintiff").
A. The Plain Language of the FCRA Requires Equifax to Give Consumers a Free Copy of Their Consumer Reports Upon Completion of Equifax's Reinvestigations.
Plaintiffs contend that defendant's position is inconsistent with and contrary to the plain language of the statute. According to plaintiffs, defendant's argument confuses 15 U.S.C. § 1681i's very distinct requirement that notice be sent to the consumer regarding the results of the defendant's reinvestigation with the requirement that it provide a consumer report after the disputed information has been revised. Plaintiffs assert that § 1681i sets out the two requirements in two distinct subsections as follows:
(6) Notice of results of reinvestigation.
(A) In general. A consumer reporting agency shall provide written notice to a consumer of the results of a reinvestigation under this subsection not later than 5 business days after the completion of the reinvestigation, by mail or, if authorized by the consumer for that purpose, by other means available to the agency.
(B) Contents. As part of, or in addition to, the notice under subparagraph (A), a consumer reporting agency shall provide to a consumer in writing before the expiration of the 5-day period referred to in subparagraph (A)
(i) a statement that the reinvestigation is completed;
(ii) a consumer report that is based upon the consumer's file as that file is revised as a result of the reinvestigation...
15 U.S.C.A. § 1681i(a)(6) (emphasis added). Although the statute allows a consumer reporting agency ("CRA") to give both the notice and the consumer report together, plaintiffs argue, they are clearly distinct items, each of which must be provided in order to comply with the statute. Plaintiffs contend that subsection (B) does not permit CRAs to give only portions or parts of the consumer report at issue. Nor, plaintiffs maintain, does it allow CRAs to provide only descriptions of the *1127 revised status of the consumer's report, such as the ones defendant gave plaintiffs. According to plaintiffs, the statute requires that CRAs give consumers the actual consumer report based on the revised consumer file. Although Equifax gave each plaintiff a one or two page notice of the results of the reinvestigations, plaintiffs allege that it never sent them copies of their consumer reports as mandated by § 1681i. Plaintiffs acknowledge that the summary notices sent by defendant do likely satisfy the requirements of § 611(a)(6)(A). However, plaintiffs argue, they do not satisfy the separate requirement of a "consumer report" under subsection (6)(B).
It is plaintiffs' position that the notices sent by defendant are expressly excluded from the FCRA's definition of a "consumer report." Plaintiffs acknowledge that "consumer report" is broadly defined to encompass "any written, oral, or other communication of any information by a consumer reporting agency..." 15 U.S.C. § 1681a. However, plaintiffs assert that under § 1681a, "[t]he term `consumer report' does not include ... any ... report containing information solely as to transactions or experiences between the consumer and the person making the report ..." 15 U.S.C. § 1681a(d)(2)(A)(i). Defendant's notices of the results of its own reinvestigations, plaintiffs contend, were reports of the "transactions" or "experiences" at issue between defendant and plaintiffs.
Plaintiffs dispute defendant's contention that the statute requires nothing more than the notice it gave to plaintiffs. According to plaintiffs, defendant's argument relies on only a selective quote taken out of context from the statute. Plaintiffs point to the language of the statute and assert that it requires defendant to provide consumers with copies of their consumer reports which include information that has been updated or revised during, or as a result of, a reinvestigation. Plaintiffs argue that reading the statute to require defendant to give a complete copy of the consumer report based on the consumer file as it exists after the reinvestigation gives effect to all the words of the statute and does not render any word "superfluous."
Plaintiffs further maintain that reading the statute to require a consumer report in this circumstance is consistent with the other provisions of the FCRA and with the purposes of the Act. Plaintiffs assert that, in almost identical language to § 611's requirement, CRAs are statutorily mandated to provide, upon request, "a free copy of a consumer report on the consumer ..." to persons against whom adverse action has been taken based on information in their consumer reports. 15 U.S.C. § 1681m(a)(3)(A); 15 U.S.C. § 1681j. Similar to § 611, this provision, plaintiffs contend, does not mention a full disclosure of the file. Further, plaintiffs point out, § 1681j(c) requires CRAs to give free reports when the consumer "is unemployed and intends to apply for employment ...; is a recipient of public welfare assistance; or ... has reason to believe that the file on the consumer at the agency contains inaccurate information due to fraud." 15 U.S.C. § 1681j(c).
According to plaintiffs, the purpose of the free consumer reports provisions of §§ 1681j, 1681m, and 1681i are the same: to give the consumer the opportunity to review his or her credit report for possible inaccuracies and have those inaccuracies corrected. Plaintiffs maintain that the error in defendant's position is made clearer when applied to the situation in which a consumer has had an adverse action taken against him or her based on inaccurate information in their report. Plaintiffs argue that such a consumer must receive a *1128 full copy of his consumer report so that he has the opportunity to review it in its entirety. It makes no sense, plaintiffs contend, to require a CRA to send only selective portions of the consumer report when the other portions may contain the erroneous information on which the adverse action is based. Plaintiffs state that the ultimate goal of accurate consumer reports is achieved only by requiring that a complete copy of the consumer report be provided. For instance, plaintiffs assert that CRAs often list an account on more than one page of a consumer's report. Therefore, plaintiffs argue, it is possible that, even if one listing of the account was removed, the inaccurate information could still be listed on another page of the report. According to plaintiffs, consumers must be provided with the entire consumer report to ensure that the inaccurate information is completely removed. Further, plaintiffs assert that consumers should be given the opportunity to make sure that the corrections made by CRAs are done correctly. Plaintiffs contend that this need is demonstrated by defendant inaccurately changing Rhodes' name on her consumer report to "Phodes."
B. The Purposes of the FCRA Are Furthered Only by Requiring Equifax to Give Consumers a Complete Copy of Their Consumer Reports.
Plaintiffs assert that requiring defendant to give consumers a complete copy of their consumer reports as it relates to their credit is consistent with, and is necessary to carry out, the purposes of the statute as expressed by Congress. Congress made the following findings in enacting the FCRA:
(1) The banking system is dependent upon fair and accurate credit reporting. Inaccurate credit reports directly impair the efficiency of the banking system, and unfair credit reporting methods undermine the public confidence which is essential to the continued functioning of the banking system.
(2) An elaborate mechanism has been developed for investigating and evaluating the credit worthiness, credit standing, credit capacity, character, and general reputation of consumers.
(3) Consumer reporting agencies have assumed a vital role in assembling and evaluating consumer credit and other information on consumers.
(4) There is a need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer's right to privacy.
15 U.S.C. § 1681(a) (emphasis added). The Act further states:
It is the purpose of this subchapter to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information in accordance with the requirements of this subchapter.
15 U.S.C. § 1681(b). According to plaintiffs, these purposes are met only if consumers are given sufficient information to determine that the consumer reports that defendant and other CRAs are distributing about them are accurate. Plaintiffs maintain that the risks inherent with defendant's practice of only sending very selective lines of a consumer's report following its reinvestigation are great, and defendant is undermining the safety precautions put in place by Congress.
*1129 III. Defendant's Reply.
Defendant disputes plaintiffs argument that this court must accept as true the complaint's assertion that defendant did not send plaintiffs a consumer report as required by § 611. Defendant maintains that this is exactly the legal issue to be decided by this court in resolving this Motion. Defendant contends that this issue can be resolved by comparing the contents of the reports provided by defendant with the governing provisions of the FCRA. See Jackson v. BellSouth Telecommunications, 372 F.3d 1250, 1262 (11th Cir.2004) (stating, "[c]onclusory allegations, unwarranted deductions of facts or legal conclusions masquerading as facts will not prevent dismissal") (internal quotation marks and citation omitted).
Defendant further argues that plaintiffs' Response mischaracterizes provisions of the FCRA. Defendant first contests plaintiffs' assertion that 15 U.S.C.A. § 1681i(6)(a) contains two requirements in two distinct subsections. What plaintiff labels as "distinct subsections," according to defendant, describe (1) the notice requirements "[i]n general," and (2) the "[c]ontents" of that notice. 15 U.S.C.A. § 1681i(6)(a). Indeed, defendant argues, the "[c]ontents" subsection expressly provides that the requirements can be "part of" the notice required in the previous subsection. 15 U.S.C.A. § 1681i(a)(6)(B).
Defendant next disputes plaintiffs' argument that the notice of the results of reinvestigations falls within an exception to "consumer reports" because it contains information solely related to transactions or experiences between plaintiffs and defendant. As an initial matter, defendant contends, the reinvestigation report is not limited to information regarding transactions between it and plaintiffs. Instead, defendant argues, the report contains information relating to plaintiffs' various accounts with third-party creditors. Further, defendant asserts, a review of the entire exception confirms that it merely serves to prevent normal correspondence (e.g., a letter from a landlord to a tenant about late rent) from constituting a "consumer report" that triggers the protections of the FCRA. See 15 U.S.C. § 1681a(d)(2)(A)(i). See also F.T.C., Statement of General Policy or Interpretation; Commentary on the Fair Credit Reporting Act, 55 FR 18804-01, 18811 (May 4, 1990) (stating that this exemption from the definition of "consumer report" "applies to reports limited to transactions or experiences between the consumer and the entity making the report (e.g., retail stores, hospitals, present or former employers, banks, mortgage servicing companies, credit unions, or universities)," and "does not apply to reports by these entities of information beyond their own transactions or experiences with the consumer").
Additionally, defendant takes exception to plaintiffs' argument that it premised its position on a "selective quote taken out of context from the statute." Instead, defendant maintains, it set forth the entire statute before parsing each of the pertinent provisions. Defendant also attacks plaintiffs' argument that other provisions of the FCRA use the phrase "consumer report" to refer to a complete disclosure of a consumer's file. Defendant asserts that several of the provisions cited by plaintiffs under this argument, including 15 U.S.C.A. § 1681j(c), cross reference 15 U.S.C.A. § 1681g, which specifically requires full disclosure of "[a]ll information in the consumer's file." Defendant notes that in its original brief, it specifically contrasted these clear cross-references to § 1681g with the narrower requirements for reinvestigation reports. Finally, defendant disputes plaintiffs' assertion that, under 15 U.S.C. § 1681m(a)(3)(A) and 15 U.S.C. *1130 § 1681j, CRAs are statutorily mandated to provide, upon request, "a free copy of a consumer report on the consumer ..." to persons against whom adverse action has been taken based on the information contained therein. Defendant asserts that the language quoted by plaintiffs concerns the duties of "users taking adverse actions" against consumers based on credit information, and not the duties of the CRAs themselves. See 15 U.S.C. § 1681m(a) (addressing the "[d]uties of users taking adverse actions on basis of information contained in consumer reports").
Defendant argues that each of plaintiffs' citations to provisions of the FCRA confirms that Congress knows how to cross-reference § 1681g's full disclosure requirements when it intends to require a credit reporting agency to provide a complete disclosure of a consumer's entire file. However, defendant notes, Congress did not include such a cross-reference in the FCRA provisions regarding the notice of results of a reinvestigation.
IV. Supplemental Responses.
During a recorded discussion on January 31, 2005, the court requested the parties to summarize their arguments with reference to the requirements of 15 U.S.C. § 1681i. Those summaries follow:
A. Plaintiffs' Summary of Argument.
Plaintiffs assert:
Section 1681i requires Equifax to give the Plaintiffs both notice of the results of its reinvestigation and a free copy of their consumer reports. 15 U.S.C. § 1681i(a)(6). Requiring a complete copy of a consumer report following a reinvestigation is the only way to achieve Congress's stated purpose to ensure credit report accuracy. A complete consumer report allows consumers to check that the disputed information has indeed been corrected, including the frequent duplication of those errors. See tab D to Pls' Oppos. to Def's Motion to Dismiss. Because consumer reports are created by the merging of electronic data, reviewing the complete consumer report also ensures that the re-merging of the corrected data in the consumer's file does not create yet additional merging errors. For example, if Equifax had merged the "corrected" data on Ms. Rhodes to create a report, it could have erroneously merged information on another "Phodes." Finally, section 1681i(d) gives consumers the right to have the Defendant "furnish notification ... to any person specifically designated by the consumer who ... received a consumer report ... which contained the deleted or disputed information." (Emphasis added). Logically, the consumer will be able to "specifically designate" which persons need to receive that updated information only if he has been provided the identity of any and all persons who have reviewed the inaccurate information, which is available in the complete consumer report. By sending only the notice, instead of the complete report, the Defendant is depriving the consumer the opportunity to accomplish any of these objectives, which are consistent with the FCRA's purpose.
B. Defendant's Summary of Argument.
Defendant asserts:
Issue Presented: When a credit reporting agency reports the results of a reinvestigation to a consumer, it must provide "a consumer report that is based upon the consumer's file as that file is revised as a result of the reinvestigation." 15 U.S.C. § 1681i(a)(6). The parties dispute whether Equifax complied with this statute by providing consumer *1131 reports summarizing the changes to the consumers' files as a result of the reinvestigations, rather than full disclosures of the consumers' files. Equifax claims that the reports summarizing the changes to the consumers' files as a result of the reinvestigations satisfy the requirements of the statute.
Summary of Equifax's Arguments:
The "consumer report" described in the statute is not the same thing as what is commonly described as an individual's "credit report." Congress required the former, not the latter, in the provision governing reinvestigation reports.
Under the FCRA, a "consumer report" is any communication containing information that relates to a consumer's credit-worthiness, no matter how brief. See FTC Stmt. of General Policy, etc. re: FCRA, 16 C.F.R. Pt. 600 (list of names can be consumer report); Yang v. GEICO, 146 F.3d 1320 (11th Cir.1998) (report of entities that obtained report regarding consumer and no other credit information constitutes consumer report). The layman's term "credit report," in contrast, refers to what the FCRA describes as a full disclosure of "All information in the consumer's file ..." 15 U.S.C. § 1681g(a)(1).[9]
Congress knows how to require a full file disclosure when it wants to. See 15 U.S.C. § 1681j. Congress did not mandate a full file disclosure after a reinvestigation. Instead, it required "written notice" of the reinvestigation results to the consumer. The "Contents" of this notice must include as "part of" the notice "a consumer report that is based upon the consumer's file as that file is revised as a result of the reinvestigation." 15 U.S.C. § 1681i(a)(6).
A report is not "based upon" a consumer's file if it discloses the entire file. To give meaning to every word chosen by Congress, the statute must be interpreted to require only a report that discusses those portions of the consumer's file "revised as a result of the reinvestigation."
Where Congress intends to require full disclosure of a consumer's file, it says so expressly or cross-references section 1681g. Congress never uses "consumer report" to refer to a full file disclosure in any statute governing a credit agency's reporting obligations. When Congress uses specific language in one part of a statute but not in another part, it is presumed that Congress acted "intentionally and purposely in the disparate inclusion or exclusion."
During the telephonic conference, Plaintiffs emphasized their reliance on an exception to the definition of "consumer report" for reports limited to transactions between the consumer and the person making the report. This exception plainly does not encompass a reinvestigation report, which sets forth revisions in the credit agency's reporting of the consumer's accounts with third-party creditors. In any event, this exception could not transform a "consumer report" a term of art defined by Congress into what is commonly called a "credit report."
CONCLUSIONS OF THE COURT
Contrary to the plaintiffs' argument that this court is being asked to address the *1132 merits of their claims, it is apparent, both from the allegations in the complaint and the arguments of the plaintiffs in their briefs, that a pure legal issue is presented.[10] That issue is simply stated, although not simply decided.
The rather simple issue is: Does 15 U.S.C. § 1681i(a)(6)(B)(ii), which provides that the CRA "shall provide to a consumer in writing ... a consumer report that is based upon the consumer's file as that file is revised as a result of the reinvestigation," require that the CRA provide a consumer report that includes the CRA's file ("all of the information on [a] consumer recorded and retained by a [CRA] ..." 15 U.S.C. § 1681a(g)).
Neither of the parties has cited any case(s) nor legislative history which bear directly on the issue. Both sides would have this court divine the correct answer from pertinent statutory language and their respective persuasive arguments.[11]
This court starts with the statutory definition of "consumer report." That definition rather broadly states as follows:
The term "consumer report" means any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for
(A) credit or insurance to be used primarily for personal, family, or household purposes;
(B) employment purposes; or
(C) any other purpose authorized under section 1681b of this title.
15 U.S.C. § 1681a(d)(1).
Arguably, the purpose of the "consumer report" required under said 15 U.S.C. § 1681i(a)(6)(B)(ii) does not comport with any of the purposes listed under § 1681a(d)(1), including those stated in § 1681b.
There seems to be little question that the alleged reports which the defendant sent to the plaintiffs fall somewhere under the broad definition in § 1681a(d) ("any written, oral, or other communication of any information ..."). Some confusion (among other reasons) is caused by § 1681a(d)(2)(A) which appears to exclude from the definition of "consumer report" "any report containing information solely as to transactions or experiences between the consumer and the person making the report." This language would arguably suggest that the "consumer report" referenced in § 1681i(a)(6)(B)(ii) is not the same "consumer report" defined in § 1681a(d), because the reports required by said § 1681i apply solely to "transactions or experiences between the consumer and the person making the report." 15 U.S.C. § 1681a(d)(2)(A)(i). On the other hand, it is arguable that the report required by § 1681i is a full file report so as to not fall under the § 1681a(d)(2)(A)(i) exclusion.
The bottom line answer is that no unbiased person really knows what is required by the § 1681i provision. On the other hand courts must make decisions.
In FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132-33, 120 S.Ct. *1133 1291, 146 L. Ed. 2d 121 (2000), the Court said:
In determining whether Congress has specifically addressed the question at issue, a reviewing court should not confine itself to examining a particular statutory provision in isolation. The meaning or ambiguity of certain words or phrases may only become evident when placed in context. See Brown v. Gardner, 513 U.S. 115, 118, 115 S. Ct. 552, 130 L. Ed. 2d 462 (1994) ("Ambiguity is a creature not of definitional possibilities but of statutory context"). It is a "fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme." Davis v. Michigan Dept. of Treasury, 489 U.S. 803, 809, 109 S. Ct. 1500, 103 L. Ed. 2d 891 (1989). A court must therefore interpret the statute "as a symmetrical and coherent regulatory scheme," Gustafson v. Alloyd Co., 513 U.S. 561, 569, 115 S. Ct. 1061, 131 L. Ed. 2d 1 (1995), and "fit, if possible, all parts into an harmonious whole," FTC v. Mandel Brothers, Inc., 359 U.S. 385, 389, 79 S. Ct. 818, 3 L. Ed. 2d 893 (1959).
This court has attempted, with little success, to fit the definition of "consumer report" into an "harmonious whole."
Perhaps the only real way to attempt to determine the contextual meaning of "consumer report" is to specifically consider said § 1681i(a) and its purposes. See Yang v. Government Employees Ins. Co., 146 F.3d 1320 (11th Cir.1998). Since the term "consumer report" can have a variety of meanings, the specific area of the pertinent statute is highly significant. In this regard, the court pays particular attention to § 1681i(a)(6).
Section 1681i(a)(6)(A) makes it plain that the agency is to "provide written notice to a consumer of the results of a reinvestigation." (Emphasis added). Section 1681i(a)(6)(A) does not provide what the form or contents of said "notice" should be.
Section 1681i(a)(6)(B) purports to state what the "Contents" of such a notice should be. The interpretative dilemma is exacerbated because (B)(ii) provides that the "consumer report" can be a "part of" or "in addition to" the notice of the results required under (A). If it simply stated "in addition to," it would appear clear that a full consumer report would be required in addition to the mere results. Even being "a part of" suggests that something over and above the mere results is required.
The parties have not called to the attention of the court any specific statutory or regulatory provisions which harmoniously or otherwise lends clarity to the issue. The court ultimately concludes, without certitude, that the term "based upon the consumer's file as that file is revised ..." means the full file. The provision does not state, "based upon the corrected portion of the file." There is no reason to suggest that the complete file was not intended.
Further, the "consumer report" term which is used is the same term which is repeatedly used in § 1681g. It would appear that if a full report is not intended, such would have been clearly stated.
This court does not deem its decision to be either infallible or final. The issue, being an open question, is clearly one which should, early on, be decided by the Court of Appeals. This is true not only because of these individual cases but because a class certification is also sought. The court will certify the case pursuant to 28 U.S.C. § 1292(b).
NOTES
[1] The facts are given as they are alleged in the complaint.
[2] Defendant maintains that plaintiffs do not and cannot assert any FCRA claim in connection with this 2002 request because the statute of limitations for such an FCRA claim is two years. 15 U.S.C. § 1681p.
[3] Plaintiffs' complaint requests that the action be certified as a class action under Federal Rule of Civil Procedure 23. (Cmpt.¶ 45). Plaintiffs seek to represent the following class:
All consumers in the United States and its Territories who requested the Defendant to reinvestigate their consumer reports and to whom the Defendant failed to send a free consumer report after the Defendant had completed its reinvestigation.
(Id.)
[4] Count One alleges:
After its reinvestigation was completed, Equifax was required under 15 U.S.C. § 1681i(a)(6) to provide to the Plaintiffs a free copy of their consumer reports after Defendant completed its reinvestigations of the Plaintiffs' consumer files.
Following the reinvestigations, Equifax sent brief summary reports concerning the results of its reinvestigations to the Plaintiffs, but failed to send the Plaintiffs a new copy of their consumer reports as required by FCRA § 1681i(a)(6)(B)(ii), resulting in a violation of the FCRA, 15 U.S.C. § 1681i(a)(6).
Due to Defendant's failure to provide the Plaintiffs with a free and complete copy of their consumer reports following the Defendant's reinvestigation (sic) were unsure and unaware of what their credit report now contained and whether Equifax had in fact corrected the inaccurate consumer report it was publishing to third parties.
Consequently, after the reinvestigations, the Plaintiffs were forced to pay Equifax a fee in order to obtain new copies of their consumer reports (that Equifax was obligated under the FCRA to provide free of charge) to ensure that Equifax had removed the inaccurate information it had previously been reporting about the Plaintiffs.
Defendant's failure to send the Plaintiffs new consumer reports free of charge following its reinvestigations constituted a willful and/or negligent violation of the FCRA, 15 U.S.C. § 1681(a)(6), and Plaintiffs are entitled to actual and/or statutory damages as provided for in 15 U.S.C. §§ 1681n and/or 1681o.
(Cmpt.¶¶ 55-59).
[5] This section summarizes the arguments made by the parties and does not necessarily reflect the conclusions reached by the court.
[6] According to defendant, plaintiffs cannot dispute that the brief summary report constitutes a "consumer report," given that it indisputably contains information bearing on plaintiffs' credit-worthiness.
[7] A counter argument could be made that § 1681i could require the "results" of the reinvestigation and nothing more.
[8] During a January 31, 2005 recorded conference, the plaintiffs somewhat, at least, withdrew this argument.
[9] The defendant has argued the term "credit report" is a "layman's term." In Stevenson v. TRW Inc., 987 F.2d 288, 292 (5th Cir.1993), the court refers to §§ 1681g and 1681h with reference to "credit reports." Neither of these sections use the term "credit report." Apparently there is some interchangeable use of the terms "credit report" and "consumer report," lay or otherwise.
[10] Plaintiff so acknowledged in a recorded discussion of January 31, 2005.
[11] For some ipse dixit discussion of 15 U.S.C. § 1681i(a)(6), see Gary Allen Gardner, The Fair Credit Reporting Act: Implications for 1999 and Beyond, 78 Michigan Bar Journal 298 (March, 1999), and 15A Am.Jur.2d Collection and Credit Agencies § 58. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2459749/ | 919 S.W.2d 747 (1996)
Charles Raymond BARTLEY and Wife, Lanetta Bartley, Appellants,
v.
BUDGET RENT-A-CAR CORP., et al., Appellees.
No. 07-95-0286-CV.
Court of Appeals of Texas, Amarillo.
March 4, 1996.
Rehearing Overruled May 9, 1996.
*749 Carr Fouts Hunt & Wolfe, L.L.P., Donald M. Hunt and Gary M. Bellair, Lubbock, for appellants.
Kelly Bickerstaff P.C., D. Craig Brinker, Dallas, for appellees.
Before REYNOLDS, C.J., and DODSON and BOYD, JJ.
REYNOLDS, Chief Justice.
Charles Raymond Bartley and wife, Lanetta Bartley, suffered a final take-nothing summary judgment in their negligence action against Budget Rent-A-Car Corp. and other business entities (collectively, Budget).[1] Appealing with five points of error, the Bartleys contend the trial court erred in not granting their motion for partial summary judgment based upon the application of a Michigan statute, and in granting Budget's motion for summary judgment, because that motion failed to negate at least one element of their claims and a supporting affidavit consisted of unsupported legal conclusions. On the rationale expressed, we will affirm.
In our resolution of the appeal, we will consider, as we must, all of the evidence presented by both motions for summary judgment. DeBord v. Muller, 446 S.W.2d 299, 301 (Tex.1969). In so doing, we accept the evidence favorable to the Bartleys, and resolve any doubts in their favor. Nixon v. Mr. Property Management, 690 S.W.2d 546, 548-49 (Tex.1985).
The parties do not dispute that on or about 15 November 1989, James Matthew Robertson rented an Isuzu truck from Budget Rent-A-Car of Romulus, Michigan for a period of ten days to move his belongings from Grosse Pointe Farms, Michigan to Las Vegas, Nevada, where the truck was to be returned to a Budget location. After packing the truck, he began his trek on 18 November 1989. By deposition, Robertson stated that he slept before he left Michigan at midnight, but did not sleep again until approximately 14 hours later, when he stopped and slept in the truck for a few hours.
At approximately 2:15 p.m., on 19 November 1989, Robertson was traveling west on Interstate 40 in Flagstaff, Arizona. Disoriented and unsure whether he was on the right road and going in the right direction to reach his ultimate destination, he made a U-turn and drove in the opposite direction of traffic on the interstate.
Contemporaneously, Charles Bartley was driving a Peterbilt truck with a Lufkin flatbed trailer in a westerly direction on Interstate 40. As Charles crested a hill, he saw Robertson coming toward him and took evasive actions to avoid a collision, which caused the tractor-trailer rig to roll over and injure him.
The Bartleys, citizens of Lubbock, Texas, brought suit in the 364th Judicial District Court of Lubbock County against Robertson, Budget Rent-A-Car Corp.; Budget Rent-A-Car of Romulus, Michigan; Budget Rent-A-Truck Corp.; Beech Holdings, Corp.; and Fulcrum II, Limited Partnership. They alleged that all of the named business entities had an ownership interest in Budget Rent-A-Car of Romulus, Michigan or the Isuzu truck, or controlled the procedures employed in the rental of the truck. Their sole pleaded claim against the Budget entities was for negligent entrustment to Robertson.
To sustain their claim, the Bartleys had the burden to plead and prove the elements constituting negligent entrustment. Those elements are (1) that Budget entrusted its vehicle to Robertson, (2) who was an unlicensed, incompetent, or reckless driver, and that (3) Budget knew or should have known Robertson to be an unlicensed, incompetent, or reckless driver, (4) Robertson was negligent on the occasion in question, and (5) *750 Robertson's negligence proximately caused the accident. Williams v. Steves Industries, Inc., 699 S.W.2d 570, 571 (Tex.1985).
Attempting to discharge their burden, the Bartleys requested, on 3 September 1992, that the trial court take judicial notice of a Michigan statute which imposed liability upon lessors for injuries arising from the operation of vehicles leased for less than 30 days. The statute submitted to the court reads in pertinent part:
[§ 9.2101 Civil actions.] Sec. 401. (1) nothing herein contained shall be construed to abridge the right of any person to prosecute a civil action for damage for injuries to either person or property resulting from a violation of any of the provisions of this act by the owner or operator of a motor vehicle, his [or her] agent or servant. The owner of a motor vehicle shall be liable for any injury occasioned by the negligent operation of [the] motor vehicle whether [the] negligence consists of a violation of the provisions of the statutes of the state or in the failure to observe such ordinary care in [the] operation [of the motor vehicle] as the rules of the common law requires. The owner shall not be liable, however, unless [the] motor vehicle is being driven with his or her express or implied consent or knowledge.
* * * * * *
Liability of lessor. (2) A person engaged in the business of leasing motor vehicles who is the lessor of a motor vehicle pursuant to a lease providing for the use of the motor vehicle by the lessee for a period that is greater than 30 days shall not be liable at common law for damages for injuries to either person or property resulting from the operation of the leased motor vehicle.
Mich.Stat.Ann. § 9.2101 (West 1991) [M.C.L.A. § 257.401]. Expressing in a 4 December 1992 letter to the parties that Texas laws were the laws to be applied to the cause of action, "not Michigan's," the trial court denied the motion by its 28 December 1992 order.
The Bartleys amended their petition on 18 February 1993, to include new allegations of negligence for Budget's failure to "inquire or develop rental forms" to determine whether drivers "intended to take medication, prescription or not," or whether drivers had health problems such as epilepsy,[2] or whether the drivers were familiar with the vehicle or intended to drive long distances without adequate rest. By the amended petition, the Bartleys included Budget Rent-A-Car Systems, Inc., the recorded title owner of the Isuzu truck, as a defendant, and further alleged that the Michigan statute applied, thereby making all of the Budget defendants liable thereunder.
On 1 September 1994, Budget filed its amended motion for summary judgment on the ground that the Bartleys could not, as a matter of law, prevail on their negligent entrustment claim. By so moving for judgment, Budget assumed the burden to disprove, as a matter of law, one of the essential elements of the Bartleys' negligent entrustment action. Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex.1991). If Budget discharged its burden, then to avoid Budget's entitlement to judgment, the Bartleys were required to present summary judgment proof necessary to establish a fact issue. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678 (Tex.1979).
The element Budget sought to disprove was that it knew or should have known Robertson to be an unlicensed, incompetent or reckless driver. The proof attached to Budget's motion for summary judgment revealed, inter alia, that at the time of the rental, Robertson possessed a valid, unrestricted Michigan driver's license, the existence of which was noted on the rental contract, had been given only one citation for disobeying a stop sign, and had not been involved in any accident in which he received a citation or traffic ticket. He did not recall that anyone at Budget had inquired whether he was on any kind of medication.
By its motion, Budget represented that the Bartleys' new allegations that Budget was *751 negligent in failing to ascertain Robertson's competency and health were encompassed by the negligent entrustment claim and, thus, likewise failed. In its motion, Budget did not address the application of the Michigan statute because, as counsel explained during submission upon oral argument, Budget believed the matter had been settled by the court's 28 December 1992 order denying judicial notice of the statute and its letter that Texas law was to be applied.
Without referring to the 28 December 1992 order, and asserting Budget was liable as a matter of law under the Michigan statute, the Bartleys moved for partial summary judgment on that ground. In so moving, they did not address any other claims against Budget or Robertson.
Subsequently, the Bartleys filed their amended response to Budget's motion for summary judgment accompanied by supporting documentation. They advanced the Michigan law as imposing liability without fault upon Budget and invoked the Restatement (Second) of Torts § 390 (1966).[3] Section 390, they represented, imposes liability beyond the elements of negligent entrustment announced by Texas courts, and embraces the supplier of a chattel to one "whom the supplier knows or has reason to know to be likely because of his youth, inexperience, or otherwise, to use it in a manner involving unreasonable risk of physical harm to himself and others." Resultantly, they asserted, Budget had a duty to inquire as to Robertson's health condition which could affect his driving.
Later, by their live pleadings, their 2 October 1994 third amended petition, the Bartleys, without reference to section 390, alleged under paragraph III, entitled "Negligence," that Budget was negligent in failing to: (1) inquire whether Robertson was an epileptic or had health problems which could affect his driving ability; (2) determine if Robertson was familiar with the vehicle he rented; (3) determine if Robertson intended to drive long distances without adequate rest; (4) adequately warn Robertson of the dangers of driving over eight hours in a twenty-four hour period; and (5) determine if Robertson regularly took prescribed medication. Budget's liability under Michigan law was reiterated.
On 3 February 1995, the trial court signed two orders. One order denied the Bartleys' motion for partial summary judgment; the other granted Budget's motion for summary judgment and ordered that the Bartleys take nothing by their suit. The orders became a final judgment on 14 April 1995 when the Bartleys' claims against Robertson were severed. H.B. Zachry Co. v. Thibodeaux, 364 S.W.2d 192, 193 (Tex.1963).
Launching their five-point attack against the judgment, the Bartleys initially present, as they may, a global point of error that the trial court erred in granting Budget's motion for summary judgment. Malooly Bros., Inc. v. Napier, 461 S.W.2d 119, 121 (Tex.1970). With the next two points, they contend the court's ruling was erroneous because (2) the motion failed to negate at least one element of their claims, and (3) the affidavit testimony of Peter H. Wemple, an interested party, was comprised of legal conclusions which were not supported by factual allegations. By their final points of error, the Bartleys contend (4) the trial court erred in denying their motion for partial summary judgment because it was error not to take judicial notice of the laws of Michigan, and (5) Michigan law imposed liability upon Budget for Robertson's negligence without regard to a showing of fault on Budget's part.
In pressing their second-point contention, the Bartleys first submit that the evidence Budget tendered to negate the element of the entrustment of a vehicle to an unlicensed, incompetent or reckless driver cannot support the take-nothing summary judgment. The evidence fails, the Bartleys submit, because proof of licensure does not negate, as a matter of law, incompetence or recklessness, which are alternate bases for imposing liability; and proof of a "good" driving record does not fulfill the burden of negating an element of the negligent entrustment claim.
To the contrary, the general purpose of the statute requiring motorists to have licenses *752 in Texas, Mundy v. Pirie-Slaughter Motor Co., 146 Tex. 314, 206 S.W.2d 587, 589 (1947), as well as in Michigan, Parks v. Pere Marquette Ry. Co., 315 Mich. 38, 23 N.W.2d 196, 200 (1946), is to insure a minimum of competence and skill of drivers of motor vehicles. Thus, the fact that Robertson held and exhibited a valid, unrestricted driver's license to Budget was prima facie evidence of his competency to drive a motor vehicle and, absent any evidence to the contrary at the time he rented the truck, conclusively negated the element that Budget then knew or should have known that Robertson was an incompetent or reckless driver. McCarty v. Purser, 373 S.W.2d 293, 296 (Tex.Civ.App.Austin 1963), rev'd and rendered on other grounds, 379 S.W.2d 291 (Tex.1964). Cf. Nobbie v. Agency Rent-A-Car, Inc., 763 S.W.2d 590, 592-93 (Tex.App.Corpus Christi 1988, writ denied) (Evidence that rental agency, which rented a vehicle after verifying the renter was the holder of a valid driver's license and insured, noted nothing unusual about renter, who was addicted to heroin, and had the agency investigated further, would have discovered that her license was previously twice suspended in connection with a judgment against her, and that her driving record only showed a citation for a defective head lamp, albeit she had received a speeding ticket which was not shown on her driving record, was insufficient to show that the rental agency knew or should have known she was an incompetent or reckless driver).
Still, the Bartleys maintain that common law imposes on Budget the duty not to entrust a vehicle to drivers who are incompetent and reckless, which cannot be discharged by merely verifying licensure, because that only assures the "minimum of competence and skill." Whether the duty exists is a question of law for the court to decide from the facts surrounding the occurrence in question. Greater Houston Transp. Co. v. Phillips, 801 S.W.2d 523, 525 (Tex. 1990).
At the time the truck was leased, Robertson exhibited, and Budget recorded, a valid driver's license. The license evinced that Robertson possessed a minimum of competence and skill as a driver, and it fixed the standard of conduct for Budget in leasing its truck for Robertson to drive. Mundy v. Pirie-Slaughter Motor Co., 206 S.W.2d at 590. It logically follows and we hold that, absent any circumstance to show Budget otherwise then knew or should have known that Robertson was an incompetent or reckless driver, and there is none in this record, Budget had no duty to inquire further into Robertson's competency to drive.
Next, the Bartleys expressly contend that the summary judgment was interlocutory because Budget's motion failed to address their claims under section 390 and the application of the Michigan statute. The alleged failure to address the section 390 claims is not well-taken, for Budget's motion did in fact address those claims through its declaration that the claims were encompassed in the negligent entrustment claims.
Additionally, we are not persuaded by the Bartleys' assertion that section 390 provides separate relief and should have been addressed separately. Section 390 provides:
One who supplies directly or through a third person a chattel for the use of another whom the supplier knows or has reason to know to be likely because of his youth, inexperience, or otherwise, to use it in a manner involving unreasonable risk of physical harm to himself and others whom the supplier should expect to share in or be endangered by its use, is subject to liability for physical harm resulting to them.
The assertion of separateness is founded on the Bartleys' belief that section 390 adds the word "inexperience" to the elements of the owner's knowledge, which is not present in the elemental definition of negligent entrustment. However, it is evinced that the word "inexperience" was employed in section 390 to convey the same meaning the word "incompetent" imparts in negligent entrustment, for not only is the section entitled "Chattel for use by a person known to be incompetent," but in Comment b under the section, it is explained that "[t]his Section deals with supplying of a chattel to a person incompetent to use it safely...." (emphasis supplied).
*753 Moreover, the Bartleys made no allegation of, nor rebutted Budget's motion for summary judgment by raising a fact issue on, Robertson's inexperience; rather, their basis for Budget's alleged negligence was its failure to inquire about his health and general knowledge of the correlation of driving and fatigue. Indeed, the Bartleys' live pleadings gave no indication of their reliance upon the fine distinction they now seek to invoke. Although we are mindful that the petition is to be construed liberally in favor of the pleader when there are no special exceptions, Roark v. Allen, 633 S.W.2d 804, 809 (Tex.1982), that rule does not apply in this instance because the petition contained no fair indication that the imposition of new duties were being urged under section 390. Accord Ross v. Texas One Partnership, 796 S.W.2d 206, 212 (Tex.App.Dallas 1990), writ denied per curiam, 806 S.W.2d 222 (Tex.1991). It was not Budget's responsibility to urge special exceptions to "flesh out" allegations which are not in the petition. Hand v. Dean Witter Reynolds Inc., 889 S.W.2d 483, 490 (Tex.App. Houston [14th Dist.] 1994, writ denied).
The Bartleys further contend that the summary judgment was interlocutory since the underlying motion did not address the application of the Michigan statute. However, the applicability of the Michigan statute was the basis for their motion for partial summary judgment, which was considered with, and determined at the same time as, Budget's motion for summary judgment. Thus, all the evidence accompanying both motions was properly before the court and was evidence to be considered in deciding each motion. DeBord v. Muller, 446 S.W.2d at 301. As previously noticed, the court's two orders merged and, upon the severance as to Robertson, became a final judgment, H.B. Zachry Co. v. Thibodeaux, 364 S.W.2d at 193, which disposed of the entire lawsuit between the Bartleys and Budget. Starr v. Koppers Company, 398 S.W.2d 827, 828 (Tex. Civ.App.San Antonio 1965, writ ref'd n.r.e.). The Bartleys' second point of error is overruled.
The Bartleys contend in their third point of error that the summary judgment was rendered in error because the affidavit of Peter H. Wemple, Senior Corporate Attorney employed by "Budget Rent a Car Corporation," contained legal conclusions unsupported by facts. The affidavit was advanced by Budget as support for its alternative ground for the summary judgment, i.e., that Budget Rent-A-Car Systems, Inc. owned the Isuzu truck and, thus, Robertson; Budget Rent-A-Car Corporation; Budget Rent-A-Car of Romulus, Michigan; Budget Rent-A-Truck Corp.; Beech Holdings, Corp.; and Fulcrum II, Limited Partnership were not "owners" or "entrustors" of the truck and were entitled to summary judgment since a showing of negligent entrustment requires establishment that the "owner" of the vehicle "entrusted" the vehicle to a known incompetent driver. Even though official documentary evidence included in the summary judgment proof revealed that the owner of the truck was "BUDGET RENT A CAR SYSTEMS INC.," we do not pause to consider the nature of Wemple's affidavit because, in view of our resolution of the Bartleys' second point of error, its consideration is unnecessary to the disposition of the appeal. Tex. R.App.P. 90(a).
The trial court did not express in its judgment the basis for its rendition; but, since the negligence claims were alleged against all six of the Budget defendants and summary judgment was rendered in favor of all six Budget defendants and not Robertson, it logically follows that the trial court did not base its judgment upon the alternative ground of ownership of the truck, which was relevant to Robertson and only five of the Budget defendants. And, even though a ground advanced is not conclusively established, when the order granting summary judgment does not specify the ground relied upon for its ruling, the judgment will be affirmed if any theory is meritorious. Carr v. Brasher, 776 S.W.2d 567, 569 (Tex.1989). The Bartleys' third point of error is overruled and, together with the overruling of their second point, results in the overruling of their first point.
The Bartleys contend by points of error four and five that the trial court erred in (4) refusing to take judicial notice of the Michigan statute, and (5) in refusing to grant their *754 partial motion for summary judgment, because Michigan law imposes liability upon Budget for the damages caused by Robertson's negligence. Their predicate for point four is rule 202 of the Rules of Civil Evidence, which they elliptically express as: "A court upon its own motion may, or upon the motion of a party shall take notice of the ... laws ... every other state ... of the United States." They represent that the rule abrogated the trial court's discretion and required the court, in conformity with the construction of its earlier form by Cal Growers, Inc. v. Palmer Warehouse, 687 S.W.2d 384, 386 (Tex.App.Houston [14th Dist.] 1985, no writ), and Braddock v. Taylor, 592 S.W.2d 40, 42 (Tex.Civ.App.Beaumont 1979, writ ref'd n.r.e.), to notice the Michigan law and, seemingly implicit in their argument, to mandate its application.
Notwithstanding, the rule further provides for notice of the request and the opportunity for the parties to be heard "as to the propriety of taking judicial notice and the tenor of the matter noticed." On balance, then, the rule does not mandate the application of the law requested to be noticed; rather, it is contemplated by the rule that the request merely presents the question of which state's law will apply, a question of law. Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 421 (Tex.1984). To hold otherwise would ignore the interest of the forum state in applying its own laws, and contravene the required use of the "most significant relationship" test governing the choice of law in tort cases. Gutierrez v. Collins, 583 S.W.2d 312, 318 (Tex.1979).
Moreover, the Bartleys and Budget agree that the "most significant relationship" test enunciated in Restatement (Second) of Conflicts sections 6 and 145 (1969) is applicable. They disagree, however, in the answer to the test. The Bartleys urge that Michigan, and Budget counters that Texas, has the most significant relationship.
In determining the choice of law with respect to an issue in tort, section 6 of the Restatement (Second) of Conflicts sets out the general principles to be applied as follows:
(1) A court, subject to constitutional restrictions, will follow a statutory directive of its own state on choice of law.
(2) When there is no such directive, the factors relevant to the choice of the applicable rule of law include
(a) the needs of the interstate and international systems,
(b) the relevant policies of the forum,
(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,
(d) the protection of justified expectations,
(e) the basic policies underlying the particular field of law,
(f) certainty, predictability and uniformity of result, and
(g) ease in the determination and application of the law to be applied.
Restatement (Second) of Conflicts § 6 (1969).
There is no statutory directive which proscribes the choice of law in this instance; consequently,
(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 domicil, residence, nationality, place of incorporation and place of business of the parties, and
(d) the place where the relationship, if any, between the parties is centered.
These contacts are to be evaluated according to their relative importance with respect to the particular issue.
Restatement (Second) of Conflicts § 145 (1969). It is the qualitative nature of these contacts, not the number of them, that controls the application of the most significant *755 relationship analysis. Gutierrez v. Collins, 583 S.W.2d at 319.
Neither the first, second, nor fourth contacts is important to the analysis. The first two contacts have no effect because the injury, and the conduct causing the injury, occurred in Arizona, the laws of which none of the parties sought to apply or has suggested are different from the laws of Texas. Although the Bartleys also alleged Budget's negligent entrustment of the truck to Robertson was a proximate cause of the injury, the summary judgment evidence negates that theory of conduct as a cause of the injury. And the fourth contact is ineffective, for there was no relationship between the parties prior to the accident giving rise to the litigation.
Thus, the third contact is the only one of any relative importance. In that regard, the Bartleys are residents of Lubbock, Texas, where they brought their cause of action against Robertson, a Nevada resident at the time, and the six Budget defendants. All of the Budget defendants are foreign corporations, except for Fulcrum II, a Limited Partnership, and apparently, at least insofar as the record reveals, only two of them are Michigan corporationsBudget Rent-A-Car of Romulus, Michigan and Budget Rent-A-Truck Corp.[4] The principle place of business of Budget Rent-A-Car Corp. and of Beech Holdings, Corp. is in Illinois; Fulcrum II, Limited Partnership, has its principal place of business in New York; and Budget Rent-A-Car Systems, Inc. is a Delaware corporation licensed to do business in Michigan and Texas. Neither Illinois, New York, nor Delaware is shown to have any interest in the litigation.
Thus, the only contact of relative importance to be considered is the residence of the Bartleys in Texas and two of the Budget defendants in Michigan in determining, under section 6, supra, the law of the state controlling the rights and liabilities of the parties with respect to the "issue in tort." The remaining "issue in tort" between the Bartleys and Budget is whether the leasing of the truck to Robertson for less than 30 days requires Michigan's liability without fault statute to be applied as substantive law in this action for recovery under Texas law.
Simply stated, the Bartleys seek the application of but a part of Michigan's "no fault" system, see Murray v. Ferris, 74 Mich.App. 91, 253 N.W.2d 365 (1977), to replace the negligent fault and proportionate responsibility system in place in Texas. See Tex.Civ. Prac. & Rem.Code Ann. § 33.001, et seq. (Vernon Supp.1996). They do not seek application of the rest of Michigan's laws under its "no fault" system, by which an injured person is limited to the recovery from his insurer of a fixed amount for economic losses over a fixed time. Only in the case of death, serious impairment of body function or permanent serious disfigurement may recovery be had from the tortfeasor for noneconomic losses. Murray v. Ferris, 253 N.W.2d at 366-67. Instead, the Bartleys have invoked Texas law to seek a recovery unlimited by law for Charles Bartley's personal injuries, as well as physical and mental pain, suffering and anguish; present and future medical expenses; past and future lost earning capacity; for Lanetta Bartley's loss of consortium; and for exemplary damages, with pre- and post-judgment interest.
After intense debates, Texas settled upon a system of proportional responsibility and recovery in causes of action based upon torts, including negligent acts. See John T. Montford & Will G. Barber, 1987 Texas Tort Reform, 25 Hous.L.Rev. 59, 80-101 (1988); Tex.Civ.Prac. & Rem.Code Ann., supra. The major purposes of the legislation were to *756 make the Texas civil justice system fairer, more predictable by favorably affecting the affordability and availability of liability insurance, and thus, by making the system fairer and more predictable, to promote economic development and growth in Texas. Montford & Barber, supra, at 69-70.
Texas, having espoused the public policy of proportional responsibility and recovery in negligence actions, would have its policy frustrated by impairing, if not nullifying, its fairness and predictability if only the "no fault" part of Michigan's system were imposed upon the Texas system. In this connection, the Bartleys have not suggested, and we have not discerned, any Michigan policy that would be advanced by the application of the "no fault" part of its law to an action in another state involving its domiciliary defendants who are not protected by its law of limited damages. A fortiori, Michigan could have no interest in extending only its "no fault" policy to actions by travelers from and in other states having no similar limitations.
Furthermore, it is highly unlikely that any party did or refrained from doing anything relevant to the accident based upon expectations as to which state's law would apply. Therefore, applying the law of the forum, Texas, will further its own policy of serving the interest of certainty, predictability and uniformity of result, thereby providing ease in the determination and application of the law.
For these reasons, the trial court correctly determined that Texas has the most significant relationship to the controversy, that the substantive law of Texas should apply, and that the Bartleys' motion for partial summary judgment grounded upon a part of Michigan's law should be denied. Their fourth and fifth points are overruled.
Accordingly, the judgment is affirmed.
NOTES
[1] The other business entities are Budget Rent-A-Car of Romulus, Michigan; Budget Rent-A-Truck Corp.; Beech Holdings Corp.; Fulcrum II, Limited Partnership; and Budget Rent-A-Car Systems, Inc.
[2] Discovery had revealed that at the times of the rental and accident, Robertson was taking medically prescribed 400 milligrams of Dilantin daily to treat a condition of epilepsy.
[3] All references to section 390 are to Restatement (Second) of Torts § 390 (1966).
[4] Although the lease agreement signed by Robertson carries the imprint "Budget rent a truck," the renter is shown as "ONE WAY TRUCK RENTAL" with the address "11757 GLOBE RD, LIVONIA, MI," which probably explains why Wemple stated in his affidavit that "[t]here is no legal entity known as Budget Rent a Truck Corporation or Budget Rent a Car of Romulus, and at no time did any legal entity known as Budget Rent a Truck Corporation or Budget Rent a Car of Romulus, Michigan ever own, rent, lease, maintain, control or operate the vehicle rented by Mr. Robertson, or own, rent, lease, maintain, control or operate the vehicle rental location at 11757 Globe Road, Livonia, Michigan where Mr. Robertson rented the vehicle." However, these named defendants responded to the pleadings without denying that they lacked the legal capacity to be sued. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1474532/ | 175 F.2d 863 (1949)
SOUTHERN STEVEDORING CO., Inc. et al.
v.
HENDERSON, Deputy Commissioner et al.
No. 12707.
United States Court of Appeals Fifth Circuit.
July 14, 1949.
*864 Frank T. Doyle and Nicholas Masters, New Orleans, La., for appellants.
J. Skelly Wright, U. S. Atty. and N. E. Simoneaux, Asst. U. S. Atty., New Orleans, La., for appellees.
Before HUTCHESON, HOLMES, and WALLER, Circuit Judges.
HOLMES, Circuit Judge.
This is an action, under the Longshoremen's and Harbor Workers' Compensation Act, to set aside an award for the death of a stevedore.[1] The decedent suffered an acute heart attack while in the employ of Southern Stevedoring Co., Inc. The appellants contend that there is no substantial evidence to support the deputy commissioner's findings that the death of the decedent was hastened as the result of his climbing *865 a thirty-foot perpendicular ladder soon after an attack of coronary thrombosis.
On August 24, 1947, James Boatner, often herein referred to as the deceased, was employed as a laborer on a vessel in the navigable waters of the Mississippi River at New Orleans. On that day he was stowing barrels in the hold of the ship (having started to work at six o'clock on the night before), when about 1:50 A.M. he suddenly had what was later diagnosed as coronary thrombosis. He immediately left the hold of the vessel by the only means of egress, a perpendicular ladder 30 feet long, but died within fifteen minutes after reaching the deck. At a hearing upon the widow's claim for compensation, at which medical testimony was introduced by both sides upon the question of casual relationship, said commissioner found that the employee's death occurred accidentally in the course of his employment. This finding was supported by substantial evidence, and thus supported should be considered as final and conclusive. Parker v. Motor Boat Sales, Inc., 314 U.S. 244, 62 S. Ct. 221, 86 L. Ed. 184; Cardillo v. Liberty Mutual Ins. Co., 330 U.S. 469, 67 S. Ct. 801, 91 L. Ed. 1028.
Under said Act, compensation is payable irrespective of fault as a cause of the injury,[2] and the concept of proximate cause, as it is applied in the law of torts, is not applicable.[3] Moreover, in the absence of substantial evidence to the contrary, there is a presumption that this claim for compensation comes within the provisions of the Act.[4] Thus the burden was on the appellants below to show that there was no substantial evidence to support the compensation order complained of in the bill.[5] Reasonable inferences from the evidence by the commissioner are not judicially reviewable.[6] This is true even though the evidence warrants conflicting inferences. Del Vecchio v. Bowers, 296 U.S. 280, 56 S. Ct. 190, 80 L. Ed. 229; South Chicago *866 Coal & Dock Co. v. Bassett, Deputy Commissioner, 309 U.S. 251, 60 S. Ct. 544, 84 L. Ed. 732; Parker, Deputy Commissioner, v. Motor Boat Sales, Inc., 314 U.S. 244, 62 S. Ct. 221, 86 L. Ed. 184; Lowe, Deputy Commissioner, v. Central R. Co. of New Jersey, 3 Cir., 113 F.2d 413; Henderson, Deputy Commissioner, v. Pate Stevedoring Co., 5 Cir., 134 F.2d 440; Liberty Mutual Ins. Co. v. Gray, Deputy Commissioner, 9 Cir., 137 F.2d 926; Contractors v. Pillsbury, Deputy Commissioner, 9 Cir., 150 F.2d 310; C. F. Lytle Co. v. Whipple, Deputy Commissioner, 9 Cir., 156 F.2d 155.
Under the evidence and the findings, the illness of deceased in the hold of the ship was not what killed him. It was the heart attack on deck, after climbing the ladder, that caused his death. He might have lived a long time if he had rested sufficiently after the first symptoms of his disease appeared; but the conditions of his employment made it necessary for him to climb the ladder in order to leave the industrial premises. There were no other means of exit. One of the basic tenets in the treatment of coronary thrombosis "is absolute bed rest," according to Dr. Akenhead, who also testified as follows: "I think his death was hastened by climbing a thirty-foot ladder." Since there was evidence before the commissioner that the climbing of the ladder superimposed upon the defendant's heart a condition that hastened his death, and since to hasten one's death is to cause it,[7] we turn at once to the issue as to the accidental character of the injury, because, under the Act, injury means accidental injury arising out of and in the course of the employment; and death, as a basis of compensation, means only death resulting from such injury.[8] An accidental injury is one that is unexpected and not designed; it includes those sustained by employees who are suffering from physical infirmities.[9]
The Act gives compensation for accidental injury or death arising out of and in the course of employment; it does not say caused by the employment. There is no standard or normal man who alone is entitled to workmen's compensation. Whatever the state of health of the employee may be, if the conditions of his employment constitute the precipitating cause of his death, such death is compensable as having resulted from an accidental injury arising out of and in the course of his employment. If the workman overstrains his powers, slight though they be, or if something goes wrong within the human frame, such as the straining of a muscle or the rupture of a blood vessel, an accident arises out of the employment when the required exertion producing the injury is too great for the man undertaking the work; and the source of the force producing the injury need not be external. This was held in an English case, Clover, Clayton & Co. v. Hughes, L.R.Cases 1910, page 242, 3 B.W.C.C. 275, where on post mortem it was found that the employee had a very large aneurism of the aorta which might have burst while the man was asleep but which in fact ruptured while, with slight effort, he was tightening a nut with a spanner wrench. The principle announced in the case just mentioned was cited with approval in Hoage v. Employers' Liability Assurance Corporation, 62 App.D.C. 77, 64 F.2d 715, certiorari denied Employers' Liability Assurance Corporation v. Kerper, 290 U.S. 637, 54 S.Ct. *867 54, 78 L. Ed. 554; Brodtmann v. Zurich General Accident & Liability Ins. Co., 5 Cir., 90 F.2d 1.
See, also, Commercial Casualty Ins. Co. v. Hoage, 64 App.D.C. 158, 75 F.2d 675, certiorari denied 295 U.S. 733, 55 S. Ct. 645, 79 L. Ed. 1682, where a grocery clerk, who had an enlarged heart, while handling sacks of potatoes suffered aortic regurgitation, which was held to be an accidental injury that caused his death. The court said: "It is enough if something unexpectedly goes wrong within the human frame," which is as true of an employee subject to physical infirmities as to one who is well and strong. In London Guarantee & Accident Co. v. Hoage, 63 App.D.C. 323, 72 F.2d 191, a baker died suddenly from heart failure while working around an oven where the temperature ranged from 110 to 120 degrees. The court sustained an award to the employee's widow, which rested on a finding that the crises in his heart trouble arose in substantial part from his work and the conditions under which he was working. In Pacific Employers' Ins. Co. v. Pillsbury, 9 Cir., 61 F.2d 101, the evidence was held sufficient to sustain a finding that the stevedore's illness, which terminated in his death, was brought on by strain due to heavy work, and that the injury and death were accidental within the meaning of the Longshoremen's Act. In Hoage v. Royal Indemnity Co., 67 App. D.C. 142, 90 F.2d 387, it was held that a collapse due to angina pectoris resulting from overwork, superimposed upon a previous condition of arterio-sclerosis, was an accidental injury within the meaning of said Act, in that the employee was doing his usual and regular work. See, also, Henderson v. Pate Stevedoring Co., 5 Cir., 134 F.2d 440; Southern Shipping Co. v. Lawson, D.C., 5 F. Supp. 321.
Even in those states where an injury is defined in the compensation law as "injury by violence to physical structure of the body" or by similar definition, the courts have considered collapses from internal causes resulting from strain or exertion as compensable. Such cases are: Tracey v. Philadelphia & Reading Coal & Iron Co., 270 Pa. 65, 112 A. 740, involving a cardiac collapse following strain; Skroki v. Crucible Steel Company of America, 292 Pa. 550, 141 A. 480, involving acute dilation of the heart from over-exertion in lifting and carrying steel bars; McArthur v. Department of Labor and Industries, 168 Wash. 405, 12 P.2d 418, involving the rupture of a duodenal ulcer due to exertion; Metcalf v. Department of Labor and Industries, 168 Wash. 305, 11 P.2d 821, involving a cerebral hemorrhage due to over-exertion; Wright v. Louisiana Ice and Utilities Company, 19 La.App. 173, 138 So. 450, involving fatal dilation of the heart from strenuous exertion.
Appellants' argument seems to be that, if the strain caused by climbing the ladder had occurred before the heart attack, it would be a compensable injury, but that since the strain occurred afterwards, there was no accidental injury in the course of employment. Such reasoning is based upon the theory that the act of leaving the hold of the vessel was personal to the deceased and not incidental to the employment. This conception is erroneous, since the act of entering or leaving the industrial premises is an incident of the employment, and an injury sustained while so doing arises out of the employment. Erie R. Co. v. Winfield, 244 U.S. 170, 37 S. Ct. 556, 61 L. Ed. 1057, Ann.Cas.1918B, 662; T. J. Moss Tie Co. v. Tanner, 5 Cir., 44 F.2d 928; Smoot Sand & Gravel Corp. v. Britton, Deputy Commissioner, 80 U.S.App.D.C. 260, 152 F.2d 17.
We do not doubt that the deceased was on duty and on pay as he descended and ascended this ladder in going to and from his work; and there is ample evidence, medical and otherwise, to support the finding that his heart was strained with fatal effect on his final exit from the hold of the ship. If he had broken an arm or sprained an ankle as he ascended the ladder for the last time, no one would question that the injury was accidental and arose in the course of employment. If he injured himself inwardly by straining his heart or rupturing an artery, the unexpected event, the fortuitous circumstance, the unintentional result, and the legal effect, are the same as if the injury had been external in character. This is true even *868 though there was no strain or exertion out of the ordinary when the injury occurred. It is sufficient if the particular strain was too great for the individual employee in his singular condition. It is the unexpected and unintentional effect of the strain or exertion, not its external or internal character, that is covered by the compensation law, regardless of how negligent or inadvisable one's conduct may be; but there must be no intention on the part of the employee to injure himself or another. Brodtmann v. Zurich General Accident & Liability Ins. Co., 5 Cir., 90 F.2d 1. The fact that the result would have been expected by a physician if he had diagnosed the case is nothing to the purpose. An occurrence is unexpected if it is not expected by the man who suffers it. Even the death of a murdered man is held to be accidental as to the victim who is the insured in an accident policy. Travellers' Ins. Co. v. McConkey, 127 U.S. 661, 8 S. Ct. 1360, 32 L. Ed. 308; Missouri State Life Ins. Co. v. Roper, 5 Cir., 44 F.2d 897; Mutual Life Ins. Co. of New York v. Sargent, 5 Cir., 51 F.2d 4; Halsbury's Laws of England, 2 Ed., Vol. 34, p. 818 et seq.
Appellants state that the medical evidence as to the casual relationship between the exertion in climbing the ladder and the death fifteen minutes later is conjectural. In addition to that previously quoted, we have the definite medical opinion that the death not only could have happened "from climbing the ladder but probably did." The preponderance of evidence as found by the commissioner goes beyond the accepted standard of proof with reasonable certainty, which is ordinarily required to establish any fact in issue. An autopsy is not required if the cause of death may be shown with reasonable certainty from the history of the case, the symptoms exhibited by the patient, the expert opinion of a physician, and other relevant facts and circumstances, that in the aggregate constitute substantial evidence from which the cause of death may reasonably be inferred. Cf. Hunter v. St. Mary's Natural Gas Co., 122 Pa.Super. 300, 186 A. 325.
The judgment appealed from is
Affirmed.
NOTES
[1] Act of March 4, 1927, 44 Stat. 1424, 33 U.S.C.A. § 901 et seq.
[2] Sec. 904(b), Title 33 U.S.C.A.
[3] Manitowoc Boiler Works v. Industrial Commission, 1917, 165 Wis. 592, 163 N.W. 172; 106 A.L.R. 82; Hartford Accident & Indemnity Co. v. Cardillo, 72 App.D.C. 52, 112 F.2d 11, 17; Avignone Freres, Inc. v. Cardillo, 73 App.D.C. 149, 117 F.2d 385.
[4] Sec. 920(a), Title 33 U.S.C.A.
[5] Grant v. Marshall, Deputy Commissioner, D.C., 56 F.2d 654; Nelson v. Marshall, Deputy Commissioner, D.C., 56 F.2d 654; Gulf Oil Corp. v. McManigal, Deputy Commissioner, D.C., 49 F. Supp. 75; United Employers Casualty Co. v. Summerour, Tex.Civ.App., 151 S.W.2d 247.
[6] Crowell, Deputy Commissioner, v. Benson, 285 U.S. 22, 52 S. Ct. 285, 76 L. Ed. 598; Jules C. L'Hote v. Crowell, Deputy Commissioner, 286 U.S. 528, 52 S. Ct. 499, 76 L. Ed. 1270; Voehl v. Indemnity Ins. Co. of North America, 288 U.S. 162, 53 S. Ct. 380, 77 L. Ed. 676, 87 A.L.R. 245; Del Vecchio v. Bowers, 296 U.S. 280, 56 S. Ct. 190, 80 L. Ed. 229; South Chicago Coal & Dock Co. v. Bassett, Deputy Commissioner, 309 U.S. 251, 60 S. Ct. 544, 84 L. Ed. 732; Parker, Deputy Commissioner v. Motor Boat Sales Co., 314 U.S. 244, 62 S. Ct. 221, 86 L. Ed. 184; Marshall, Deputy Commissioner, v. Pletz, 317 U.S. 383, 63 S. Ct. 284, 87 L. Ed. 348; Cardillo, Deputy Commissioner, v. Liberty Mutual Ins. Co., 330 U.S. 469, 67 S. Ct. 801, 91 L. Ed. 1028; Joyce v. United States Deputy Commissioner, D.C., 33 F.2d 218; Zurich General Accident & Liability Ins. Co. v. Marshall, Deputy Commissioner, D.C., 42 F.2d 1010; Booth v. Monahan, Deputy Commissioner, D.C., 56 F.2d 168; Michigan Transit Corporation v. Brown, Deputy Commissioner, D.C., 56 F.2d 200; Baltimore & Ohio R. R. Co. v. Clark, Deputy Commissioner, D.C., 56 F.2d 212; Jarka Corporation of Philadelphia v. Norton, Deputy Commissioner, D.C., 56 F.2d 287; Simmons v. Marshall, Deputy Commissioner, 9 Cir., 94 F.2d 850; Lowe, Deputy Commissioner, v. Central R. Co. of New Jersey, 3 Cir., 113 F.2d 413; Liberty Mutual Ins. Co. v. Gray, Deputy Commissioner, 9 Cir., 137 F.2d 926; Contractors v. Pillsbury, Deputy Commissioner, 9 Cir., 150 F.2d 310; Liberty Stevedoring Co. v. Cardillo, Deputy Commissioner, D.C., 18 F. Supp. 729; Eastern Steamship Lines v. Monahan, Deputy Commissioner, D.C., 21 F. Supp. 535; Grain Handling Co. v. McManigal, Deputy Commissioner, D.C., 23 F. Supp. 748; Ryan Stevedoring Co. v. Norton, Deputy Commissioner, D.C., 50 F. Supp. 221; Liberty Mutual Ins. Co. v. Marshall, Deputy Commissioner, D.C., 57 F. Supp. 177, affirmed, Contractors, Pacific Naval Air Bases v. Marshall, 9 Cir., 151 F.2d 1007; Marine Operators v. Barnhouse, D.C., 61 F. Supp. 572; 71 C.J. 1297, Sec. 1268.
[7] Avignone Freres v. Cardillo, Deputy Commissioner, 73 App.D.C. 149, 117 F.2d 385; McCarthy Stevedoring Corporation v. Norton, Deputy Commissioner, D. C., 46 F. Supp. 26; Bartlinski v. North-umberland Mining Co., 117 Pa.Super. 437, 177 A. 518; Lucas v. Haas Coal Co., 118 Pa.Super. 182, 179 A. 876.
[8] Section 902(2) and (11), Title 33 U. S.C.A.
[9] Hoage v. Employers' Liability Assurance Corporation, 62 App.D.C. 77, 64 F.2d 715, certiorari denied, Employers' Liability Assurance Corporation v. Kerper, 290 U.S. 637, 54 S. Ct. 54, 78 L. Ed. 554; Commercial Casualty Ins. Co. v. Hoage, Deputy Commissioner, 64 App. D.C. 158, 75 F.2d 677, certiorari denied 295 U.S. 733, 55 S. Ct. 645, 79 L. Ed. 1682; Hoage, Deputy Commissioner, v. Royal Indemnity Co., 67 App.D.C. 142, 90 F.2d 387, certiorari denied Royal Indemnity Co. v. Cardillo, 302 U.S. 736, 58 S. Ct. 122, 82 L. Ed. 569; Henderson, Deputy Commissioner, v. Pate Stevedoring Co., 5 Cir., 134 F.2d 440; Harbor Marine Contracting Co. v. Lowe, Deputy Commissioner, 2 Cir., 152 F.2d 845, certiorari denied 328 U.S. 837, 66 S. Ct. 1012, 90 L. Ed. 1613. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1114239/ | 651 So. 2d 167 (1995)
Randall Evan RITCHIE, Appellant,
v.
STATE of Florida, Appellee.
No. 94-1866.
District Court of Appeal of Florida, First District.
February 21, 1995.
Spiro T. Kypreos, Pensacola, for appellant.
*168 Robert A. Butterworth, Atty. Gen., Douglas Gurnic, Asst. Atty. Gen., Office of the Atty. Gen., Tallahassee, for appellee.
ERVIN, Judge.
Appellant, Randall Evan Ritchie, contends that his sentence for second degree murder is invalid, because the trial court failed to comply with the statutory requirements provided in section 39.059(7)(c), Florida Statutes (1993), for sentencing him as an adult. We hold that because appellant was convicted of a lesser offense to that charged, which is punishable by a maximum sentence of life imprisonment, the trial court was not required to comply with the sentencing criteria of section 39.059(7)(c), pertaining to the child's suitability for the imposition of adult sanctions, and, therefore, we affirm Ritchie's sentence.
Ritchie was charged by amended information with the premeditated first degree murder of his adoptive father, which occurred on July 5, 1993, when Ritchie was 16 years old. He was thereafter tried as an adult, and the jury found him guilty of the lesser included offense of second degree murder with a firearm. Ritchie was sentenced as an adult to 20 years in prison, with a mandatory minimum of three years for use of a firearm, followed by ten years of probation. The court entered no oral findings or written order concerning the imposition of adult sanctions.
Section 39.022(5)(c), Florida Statutes (1993), was in effect at the time of the offense in this case. That statute provides, in pertinent part, as follows:
3. If the child is found to have committed the offense punishable by death or by life imprisonment, the child shall be sentenced as an adult. If the child is not found to have committed the indictable offense but is found to have committed a lesser included offense or any other offense for which he was indicted as a part of the criminal episode, the court may sentence as follows:
a. Pursuant to the provisions of s. 39.059;
b. Pursuant to the provisions of chapter 958 [as a youthful offender], notwithstanding any other provisions of that chapter to the contrary; or
c. As an adult, pursuant to the provisions of s. 39.059(7)(c).
The determination of the issue on appeal turns on the proper interpretation of the language of subsection (5)(c)(3): whether appellant's sentence falls under the first portion of the above subsection, i.e., he was convicted of an offense punishable by death or life imprisonment, for which he "shall be sentenced as an adult," or whether his sentence is controlled by the remaining portion thereof, that is, he was found not to have committed the indictable offense, but rather a lesser included offense thereof, for which he may be sentenced "[a]s an adult, pursuant to the provisions of s. 39.059(7)(c)."
Ritchie contends that his sentence for second degree murder is governed by the latter part of the statute as he was convicted of a lesser included offense; therefore, under the clearly stated language of the statute, the trial court was required to sentence him in accordance with the provisions of section 39.059(7)(c), Florida Statutes (1993), mandating that the court make written findings regarding the specific statutory criteria and give reasons for the imposition of adult sanctions.
The state, on the other hand, argues that Ritchie's sentence is governed by the first part of section 39.022(5)(c)(3), and even though he was not convicted of the indictable offense (first degree premeditated murder), he nevertheless was convicted of an offense punishable by life imprisonment (second degree murder) and therefore was properly sentenced as an adult without the necessity of any written findings for the imposition of adult sanctions.
The state relies on Tomlinson v. State, 589 So. 2d 362 (Fla. 2d DCA 1991), review denied, 599 So. 2d 1281 (Fla. 1992), which involved a similar fact pattern wherein the defendant was indicted for first degree murder, but found guilty of the lesser included offense of second degree murder. That defendant was sentenced as an adult and complained on appeal that the court failed to comply with the procedural safeguards for imposing adult *169 sanctions. The Second District rejected that argument, concluding from its examination of the statute that the legislature intended for all children convicted of offenses punishable by death or life imprisonment to be sentenced as adults without entitlement to the special provisions of chapter 39. Id. at 363 (citing Duke v. State, 541 So. 2d 1170 (Fla. 1989)).
Although Ritchie attempts to distinguish Tomlinson, because it dealt with the 1989 version of section 39.022(5)(c)(3), which did not reference section 39.059(7)(c),[1] a close reading of Tomlinson indicates that the defendant was sentenced pursuant to the first sentence of section 39.022(5)(c)(3), not the remainder, which refers to the court's "discretionary sentencing power." Thus, Tomlinson is directly on point and supports affirmance. Moreover, we note that the result in Tomlinson is consistent with the following statement in Duke v. State, 541 So. 2d 1170, 1171 (Fla. 1989), observing that "[c]hildren of any age who are convicted of offenses punishable by death or life imprisonment shall be sentenced as adults. They shall not be sentenced as youthful offenders and are not subject to the provisions of section 39.111 [now 39.059(7)(c)]." (Emphasis in original.)
Although we elect to follow Tomlinson and affirm Ritchie's sentence, we have some doubt as to whether Tomlinson appropriately interpreted section 39.022(5)(c)(3). Specifically, we are concerned about certain language in the latter portion of section 39.022(5)(c)(3), namely, that the child was not found to have committed "the indictable offense but [was] found to have committed a lesser included offense." (Emphasis added.) Ritchie was not found guilty of "the indictable offense" (first degree premeditated murder), but was found guilty of "a lesser included offense" (second degree murder). Given the strict construction generally accorded to penal statutes and the fact that the Second District did not expound on "the indictable offense" language cited above in Tomlinson, we find merit in Ritchie's contention that his sentence is controlled by the latter portion of the statute; therefore, the court was required to comply with section 39.059(7)(c) and make written findings to support the imposition of adult sanctions.
Because we have difficulty in concluding that this penal statute is free from ambiguity, we certify the following question to the supreme court as one of great public importance:
WHETHER A CHILD, CHARGED WITH AN OFFENSE PUNISHABLE BY DEATH OR LIFE IMPRISONMENT, BUT FOUND GUILTY OF A LESSER INCLUDED OFFENSE, PUNISHABLE BY A TERM OF YEARS NOT EXCEEDING LIFE, MUST BE SENTENCED AS AN ADULT WITHOUT THE PROCEDURAL SAFEGUARDS AFFORDED BY SECTION 39.059(7)(c), FLORIDA STATUTES?
AFFIRMED.
MINER, J., concurs.
WOLF, J., specially concurs with opinion.
WOLF, Judge, specially concurring.
While I agree that the statute is not a model of clarity, the result we reach is the only logical way to interpret the statute. If we were to accept the arguments submitted by appellant, a person originally indicted for a more severe offense (first-degree murder) and later found guilty of a lesser-included offense (second-degree murder with a firearm), would be entitled to greater protection from being sentenced as an adult than a person who was originally indicted for and found guilty of second-degree murder with a firearm. The only difference in the two situations is that the grand jury would have found the first person to be more culpable. It does not make good common sense to provide the more culpable person with greater procedural protections prior to adult sentencing.
NOTES
[1] Prior to 1991, section 39.02(5)(c)(3)(c) provided the court could sentence the child "[a]s an adult," but in 1991 the statute was renumbered and amended to add the reference to section 39.059(7)(c), i.e., "[a]s an adult, pursuant to the provisions of s. 39.059(7)(c)." See generally Tomlinson; § 39.02(5)(c)(3)(c) & 39.022(5)(c)(3)(c), Fla. Stat. (1989 & 1991). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2245715/ | 64 Ill.2d 434 (1976)
356 N.E.2d 524
PAUL E. HAMER et al., Appellees,
v.
FRANK A. KIRK, Director of the Department of Local Government Affairs, et al., Appellants.
No. 48277.
Supreme Court of Illinois.
Opinion filed October 1, 1976.
Rehearing Denied November 12, 1976.
*435 *436 William J. Scott, Attorney General, of Chicago, and Jack Hoogasian, State's Attorney, of Waukegan (Paul V. Esposito, Assistant Attorney General, and Ephraim G. Sayad and William J. Blumthal, Assistant State's Attorneys, of counsel), for appellants.
Paul E. Hamer, of Northbrook, for appellees.
Judgment reversed.
MR. JUSTICE CREBS delivered the opinion of the court:
This is an appeal from a judgment of the circuit court of Lake County awarding the petitioner, Paul E. Hamer, attorney's fees and expenses in the amount of $28,308.02.
The petitioner, representing a class of taxpayers, brought a class action suit against the Director of the Department of Revenue of the State of Illinois, the Director of the Department of Local Government Affairs of the State of Illinois and the Lake County Board of Review. The background of this protracted litigation, which has resulted in several prior appeals to this court, is summarized in Hamer v. Lehnhausen, 60 Ill.2d 400. The trial court granted partial relief to the plaintiffs by ordering that the Lake County Board of Review equalize the level of assessment of property for each township in the County of Lake. The petitioner subsequently filed a petition requesting a judgment against the defendants for attorney's fees and expenses. The defendants filed objections to the petition, generally alleging that there was no *437 fund from which attorney's fees could be paid to the petitioner. The court denied the petitioner's request for attorney's fees based upon a percentage of the amount of the taxes claimed by the petitioner to have been saved or recovered. The court did rule, however, that the petitioner was entitled to attorney's fees in the amount of $20,280, based upon the amount of time spent on the case. In addition, the court held that the petitioner was entitled to recover expenses of $8,028.03. The court ordered that the Department of Local Government Affairs and the County of Lake each arrange for payment to the petitioner in the sum of $14,154.01. The defendants have appealed directly to this court pursuant to our Rule 302(b). (Ill. Rev. Stat. 1975, ch. 110A, par. 302(b).) The petitioner has cross-appealed, arguing that the trial court erred in refusing to recognize the existence of funds from which attorney's fees could be paid. In his cross-appeal, the petitioner also alleges error in the trial court's computation of the attorney's fees awarded.
The general rule is that, in the absence of a statute or an agreement of the parties, the successful party may not recover attorney's fees or the costs of the litigation. (House of Vision, Inc. v. Hiyane, 42 Ill.2d 45; People ex rel. Horwitz v. Canel, 34 Ill.2d 306.) An exception to that rule is that attorney's fees may be awarded where a fund has been brought within the control of the court by the parties. (Hoffman v. Lehnhausen, 48 Ill.2d 323.) In Hoffman v. Lehnhausen, two class actions were filed on behalf of plaintiff taxpayers challenging the constitutionality of a certain statutory tax exemption. The class actions proved successful, and the attorneys for the plaintiffs moved for an allowance of costs and reasonable attorney's fees. The trial court denied that motion, and this court affirmed. Our holding was that, since no fund had been created from which attorney's fees could be paid, the trial court acted properly in refusing to grant such fees. We have reiterated this position in other cases featuring *438 class action taxpayer suits. Rosemont Building Supply, Inc. v. Illinois Highway Trust Authority, 51 Ill.2d 126; Doran v. Cullerton, 51 Ill.2d 553.
The petitioner contends that it was proper to award attorney's fees in the instant case because several funds exist from which fees could be paid. The petition for attorney's fees which was filed in the trial court alleged the existence of four such funds. The first of these purported funds allegedly resulted from the trial court's order of April 26, 1974, directing the Lake County Board of Review to equalize the level of assessment of property for each township in Lake County. The petitioner maintains that that order had the effect of shifting a tax burden from previously overassessed taxpayers to previously underassessed taxpayers. The petitioner argues that the savings to the previously overassessed taxpayers constitute a common fund from which attorney's fees can be paid.
The petitioner also asserts that three funds were created because of his successful defense of a counterclaim filed by the County of Lake in which the county sought an order to reduce the equalization factor then in effect. While the record before this court does not substantiate his claim, the petitioner alleges that his efforts prevented the equalization factor from being reduced. Since the total assessed valuation of real property in Lake County would have been reduced if the equalization factor had been lowered, the petitioner contends that his efforts created additional tax funds for both the County of Lake and other taxing bodies within the county, such as school districts. The petitioner argues that the tax revenue saved on behalf of the county constitutes one fund and the tax revenue saved on behalf of the other taxing bodies constitutes another fund from which attorney's fees can be paid. He further argues that, had the tax revenues of the various school districts been diminished, a certain amount of State school revenue would have been diverted to the various Lake County school districts. The petitioner *439 maintains that his efforts prevented the State school revenues from being so diverted and that the savings to the State school revenues constitute still another fund from which attorney's fees can be awarded.
In addition to the four funds referred to in his petition for attorney's fees, the petitioner has argued on appeal that two other funds exist which can serve as the source of attorney's fees. The first of these funds is said to consist of money which should have been returned in 1974, according to petitioner, to those taxpayers whose real property had been overassessed. A portion of the trial court's order of April 26, 1974, states that the court was reserving the question of whether an improper classification had been created between urban and rural real property in Lake County. The court held that, if it were later proved that a disparity between urban and rural real property existed in Lake County for the 1973 tax year, the court would order that disparity eliminated by reduction of the assessed valuation of the overassessed property for the 1974 tax year. The petitioner asserts that evidence presented to the trial court did in fact prove that such a disparity existed. However, the trial court did not issue an order subsequent to April 26, 1974, giving any relief to taxpayers whose real property had allegedly been overassessed. The petitioner argues that, pursuant to the trial court's order of April 26, 1974, and the evidence subsequently presented to the trial court, the trial court should have ordered that some type of refund be given in 1974 to those taxpayers whose real property had been overassessed. The petitioner maintains that the money which should have been refunded somehow constitutes a fund from which attorney's fees could be paid.
The final fund alleged by the petitioner consists of money that underassessed taxpayers allegedly should have paid to taxing bodies for the 1967 through 1972 tax years. The petitioner contends that the Lake County Board of Review should have been ordered to reassess upwards *440 previously underassessed real property and to determine that certain taxpayers owed back taxes for the 1967 through 1972 tax years. The petitioner further argues that the back taxes should have been collected from owners of previously underassessed real property in subsequent tax years, beginning in 1974. This additional tax revenue could have been paid into the court and distributed to the various taxing bodies. The petitioner maintains that this money constitutes a fund from which attorney's fees could have been paid.
An analysis of the petitioner's arguments with respect to funds from which attorney's fees can be paid demonstrates that no such funds exist. Overlooking the apparent inconsistencies in petitioner's fund theories, we note that at no point in his argument has petitioner contended that a specific fund under the control of the court was in existence. The petitioner is asking to be paid attorney's fees from the alleged savings of previously overassessed taxpayers, from the treasuries of various taxing bodies or from the pockets of previously underassessed taxpayers who allegedly should have been ordered to pay back taxes. In Hoffman v. Lehnhausen, we stated:
"We are aware of no authority under which the process of tax collection and distribution could have been interrupted to divert from the governmental bodies that had levied the taxes an amount fixed by the court as fees for the attorneys for the plaintiffs." (48 Ill.2d 323, 329.)
We recognized in Hoffman that attorney's fees could not be awarded to the attorneys for the plaintiffs because no fund had been "brought into court." (48 Ill.2d 323, 329.) In Rosemont Building Supply, Inc. v. Illinois Highway Trust Authority, we again recognized that a fund must be "brought into court" if it is to serve as a source of attorney's fees. (51 Ill.2d 126, 130.) In People ex rel. Stephens v. Holten, 304 Ill. 394, this court affirmed the *441 trial court's denial of a petition for attorney's fees and stated:
"There is no provision in equity, however, permitting a court, in the exercise of equitable powers, to declare an allowance of fees and the payment of them out of a fund of this character before the fund comes under the control of the court. * * * There is no such fund at this time in the control of the court from which an allowance of reasonable attorney's fees could be made." 304 Ill. 394, 399.)
(See also Doran v. Cullerton, 51 Ill.2d 553; compare Leader v. Cullerton, 62 Ill.2d 483, 487.) Since no fund had been placed under control of the court in the instant case, the trial court was without authority to award attorney's fees to the petitioner.
The petitioner maintains that, even if this court finds that no fund exists from which attorney's fees can be paid, an award of such fees can be sustained on other theories. One such theory advanced by the petitioner is that attorney's fees may be awarded when the services rendered have benefited the public interest. There is no authority in Illinois to support an award of attorney's fees solely on the basis of a public interest rationale. Petitioner acknowledges this to be the case, but urges us to fashion an additional exception to the general rule in order to "meet the new conditions which recognize the need for more public representation." We are unpersuaded by petitioner's argument. The United States Supreme Court rejected similar reasoning in Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 44 L.Ed.2d 141, 95 S.Ct. 1612. In Alyeska, several environmental organizations brought suit in an effort to prevent issuance of permits for construction of the trans-Alaskan oil pipeline. Although subsequent legislation rendered that effort unsuccessful, the Court of Appeals for the District of Columbia circuit held that the plaintiffs were entitled to an award of *442 attorney's fees. The court based its decision primarily upon the notion that the plaintiffs had acted as private attorneys general in advancing and protecting "substantial public interests" and ensuring "the proper functioning of our system of government." (495 F.2d 1026, 1036.) On appeal, the Supreme Court reversed, holding that "it would be inappropriate for the Judiciary, without legislative guidance, to reallocate the burdens of litigation in the manner and to the extent urged by respondents and approved by the Court of Appeals." (421 U.S. 240, 247, 44 L.Ed.2d 141, 147, 95 S.Ct. 1612, 1616.) We believe that such a determination by this court would be equally inappropriate.
The petitioner also argues that attorney's fees can be awarded in a class action case on the ground that the services of the attorney have conferred substantial benefits upon the class of persons represented. We implicitly rejected this argument in Hoffman v. Lehnhausen. In upholding the denial of attorney's fees in that case, we stated:
"There is no doubt that the attorneys for the plaintiffs have rendered valuable services and that their efforts have benefited the class of persons they purported to represent. It is also true that allowances of fees and expenses to those who volunteer to represent the rights of others are more freely made today than in the past. * * * Nevertheless the principle of stare decisis remains a basic tenet of our legal system, and one of the consequences is that a legal doctrine established in a case involving a single litigant characteristically benefits all others similarly situated." (48 Ill.2d 323, 329-30.)
We hold that, in the absence of a fund, a plaintiff's attorney is not entitled to attorney's fees merely because he has conferred a benefit upon members of a class. If a *443 fund were available from which attorney's fees could be paid, the benefit to the public and to the class would be relevant in determining the amount of the fee. Flynn v. Kucharski, 59 Ill.2d 61.
Still another theory upon which the petitioner relies is that attorney's fees may be awarded against a party who is in wilful disobedience of a court order. The petitioner maintains that the defendants have been in wilful disobedience of the mandate of this court in the case of Chicago, Burlington & Quincy R.R. Co. v. Department of Revenue, 17 Ill.2d 376. In that case, we stated that it was the duty of the Department of Revenue to assess or equalize assessments of all property at full, fair cash value. The petitioner insists that the defendants have been and still are in violation of that order. In a closely related argument, the petitioner asserts that attorney's fees should be awarded to the successful litigant if the opposing party has acted in bad faith, vexatiously, wantonly or for oppressive reasons. The defendants have allegedly acted in such a manner by failing to comply with the aforementioned mandate and by otherwise impeding the progress of this litigation. Assuming without deciding that these theories constitute properly cognizable exceptions to the general Illinois rule, we conclude that petitioner has failed to demonstrate their applicability to this case. The petitioner did not allege in his petition for attorney's fees that the defendants were in wilful disobedience of a court order or that the defendants have acted in bad faith, vexatiously, wantonly or for oppressive reasons. The trial court made no such finding, and no record has been presented to this court from which we can make such a finding.
While we have heretofore examined those arguments which the petitioner has advanced most strenuously before this court, we are mindful that petitioner also contends that statutory authority exists to support the trial court's *444 award of attorney's fees and expenses. Initially, petitioner relies upon section 41 of the Civil Practice Act (Ill. Rev. Stat. 1975, ch. 110, par. 41) and Supreme Court Rule 219 (Ill. Rev. Stat. 1975, ch. 110A, par. 219; see also Ill. Rev. Stat. 1975, ch. 110, par. 3). Section 41 relates to untrue pleadings, and Rule 219 deals with refusal or failure to comply with our rules. Petitioner's reliance upon these provisions is clearly misplaced. The petitioner separately moved for imposition of sanctions, including attorney's fees and expenses, against the defendants, pursuant to section 41 and Rule 219. That motion was denied. We find no indication in the record that the trial court considered either of these provisions as affording an independent basis for its award.
As a further source of statutory authority, petitioner cites section 18 of "An Act to revise the law in relation to costs" (Ill. Rev. Stat. 1975, ch. 33, par. 18) and section 57.1(5) of the Civil Practice Act (Ill. Rev. Stat. 1975, ch. 110, par. 57.1(5)). Section 18 states:
"Upon the plaintiff dismissing his suit, or the defendant dismissing the same for want of prosecution, the defendant shall recover against the plaintiff full costs; and in all other civil cases, not otherwise directed by law, it shall be in the discretion of the court to award costs or not; and the payment of costs, when awarded, may be compelled by execution."
Section 57.1(5) reads as follows:
"Unless the parties agree by stipulation as to the allowance thereof, costs in proceedings authorized by this section shall be allowed in accordance with rules. In the absence of rules the practice followed in ordinary actions at law or in equity shall be followed if applicable, and if not applicable, the costs may be taxed as to the court seems just."
While these sections allow recovery of statutory costs, such as clerk filing fees or fees for a sheriff's service of summons, they do not permit the award of attorney's fees and expenses, and thus are not applicable here.
*445 Accordingly, the judgment of the circuit court of Lake County awarding attorney's fees and expenses to the petitioner is reversed.
Judgment reversed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1989578/ | 188 B.R. 227 (1995)
In re EMERGENCY NETWORKS, INC., Debtor.
Dale L. McCULLOUGH, Trustee, Plaintiff-Appellee,
v.
KENNETH LEVENTHAL & COMPANY, Defendant-Appellant.
Civ. A. No. 3:95-CV-1151-D. Bankruptcy No. 392-37505-RCM-7. Adv. No. 394-3691.
United States District Court, N.D. Texas, Dallas Division.
November 1, 1995.
William A. Brewer III, Scott S. Hershman, Richard E. Aubin and Elizabeth A. Handschuch (argued) of Bickel & Brewer, Dallas, Texas, for defendant-appellant.
J. Maxwell Tucker (argued), R. Michael Farquhar, and James S. Brouner of Winstead Sechrest & Minick, P.C., Dallas, Texas, for plaintiff-appellee.
FITZWATER, District Judge:
This bankruptcy appeal presents a question concerning the limitations period prescribed by the pre-1994 version of 11 U.S.C. § 546(a)(1). The court is asked to decide, with respect to a preference action brought by a trustee who succeeds a debtor in possession, whether the period commences on the date the chapter 11 debtor becomes a debtor in possession, or on the date of the trustee's appointment. Because the bankruptcy court correctly denied a summary judgment motion in which appellant contended the preference action was time-barred, its order is affirmed.
I
On August 24, 1992 debtor Emergency Networks, Inc. ("ENI") was placed in involuntary chapter 7 bankruptcy. On September 29, 1992 ENI consented to the bankruptcy and elected relief under chapter 11 of the *228 Code, assuming the status of a debtor in possession. On December 4, 1992 the bankruptcy court appointed J. Gregg Pritchard ("Pritchard") as ENI's trustee pursuant to § 1104 of the Code. Plaintiff-appellee Dale L. McCullough ("McCullough") succeeded Pritchard as trustee.[1]
On December 2, 1994 within two years of his appointment as trustee, but in excess of two years after ENI became a debtor in possession Pritchard commenced the instant preference action against defendant-appellant Kenneth Leventhal & Company ("Leventhal"). Leventhal moved for summary judgment on limitations grounds, contending the two-year period set out in § 546(a)(1) commenced on September 29, 1992 the date on which the case was converted to chapter 11 and ENI became a debtor in possession. In an order entered June 22, 1995 the bankruptcy court denied Leventhal's summary judgment motion. On June 30, 1995 this court granted Leventhal's motion for leave to bring this interlocutory appeal.
Leventhal maintains that the two-year limitations period of the pre-1994 version of § 546(a)(1) which both parties agree applies in this case commenced on the date ENI's case was converted to chapter 11 and ENI became a debtor in possession. Leventhal argues that the bankruptcy court's order must be reversed, because the court should have dismissed this preference action as time-barred. Leventhal asserts that § 1107(a) of the Code read in conjunction with § 546(a)(1) mandates that the limitations period started running when ENI became a debtor in possession, rather than on the date Pritchard was appointed as ENI's trustee. According to Leventhal, because § 1107(a) grants a debtor in possession the same powers as a trustee, "[s]ubject to any limitations on a trustee," the limitations period of § 546(a)(1) applies to a debtor in possession. Leventhal posits that the time a debtor in possession remains in possession of the bankruptcy estate counts against the limitations period that governs to a subsequently-appointed trustee, and that the clock is not reset upon appointment of the trustee.
II
The validity of Leventhal's summary judgment motion turns upon the correct interpretation of § 546(a). The pre-1994 version of this section provided:
An action or proceeding under section 544, 545, 547, 548, or 553 of this title may not be commenced after the earlier of
(1) two years after the appointment of a trustee under section 702, 1104, 1163, 1302, or 1202 of this title; or
(2) the time the case is closed or dismissed.
A
Section 546 has been the subject of various judicial interpretations. Courts almost uniformly hold that the limitations period of § 546(a)(1) does not apply to interim trustees, but instead takes effect upon either the appointment or election of a permanent trustee. See, e.g., In re Maxway Corp., 27 F.3d 980, 984 (4th Cir.), cert. denied, ___ U.S. ___, 115 S.Ct. 580, 130 L.Ed.2d 495 (1994) (holding limitations period does not begin to run until permanent trustee selected); In re Metro Shippers, Inc., 95 B.R. 366, 368-69 (Bankr.E.D.Pa.1989) (noting courts uniformly conclude that period runs from time permanent trustee is in place). Courts have not adopted a uniform interpretation, however, of other aspects of § 546. For instance, courts differ as to whether appointment of a successor trustee starts the period anew. Compare In re M & L Business Mach. Co., 171 B.R. 383, 385-86 (D.Colo. 1994) (holding chapter 7 trustee has full two-year period to bring action regardless of existence of prior trustee or debtor in possession) with McCuskey v. Central Trailer Servs., 37 F.3d 1329, 1332 (8th Cir.1994) (holding two-year limitations period runs from appointment of first statutory trustee following debtor in possession, but is not reset for successor trustees).
*229 Because § 546(a)(1) refers only to trustees, courts have also reached conflicting results regarding whether the limitations period applies to debtors in possession. Extrapolating from the plain language of § 546 and the former Bankruptcy Act, which gave trustees two years from the date of adjudication to bring claims but also tolled the statute during chapter 11 proceedings, many courts concluded that § 546(a)(1) placed no limitation on debtors in possession. See, e.g., Maxway, 27 F.3d at 982 (citing cases). However, subsequent to the Tenth Circuit's decision in Zilkha Energy Co. v. Leighton, 920 F.2d 1520, 1524 (10th Cir.1990), several courts have held that the two-year limitations period commences at the inception of the debtor in possession, i.e., the time of the order for relief. See In re Century Brass Prods., 22 F.3d 37, 40 (2d Cir.1994); In re Coastal Group, 13 F.3d 81, 86 (3d Cir.1994); In re Softwaire Centre Int'l, Inc., 994 F.2d 682, 683 (9th Cir.1994). These recent decisions have left unresolved the question whether the two-year limitations period that applies to debtors in possession affects the limitations period with respect to subsequently-appointed trustees. See In re Harry Levin, Inc., 175 B.R. 560, 574 (Bankr.E.D.Pa.1994) (collecting cases).
B
In its brief, Leventhal relies on Zilkha, Century Brass, Coastal Group, and Softwaire Centre to argue that the limitations period that applies to debtors in possession counts against the time that is accorded trustees under § 546(a)(1) to bring an action. See Appellant Br. at 5. The court declines to adopt Leventhal's analysis, because each of these decisions is distinguishable from the present case.[2]
In each of these opinions, the issue was whether the two-year limitations period of § 546(a) applied to debtors in possession at all, or instead only to trustees. Reading § 1107(a) in conjunction with § 546(a), these courts concluded that a debtor in possession, who acts as the functional equivalent of a trustee, must be subject to the limitations period otherwise applicable to trustees.[3] Section 1107(a) states:
Subject to any limitations on a trustee serving in a case under this chapter, and to such limitations or conditions as the court prescribes, a debtor in possession shall have all the rights, other than the right to compensation under section 330 of this title, and powers, and shall perform all the functions and duties, except the duties specified in sections 1106(a)(2), (3), and (4) of this title, of a trustee serving in a case under this chapter.
In none of these cases was a trustee appointed, and three of the four opinions specifically reserved judgment on the effect the subsequent appointment of a trustee would have on the applicable limitations period. See Century Brass, 22 F.3d at 41 ("[S]ince no trustee was ever appointed in the present case, we need not decide whether such an appointment might revive a claim that the [debtor in possession] itself would have been barred from bringing."); Coastal Group, 13 F.3d at 86 n. 7 ("We do not need to reach the question whether a trustee appointed more than two years after the Chapter 11 case began may commence adversary proceedings."); Zilkha, 920 F.2d at 1524 n. 11 ("We take no position on whether a subsequent appointment of a trustee in a chapter 11 case would change the analysis."). In Softwaire Centre the Ninth Circuit did not explicitly limit its holding, but did note that it followed the reasoning in Zilkha and that, like that case, the action under review involved a situation where no trustee was ever appointed. Softwaire Centre, 994 F.2d at 683 ("Here the case has not been closed or dismissed, nor has a trustee been appointed.").
Contrary to Leventhal's position, these decisions are not inconsistent with the bankruptcy court's ruling. "[N]othing in the language of § 546(a)(1) suggests that the limitation *230 on a debtor in possession would be `tacked' or `added' to calculate the limitation with respect to a subsequently appointed trustee." In re Brook Meade Health Care Ctr., 165 B.R. 195, 197 (Bankr.M.D.Tenn. 1994). Rather, the opinions Leventhal cites in its brief indicate that there are two limitations periods created by § 546(a)(1) a two-year period that applies to a debtor in possession so long as he stands in the shoes of the trustee, and a two-year period that applies to the trustee and runs from the time he is appointed. See In re Appliance Store, Inc., 171 B.R. 525, 527 (Bankr.W.D.Pa.1994). Unlike the present case, in each of these decisions, a debtor in possession remained in possession of the assets of the bankruptcy estate, and no trustee was ever appointed.
Courts within the Second, Third, and Tenth Circuits three of the circuits on whose opinions Leventhal relies have held that a new two-year period commences upon appointment of a trustee. See, e.g., In re Ted A. Petras Furs, Inc., 172 B.R. 170, 173-74 (Bankr.E.D.N.Y.1994) (holding § 546(a)(1) limitations period runs anew in event trustee subsequently appointed in case originally involving debtor in possession, and noting Century Brass does not require contrary holding); In re Nelson Co., 167 B.R. 1018, 1023 (Bankr.E.D.Pa.1994) (holding trustee appointed more than two years after chapter 11 petition filed not bound by debtor in possession's inaction); In re D-Mart Servs., Inc., 138 B.R. 985, 986-87 (Bankr.D.Utah 1992). The court finds these cases to be persuasive.
C
Although the majority of courts favors commencing the limitations period anew when a trustee is appointed in place of a debtor in possession, see, e.g., In re Ajayem Lumber Corp., 145 B.R. 813, 817 (Bankr. S.D.N.Y.) (adopting holding in D-Mart); In re Carroll Indus., 153 B.R. 100, 102 (Bankr. D.N.H.1993) (holding that for causes of action not time-barred as of date of trustee's appointment, limitations period runs for two years from appointment), some courts have adopted a contrary view. See, e.g., Tusa Florida, Inc. v. General Motors Acceptance Corp., 186 B.R. 542, 546 (Bankr.S.D.Fla.1995) (holding that plain meaning of § 546, when considered in light of § 1107, provides two-year limitations period running from date petition filed, and that new period does not begin upon appointment of trustee).
At oral argument, Leventhal was able to point to a recent decision of the Ninth Circuit that supports Leventhal's position. In In re IRFM, Inc., 65 F.3d 778 (9th Cir.1995), the Ninth Circuit affirmed the district court's appellate ruling that a chapter 7 trustee's preference action was time-barred by § 546(a). The circuit court held that the limitations period commenced when the debtor filed a chapter 11 petition on July 22, 1988, not on October 3, 1989, when the case was converted to chapter 7, or on October 14, 1989, when the chapter 7 trustee was appointed. Id. at 779-81. The Ninth Circuit reached this conclusion on the basis of its earlier decisions in In re San Joaquin Roast Beef, 7 F.3d 1413 (9th Cir.1993), and Softwaire Centre. Id.
In San Joaquin Roast Beef the circuit court had concluded that the limitations period commences when the first trustee is appointed, and that all subsequent trustees are subject to the same statute of limitations. San Joaquin Roast Beef, 7 F.3d at 1415. Focusing on the plain meaning of § 546, the Ninth Circuit rejected holdings of other courts that the statute of limitations is renewed when a case is converted from one chapter to another. Id. at 1416. In doing so, the court expressly rejected policy arguments in favor of a new limitations period, deferring to Congress to consider matters of policy. Id. at 1415-16. In Softwaire Centre the court followed the Tenth Circuit's holding in Zilkha, 920 F.2d at 1523-24, and concluded that the statute of limitations in § 546 applies to debtors in possession because they have the same powers and limitations as trustees. Softwaire Centre, 994 F.2d at 683-84.
In IRFM the Ninth Circuit read these two cases together, and reached its result on the basis of the following syllogism: if a chapter 11 debtor in possession is the functional equivalent of an appointed trustee, and limitations begins running from the petition date, and if limitations does not begin anew when *231 there is a conversion to chapter 7, then the limitations period must commence on the chapter 11 petition date, and the clock does not restart when a chapter 7 trustee is appointed. IRFM, 65 F.3d at 780-81. According to the panel, "The reasoning of Softwaire Centre and San Joaquin Roast Beef compels us to the conclusion that the statute of limitations began running in this case at the time the Chapter 11 petition was filed." Id. at 780 (footnote omitted). The IRFM court also cited two lower court decisions that had reached the same conclusion. Id. at 780 n. 2.[4]
In In re EPI Prods. USA, Inc., 162 B.R. 1 (Bankr.C.D.Cal.1993), the bankruptcy court essentially forecast the reasoning that the Ninth Circuit followed in IRFM. The court relied on San Joaquin Roast Beef and Softwaire Centre to hold that a chapter 7 trustee's action was barred because the limitations period commenced when the original chapter 11 petition was filed. Id. at 3-4.[5] In In re Sahuaro Petroleum & Asphalt Co., 170 B.R. 689, 692-93 (C.D.Cal.1994), the district court followed EPI Products' analysis of San Joaquin Roast Beef and Softwaire Centre.[6]
This court respectfully declines to adopt the reasoning of the Ninth Circuit in IRFM and of the lower courts in the opinions that Leventhal cites. Softwaire Centre pertained to the limitations period to be applied to a debtor in possession in a case in which no trustee was appointed. The Softwaire Centre line of cases quite logically prevents debtors in possession from having essentially an indeterminate period of time to commence an action; it does not dictate that a subsequently-appointed trustee is encumbered by loss of the time during which a debtor in possession is in place. The result of the Ninth Circuit's IRFM decision is to disregard the plain language of § 546(a)(1), because it creates a limitations period that, under all circumstances, runs from the time the bankruptcy petition is filed. San Joaquin Roast Beef certainly does not command this result, because it considered only the appropriate limitations period when a second trustee is appointed, not when an initial trustee succeeds a debtor in possession. San Joaquin Roast Beef, 7 F.3d at 1414-15. In fact, the San Joaquin Roast Beef panel held that the statute of limitations began to run from appointment of the first trustee, even though that trustee was appointed twelve days after the petition date. Id. at 1414, 1416.
The plain language of § 546 supports the result that the bankruptcy court reached below. Section 546(a)(1) specifically provides that an action may not be commenced after the earlier of "two years after the appointment of a trustee." (Emphasis added). Had Congress intended the limitations period to commence on the petition date, it could have said so. Cf. 11 U.S.C. § 108.
Leventhal argues that when read in conjunction with § 1107, § 546(a) indicates that "[n]either the subsequent appointment of a trustee nor the conversion of a case resets the limitations period." Appellant Br. at 10. Even if Leventhal is correct in its assertion that once a trustee is appointed, subsequent trustees are subject to the original limitations period,[7] this reasoning does not support the contention that a trustee replacing a debtor in possession is similarly bound. Section 1107 provides that debtors in *232 possession will be "[s]ubject to any limitations on a trustee." The effect of § 1107, read in conjunction with § 546, is to limit the time period during which debtors in possession may commence actions.[8] Section 1107 does not mandate that trustees who are also subject to a two-year limitations period are charged for the time during which a prior debtor in possession managed the estate. This interpretation of the Code means that an inference drawn from § 1107 overrides a trustee's explicit right in § 546(a)(1) to bring an action within two years after his appointment. The Ninth Circuit's reading of §§ 546 and 1107 would completely preclude a trustee from bringing a preference action if a case were converted more than two years after filing. Such a result is contrary to the Code's intent to enable bankruptcy trustees to perform their statutorily prescribed duties. See In re SSS Enters., 145 B.R. 915, 919 (Bankr.N.D.Ill.1992). Instead, properly understood, the combined effect of §§ 546(a)(1) and 1107 is to create two distinct limitations periods: one that commences on the petition date and runs for two years or until the appointment of a trustee, and one that starts upon the appointment of a trustee in place of the debtor in possession and runs for two years thereafter. See Nelson, 167 B.R. at 1023.[9]
D
Leventhal contends that this interpretation of § 546(a) does not comport with Congressional intent as evidenced by changes to § 546 enacted by the Bankruptcy Reform Act of 1994, Pub.L. No. 103-394, 108 Stat. 4106.[10] The 1994 amendments, however, accomplish precisely the result of today's case; they create separate limitations periods applicable to debtors in possession and to trustees. The amendments establish that debtors in possession are, in fact, subject to a two-year limitations period. They do not, however, support Leventhal's contention that a subsequently-appointed trustee is bound by the limitations period that originally applied to the debtor in possession. To the contrary, the amended version provides that a trustee can bring actions more than two years after entry of the order for relief, because a trustee appointed or elected within two years after entry of the order for relief has one additional year in which to bring suits.
E
Leventhal also maintains that the approach taken by the bankruptcy court below will result in the needless perpetuation of bankruptcy proceedings and frustrate the goal of statutes of limitations. As applied to a preference action, the limitations period is intended to apprise creditors of any adverse claims against them by preventing plaintiffs from delaying action to the detriment of creditors. Cf. Crown Cork & Seal Co. v. Parker, 462 U.S. 345, 352, 103 S.Ct. 2392, 2396, 76 L.Ed.2d 628 (1983). This purpose is not unduly frustrated by allowing the trustee in this case two years in which to file a preference action. Moreover, there are several countervailing interests that favor providing a separate limitations period for a *233 trustee who takes the place of a debtor in possession.
A distinct limitations period provides the trustee with adequate time to investigate potential causes of action for the estate. The opportunity to pursue these claims for recovery of assets may be lost if the trustee is subject to an abbreviated limitations period. See In re Dry Wall Supply, Inc., 111 B.R. 933, 936-37 (D.Colo.1990). Adequate time for investigation is essential to obtain equal distribution of assets among creditors, a principle at the core of the Bankruptcy Code. See Begier v. IRS, 496 U.S. 53, 58, 110 S.Ct. 2258, 2262, 110 L.Ed.2d 46 (1990). Leventhal's reading of § 546(a)(1) could require that trustees do the seemingly impossible investigate claims prior to their appointment or risk forgoing any opportunity to bring them. The Code certainly does not support this result.
The practical realities of bankruptcy likewise weigh in favor of applying a new limitations period upon appointment of a trustee. Where bankruptcy is voluntary, the debtor often files under chapter 11 of the Code, and the case can remain open for a substantial period of time before it is either converted to chapter 7 or a chapter 11 trustee is appointed. In re Topcor, 132 B.R. 119, 125 (Bankr.N.D.Tex.1991). While trustees and debtors in possession share many duties and powers, the two often operate with different agendas. A debtor in possession seeking to reorganize its business may be more likely to make compromises in order to develop a plan of reorganization that is acceptable to creditors. Under these circumstances, the debtor in possession may elect to relinquish preference actions in order to effect plan confirmation. In contrast, the chapter 11 trustee should seek to maximize the return for the estate's creditors, and therefore may be more diligent in pursuing claims for preferential or fraudulent transfers. See In re Hunt, 136 B.R. 437, 448 (Bankr.N.D.Tex.1991). And, unlike the debtor in possession, the trustee is required by the Code to investigate the affairs of the debtor in search of such causes of action. See 11 U.S.C. § 1107(a) (exempting debtor in possession from investigatory duties prescribed in 11 U.S.C. § 1106(a)(3)).
The result of these distinctions is that a debtor in possession may have significantly less incentive to bring a preference action and may, in fact, attempt to delay conversion to chapter 7 (where a trustee will automatically be appointed) in order to protect creditors to which it made preferential transfers. At least in part because Leventhal's reading of § 546(a) permits such a result which the court deems contrary to the intent of Congress and the purposes underlying bankruptcy the court declines to accept Leventhal's arguments.[11]
* * *
Properly read together, the pre-1994 version of § 546(a)(1) and § 1107(a) provide that a debtor in possession is subject to a two-year limitations period measured from the petition date for commencing a preference action. But upon subsequent appointment of a trustee, the trustee is entitled by virtue of the plain language of § 546(a)(1) to a full two-year period commencing upon appointment, notwithstanding that a debtor in possession had been in place prior to the trustee's appointment. The bankruptcy court therefore correctly held that this preference action is not time-barred. Its order denying summary judgment is
AFFIRMED.
NOTES
[1] McCullough does not contend the limitations clock started anew with his appointment as successor to Pritchard. The question presented in this appeal turns upon Pritchard's appointment as trustee.
[2] At oral argument, Leventhal conceded that at least some of these opinions are distinguishable.
[3] Bankruptcy courts in this district have not adopted this line of reasoning, but have instead held that the two-year limitations period in § 546(a)(1) does not apply to a debtor in possession under any circumstances. See, e.g., In re Hunt, 136 B.R. 437, 447-48 (Bankr.N.D.Tex. 1991).
[4] Leventhal urges this court to follow these opinions as well.
[5] In In re California Canners & Growers, 175 B.R. 346, 348 (9th Cir. BAP 1994), a decision that preceded IRFM, a Ninth Circuit bankruptcy appeals panel rejected the reasoning of EPI Products.
[6] Leventhal also relies on Harry Levin, 175 B.R. at 575, in which the bankruptcy court noted that EPI Products "is a minority position," but concluded that the approach taken there was the most persuasive.
[7] The court does not decide the question whether the conversion of a case from one chapter to another restarts the limitation period. The courts are split on this issue. Compare In re Moody, 77 B.R. 566, 574 (S.D.Tex.1987) (holding each trustee appointed following conversion from chapter 11 to chapter 13 allotted two years within which to commence avoidance actions), aff'd, 862 F.2d 1194 (5th Cir.1989), cert. denied, 503 U.S. 960, 112 S.Ct. 1562, 118 L.Ed.2d 209 (1992) with San Joaquin Roast Beef, 7 F.3d at 1416 (holding limitations period runs from date first trustee appointed and binds subsequent trustees). See also Ted A. Petras Furs, 172 B.R. at 175 n. 6 (noting majority of courts favor running period anew).
[8] The court rejects the reasoning of cases that place no limits on the debtor in possession's ability to bring preference actions. See, e.g., Maxway, 27 F.3d at 982; Coastal Group, 13 F.3d at 83 ("Most courts to consider the issue have held that the word `trustee' in § 546(a)(1) does not include `debtor in possession' for statute of limitations purposes.").
[9] Under the facts of the present case, the court need only decide this issue in the context of the appointment of the first trustee appointed. See supra note 1; supra § II(A) (noting split of authorities regarding whether appointment of successor trustee starts limitations period anew); & supra note 7 (declining to decide whether conversion of case from one chapter to another restarts the limitations period).
[10] 11 U.S.C. § 546(a) (Supp.1995), as amended in 1994, provides:
An action or proceeding under section 544, 545, 547, 548, or 553 of this title may not be commenced after the earlier of
(1) the later of
(A) 2 years after the entry of the order for relief; or
(B) 1 year after the appointment or election of the first trustee under section 702, 1104, 1163, 1202, or 1302 of this title if such appointment or such election occurs before the expiration of the period specified in subparagraph (A); or
(2) the time the case is closed or dismissed.
[11] Leventhal also asserts that it is "unaware of any situation in American jurisprudence where the clock is not only stopped, but actually turned back where the limitations period is reset, to day one." Appellant Br. at 11. As noted above, several courts have held that the limitations period of § 546 begins anew when a trustee takes the place of a debtor in possession. The court finds the reasoning of these cases persuasive and is untroubled by Leventhal's inability to find analogous authorities in other areas of the law. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2248513/ | 273 F.Supp. 1 (1967)
MISSISSIPPI VALLEY BARGE LINE COMPANY, American Commercial Lines, Inc., and Union Barge Line Corporation, Plaintiffs,
v.
UNITED STATES of America and Interstate Commerce Commission, Defendants, and
Pittsburgh Towing Company, Charles Zubik, Jr., as Executor, and Virginia Zubik Drambel, as Executrix, of the Estate of Charles Zubik, Deceased, Intervenors.
No. 64 C 3(1).
United States District Court E. D. Missouri, E. D.
July 31, 1967.
*2 G. F. Gunn, Jr., St. Louis, Mo., James M. Henderson and Jacob P. Billig, Washington, D. C., for plaintiffs.
Veryl L. Riddle, U. S. Atty., St. Louis, Mo., Harold D. McCoy, Secretary, I.C.C., and Robert Ginanne, Gen. Counsel, I.C.C., Washington, D. C., for defendants.
Ernest L. Keathley, St. Louis, Mo., and Ernie Adamson, Middleburg, Va., for intervenors.
Before MATTHES, Circuit Judge, and HARPER and MEREDITH, District Judges.
HARPER, District Judge.
MEMORANDUM OPINION
On April 6, 1967, the plaintiffs filed a motion to require defendant, Interstate Commerce Commission, to show cause why it should not set aside its order of February 9, 1967, refusing to strike tariff of Charles Zubik, Jr., Executor, and Virginia Zubik Drambel, Executrix, and to show cause why such tariff should not be stricken from the Commission's files, and the said motion was noticed for hearing on May 5, 1967.
On May 3, 1967, Charles Zubik, Jr., Executor, and Virginia Zubik Drambel, Executrix, of the Estate of Charles Zubik, Deceased, filed a motion for leave to intervene.
On May 5, 1967, the plaintiff's motion was presented to the court and an order was issued to the Interstate Commerce Commission to show cause on July 6, 1967, why its order of February 9, 1967, refusing to strike the tariff of Charles Zubik, Jr., Executor, and Virginia Zubik Drambel, Executrix, of the Estate of Charles Zubik, Deceased, should not be set aside and said tariff stricken from its files and records, and the court further granted Charles Zubik, Jr., Executor, and Virginia Zubik Drambel, Executrix, of the Estate of Charles Zubik, Deceased, leave to intervene.
The parties were ordered to file exhibits or a statement of fact and briefs and responsive briefs.
Thereafter, on June 16, 1967, the United States of America and the Interstate Commerce Commission filed with the clerk of the court a motion to enforce judgment and commission order, and at the same time filed with the clerk a motion for a temporary injunction, and lodged with the clerk of the court an order to show cause.
The defendants in the two motions and order to show cause were Edmund D. Osbourne, Pittsburgh Towing Company, Charles Zubik, Jr., as Executor, and Virginia Zubik Drambel, as Executrix, of the Estate of Charles Zubik, Deceased.
On July 6, 1967, the various motions were presented and argued to the court, and the testimony of one witness, John T. Walsh, was heard. The attorney for Edmund D. Osbourne, raised the question of jurisdiction with respect to his client, who had not been served and was not a party to the original litigation, and had not entered his appearance.
Thereafter, on July 10, 1967, the office of the United States Attorney, on behalf of the United States of America and the Interstate Commerce Commission, refiled the motion to enforce judgment and commission order and the motion for temporary injunction previously referred to, and requested the court to, and the court did issue the order to show cause, returnable July 27, 1967, and all of the *3 parties defendant, namely, Edmund D. Osbourne, Pittsburgh Towing Company, Charles Zubik, Jr., as Executor, and Virginia Zubik Drambel, as Executrix, of the Estate of Charles Zubik, Deceased, were served with the order to show cause. The order to show cause seeks a temporary injunction pursuant to the motion to enforce judgment and commission order, which motion in addition seeks a permanent injunction.
On July 27, 1967, when the matter came on for hearing, before the court, before the commencement of the hearing, the court ordered the trial of the action on the merits advanced and consolidated with the hearing of the application for the temporary injunction, pursuant to Rule 65 (a) (2) of the Rules of Civil Procedure, and the hearing on the temporary and permanent injunction was consolidated.
The parties stipulated that the testimony introduced at the hearing before the court on July 6, 1967, was to be treated as a part of the record and as testimony in the hearing with respect to orders to show cause and the seeking of the injunction.
The testimony and the facts deduced from the record and the file disclose that the plaintiffs, Mississippi Valley Barge Line Company, American Commercial Lines, Inc., and Union Barge Line Corporation, commenced this three-judge action on January 7, 1964, to enjoin, set aside, annul, and suspend orders of the Interstate Commerce Commission (hereinafter referred to as the Commission) authorizing one Charles Zubik, Sr., to transfer and issue Water Carrier Certificate W-364 (hereinafter referred to as W-364) to Pittsburgh Towing Company (hereinafter referred to as Pittsburgh). Pittsburgh was permitted to intervene in the action.
On February 18, 1966, this court filed a memorandum opinion setting aside and annulling the Commission's approval of the said transfer. (See 252 F.Supp. 162 for a complete statement of the facts upon which this court based its opinion.) Some of these facts which are relevant in these motions will be set out in this opinion.
W-364 was issued to Charles Zubik, Sr., on January 18, 1943. W-364 granted to Zubik, Sr., the right to conduct towing operations on certain inland waterways. Zubik, Sr., suspended services under W-364 on or about July 31, 1950, and from thenceforth the certificate became dormant (at least in Zubik, Sr.'s hands). Zubik, Sr., was approached by Edmund D. Osbourne to buy W-364, and on June 9, 1960, Zubik, Sr., entered into an option agreement with Osbourne wherein for a consideration of $50.00 Zubik, Sr., gave to Osbourne the exclusive right of option to purchase at any time prior to December 31, 1960, for a purchase price of $100,000.00, W-364, provided the transfer was approved by the Commission. This transfer could not be made without complying with certain rules and regulations of the Commission.
On June 29, 1960, Zubik, Sr., at OsBourne's request, amended the option agreement and assigned W-364 to Pittsburgh, subject to approval by the Commission, with the understanding that upon the Commission's approval of the transfer Pittsburgh would issue to Zubik, Sr., 2,500 shares of its capital stock. Pittsburgh was formed in 1959 by Osbourne and the stock was issued to Osbourne (100 shares), to Douglas B. Meyers, an employee of Osbourne's (100 shares), and to a Francis X. Wiget (1 share). The change in the option agreement was made in an effort to facilitate the transfer of W-364. Osbourne had until December 31, 1960, to exercise his option to purchase the 2,500 shares from Zubik, Sr., on exchange for the $100,000.00 agreed upon in the option agreement of June 9, 1960. The Commission approved this transfer of W-364 on the theory that Zubik, Sr., was merely incorporating to operate his certificate.
It is clear that the change in the option agreement was a mere subterfuge to enable Zubik, Sr., and Osbourne to circumvent the transfer rules and regulations of the Commission, and this court so held when it entered its decree annulling *4 the Commission's approval of the transfer, and permanently enjoining the Commission from allowing a transfer of W-364 to Pittsburgh until such time as Zubik, Sr., complied with the rules and regulations of the Commission.
On March 25, 1966, pursuant to this court's memorandum opinion of February 18, 1966, the clerk of the court entered an order setting aside the Commission's orders authorizing the said transfer.
A notice of appeal was filed on this court's decision, and an appeal was taken to the Supreme Court of the United States. On November 7, 1966, the Supreme Court granted a motion to dismiss the appeal on the grounds that there had been a failure to make timely filing of the jurisdictional statement involved. A petition for rehearing was denied on December 5, 1966. At this time this court's stay of its prior order pending appeal was automatically set aside and the court's order became effective as of that date, December 5, 1966.
While the said appeal was pending, Zubik, Sr., died on August 25, 1966, and W-364 then passed to his executors, Charles Zubik, Jr., and Virginia Zubik Drambel (hereinafter referred to as the executors). On September 26, 1966, the executors, by affidavit, adopted the Zubik-Osbourne transaction and they requested the Commission to approve the transfer. By this time Osbourne had paid Zubik, Sr., a considerable sum of money on the option agreement.
On January 17, 1967, the Commission entered an order (reinstating a prior order) implementing this court's decision of February 18, 1966, whereby the said transfer to Pittsburgh was annulled and Pittsburgh was ordered to cease all operations under W-364, and the tariff which Pittsburgh had filed to operate under W-364 was stricken from the Commission records.
By this time Pittsburgh had ostensibly ceased all operations under W-364; however, on January 10, 1967, just prior to this final order of the Commission, the executors executed a power of attorney to Osbourne whereby Osbourne was permitted to file in Zubik's name a tariff to operate under W-364. The tariff which Osbourne filed by authority of the power of attorney and approved by the Commission was identical in every minute detail to the tariff under which Pittsburgh had conducted its illegal operations. In short, it was and is the same tariff.
John T. Walsh (an investigator for the Commission) testified that he had an interview with Osbourne at his office on February 13, 1967. The substance of this interview was that Osbourne had been given the power of attorney by the executors and that the said power of attorney authorized Osbourne to completely run W-364; that on February 12, 1967, Pittsburgh ceased all operations as such and that a similar operation was being conducted in the name of Charles Zubik, because Osbourne was afraid that if operations were not continued under W-364 the certificate might be revoked, and he wanted to recover $88,000.00 which he had paid Zubik, Sr., in installments on the option agreement; that the operations would continue until he got his money (assuming the operation was profitable) and after that he would continue in the capacity of manager; that a special bank account had been set up in Zubik's name, but that Osbourne could draw from the account; and that outside firms provided the towboats.
Walsh had another interview with Osbourne on February 15, 1967, and at this meeting Zubik, Jr., was present. This interview revealed that Zubik, Jr., was advised of major financial decisions in the W-364 operation, but that he did not devote all of his time to the operation since he was the manager of a concrete and gravel firm and had other problems with respect to the Estate. The Zubik Estate owned some towboats and barges, but these boats were not used in the operation of W-364.
Walsh had still another interview with Osbourne on March 10, 1967. This interview revealed that Meyer (an employee of Osbourne) was acting as office manager of the operation; and that Osbourne *5 made out all of the deposits to Zubik's account.
Walsh testified that he received a copy of the inventory of Zubik's estate and that W-364 was not listed as an asset thereon, nor were there any claims filed by Osbourne against the Estate.
The testimony of Edmund D. Osbourne and Charles Zubik, Jr., disclosed that there was a signed agreement (Exhibit 3), dated January 6, 1967, which agreement was signed by Western Rivers Corporation (hereinafter referred to as Western), by Edmund D. Osbourne, President, and accepted by the Estate of Charles Zubik, signed by Charles Zubik, Jr., Executor.
The agreement provided in part: "Western Rivers Corporation will undertake the management of Certificate W-364, operating same * * *."
Western is a corporation owned by Osbourne, which has not been in active operation before this date for some time and is really a shell, and when Osbourne was questioned with respect to its corporate powers he was unable to state that it had authority to manage any such operation, and in fact, when read what purported to be its corporate powers, could point out no reference to any part that would grant such authority.
Both Osbourne and Zubik admitted they told Walsh that Osbourne was the manager of the operation of Certificate W-364, and that the operation was really the Zubik Estate, and at no time advised Walsh of Western's position in the operation. The testimony of Osbourne, Zubik, and other witnesses, conclusively shows that the operation under W-364 before January 1, 1967, and after January 1, 1967, was identical in every respect, except for the name under which the operation was conducted, and the name under which the bank account was kept and the billings made.
Both Osbourne and Zubik testified that the income from the operation after January 1, 1967, was placed in a bank account in Zubik's name, subject to withdrawal by checks signed by Osbourne, Osbourne's wife, and Zubik, Jr.; that Zubik had only drawn one, two or three checks on the account, and those checks were for such purposes as payment to the Commission for filing fees when the tariff was filed. Osbourne drew checks on the account in favor of Western, and Western paid all operating expenses amounting to some fifty-five hundred to six thousand dollars a month, twelve hundred dollars of which was paid each month to Osbourne.
An examination of the agreement of January 6th (Exhibit 3) discloses that it is in many ways a partnership agreement. As an example, it says:
"The problem remains for us to reach an agreement which will protect all of us while keeping the Authority in effect, as well as complying with the unhappy court order in St. Louis. * * * We agree particularly under a new law we cannot afford to allow the Authority to lapse. If we cannot continue the active life of the Certificate it becomes a liability for both of us instead of an asset for both of us."
It ends up by stating:
"If you will pledge yourselves to every cooperation, particularly with respect to additions to the Authority, we will pledge ourselves to the maintenance of its vigorous life."
In this connection, the "you" in the exhibit refers to the Zubik Estate.
The testimony of Osbourne and Zubik further disclosed that under their agreement if the operation of W-364 was unprofitable Osbourne would personally take care of all losses, holding the Zubik Estate harmless. While this is not included in Exhibit 3, both witnesses testified to this fact. On June 8, 1967, an affidavit was signed by Charles Zubik, Jr., Executor, and Virginia Zubik Drambel, Executrix, which affidavit was filed with the clerk of the court on June 19, 1967, and which affidavit states in part:
"Certificate W-364 originally issued to Charles Zubik in 1953, is being operated for the best advantage of the Zubik Estate, subject to the supervision of the courts of Allegheny County, Pennsylvania."
*6 It is interesting to note that the affidavit does not say that Certificate W-364 is being operated by the Zubik Estate, but rather it says for the best advantage of the Estate. While the affidavit says the operation is "* * * subject to the supervision of the courts of Allegheny County * * *", it is admitted that W-364 is not listed as an asset of the Estate, and no orders have been made by the courts of Allegheny County with respect to W-364 or its operation or anything in any kind pertaining thereto.
The preceding facts lead to one inescapable conclusion; that is, that Edmund D. Osbourne, through Charles Zubik, Jr. and Virginia Zubik Drambel, Executors of the Estate of Charles Zubik, is employing but another subterfuge, as he previously did with Pittsburgh Towing Company, to avoid compliance with the decree of this court and with the judgment and order of the Commission. This court's decree in this case had the effect of permanently enjoining Pittsburgh (Osbourne's alter ego) from conducting any operations under W-364 until it complied with the rules and regulations of the Commission. It is evident that Osbourne has not ceased his illegal operation under W-364, but has merely changed names, and is now operating in the same manner as before the court's decision, and using the Zubik name for operations instead of Pittsburgh as his alter ego. There has been a vain attempt to show that the operation of the certificate is now by Zubik, Jr., and not Osbourne, but the facts show otherwise.
In the final analysis, the only operation that could be and is continuing under W-364 at this time is that of Osbourne.
It has been argued that the United States may not bring the present injunction motion and that this court does not have jurisdiction over Osbourne who was not a party to the primary action and did not intervene therein as the Zubiks did.
It is well settled that the courts of the United States have the inherent and statutory (28 U.S.C.A. § 1651) power and authority to enter such orders as may be necessary to enforce and effectuate their lawful orders and judgments, and to prevent them from being thwarted and interfered with by force, guile, or otherwise. Federal Trade Commission v. Dean Foods Co., 384 U.S. 597, 86 S.Ct. 1738, 16 L.Ed.2d 802; Faubus v. United States, 254 F.2d 797 (CA 8); United States v. Wallace, 218 F.Supp. 290 (DC Ala.). This rule applies whether or not the person charged with the violation of the judgment or decree was originally a party defendant to the action.
The intervenors and Osbourne have willfully and deliberately violated this court's decree and the order of the Interstate Commerce Commission of January 12, 1967, by employing deceptive and deceitful tactics. It clearly appears in the record of this case (and the plaintiffs have supplied an affidavit) that unless an injunction is issued the plaintiffs will suffer irreparable injury resulting from the obstruction of the lawful order and decree of this court and the consequent impairment of this court's integrity and the judicial process of the United States of America.
Although Charles Zubik, Jr., as Executor, and Virginia Zubik Drambel, as Executrix, of the Estate of Charles Zubik, Deceased, as intervenors, and Edmund D. Osbourne, were not parties to the proceedings to enjoin, set aside and annul Certificate No. W-364 (252 F.Supp. 162), it is conceded that they had actual knowledge of this court's decree entered in that case. Additionally, we find that they have been and are acting in concert with Pittsburgh Towing Company. This being the situation, our decree is binding upon them and the motion to enforce the judgment shall extend to them as well as the Pittsburgh Towing Company.
A motion to enforce judgment is a proper procedure to be utilized to compel compliance with the court's decision in a case of this type. Eastern Central Motor Carriers Ass'n v. United States, 251 F.Supp. 483; Movers Conference of America v. United States, 251 F.Supp. 882.
*7 For the foregoing reasons the motion to enforce judgment and commission's order with respect to Pittsburgh Towing Company, a corporation, Charles Zubik, Jr., Executor, and Virginia Zubik Drambel, Executrix, of the Estate of Charles Zubik, intervenors, and Edmund D. Osbourne, will be sustained and the injunction sought thereof entered.
In light of the evidence and our findings and conclusions, we believe that the Interstate Commerce Commission should be afforded the opportunity to give further consideration to striking the tariff filed on behalf of the Zubik Estate. An appropriate order will be entered remanding this phase of the proceeding to the Interstate Commerce Commission, with directions to again consider whether the tariff in question should be stricken.
This memorandum opinion is hereby adopted by the court as its findings of fact and conclusions of law. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1449115/ | 362 F. Supp. 1311 (1973)
The MIDLAND TAR DISTILLERS, INC., Plaintiff,
v.
M/T LOTOS, her engines, boilers, etc.,
v.
skibs A/S storli et al., Defendants.
No. 70 Civ. 3831.
United States District Court, S. D. New York.
September 5, 1973.
Brigham, Englar, Jones & Houston, New York City, for plaintiff.
Haight, Gardener, Poor & Havens, New York City, for defendants.
CANNELLA, District Judge.
Defendants Skibs A/S Storli; Skibs A/S Oljetransport & Stener S.; and Muller Rederi A/S, corporations organized *1312 under the laws of the Kingdom of Norway (hereinafter referred to as "Shipowners"), the owners of M/T "LOTOS", move to stay further proceedings on this admiralty and maritime claim pending arbitration, pursuant to 9 U.S.C. § 3. The motion is granted.
The relevant facts are not in dispute and, briefly stated, are as follows: On September 2, 1970, the date on which this action was commenced, the M/T "LOTOS", an oil tank motor vessel, was owned by the defendant shipowners. Prior to that date the M/T "LOTOS" was chartered to The Midland Tar Distillers Limited (hereinafter referred to as Midland Limited), a corporation organized under the laws of the United Kingdom of Great Britain, under a charter party, dated Bergen, Norway, July 20, 1965, between A/S Rederiet Odfjell, Minde per Bergen, as manager and agent for the Shipowners and Midland Limited, as charterer. This charter party, presently before the court, contains an arbitration clause governing all disputes arising thereunder.
18. Any dispute arising in any way whatsoever out of this Charter-Party shall be settled in London, Owners and Charters each appointing an Arbitrator-Merchant or Broker and the two thus chosen, if they cannot agree, shall nominate a third Arbitrator-Merchant or Broker whose decision shall be final. Should one of the parties neglect or refuse to appoint an Arbitrator within twenty-one days after receipt of request from the other party, the single Arbitrator appointed shall have the right to decide alone, and his decision shall be binding on both parties. For the purposes of enforcing awards this agreement shall be made a Rule of Court.
On July 29, 1970, Midland Limited shipped a bulk cargo of Cresylic Acid on board the "LOTOS" to Midland Storage, Inc. (a new Jersey Corporation), as consignee, under a bill of lading, dated in Cadishead, England. The "LOTOS" arrived at Port Elizabeth, New Jersey on August 15, 1970 and there made delivery of its cargo to the plaintiff, Midland Tar Distillers, Inc. (a New Jersey corporation), which had, prior to that date, become the owner for value and holder of the bill of lading, dated July 29th.[1] This July 29th bill of lading, the subject of the instant motion, states in pertinent part:
SHIPPED ON BOARD in apparent good order and condition (unless otherwise stated) the above goods or packages said to contain the goods specified (weight, measurement, quality, contents value unknown) for conveyance as described herein and which, subject to all the terms, liberties and conditions of CHARTER PARTY DATE are to be carried to and discharged at the port of discharge above named, or as near thereto as the ship may safely get, always afloat, and there deliver unto The Midland Tar Distillers Inc., 534 South Front Street, Elizabeth, New Jersey, U.S.A. or his assigns.
Plaintiff commenced this action alleging that the defendants' improper loading, stowage, handling, and discharge of the cargo and the exposure of the cargo to salt water and other foreign substances, caused the Cresylic Acid to arrive with substantial product losses and in a severely contaminated condition. Defendant now moves for a stay of this litigation pending arbitration of the controversy.
The primary question raised by the motion is whether the provisions of the instant bill of lading effectively incorporate by reference the charter party of July 20, 1965, including the arbitration clause thereof (set out above) and thereby embody the complete contract of carriage governing this transaction. This question must be answered in the affirmative.
It is well settled that arbitration is a creature of contract and that one cannot be compelled to arbitrate unless *1313 he has agreed to do so. Such an agreement need not be embodied in any single writing or document, but rather, as the Court of Appeals for this circuit has made clear, a charter party and a bill of lading may be read together to form the complete contract of carriage between the parties. Son Shipping Co. v. DeFosse & Tanghe, 199 F.2d 687, 688 (2 Cir.1952).
Where the terms of the charter party are, as here, expressly incorporated into the bills of lading they are a part of the contract of carriage and are binding upon those making claim for damages for the breach of that contract just as they would be if the dispute were between the charterer and the shipowner.
Numerous later cases, both in this district and elsewhere, have adhered to this approach. See, Lowry & Co. v. S.S. LeMoyne D'Iberville, 253 F. Supp. 396 (S.D.N.Y.1966), appeal dismissed, 372 F.2d 123 (2 Cir. 1967); Kurt Orban Company v. S/S Clymenia, 318 F. Supp. 1387 (S.D.N.Y.1970); Michael v. S/S Thanasis, 311 F. Supp. 170 (N.D.Cal. 1970); Mitsubishi Shoji Kaisha Ltd. v. MS Galini, 323 F. Supp. 79 (S.D.Texas 1971). See also, W. Poor, Poor on Charter Parties and Ocean Bills of Lading § 26 (5th ed. 1968).
The court must construe the terms of the charter party and the bill of lading, as well as both of them together, in accordance with the principles ordinarily applied to the construction of commercial contracts. Lowry & Co. v. S.S. LeMoyne D'Iberville, 253 F. Supp. 396, 398-399 (S.D.N.Y.1966). The bill of lading will be found to incorporate an arbitration clause contained in the charter party and will be made subject to it when the bill clearly refers to the charter party and the holder of the bill has either actual or constructive notice of the incorporation. Son Shipping, supra, 199 F.2d at 688; Lowry & Co. v. S.S. Nadir, 223 F. Supp. 871 (S.D.N.Y.1963); Michael v. S.S. Thanasis, supra, 311 F. Supp. at 173; C.f., Import Export Steel Corp. v. Mississippi Valley Barge Line Co., 351 F.2d 503, 505-506 (2 Cir. 1965). The bill in the instant case makes clear reference to the charter by employing the words "subject to all the terms, liberties and conditions of the CHARTER PARTY" and it names the plaintiff, both in the "incorporation clause" and elsewhere, thereby affording it sufficient notice of the terms incorporated.
Plaintiff opposes the application of these principles of incorporation by reference to the present dispute and relies on Production Steel Company of Illinois v. S.S. Francois L.D., 294 F. Supp. 200 (S.D.N.Y.1968) in support of its position. In Production Steel, Judge Mansfield refused a stay pending arbitration, based on a finding that the arbitration clause of the charter had not been incorporated by the bill of lading, and therefore, was not binding on the parties then before the court. The court premises this result on the detailed provisions of the bill, which it found to fully and exclusively embody the obligations of the parties, thus operating to prevent incorporation of the charter party terms. 294 F.Supp. at 201. The instant bill of lading, unlike that before the court in Production Steel, is completely devoid of any detail, and it cannot support an argument against the court's application of the doctrine of incorporation by reference. (Indeed, this lack of detail manifests to the court the intent of the parties that incorporation occur.)
The plaintiff next contends that even if the bill of lading effectively incorporates the terms and conditions of the charter party, the arbitration clause is not thereby incorporated; the clause being limited by its terms to disputes between the owners and charterer and not available in disputes to which plaintiff is a party. The clause provides that "any dispute arising in any way whatsoever out of this Charter-Party shall be settled in London, Owners and Charterers each appointing an Arbitrator" (emphasis added). Judge Weinfeld has well stated the criteria applicable in determining *1314 whether or not such a provision may be enforced against the original parties only or against subsequent parties as well. Lowry & Co. v. S.S. LeMoyne D'Iberville, 253 F. Supp. 396, 398 (S.D.N.Y.1966), appeal dismissed, 372 F.2d 123 (2 Cir. 1967).
It is true that a charter party provision for arbitration of disputes which is restricted to the immediate parties or limited to disputes "between the * * * Owners and the Charterers," as was the case of Import Export Steel Corp. v. Mississippi Valley Barge Line Co. . . . does not bind any but the named persons. On the other hand, an agreement to arbitrate all "disputes * * * arising out of this charter" binds not only the original parties, but also all those who subsequently consent to be bound by its terms.[2]
The court finds the clause presently before it to be ambiguous on its face and therefore, to be not clearly within the categories enunciated by Judge Weinfeld. Two very different meanings can be drawn from the words used. The provision can be read as encompassing all disputes between any of the parties to the charter or the bill of lading. Alternatively, the clause may be construed as limited to only disputes between the owners and charterer since they alone appear to have the power to select arbitrators (other than the impartial).
The plaintiff argues for the latter construction and, again, relies on Production Steel, supra, 294 F. Supp. 200, in support of its position. In that case the arbitration clause was, by its terms, expressly and unequivocally limited to the parties to the charter party and to the arbitration of disputes between the owners and charterers and did not encompass disputes with third parties. 294 F.Supp. at 201. The court finds plaintiff's reliance on Production Steel misplaced. The arbitration clause presently before the court contains no such clear and unequivocal limitation, nor, as will be demonstrated may such construction be reasonably inferred.[3]
The court is obligated to construe the ambiguities of the instant clause in accordance with the rules generally applied to commercial contracts, in order to glean the intent of the parties from the words they used and the actions they performed in their conduct of the transaction. The arbitration provision, by its terms, plainly manifests the intent of the parties to the charter party to arbitrate all disputes arising thereunder. This intent to arbitrate all *1315 disputes was carried forward into the bill of lading by the parties thereto by means of the unrestricted incorporation provision contained in the bill. The parties' use of the words "all the terms, liberties and conditions" allows the court no inference of any contrary intent. The plaintiff became obligated to arbitrate any dispute involving this shipment at the moment it became holder of the bill; plaintiff then having sufficient notice of the incorporated terms.[4]
The incorporation of the arbitration clause by the bill of lading, and thereby, by the plaintiff's contract of carriage, expands the scope of that clause to embrace persons other than the two parties extant at the time of its drafting. The court finds implicit in this expanded usage, a concomitant expansion in the provision for the selection of arbitrators. The arbitration provision, viewed in light of the totality of the present circumstances, especially the intended incorporation of it as a term of the bill, should be read so as to afford each party to an arbitrable controversy the right to select an arbitrator. The intent of the parties to arbitrate all controversies could not otherwise be effectuated without creating hardship and working an injustice.[5]
The Court must next address itself to plaintiff's argument that the court cannot stay the present action in favor of an arbitration that is to take place in London, England. The argument is without merit. It is well settled that provision for arbitration to take place in a foreign country does not affect the power of this court to stay the action pursuant to 9 U.S.C. § 3. Kurt Orban Company v. S/S Clymenia, 318 F. Supp. 1387, 1390 (S.D.N.Y.1970); Mannesmann Rohrleitungsbau v. S.S. Bernard Howaldt, 254 F. Supp. 278 (S. D.N.Y.1965); The Quarrington Court, 25 F. Supp. 665 (S.D.N.Y.1938).[6] The contract of the parties requires that the instant dispute be submitted to arbitration and the court concludes that this action should be stayed pending the outcome of that proceeding.
Defendants' motion to stay the instant action pending arbitration, pursuant to 9 U.S.C. § 3, is granted. Submit order on notice in conformity herewith.
NOTES
[1] Complaint ¶ 7 at 3.
[2] This approach has been employed elsewhere. Son Shipping Co. v. DeFosse & Tanghe, 199 F.2d 687, 688 (2 Cir. 1952); Kurt Orban Company v. S/S Clymenia, 318 F. Supp. 1387, 1389 (S.D.N.Y.1970); Import Export Steel Corp. v. Mississippi Valley Barge Line Co., 351 F.2d 503, 505-506 (2 Cir. 1965).
[3] The court is not unmindful of the English case of "The Elizabeth H." 1 Lloyd's List L.R. 172 (Admiralty Div.1962), wherein the court had before it an arbitration provision phrased almost identically to the instant clause. The court there refused to stay the action pending arbitration finding that the provision for the owners and charterers to select the arbitrators made the applicability of the clause to third persons unclear, thereby rendering it unenforceable against them. Id. at 178. The case considered at length the Son Shipping case, supra, and recites that the clause before the court in Son Shipping was phrased similarly to the one presently before the court, as well as, to that before the English court. Id. at 175-178. The English court found that the Court of Appeals did not pass upon the scope of such clause, and therefore, it was free to refuse the stay requested of it. Id. at 178. The English judge goes so far as to suggest that had the Court of Appeals considered the clause in full it would have denied the requested stay. Id. at 177-178. With this the court cannot agree. There is no indication of such result in Son Shipping or in any later American case. The relatively unfavorable attitude toward arbitration embraced by the English courts, unlike the approach taken by the courts of this country, better explains the result in "The Elizabeth H." than does any reliance on American precedent by the English court. Kulukundis Shipping Co. v. Amtorg Trading Corp., 126 F.2d 978 (2 Cir. 1942); Lowry & Co. v. S.S. Nadir, 223 F. Supp. 871, 874 (S.D.N.Y.1963).
[4] Son Shipping, supra, 199 F.2d at 688; Import Export Steel Corp. v. Mississippi Valley Barge Line Co., supra, 351 F.2d at 506; Lowry & Co. v. SS LeMoyne D'Iberville, supra, 253 F.Supp. at 398-399.
[5] The court, while sitting in admiralty, is not deprived of its character as an equity court and, therefore, it may apply equitable principles to insure that justice is done between the parties. 1 Benedict on Admiralty § 71 (6th ed., Knauth, 1940); Robinson on Admiralty § 22 (1939).
[6] See also, 4 Benedict on Admiralty § 611 (6th ed., Knauth, 1940); Robinson on Admiralty § 26 (1939). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1154321/ | 977 So. 2d 594 (2007)
SHANDS TEACHING HOSPITAL AND CLINICS, INC., Appellant,
v.
Michael Adam DUNN and Kathie Lynette Dunn, individually and as co-personal representatives of the estate of Michael Dylan Dunn, Appellees.
No. 1D06-4086.
District Court of Appeal of Florida, First District.
November 20, 2007.
Rehearing Denied March 27, 2008.
*595 Susan L. Kelsey of Anchors Smith Grimsley, Tallahassee, for Appellant.
Rebecca Bowen Creed of Mills & Creed, P.A., Jacksonville; Alan E. McMichael of Stripling, McMichael & Stripling, P.A., Gainesville, for Appellees.
PADOVANO, J.
The defendant, Shands Teaching Hospital & Clinics, Inc., appeals a final judgment entered on a jury verdict awarding $2 million to the plaintiffs, Michael and Kathie Dunn, for medical negligence in connection with the death of their son, Dylan. The plaintiffs alleged that a hospital nurse, Susan Lim, failed to properly monitor Dylan's condition following open heart surgery and that she gave him an excessive amount of a powerful medication known as Digoxin. We reverse the judgment on two grounds, either of which would require a new trial.
First, the trial court erred in excluding evidence that the hospital had a routine practice of requiring the attendance of two nurses when drugs such as Digoxin are administered, in order to ensure that the patient receives the prescribed dosage. The evidence of this practice may have made a difference in the outcome of the case, given the fact that there was no direct evidence that Nurse Lim gave the child more than the prescribed dose. Second, the trial court erred in denying the hospital's motion to continue the trial until such time as Nurse Lim could appear in court to testify in person before the jury. Because Nurse Lim's alleged negligence was the centerpiece of the case, the hospital should have been allowed to defend itself by presenting her testimony directly to the jury. In this situation, we conclude that the trial court abused its discretion by denying the hospital's motion for a continuance.
Dylan was born with a heart defect known as tricuspid atresia, a condition in which the tricuspid valve is not properly formed and impedes blood flow and normal heart function. This defect is corrected surgically by the Fontan procedure, which is actually a series of three surgical procedures performed in sequence over the course of the first few years of the child's life. The Fontan procedure is risky, but a child born with a tricuspid atresia cannot survive without it.
The controversy in this case arose from the medical care Dylan received in the pediatric intensive care unit at the hospital following the third procedure. He was fairly stable on the first day after surgery, but on the second day he developed a *596 rapid heartbeat and an abnormal heart rhythm. He was suffering from a form of tachycardia that develops as a post-surgical complication in fifteen to twenty percent of the children who have the Fontan procedure. The condition is not only difficult to treat, it is also serious, in that it impairs the functioning of the heart.
The doctors tried a number of corrective measures, but nothing proved to be effective in slowing Dylan's heart rate or correcting his abnormal heart rhythm. They gave him a saline-type solution to build up the volume of the heart, they sedated him with a dose of morphine, and then they administered a series of other drugs that are ordinarily used to correct heart arrhythmias. When these measures failed, they prescribed Digoxin.
Digoxin can improve the pumping action of the heart, but this potential benefit comes with risks. One possible adverse consequence of the drug is that it may cause the concentration of potassium in the patient's blood to rise to an unsafe level. Another consideration is that the drug is said to have a narrow therapeutic range: the difference between a safe, effective dose and a toxic dose is relatively small. For these reasons, the hospital controls access to Digoxin. It can be obtained only from a special dispensing machine that requires a user name and password.
Dylan was to receive a total of 450 micrograms of Digoxin, with an initial dose of 225 micrograms to be followed by two doses of 112.5 micrograms over the course of the next two days. When the order was given, Nurse Lim obtained an ampule of Digoxin from the dispensing machine. The procedure at that point would be to measure out the initial dose from the ampule and to administer it to the patient.
Nurse Lim gave Dylan the initial dose of Digoxin, but she incorrectly charted the dose as 225 milligrams instead of 225 micrograms. The parties agree that the charted amount could not have been correct, as the entire ampule contained only 500 micrograms. However, the amount that was given could not be calculated by the amount that remained in the ampule, because the unused portion was eventually destroyed as medical waste, and Digoxin is not within the class of drugs that requires a destruction record.
Dylan's potassium level had been higher than normal throughout the day and, when the initial dose of Digoxin was administered, it began to rise even higher. It continued to rise for the next seventy-five minutes, at which point he went into cardiac arrest. Doctors tried for several hours to resuscitate him by various means but they were ultimately unable to restart his heart.
In their complaint against the hospital, the plaintiffs alleged that Nurse Lim was negligent, in that she failed to properly monitor Dylan's condition after his surgery. They-contend that, as a result of this negligence, the doctors were not able to take the proper action to save Dylan's life. Relying in part on the opinions of other doctors, the plaintiffs also alleged that Nurse Lim administered an overdose of Digoxin, which caused a rapid and uncontrolled increase in Dylan's potassium level. This, they maintain, was the underlying cause of his death.
The trial began as scheduled in October 2005, but, after the jury had been selected and sworn and the parties had presented several days of testimony, the presiding judge was disqualified. This required a mistrial, and the case was then assigned to another judge and rescheduled for a jury trial on June 5, 2006.
Nurse Lim testified as a defense witness in the first trial, but the parties soon learned that she might not be available for *597 the second trial. On February 20, 2006, counsel for the hospital informed the successor judge that Nurse Lim was pregnant and that she was due to deliver her baby on June 7, 2006. He feared that she might not be able to attend the second trial, a concern the trial judge apparently shared. The judge noted that it would be important to have Nurse Lim appear in person. As he explained, "I just trust that you all probably want her live. One of the things that I'm going to be encouraging . . . is live witnesses. I know you've already done a trial, but there's nothing worse than re-plowing the ground with nothing but depositions and reading to the jurors." The judge ended the discussion on this point by telling the lawyers that he would deal with the issue later.
On March 20, 2006, the hospital moved for a continuance on the ground that Nurse Lim would not be available to testify in person. She was living in another city by then, and her doctors had advised her that she could not travel during the early part of June. The judge denied the motion, explaining that, although he preferred live testimony, he was "somewhat in error" to suggest that the trial would be continued because of Nurse Lim's pregnancy. The judge suggested that finding an alternative date would be too burdensome, and the parties then made arrangements to have Nurse Lim appear for a video deposition to be used in place of live testimony.
In her video deposition, Nurse Lim stated that she had cared for many sick children during her time at the hospital. She did not remember Dylan but she was able to offer pertinent information about his medical care from her review of the nursing charts and her knowledge of the hospital's procedures. She testified that she had removed a 500-microgram ampule of Digoxin from the dispensing machine and that she had used a calculator to convert the dosage to a fluid measurement. She explained that the calculations are very simple. The drug is dissolved in a solution. Given the fact that 250 micrograms of Digoxin would be the equivalent of one cubic centimeter of the solution, she used the calculator to conclude that the liquid measurement of the prescribed dose would be 9 cubic centimeters. She said she was certain this was the amount of Digoxin she had given to Dylan.
In the course of the video deposition, Nurse Lim also testified that the hospital has a policy of double checking the dosage of certain drugs including Digoxin, before they are administered to patients. The practice is to require that a second nurse review the calculation and measurement, to make sure that the dosage is correct. Nurse Lim testified that it was her routine to double check with another nurse before administering drugs, such as Digoxin, that are subject to this policy. She said that other nurses followed the practice, as well. Other nurses had checked her work many times before, and vice versa.
When the parties first asked the court to review Nurse Lim's deposition to consider the various objections by the plaintiffs, the trial judge determined that the evidence pertaining to the hospital's policy of double checking would be admissible. However, during the course of the trial, the judge reversed course on this point and ruled that there would be no testimony concerning the policy. Thus, the jurors were not informed that Nurse Lim would have been required to have another nurse present to check her calculations against the doctor's prescription.
Medical experts for the plaintiffs testified that blood tests done during Dylan's autopsy were consistent with the conclusion that he had died of an overdose of Digoxin. The plaintiffs' experts were of *598 the opinion that the levels of Digoxin found in his blood suggested that he had been given more than the 225 micrograms of Digoxin he was supposed to receive as the initial dose. They concluded that the rapidly rising potassium levels that ultimately caused Dylan's death resulted from an excessive amount of Digoxin.
In contrast, the hospital's experts testified that Dylan's congenital heart disease and the trauma of his recent surgery had caused the increase in his potassium level. They accepted the possibility that an excessive amount of Digoxin could have caused a marked increase in potassium, but they believed that Dylan's potassium level was so high that it was more likely produced in his body as a consequence of his medical condition. The jury rejected this explanation and found for the plaintiffs.
Whether the trial court erred in excluding the evidence of a routine practice is an issue of law. We acknowledge that many issues pertaining to the admission or exclusion of evidence are subject to review by the abuse of discretion standard. However, the de novo standard applies if the issue presented on appeal is whether the trial court erred in applying a provision of the Florida Evidence Code. See McCray v. State, 919 So. 2d 647, 649 (Fla. 1st DCA 2006); Burkey v. State, 922 So. 2d 1033 (Fla. 4th DCA 2006). If the hospital's policy of requiring two nurses qualifies as a routine practice of an organization as defined in the Florida Evidence Code, the hospital would be entitled to present evidence of the policy. There was no dispute regarding the factual predicate for the admission of the policy; it either qualifies under the Evidence Code as a routine practice or it does not. Hence, we conclude that the issue is one of law.
The policy in this case could have been proven either by documentary' evidence or by witness testimony. However, we confine our consideration to the proposed testimony, inasmuch as the document memorializing the policy was not proffered in evidence during the second trial.[1] Unlike the documentary evidence, the testimony was proffered. The hospital offered in evidence Nurse Lim's video deposition, which included her explanation of the procedure for administering Digoxin.
The plaintiffs contend that the issue regarding Nurse Lim's testimony is not preserved for review, because the hospital initially prevailed on this point and then failed to object when the trial court decided to exclude the evidence during the course of the trial. However, our review of the record reveals that the hospital did object to the exclusion of this evidence. It is clear at several points in the record that the hospital took the position that it should have been allowed to present Nurse Lim's testimony that two nurses would have been present. Hence we conclude that the issue was properly preserved for review.
That leaves us to decide whether the trial court erred by excluding the proposed evidence of the hospital's practice. To answer this question, we turn first to the applicable statute. Section 90.406, Florida Statutes states,
Evidence of the routine practice of an organization, whether corroborated or not and regardless of the presence of eyewitnesses, is admissible to prove that *599 the conduct of the organization on a particular occasion was in conformity with the routine practice.
§ 90.406 Fla. Stat. (2007). The existence of a routine practice creates an inference that an agent or employee of the organization acted according to the practice. See Tabb v. Fla. Birth-Related Neurological Injury Comp. Ass'n, 880 So. 2d 1253, 1259 (Fla. 1st DCA 2004). In the absence of contrary evidence, jurors may properly assume that an employee has adhered to established procedures.
Prior to the enactment of the Evidence Code, some courts held that proof of a routine practice was admissible only if there were some independent evidence that the practice was followed at the time of the event in question. See Charles W. Ehrhardt, Florida Evidence § 406.1 (2007 ed.). However, it is clear from the text of section 90.406 and the applicable cases that evidence of a routine practice is now admissible without such a showing. See Progressive Am. Ins. Co. v. Kurtz, 518 So. 2d 1339 (Fla. 5th DCA 1987). This rule places evidentiary value on the practice itself.
The present case illustrates the reason for the rule. Nurse Lim could not remember Dylan in particular, and she could not say from her memory alone that she gave him gave him 225 micrograms of Digoxin, as the doctors had ordered. Nor could this be proven by the nursing chart. At best, the chart would show the amount of Digoxin she believed she had given him. Yet the jurors might have concluded that she gave Dylan precisely 225 micrograms of the drug, had they known that there would have been another nurse present for the purpose of ensuring that Nurse Lim administered the correct dosage.
The evidence of the hospital's routine practice would have served to forcefully rebut the plaintiffs' claim that Nurse Lim administered an overdose of Digoxin. The trial court erred in excluding this evidence, and because there was no direct proof of the alleged overdose, we are not able to say that the error was harmless. Although this point alone would warrant reversal, we believe that the trial court also committed reversible error by denying the hospital's motion for a continuance.
Whether to grant or deny a motion to continue a trial is a matter that rests within the sound discretion of the trial judge. Therefore, Florida courts have held that a judgment should not be reversed on appeal on the ground that the trial court ruled improperly on a motion for continuance, unless the ruling amounts to an abuse of discretion. See Carpenter v. Carpenter, 451 So. 2d 914, 916 (Fla. 1st DCA 1984); Fasig v. Fasig, 830 So. 2d 839, 841 (Fla. 2d DCA 2002).
A ruling on a motion for continuance is treated with a relatively high degree of deference, even among other kinds of discretionary decisions. The Florida Supreme Court has noted that a reversal on the ground that the trial court erred in denying a motion for a continuance requires a "clear showing of a palpable abuse of . . . judicial discretion." Webb v. State, 433 So. 2d 496, 498 (Fla.1983). We take this to mean that the court has required even greater deference to continuance orders than is required of other discretionary rulings.
In light of this standard, we acknowledge that a reversal for failure to grant a motion for continuance would be justified only in very rare situations. However, there are indeed cases in which the appellate court will have no alternative but to reverse, because the injustice caused by the denial of the motion outweighs the judicial policy of deferring to the trial judge. See, e.g., Silverman v. *600 Millner, 514 So. 2d 77, 78 (Fla. 3d DCA 1987). In our view, this is one of those cases.
The need for a continuance in this case was compelling. Nurse Lim was pregnant and her doctor had ordered her not to travel. This was not a problem of the hospital's making. Likewise, the hospital could not have offered an effective solution to the problem. No other witness could have given testimony that would have been as effective as Nurse Lim's live explanation to the jury.
Nor does it appear that the reasons for denying the motion outweighed the reasons for granting it. In our view, there was no good reason to deny the motion. The trial judge said that it would be too burdensome to find another trial date. That might have been a legitimate reason to deny a continuance if the hospital had waited until the last minute to seek a continuance on grounds that could have been asserted earlier. However, in this case the hospital informed the court that Nurse Lim would be unavailable more than three months before the trial, at a time when it would have been possible to reschedule the trial without any disruption.
We would be more inclined to excuse the error in denying the motion for continuance if Nurse Lim were not such an important witness. The claim against the hospital was based entirely on the allegation that Nurse Lim was negligent. She stood in the shoes of the hospital, and her testimony would have given voice to the hospital's defense. If the jury believed Nurse Lim's statement that she monitored Dylan's condition properly and gave him the correct amount of Digoxin, the hospital would have prevailed. Yet the jury did not have the advantage of observing her live testimony. The denial of the motion for continuance deprived the hospital of the opportunity to put Nurse Lim on the witness stand so she could explain herself to the jury in person.
For these reasons, we conclude that the judgment must be reversed and that the hospital is entitled to a new trial. In light of this disposition, we find it unnecessary to address any of the other issues presented, except to say that we reject the hospital's argument that the trial court erred in denying its motion for a directed verdict. Had the hospital succeeded on that point, it would have been entitled to a judgment in its favor, not merely a new trial.
Reversed and remanded.
ALLEN and VAN NORTWICK, JJ., concur.
NOTES
[1] The document entitled, "Medical Administration Policy," states that two nurses must be present when Digoxin is administered to a patient, to ensure the correct concentration and dosage. This document was attached to the deposition Nurse Lim gave before the first trial and it was introduced by the plaintiffs in the first trial. However, for reasons that are not clear to us, neither party offered it as an exhibit in the second trial. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1845722/ | 503 So. 2d 481 (1987)
Joanne L. HEARD
v.
BONNIE AND CLYDE'S OF HATTIESBURG, INC., d/b/a Chevy's Diner and Bar.
No. 87-C-0412.
Supreme Court of Louisiana.
March 20, 1987.
Denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2141982/ | 614 F. Supp. 187 (1985)
UNITED STATES of America,
v.
Joseph CALABRIA.
Crim. No. 85-00112-02.
United States District Court, E.D. Pennsylvania.
July 9, 1985.
As Amended July 15, 1985.
*188 Edward S.G. Dennis, Jr., U.S. Atty., Ewald Zittlau, Asst. U.S. Atty., Philadelphia, Pa., for plaintiff.
Thomas Bergstrom, Philadelphia, Pa., for defendant.
MEMORANDUM
BECHTLE, District Judge.
On Thursday, June 13, 1985, the court granted the government's motion to disqualify Walter M. Phillips, Jr., Esquire, from representing defendant Joseph Calabria. The reasons for the court's Order are as follows.
FACTS
Joseph Calabria ("Calabria") testified before a Federal Grand Jury on July 24 and July 25, 1984. The Grand Jury was seeking to determine whether General Electric Company ("GE") and any of its employees participated in a scheme to defraud the United States whereby overrun labor costs, which accrued under a fixed price incentive contract with the Air Force and were not reimbursable, were claimed as costs of other government contract work.[1] In the course of his testimony Calabria, the Grand Jury indictment alleges, made several knowingly false declarations in response to questions regarding matters material to the Grand Jury investigation. As a result, the Grand Jury indictment charged Calabria with violations of 18 U.S.C. § 1623.
*189 In order to understand the pending criminal action, and the government's motion to dismiss Walter M. Phillips, Jr. ("Phillips"), a review of the facts underlying the indictment is helpful.
A. Allegations Set Forth in the Indictment
At some time prior to the initiation of the Grand Jury investigation, GE and the United States Department of the Air Force entered into a series of contracts relating to parts of the Minuteman intercontinental ballistic missile, in particular, arming and fusing systems and re-entry vehicles.[2] The contracts provided for the development, manufacture, installation, and checkout of physical components ("hardware") and computer programs ("software") used to test automatically the reliability and condition of the arming and fusing system and its component parts.
Two contracts were relevant to the Grand Jury investigation. The first contract ("First Buy")[3] was for the fabrication, testing, installation, and checkout of hardware. The hardware facilitated the running of a software package for testing the reliability of the arming and fusing system.[4] The second contract[5] involved two buys in which GE was to develop and manufacture ("Second Buy") and install and checkout ("Third Buy") hardware and software for a system to test, repair, and maintain the individual components of the arming and fusing system.
The First Buy, a cost reimbursement contract, provided that the United States would reimburse GE all allowable costs incurred in the performance of the contract to the extent prescribed in the contract. It also established an estimate of total cost for the purpose of obligation of funds and established a ceiling price which GE could not exceed, without prior approval or subsequent ratification by the United States. Under the contract, GE was required to absorb costs sustained by GE in excess of the ceiling.
The Second and Third Buy contract was a fixed-price incentive contract. This contract provided for a target cost, a target profit, a target price, and a price ceiling. The United States agreed to reimburse costs to GE up to a target cost limit. In addition, the Air Force paid the target profit as a cost of GE under the contract. The contract provided, also, that the target cost plus the target profit was called the target price. Any costs incurred by GE over the target price, but under the ceiling price, were partially reimbursed by the United States. Any costs incurred by GE over the ceiling price were not reimbursable, and would have to be absorbed by GE.
Under the contracts, GE was required to segregate all costs incurred in the performance of each Buy and maintain accurate records of these costs. Costs identifiable with a specific Buy were charged to the specific individual task for which the cost was expended. Each specific individual task was assigned a "shop order" number. Other costs, such as those not identifiable with a specific contract, were expended on overhead projects and were charged to overhead shop order numbers. Labor costs were charged to each shop order. These labor costs were calculated from time cards prepared weekly by GE employees. GE was required by federal regulation to retain all time cards and other documents relating to costs so that bills could be substantiated *190 when audited by the United States and its departments and agencies.
When all work on a task was performed, the shop order for that particular task was closed. Information, collected from the shop orders, was used to prepare the bills or billings which were submitted to the Air Force for reimbursement.
On or about January 1, 1980, before the Second Buy was completed, GE's costs had already exceeded the ceiling set under the Second Buy, which meant that additional costs had to be absorbed by GE. In what appears to have been an effort to reduce the amount of GE's non-reimbursable costs on these contracts, GE, through its employees allegedly including defendant Joseph Calabria and Roy Baessler ("Baessler"), engaged in a plan to defraud the United States by claiming and causing reimbursement of costs to GE for over $800,000.00 in non-reimbursable overrun labor tasks performed on the Second Buy. In particular, when the cost ceiling on the Second Buy was approached or exceeded, substantial portions of the additional labor costs for the Second Buy were charged to other contracts, including the First Buy, the Third Buy, and an overhead claim, all of which were, at the time, either below their cost ceiling or were directly or indirectly reimbursable by the United States.
The mischarging scheme was carried out by a variety of methods. For example, shop orders for the Second Buy were closed months before the work or tasks assigned to the shop orders were complete. As a result, GE employees were not able to charge their time to the correct Buy. In another technique used to accomplish the scheme, GE, its managers, and employees, directed that labor hours billed on time cards be changed from the Second Buy to the Third Buy.
On March 28, 1984, a federal Grand Jury was impanelled to investigate possible violations of federal criminal laws in the Eastern District of Pennsylvania, including violations of 18 U.S.C. §§ 287 and 1001. In the course of its investigation, the Grand Jury called Joseph Calabria and Roy Baessler as witnesses. Both Calabria and Baessler testified under grants of immunity. Calabria was the GE manager of the 9610 group of engineers and was chief engineer with respect to certain tasks in the Second Buy. Also, it was Calabria's responsibility to close shop orders of groups in the 9500 series. Baessler was the manager of the 9566 group of engineers and was chief engineer with respect to other tasks in the Second Buy.
Before the Grand Jury, Calabria testified (1) that he did not close nor did he know who closed shop orders for the Second Buy for the 9560 group before the work was completed, and (2) that, when he ordered labor costs billed on Lester Cohen's ("Cohen") time card for fiscal week 29 changed from the billing of the Second Buy to the Third Buy, he was not aware that Cohen was working on the Second Buy.
According to the Grand Jury indictment, when Calabria testified before the Grand Jury, (1) Calabria knew that he himself had closed or caused to be closed the shop orders for the Second Buy for the 9560 group before the work was completed, and (2) Calabria knew that Cohen was working on the Second Buy and that the time card was correct as originally submitted by Cohen. In addition, according to the indictment, these facts were significant to the Grand Jury investigation.
B. Facts Not Alleged Nor a Part of the Indictment
Walter Phillips, Jr., Esquire, has represented many of GE's officials and employees before the Grand Jury. In fact, GE has paid Phillips through the period in which Phillips represented those officials and employees before the Grand Jury until the present time. In the meantime, on May 13, 1985, GE entered a plea of guilty to 108 counts of the Indictment.
GE's officials and employees, whom Phillips represented before the Grand Jury, include Calabria, Baessler, Cohen, William Kinney ("Kinney"), Thomas Barrett ("Barrett"), Kenneth Lies ("Lies"), John Ellis *191 ("Ellis"), Michael Boyle ("Boyle"), and John Renz ("Renz"). Of these individuals, only Calabria and Baessler were indicted under 18 U.S.C. § 1623 for false declarations before the Grand Jury. The charges against Baessler have subsequently been dropped.
The government expects Baessler, Kinney, Barrett, Lies, Cohen, Ellis, Boyle, and Renz to all testify on behalf of the government in the criminal action against Calabria. None of the government's prospective witnesses continue to be represented by Phillips.
Each of these prospective witnesses, except Baessler, has said under oath in open court that each knowingly and voluntarily waives his attorney-client privilege for purposes of cross-examination by Phillips at Calabria's trial. Baessler has refused and continues to refuse to waive his attorney-client privilege.
An offer of proof submitted by the government with respect to Baessler's prospective testimony at trial indicates that Baessler will give circumstantial evidence which will, at least, marginally indicate, and, at most, establish that Calabria's answers concerned a material matter, that Calabria must have known who closed the shop order for the 9560 group before the work was completed, and that Calabria knew that Cohen was working on the Second Buy and Cohen's time card for fiscal week 29 was correct as submitted.
The government moves to disqualify Phillips. The government asserts that (1) because Phillips is paid by GE, Phillips is not independent and cannot be effective counsel for Calabria, and (2) because Phillips is hindered by his duty to Baessler, his former client, Phillips cannot effectively cross-examine and impeach Baessler.
Phillips, on the other hand, cannot perceive any conflicts of interest hindering his effective and zealous representation of Calabria. First, Phillips finds no conflict of interest or impropriety in his representation of Calabria while Phillips is being paid by GE. Second, Phillips, conceding that he cannot impeach Baessler, argues that the best defense tactic is to show Baessler has no personal knowledge because Baessler was on vacation when the 9560 group shop order was closed and when Cohen's time card was corrected. Phillips believes, therefore, that he need not impeach Baessler and his duty to Calabria does not conflict with his duty to Baessler.
Calabria maintains that he understands his rights to competent and independent counsel. Calabria states, however, that he has complete confidence in Phillips, whether or not Phillips' representation was hindered by Phillips' duty to Baessler. In addition, Calabria said that in order to keep Phillips as his attorney, Calabria was willing to hire another attorney to cross-examine Baessler, to waive his right to cross-examine Baessler. He says that he will also waive his right to appeal an adverse verdict on the ground that his attorney's representation was ineffective.
DISCUSSION
The court must not arbitrarily or lightly interfere with a defendant's choice of counsel. United States v. Flanagan, 679 F.2d 1072, 1076 (3d Cir.1982), rev. on other grounds, 465 U.S. 259, 104 S. Ct. 1051, 79 L. Ed. 2d 288 (1984). For example, if defendant's attorney's alleged conflict of interest is highly speculative, the court will not disqualify the attorney on the grounds of his conflict of interest. Where, however, an attorney's judgment in handling a case is actually or is likely to be tainted or limited by a conflict of interest, the court should disqualify him. Id. Three considerations provide the basis of this rule. First, courts must be concerned with seeing that defendants are provided with their Sixth Amendment right to effective counsel.[6] Second, the court must be concerned with judicial integrity. Third, the court, through its supervisory powers, must make *192 an effort to see that the ethical standards of the legal profession are preserved.
An attorney may have a conflict of interest when one party pays the fees for the attorney to represent another party. Model Code of Professional Responsibility, DR 5-107 (the "Code"). The Code does permit, however, the attorney to accept compensation from one other than his client with the client's consent after full disclosure. Id.
Conflict of interest concerns arise also when an attorney must prepare a case against, cross-examine, or impeach a former client on subject matter "so closely connected with the subject matter of the earlier representation that confidences might be involved." Richardson v. Hamilton International Corporation, 469 F.2d 1382, 1384 (3d Cir.1972); United States v. Dolan, 570 F.2d 1177 (3d Cir.1978). The source of this conflict is the duty owed by each attorney to each of his clients to preserve all confidential attorney-client communications. This attorney-client privilege applies when:
(1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion on law or (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client.
United States v. United Shoe Machinery Corp., 89 F. Supp. 357, 358-59 (D.Mass. 1950).
In order to assert the privilege, the holder of the privilege has the burden of affirmatively raising and demonstrating to the court the elements of the privilege. The court must, however, conclusively presume the existence of specific attorney-client confidences, in attorney disqualification cases, because the court cannot "actually inquire about the matter without thereby ... destroying the confidences." United States v. Provenzano, 620 F.2d 985, 1005 (3d Cir.1980).
The attorney's duty to preserve the confidences of his client does not end when the attorney-client relationship ends. The attorney continues to be obligated to protect his former client's privileged communications until he is released from the duty. See Model Code of Professional Responsibility, Canon 4.
The defendant may waive his Sixth Amendment[7] right to effective assistance of counsel if the waiver is knowing and voluntary. United States ex rel. Hart v. Davenport, 478 F.2d 203 (3d Cir.1973). In order for the waiver to be knowing and voluntary, the court must be satisfied that the defendant, at the time of the waiver, is aware of all the foreseeable prejudices and detrimental consequences which may result therefrom. Dolan, 570 F.2d at 1181.
Turning now to the application of these legal principles to the facts, the court has concluded, after three hearings and many hours of deliberation, that Phillips must be disqualified. Two independent grounds support this conclusion: (1) Phillips' duty to Baessler not to disclose confidential communications hinders Phillips' pretrial decision-making and preparation; and (2) at trial, there is strong likelihood that Phillips' duty to Baessler will materially hinder Phillips' defense of Calabria.
*193 Phillips does not contest that his former representation of Baessler will limit his ability to impeach Baessler at trial. Instead, Phillips has already decided that Calabria's best defense against Baessler's testimony (which he has not heard) will be to limit its harmful effects and Phillips believes that cross-examination of Baessler will indicate that Baessler was on vacation when the time cards were altered and the shop orders closed (which is presumably not privileged information). Phillips concludes that since cross-examination will indicate that Baessler was not present when the time cards were altered or when the shop orders were prematurely closed, the jury will disregard, rather than disbelieve, Baessler's testimony that Calabria knew that Cohen was working on the Second Buy during fiscal week 29 or that Calabria was responsible for closing the shop orders.
The difficulty with Phillips' argument is that he has tailored Calabria's defense in advance of the trial in a way that is the only way to avoid his professional disabilities arising out of previous representation of the government's chief witness, Roy Baessler. This simply reverses the priorities that the attorney owes to his client because it puts the lawyer's concerns ahead of the defendant's needs and then shapes the defendant's needs to eliminate the attorney's problems created by a direct conflict of interest. The court must determine whether Calabria's attorney can be independent without considering which trial tactic is defendant's best tactic. The court has neither the ability nor the authority to pick and choose which strategy is best or will be best in Calabria's case. What the court is sure of, however, is that to have to give up before trial the major traditional strategy of impeaching a key prosecution witness in a criminal case simply because that witness was a former client is a very disturbing development. It is true that in some circumstances the best cross-examination is no cross-examination. It is also true that every adverse witness does not have to be impeached or contradicted. It is not true, however, that these decisions are best made in a case such as this before trial. In preparation for trial, Calabria's attorney should be able to develop all of Calabria's defenses, unhindered by a duty to a former client. Phillips may be correct that Calabria's best defense is not to impeach Baessler, but he could easily be wrong. In any event, whether he is right or wrong cannot be decided until Baessler testifies, at the earliest.
All lawyers worth their salt know that as evidence develops at trial, trial strategies frequently emerge and change as a defense tracks the evidence offered against a defendant. Baessler's testimony alone may be sufficient to convict Calabria. If, in that circumstance, Phillips is unable to impeach his former client because of the risk that he may be using confidential information to do so, he has deprived his client of what may be the only argument to the jury Calabria has in his favor. A defense attorney not having formerly represented Baessler would have the right to probe and inquire and examine in detail Baessler's role and the foundation for his testimony. Some of this may have been disclosed to Phillips, but this will not be a disability to a new attorney because he will not be barred even if some of the information that he develops might also have been unavailable to Phillips because it had been disclosed to Phillips prior to trial by Baessler as a confidential communication.
With respect to Calabria's waiver of his rights to confront Baessler, to cross-examine Baessler, and to appeal a guilty verdict for ineffective assistance of counsel, the court finds that Calabria is not aware of the foreseeable prejudices his attorney's continued representation will entail for his trial and the possible detrimental consequences of these prejudices. Dolan, 570 F.2d at 1181. If Baessler's testimony is as damaging to Calabria's case as it is expected by the government to be, and if Phillips is deprived of a full range of cross-examination of Baessler because of prior representation, the court can only conclude that there is a direct conflict of interest in continued representation and not merely a suspicion or a speculative conflict and, accordingly, *194 the court need not accept, and does not accept, Calabria's waiver of his right to have Phillips continue to represent him despite a disclosure of the prior representation of Baessler by Phillips. See United States v. Dolan, supra.
The court finds without merit the suggestion that the court should allow Calabria to employ supplemental counsel for the purpose of cross-examining Baessler. This would be awkward, confusing to the jury, a fragmentation of the defendant's right to a strong unified defense, and of doubtful effectiveness.
CONCLUSION
For the above reasons, on June 13, 1985, the court ruled from the bench that Walter M. Phillips, Jr., Esquire was disqualified from representing Joseph Calabria in the above captioned criminal action. It was the court's concern then, as it is now, that Calabria's rights, inherent and necessary rights in the adversial judicial process, be preserved for trial.
NOTES
[1] The government reimbursed GE for all the costs which GE claimed to have incurred under these other government contracts.
[2] The re-entry vehicle is the cone which carries the warhead to its target. Inside the re-entry vehicle is the arming and fusing system which causes the warhead to explode at the appropriate time.
[3] The term "Buy" was used to designate the work for which, under the contract, compensation was to be paid in a particular fiscal year. The contracts, therefore, specified that costs for each Buy were to be segregated.
[4] This Buy was concerned with Service Star interface adaptor units for the Service Star program.
[5] This second contract pertained to the Depot Maintenance Ground Equipment/Aging and Surveillance test program and the Depot Maintenance Ground Equipment/Aging and Surveillance interactive adaptor units.
[6] Representation of a defendant by an attorney burdened by a prejudicial conflict of interest "will constitute a constitutionally defective denial of effective assistance of counsel." Walker v. United States, 422 F.2d 374 (3d Cir.), cert. denied, 399 U.S. 915, 90 S. Ct. 2219, 26 L. Ed. 2d 573 (1970).
[7] The Sixth Amendment of the United States Constitution provides:
In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1965589/ | 819 F. Supp. 1555 (1992)
CAPITAL FORD TRUCK SALES, INC. and William M. Anderson
v.
FORD MOTOR COMPANY.
Civ. No. 1:90-cv-507-ODE.
United States District Court, N.D. Georgia, Atlanta Division.
March 31, 1992.
*1556 *1557 *1558 Dirk Glen Christensen, Homer Lamar Mixson, Suzanne Forbis Herron, Bondurant Mixson & Elmore, Atlanta, GA, for plaintiffs.
Carey P. DeDeyn, Laura Malynn Shamp, Sutherland, Asbill & Brennan, Atlanta, GA, Jill Nickerson MacDonald, Ford Motor Co., Dearborn, MI, pro hac vice, for defendant.
ORDER
ORINDA D. EVANS, District Judge.
This case, alleging price discrimination and other federal and state law claims, is before the court on the following motions: (1) Defendant's motion for summary judgment on the constitutionality of the Georgia Motor *1559 Vehicle Franchise Practices Act; (2) Defendant's motion for summary judgment on the merits of Plaintiffs' claims; (3) Defendant's motion to file an out of time motion to compel; (4) Plaintiffs' motion to notify the Attorney General of the State of Georgia of an attack on the constitutionality of the Georgia Motor Vehicle Franchise Practices Act; (5) Defendant's motion to exclude affidavits filed in opposition to Defendant's motion for summary judgment; (6) Plaintiffs' motion to abstain; (7) Plaintiffs' motion for a continuance; and (8) Plaintiffs' motion for leave to file a supplemental brief in opposition to Defendant's motions for summary judgment.
I. Factual Overview.
This action, brought by Plaintiffs Capital Ford Truck Sales, Inc. ("Capital Ford") and its principal shareholder, William M. Anderson ("Anderson"), involves a challenge to the wholesale pricing mechanism used by Defendant Ford Motor Company ("Ford Motor") in selling medium and heavy trucks to Ford Motor's truck dealers, including Capital Ford. The complaint alleges numerous federal and state law claims arising out of the pricing mechanism, including violations of the Federal Dealer's Day in Court Act, 15 U.S.C. § 1221, et seq.; the Georgia Motor Vehicle Franchise Practices Act, O.C.G.A. § 10-1-620, et seq.; Section 1 of the Sherman Anti-Trust Act, 15 U.S.C. § 1;[1] and the Robinson-Patman Act, 15 U.S.C. § 13(a). The complaint also alleges breach of fiduciary duty under common law. Plaintiffs also assert a claim for "increased interest costs" in connection with the floor planning of Plaintiffs' truck inventory by Ford Motor Credit Company ("FMCC"), a wholly owned subsidiary of Defendant Ford Motor.
Defendant Ford Motor is engaged in the manufacture of various types of vehicles, including heavy, medium and light duty trucks. At the time the complaint in this action was filed, Plaintiff Capital Ford was in the business of selling and servicing trucks manufactured by Ford Motor. Capital Ford purchased vehicles and operated in the Atlanta, Georgia area pursuant to several written agreements executed by Capital Ford and Ford Motor.[2]
The principal agreement was a document dated September 1, 1973 entitled "Ford Heavy Duty Truck Sales and Service Agreement" (the "Sales and Service Agreement").[3] The Sales and Service Agreement incorporated, as part of its terms and conditions, periodic notices issued by Ford Motor known as "Heavy Duty Truck Terms of Sale Bulletins" ("Bulletins"). At all times relevant to this litigation, the Bulletin applicable to the Sales and Service Agreement between Capital Ford and Ford Motor was the "Heavy Duty Truck Terms of Sale Bulletin No. HT-4," effective April 1, 1981.[4]
The principal focus of Plaintiffs' complaint is two pricing programs, implemented by Ford Motor under the Sales and Service Agreement in 1980,[5] and expanded in the following years. Those programs were known as the competitive price assistance ("CPA") program and the government price concession ("GPC") program. As the programs initially operated, Ford Motor would lower its wholesale heavy truck prices (i.e., *1560 the price it charged to dealers) on a case-by-case basis when Ford Motor was notified that its dealer was attempting to sell trucks to certain fleet customers. The lowering of the price was known as competitive price assistance, or CPA, because the dealer received the wholesale price discount only if the dealer could show that competition was underbidding him on the potential sale.[6]
In the years that followed the establishment of CPA/GPC, Ford Motor expanded the program so that CPA/GPC price assistance was applicable to all purchases of heavy trucks. In addition, Ford Motor changed the procedures by which it determined the level of price assistance allowed in each transaction. The program evolved from one in which each request for price assistance was reviewed on a case-by-case basis to one in which published schedules were utilized to set assistance levels. It appears that by the mid-1980s, the program had changed to its current form in which Ford Motor utilized CPA/GPC schedules to set price assistance levels for all sales of medium and heavy trucks to its dealers. These schedules, known as "rainbow schedules" because of their color coded references, set the dollar amount of CPA/GPC available to a dealer in a given transaction based on the model of truck, the option package, and the number of trucks being sold in the transaction.[7]
In cases in which a dealer felt that the initial allowance of CPA/GPC under the rainbow schedule was insufficient, a CPA/GPC appeal procedure was in place in which a dealer could request additional price reductions. Under the appeal process, a dealer provided Ford Motor with data about the "street price" (perceived actual retail value) of the truck and the amount of anticipated dealer profit on the transaction. Ford Motor then evaluated the appeal, and advised the dealer regarding the amount of additional CPA/GPC, if any, that would be allowed. According to Ford Motor rules, appeals from rainbow schedule allocations were only available if the sale met certain criteria. For a transaction to be eligible for CPA/GPC appeal, it had to involve a sale of ten or more trucks or had to be a sale to one of approximately 2,200 "sales solicitation program" customers ("SSP customers"). Deposition testimony indicates that these appeal criteria were strictly enforced. See Eaton Depo., p. 114; Kahn Depo., p. 187. Capital Ford did not generally sell to SSP customers or to customers who bought more than ten vehicles at one time. Anderson Depo., pp. 369-69, 272-73.
Two final facts bear mention with regard to Ford Motor's CPA/GPC price assistance program. First, evidence in the record supports Plaintiffs' claim that, where a price-assisted sale resulted in a profit to Capital Ford in excess of 4%, Ford Motor would reduce subsequent CPA/GPC awards to "chargeback" that excess profit. Merrifield Depo., p. 109; Bloomquist Depo., pp. 82-83; Anderson Depo., pp. 729, 739, 775-76. Second, there is evidence in the record supporting Plaintiffs' contention that during the mid-to-late 1980s, Ford Motor wholesale truck prices were above actual retail value,[8] thus forcing dealers to request CPA/GPC assistance on 100% of their heavy truck sales.[9] It is these two facts which give rise to a substantial number of Plaintiffs' claims in this action.
*1561 II. Preliminary Motions.
Before turning to the substance of Defendant's two motions for summary judgment, the court will address a number of preliminary motions now pending before the court. The first of these is a motion by Plaintiffs Capital Ford and Anderson for a second continuance in responding to Ford Motor's motion for summary judgment on the merits. Plaintiffs seek a continuance to respond to the summary judgment motion until sixty (60) days after McNeilus Truck and Manufacturing, Inc. ("McNeilus"), a non-party to this case, complies with a Minnesota Court order compelling discovery.
Fed.R.Civ.P. 56(f) governs this court in its determination whether to defer ruling on Defendant's motion for summary judgment a second time in order to allow additional discovery. This rule provides, in relevant part:
[s]hould it appear from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had....
The Fifth Circuit has elaborated on the requirements of Rule 56(f) by explaining:
[a] party must conclusively justify his entitlement to the shelter of rule 56(f) by presenting specific facts explaining the inability to make a substantive response ... and by specifically demonstrating "how postponement of a ruling on the motion will enable him ... to rebut the movant's showing of the absence of a genuine issue of fact."
Securities and Exchange Comm. v. Spence & Green Chemical Co., 612 F.2d 896, 901 (5th Cir.1980).
A review of Plaintiffs' motion for continuance reveals that they have not met their burden under Rule 56(f). Plaintiffs explain that they have diligently pursued discovery against McNeilus, but fail to present any specific facts which demonstrate how postponement of the court's ruling will enable them to rebut Ford Motor's motion for summary judgment on Count III of the complaint.[10] For this reason, Plaintiffs' motion for a continuance is DENIED.
Also pending before the court is Defendant's motion to exclude 13 affidavits filed by Plaintiffs in opposition to summary judgment. Ford Motor objects to the first ten of these affidavits,[11] collectively known as the Craig Affidavits, on the ground that Plaintiffs failed to produce them in response to a March 29, 1991 request for production served by Defendant.[12]See Ford Motor's third request for production of documents, no. 1. As a result, Ford Motor contends that it has been unduly prejudiced because it was denied access to the affidavits in preparing its motion for summary judgment.
Contrary to Defendant's contentions, it appears that any prejudice suffered by Ford Motor was minimal. As of May 3, 1991, Ford Motor was aware that each of the affiants (with the exception of Thomas H. Reeves) was a person having knowledge of the facts alleged in the complaint. See Plaintiffs' response to second interrogatories of Ford Motor, no. 1. In fact, in February, 1991, Ford Motor questioned Plaintiff Anderson about each of these individuals, including Mr. Reeves, in deposition. See Anderson Depo., pp. 329-47, 392-413. Thus, *1562 Ford Motor had the opportunity to interview or depose these individuals prior to the court imposed discovery deadline of May 30, 1991. In addition, to the extent that the affidavits submitted by Plaintiffs contained information which Ford Motor considered inaccurate, Defendant had the opportunity to respond in one of its two extensive reply briefs in support of summary judgment. Because any prejudice suffered by Defendant was slight, the motion to exclude the Craig affidavits is DENIED.
Ford Motor also seeks to exclude 9 of the 176 paragraphs contained in the affidavit of Plaintiff William M. Anderson, which was submitted by Plaintiffs in connection with their opposition to Ford Motor's summary judgment motions. Ford Motor objects to paragraphs 4, 6 and 7 of the affidavit because the paragraphs contain contentions which conflict with Anderson's deposition testimony. As such, Ford Motor argues that the affidavit contentions do not raise genuine issues of material fact. Plaintiffs concede that the paragraphs appear to be somewhat inconsistent with Anderson's deposition testimony, and they have submitted a supplemental affidavit explaining the differences. In light of this response, the court will not exclude paragraphs 4, 6 and 7 of the Anderson affidavit, but will consider those paragraphs in connection with the Mr. Anderson's supplemental affidavit and deposition testimony. The motion to exclude paragraphs 4, 6 and 7 of the Anderson affidavit is DENIED.
Ford Motor also moves to exclude paragraphs 20 through 25 of the Anderson affidavit on the grounds that the paragraphs contain allegations not made on personal knowledge. The subject paragraphs relate to Plaintiffs' claims of price discrimination in connection with certain transactions involving Ryder Truck Rental, Inc. ("Ryder") and sales to Ryder under "trade packages". In view of the fact that Plaintiffs' claims relating to these transactions are dismissed below, the motion to exclude these paragraphs is unnecessary and is DISMISSED. Similarly, Ford Motor's motion to exclude the affidavit of Dr. Ferdinand Levy, which was submitted by Plaintiffs in connection with their brief in support of the constitutionality of the Georgia Motor Vehicle Franchise Practices Act, is unnecessary in light of this court's abstention on this issue (see below). That motion is also DISMISSED.
Two other minor motions are also pending before the court. Plaintiffs' motion to file a supplemental brief in opposition to summary judgment is GRANTED. Defendant's motion to file an out of time motion to compel is DISMISSED as moot.
III. Defendant's Motion For Summary Judgment On The Constitutionality of the Georgia Motor Vehicle Franchise Practices Act and Plaintiffs' Motion To Abstain.
The first substantive motion before the court is Defendant Ford Motor's motion for summary judgment on the constitutionality, under the Constitution of the State of Georgia, of the Georgia Motor Vehicle Franchise Practices Act, O.C.G.A. § 10-1-620, et seq. (the "Franchise Practices Act"). Ford Motor maintains that the Franchise Practices Act is unconstitutional under the "due process" and "impairment of contract" clauses of the state Constitution, as well as under the clause requiring laws to protect people and property "impartially and completely." Capital Ford disputes these claims.
Before considering Defendant's motion for summary judgment, the court must address Plaintiffs' motion to abstain from ruling on the constitutionality of the Franchise Practices Act. In August, 1990, Plaintiffs Capital Ford and Anderson filed an action in the State Court of Fulton County, Georgia against Defendant Ford Motor, seeking to recover for violations of the Franchise Practices Act, breach of fiduciary duty and breach of contract.[13] The parties agree that the operative facts of the state court action, styled Capital Ford Truck Sales, Inc. and William M. Anderson v. Ford Motor Company, Civil Action File No. 90-VS-21786-E, *1563 are virtually identical to the facts asserted in the instant case.
The pending motion for summary judgment on the constitutionality of the Franchise Practices Act was filed by Defendant Ford Motor in July, 1991. In their initial response, Plaintiffs argued that the state court was better suited to rule on the constitutionality of the statute under the Georgia Constitution. Defendant Ford Motor has now challenged the constitutionality of the Franchise Practices Act in the state court action by filing a motion for summary judgment. The arguments raised by Ford Motor in the two summary judgment motions are identical, and each of the issues presented to this court regarding the constitutionality of the Franchise Practices Act has been presented to the state court. Under these circumstances, Plaintiffs argue that abstention by this court is warranted.
The Supreme Court has explained:
[A] federal court, adhering to the salutary policy of refraining from the unnecessary decision of constitutional questions, may stay proceedings before it, to enable the parties to litigate first in the state courts questions of state law, decision of which is preliminary to, and may render unnecessary, decision of the constitutional questions presented. Railroad Commission v. Pullman Co., 312 U.S. 496 [, 61 S. Ct. 643, 85 L. Ed. 971].... It is the court's duty to do so when a suit is pending in the state courts, where state questions can be conveniently and authoritatively answered, at least where the parties to the federal court action are not strangers to the state action. Chicago v. Fieldcrest Dairies, 316 U.S. 168 [, 62 S. Ct. 986, 86 L. Ed. 1355].
Meredith v. City of Winter Haven, 320 U.S. 228, 236, 64 S. Ct. 7, 12, 88 L. Ed. 9 (1943).[14] Other cases have similarly held that when parties to a federal action which raises a difficult state law issue are litigating the identical issue in state court, abstention is warranted. See Harris County Commissioners Court v. Moore, 420 U.S. 77, 83, 95 S. Ct. 870, 875, 43 L. Ed. 2d 32 (1975) ("[w]here there is an action pending in state court that will likely resolve the state-law questions underlying the federal claim, we have regularly ordered abstention."); Albertson v. Millard, 345 U.S. 242, 244, 73 S. Ct. 600, 601, 97 L. Ed. 983 (1953) (holding that pendency of an identical action in state court involving the construction of a state statute requires the district court to abstain pending the outcome of the state action); City of Chicago v. Field-crest Dairies, 316 U.S. 168, 62 S. Ct. 986, 86 L. Ed. 1355 (1942) (holding that a federal court action should be stayed where matter of state law is at issue and an identical action is pending in a state court).
As explained by a leading commentator, in discussing abstention in private litigation:
[t]here is no problem if the federal court merely postpones its decision for a time to await an opinion of the state court in an action already pending.... "[t]his course is fairly common, and since it does not require the present parties to institute a second action, it is less burdensome to them than the typical abstention...."
17A Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 4246, at pp. 104-05 (2d ed. 1988) (quoting American Law Institute, Study of the Division of Jurisdiction between State and Federal Courts, p. 297 (1969)). Based on this authority, it appears that abstention is warranted in this case.
Defendant Ford Motor opposes Plaintiffs' motion to abstain on two grounds. First, Ford Motor argues that abstention is unwarranted because the legal issues presented are neither novel nor surrounded by uncertainty. A review of Ford Motor's brief in support of summary judgment, however, belies this claim. The due process challenge, on which Ford Motor principally relies, raises difficult issues regarding whether the "rational relationship" test developed in Harris v. Duncan, 208 Ga. 561, 67 S.E.2d 692 (1951) or the "affected with a public interest" test, as explained in State v. Major, 243 Ga. 255, 253 S.E.2d 724 (1979), is applicable in determining the constitutionality of the Franchise *1564 Practices Act.[15] Also at issue is whether the Georgia Supreme Court's invalidation of portions of a prior Georgia statute, the 1976 Motor Vehicle, Farm Machinery and Construction Equipment Franchise Practices Act, as amended, in Georgia Franchise Practices Commission v. Massey-Ferguson, Inc., 244 Ga. 800, 262 S.E.2d 106 (1979), compels this court to invalidate sections of the current Franchise Practices Act which provide a remedy for a manufacturer's failure to act in "good faith". On its face the Georgia Supreme Court's opinion in Massey-Ferguson does not provide a clear answer.
Ford Motor's other constitutional challenges to the Franchise Practices Act also raise difficult issues of Georgia constitutional law. Ford Motor's "void for vagueness" argument implicates unresolved issues of Georgia law regarding whether the terms "good faith," "discrimination," "any of its business transaction," "any aspect of dealings," and "any aspect of operating a motor vehicle dealership" are too vague to be enforceable. Similarly, Defendant's claim that the Franchise Practices Act violates the "impairment of contracts" and "impartial and complete" clauses of the Georgia Constitution would require the court to rule on the scope of the Franchise Practices Act and various recent decisions of the Georgia Supreme Court, including Denton v. Con-Way Southern Express, Inc., 261 Ga. 41, 402 S.E.2d 269 (1991). In view of the difficult issues raised, it is clearly the wiser course to allow the state court to authoritatively construe the Franchise Practices Act and to decide on its constitutionality under the Georgia Constitution.
Ford Motor makes a second argument in opposition to Plaintiffs' motion to abstain. In light of the fact that Plaintiffs have chosen to institute an action in federal court and to append state law claims, Ford Motor argues that it would be inequitable to now abstain in order to allow a state court to adjudicate on issues of state law. Defendant cites Fields v. Rockdale County, 785 F.2d 1558 (11th Cir.), cert. denied, 479 U.S. 984, 107 S. Ct. 571, 93 L. Ed. 2d 575 (1986) as support for this claim. Fields, however, stands only for the proposition that abstention is not proper if the district court finds that the state proceeding is motivated "by a desire to harass or is conducted in bad faith." 785 F.2d at 1562 n. 6 (citing Huffman v. Pursue, Ltd., 420 U.S. 592, 611, 95 S. Ct. 1200, 1212, 43 L. Ed. 2d 482 (1975)). As explained in the court's order of January 4, 1991, Plaintiffs are entitled to a state forum to resolve their state law claims. See Capital Ford Truck Sales, Inc. vs. Ford Motor Co., No. 1:90-cv-2062-ODE, slip op. at 4 (N.D.Ga. Jan. 4, 1991). The court cannot say that the state law filing in this case was motivated by bad faith.
In view of the fact that difficult issues of Georgia law are raised by Defendant's challenge to the Franchise Practices Act, and in light of the fact that the constitutional validity of the statute is presently being considered in a state court action between these two parties, the court finds that abstention on this issue is warranted. Plaintiffs' motion to abstain is GRANTED. The court will STAY all further proceedings with regard to Counts two, six and seven of Plaintiffs' complaint pending resolution by the State Court of Fulton County, Georgia of the constitutionality of the Franchise Practices Act.[16] In view of this decision, Defendant's motion for summary judgment on the constitutionality of the Georgia Motor Vehicle Franchise *1565 Practices Act is DISMISSED without prejudice to refile. Plaintiffs' motion to notify the Attorney General of the State of Georgia of an attack on the constitutionality of the Georgia Motor Vehicle Franchise Practices Act is DISMISSED as unnecessary.
IV. Ford Motor's Motion For Summary Judgment On The Merits.
With Plaintiffs' claims under the Georgia Motor Vehicle Franchise Practices Act stayed, four claims remain. The court will consider Defendant's motion for summary judgment on Plaintiffs' Sherman Act, Robinson-Patman Act, Federal Dealer's Day In Court Act and common law claims in the order in which the claims appear in Plaintiffs' complaint.
A. Standard For Summary Judgment.
Summary judgment is appropriate only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the [Defendant] is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In ruling on Defendant's motion, the court must view the evidence in a light most favorable to Plaintiffs. Adickes v. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 1608, 26 L. Ed. 2d 142 (1970). To prevail in its motion for summary judgment, Defendant must show that the evidence is insufficient to establish an essential element of Plaintiffs' case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). If Defendant makes a sufficient showing, then Plaintiffs "must come forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corporation, 475 U.S. 574, 587, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986) (quoting Fed.R.Civ.P. 56(e)). If the evidence supporting Plaintiffs' claims is insufficient for a jury to return a Plaintiffs' verdict, or is merely colorable or not significantly probative, then Defendant is entitled to summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). If, however, reasonable minds could differ as to the import of the evidence, and a reasonable interpretation of the evidence could lead to a Plaintiffs' verdict, then summary judgment is inappropriate. Id. at 251-52, 106 S. Ct. at 2511-12. With this standard in mind, the court now turns to each of Plaintiffs' claims.
B. Claims Under The Federal Dealer's Day In Court Act.
In count I of their complaint, Plaintiffs have alleged numerous claims under the Federal Dealer's Day In Court Act (the "Dealer Act"), 15 U.S.C. § 1221 et seq. The Dealer Act was enacted "to protect automobile dealers from abusive trade practices employed by manufacturers in an extremely concentrated market." Stamps v. Ford Motor Co., 650 F. Supp. 390, 395 (N.D.Ga.1986) (citing legislative history of the Act). The Dealer Act permits an automobile dealer to bring suit against an automobile manufacturer if the manufacturer fails
to act in good faith in performing or complying with any of the terms or provisions of the franchise, or in terminating, canceling or not renewing the franchise with said dealer....
15 U.S.C. § 1222. The term "good faith" has a specialized meaning under the Dealer Act. It is defined as the duty of the parties
to act in a fair and equitable manner toward each other so as to guarantee the one party freedom from coercion, intimidation or threats of coercion or intimidation from the other party: Provided, That recommendation, endorsement, exposition, persuasion, urging or argument shall not be deemed to constitute a lack of good faith.
15 U.S.C. § 1221(e). The Eleventh Circuit, in interpreting the Dealer Act, has explained:
[c]ase law is clear that a manufacturer fails to act in good faith for purpose of recovering under this Act only if its conduct amounts to coercion or intimidation. In absence of coercion, intimidation or threats thereof, there can be no recovery under the Act, even if the manufacturer otherwise acts in "bad faith" as that term is normally used.
*1566 Cabriolet Porsche Audi, Inc. v. American Honda Motor Co., 773 F.2d 1193, 1210 (11th Cir.1985), cert. denied, 475 U.S. 1122, 106 S. Ct. 1641, 90 L. Ed. 2d 186 (1986).
The legislative history of the Dealer Act explains that the "existence of coercion or intimidation depends on the circumstances arising in each particular case and may be inferred from a course of conduct." H.R.Rep. No. 2850, 84th Cong., 2d Sess., reprinted in 1956-3 U.S.Code Cong. & Ad. News 4596, 4603. See also H.C. Blackwell Co. v. Kenworth Truck Co., 620 F.2d 104, 106 (5th Cir.1980). In determining whether a questionable course of conduct amounts to coercion, ascertaining the manufacturer's intent is crucial. See Overseas Motors, Inc. v. Import Motors Limited, Inc., 519 F.2d 119, 123-24 (6th Cir.1975); Stamps, 650 F.Supp. at 397. The Fifth Circuit, in binding authority, has explained:
[t]he issue of [a Defendant's] bad faith involves its intentions as manifested by its actions. This is a factual determination for the jury. Shor-Line Rambler, Inc. v. American Motors Sales, 543 F.2d 601, 604 (7th Cir.1976). Bad faith may consist of coercive conduct manifested by "a wrongful demand which will result in sanctions if not complied with." Rea v. Ford Motor Company, supra, 497 F.2d [577] at 585 [3rd Cir.1974]. "[W]hether a manufacturer has acted with sufficient justification to constitute good faith in bringing pressure to bear on a dealer is a factual question the determination of which will depend on the circumstances arising in each particular case." Id.
H.C. Blackwell Co., 620 F.2d at 107. See also General Motors Acceptance Corp. v. Marlar, 761 F.2d 1517, 1522 (11th Cir.1985).
Plaintiffs set forth three distinct claims under the Dealer Act. They describe their first claim as follows:
Ford Motor engaged in coercive and intimidating behavior by intentionally and with malicious intent inflating the wholesale prices of Ford heavy trucks so that Capital Ford would be coerced into seeking CPA and GPC discounts from Ford Motor. Before giving the needed discount, Ford Motor would coerce Capital Ford into reducing its profit margin to an "approved" level, which level was so small that Capital Ford could not remain in business.
Plaintiffs' Brief Opposing Summary Judgment On The Merits, p. 40. Ford Motor concedes that several of Plaintiffs' factual allegations are correct. It admits that the wholesale prices on its heavy trucks were in excess of the actual retail value and that CPA/GPC assistance was necessary for dealers to make heavy truck sales. It further admits that, in some cases, it made inquiries into the expected dealer profits on individual transactions prior to awarding price assistance.[17] Ford Motor argues, however, that these facts are insufficient to establish a Dealer Act claim. The court agrees.
The cornerstone of Plaintiffs' Dealer Act claims is the assertion that Ford Motor structured its pricing system so as to restrict dealer profits to a level insufficient for Capital Ford to remain in business. It is beyond dispute, however, that a manufacturer is free to set prices at any level it chooses.[18] The claim that manufacturer price levels are set too high, or fail to provide a sufficient profit margin for dealers, is insufficient to give rise to a cognizable claim under the Dealer Act. Overseas Motors, Inc. v. Import Motors, Ltd., 519 F.2d 119 (6th Cir.), cert. denied, 423 U.S. 987, 96 S. Ct. 395, 46 L. Ed. 2d 304 (1975). Defendant argues that because manufacturer decisions on wholesale price levels are not the proper subject of Dealer Act claims, manufacturer decisions on the level of price *1567 discounts to offer are similarly not the proper subject of claims under the Act. Defendant points out that this is the law under the Sherman Anti-Trust Act, see e.g., Lehrman v. Gulf Oil Corp., 464 F.2d 26 (5th Cir.) (supplier may grant price support to dealer to match competitors' prices, as long as the supplier does not forbid lowering prices below price support level), cert. denied, 409 U.S. 1077, 93 S. Ct. 687, 34 L. Ed. 2d 665 (1972); Butera v. Sun Oil Co., 496 F.2d 434 (1st Cir.1974),[19] and argues that the same principle should apply in Dealer Act cases.
The court agrees with Defendant's argument. It follows that if manufacturers are free to set wholesale price levels, they are also free to periodically lower those wholesale prices in order to assist their distributors in meeting price competition. Under the rationale of Overseas Motors, the discount levels manufacturers choose are not subject to judicial scrutiny, even if insufficient to provide "adequate" profits. The court can conceive of no principled basis by which to distinguish Overseas Motors from the instant case. Plaintiff in that case alleged that the price a manufacturer was charging made the cars "commercially non-competitive." 519 F.2d at 124. In this case, Plaintiffs similarly attack the price level Ford Motor set for its heavy trucks, as ultimately revised by the price assistance program, and contend that the prices were too high. As in Overseas Motors, Plaintiffs' claim is, at bottom, simply a challenge to manufacturer wholesale price levels. Overseas Motors establishes that regardless of the price a manufacturer chooses, that price is not subject to a challenge as "coercive" or "intimidating" under the Dealer Act. Id.
Ford Motor's price assistance program was well within the requirements set by antitrust law. See Order of September 12, 1990. Its action in establishing heavy truck wholesale prices at a level which exceeded "street value," and adjusting those prices through the CPA/GPC program, might have been an inefficient or unwise pricing decision.[20] The court, however, has uncovered no case holding that such unwise pricing decisions constitute "bad faith" or "coercion" as those terms are defined in the Dealer Act. See H.R.Rep. No. 2850, 84th Cong., 2d Sess. (1956), reprinted in 1956 U.S.Code Cong. Admin.News 4596, 4604 (stating that under the Dealer Act, a manufacturer is not required to guarantee profitable operation for a dealer). Under relevant law, Ford Motor was free to set prices at any level, and was free to discount or not discount those prices as it saw fit. In view of this, the court holds that Ford Motor's enforcement of its price assistance program did not amount to "coercion" under the Dealer Act. See H.C. Blackwell Co., 620 F.2d at 107. Defendant is entitled to summary judgment on Plaintiffs' first Dealer Act claim and its motion is GRANTED as to this claim.
Plaintiffs' second Dealer Act Claim relates to the actions of Ford Motor's wholly owned subsidiary, FMCC, the company which financed Capital Ford's floor plan. According to Plaintiffs, FMCC required Capital Ford to pay interest on the inflated wholesale prices of the trucks held in inventory pending the CPA/GPC discount received from Ford Motor. Anderson Depo., pp. 292-96, 683-85. Capital Ford contends that because all profits of FMCC went directly to Ford Motor, this interest charge was another mechanism through which Ford Motor profited from its wholesale price scheme and that *1568 this constitutes a separate Dealer Act violation. This claim is derivative of Plaintiffs' first Dealer Act claim, as it relies on the contention that Ford Motor's setting of wholesale prices on heavy trucks, and subsequent CPA/GPC discounts, violated the Dealer Act. Because Ford Motor's underlying actions do not violate the Dealer Act, a fortiori, FMCC's actions are not violative of the Act. For the reasons stated above, Defendant is entitled to summary judgment on this claim.
Plaintiffs' final Dealer Act claim can be disposed of quickly. Plaintiffs assert in their memorandum in opposition to summary judgment that Ford Motor acted in bad faith in terminating the Capital Ford Sales and Service Agreement in March, 1991. A review of the pleadings filed in this case reveals that there is no Dealer Act wrongful termination claim before the court. The claim was not made in the original complaint and Plaintiffs have not amended their complaint to allege that Capital Ford was wrongfully terminated or to allege that Ford Motor failed to perform its obligations under the termination provisions of the Sales and Service Agreement. Accordingly, summary judgment is GRANTED on this claim.
C. Robinson-Patman Act Claims.
In count III of their complaint, Plaintiffs have asserted several claims under the Robinson-Patman Act, 15 U.S.C. § 13(a). The bulk of these claims relate to alleged unlawful price discrimination in connection with the sale of Ford heavy trucks to: (1) Ryder Truck Rental, Inc.; (2) certain body companies; and (3) other Ford heavy truck dealerships, including Peach State Ford Truck Sales, Inc., the principal competitor of Capital Ford in the Atlanta market. The essence of each of these claims is that the above entities received, either directly or indirectly, greater amounts CPA/GPC than Capital Ford and thus were able to sell to end-user customers at prices significantly below what Capital Ford could offer. Plaintiffs have also asserted price discrimination claims in connection with Ford Motor's handling of its inventory of model CF-8000 trucks. Finally, Plaintiffs contend that the rainbow schedules used by Ford Motor to initially assess CPA/GPC, when considered in conjunction with the limited appeal rules, discriminate in favor of dealers selling to high volume or SSP customers and thus violate the Robinson-Patman Act.
Section 2(a) of the Robinson-Patman Act provides that it is unlawful for a seller "either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality." 15 U.S.C. § 13(a). In order to establish a violation of the Robinson-Patman Act, Plaintiffs must show that Ford Motor discriminated in price between equipment of like grade and quality sold to Capital Ford and to one of Capital Ford's competitors. Mays v. Massey-Ferguson, Inc., 1990-1 Trade Cases (CCH) ¶ 69,028, p. 63,637, 1990 WL 80673 (S.D.Ga.1990). Plaintiffs must also show that the challenged sales were reasonably contemporaneous; that the price discrimination involved a discount that was not "functionally available" to Capital Ford on equal terms; and that there was a reasonable possibility that the discrimination was likely to result in substantial injury to competition. Id. Injury to competition may be shown either by "proof of substantial discrimination over time," or "direct evidence of lost sales...." J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524 (3rd Cir.1990). Finally, Plaintiffs must show that the price discrimination caused actual injury to Capital Ford. Mays, cited supra. Ford Motor contends that each of Plaintiffs' Robinson-Patman claims is insufficient as a matter of law for one or more of the above reason. For ease of analysis, the claims are discussed separately.
1. Sales to body companies.
Plaintiffs have alleged price discrimination in connection with certain sales of Ford heavy truck chassis to body companies.[21] Capital Ford admits that it did not regularly sell to body companies or compete with other *1569 Ford dealers for that business. Capital Ford maintains, however, that it competed with body companies for sales of both improved vehicles and bare chassis to certain end-user customers. Anderson Depo., pp. 612-18, 665-67; Litchfield Depo., pp. 126-28. The price discrimination claim rests on the allegation that certain body companies were able to purchase Ford heavy truck chassis from Ford Motor dealers at CPA assisted prices which were less than the prices available to Capital Ford. As a result, Capital Ford maintains that the body companies had a competitive advantage in competing with Capital Ford for end-user customers purchasing improved, specialty vehicles and bare truck chassis. Capital Ford has identified 11 sales or customers which it claims to have lost to body companies during the past four years. See Capital Ford's response to Ford Motor Company's first interrogatories, no. 3; Anderson Depo., p. 577.
Ford Motor has moved for summary judgment as to this claim on numerous grounds. For the purposes of this motion, it is only necessary to consider Defendant's claim that the evidence of record does not support a finding of actual injury to Capital Ford, and therefore does not establish a prima facie case under Section 2(a).
Ford Motor asserts that the product sold by Ford dealers to body companies (heavy truck chassis), and the improved vehicles offered by body companies in competition with Capital Ford (improved specialty vehicles), were substantially different. According to Ford Motor, these differences negate any notion of actual injury because customer preferences and competitive efficiencies enjoyed by the body companies in manufacturing specialty vehicles constitute intervening factors which eliminate the link between Ford Motor's alleged price discrimination and competitive injury suffered by Plaintiffs. See J. Truett Payne Co. v. Chrysler Motor Corp., 451 U.S. 557, 101 S. Ct. 1923, 68 L. Ed. 2d 442 (1981); Perkins v. Standard Oil Co., 395 U.S. 642, 648, 89 S. Ct. 1871, 1874, 23 L. Ed. 2d 599 (1969). Plaintiffs offer two responses to this contention.
Plaintiffs first argue that the evidence of record shows that body companies who purchased heavy truck chassis at CPA/GPC favored prices often did not improve the vehicles, but instead sold them as bare chassis in competition with Capital Ford. According to Plaintiffs, this fact is sufficient to establish the necessary causal link between Defendant's actions and Plaintiffs' injuries and to negate Ford Motor's claim of competitive efficiency or customer preference. To substantiate this argument, Plaintiffs point to the deposition testimony of their witnesses, primarily Plaintiff Anderson. Plaintiff Anderson, however, testifies only that body companies were selling unimproved truck chassis on the open market. See Anderson Depo., pp. 612-18, 665-67. Plaintiffs point to no evidence showing that Capital Ford was in competition with the body companies for sales of these unimproved chassis, or showing any specific instances in which Capital Ford lost a sale to a body company. Standing alone, Plaintiffs' evidence that body companies sold unimproved chassis in the Atlanta market does not provide direct evidence that Capital Ford lost sales to body companies, and is thus insufficient for a jury to return a Plaintiffs' verdict. See J.F. Feeser, cited supra. Therefore, the evidence is insufficient to withstand Defendant's motion for summary judgment. Anderson v. Liberty Lobby, 477 U.S. at 249, 106 S. Ct. at 2510.
Plaintiffs' second response to Defendant's claim that the evidence of record does not support a finding of actual injury is also unpersuasive. Plaintiffs contend that such evidence is unnecessary in this case. According to Plaintiffs, in cases where a manufacturer engages in price discrimination involving the principal component of a final product, a cognizable Robinson-Patman claim exists without direct evidence of lost sales because an impact on secondary line competition is established. See 5 J. Von Kalinowski, Antitrust Laws and Trade Regulations, § 31.01[4][j], at 31-54 (1990). While this may be correct as an abstract proposition, Plaintiffs have failed to adduce sufficient evidence to create a genuine issue of material fact on this claim. Arguably, the evidence of record tends to establish that body companies were able to purchase heavy truck chassis at CPA/GPC favored prices by purchasing *1570 from large volume Ford dealers. As Defendant correctly points out, however, Plaintiffs cite no evidence to show: (1) the specific amount of alleged price discrimination in the sale of truck chassis; (2) the relationship of that amount to the final truck selling price after the body was added; (3) the final selling price of the successful body companies; or (4) the margins involved. Because the chassis is only one component of the final product, and because the cost of the final truck was almost certainly determined by several factors unrelated to chassis price, the evidence of record is insufficient to establish that any price difference in chassis sold to body companies, as compared to those sold to Capital Ford, caused actual injury to Capital Ford. See Marty's Floor Covering Co. v. GAF Corp., 604 F.2d 266, 270 (4th Cir.1979), cert. denied, 444 U.S. 1017, 100 S. Ct. 670, 62 L. Ed. 2d 647 (1980); Minneapolis-Honeywell Regulator Co. v. FTC, 191 F.2d 786, 792 (7th Cir.1951), cert. dismissed, 344 U.S. 206, 73 S. Ct. 245, 97 L. Ed. 245 (1952). Accordingly, because Plaintiffs are unable to establish actual injury, Defendant's motion for summary judgment as to Plaintiffs' claims of price discrimination in connection with sales to body companies is GRANTED.
2. Sales to Ryder Truck Rental, Inc.
Plaintiffs' claim with regard to sales of Ford trucks to Ryder is similar to the above "body company" claim. Plaintiffs do not allege price discrimination between Capital Ford and other Ford dealers in connection with competing efforts to sell heavy trucks to Ryder. Instead, Plaintiffs claim that Ryder was able to purchase heavy trucks from Ford dealers at CPA assisted prices which were less than the prices available to Capital Ford. As a result, Plaintiffs maintain that Ryder had an advantage over Capital Ford in subsequent transactions where Ryder, through a proposed lease, and Capital Ford, through a proposed sale, were competing for the same end-user customers. Plaintiffs have identified six customers allegedly lost to Ryder. Anderson Depo., pp. 529-33, 552-53. Defendant has moved for summary judgment as to this claim on several grounds. Because the court finds the first of these grounds sufficient to grant Defendant summary judgment, it does not reach Ford Motor's remaining contentions.
As with the body company claims, Ford Motor argues that Plaintiffs have not met their burden of showing actual injury in connection with the sales to Ryder because they have not shown that any the sales which Capital Ford lost to Ryder were lost due to price discrimination. See J. Truett Payne Co., cited supra; Perkins, 395 U.S. at 648, 89 S. Ct. at 1874. Defendant argues that the lost sales were the result of a number of factors unrelated to price discrimination, most importantly the fact that Ryder was engaged in leasing transactions while Capital Ford offered trucks for sale, and that Plaintiffs have failed to adduce sufficient evidence to show a causal connection between the price discrimination and lost sales. See J. Truett Payne Co., 451 U.S. at 563, 101 S. Ct. at 1927.
To refute this claim, Plaintiffs rely on the deposition testimony of Mr. Anderson that former Capital Ford truck purchasers subsequently leased trucks from Ryder. Anderson Depo., pp. 521-24. Anderson confesses, however, that he has no specific information linking alleged price discrimination favoring Ryder with any customer loss by Capital Ford. Id. at 524, 528-34. He also admits that there are significant factors which differentiate the lease transactions offered by Ryder from the purchase transactions offered by Capital Ford, and that these factors may influence customer decisions to lease or buy. Id. at 528-29, 534. Even assuming, as Plaintiffs argue, that Ryder received across-the-board discounts which were not available to Capital Ford, Plaintiffs have failed to adduce any evidence that the sales allegedly lost to Ryder were the result of cost advantages enjoyed by another Ford dealer. See J. Truett Payne Co., 451 U.S. at 563, 101 S. Ct. at 1927. As such, Defendant is entitled to summary judgment on the Robinson-Patman claims as they relate to sales to Ryder.
3. Cargo CF-8000 Transactions.
For the 1986 model year, Ford Motor introduced a new line of trucks identified as the Cargo model. Ford initially offered various sales incentives on these trucks, but the vehicle was not eligible for CPA until 1988. *1571 Anderson Depo., pp. 623, 627, 639-40. Capital Ford purchased 12 Cargo CF-8000 trucks when the line was introduced. Capital Ford eventually purchased in excess of 25 vehicles, including 14 it purchased in late 1987 and 1988. Id. at 623-25, 639-42.
In August, 1988, Ford announced the availability of certain special discount incentives for various trucks which were in inventory at Ford's Kentucky Truck Plant. Included among these were 11 Cargo CF-8000 trucks from the 1987 model year. Merrifield Depo., Exs. 183, 184. The price incentives offered on the Cargo CF-8000s located at Ford Motor's Kentucky plant exceeded $6,000. The special discount incentives were not, however, applied on a retroactive basis to any Cargo CF-8000s which were in dealer inventory when the incentives were announced, Anderson Depo., pp. 651-54, and Ford Motor granted only $3,600 in CPA to Capital Ford in order to assist it in selling those CF-8000s it had in stock. Anderson Depo., pp. 639-42. Eventually Capital Ford sold its stock of CF-8000s at a loss. Id. Capital Ford challenges, as a violation of the Robinson-Patman Act, Ford Motor's failure to apply the special discount incentives offered in connection with the CF-8000s in inventory in Ford's Kentucky plant to vehicles that were in dealer stock at the time the incentives were announced.
Ford Motor has moved for summary judgment on this claim, maintaining that the special incentives offered by it on the CF-8000s left in inventory at its Kentucky Truck plant do not constitute actionable price discrimination. Defendant makes two specific claims which it contends take the special incentives out of the scope of the Robinson-Patman Act. Defendant first claims that the price incentives offered on the CF-8000 trucks were functionally available to all Ford heavy truck dealers, including Capital Ford. In response to this first argument, Plaintiffs claim that the court has previously disposed of the "availability" issue and need not revisit it.
Plaintiffs' claim that this issue has previously been resolved is without merit. In its order of September 12, 1990, the court merely denied Defendant Ford Motor's motion to dismiss the Cargo CF-8000 claim under Fed. R.Civ.P. 12(b)(6). That denial rested on the fact that Ford Motor had failed to cite persuasive authority as support for its position. See order of September 12, 1990, 779 F. Supp. at 1352. Ford Motor has now remedied that problem.
As discussed above, in connection with Plaintiffs' "body company" claims, the Eleventh Circuit has held:
Where a purchaser does not take advantage of a lower price or discount which is functionally available on an equal basis, it has been held that either no price discrimination has occurred, or the discrimination is not the proximate cause of the injury.
Delong Equip Co. v. Washington Mills Abrasive Co., 887 F.2d 1499, 1517 (11th Cir.) (quoting Shreve Equipment, Inc. v. Clay Equipment Corp., 650 F.2d 101, 105 (6th Cir.), cert. denied, 454 U.S. 897, 102 S. Ct. 397, 70 L. Ed. 2d 213 (1981). As Defendant accurately points out in its brief, the record shows that Capital Ford was treated identically to all other Ford Motor dealers with respect to the special price incentives on the Cargo CF-8000 vehicles. Anderson Depo., pp. 645-46. Plaintiffs concede that the discounts on the CF-8000s in Ford's Kentucky plant were made available to Capital Ford on an equal basis with other Ford dealers and the price discounts were not applied on a retroactive basis to any Cargo CF-8000 trucks held in any dealer's inventory. Anderson Depo., pp. 651-54; Wiggins Aff., ¶ 5.
As stated above, Plaintiffs' claim that this issue has previously been resolved is without merit. Ford Motor has now persuaded the court that the discount prices on the CF-8000 trucks were functionally available to Capital Ford and that this entitles Defendant to summary judgment. Accordingly, Ford Motor's motion for summary judgment on the claims relating to model CF-8000 trucks is GRANTED.[22]
*1572 4. Transactions Involving Other Ford Dealerships.
Claims relating to transactions between Ford Motor and other Ford dealerships are the most significant of Plaintiffs' Robinson-Patman claims. Plaintiffs have identified approximately 116 transactions involving Ford heavy trucks in which they contend that Ford discriminated in CPA and GPC as between Capital Ford and another Ford dealership when both dealerships were bidding for the same customer. In the extensive briefing on this issue, the parties have divided the transactions into two categories. The first category, involving seven transactions and thirteen vehicles, involves sales by Capital Ford's leading competitor, Peach State Ford Truck Sales, Inc. ("Peach State"), to certain municipalities under a contract between Peach State and the State of Georgia. The second category, involving the remaining 109 transactions, relates to sales by Ford dealerships to various public and private entities. These two categories are discussed separately below.
(a) Sales to local governments.
In the latter part of 1988, the State of Georgia, through its purchasing division, solicited competitive bids from numerous heavy truck manufacturers and dealers, including Capital Ford and Peach State, for the sale of heavy truck equipment. In connection with the preparation of their respective bids, both Capital Ford and Peach State submitted GPC requests to Ford Motor for the vehicles covered by the bid invitation. Ford Motor offered equivalent GPC commitments to both dealers, Anderson Depo., pp. 45-46, and based on those GPC offers Capital Ford and Peach State then submitted bids to the State of Georgia. Antel Aff., ¶¶ 4, 5.
On March 30, 1989, the State of Georgia contract was awarded to Peach State. The contract covered orders placed by both the State of Georgia and local governments through April 30, 1989 or the end of the model year, whichever was later. During the term of the contract, Peach State purchased numerous heavy trucks from Ford Motor to fill both state and local government orders. In these purchases, Peach State qualified for and received the per unit GPC guaranteed by Ford Motor during the bidding process. Antel Aff., ¶ 6.
Plaintiffs raise a Robinson-Patman claim with regard to certain sales made by Peach State to local governments under the State of Georgia contract. Plaintiffs contend that Capital Ford competed with Peach State on several of these sales, but was unable to underbid Peach State because the GPC assistance available to Peach State under the 1989 contract for these transactions was greater than that available to Capital Ford. According to Plaintiffs, the fact that Peach State received GPC awards guaranteed at the time of the 1989 contract, while Capital Ford received only the rainbow schedule level of GPC when competing for the same sales, violated the Robinson-Patman Act. Defendant challenges this claim on two grounds. Because the court finds the first argument to be persuasive, it does not consider Defendant's second argument.
Defendant argues that the sales by Ford Motor to Peach State and to Capital Ford were not "reasonably contemporaneous" under the Robinson-Patman Act and thus are not comparable for purposes of a price discrimination claim. Under the Act, allegations of illegal price discrimination between contracts must be evaluated as of the date each contract is made. See FTC v. Borden Co., 383 U.S. 637, 643, 86 S. Ct. 1092, 1097, 16 L. Ed. 2d 153 (1966) (the Robinson-Patman Act "proscribes unequal treatment of different customers in comparable transactions...."). See also M.C. Mfg. Co. v. Texas Foundaries, Inc., 517 F.2d 1059, 1066 n. 13 (5th Cir.1975) ("[T]he legality of price discrimination between contracts to purchase that contemplate contemporaneous delivery must be evaluated as of the date the respective contracts were made.").
Contracts which contemplate contemporaneous delivery, but which are entered into at different times, are not "reasonably contemporaneous" for purposes of the Act and are not the proper subject of a price discrimination claim. Id. The rationale for this was explained by the Seventh Circuit in A.A. Poultry Farms, Inc. v. Rose Acre Farms, *1573 Inc., 881 F.2d 1396, 1407 (7th Cir.1989), cert. denied, 494 U.S. 1019, 110 S. Ct. 1326, 108 L. Ed. 2d 501 (1990):
[n]o one supposes that a seller must charge the same price on contracts signed at different times, or on long-term contracts and spot sales.... Whether [defendant] engaged in price discrimination depends on whether it charged the same price to customers at the same time.
881 F.2d at 1407 (citing M. Rowe, Price Discrimination Under the Robinson-Patman Act 50 (1962)). See also Pacific Molasses Co., 65 F.T.C. 675 (1964), rev'd on other grounds, 70 F.T.C. 301, 306 (1966) (citing the legislative history of the Robinson-Patman Act for the proposition that the bill does not prohibit sales at different prices under long-term and spot contracts).
Defendant maintains that awards of GPC to Peach State in connection with sales to local governments were governed by the commitments made by Ford Motor when Peach State bid for the 1989 State of Georgia contract. According to Ford Motor, the terms of the local government transactions, including price and GPC allocations, were established at the time bids were sought on the Georgia contract, and Ford Motor was obligated to provide Peach State with the level of GPC guaranteed at that time. In contrast, no such commitment existed for latter sales by Capital Ford to local government customers, and the GPC level was not set for sales by Capital Ford to municipalities until Capital Ford made a specific price assistance request to Ford Motor. Defendant maintains that, under these circumstances, there can be no allegation of price discrimination. The court agrees.
By its terms, the 1989 contract between Peach State and the State of Georgia governed both sales to local governments and sales to the state. Antel Aff., ¶ 6; Labelle Depo., pp. 44-51, 54. Thus, the level of GPC Ford Motor was obligated to provide on trucks ordered by Peach State to fulfill the contract, including orders for sales to local governments, was determined at the time Peach State bid on the contract. Antel Aff., ¶ 6. No contemporaneous commitment was made to Capital Ford. The Robinson-Patman Act does not require Ford Motor to make the GPC discounts guaranteed to Peach State in 1989 available to Capital Ford or other dealers who subsequently bid on sales to a municipality. A.A. Poultry Farms, 881 F.2d at 1407.[23]
Plaintiffs offer only one argument in an attempt to counter Defendant's motion for summary judgment. Plaintiffs argue that because delivery and transfer of title did not take place until the time that Peach State actually sold to the municipality under the State of Georgia contract, the price discrimination did not occur until that time. As explained above, however, price discrimination is to be compared as of the time of the contract, not at the time of delivery. See M.C. Mfg. Co., 517 F.2d at 1066 n. 13. Again, when Ford Motor granted GPC to Peach State in connection with the sales to local governments, it was acting under a pre-existing agreement. No similar agreement existed with Capital Ford. As a result, the GPC requests by Capital Ford and Peach State were not "reasonably contemporaneous" and are not the proper subject for a Robinson-Patman claim. As no material issues of fact remain, Defendant is entitled to summary judgment on this claim.
(b) Other transactions.
Ford Motor has attacked most of the remaining 109 transactions of price discrimination as failing to satisfy one or more of the elements necessary to make out a claim under the Robinson-Patman Act. According to Defendant, the remaining claims, which do satisfy all of the elements of a Robinson-Patman claim, are so small in number as to be de minimis and thus not actionable. Ford Motor has placed each contested transaction into a category based on the jurisdictional *1574 element the transaction allegedly fails to satisfy. These categories are discussed separately.
(i) Absence of two sales.
As discussed above, to establish a claim under § 2 of the Robinson-Patman Act, Plaintiffs must make a showing of at least two sales to two different competing purchasers. M.C. Mfg. Co., 517 F.2d at 1065 (quoting Jones v. Metzger Dairies, Inc., 334 F.2d 919, 924 (5th Cir.1964), cert. denied, 379 U.S. 965, 85 S. Ct. 659, 13 L. Ed. 2d 559 (1965)). In 51 of the 116 price discrimination transactions, Defendant points to uncontradicted evidence that no sale was made by Ford to any Ford dealer.[24] According to Defendant, the fact that no sale was made to any Ford dealer in these transactions is fatal to Plaintiffs' price discrimination claim because of the two purchaser requirement.
In opposition to Defendant's argument, Plaintiffs argue that they fall into an exception to the two purchaser requirement first established in American Can Co. v. Bruce's Juices, 187 F.2d 919 (5th Cir.), modified, 190 F.2d 73 (5th Cir.), cert. dismissed, 342 U.S. 875, 72 S. Ct. 165, 96 L. Ed. 657 (1951). Bruce's Juices involved a plaintiff who brought a price discrimination claim against a defendant can manufacturer. The claim was based on the defendant's refusal to offer plaintiff a price on particular cans (3.12 Iscans) that it was offering to plaintiff's competitors. Despite the fact that plaintiff did not purchase the 3.12 Iscans at issue, but only bid on them, the court held that plaintiff could bring the Robinson-Patman. The court based its decision on the fact that plaintiff was purchasing other types of cans not discriminatorily priced and was selling a product that competed with products packaged in 3.12 Iscans. 187 F.2d at 924. As summed up by the Fifth Circuit, the Bruce's Juices holding:
create[d] a special exception to the two-purchaser requirement where competitors in the same market are engaged in competitive purchasing and selling at the time of the price discrimination and where the failure of the plaintiff to consummate a second purchase of the item discriminatorily priced is directly attributable to defendant's own discriminatory practice.
M.C. Mfg. Co., 517 F.2d at 1067 n. 17.
Bruce's Juices is inapplicable here. The case provides a very narrow exception to the two purchaser requirement of Robinson-Patman by allowing a plaintiff who has not consummated the second purchase required under Robinson-Patman to bring a price discrimination claim under certain narrowly defined circumstances. See Gillette Tire Jobbers, Inc. v. Appliance Indus., Inc., 596 F. Supp. 1277 (E.D.La.1984). There is no evidence that Bruce's Juices intended to completely eviscerate the general rule that the Robinson-Patman Act requires at least two sales. No case has ever held that a claim under Robinson-Patman is cognizable when no sale of any product occurred. As such, Defendant is entitled to summary judgment on Plaintiffs' claims relating to these 51 transactions.[25]
(ii) Goods of like grade and quality.
Ford Motor challenges seven transactions alleged by Plaintiffs to involve price discrimination on the ground that the dealer competing with Capital Ford was bidding a different model year truck.[26] According to Defendant, as a matter of law, vehicles from two different model years cannot be considered commodities of like grade and quality. Therefore, any price discrimination between such vehicles is not actionable under the *1575 Robinson-Patman Act. Defendant cites Valley Plymouth v. Studebaker-Packard Corp., 219 F. Supp. 608 (S.D.Cal.1963) as support for its position.
Plaintiffs argue that Ford Motor miscites Valley Plymouth in support of its claim and that the determination of whether vehicles are of like grade and quality is a question of fact reserved for the jury. The court agrees. A careful reading of Valley Plymouth reveals that the district court in that case merely resolved an issue of fact by finding that cars of different model years were not of like grade and quality.
The court concludes that a normal change in car models, made in good faith, as in the instant case, would come within the exception of the [Robinson-Patman Act], and that it, therefore, follows that the sale by Studebaker to Ranchero on December 31, 1960, in the circumstances here involved, did not constitute a violation of the [Act].
219 F.Supp. at 613 (emphasis added). While evidence that Defendant was awarding different levels of price assistance on trucks of different model years would probably not be violative of the Robinson-Patman Act, as long as Defendant differentiated between model years on a consistent basis, the evidence of record in this case fails to show such a consistent differentiation. The mere fact that the seven subject transactions involved different model year trucks is insufficient, by itself, to entitle Defendant to summary judgment. Accordingly, Defendant's motion for summary judgment on transactions involving trucks from different model years is DENIED. For the same reason, Ford Motor's motion for summary judgment on transactions in which Capital Ford and competing dealers were bidding different model trucks or trucks with different option packages is DENIED.
(iii) Non-competitive sales or bids.
Ford Motor also seeks summary judgment with regard to numerous transactions because the dealers involved were either bidding different vehicles or were bidding at different times.[27] According to Ford Motor, these transactions fail to satisfy a fundamental requirement that the respective purchasers be in actual competition with each other. In addition, Ford Motor seeks summary judgment on transactions in which all dealers competing for the sale were quoted equivalent levels of CPA on the ground that no price discrimination occurred.
Defendant is clearly correct that, absent a difference in price offered to two competing dealers, no Robinson-Patman claim exists. FTC v. Anheuser-Busch, Inc., 363 U.S. 536, 549, 80 S. Ct. 1267, 1274, 4 L. Ed. 2d 1385 (1960). Further, in the absence of actual competition between the dealers, there is no basis for establishing the necessary element of competitive injury arising out of alleged price discrimination. See M.C. Mfg. Co., 517 F.2d at 496; National Distillers and Chemical Corp. v. Brad's Machine Products, Inc., 666 F.2d 492, 496 (11th Cir.1982). Plaintiffs, however, dispute Defendant's factual allegations that Capital Ford received equivalent CPA/GPC quotes on the subject transactions or that Capital Ford's bids in the subject transactions were not in actual competition with other dealers. Plaintiffs assert that each of the challenged transactions involved bids within weeks of each other to the same customers on the same or similar trucks, and that on each of these bids, Capital Ford did not receive *1576 equivalent CPA/GPC quotes from Ford Motor.
A review of each of the transactions challenged by Ford Motor shows that material issues of fact have been resolved only with respect to three transactions those involving sales to the City of Jesup (Tab 21 to the Anderson Affidavit), the City of Lavonia (Tab 22) and Owsley & Sons (Tab 100). With respect to each of these transactions, Plaintiffs concede that all dealers bidding on the sales received equivalent levels of GPC at the time the vehicles were bid to the customer. Anderson Aff., ¶¶ 76, 77 and 156. Accordingly, Defendant is entitled to summary judgment with respect to these transactions.
As to the remaining transactions, material issues of fact remain with regard to whether Capital Ford and the competing dealer received equivalent grants of CPA/GPC or were in actual competition with each other. With respect to the bid involving the City of Marietta (Tab 24) and the transactions involving Pike County (Tab 101), Bartow Paving (Tab 94), Atlanta Gas Light (Tab 7), Cobb EMC (Tab 31), Georgia Department of Corrections (Tab 42), Hendrix Hauling (Tab 49), Jackson Electric Membership (Tab 55), Seelbach & Company (Tab 71), and Walker Trucking (Tab 86), the evidence of record conflicts as to whether the Peach State and Capital Ford received equivalent grants of GPC.[28] While in the transactions involving the City of College Park (Tab 14), Fulton County (Tab 38), and Georgia Power (Tab 43), the evidence of record shows that all Ford dealers bidding on the business received equivalent CPA/GPC awards at the time the vehicles were bid to customers, an issue of fact remains with regard to whether the dealers competing with Capital Ford actually received greater price assistance than was promised to Capital Ford.
With respect to the transactions involving Southeast Atlantic Corporation (Tab 72), Sutherland Egg (Tab 79), and the City of Roanoke (Tab 115), the evidence conflicts as to whether Peach State and Newnan Motor Company were bidding the customers at issue at the same time that Capital Ford was bidding those customers and whether Capital Ford was entitled to equalized CPA allocations despite its failure to request an extension of the CPA commitment.
As is evident from the above discussion, the evidence shows that material issues of fact remain as to whether Capital Ford was in actual competition with competing dealers or received equivalent grants of CPA/GPC with respect to transactions which are documented at the following tabbed appendices to the first affidavit of William Anderson: 7, 14, 24, 31, 38, 42, 43, 49, 55, 71, 72, 78, 79, 86, 94, 101, and 115. See Hartley & Parker, Inc. v. Florida Beverage Corp., 307 F.2d 916, 920-21 (5th Cir.1962). Accordingly, Defendant's motion for summary judgment with respect to these transactions is DENIED. Defendant's motion for summary judgment with respect to transactions documented at tabbed appendices 21, 22 and 100 to the first affidavit of William Anderson is GRANTED.[29]
*1577 (iv) Functional Availability.
Ford Motor has moved for summary judgment on nine transactions involving alleged price discrimination on the grounds that Capital Ford failed to take advantage of an available opportunity to appeal the grant of CPA.[30] Ford Motor contends that five of the seven challenged transactions (involving Altec, Florida Rock Industries, Guzzler Manufacturer, Harley Davidson and Utility Supply) were sales to SSP customers which were fully appealable, and the remaining two transactions (involving Cryar Lamp Company and Hester Bros. Paving) were also appealable. According to Ford Motor, the difference in price assistance provided to the competing dealer in these transactions was the result of an appeal taken by the competing dealer. Had Capital Ford appealed, Ford Motor maintains that it would have been eligible to receive CPA equivalent to that received by a competing dealer. As such, Ford Motor contends that the amount of price assistance awarded to the competing dealer was equally and functionally available to Capital Ford, and there can be no finding of price discrimination. See Bouldis v. U.S. Suzuki Motor Corp., 711 F.2d 1319 (6th Cir. 1983).
Plaintiffs oppose Ford Motor's motion on the ground that, as a matter of fact, the appeals were not available to Capital Ford on these transactions. The evidence is uncontroverted that appeals from an award of CPA were not available except when the transaction involved the sale of ten or more trucks or when the transaction involved a sale to an SSP customer. Plaintiffs' Ex. 268, p. 9432. According to Plaintiffs, none of the above transactions involved sales of ten or more trucks. Further, with regard to the sales to the SSP customers, Plaintiffs contest the claim that appeals were functionally available. Plaintiffs claim that the list of SSP customers was confidential and, as such, even when Capital Ford was selling to an SSP customer it had no way to know about the availability of an appeal.
After a review of the record, the court cannot say that no issues of material fact remain with regard to the functional availability of appeals to Capital Ford on these seven transactions. As to the transactions involving Cryar Lamp Company and Hester Bros. Paving, the sales at issue did not involve ten or more vehicles and these companies were not one of Ford Motor's 2,200 SSP customers. As such, it appears that no appeal was available to Capital Ford for these two transactions. With regard to the sales to the remaining five companies, the issue of whether Capital Ford could, in fact, learn that these companies were on Ford Motor's SSP list, and could appeal the original CPA grant, is in dispute. While Ford Motor maintains that access to the SSP list was available by calling the district office, Capital Ford has created a genuine issue of fact by pointing to evidence that continuous contact with that office to learn whether each customer was on the SSP list was infeasible and that, therefore, Capital Ford had no way of learning that appeals were available on these transactions. See Third Anderson Aff. (attached to Plaintiffs' supplemental brief opposing summary judgment on the merits) ¶¶ 1-4. Under these circumstances, a grant of summary judgment to Ford Motor on these transactions is not warranted and is DENIED.
(v) De minimis transactions
With regard to the transactions which Ford Motor does not challenge on one of the above grounds, Defendant contends that Plaintiffs have failed to offer evidence that these transactions, when compared to the overall sales volume of Capital Ford over the years in question, resulted in anything more than a de minimis injury to competition. Under these circumstances, Defendant claims that it is entitled to summary judgment.
*1578 Defendant's argument is unpersuasive. The de minimis injury doctrine applies only when a plaintiff has no direct evidence of lost sales and adduces proof of competitive injury through evidence of substantial price discrimination over time. See Alan's of Atlanta, Inc. v. Minolta Corp., 903 F.2d 1414, 1228 n. 20 (11th Cir.1990). In those cases, courts will consider whether, given the increment of price advantage granted to the favored competitor, injury to competition could arise. Id. In this case, however, Plaintiffs have adduced direct evidence of lost sales due to the alleged price discrimination. Accordingly, the de minimis injury doctrine is inapplicable. Defendant's motion for summary judgment on this ground is DENIED.
5. Rainbow Schedules.
Apart from the 116 transactions discussed above, in which Plaintiffs allege Ford Motor engaged in individual acts of illegal price discrimination, Plaintiffs contend that Ford Motor's CPA rainbow schedules and appeal criteria, by their very nature, violated the Robinson-Patman Act by doling out CPA/GPC benefits in an inherently discriminatory manner. Specifically, Plaintiffs contend that the system conferred greater price assistance benefits upon truck dealers who sold to high-volume purchasers than to dealers, like Capital Ford, whose customers purchase smaller numbers of vehicles.
Defendant contends that this claim must fail based on the fact that in each particular transaction, all dealers were entitled to equivalent levels of CPA. The CPA award depended only on the type and number of trucks involved. Because the overall customer base of any individual dealer did not affect CPA level, and because all CPA discounts were functionally available to Capital Ford, Ford Motor contends there is no actionable price discrimination.
As both parties recognize, the Supreme Court has held that a pricing system which grants standard quantity discounts does not give rise to a price discrimination claim if the discounts are functionally available to all customers. FTC v. Morton Salt Co., 334 U.S. 37, 42, 68 S. Ct. 822, 826, 92 L. Ed. 1196 (1948). The Sixth Circuit, in the frequently cited case of Bouldis v. U.S. Suzuki Motor Corp., 711 F.2d 1319 (6th Cir. 1983), has explained:
[t]he practice of conditioning price concessions and allowances upon the customer's purchase of a specific quantity of goods will not give rise to a Robinson-Patman violation if the concessions are available equally and functionally to all customers.... Further, a claim of price discrimination will not lie if the buyer failed to take advantage of a price concession which was realistically and functionally available.... The legislative history reveals that the aim of the Act is to prevent a large buyer from gaining discriminatory preferences over the small buyer because of the large buyer's greater purchasing power.
Id. at 1326 (citations omitted). See also Edward J. Sweeney & Sons, Inc. v. Texaco, Inc., 637 F.2d 105, 120-21 (3rd Cir.1980) (price discounts must be truly available to all distributors regardless of size of order), cert. denied, 451 U.S. 911, 101 S. Ct. 1981, 68 L. Ed. 2d 300 (1981); Shreve Equipment, Inc. v. Clay Equipment Corp., 650 F.2d 101, 105 (6th Cir.) (a discount must be functionally available to all purchasers), cert. denied, 454 U.S. 897, 102 S. Ct. 397, 70 L. Ed. 2d 213 (1981).
The parties agree that the CPA/GPC system conditioned price concessions on the number of trucks a dealer sold in a single transaction. The undisputed evidence shows that a Ford dealer was required to engage in a sale of ten trucks to a single purchaser (or sell to an SSP customer) before an appeal was available from the CPA schedule and the maximum level of price assistance was granted. Ford Motor avers in its motion for summary judgment that the maximum purchase quantity discounts under the rainbow schedules and appeal criteria, which were granted in a sale involving ten trucks or more, were realistically available to all dealers.
Plaintiffs respond by adducing evidence which indicates that, because Capital Ford was not selling to large quantity purchasers, it did not qualify for the maximum price assistance under the CPA/GPC program. *1579 This appears, however, to be the result of a marketing decision by Capital Ford to concentrate on sales to smaller volume customers as opposed to large fleet purchasers. Plaintiffs do not allege that Defendant in any way restricted the customers to whom Capital Ford could sell, and Plaintiffs have adduced absolutely no evidence that the purchase quantity discounts offered under the CPA/GPC program were not realistically available to all dealers if they chose to bid larger volume buyers. See Bouldis, 711 F.2d at 1326; Shreve Equipment, 650 F.2d at 105.
As discussed above, it may well be that Ford Motor has utilized its price assistance scheme to commit individual acts of illegal price discrimination against Capital Ford. The court finds, however, that Plaintiffs have failed to come forward with any facts to show that the CPA/GPC rainbow schedules and appeal criteria, by their very nature, violated the Robinson-Patman Act by awarding CPA/GPC benefits in an inherently discriminatory manner. As such, Defendant's motion for summary judgment as to this claim is GRANTED.
D. Fiduciary Duty Claims.
In Count IV of their amended complaint, Plaintiffs allege that Ford Motor, in the Sales and Service Agreement and through the administration of the CPA and GPC programs, took on fiduciary responsibilities to act in the best interests of Capital Ford. Plaintiffs further allege that Ford Motor breached those duties by running Capital Ford out of business. Ford Motor does not challenge this claim on the merits, but instead alleges that the claim fails as a matter of law because the relationship between Ford Motor and Capital Ford is that of manufacturer and dealer operating under a written dealership agreement. According to Ford Motor, such arrangements, as a matter of law, do not create fiduciary relationships.
Defendant cites a plethora of decisions from numerous jurisdictions which refuse to find a fiduciary relationship arising out of business contracts, including franchise agreements. See O'Neal v. Burger Chef Systems, Inc., 860 F.2d 1341, 1349 n. 4 (6th Cir.1988); Rajala v. Allied Corp., 919 F.2d 610, 623 (10th Cir.1990), cert. denied, ___ U.S. ___, 111 S. Ct. 1685, 114 L. Ed. 2d 80 (1991); Domed Stadium Hotel, Inc. v. Holiday Inns, Inc., 732 F.2d 480, 485 (5th Cir. 1984). Defendant is correct that, except in cases of franchise terminations or when a duty is created by the express terms of a contract, courts do not impose general fiduciary obligations upon franchisors. Domed Stadium, 732 F.2d at 485 (citations omitted). Plaintiffs' argument to the contrary is without merit.[31]
Nevertheless, Plaintiffs claim that there are unique factors in this case which make the relationship between Capital Ford and Ford Motor a fiduciary one. First, Plaintiffs claim that the preamble language in the Sales and Service Agreement, to the effect that the parties express "confidence" in each other's "integrity and ability," establishes a fiduciary relationship. As Defendant correctly argues, however, the fact that one party expressly places confidence in another party is not sufficient evidence of a fiduciary relationship. Rajala, 919 F.2d at 624.[32] The fact that Ford Motor was under an obligation to treat Capital Ford with good faith and fairness, by virtue of the Federal Dealer's Day In Court Act and the duty of good faith required in every contract, similarly does not *1580 give rise to a fiduciary duty. See Newark Motor Inn Corp. v. Holiday Inns, Inc., 472 F. Supp. 1143, 1151-52 (D.N.J.1979).
Plaintiffs argue finally that Ford Motor's actions, in going beyond the arm's length relationship that normally exists between manufacturers and dealers and exercising absolute control over all aspects of Plaintiffs' business, gave rise to fiduciary responsibilities on the part of Defendant. Courts have recognized that when one party assumes and exercises virtually complete control over another party, a fiduciary duty can arise. See In re N & D Properties, Inc., 799 F.2d 726, 732 (11th Cir.1986). However, a fiduciary duty in such circumstances will not be found unless the party asserting the relationship present clear and convincing evidence. Rajala, 919 F.2d at 623.
In this case, Plaintiffs have not adduced the clear and convincing evidence necessary to establish a fiduciary obligation on the part of Ford Motor. Plaintiffs rely primarily on the claim that Ford Motor gained control over the level of Capital Ford's profits through the alleged price discrimination discussed above. Standing alone, however, the fact that Capital Ford may have been injured by virtue of violations of the Robinson-Patman Act is not sufficient to establish that Defendant had acquired the complete control over Capital Ford necessary to impute a fiduciary obligation. See In re N & D Properties, Inc., 799 F.2d at 732. Plaintiffs refer to no other evidence to support their contention that Ford Motor somehow exerted absolute control over Capital Ford's day-to-day operations and nothing about this case suggests that Defendant exercised the type of control over Plaintiffs which would be required to impute a fiduciary duty. Id. Under these circumstances, Ford Motor is entitled to summary judgment on Plaintiffs' common law fiduciary duty claims and its motion is GRANTED with respect to those claims.
E. Sherman Act Claim.
The only remaining claim under count V of Plaintiffs' complaint is the claim that certain transactions involving the sale of Ford heavy trucks to Ryder Truck Rental, Inc. ("Ryder") constituted vertical price fixing in violation of the Sherman Act.[33] Defendant claims that the undisputed facts now demonstrate Plaintiffs' lack of standing to assert such a claim and establish the absence of any foundation for a vertical price fixing claim in connection with the sales of Ford trucks to Ryder.
The facts relating to Ryder sales are as follows. During all relevant times, sales of Ford heavy trucks to Ryder were accomplished primarily through a process known as "trade packages." Under this process, Ryder's purchase of new vehicles from Ford Motor dealers (as well as competing dealers) was conditioned upon a quid pro quo purchase by the dealer of used trucks from Ryder. Affidavit, ¶ 4.
The procedure used for sales to Ryder under the trade packages is straightforward and uncontested. Ryder organized its trade packages by geographic areas and notified heavy truck manufacturers, including Ford Motor, of the date of each trade package meeting. Ford Motor, in turn, notified its dealers of the trade packages.[34] In advance of each trade package meeting, Ryder would circulate a list of its used trucks offered for sale. Based on these circulars, Ford Motor's dealers would independently decide whether they would participate in the trade package. Johnson Aff., ¶ 5. If they decided to participate, the dealers would first seek CPA allowances from Ford Motor.[35] They would then present a proposal to Ryder and meet with Ryder personnel to negotiate the final trade package. Johnson Aff., ¶ 6.
*1581 The negotiations at these trade packages focused only on the price the dealers would pay to buy Ryder's used trucks. Johnson Aff., ¶ 4. This was because the price at which the dealers would sell to Ryder was preset and not subject to change. The price was apparently set based on fleet price lists published by Ford Motor. Johnson Aff., ¶ 7. According to Plaintiffs, the profit that could be earned on trade package sales was limited to 4% because the fleet price lists which Ford published were based on this level of dealer profit. Witcher Aff., ¶ 9; Turnauer Aff., ¶ 6. Plaintiffs maintain that if the dealer sold in excess of the fleet price list in a trade package, the extra profit earned would be negated by a CPA chargeback.[36] Anderson Depo., p. 508.
Capital Ford alleges that by directly setting the prices at which Ford Motor's dealers must sell to Ryder in trade packages, and by enforcing those prices through a system of CPA chargebacks, Ford Motor instituted a "resale price maintenance" scheme which violates Section 1 of the Sherman Act.[37] Ford Motor contests this claim, and argues that the essential elements of a per se illegal resale price maintenance program have not been shown. In addition, Ford Motor seeks summary judgment on this claim on the ground that Plaintiffs lack standing.
Since the Supreme Court's decision in Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 31 S. Ct. 376, 55 L. Ed. 502 (1911), vertical resale price maintenance has been per se illegal under § 1 of the Sherman Act. In Dr. Miles, the Court proscribed written contracts between a manufacturer and dealer which fixed retail prices. Id. at 407-08, 31 S. Ct. at 384. The rule of per se illegality originally announced in Dr. Miles, however, was somewhat limited by the court in a decision eight years later. In United States v. Colgate & Co., 250 U.S. 300, 39 S. Ct. 465, 63 L. Ed. 992 (1919), the Court explained:
In the absence of any purpose to create or maintain a monopoly, the [Sherman Act] does not restrict the long recognized right of trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal. And, of course, he may announce in advance the circumstances under which he will refuse to sell.
Id. at 307, 39 S. Ct. at 468.
Since Colgate, courts have struggled to determine the reach of that decision and the continuing vitality of Dr. Miles. See Yentsch v. Texaco, Inc. 630 F.2d 46, 51 (2nd Cir.1980). In more recent times, the Supreme Court has affirmed that resale price maintenance is per se illegal under the Sherman Act, but only if enforced by a contract, combination or a conspiracy. Albrecht v. Herald Co., 390 U.S. 145, 149, 88 S. Ct. 869, 871, 19 L. Ed. 2d 998 (1968); United States v. Parke, Davis & Co., 362 U.S. 29, 43, 80 S. Ct. 503, 511, 4 L. Ed. 2d 505 (1960). Under modern precedent, the required combination may be shown in one of two ways. Yentsch, 630 F.2d at 52. An adequate showing is made if a plaintiff presents proof of an express or implied agreement between a manufacturer and a dealer to set resale prices. See Business Electronics Corp. v. Sharp Electronics Corp., 485 U.S. 717, 724-25, 108 S. Ct. 1515, 1519-20, 99 L. Ed. 2d 808 (1988). In the alternative, a plaintiff may show that the manufacturer secures adherence to his prices by means beyond mere refusal to deal, i.e., by "coercion". Simpson v. Union Oil Co., 377 U.S. 13, 17, 84 S. Ct. 1051, 1054, 12 L. Ed. 2d 98 (1964) (holding that "a supplier may not use coercion on its retail outlets to achieve resale price maintenance").
*1582 In the instant case, Plaintiffs have conceded that no express or implied agreement existed between Ford Motor and participating dealers which set the price at which trucks were marketed to Ryder in trade packages. Instead, Plaintiffs maintain that Ford Motor's utilization of the CPA chargebacks coerced Capital Ford to sell trucks to Ryder at prices that Ford Motor set directly and which afforded insufficient profit for Capital Ford to survive. Ford Motor counters that this type of "coercion" has been repeatedly rejected by courts as insufficient to constitute a per se violation of the Sherman Act. As such, Defendant maintains that it is entitled to judgment as a matter of law on the Sherman Act claims.
Plaintiffs rely primarily on Greene v. General Foods Corp., 517 F.2d 635 (5th Cir.1975), cert. denied, 424 U.S. 942, 96 S. Ct. 1409, 47 L. Ed. 2d 348 (1976) for the proposition that Ford Motor's actions in setting the trade package prices and enforcing them with CPA chargebacks constitutes a per se violation of the Sherman Act. Greene involved a manufacturer General Foods, that negotiated directly with certain national accounts and set the prices at which distributors were required to sell coffee and other institutional foods to these accounts. Id. at 641. Mr. Greene was a local distributor for General Foods who dealt with both local customers, with whom he was free to set his own price, and national customers whose prices were preset. Throughout 1970, Mr. Greene complained to General Foods about the low profit margin on sales to national account customers, and in alleged response to those complaints, General Foods reduced his overall Growth Opportunity Allowances (identical to CPAs in this case) and eventually terminated the distributorship. Id. at 644-45. Following his termination, Mr. Greene filed suit, alleging that the practices of General Foods constituted illegal resale price maintenance. The Fifth Circuit agreed.
What has emerged from the record of this case is a vast system for controlling resale prices.... Through its MFSA [national accounts] system, General Foods has segregated buyers of institutional food above a certain threshold in terms of annual demand.... General Foods has determined prices for these buyers on the basis of its national MFSA list minus [certain allowances].... It is clear that General Foods went far beyond the simple announcement of terms and refusal to deal with a noncomplying independent distributor that is still permissible under Colgate. The MFSA invoice formset ... was a device for policing the conduct of distributors, and there was other evidence of monitoring of Greene's pricing to his [local] customers.
There was sufficient evidence for the jury to conclude that the precipitate termination of the distributorship ... was to punish him for failure to comply with the MFSA regime.... The entire MFSA system is unabashedly calculated to affect the resale price and it is enforced by the coercive potential of summary termination....
Id. at 657-58.
Plaintiffs equate the MFSA system at issue in Greene with the trade package procedure at issue here. A review of Greene, however, reveals that the case is distinguishable on important grounds. Most significantly, the Fifth Circuit found that General Foods's national account program was "enforced by the coercive potential of summary termination and ... reduction in [overall price allowances]." Id. at 658. The Court further found evidence that attempts by Greene and other distributors to sell to all customers, including national account customers, at any price they choose "were blocked by General Foods." Id. at 656.
In contrast to Greene, Capital Ford has presented no evidence in this case that Ford Motor enforced the trade package prices set with Ryder through the coercive means discussed above. There is no evidence that Ford Motor threatened termination for failure to sell to Ryder at the announced prices, or even that Defendant threatened to withdraw overall CPA/GPC support. To the contrary, it is undisputed that Ford dealers where free to participate or not participate in trade packages as they wished. There is no evidence of record that Ford Motor threatened or took any adverse action against dealers for declining to participate in the program, see Johnson Aff., ¶ 3, and the dealers who chose not to participate were free to sell *1583 trucks to Ryder outside the trade packages by negotiating directly with Ryder. In sum, the "coercion" upon which Plaintiffs rely to establish a vertical price fixing claim in this case is not equivalent to the coercion at issue in Greene.
The fact that Ford Motor did utilize CPA chargebacks in conjunction with Ryder trade packages is simply not enough, by itself, to establish coercion. In contrast to Lehrman v. Gulf Oil Corp., 464 F.2d 26 (5th Cir.1972), cited by Plaintiffs in support of their claim, it is undisputed that Ford Motor dealers were free to abstain from the trade packages and to make sales to Ryder or to other customers at any price without any penalty, including any loss of future CPA. Unlike other situations involving the CPA/GPC program, Capital Ford does not contend that Ford Motor withdrew overall price support which was crucial to Plaintiffs' survival as a penalty for not adhering to specified prices in the trade packages. See Lehrman, 464 F.2d at 38.
In sum, Plaintiffs have presented no evidence that they were coerced to sell trucks to Ryder at prices that Ford Motor set directly. As such, they have presented no evidence which would make out a claim of per se price fixing. Because, under the rule of reason, Plaintiffs have failed to present any evidence of an adverse effect on competition in the relevant market, they cannot avoid summary judgment on their Sherman Act claim. Accordingly, Defendant's motion for summary judgment as to count V of Plaintiffs' complaint is GRANTED.[38]
V. Summary.
Accordingly, Plaintiffs' motion for a continuance [# 92-1] is DENIED. Plaintiffs' motion to abstain [# 91-1] is GRANTED. Defendant's motion for summary judgment on the constitutionality of the Georgia Motor Vehicle Franchise Practices Act [# 66-1] is DISMISSED without prejudice to refile. Plaintiffs' motion to notify the Attorney General of the State of Georgia of an attack on the constitutionality of the Georgia Motor Vehicle Franchise Practices Act [# 79-1] is DISMISSED as unnecessary. The court hereby STAYS all further proceedings with regard to Counts two, six and seven of Plaintiffs' complaint pending resolution by the State Court of Fulton County, Georgia of the constitutionality of the Georgia Motor Vehicle Franchise Practices Act. Defendant's motion to exclude affidavits filed in opposition to Defendant's motion for summary judgment [87-1] is DENIED IN PART and DISMISSED IN PART. Plaintiffs' motion for leave to file a supplemental brief in opposition to Defendant's motions for summary judgment [# 99-1] is GRANTED. Defendant's motion for summary judgment on the merits of Plaintiffs' claims [# 67-1] is GRANTED IN PART and DENIED IN PART. Defendant's motion to file an out of time motion to compel [# 72-1] is DISMISSED as moot.
SO ORDERED.
NOTES
[1] By order dated September 12, 1990, 779 F. Supp. 1345, this court granted in part and denied in part Ford Motor's motion to dismiss. The court specifically found that the two pricing programs at issue in this suit (the CPA and GPC programs discussed below) did not constitute vertical price fixing in violation of the Sherman Act. The court dismissed all of Plaintiff's Sherman Act claims with the exception of claims relating to transactions involving Ryder Truck Rental, Inc.
[2] In June, 1990, during the pendency of this litigation, Capital Ford ceased operations and has not operated as a Ford Dealership since that time. Capital Ford's agreements with Ford Motor were formally terminated on March 21, 1991.
[3] The Sales and Service Agreement superseded a 1969 agreement entered into by the parties.
[4] Other agreements between Capital Ford and Ford Motor include a "Ford Truck Sales and Service Agreement," dated September 1, 1973, and a "Foreign Vehicle Sales Agreement," dated April 26, 1976. Capital Ford has also entered into separate agreements with Ford Motor Credit Company relating to floor plan financing for Capital Ford's truck acquisitions.
[5] Ford Motor maintains that it has had price assistance programs, in varying forms, for twenty-five years.
[6] When the wholesale price discounts were granted to dealers selling to governmental entities, the program was called government price concession, or GPC. Functionally, the CPA and GPC programs were identical but were handled through different offices until 1990. Litchfield Depo., pp. 81-82.
[7] The rainbow schedules set different levels of CPA/GPC depending on whether the transaction involved 1 truck, 2-4 trucks, or 5 or more trucks.
[8] Plaintiffs point to evidence that shows increasing differences between wholesale published prices of Ford Motor heavy trucks and the retail market value of those trucks. The evidence shows that Ford Motor increased wholesale prices of its trucks throughout the mid-1980s so that by 1987, the wholesale prices of Ford Motor's trucks were more than 20% above the Producer Price Index, while the actual retail market value of those vehicles was 3% below the Produce Price Index. See Plaintiff's Depo. Ex. 69, p. 9486.
[9] The evidence of record shows that by 1988, 100% of all Ford Motor trucks being sold received some level of discount under the CPA or GPC programs. Plaintiffs' Ex. 69, O'Donnell Depo., p. 71.
[10] In addition, the court notes that the delay in obtaining the discovery from McNeilus is due, in large part, to the unsuccessful actions of Plaintiffs in attempting to subpoena McNeilus' records in this court rather than in Minnesota. See Order of September 19, 1991.
[11] The affidavits are submitted by John W. Craig, Hank Harley, Lou Mazure, David Minor, Fred Morton, Ken Nichols, Larry O'Connor, Thomas H. Reeves, Jerry Turnauer, Billy W. Witcher and Fred L. Yates.
[12] The request sought production of all written or recorded statements taken from or provided by any person concerning any of the issues or allegations in the litigation. Plaintiffs' initial response on May 5, 1991 indicated that they would produce these affidavits. See Plaintiffs' response to Ford Motor's third request for production of documents, No. 1. On June 19, 1991, however, Plaintiffs filed an amended response in which they refused to produce the affidavits on work-product grounds.
[13] Defendant Ford Motor originally removed the state court action to this court. On motion of the Plaintiffs, however, this court remanded the action to state court. Capital Ford Truck Sales, Inc. vs. Ford Motor Co., No. 1:90-cv-2062-ODE, slip op. at 4 (N.D.Ga. Jan. 4, 1991).
[14] In Meredith, the Supreme Court held that the district court below had a duty to exercise its jurisdiction because no case was then pending in state court and no other consideration weighed against the exercise of jurisdiction. 320 U.S. at 228, 64 S.Ct. at 7.
[15] Even if the "affected with a public interest test" were applicable to determine the constitutionality of the statute under the due process clause of the Georgia Constitution, an additional issue would be raised regarding whether the automobile industry affects the public interest.
[16] Defendant argues that this court should dismiss, rather than stay, Plaintiffs' Franchise Practices Act claims in the event of abstention. Defendant cites Burford v. Sun Oil Co., 319 U.S. 315, 63 S. Ct. 1098, 87 L. Ed. 1424 (1943) as support for this contention. This is not a case of Burford abstention in which "federal intervention ... would have a disruptive effect on the state's efforts to establish a coherent policy on a matter of substantial public concern." 17A Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 4244 (2d ed. 1988). Under Meredith v. City of Winter Haven, 320 U.S. at 236, 64 S. Ct. at 11, the court finds that the proper action in this case is to stay proceedings under counts two, six and seven. See also Albertson v. Millard, 345 U.S. at 244, 73 S. Ct. at 1074.
[17] Plaintiffs contend that Ford Motor inquired into dealer profit when awarding price assistance pursuant to the rainbow schedules. The record, however, does not support this contention. Ford Motor points to evidence indicating that no dealer profit inquiry occurred in connection with CPA/GPC requests involving rainbow schedules. O'Donnell Depo., p. 177. In response, Plaintiffs have adduced general evidence showing that dealership profits were restricted through the CPA/GPC program, but no specific evidence showing that Ford Motor inquired into dealer profit in granting rainbow price assistance. It is undisputed that a dealer profit inquiry was made on CPA/GPC appeals.
[18] Of course, this is subject to certain antitrust requirements which are not applicable in the instant case.
[19] In addition, under antitrust law, a manufacturer may condition the lowering of prices on agreements from retailers to pass the lower prices on to consumers. See AAA Liquors, Inc. v. Joseph E. Seagram & Sons, Inc., 705 F.2d 1203 (10th Cir.1982). In AAA Liquors, the Tenth Circuit held that such conditional price discounts do not constitute "coercion or pressure to maintain resale prices...." Id. at 1206.
[20] Actually, Ford Motor argues that one would expect to find published prices in excess of actual selling prices in a highly competitive, capital goods market such as the heavy truck industry. In such an environment, manufacturers and distributors attempt to maintain high published prices to cover rising costs and to provide a high starting point for negotiations. In a market where capacity is in excess of demand, Defendant argues that end-user customers demand and receive deep discounts from published prices. See Lewis Service Center, Inc. v. Mack Trucks, Inc., 714 F.2d 842 (8th Cir.1983), cert. denied, 467 U.S. 1226, 104 S. Ct. 2678, 81 L. Ed. 2d 873 (1984).
[21] A body company is a manufacturing concern which adds a special use vehicle body, such as a school bus or cement mixer, to an unimproved heavy truck chassis and markets the improved product to end-user customers.
[22] It is unnecessary to reach Defendant's second argument, relating to competitive injury, with respect to this claim.
[23] Of course, the analysis would be different if Capital Ford had not been provided the same initial opportunity to enter into the State contract. See e.g. Bouldis v. U.S. Suzuki Motor Corp., 711 F.2d 1319, 1326 (6th Cir.1983). Here, it is uncontested that Ford Motor offered the same GPC assistance to Capital Ford as it did to Peach State in connection with the 1989 bid for the State of Georgia contract. As such, the original arrangement between Peach Sate and Ford Motor was nondiscriminatory.
[24] The subject transactions are documented at the following tabbed appendices to the first affidavit of William Anderson: 1, 2, 4, 9, 10, 11, 12, 19, 26, 28, 35, 36, 40, 41, 44, 46, 47, 51-53, 57-59, 61-64, 66-68, 73, 76, 77, 80-82, 85, 87, 90, 92, 93, 96-99, 107-111, 116.
[25] Defendant does not argue that it is entitled to summary judgment on those transactions involving one, but not two, sales of trucks by Ford Motor. As such, the court does not reach the issue of whether these transactions fall within the Bruce's Juices exception to the two purchaser rule.
[26] The subject transactions are documented at the following tabbed appendices to the first affidavit of William Anderson: 6, 34, 65, 103, 105, 113, and 114.
[27] The subject transactions are documented at the following tabbed appendices to the first affidavit of William Anderson: 7, 14, 21, 22, 24, 31, 38, 42, 43, 49, 55, 71, 72, 78, 79, 86, 94, 100, 101, and 115. Defendant also challenges the transaction documented at tab 23, but does not specify the reason that Capital Ford and Peach State were not in actual competition with each other. In its reply brief, Defendant challenges six transactions (documented at tabs 8, 54, 69, 88, 112, and 117) in which it maintains that Capital Ford was the successful bidder, and thus sustained no antitrust injury and challenges a transaction involving a 1989 bid by Capital Ford and two other Ford dealers to Carolina Freight Carriers Corporation. These two claims were not addressed in Ford Motor's original brief in support of summary judgment, but only in its reply brief. Plaintiffs have not had an adequate opportunity to respond. As such, the motions for summary judgment as to these transactions are not properly before the court and will not be considered here.
[28] Ford Motor argues that the bid involving the City of Marietta, documented at Tab 24, actually involved two transactions and that Peach State and Capital Ford were granted equivalent levels of GPC on both. Ford Motor, however, cites no evidence to support this claim. In contrast, Plaintiffs point to evidence, in the form of the affidavit of William Anderson, that the GPC levels were different. Anderson Aff., ¶ 78. Similarly, with respect to the transactions involving Pike County (Tab 101), Bartow Paving (Tab 94), Atlanta Gas Light (Tab 7), Cobb EMC (Tab 31), Georgia Department of Corrections (Tab 42), Hendrix Hauling (Tab 49), Jackson Electric Membership (Tab 55), Seelbach & Company (Tab 71) and Walker Trucking (Tab 86) Ford Motor argues that Capital Ford received the same or greater levels of CPA on the subject trucks, but points to no evidence. Plaintiffs point to evidence that Capital Ford received a lower CPA allocation on the transaction. Anderson Aff., ¶¶ 150, 157, 62, 85, 96, 103, 109, 125, and 140.
[29] In addition to the above discussed transactions, Plaintiffs have asserted an additional price discrimination claim in their supplemental brief in opposition to summary judgment, based on the allegation that Midway Ford ("Midway"), a Ford heavy truck dealer in Kansas City, was quoted a greater CPA discount than Capital Ford with respect to a proposed sale of 400 vehicles to ABF Systems, Inc. in 1986. Defendant contends that Plaintiffs have offered no substantiated, admissible evidence to support their assertion that Capital Ford was offered CPA of $12,625 per unit while Midway was quoted $13,900. A review of Plaintiff Anderson's third affidavit (attached to Plaintiffs' supplemental brief in opposition to Defendant's motion for summary judgment) and exhibit "D" to that affidavit, which documents the transaction, indicates that Ford Motor did grant greater CPA to Midway than to Capital Ford for the subject transaction. Under these circumstances, the court cannot say that no issue of material fact remains with regard to this transaction.
[30] The subject transactions are documented at the following tabbed appendices to the first affidavit of William Anderson: 3, 33, 37, 45, 48, 50, and 83.
[31] Plaintiff cites Arnott v. American Oil Co., 609 F.2d 873, 881 (8th Cir.1979) for the proposition that a fiduciary duty is inherent in a franchise relationship. Arnott takes a distinctly minority position and numerous courts have refused to follow the case. See Domed Stadium, 732 F.2d at 4485. The Eighth Circuit itself, in later decisions, has declined to follow Arnott. See Bain v. Champlin Petroleum Co., 692 F.2d 43, 47-48 (8th Cir.1982).
[32] Plaintiffs cite to Ewers v. Ford Motor Co., 843 F.2d 1331 (11th Cir.1988) does not support the proposition that this language creates a fiduciary duty between Ford Motor and Capital Ford. The Ewers court referenced the preamble language in the Franchise Agreement to find that a question of fact existed as to whether a Ford dealer justifiably relied on the manufacturer's representations. Ewers did not hold that any obligations of fiduciary duty arise out of that language. In fact, the court rejected the dealer's contention that it had a "confidential relationship" with the manufacturer. Id. at 1335.
[33] By order dated September 12, 1990, 779 F. Supp. 1345, the court dismissed Plaintiffs' other Sherman Act claims. The court declined to dismiss the claim relating to Ryder, finding that Plaintiffs had stated a cognizable claim under Greene v. General Foods Corp., 517 F.2d 635 (5th Cir.1975), cert. denied, 424 U.S. 942, 96 S. Ct. 1409, 47 L. Ed. 2d 348.
[34] Unlike other truck manufacturers, Ford Motor did not sell directly to Ryder in the trade packages. Instead, all sales were made through participating Ford Motor dealers. Johnson Aff., ¶ 3.
[35] Available CPA was allocated by Ford Motor either as a reduction of new vehicle prices or as an allowance on used vehicle bids. Johnson Depo., pp. 23, 33-34.
[36] Ford Motor's dealers would also occasionally sell directly to Ryder outside the trade packages. In those cases, the dealers would negotiate independently with Ryder. Like the trade packages, these sales usually involved a used truck purchase requirement and CPA was available to the dealers. The evidence of record shows that the prices Ryder pays in these direct sales were also based on Ford Motor's fleet price lists and profits were similarly limited. Anderson Depo., p. 507.
[37] Section 1 of the Sherman Act states:
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.
15 U.S.C. § 1.
[38] In view of this ruling, it is unnecessary to reach Defendant's antitrust standing argument. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1970880/ | 911 F. Supp. 161 (1995)
Ilene K. KING
v.
M.R. BROWN, INC. t/a Ruth's Chris Steak House.
No. 95-2271.
United States District Court, E.D. Pennsylvania.
September 22, 1995.
*162 *163 Adam H. Feinstein, Philadelphia, PA, for plaintiff.
Joan R. Sheak, Klehr, Harrison, Harvey, Branzburg and Ellers, Allentown, PA, for defendant.
MEMORANDUM
NEWCOMER, District Judge.
Presently before this Court are defendant's Motion to Dismiss Counts I, III, and IV of the Second Amended Complaint pursuant to Fed.R.Civ.P. 12(b)(1) or 12(b)(6) and to Strike Certain Paragraphs of that Complaint, and plaintiff's response thereto. For the reasons that follow, this Court shall grant the motion in part and deny the motion in part.
I. Background
Plaintiff Ilene King filed this sexual harassment action under Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e, and the Pennsylvania Human Relations Act ("PHRA"), 43 P.S. § 951, against her former employer, Ruth's Chris Steak House ("Ruth's Chris"). Plaintiff also asserts a state law claim for breach of contract against Ruth's Chris.
In her Second Amended Complaint, plaintiff makes the following allegations. Plaintiff was employed as a waitress at defendant Ruth's Chris Steak House, an upscale restaurant located in Philadelphia, Pennsylvania, from September 1989 until Ruth's Chris dismissed her in June 1994. From March 1994 until her termination, plaintiff was subjected to unwelcome sexual overtures and harassment by Karen Leader, a female co-worker. Ms. Leader, who is a lesbian, harassed plaintiff by engaging in acts of "undesired and nonconsensual physical touching as well as verbal abuse and intimidation." Second Am. Compl. ¶ 10. Plaintiff then notified defendant's owner of the alleged harassment. The owner assigned the investigation of this matter to the restaurant's general manager, Curt Gaither.
The events that transpired subsequently are not entirely clear from the Second Amended Complaint. It appears that Mr. Gaither called a meeting between plaintiff and Ms. Leader that resulted in management issuing written warnings to both Ms. Leader and plaintiff that sexual harassment violates company policy and would not be tolerated. It is unclear why plaintiff received a warning since there is nothing in the record to indicate that she committed acts of sexual harassment, only that she was a victim of it. After receiving the written warning, plaintiff informed Mr. Gaither that she believed that the company had issued a warning to her as retribution against her for raising her claim of sexual harassment. Plaintiff also telephoned Charles DiLapi, the Vice President for Human Resources of Ruth's Chris' parent corporation, to notify him of the harassment.
Five days after the first meeting, Mr. Gaither again summoned plaintiff to his office. During this time period, plaintiff had *164 skipped two scheduled shifts at work, claiming that she felt that Ms. Leader posed a physical danger to her. As a result of plaintiff's absences, the company gave her a written reprimand and suspended her for two weeks. Mr. Gaither stated that, based on the opinion of another Ruth's Chris employee, David McSherry, whose role in this matter is somewhat nebulous, he did not believe that plaintiff was in any physical danger from Ms. Leader.
On May 31, 1994, while suspended from work, plaintiff filed a Charge of Discrimination with the EEOC and the Pennsylvania Human Rights Commission ("PHRC"). Compl.Ex. D. The Charge was limited to a description of Ms. Leader's harassment of plaintiff and a claim for retaliatory suspension. Subsequently, on June 8, 1994, Mr. Gaither provided plaintiff with a written notice of termination, which stated that the termination was "a result of warning and suspension of [sic] confrontation with Karen Leader." Compl.Ex. E. On June 17, 1994, plaintiff filed a second Charge of Discrimination with the EEOC and PHRC alleging retaliatory discharge.
Plaintiff then filed the present action in this Court. In Count I, plaintiff alleges discriminatory discharge in violation of Title VII. In Count II, plaintiff alleges retaliatory discharge in violation of Title VII. In Count III, plaintiff alleges discriminatory employment practices pursuant to the PHRA. In Count IV, plaintiff seeks damages for breach of contract. Defendant now moves to dismiss Counts I, III and IV of plaintiff's Second Amended Complaint and to strike paragraphs 12(e) and (f) of that complaint.
II. Legal Standard for Motion to Dismiss
Pursuant to Fed.R.Civ.P. 12(b)(6), a court should dismiss a claim for failure to state a cause of action only if it appears to a certainty that no relief could be granted under any set of facts which could be proved. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S. Ct. 2229, 2232, 81 L. Ed. 2d 59 (1984). Because granting such a motion results in a determination on the merits at such an early stage of a plaintiff's case, the district court "must take all the well pleaded allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the pleadings, the plaintiff may be entitled to relief." Colburn v. Upper Darby Township, 838 F.2d 663, 664-65 (3d Cir.1988) (quoting Estate of Bailey by Oare v. County of York, 768 F.2d 503, 506 (3d Cir.1985), cert. denied, 489 U.S. 1065, 109 S. Ct. 1338, 103 L. Ed. 2d 808 (1989)).
III. Discussion
A. Motion to Dismiss for Lack of Subject Matter Jurisdiction
Defendant moves this Court to dismiss portions of plaintiff's sexual harassment claim for lack of subject matter jurisdiction. This Court will grant defendant's request in part and deny the request in part.
Under Title VII, a plaintiff must file charges with the EEOC and receive a right to sue letter before filing a complaint in federal court. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973); Ostapowicz v. Johnson Bronze Company, 541 F.2d 394, 398 (3d Cir. 1976), cert. denied, 429 U.S. 1041, 97 S. Ct. 741, 50 L. Ed. 2d 753 (1977). The purpose of this requirement is to "correct discrimination through administrative conciliation and persuasion if possible, rather than by formal court action." Ostapowicz, 541 F.2d at 398. In order to ensure that the EEOC has the first opportunity to address the allegations of discrimination, a district court may adjudicate only those claims that fall within "the scope of the EEOC investigation which can reasonably be expected to grow out of the charge of discrimination." Id. at 398-399 (quoting Gamble v. Birmingham Southern R.R. Co., 514 F.2d 678 (5th Cir.1975)).
In this case, the Second Amended Complaint includes various allegations of sexual harassment that occurred during plaintiff's employment at Ruth's Chris. As described infra, plaintiff alleges in paragraph 10 that she was the victim of sexual harassment by Karen Leader that created a hostile work environment at Ruth's Chris. Plaintiff properly raised this claim with the EEOC and PHRA. As such, this Court may exercise *165 subject matter jurisdiction over this claim.
Not previously raised with the EEOC and PHRA, however, are plaintiff's remaining allegations of harassment, which are contained in paragraphs 11-16 of the Second Amended Complaint. These allegations, which are described in greater detail below, allege harassment by individuals other than Ms. Leader as well as different forms of harassment, including instances of quid pro quo sexual harassment.[1] Defendant maintains that this Court may not adjudicate these claims because they were not included in plaintiff's EEOC Charge of Discrimination. Because this Court agrees in part, it will dismiss those claims raised in paragraphs 14-16 for lack of subject matter jurisdiction. The claims raised in paragraphs 11-13, however, are valid. A summary of the specific averments follows.
In paragraphs 11 and 12, plaintiff alleges that employees other than Ms. Leader created a hostile work environment by making lewd comments about the anatomy of female customers, hanging a sexually suggestive poster in the restaurant's kitchen, and permitting the posting of explicit hand-drawn pictures on the employee bulletin board.
In paragraph 13, plaintiff contends that defendant "created a hostile work environment by engaging in quid pro quo sexual harassment of female members of the employer's waitstaff other than plaintiff." In support of this allegation, plaintiff avers that defendant's former general manager, Quinn Brennan, engaged in sexual relations with female employees and that he made sexually provocative comments to female employees.[2]
In paragraphs 14 and 15, plaintiff states that she personally was subjected to quid pro quo sexual harassment by male managerial staff. She claims that Brennan confessed to having sexually explicit dreams about her, stared at her, and made comments about her physical appearance. She also alleges that Brennan became jealous after plaintiff paid attention to a "high roller" customer and that he retaliated by reducing the number of tables she was permitted to service. Plaintiff further claims that she was repeatedly physically touched on the derriere by the restaurant's maitre'd, and that the maitre'd once followed her into the ladies' room to express his physical attraction to her and his desire to initiate a sexual relationship with her.
Finally, in paragraph 16, plaintiff alleges that Brennan met with two male members of the restaurant's waitstaff "to discuss ways in which they could conspire to remove Plaintiff and another female member of the employer's waitstaff, Debbie Donato, because these female employees had the audacity to earn the same level of gratuities which these male employees were able to command."
As previously stated, defendant maintains that this Court should dismiss the allegations contained in paragraphs 11-16 for lack of subject matter jurisdiction because they neither were raised in the EEOC charge nor fell within the scope of the EEOC's investigation of plaintiff's charges. The recent opinion of West v. Philadelphia Elec. Co., 45 F.3d 744 (3d Cir.1995), governs resolution of this issue. In West, a racial harassment case, the district court excluded at trial evidence of specific incidences of racial harassment of both plaintiff and other black employees that were not included in the plaintiff's EEOC charge. The district court reasoned that, unless the *166 evidence involved the same actor or the same specific form of discriminatory conduct, plaintiff failed to meet the jurisdictional requirements of Title VII as to the newly added claims.
The Third Circuit reversed, holding that district courts should apply a "totality of the circumstances" standard to ascertain whether specific instances of harassment are relevant to prove the existence of a hostile work environment. The Third Circuit specifically rejected the district court's use of the "same actor, same conduct" test, stating that "[b]ecause a hostile work environment claim is a single cause of action, rather than a sum of discrete claims, each to be judged independently, the focus is the work atmosphere as a whole." Id. at 756. The court reasoned that
[i]f an employer knowingly (actively or constructively) permits a hostile work environment to exist, it is of no import that the collection of incidents comprising the claim were committed by a variety of individuals. Rather, by implicitly condoning harassing behavior, the employer may facilitate its spread by a greater number of employees.
Id. (footnote omitted). The court added that "[i]n some instances, evidence of harassment of others will support a finding of discriminatory intent with regard to a later incident." Id. at 757.
Although the narrow issue in West was the admissibility of evidence at trial rather than Title VII's requirement of exhaustion of administrative remedies, the Third Circuit's pronouncement on the scope of a hostile work environment claim is relevant to the case at bar. Since a hostile work environment claim is a "single cause of action," Id. at 756, West dictates that a jury be permitted to evaluate instances of impermissible harassment in the aggregate in order to ascertain whether the incidents collectively created a hostile work environment. In this case, plaintiff's "new" allegations of a hostile work environment at Ruth's Chris merely buttress her original claim of hostile work environment, which she properly raised with the EEOC and of which Ruth's Chris was clearly on notice. Because plaintiff may offer evidence of these "new" allegations at trial without stating a new cause of action, it would make little sense to require her to file a separate Charge of Discrimination with the EEOC based on these allegations. Thus, plaintiff's averments of paragraphs 11-13, which allege facts supporting her claim of a hostile work environment, are properly before this Court.
On the other hand, paragraphs 14-16, which allege quid pro quo harassment of plaintiff, are not properly part of the instant action. These allegations, which state a different cause of action not previously raised with the EEOC, are neither related to plaintiff's charge of a hostile work environment nor likely to have been included in the EEOC's investigation of plaintiff's charge. To hold otherwise would frustrate Title VII's preference for investigation and conciliation by the EEOC over formal adjudication, as well as deprive the charged party of notice of the allegations against it. See EEOC v. E.I. duPont de Nemours & Co., 516 F.2d 1297 (3d Cir.1975).
B. Counts I and III: Same-Gender Sexual Harassment
Defendant next contends that sexual harassment is not actionable pursuant to Title VII or the PHRA when the alleged harasser and the victim are members of the same gender.[3] This is an issue of first impression in the Third Circuit. This Court finds that same-sex sexual harassment is actionable under Title VII.
Title VII of the Civil Rights Act of 1964 renders it illegal for an employer
"to discriminate against any individual with respect to his compensation, terms, conditions, or privileges or employment, because of such individual's race, color, religion, sex, or national origin."
42 U.S.C. § 2000e-2(a)(1) (emphasis added). The EEOC and federal courts have interpreted *167 this language to proscribe harassment based on the factors listed in the statute. Vinson, 477 U.S. at 65, 106 S. Ct. at 2404.
The courts that have ruled on the actionability of same-gender harassment have reached divergent results. It appears, however, that the trend is to permit such claims to proceed.
On the one hand, the courts that have found same-sex sexual harassment to be actionable have relied on the Supreme Court's recognition in Vinson that "when a supervisor harasses a subordinate because of the subordinate's sex, that supervisor `discriminates' on the basis of sex." 477 U.S. at 64, 106 S.Ct. at 2404. See EEOC v. Walden Book Co., Inc., 885 F. Supp. 1100 (M.D.Tenn. 1995); McCoy v. Johnson Controls World Services, Inc., 878 F. Supp. 229 (S.D.Ga.1995); Prescott v. Independent Life and Acc. Ins. Co., 878 F. Supp. 1545 (M.D.Ala.1995); Marrero-Rivera v. Dept. of Justice, 800 F. Supp. 1024 (D.P.R.1992), aff'd, 36 F.3d 1089 (1st Cir.1994); Parrish v. Washington National Insurance Co., 1990 WL 165611 (N.D.Ill. 1990); Joyner v. AAA Cooper Transp., 597 F. Supp. 537 (M.D.Ala.1983), aff'd, 749 F.2d 732 (11th Cir.1984); Wright v. Methodist Youth Services, 511 F. Supp. 307 (N.D.Ill. 1981). In effect, these courts have concluded that, if the plaintiff had been a member of the opposite sex, he or she would not have been harassed. See also Barnes v. Costle, 561 F.2d 983, 990 n. 55 (D.C.Cir.1977).
On the other side of the debate are several courts that have found that no cause of action exists for same-gender harassment. See Garcia v. Elf Atochem North America, 28 F.3d 446 (5th Cir.1994); Benekritis v. Johnson, 882 F. Supp. 521 (D.S.C.1995); Fox v. Sierra Development Co., 876 F. Supp. 1169 (D.Nev.1995); Hopkins v. Baltimore Gas & Elec. Co., 871 F. Supp. 822 (D.Md.1994); Vandeventer v. Wabash National Corp., 867 F. Supp. 790, 796 (N.D.Ind.1994); Goluszek v. Smith, 697 F. Supp. 1452 (N.D.Ill.1988). These courts have reasoned that Congress' only purpose in enacting Title VII was to foster equal employment opportunity and that this purpose is not furthered by protecting employees from harassment by other members of the same gender.
This Court respectfully declines to follow the reasoning of Goluszek and its progeny that the only sex discrimination Title VII endeavors to prevent is that "stemming from an imbalance of power and an abuse of that imbalance by the powerful which results in discrimination against a discrete and vulnerable group." Goluszek, 697 F.Supp. at 1456 (citing Note, Sexual Harassment Claims of Abusive Work Environment Under Title VII, 97 Harv.L.Rev. 1449, 1451-52 (1984)). First, the cognizability of reverse discrimination claims under Title VII belies this conclusion; as the Walden Book Co. court aptly noted, it is "untenable to allow reverse discrimination cases but not same-sex sexual harassment cases to proceed under Title VII." 885 F. Supp. at 1103. Accord Prescott, 878 F.Supp. at 1550. Second, nothing in the text of the statute indicates that Title VII's protections extend only to individuals who are harassed by members of the opposite sex. Third, as no legislative history exists on this issue,[4] this Court fails to understand how the Goluszek court was able to reach its conclusion. Finally, Goluszek's conclusion is further weakened by the Supreme Court's implicit acknowledgement that both men and women can be victims of sexual harassment:
Surely, a requirement that a man or woman run a gauntlet of sexual abuse in return for the privilege of being allowed to work and make a living can be as demeaning and disconcerting as the harshest of racial epithets. *168 Henson v. Dundee, 682 F.2d 897, 902 (11th Cir.1982) (quoted with approval in Vinson, 477 U.S. at 67, 106 S. Ct. at 2405) (emphasis added). See also Harris v. Forklift Systems, Inc., ___ U.S. ___, ___, 114 S. Ct. 367, 370-71, 126 L. Ed. 2d 295, 302 (1993) ("A discriminatorily abusive work environment, even one that does not seriously affect employees' psychological well-being, can and often will detract from employees' job performance, discourage employees from remaining on the job, or keep them from advancing in their careers"). Therefore, this Court concludes that same-gender sexual harassment is actionable.
C. Count IV: Breach of Contract
Defendant next argues for dismissal of Count IV, which states a claim for breach of contract. The essence of plaintiff's claim is that, by providing her with a copy of its written prohibition against sexual harassment, defendant granted plaintiff a contractual right to be free from sexual harassment. In response, defendant makes two arguments. First, defendant contends that defendant's personnel policies and procedures do not create contractual obligations. Second, defendant argues that the PHRA preempts any claim for breach of contract.
1. Creation of Contractual Obligations
This Court rejects defendant's argument that defendant's personnel policies and procedures do not create contractual obligations. Under Pennsylvania law, a written embodiment of personnel policies and procedures may become part of an employment contract if the employer offered the policy as a binding term of employment. Morosetti v. Louisiana Land and Exploration Co., 522 Pa. 492, 564 A.2d 151 (1989). What is required is that the policy be offered as "an inducement to employment." Gruver v. Ezon Products, Inc., 763 F. Supp. 772, 774 (M.D.Pa.1991).
Here, plaintiff alleges in her Second Amended Complaint that defendant gave her materials guaranteeing a harassment-free workplace and Open Door Policy as a specific inducement offered to convince her to continue in defendant's employ. Second Am. Compl. ¶ 61. Accepting this allegation as true for purposes of the present motion to dismiss, this Court is not permitted to make the factual determination as to whether the materials provided to plaintiff formed part of a contract.
2. PHRA Preemption of State Law Claims
The PHRA preempts parties from bringing common law claims for wrongful discharge based on claims of discrimination. Clay v. Advanced Computer Applications, 522 Pa. 86, 559 A.2d 917, 918 (1989); 43 P.S. § 962(b). The PHRA also preempts common law claims for breach of contract when the only act that would support the common law claim is the act of discrimination. DiFlorio v. Nabisco Biscuit Co., 1995 WL 355580 at *2 (June 9, 1995) (citing Keck v. Commercial Union Ins. Co., 758 F. Supp. 1034 (M.D.Pa.1991)); Brennan v. National Telephone Directory Corp., 850 F. Supp. 331, 345 (E.D.Pa.1994); Schweitzer v. Rockwell Int'l, 402 Pa.Super. 34, 586 A.2d 383 (1990). See also Sola v. Lafayette College, 804 F.2d 40, 43 (3d Cir.1986) (noting that the PHRA preempts state law claims alleging discriminatory conduct, Third Circuit addressed but did not decide whether PHRA preempted plaintiff's claim for breach of express contract). Here, plaintiff's only allegation is that she "was subjected to unlawful sexual harassment by a fellow Ruth's Chris employee which the Defendant failed and refused to remedy and, in fact, condoned misfeasance in responding to the Plaintiff's plea for help." Second Am.Compl. ¶ 62. Since it is impossible for plaintiff to succeed on her breach of contract claim without succeeding on her claim of discrimination, her breach of contract claim is preempted by the PHRA.
D. Motion to Strike Paragraphs 12(e) and (f)
Finally, defendant moves to strike paragraphs 12(e) and 12(f) of the Second Amended Complaint. Those paragraphs allege the following:
11. The Defendant's former maitre'd, Scott Rouseau, who happens to be the son of the owner of the Defendant restaurant, called a customer a "cock-sucking Jew" in the presence of the Plaintiff; and
12. Rouseau regularly referred to African American customers of the defendant as *169 "niggers" and on one occasion, in Plaintiff's presence, stated that "I wish that nigger would hurry up and eat his dinner."
Defendant contends that these paragraphs should be stricken as "immaterial, impertinent or scandalous" pursuant to Fed.R.Civ.P. 12(f) since the comments describe racial or religious bigotry rather than bigotry based on sex.
Motions to strike are generally disfavored. United States v. Marisol, 725 F. Supp. 833 (M.D.Pa.1989). A motion to strike should be granted only when the material at issue bears no possible relation to the controversy or may cause prejudice to the party opposing the motion. Talbot v. Robert Matthews Distr. Co., 961 F.2d 654 (7th Cir. 1992). The Third Circuit has acknowledged the broad scope of a claim of hostile work environment. West, 45 F.3d at 756-57 (inquiry not limited to same actor or same conduct). Because the behavior alleged in paragraphs 12(e) and (f) may be relevant to the question of hostile work environment, this Court will deny defendant's Motion to Strike.
An appropriate Order follows.
ORDER
AND NOW, this 22nd day of September, 1995, upon consideration of defendant's Motion to Dismiss Counts I, II, and IV of the Second Amended Complaint and Motion to Strike Certain Paragraphs of that Complaint, and plaintiff's response thereto, and consistent with the foregoing Memorandum, it is hereby ORDERED that said Motion is GRANTED in part and DENIED in part as follows:
1. Plaintiff's claim of quid pro quo sexual harassment as alleged in paragraphs 14-16 of the Second Amended Complaint is DISMISSED.
2. Count IV is DISMISSED.
3. Defendant's Motion is DENIED as to all other claims.
AND IT IS SO ORDERED.
NOTES
[1] The Supreme Court has held that Title VII's ban against sex discrimination encompasses two distinct forms of sexual harassment: (1) "quid pro quo" harassment, in which the sexual conduct is linked to the grant or denial of an economic quid pro quo, and (2) "hostile work environment" harassment, in which the harassing conduct "has the purpose or effect of unreasonably interfering with an individual's work performance or creating an intimidating, hostile, or offensive working environment." Meritor Savings Bank v. Vinson, 477 U.S. 57, 106 S. Ct. 2399, 91 L. Ed. 2d 49 (1986); 29 CFR § 1604.11(a)(3). Actionable sexual harassment occurs not only when the alleged harasser is the supervisor of an employee, but also if an employer tolerates harassment by an employee's co-worker. Andrews v. City of Philadelphia, 895 F.2d 1469 (3d Cir.1990).
[2] Although the Second Amended Complaint refers to the acts alleged in paragraph 13 as quid pro quo sexual harassment of other employees, these allegations appear to be more consistent with the Supreme Court's definition of hostile work environment harassment than quid pro quo harassment.
[3] Because the PHRA has been interpreted and applied identically to Title VII, the following analysis applies equally to plaintiff's Title VII claim stated in Count I and her PHRA claim stated in Count III. Allegheny Housing Rehabilitation Corp. v. Commonwealth of Pennsylvania, 516 Pa. 124, 532 A.2d 315 (1987).
[4] The Supreme Court has acknowledged the dearth of legislative history pertaining to Title VII's ban against sex discrimination:
The prohibition against discrimination based on sex was added to Title VII at the last minute on the floor of the House of Representatives. 110 Cong.Rec. 2577-2584 (1964). The principal argument in opposition to the amendment was that "sex discrimination" was sufficiently different from other types of discrimination that it ought to receive separate legislative treatment. This argument was quickly defeated, the bill quickly passed as amended, and we are left with little legislative history to guide us in interpreting the Act's prohibition against discrimination based on "sex."
Vinson, 477 U.S. at 63-64, 106 S. Ct. at 2404 (citation omitted). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2294378/ | 118 Cal. Rptr. 2d 354 (2002)
97 Cal. App. 4th 483
Vinod PATEL, Plaintiff and Appellant,
v.
CITY OF GILROY, Defendant and Respondent.
No. H021888.
Court of Appeal, Sixth District.
March 8, 2002.
Review Denied June 12, 2002.
*356 Frank A. Weiser, Los Angeles, for Appellant.
Berliner, Cohen, Linda A. Callon and Jolie Houston, San Jose, for Respondent.
*355 ELIA, J.
Vinod Patel, owner of the Pacheco Pass Motel in Gilroy, appeals from a judgment upholding the tax assessments imposed on the motel by the City of Gilroy (City). Appellant contends that the ordinance that created and defined the tax is unconstitutionally vague. We disagree and affirm the judgment.
Background
In June 1998, following an audit, the City notified appellant that he owed $26,292.33 in delinquent taxes, interest and penalties, under the city's Transient Occupancy Tax ordinance, Gilroy City Code section 25A.1, et. seq.[1] The ordinance requires the proprietor of each "hotel" to collect, along with the rent, a 9 percent tax from each "transient" for the privilege of "occupancy" in the hotel.[2] (§ 25A.2.)
After a hearing in August 1998, the Administrative Services Director (Director) found that appellant owed the City $10,965.36, attributable to exemptions improperly claimed for the three-year audit period ending December 1, 1996, plus interest. The Director noted that the motel kept "very erratic" records, and that there were no written agreements for stays of more than 30 days, which would have allowed an exemption from the tax. However, the Director also noted that many of the hotel patrons had in fact stayed longer than 30 days, as reflected in the room rental cards. The Director further found that appellant had collected some tax, which he had included in the room rate without itemizing it on the rental cards. Consequently, the Director allowed an exemption from the tax for all of the patrons who appeared to have stayed more than 30 consecutive days. The Director declined to impose penalties, finding no intent to underreport taxes.
Appel lant filed a timely appeal to the Gilroy City Council, which conducted a hearing and upheld the Director's findings. In January 1999, appellant, together with the owners of the Leavesley Inn,[3] filed a petition for a writ of mandate and complaint for declaratory and injunctive relief. *357 The petitioners alleged that the assessment violated their rights to due process and equal protection, and that the Transient Occupancy Tax ordinance was facially void for vagueness.
In August 1999 the City filed its own complaint to recover the amounts found due by the Director and the City Council, along with the interest that had continued to accrue.[4] Pursuant to a stipulation by the parties, the court ordered that the outcome of the proceedings against the City would control the outcome of the City's collection lawsuit against appellant. As part of the stipulation the parties acknowledged that if the City prevailed, it would be entitled to recover the amount found due by the Director, plus accrued interest. On June 20, 2000, the court entered judgment in favor of the City, finding the Transient Occupancy Tax ordinance to be "valid and constitutional."
Discussion
An enactment may be declared unconstitutionally vague under the due process clauses of the United States Constitution and the California Constitution (U.S. Const., Amends V, XIV; Cal. Const., art. I, § 7) "if it fails to provide people of ordinary intelligence a reasonable opportunity to understand what conduct it prohibits [or] if it authorizes or even encourages arbitrary and discriminatory enforcement." (Hill v. Colorado (2000) 530 U.S. 703, 732, 120 S. Ct. 2480, 147 L. Ed. 2d 597; Chicago v. Morales (1999) 527 U.S. 41, 56, 119 S. Ct. 1849, 144 L. Ed. 2d 67; People v. Castenada (2000) 23 Cal. 4th 743, 751, 97 Cal. Rptr. 2d 906, 3 P.3d 278.) A tax law in particular "`must prescribe a standard sufficiently definite to be understandable to the average person who desires to comply with it. [Citation.]'" (State Bd. of Equalization v. Wirick (2001) 93 Cal. App. 4th 411, 420, 112 Cal. Rptr. 2d 919.) We therefore must consider whether chapter 25A of the Gilroy City Code (the Transient Occupancy Tax ordinance) gives fair notice of the tax collection and reporting requirements and provides reasonably adequate standards to guide enforcement. (Id. at p. 419, 112 Cal. Rptr. 2d 919, quoting Fisher v. City of Berkeley (1984) 37 Cal. 3d 644, 702, 209 Cal. Rptr. 682, 693 P.2d 261; City San Bernardino Hotel/Motel Assn. v. City of San Bernardino (1997) 59 Cal. App. 4th 237, 245, 69 Cal. Rptr. 2d 97.)
The primary focus of the parties' dispute is the definition of the terms used in section 25A.1specifically, "hotel," "occupancy," and "transient." From 1994 to 1996, the period for which appellant was audited, "hotel" was defined as "any structure, or any portion of any structure, which is occupied or intended or designed for occupancy by transients for dwelling, lodging or sleeping purposes, and includes any hotel, inn, tourist home or house, motel, studio hotel, bachelor hotel, lodging house, rooming house, apartment house, dormitory, public or private club, mobile home or house trailer at a fixed location, or other similar structure or portion thereof." (Former § 25A.1; Ord. No. 928, 1971, § 1.)[5] The term "occupancy" refers to "the use or possession, or the right to the use or possession of any room or rooms or portions thereof, in any hotel for dwelling, lodging or sleeping purposes." (§ 25A.1.) And a "transient" is "any person who exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license or other agreement for a *358 period of thirty (30) consecutive calendar days or less, counting portions of calendar days as full days. Any such person so occupying space in a hotel shall be deemed to be a transient until the period of thirty (30) days has expired unless there is an agreement in writing between the operator and the occupant providing for a longer period of occupancy. In determining whether a person is a transient, uninterrupted periods of time extending both prior and subsequent to the effective date of this chapter may be considered." (§ 25A.1.)
Appellant contends that these terms are "hopelessly confusing" because they are defined in a circular way and fail to distinguish temporary living arrangements from permanent ones. The definitions of "hotel" and "occupancy," for example, are flawed because they contain the words "dwelling" and "lodging," which imply either a temporary or a permanent situation. The 30 day restriction in the definition of "transient" is inadequate to clarify the reach of the tax, appellant adds, because it suggests that a tenant of an apartment on a month-to-month arrangement must pay the tax for the first 30 days, a situation not intended by the lawmakers. "It is only on day 31, when the renter pays the second month's rent, that the owner may safely assume no tax is due. But the Ordinance chose to use the words `hotel' and `transient', which apparently was intended to exclude this hypothetical."
Appellant's argument is self-defeating, as it expressly invokes a "hypothetical" scenario appellant himself does not face. Whether a month-to-month apartment rental would create confusion in the lessor and lessee is not the problem presented here. Rather, here the only issue was whether appellant failed to collect tax for those guests who stayed in his motel for 30 or fewer days without a written agreement for a longer stay. Appellant "cannot prevail by simply suggesting hypothetical situations in which constitutional problems may arise." (People v. Sipe (1995) 36 Cal. App. 4th 468, 481, 42 Cal. Rptr. 2d 266, italics added.) "[Speculation about possible vagueness in hypothetical situations not before the Court will not support a facial attack on a statute when it is surely valid `in the vast majority of its intended applications.'" (Hill v. Colorado, supra, 530 U.S. at p. 733, 120 S. Ct. 2480; see also Tobe v. City of Santa Ana (1995) 9 Cal. 4th 1069, 1109, 40 Cal. Rptr. 2d 402, 892 P.2d 1145 [unless law sweeps in substantial amount of constitutionally protected conduct, facially vague law must be invalid in all respects and applications]; Evangelatos v. Superior Court (1988) 44 Cal. 3d 1188, 1201, 246 Cal. Rptr. 629, 753 P.2d 585 [in facial vagueness challenge party must demonstrate vagueness in "all of its applications," not just some instances of uncertainty or ambiguity]; cf. American Academy of Pediatrics v. Lungren (1997) 16 Cal. 4th 307, 347-348, 66 Cal. Rptr. 2d 210, 940 P.2d 797.)
Appellant maintains, however, that we must exercise stricter scrutiny of the ordinance because it prescribes criminal penalties for violations.[6] (Kolender v. Lawson (1983) 461 U.S. 352, 358, fn. 8, 103 S. Ct. 1855, 75 L. Ed. 2d 903 [where a statute imposes criminal penalties, the standard of certainty is higher].) Penal enactments are given greater scrutiny when *359 their enforcement threatens the exercise of constitutional rights, such as freedom of expression or freedom of movement. (Chicago v. Morales, supra, 527 U.S. at p. 55, 119 S. Ct. 1849; Tobe v. City of Santa Ana, supra, 9 Cal.4th at p. 1095, 40 Cal. Rptr. 2d 402, 892 P.2d 1145.) But where no such constitutional rights are at stake, it is the facts of the case and not hypothetical situations that determine the viability of a vagueness challenge. (Chapman v. United States (1991) 500 U.S. 453, 467, 111 S. Ct. 1919, 114 L. Ed. 2d 524; People v. Sipe, supra, 36 Cal.App.4th at p. 481, 42 Cal. Rptr. 2d 266.) Thus, if the conduct with which appellant is charged falls clearly within the bounds of the ordinance, appellant may not be heard to complain. (Tobe v. City of Santa Ana, supra, 9 Cal.4th at p. 1095, 40 Cal. Rptr. 2d 402, 892 P.2d 1145.)
Even considering appellant's challenge as properly presented, we do not find the ordinance unconstitutionally vague. Appellant acknowledges that the Transient Occupancy Tax ordinance is presumed to be valid and must be upheld unless its unconstitutionality "`clearly, positively and unmistakably appears.'" (Hale v. Morgan (1978) 22 Cal. 3d 388, 404, 149 Cal. Rptr. 375, 584 P.2d 512; Tobe v. City of Santa Ana, supra, 9 Cal.4th at p. 1102, 40 Cal. Rptr. 2d 402, 892 P.2d 1145; Voters for Responsible Retirement v. Board of Supervisors (1994) 8 Cal. 4th 765, 780, 35 Cal. Rptr. 2d 814, 884 P.2d 645.) Furthermore, even when criminal penalties apply, a statute or ordinance will be upheld against a vagueness challenge "`"if any reasonable and practical construction can be given its language."'" (State Bd. of Equalization v. Wirick, supra, 93 Cal. App.4th at p. 420, 112 Cal. Rptr. 2d 919; People v. Townsend (1998) 62 Cal. App. 4th 1390, 1400-1401, 73 Cal. Rptr. 2d 438; People ex ret. Gallo v. Acuna (1997) 14 Cal. 4th 1090, 1117, 60 Cal. Rptr. 2d 277, 929 P.2d 596.) We are bound to give the ordinance before us "a liberal, practical commonsense construction ... in accordance with the natural and ordinary meaning of its words." (Amador Valley Joint Union High Sch. Dist. v. State Bd. of Equalization (1978) 22 Cal. 3d 208, 245, 149 Cal. Rptr. 239, 583 P.2d 1281.)
In this case, appellant argues, the ordinance "is so vague that a hotel/motel operator cannot determine how to avoid the tax and properly comply with its requirements and that the respondent cannot avoid arbitrary enforcement." Specifically, as noted above, the ordinance uses circular definitions of "hotel" and "transient" and fails to distinguish between a person living from day to day or week to week in a motel and a person living in an apartment on a month-to-month tenancy. In addition, the provision for an "agreement in writing" is not defined, thereby adding to the "definitional confusion between `transient' and `permanent' occupancy." The "Exemptions" provision, section 25A.3, "further exacerbates the problem of vagueness and circularity" because it "does not set forth adequate guidelines or definitions as to which class of `persons' or `occupancy' it is `beyond the City [sic] to impose the tax.'"[7]
Appellant relies principally on City of San Bernardino Hotel/Motel Assn. v. City of San Bernardino, supra, 59 Cal. App. 4th 237, 69 Cal. Rptr. 2d 97, where the Fourth District, Division Two, found a hotel tax *360 ordinance deficient because it inadequately defined "hotel," "occupancy," and "transient." He also cites Britt v. City of Pomona (1990) 223 Cal. App. 3d 265, 272 Cal. Rptr. 724, where the Second District, Division Three, invalidated an ordinance on vagueness grounds based on the "circular" definitions of "hotel" and "transient" which failed to distinguish temporary occupants from long-term residents in identifying who was subject to the tax.
The ordinance before us does not present the same interpretative difficulties as those examined in San Bernardino and Britt. In Britt, the City of Pomona used the term "dwelling" in the definition of "hotel," thus making it appear that permanent residents also had to pay the tax. Significantly, however, the definitions of the terms "hotel," "occupancy," and "transient" did not confine the tax to those occupying a hotel for any specific period.[8] Thus, it was readily susceptible of an interpretation that a person "dwelling" in the hotel on a long-term basis was subject to the tax. (223 Cal.App.3d at p. 279, 272 Cal. Rptr. 724.) The use of the term "transient" added circularity, not clarity, because a transient was defined as one who occupied a "hotel," while a "hotel" was a structure designed for occupancy by transients. In San Bernardino the central problem was not just that the ordinance used the term "dwelling" in the definition of "occupancy." Rather, the ordinance was confusing because it described a transient as a person who occupied a hotel for a period of 90 days or less and one who occupied the hotel for more than 90 days without a written agreement for "permanent" occupancy. Both "agreement in writing" and "permanent occupancy" were vague, as it was not clear to the court what kind of writing could qualify as a written agreement and "permanent" meant "any definite period of time," except for the first 90 days in certain kinds of facilities. (59 Cal.App.4th at pp. 249-250, 69 Cal. Rptr. 2d 97.) The court also acknowledged the hotel/motel association's argument that the definitions of "hotel" and "transient" were "needlessly contradictory" because the former included occupancy for no more than 30 days,[9] while the latter included occupancy for 90 days or (in some circumstances) more. (59 Cal.App.4th at p. 249, 69 Cal. Rptr. 2d 97.)
The Gilroy ordinance does not suffer from these infirmities. It is true that the definitions of "hotel" and "occupancy" refer to "dwelling" as well as "lodging or sleeping" purposes, but the tax applies solely to those who occupy a hotel "for a period of thirty (30) consecutive calendar days or less." There is no confusing 90-day period as in San Bernardino; the hotel guest is invariably deemed to be a transient until the first 30 days have passed, even if he or she appears to be "dwelling" in the hotel for that period.[10]*361 That the provision may require tax on a tenant's rent for the first 30 days does not make it impermissibly vague. Furthermore, a written agreement providing for a longer occupancy will remove the rental arrangement from the reach of the ordinance. This exemption provision is not as ambiguous as that of the San Bernardino ordinance, which inadequately defined "permanent" as well as "agreement in writing" in the context of the convoluted definition of "transient." (59 Cal.App.4th at p. 249, 69 Cal. Rptr. 2d 97.)
The "Exemptions" provision, section 25A.3, is hardly a model of clarity in exempting whoever is "beyond the power of the city to impose the tax." Nevertheless, "[t]he fact that a term is somewhat imprecise does not itself offend due process. Rather, so long as the language sufficiently warns of the proscribed conduct when measured by common understanding and experience, the statute is not unconstitutionally vague." (People v. Ellison (1998) 68 Cal. App. 4th 203, 207-208, 80 Cal. Rptr. 2d 120; see also People v. Hazelton (1996) 14 Cal. 4th 101, 109, 58 Cal. Rptr. 2d 443, 926 P.2d 423 [mere fact that statute requires interpretation does not make it unconstitutionally vague].) "[Because we are `[condemned to the use of words, we can never expect mathematical certainty from our language.'" (Hill v. Colorado, supra, 530 U.S. at p. 733, 120 S. Ct. 2480.) "Many, probably most, statutes are ambiguous in some respects and instances invariably arise under which the application of statutory language may be unclear. So long as a statute does not threaten to infringe on the exercise of First Amendment or other constitutional rights, however, such ambiguities, even if numerous, do not justify the invalidation of a statute on its face." (Evangelatos v. Superior Court, supra, 44 Cal.3d at p. 1201, 246 Cal. Rptr. 629, 753 P.2d 585.)
Here the Director expressed no confusion in determining that appellant had not entered into any written agreements with patrons who had stayed in the motel for a period shorter than 31 days; nor did he appear to have any difficulty construing the ordinance to require the collection of tax from those guests. We do not believe that the exemption provision alone makes it impossible for a hotel operator to comply with his or her duty to collect the transient occupancy tax or that it promotes arbitrary enforcement of the law.
In summary, appellant has not demonstrated the facial invalidity of the ordinance on constitutional vagueness grounds. Because "`it is clear what the ordinance as a whole prohibits,'" and because the ordinance is "surely valid `in the vast majority of its intended applications,'" his facial vagueness claim must be rejected. (Hill v. Colorado, supra, 530 U.S. at p. 733, 120 S. Ct. 2480.) The superior court properly upheld the tax assessments against appellant.
Disposition
The judgment is affirmed.
WE CONCUR: PREMO, Acting P.J., and MIHARA, J.
NOTES
[1] All further unspecified section references are to the Gilroy City Code.
[2] Section 25A.2 specifically states: "For the privilege of occupancy in any hotel, each transient is subject to and shall pay a tax in the amount of nine (9) per cent of the rent charged by the operator. Said tax constitutes a debt owed by the transient to the city which is extinguished only by payment to the operator or to the city. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due upon the transient's ceasing to occupy space in the hotel. If for any reason the tax due is not paid to the operator of the hotel, the director of finance may require such tax [to] be paid directly to the director of finance."
[3] This appeal is being considered with City of Gilroy v. Vinod Patel (doing business as Oaks Motel), H021900, and City of Gilroy v. Leavesley Ocean-Inn Investors, H021889.
[4] The complaint is not in the clerk's transcript on appeal, but is referred to by the court in its subsequent order.
[5] "Hotel'' now includes a recreational vehicle park. (§ 25A.1, Ord. No. 97-9, § I, Oct. 20, 1997.)
[6] In addition to prescribing monetary penalties for noncompliance, the ordinance originally declared any violation of the ordinance a misdemeanor punishable by a $500 fine or imprisonment, or both. The current version of the ordinance declares such a violation to be an infraction.
[7] Section 25A.3, "Exemptions," precludes imposition of the tax on "[a]ny person as to whom, or any occupancy as to which, it is beyond the power of the city to impose the tax herein provided." (§ 25A.3(a).) Also exempted are officers and employees of foreign governments if they are made exempt by an "express provision of federal law or international treaty."
[8] The contested ordinances were the result of amendments that had eliminated the city's previous limitation of the occupancy period. Before the 1987 and 1988 amendments the ordinance had defined "transient" as a person who occupied a lodging for a period of 30 days or less. (Britt, supra, 223 Cal.App.3d at p. 270, 272 Cal. Rptr. 724.)
[9] The association's complaint referred to a definition of "hotel" that appeared to encompass mobile homes and house trailers in mobile-home parks occupied for 30 or fewer days. (San Bernardino, supra, 59 Cal.App.4th at p. 246, 69 Cal. Rptr. 2d 97.)
[10] Although appellant suggests the City could not have intended to require the tax for the first 30 days of a longer stay, the language of this section appears to state otherwise: any person occupying space in a hotel "shall be deemed to be a transient until the period of thirty (30) days has expired unless there is an agreement in writing between the operator and the occupant providing for a longer period of occupancy." Thus, the tax need not be collected for the first 30 days only if there is a written agreement providing for a stay of longer than 30 days. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2456501/ | 63 F. Supp. 2d 908 (1999)
Ronald ERNST, Plaintiff,
v.
CITY OF CHICAGO, et al., Defendants.
No. 99 C 1820.
United States District Court, N.D. Illinois, Eastern Division.
September 7, 1999.
*909 Ronald Ernst, Chicago, IL, plaintiff pro se.
Karen Dorff and Diane M. Pezanoski, Assistant Corporation, Chicago, IL, for City of Chicago.
MEMORANDUM OPINION AND ORDER
SHADUR, Senior District Judge.
Ronald Ernst ("Ernst") sues the City of Chicago and "various John Does and Jane Does who work for the City of Chicago and were involved in this case" (collectively "City"), asserting a number of claimed constitutional violations resulting from the towing of four motor vehicles belonging to Ernst. City has responded with a motion to dismiss all counts of the Complaint under Fed.R.Civ.P. ("Rule") 12(b)(6). For the reasons set out in this memorandum opinion and order, City's motion is granted.
Facts[1]
On March 21, 1997, without prior notice to Ernst, City employees towed four of his motor vehicles (a 1970 Ford Maverick, a 1977 Mercury Monarch, a 1977 Chevy van and a 1977 Pontiac Grand Prix) from an open gravel parking lot on private property behind his home. Several days later Ernst received post-tow notices (sent by regular mail) as to two of the four automobiles. Those notices explained his options: (1) to pay towing and storage fees and reclaim the vehicles, (2) to request a hearing to determine the validity of the tow or (3) to pay no fees and sign over the vehicles to City.
Ernst called to request a post-tow hearing, which was held on April 8, 1997 before hearing officer Dolores Barrett ("Barrett"). That hearing was conducted in the entryway of a City building near the receptionist's desk. Barrett made no record of the hearing and refused to let Ernst see any documents concerning the tows. Barrett ultimately found that the tows of Ernst's vehicles were valid because they were "hazardous dilapidated motor vehicle[s]" as defined by Chicago ordinance.
Ernst appealed that finding to the Cook County Circuit Court (Ernst v. City of Chicago Bureau of Parking Enforcement, No. 97 M1 1046), paying $205.29 in filing fees for that administrative review.[2] Ernst prevailed in his lawsuit: In November 1997 the judge reversed the hearing officer's determination that the tow was valid and ordered City to return Ernst's automobiles to him. But after City moved for reconsideration on the ground that the *910 judge did not have the authority to grant injunctive relief, the judge vacated the portion of the earlier order that had ordered City to return the vehicles. Thus according to the Circuit Court's final judgment (which was not appealed), Ernst was free to retrieve his cars without paying any charges because the tow was invalid, but City did not have to deliver the cars to him.
While Ernst's administrative review action was pending, City wrongfully sold his cars for scrap. City's Claims Unit then offered to compensate Ernst for the loss of the vehicles, but Ernst allowed the offer to lapse when City did not address Ernst's concerns about the asserted constitutional defects in its procedures.
Rule 12(b)(6) Standards
As indicated in n. 1, on the current motion to dismiss this Court accepts all well-pleaded factual allegations of the Complaint as true, drawing all reasonable inferences in Ernst's favor (Sherwin Manor Nursing Ctr., Inc. v. McAuliffe, 37 F.3d 1216, 1219 (7th Cir.1994)). No claim will be dismissed unless "it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations" (Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S. Ct. 2229, 81 L. Ed. 2d 59 (1984), quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957)).
Claim Preclusion
City first argues that many of Ernst's claims all except those relating to the sale and destruction of his vehicles are barred under the doctrine of claim preclusion. Although Ernst also contends here that the towing of his four vehicles and City's notice and hearing procedures violated various municipal, state and federal laws and constitutional provisions, all of those challenges either were raised or could have been raised in Ernst's earlier state court proceeding. Hence under Illinois preclusion law this Court cannot hear them.
River Park, Inc. v. City of Highland Park, 184 Ill. 2d 290, 302, 234 Ill. Dec. 783, 703 N.E.2d 883, 889 (1998) has set out the well-established Illinois doctrine of claim preclusion[3]:
Under the doctrine of res judicata, a final judgment on the merits rendered by a court of competent jurisdiction acts as a bar to a subsequent suit between the parties involving the same cause of action. Rein v. David A. Noyes & Co., 172 Ill. 2d 325, 334-35, 216 Ill. Dec. 642, 665 N.E.2d 1199 (1996); Rodgers v. St. Mary's Hospital, 149 Ill. 2d 302, 311-12, 173 Ill. Dec. 642, 597 N.E.2d 616 (1992). The bar extends to what was actually decided in the first action, as well as those matters that could have been decided in that suit. LaSalle National Bank v. County Board of School Trustees, 61 Ill. 2d 524, 529, 337 N.E.2d 19 (1975). For the doctrine of res judicata to apply, the following three requirements must be satisfied: (1) there was a final judgment on the merits rendered by a court of competent jurisdiction, (2) there is an identity of cause of action, and (3) there is an identity of parties or their privies. Downing v. Chicago Transit Authority, 162 Ill. 2d 70, 73-74, 204 Ill. Dec. 755, 642 N.E.2d 456 (1994).
Illinois law controls this Court's analysis, of course, because it is an Illinois state court judgment whose preclusive effect is at issue (Rogers v. Desiderio, 58 F.3d 299, 301 (7th Cir.1995)).
City easily meets all three requirements of Illinois law. First, the Circuit Court did render a final judgment in *911 Ernst's favor reversing the hearing officer's decision.[4] Next "there is an identity of cause of action" under Illinois' transactional test: Ernst's prior state court action and his several claims raised in this federal action "arise from a single group of operative facts, regardless of whether they assert different theories of relief" (River Park, 184 Ill.2d at 311, 234 Ill. Dec. 783, 703 N.E.2d at 893) those operative facts comprise the tows and the ensuing administrative proceedings against Ernst. Finally, both Ernst and City were parties to the earlier state court action.
Furthermore, Ernst could have raised his statutory and constitutional challenges in the state court administrative review proceedings (see, e.g., Rogers, 58 F.3d at 301, citing Stratton v. Wenona Community Unit Dist. No. 1, 133 Ill. 2d 413, 429-30, 141 Ill. Dec. 453, 551 N.E.2d 640, 646-47 (1990); accord, Edwards v. City of Quincy, 124 Ill.App.3d 1004, 1012-13, 80 Ill. Dec. 142, 464 N.E.2d 1125, 1131-32 (1984)). As Rogers, 58 F.3d at 301 has made clear:
We know from Kremer v. Chemical Construction Corp., 456 U.S. 461, 102 S. Ct. 1883, 72 L. Ed. 2d 262 (1982) that principles of preclusion are fully applicable when the first suit is an administrative-review action in state court.
Ernst did challenge the validity of the tows (indeed, he did so successfully), and he could also have challenged the administrative hearing process on any grounds he chose.
It is true that Ernst has handled all of his administrative and judicial proceedings pro se, and it may well be that he was unaware of his ability to assert those other challenges in the state proceedings. Thus his Mem. 15-16 complains that the Circuit Court judge's order spoke of "sitting solely as a court of review" and that Ernst didn't need to raise constitutional issues because he had a winner on administrative review grounds. But that does not temper the square applicability of Illinois preclusion law to him, just as it would apply to a lawyer-represented party.
In sum, Ernst's claims challenging the towing of his vehicles and the administrative hearing process are precluded and cannot be made the subject of a second suit in this Court.[5] Those claims are dismissed.
Disposition of Ernst's Vehicles
It is far less certain that Ernst could have challenged the sale and destruction of his vehicles in state court, for the cars were not sold until those proceedings had already begun.[6] Even though Ernst's Complaint is not clear as to just what statutory or constitutional provisions he is now invoking to dispute the ultimate disposition of his vehicles, for it alleges only that they were "unlawfully" sold (Complaint ¶¶ 5, 10, 17), this Court will read his pro se Complaint as generously as possible (see, e.g., Haines v. Kerner, 404 U.S. 519, 520-21, 92 S. Ct. 594, 30 L. Ed. 2d 652 (1972) (per curiam)). So the ensuing discussion will address both (1) a possible procedural due process claim as to City's sale of his vehicles for scrap and (2) a possible supplemental jurisdiction claim under 28 *912 U.S.C. § 1367(a) ("Section 1367(a)") that the sale violated municipal and state law.
Procedural Due Process
Under the Supreme Court's decisions in Parratt v. Taylor, 451 U.S. 527, 543-44, 101 S. Ct. 1908, 68 L. Ed. 2d 420 (1981) and Hudson v. Palmer, 468 U.S. 517, 533, 104 S. Ct. 3194, 82 L. Ed. 2d 393 (1984), there is no denial of due process if a plaintiff is seeking a postdeprivation remedy for loss of property resulting from a random and unauthorized act of a government official, and if the state already provides an adequate postdeprivation remedy.[7] That principle dooms Ernst's possibility of a 42 U.S.C. § 1983 claim.
Clearly Ernst alleges that a City employee's random and unauthorized act led to the loss of his vehicles. Three times in his Complaint he refers to the City's having "unlawfully" sold his cars (Complaint ¶¶ 5, 10, 17). And the municipal ordinance governing the disposal of towed cars does not authorize City officials to sell them while administrative review proceedings are pending (Mun.Code § 9-80-110(b), reproduced at City Ex. A). Although Ernst's response to City's motion to dismiss states that "the circumstances involving [his] four vehicles certainly do[] suggest that indeed the city may have just such a policy" (Ernst Mem. 37), that statement in a brief does not cure his Complaint's failure to have alleged anything other than a random and unauthorized act causing his loss of property. Indeed, it is conventional wisdom that a party's memorandum may not be used as a vehicle to overcome a pleading deficiency (Shanahan v. City of Chicago, 82 F.3d 776, 781 (7th Cir.1996), citing Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1107 (7th Cir. 1984)), and nothing in Ernst's current vague suggestion of the possibility of a policy justifies keeping his lawsuit alive in such speculative terms.
Because Ernst has alleged a property deprivation resulting from a random and unauthorized action, he cannot have stated a claim for a procedural due process violation under Parratt (as curbed by Daniels) or under Hudson, or under the many later cases following their lead, if he had an adequate postdeprivation state remedy. And so he did indeed, via more than one route.
First, City offered to pay Ernst for the loss of the vehicles. Although it offered him a set reimbursement amount, Ernst does not argue that City offered too little, nor did he attempt to negotiate that amount with City. Second, Illinois caselaw provides for a bailment action in which Ernst could have sued City for damages for its failure to keep his vehicles safely (see, e.g., American Ambassador Cas. Co. v. City of Chicago, 205 Ill.App.3d 879, 883, 150 Ill. Dec. 755, 563 N.E.2d 882, 885 (1990), permitting a bailment action when "the police department lawfully acquired possession of the vehicle and held it under circumstances whereby it was obligated, under the principles of justice, to keep it safely and restore it or deliver it to the owner").
Because Ernst thus had adequate postdeprivation state law remedies, he has not stated a claim for a denial of due process. And that result does not change if Ernst intends to sue City employees in their personal, rather than their official, capacities (Wilson v. Civil Town of Clayton, 839 F.2d 375, 384 (7th Cir.1988)). So City's *913 motion to dismiss Ernst's claim that he was deprived of his property in violation of due process is granted.
State Law Violations
Ernst also appears to raise a claim, although not explicitly, that City's sale and destruction of his vehicles violated city and state law. Of course any such claim could be raised in this action only under this Court's supplemental jurisdiction conferred by Section 1367(a). But with Ernst's federal claims having been dismissed at this initial stage, the fundamental teaching of United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S. Ct. 1130, 16 L. Ed. 2d 218 (1966) still persuasive in the Section 1367(a) context (see, e.g., Carr v. CIGNA Sec., Inc., 95 F.3d 544, 546 (7th Cir.1996)) calls for the dismissal of his state law claims as well (albeit without prejudice).
Conclusion
City's motion to dismiss Ernst's Complaint is granted in its entirety. When any Rule 12(b)(6) motion has proved successful (as City's has here), and when it also appears either (1) that the movant has identified a potentially curable flaw in a notice-type pleading or (2) that some other reason calls for the loser to be allowed to recast the insufficient pleading, this Court's regular practice is to grant leave to do so. But here the situation is patently different: It is crystal clear from Ernst's prolix submissions his Complaint covering 16 pages plus exhibits (plainly an instance of fact pleading rather than notice pleading), followed by his detailed 42-page plus nine-exhibit (!!) response to City's dismissal motion that he has already given the matter his best shot.
This is not then an appropriate case for allowing a return to the pleadings drawing board. This action is also therefore dismissed with prejudice as to all federal claims, but without prejudice as to Ernst's possible state law claims referred to in the preceding section of this opinion.
NOTES
[1] Because for Rule 12(b)(6) purposes this opinion must credit Ernst's allegations as true, what follows in this Facts section is drawn from his Complaint hence the factual recital omits "Ernst alleges" or any comparable locution.
[2] Although this opinion regularly refers to "administrative review" in the generic sense, the review proceeding was technically pursuant to the common law writ of certiorari but that makes no substantive difference because under that rubric just as under the Illinois Administrative Review Act the scope of review is all-inclusive, "including de novo review of any constitutional issues" (Holstein v. City of Chicago, 29 F.3d 1145, 1148 (7th Cir.1994) and Illinois cases cited there). It is thus irrelevant that the Circuit Court proceeding may have been characterized by City or even by the judge there as brought under the Illinois Administrative Review Law rather than the common law writ: Either way the later-discussed principles of claim preclusion apply.
[3] Although the text quotation (like most Illinois cases) uses the term "res judicata," this Court (adhering to the teaching in Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 77 n. 1, 104 S. Ct. 892, 79 L. Ed. 2d 56 (1984) and many later cases) has consistently referred to "claim preclusion" to distinguish the concept from "issue preclusion." That usage avoids any potential for the frequently-encountered confusion engendered by the older practice of applying the term "res judicata" to both branches of preclusion analysis.
[4] Ernst Mem. 5-6 disputes the significance of the references in City's memorandum to the absence of an appeal from the Circuit Court's decision Ernst stresses that as the prevailing party he had neither standing nor an incentive to appeal. That however is quite beside the mark the critical fact is that a final judgment was entered in a proceeding in which he could have (see n. 2) but did not raise the selfsame issues that he forwent there and now seeks to advance here.
[5] This ruling obviates any need to prolong the discussion by addressing City's added arguments that would independently defeat Ernst's action: Ernst's asserted lack of standing (City R.Mem. 9-11) and the untenability of his constitutional claims on the merits (id. 11-14). Suffice it to say that this opinion's consequent omission of any point-by-point analysis of those contentions should not be mistaken as an adverse reflection on their probative force.
[6] Further, it is unclear from the Complaint when Ernst discovered that his cars had been sold.
[7] Parratt was overruled by Daniels v. Williams, 474 U.S. 327, 330-31, 106 S. Ct. 662, 88 L. Ed. 2d 662 (1986), but only as to Parratt's holding that a deprivation resulting from negligent conduct could support a due process claim. Daniels held instead that only an intentional deprivation would suffice (that decision left Hudson unimpaired see Daniels, id. at 331, 106 S. Ct. 662). If then the sale of Ernst's cars for scrap were merely negligent (as would seem more probable), he would lose at the very threshold of Section 1983 analysis in light of Daniels. But to demonstrate that Ernst fails under any hypothesis, the discussion that follows in the text indulges the assumption most favorable to Ernst: that the sale and destruction of the vehicles was an intentional deprivation. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2450452/ | 853 S.W.2d 56 (1993)
CITY OF PHARR, Appellant,
v.
Arnulfo PENA, Appellee.
No. 13-91-356-CV.
Court of Appeals of Texas, Corpus Christi.
February 25, 1993.
Rehearing Overruled May 6, 1993.
*58 Donald W. Allee, McAllen, Alejandro Moreno, Jr., Edinburg, for appellant.
George P. Powell, Hinojosa & Powell, McAllen, James A. Herrmann, Harlingen, for appellee.
Before SEERDEN, KENNEDY and GILBERTO HINOJOSA, JJ.
*59 OPINION
SEERDEN, Justice.
This is an inverse condemnation case. Arnulfo Pena sued the City of Pharr for taking his property by preventing him from operating a junkyard thereon. The trial court agreed that the City had taken Pena's land and based on the jury's verdict ordered that Pena recover from the City $272,500 in actual damages, and $112,500 in exemplary damages. The City of Pharr brings eleven points of error. We reverse and render.
The evidence viewed in the light most favorable to the verdict shows that in 1979 Pena and a partner purchased a 44-acre tract of land along U.S. Highway 281 outside the city limits of Pharr, but within the City's extraterritorial jurisdiction. Pena and his partner planned to start a junkyard and used car business on the property. In accordance with these plans, they subdivided the 44 acres into separate tracts between themselves and two other purchasers, all of whom planned to set up junkyards.
In January or February of 1980, Pena started to prepare his separate tract for opening a junkyard business by clearing the land, putting down a caliche surface, and putting 20 or 30 cars on his tract. However, on February 22, 1980, the City filed suit against Pena and the other owners for wrongfully subdividing the 44-acre tract without the City's approval, in violation of city ordinances which were applicable to land within the City's extraterritorial jurisdiction.
On March 12, 1980, the City had its action against Pena and the other owners dismissed. The City's Planning and Zoning Commission had discussed annexation of the property as a condition for allowing the owners to develop their junkyards and represented that the City would provide the owners with the necessary permits and zoning.
The owners then submitted a subdivision plat and requested annexation into the City of Pharr. The City Commission approved the subdivision plat on May 6, 1980. Pena then continued preparations for opening his junkyard business. He erected a fence, put a mobile home on the property to use as an office, put in a septic tank, and installed a concrete foundation for his mechanic shop.
On some unspecified date shortly after the subdivision plat had been approved, the City annexed a 660-foot wide strip of Pena's property abutting U.S. Highway 281 and zoned it residential, which did not allow the operation of a junkyard or a used car lot. Although the back portion of Pena's tract remained outside the city limits, the front portion annexed by the city was much better suited to business operations because of its proximity to the highway.
On September 16, 1980, Pena applied to the City for rezoning from residential to industrial in order to allow operation of his junkyard. However, after a December 16, 1980, hearing, the City Commission denied Pena's application for rezoning. This denial of rezoning is the basis for Pena's claim that the City took his land.
By its first point of error, the City contends that as a matter of law it did not take Pena's property. Pena claims that the City's failure to rezone his property industrial in order to allow him to operate a junkyard amounted to a taking of his property without just compensation. He argues that the continued residential zoning classification of his property did not constitute a reasonable exercise of the City's police power, was contrary to an agreement by the City to allow him to operate his junkyard, and interfered with his entitlement to continue his junkyard business as a nonconforming preexisting use.
A. "Takings" Generally.
Tex. Const. art. I, § 17 provides in pertinent part that "[n]o person's property shall be taken, damaged or destroyed for or applied to public use without adequate compensation being made, unless by the consent of such person." A wrongful taking of property by a governmental entity without compensation to the owner in violation of Tex. Const. art. I, § 17, is generally referred to as inverse condemnation, and in *60 order to recover under a theory of inverse condemnation, the property owner must establish that the governmental entity intentionally performed certain acts that resulted in a taking of his property for public use. Woodson Lumber Co. v. City of College Station, 752 S.W.2d 744, 746-47 (Tex. App.-Houston [1st Dist.] 1988, no writ).
A "taking" requires either actual physical appropriation or invasion of the property, or unreasonable interference with the land owner's right to use and enjoy his property. DuPuy v. City of Waco, 396 S.W.2d 103, 108-09 (Tex.1965); Allen v. City of Texas City, 775 S.W.2d 863, 865 (Tex.App.-Houston [1st Dist.] 1989, writ denied). Specifically, governmental restrictions on the use of property can be so burdensome as to constitute a compensable taking. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415, 43 S. Ct. 158, 160, 67 L. Ed. 322 (1922); San Antonio River Authority v. Garrett Brothers, 528 S.W.2d 266, 273 (Tex.Civ.App.-San Antonio 1975, writ ref'd n.r.e.).
B. Valid Exercise of the Police Power.
However, all property is held subject to the valid exercise of the police power, and a city is not required to make compensation for losses occasioned by the proper and reasonable exercise of its police power. In order for a city ordinance to be a valid exercise of police power, rather than a taking, it must be: (1) adopted to accomplish a legitimate goal and substantially related to public health, safety or general welfare; and (2) reasonable and not arbitrary. City of College Station v. Turtle Rock Corp., 680 S.W.2d 802, 804-05 (Tex.1984).
Nevertheless, whether a particular ordinance is a proper exercise of the police power or constitutes a compensable taking is a question of law for the court, and the ordinance is presumed to be a valid exercise of the police power absent a contrary showing by the plaintiff on the basis of which reasonable minds could not differ. Turtle Rock Corp., 680 S.W.2d at 804-05; DuPuy, 396 S.W.2d at 110; Estate of Scott v. Victoria County, 778 S.W.2d 585, 590 (Tex.App.-Corpus Christi 1989, no writ).[1] In making this determination, the trial court must consider all of the circumstances to determine the reasonableness of the regulation, and a careful analysis of the facts is necessary in each case of this kind. Turtle Rock Corp., 680 S.W.2d at 804; Estate of Scott, 778 S.W.2d at 591. The mere fact that a regulation may prevent the most profitable use of property does not conclusively establish that there has been a taking. Estate of Scott, 778 S.W.2d at 590.
C. City Zoning.
Specifically, cities may establish zoning districts under the police power to safeguard the health, comfort and general welfare of their citizens, so long as zoning ordinances constitute a reasonable exercise of that power. City of Corpus Christi v. Allen, 152 Tex. 137, 254 S.W.2d 759, 761 (1953); Lombardo v. City of Dallas, 124 Tex. 1, 73 S.W.2d 475 (1934); Woodson Lumber Co. v. City of College Station, 752 S.W.2d 744, 748 (Tex.App.-Houston [1st Dist.] 1988, no writ). This reasonableness requirement is expressed in the statute authorizing municipalities to adopt zoning regulations "with reasonable consideration, among other things, for the character of each district and its peculiar suitability for particular uses, with a view of conserving the value of buildings and encouraging the most appropriate use of land in the municipality." Tex.Local Gov't Code Ann. § 211.005(b) (Vernon 1988)[2]; see also Allen, 254 S.W.2d at 761.
In the present case, it was Pena's burden to show that the City's failure to rezone his property from residential to industrial was not a valid exercise of the City's police *61 power. However, all that Pena showed was that the City as well as neighboring landowners were concerned about the appearance of this strip of land along the highway near the site of a planned international bridge to Mexico.
Cris Vela, community development director for the City of Pharr, testified that the City annexed this strip of land along U.S. Highway 281 in connection with its international bridge project across the Rio Grande to Mexico. Vela explained that the City wanted the corridors along the sides of the highway under its jurisdiction in order to control the aesthetics as well as the land use in conjunction with the bridge project. In addition, at the hearing on Pena's application for rezoning, several neighboring landowners voiced opposition to giving Pena a permit to set up a junkyard because it would make the City look dirty, would not look nice in that area, and would lower the value of their property.
Considerations of aesthetics as well as surrounding property values thus apparently motivated the City not to rezone the property industrial for the establishment of businesses such as Pena's junkyard. These concerns represent a legitimate goal, were substantially related to the public welfare, and provide a reasonable basis for the City's failure to rezone in accordance with Pena's desire to operate a junkyard.
1. Improper motivations.
Nevertheless, Pena cites the cases of City of Austin v. Teague, 570 S.W.2d 389 (Tex.1978) and San Antonio River Authority v. Garrett Brothers, 528 S.W.2d 266, 273-74 (Tex.Civ.App.-San Antonio 1975, writ ref'd n.r.e.) to show that the City's concern about preserving the appearance of this strip of land was an improper reason for refusing to rezone it industrial. In Teague, the City of Austin in effect acquired a scenic easement on the plaintiffs' property by denying the plaintiffs a necessary permit to rechannel a creek in order to prepare the land for development. However, it was clear in Teague that the City of Austin denied the permit specifically to preserve the area as a scenic easement for the benefit of the public and to prevent development of any kind. The Texas Supreme Court held that the City of Austin, by denying the permit, was liable in inverse condemnation for a taking of the property. Id. at 394. In the present case, the City did not prevent all development of the property or attempt to acquire a scenic easement at Pena's expense, but only refused to rezone the property for industrial uses such as Pena's junkyard.
In Garrett Brothers, the City of San Antonio halted installation of utility lines and refused to issue permits to install sewers within a new subdivision, because development of the area would increase the City's cost of acquiring the land for a future dam and lake project. The San Antonio Court of Appeals there found a taking where the purpose of the governmental action was the prevention of development of land that would increase the cost of a planned future acquisition of such land by government. Id. at 273-74. In the present case, however, Pena offered no evidence to show that the City wanted to hold down the value of the property in contemplation of future condemnation in connection with the international bridge. Thus, in the absence of any evidence upon which the trial court could conclude that the City's actions were based on an improper motive or were arbitrary or capricious, it must be concluded that the City's actions were a valid exercise of its police power and did not constitute a taking.
2. Invalidity of agreement concerning future zoning.
Nevertheless, Pena further contends that the representations made to him by the City concerning his ability to obtain any necessary permit and zoning to operate the junkyard constitute an agreement by the City to allow him to establish and operate his junkyard on the property, and that the violation of that agreement amounted to a taking of his property. However, assuming that members of the City Planning and Zoning Commission, or even members of the City Commission, attempted to make such an agreement on behalf of the City, it *62 would have been void and of no effect on the City's later zoning decisions.
The passage of a zoning ordinance or amendments thereto is an exercise of legislative power, and a city may not by contract or otherwise barter or surrender its governmental or legislative functions or its police power. City of Farmers Branch v. Hawnco, Inc., 435 S.W.2d 288, 291 (Tex. Civ.App.-Dallas 1968, writ ref'd n.r.e.); see also Bowers v. City of Taylor, 16 S.W.2d 520 (Tex.Comm'n App.1929, holding approved); Urso v. City of Dallas, 221 S.W.2d 869, 872 (Tex.Civ.App.-Dallas 1949, writ ref'd). Specifically, statements or assurances regarding zoning made by individual members of the city council, board or commission are not binding and do not give private property owners a vested right to the use or disposal of their property so as to deny the city the exercise of its police power. Hawnco, 435 S.W.2d at 292 (private landowners could not enforce councilmen's campaign promises and assurances that they would not rezone).
In the present case, Pena's reliance on the City's alleged agreement that he could acquire a specific type of zoning and permits to operate his junkyard did not bind the City to later confer the specific zoning and permits. Nor does an alleged agreement of this nature support a claim of inverse condemnation based on the City's subsequent failure to honor the invalid agreement.[3]
D. Nonconforming Preexisting Use.
Finally, Pena contends that he began use of the property as a junkyard before the City annexed it and zoned it residential. Therefore, he asserts that his preexisting nonconforming use of the property should have been allowed to continue as an exception to the residential zoning of the property.
In City of Corpus Christi v. Allen, 152 Tex. 137, 254 S.W.2d 759 (1953), the Texas Supreme Court held that zoning ordinances ordinarily may not operate to remove preexisting buildings and uses not in conformity with the restrictions applicable to the district, at least where such buildings and uses are not nuisances and do not appear to be harmful in any way to public health, safety, morals, or welfare. The Court further concluded that the enforcement of such an ordinance against a preexisting nonconforming use would be an unreasonable exercise of the city's police power and would constitute an unconstitutional taking of the property. Id. at 761; see also Adcock v. King, 520 S.W.2d 418, 423 (Tex.Civ.App.-Texarkana 1975, no writ).[4] However, it is the landowner's duty to assert before the proper local official and to prove his entitlement to continue a nonconforming use of the land by showing that his business actually existed and was in lawful use on the effective date that the zoning ordinance went into effect. See Thomas v. City of San Marcos, 477 S.W.2d *63 322, 325 (Tex.Civ.App.-Austin 1972, no writ); Duke v. City of Texarkana, 468 S.W.2d 483, 484 (Tex.Civ.App.-Texarkana 1971, no writ).[5] In order to establish a preexisting non-conforming use the property owner must make certain showings.
1. formal preparations and request for annexation.
Moreover, in determining the date before which the landowner must show that a preexisting use has been established which is inconsistent with the initial zoning after annexation of a tract of land into the city, the city's and the landowner's formal preparations for annexation are controlling. At the time the landowner requests annexation and the annexation ordinance is passed on first reading, but before the property is formally annexed on passage of the ordinance after the third reading, jurisdiction of the city attaches to the property to hold the area in status quo, pending final determination of annexation and zoning. In the interim, the landowner makes any changes of use or expenditures on his property at his peril, and such interim changes may not give rise to a claim of preexisting use. White v. City of Dallas, 517 S.W.2d 344, 348 (Tex.Civ.App.-Dallas 1974, no writ); Westwood Development Co. v. City of Abilene, 273 S.W.2d 652 (Tex.Civ.App.-Eastland 1954, writ ref'd n.r.e.); City of Dallas v. Meserole, 155 S.W.2d 1019, 1022-23 (Tex.Civ.App.-Dallas 1941, writ ref'd w.o.m.)
In the present case, Pena requested annexation at the time his subdivision plat was approved in May 1980, but Pena failed to show when the annexation ordinance was approved on first reading, much less when annexation became final. Because it was Pena's burden to show that his use of the property as a junkyard preexisted the formal preparations for annexation, we cannot assume that the first reading occurred any later than the date of Pena's initial request for annexation.
Moreover, regardless of when the first reading occurred, Pena's request for annexation was itself sufficient to put him on notice of the impending annexation and application of city zoning ordinances to his property. As with new uses initiated by the landowner after the first reading of an annexation ordinance, so after the landowner himself requests annexation he should initiate new uses of his property at his own peril and without the expectation that they will be allowed to continue as preexisting nonconforming uses. Cf. City of Round Rock v. Smith, 687 S.W.2d 300, 303 (Tex.1985) (consent of the owner to the conditions or regulations later claimed to constitute a "taking" deprives the owner of his right to compensation).
2. illegal preexisting use.
Therefore, in order to show a preexisting nonconforming use Pena must have established his junkyard business before he requested annexation and his subdivision plat was approved in May of 1980. However, it was uncontroverted at trial that the owners' development and preparation of their separate individual tracts before approval of the subdivision plat violated City ordinances applicable to the property through the City's extraterritorial jurisdiction. An illegal preexisting use of the property at the time that the zoning ordinance is passed, even if the prior illegality is later removed, does not allow the formerly illegal use to continue as a preexisting nonconforming use. See City of Mesquite v. Coltharp, 685 S.W.2d 78, 82 (Tex.App.- *64 Dallas 1984, writ ref'd n.r.e.). Thus, Pena could not have established his junkyard as a preexisting nonconforming use before the subdivision plat had been approved by the City, nor could he thereafter do so in view of his own request for annexation into the City.
3. mere preparation.
Even assuming that neither Pena's request for annexation nor the date on which the City passed the annexation ordinance on first reading affected Pena's ability subsequently to initiate a nonconforming use, Pena's preparations of his land in the present case fell short of the requirements for a preexisting nonconforming use.
A preexisting use must be actual, not contemplated. Mere preparation for use of property before adoption of a zoning ordinance is not enough to show a devotion of the property to that use. City of Silsbee v. Herron, 484 S.W.2d 154, 156 (Tex. Civ.App.-Beaumont 1972, writ ref'd n.r.e.); Huguley v. Board of Adjustment of City of Dallas, 341 S.W.2d 212, 218 (Tex.Civ.App.-Dallas 1960, no writ); Caruthers v. Board of Adjustment of the City of Bunker Hill Village, 290 S.W.2d 340, 347 (Tex.Civ.App.-Galveston 1956, no writ); Meserole v. Board of Adjustment, City of Dallas, 172 S.W.2d 528, 531 (Tex. Civ.App.-Dallas 1943, no writ). Perhaps the most understandable and easily applied test is that an existing use should mean the utilization of the premises so that they may be known in the neighborhood as being employed for a given purpose. City of Silsbee, 484 S.W.2d at 157; Huguley, 341 S.W.2d at 218. In City of Silsbee, for instance, the owner of land who wished to construct a trailer park thereon did not show a preexisting use merely because two trailers were already on the land, his own and that of his mother-in-law who did not pay rent for her space. Id. at 157.
In the present case, the preparations that Pena made before final annexationclearing the land, putting down some caliche, and putting a trailer house and some junked cars on the propertyamounted to no more than mere preparation for use of the property as a junkyard. Pena himself admitted that, although he had sold a very small amount of parts, he had not opened for business at the time he applied for rezoning to industrial. Nor did he show that his junkyard business had by that time become known in the neighborhood as being employed for that purpose. Therefore, Pena failed to show that his junkyard should have been treated as a preexisting nonconforming use.
E. Conclusion.
In conclusion, we hold that the trial court erred in finding a taking of Pena's property. We sustain appellant's first point of error. The remaining points of error are not dispositive and we do not address them. See Tex.R.App.P. 90(a). The judgment of the trial court is REVERSED and judgment is RENDERED that Pena take nothing against the City of Pharr.
Dissenting opinion by GILBERTO HINOJOSA, J.
GILBERTO HINOJOSA, Justice, dissenting.
The trial court found the City's regulations and burdens on the land so severe that a taking occurred. The jury found the City's actions were arbitrary and unreasonable. Yet, the majority reverses and renders. It holds that the City's actions constituted a valid exercise of "police power." I respectfully dissent because I believe the primary issue involved in this case was a question of fact, and the jury found this question in favor of the plaintiff.
The distinctions drawn in inverse condemnation cases have variously been described as: illusory, "a sophistic Miltonian Serbonian Bog," and "a crazy quilt pattern." City of Austin v. Teague, 570 S.W.2d 389, 391 (Tex.1978). However, the law is clear that unreasonable interferences with a landowners' right to use property are considered "takings," and are subject to an inverse condemnation action. DuPuy v. City of Waco, 396 S.W.2d 103, 108-09 (Tex.1965); San Antonio River Authority v. Garrett Brothers, 528 S.W.2d 266, 273 (Tex.Civ.App.-San Antonio 1975, writ *65 ref'd n.r.e.). The law also provides a recovery if a governmental authority unreasonably uses its regulatory power to burden land when its motivation is to benefit itself. Teague, 570 S.W.2d at 391.
I recognize that the question of whether a taking has occurred is a question of law for the court. Woodson Lumber v. City of College Station, 752 S.W.2d 744, 747 (Tex. App.-Houston [1st Dist.] 1988). However, if the issue is whether the governmental entity is attempting to unreasonably burden the land with the intent to benefit itself, I believe a question of fact for the jury is presented on the questions of unreasonableness and intent.[1]Cf. Guidry, 801 S.W.2d 142, 147 (Tex.App.-San Antonio 1990, no writ) (a question of fact is presented if a landowner sues for losses caused by unreasonable delay in construction); Woodson, 752 S.W.2d at 748 (a question of fact is presented if City's actions are arbitrary and capricious). Questions of intent are clearly within the province of the fact-finder. Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex.1986). Because the evidence supported these findings, and the jury found the City's actions unreasonable, I would affirm.[2]
I believe a taking occurred because the City unreasonably used its zoning powers to forbid the primary and intended use of the property for the City's present and future benefit. The evidence showed that the City was attempting to maintain aesthetics and to keep "options" open for future land use. The means the City used were to place one condition after another in front of Pena before it would permit him to operate the salvage yard. The somewhat unorthodox means used by the City to accomplish its goals was direct evidence of unreasonableness, and sufficient circumstantial evidence for the jury to find an improper motive. Cf Spoljaric, 708 S.W.2d at 435 (slight circumstantial evidence is sufficient to support a finding of fraudulent intent). Based on this evidence, I believe the jury was entitled to conclude that the City was motivated by a desire to benefit itself by keeping a profitable business from starting on land it might later need to acquire, and a desire to stop the operation of Pena's "eyesore" businessall without paying the landowner.
Unlike the majority, I find this case indistinguishable from Teague. In that case, the City of Austin used its permit power to effectively stop development of property owned by Teague. The City's goal was to preserve a "scenic easement" on Teague's land. The Supreme Court of Texas held that the City's denial of permits was a burden so severe that it was a taking and therefore Teague should be compensated.
The evidence in this case showed that the City of Pharr used its regulatory powers to keep appellee from developing and operating his auto salvage yard. One motivation was to keep this alleged eyesore from operating along the main road from the City to Reynosa, Mexico. I do not find this significantly different from Teague where the City of Austin used its regulatory power to acquire a "scenic easement" along Interregional Highway 35. Moreover, just like in Teague, the burden of City's regulations fell only upon the shoulders of the landowner, while the benefit fell into the collective lap of the general public. I would hold that there was sufficient evidence to establish that this type of restriction and the manner in which it was carried out was unreasonable.
The majority distinguishes Teague on the grounds that the City of Austin's actions caused Teague to lose all use of the land, and in this case appellee lost only one use of the land. However, Tex. Const. art. I § 17 provides recovery if a party's land is taken or damaged. See Teague, 570 S.W.2d at 393. The evidence showed that after the City's actions, the land's value reverted to that for pasture. The jury found that it was worth $350,000 as a salvage yard. After the City's regulation, it was worth only $65,000. The land has, in *66 my opinion, been damaged by the City's acts.
I would affirm the trial court's judgment.
NOTES
[1] See also City of San Antonio v. Guidry, 801 S.W.2d 142 (Tex.App.-San Antonio 1990, no writ). As the San Antonio Court of Appeals has reasoned, if the law were otherwise, juries could second-guess and compensate every land use decision made by the community's lawfully elected representatives. Id. at 145.
[2] Formerly Tex.Rev.Civ.Stat.Ann. art. 1011c (repealed).
[3] We note that the recent Texas Supreme Court case of Westgate, Ltd. v. State of Texas, 843 S.W.2d 448, 452-53 (1992), suggests the possibility that a governmental entity's intentional or bad faith injuries to a landowner may justify a cause of action in inverse condemnation under circumstances that would not otherwise give rise to such a cause of action. In Westgate, the landowner sought damages flowing from an unreasonable delay between the time condemnation was first proposed and the time of the State's final acquisition of his land. However, because no theory of "bad faith" was submitted to the jury in Westgate, the court determined that any such claim had been waived.
Similarly, in the present case, although Pena plead fraudulent inducement and bad faith, and there was some evidence of actions by City officials which might support such claims (e.g., continued assurances that Pena would be allowed to operate his junkyard if he complied with the City's conditions), neither theory was submitted to the jury. Thus, even if bad faith or fraudulent inducement may give rise to a claim for inverse condemnation under circumstances in which such a claim would not otherwise be cognizable, there was no jury finding in the present case to support such a theory.
[4] Cf. City of University Park v. Benners, 485 S.W.2d 773 (Tex.1972). The Benners Court adopted the "amortization technique" for analyzing an ordinance which terminates a preexisting land use. Thus, municipal zoning ordinances requiring the termination of nonconforming uses under reasonable conditions, which allow time for the owner to recover his investment and to convert the property to a conforming use, are within the scope of municipal police power. Id. at 777-78.
[5] Generally, the courts review the status of a preexisting nonconforming use of property only after a local building inspector's determination has been appealed to the city's board of adjustment. The decision of the board of adjustment is then reviewable by certiorari to the courts to determine as a question of law whether the board abused its discretion. See Nu-Way Emulsions, Inc. v. City of Dalworthington Gardens, 617 S.W.2d 188 (Tex.1981); City of San Angelo v. Boehme Bakery, 144 Tex. 281, 190 S.W.2d 67 (Tex.1945); Thomas, 477 S.W.2d at 325; Washington v. City of Dallas, 159 S.W.2d 579 (Tex.Civ. App.-Dallas 1942, no writ). In the present case, however, we need not determine whether Pena waived his right to assert that his junkyard was a preexisting non-conforming use by failure to first appeal to the City's board of adjustment, since we hold that Pena also failed to prove before the trial court below that his junkyard was entitled to be treated as a preexisting non-conforming use.
[1] The Teague Court did not reach this question because the City did not contest the issue of intent.
[2] In other words, I would deem a finding that the City attempted to benefit itself. TEX.R.CIV.P. 279. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3098679/ | Order entered August 29, 2013
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-13-00891-CV
RICHARDSON TRIDENT COMPANY, INC. & THOMAS E. BENTLY, Appellants
V.
WHITE ROCK ADVISORS, LLC, ET AL., Appellees
On Appeal from the 134th Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-13-04592
ORDER
The Court has before it the request of Vielica Dobbins, Official Court Reporter of the
134th Judicial District Court, for an extension of time in which to file the reporter’s record in this
case. The Court GRANTS the motion and ORDERS the reporter’s record submitted on August
22, 2013 timely filed as of that date.
/s/ ELIZABETH LANG-MIERS
JUSTICE | 01-03-2023 | 10-16-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1390824/ | 549 P.2d 277 (1976)
89 N.M. 199
STATE of New Mexico, Petitioner,
v.
Jackie ROBINSON, Santos Perez, Placido Perez, Barbara Garcia, Danny Alderette, Candelario Baca, Respondents.
No. 10837.
Supreme Court of New Mexico.
April 27, 1976.
James L. Brandenburg, Dist. Atty., James F. Blackmer, Asst. Dist. Atty., Albuquerque, for petitioner.
Sarah M. Singleton, Santa Fe, John W. Boyd, Charles R. Finley, George H. Farrah, III, Farrell Lines, Joseph M. Fine, James R. Beam, Albuquerque, for respondents.
OPINION
McMANUS, Justice.
Defendants filed a motion requesting the state to identify and produce the confidential informant involved. It was agreed that the informant had arranged, participated in and witnessed the alleged narcotics transactions which formed the basis for the prosecution of the defendants. The trial judge held an in camera hearing during which he interviewed the informant. Following the hearing which was not transcribed, he found that the informant's testimony would not be relevant or helpful to the defense of any of the defendants nor necessary to a fair determination of the defendants' guilt or innocence. After such finding the trial court certified for interlocutory appeal its denial of the defense motion. The Court of Appeals remanded the case to the District Court for the court to hold another in camera hearing and submit the transcript thereof to the Court of Appeals. State v. Robinson, (N.M.Ct.App. 1975). This was done. A second trial judge came up with the same result as the first one, i.e., a refusal to disclose the identity of the informant. On February 10, 1976, the Court of Appeals issued its opinion concluding that the informer could supply testimony that is "necessary *278 to a fair determination of the issue of guilt or innocence" and reversed the decision of the trial court. State v. Robinson, (N.M. Ct.App. 1976). The matter reaches us on a petition for writ of certiorari.
The state's petition for the writ presented the following questions for review:
"I. When an informant and a police officer are mutual witnesses to criminal conduct resulting in criminal charges, are the informer privilege and in camera interview of informant [Rule 510(c)(2) of the New Mexico Rules of Evidence] rendered inapplicable, and/or mandating per se the disclosure of the identity of the informant?
"II. When Appellants raised only the issue of unconstitutionality or inapplicability of the rule 510 informer privilege and the in camera interview of an informant by a district judge, did the Court of Appeals exceed its jurisdiction by sua sponte remanding the appeal for a transcript of in camera hearing, and then reviewing de novo the validity of the District Judge's ruling refusing to disclose informant identity?
III. Aside from the specific provisions of Rule 510(b), what circumstances render the informer's privilege per se inapplicable, and the identity of a confidential informant required to be disclosed (A.) prior to or without an in camera interview of the informant, and (B.) after an in camera hearing?
"IV. Aside from the provisions of Rule 510 of the New Mexico Rules of Evidence governing the informer's privilege, what procedures should a trial judge follow in ordering, conducting, and following an in camera hearing/interview with an informant, and deciding whether to order the prosecution to reveal the identity of its informant?"
While we will not attempt to answer each of these four questions specifically, we believe that the conclusion which we reach sufficiently answers the principal issues raised by them.
Rule 510 of the New Mexico Rules of Evidence establishes the privilege of the state to refuse to disclose an informant's identity but subsection (c)(2) of the Rule provides the following exception to that privilege:
(c) EXCEPTIONS:
* * * * * *
(2) Testimony on Merits. If it appears from the evidence in the case or from other showing by a party that an informer will be able to give testimony that is relevant and helpful to the defense of an accused, or is necessary to a fair determination of the issue of guilt or innocence in a criminal case or of a material issue on the merits in a civil case to which the state or a subdivision thereof is a party, and the state or subdivision thereof invokes the privilege, the judge shall give the state or subdivision thereof an opportunity to show in camera facts relevant to determining whether the informer can, in fact, supply that testimony. The showing will ordinarily be in the form of affidavits, but the judge may direct that testimony be taken if he finds that the matter cannot be resolved satisfactorily upon affidavit. If the judge finds that there is a reasonable probability that the informer can give the testimony, and the state or subdivision thereof elects not to disclose his identity, the judge on motion of the defendant in a criminal case shall dismiss the charges to which the testimony would relate, and the judge may do so on his own motion. In civil cases, he may make any order that justice requires. Evidence submitted to the judge shall be sealed and preserved to be made available to the appellate court in the event of an appeal, and the contents shall not otherwise be revealed without an order of the court. All counsel shall be permitted to be present at any stage at *279 which counsel for any party is permitted to be present." (emphasis added).
In the case before us the informant in his testimony in the in camera hearing did not contradict nor vary the police offense reports which were made part of the record in the case before the Court of Appeals. There was no showing in any of the courts involved in this matter, that the informant's disclosure would be relevant or helpful to the defense, or necessary to a fair determination of the guilt or innocence involved.
The case of Roviaro v. United States, 353 U.S. 53, 77 S.Ct. 623, 1 L.Ed.2d 639 (1957), is used to bolster the defendants' cause herein. However, in Roviaro the Government's informer was the sole participant, other than the accused, in the transaction charged. The informer was the only witness in a position to amplify or contradict the testimony of Government witnesses. In the case before us agent Vigil was the dominant moving party in the transactions, not the informer. The Roviaro case did set forth the following observation:
"We believe that no fixed rule with respect to disclosure is justifiable. The problem is one that calls for balancing the public interest in protecting the flow of information against the individual's right to prepare his defense. Whether a proper balance renders non-disclosure erroneous must depend on the particular circumstances of each case, taking into consideration the crime charged, the possible defenses, the possible significance of the informer's testimony, and other relevant factors." Id. at 62, 77 S.Ct. at 628.
In an attempt to apply the "balancing" test to the case before it, the Court of Appeals for the Tenth Circuit concluded in United States v. Martinez, 487 F.2d 973 (10th Cir.1973) that:
"* * * [W]hen, as here, the informer introduced the undercover agent to the accused's co-defendant and was present when the sale was consummated, then the testimony of the informer is relevant and the `balancing' test in such circumstances dictates a disclosure of the identity of the Government's informer."
The New Mexico Court of Appeals adopted this reasoning in its opinion. We disagree. We do not believe this position is in accordance with Roviaro v. United States, supra. While Roviaro warns against a fixed rule with respect to the disclosure of an informer's identity, United States v. Martinez, supra, and the New Mexico Court of Appeals' opinion attempt to formulate one.
While we are cognizant of the respondents' need for disclosure of all relevant, helpful or necessary evidence, we are equally aware of the state's need for reliable, confidential informants, especially in the enforcement of narcotics laws. To require the state to reveal the informer's identity in every instance where that person has witnessed and helped arrange the drug transaction, without first determining whether the informer's testimony will be at all relevant or necessary to the defense, would unreasonably cripple the state's efforts at drug law enforcement.
Our evidentiary Rule 510 provides a systematic method for balancing the state's interest in protecting the flow of information against the individual's right to prepare his defense. It gives the trial court the opportunity to determine through an in camera hearing whether the identity of the informer must be disclosed or not. Where it appears that the informer's testimony will be relevant and helpful to the defense of an accused, or necessary to a fair determination of the issue of guilt or innocence, then the trial judge can order the state to either reveal the identity of the informer or suffer a dismissal of the charges to which the testimony would relate. On the other hand, where it appears to the trial judge from the evidence that the informer's testimony will not be relevant *280 and helpful to an accused's defense, or necessary to a fair determination of the issue of guilt or innocence, then the identity of the informer can remain undisclosed, and that person is not exposed unnecessarily to the highly dangerous position of being a known informant. Our only concern upon appellate review of the trial court's determination is to insure that it did not abuse its discretion in this matter.
Respondents argue that the in camera method of determining the relevancy and necessity of the informer's probable testimony conflicts with Jencks v. United States, 353 U.S. 657, 77 S.Ct. 1007, 1 L.Ed.2d 1103 (1957). In Jencks the trial court had denied defendant's request that the Government be required to produce certain confidential F.B.I. reports for inspection and use by the defense in cross-examining the two prosecution witnesses who had made the reports. The Court of Appeals affirmed on the ground that the defendant had not established any inconsistency between the reports and the witnesses' trial testimony. The Supreme Court held that the defendant was entitled to inspect the reports without any prior showing of inconsistency. The Supreme Court also concluded that:
"The practice of producing government documents to the trial judge for his determination of relevancy and materiality, without hearing the accused, is disapproved. Relevancy and materiality for the purposes of production and inspection, are established when the reports are shown to relate to the testimony of the witness. Only after inspection of the reports by the accused, must the trial judge determine admissibility e.g., evidentiary questions of inconsistency, materiality and relevancy of the contents and the method to be employed for the elimination of parts immaterial or irrelevant." Id. at 669, 77 S.Ct. at 1014 (footnote and citation omitted).
Mr. Justice Burton, who had authored Roviaro, and Mr. Justice Harlan concurred in the result in Jencks but argued that before disclosing the privileged material to the defendant, the trial court should examine in camera the portions claimed to be privileged to determine their relevancy to the defendant's case. In this way:
"The trial judge exercises his discretion with knowledge of the issues involved in the case, the nature and importance of the Government's interest in maintaining secrecy, and the defendant's need for disclosure. By vesting this discretion in the trial judge, the conflicting interests are balanced, and a just decision is reached in the individual case without needless sacrifice of important public interests." Id. at 677, 77 S.Ct. at 1018 (footnote omitted).
The Jencks decision resulted in legislation, popularly known as the Jencks Act, which adopts much of the Court's decision, but, in line with Mr. Justice Burton's reasoning, allows the trial court to determine through an in camera inspection of the confidential statement or report made by a Government witness whether it contains material which does not relate to the subject matter of the witness' testimony. If such extraneous material is found by the court, it can be excised before being shown to the defendant. The defendant may appeal this decision by the trial court to excise certain portions, in which case the entire statement or report, including the deleted material, is made available to the appellate court for determining the correctness of the trial court's ruling. 18 U.S.C. § 3500(c) (1970). We are, therefore, not persuaded that the Jencks case requires the trial court to order the disclosure of an informer's identity to the defense without first making an in camera determination of the necessity for disclosure.
We are further persuaded that the in camera method accords with Roviaro since our Rule 510 is quite similar to Rule 510 of the proposed Federal Rules of Evidence, which were submitted to Congress in November, *281 1972, by the United States Supreme Court.[1] In fact, our Rule requires the trial court to order the disclosure of the informer's identity if his testimony will be relevant and helpful to the defense of an accused, or necessary to a fair determination of the issue of guilt or innocence, while the proposed federal Rule only requires disclosure if the testimony is necessary. See 56 F.R.D. 183, 255-58 (1973).
Significantly, the court in United States v. Martinez, supra, retreated slightly from the seemingly rigid rule quoted above when it stated that "[t]hough the trial court erred in refusing to require the Government to identify its informer, it does not necessarily follow that Martinez is entitled to a new trial." The case was remanded to the United States District Court for the District of New Mexico for further proceedings to require the Government to identify the informer and then to determine whether the informer's testimony would be favorable to Martinez or not. If the trial court determined that the informer's testimony would be favorable, then Martinez was to be granted a new trial. Otherwise, the original judgment and sentence were to stand. Upon rehearing, the Court of Appeals modified its opinion to allow the trial court to make this determination through an in camera proceeding. In short, the Court of Appeals ultimately adopted a method quite similar to the one outlined in our Rule 510 for determining whether an informer's identity should be disclosed or not. See also United States v. Jackson, 384 F.2d 825 (3d Cir.1967), cert. denied, 392 U.S. 932-33, 88 S.Ct. 2292, 20 L.Ed.2d 1390 (1968) and United States v. Day, 384 F.2d 464 (3d Cir.1967), both of which were cited in the advisory committee's note to proposed federal Rule 510 for the proposition that a hearing in camera provides an accommodation, in harmony with Roviaro, of the conflicting interests. Cf. McCray v. Illinois, 386 U.S. 300, 87 S.Ct. 1056, 18 L.Ed.2d 62 (1967), which held that a trial court has no absolute constitutional duty to require disclosure at a pretrial suppression hearing of the identity of a reliable informer whose information had given police probable cause for a warrantless arrest and incidental search.
In the case before us, two trial judges held separate in camera hearings. Both concluded that, based upon the particular circumstances of this case, the state should not be required to disclose the informer's identity, since his testimony would not be relevant and helpful to the defense of the accused, or necessary to a fair determination of the issue of their guilt or innocence. We have reviewed the record, including the transcript of the second in camera proceeding and conclude that the trial court was correct and clearly did not abuse its discretion.
Accordingly, the decision of the Court of Appeals is reversed, the decision of the trial court is affirmed, and this case is remanded so that the trial of these defendants can continue.
IT IS SO ORDERED.
OMAN, C.J., and STEPHENSON, MONTOYA and SOSA, JJ., concur.
NOTES
[1] Congress did not adopt any of the proposed evidentiary privilege rules, including Rule 510. Instead, Congress substituted Rule 501 in the Federal Rules of Evidence, which states that except as otherwise specifically provided the privilege of a witness, person, government, state or political subdivision to decline to give evidence which is otherwise relevant, material and probative shall be governed by common law principles as they may be interpreted by the courts of the United States in the light of reason and experience. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1439959/ | 878 F.Supp. 229 (1995)
Robin D. McCOY, Plaintiff,
v.
JOHNSON CONTROLS WORLD SERVICES, INC., Defendant.
Civ. A. No. 294-155.
United States District Court, S.D. Georgia, Brunswick Division.
March 10, 1995.
*230 Roy Jerome Boyd, Jr., Brunswick, Stephen M. Katz, Atlanta, for plaintiff.
Donna Linn Crossland, Brunswick, Kevin E. Hyde, Guy O. Farmer, II, Amy W. Littrell, Jacksonville, FL, Elizabeth Black, Kingsland, Marjorie Ivey, c/o Johnson Controls World Services, Inc., Kings Bay, for defendant.
ORDER
ALAIMO, District Judge.
In this action, Plaintiff, Robin D. McCoy ("McCoy"), a white female, claims that Johnson Controls World Services, Inc. ("Johnson Controls"), discriminated against her because of her sex and race in violation of Title VII of The Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq., and 42 U.S.C. § 1981. McCoy also brings several pendant state law claims.
McCoy alleges that during her employment as a security guard for Johnson Controls, *231 two black female co-workers sexually and racially harassed her. Before the Court is Johnson Controls' Motion to Dismiss McCoy's sexual harassment claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Johnson Controls contends that sexual harassment between persons of the same gender is not actionable under Title VII or 42 U.S.C. § 1981. For the reasons stated below, Johnson Controls' motion will be GRANTED in part and DENIED in part.
FACTS
McCoy's complaint alleges the following facts: Robin McCoy began working as a security guard for Johnson Controls in October of 1988. She was assigned to the security force of Kings Bay Project, Kings Bay, Georgia. According to McCoy, two black female employees, Elizabeth Black ("Black") and Marjorie Ivey ("Ivey"), sexually and racially harassed her. On one occasion, Ivey approached McCoy and rubbed her breasts against McCoy's chest. McCoy reported the incident to Lt. Emery Andrews who told McCoy that he had heard similar complaints about Ivey from other female employees. On another occasion, McCoy was alone on duty at a guard house when Ivey attacked McCoy and began rubbing McCoy between her legs. Ivey also forced her tongue into McCoy's mouth. McCoy reported this incident to her supervisor, Lt. Roger Jenkins.
As a matter of routine, Black would refer to McCoy as "stupid poor white trash" or "stupid poor white bitch." Black also told McCoy that "we have always been able to make white bitches like you quit, you're one stubborn stupid bitch ... we are going to make you quit this job." McCoy reported several of these incidents to her superiors, but no actions were taken. Instead, McCoy and Black were continuously assigned to the same car.
DISCUSSION
I. Motion To Dismiss For Failure To State A Claim
Rule 12(b)(6) of the Federal Rules of Civil Procedure permits a defendant to move to dismiss a complaint on the ground that the plaintiff has failed to state a claim upon which relief can be granted. A motion under Rule 12(b)(6) attacks the legal sufficiency of the complaint. In essence, the movant says, "Even if everything you allege is true, the law affords you no relief." Consequently, in determining the merits of a 12(b)(6) motion, a court must assume that all of the factual allegations of the complaint are true. Jackson v. Okaloosa County, Fla., 21 F.3d 1531, 1534 (11th Cir.1994). The court should not dismiss a complaint for failure to state a claim unless it is clear that the plaintiff can prove "no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); see also Blackston v. State of Alabama, 30 F.3d 117, 119 (11th Cir.1994) (citing Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232-33, 81 L.Ed.2d 59 (1984)).
II. Homosexual Harassment Under Title VII
Fairly read, McCoy's complaint alleges hostile environment sexual harassment in violation of Title VII. Johnson Controls contends that homosexual or same gender harassment is not actionable under Title VII, 42 U.S.C. § 2000e-2.
The Fifth Circuit is the only circuit which has addressed this issue in a published opinion. In Garcia v. ELF Atochem North America, 28 F.3d 446 (5th Cir.1994), the court stated that "harassment by a male supervisor against a male subordinate does not state a claim under Title VII even though the harassment has sexual overtones. Title VII addresses gender discrimination." Garcia, 28 F.3d at 451-452 (citing Goluszek v. Smith, 697 F.Supp. 1452, 1456 (N.D.Ill. 1988)). Since Garcia, two district courts outside of the Fifth circuit have followed its holding. Hopkins v. Baltimore Gas & Elec. Co., 871 F.Supp. 822 (D.Md.1994); Vandeventer v. Wabash Nat. Corp., 867 F.Supp. 790 (N.D.Ind.1994). Johnson Controls urges the Court to do likewise.
McCoy, in contrast, argues that the Court should follow Joyner v. AAA Cooper Transp., 597 F.Supp. 537 (M.D.Ala.1983), aff'd without published opinion, 749 F.2d 732 (11th Cir.1984). In Joyner, the court held that "unwelcomed homosexual harassment *232 also states a violation of Title VII." Joyner, 597 F.Supp. at 541. For the reasons stated below, the Court follows Joyner in holding that homosexual harassment can violate Title VII.
Title VII of The Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. prohibits discrimination in the workplace on the basis of sex:
It shall be an unlawful employment practice for an employer to ... discriminate against any individual ... because of such individual's ... sex....
42 U.S.C. § 2000e-2.
In 1986, the Supreme Court interpreted this statute to prohibit sexual harassment in the workplace. Meritor Savings Bank v. Vinson, 477 U.S. 57, 106 S.Ct. 2399, 91 L.Ed.2d 49 (1986). According to the Supreme Court, "a plaintiff may establish a violation of Title VII by proving that discrimination based on sex has created a hostile or abusive working environment." Id. at 66, 106 S.Ct. at 2405. The Court also noted that "unwelcome sexual advances that create an offensive or hostile working environment violate Title VII." Id. at 64, 106 S.Ct. at 2404. "The gravamen of any sexual harassment claim is that the alleged sexual advances were `unwelcome.'" Id. at 68, 106 S.Ct. at 2406 (quoting 29 C.F.R. § 1604.11(a) (1985)). To be sure, sexual advances can be "unwelcome" regardless of the harasser's gender.
Indeed, while Vinson did not directly address homosexual harassment, nothing in the Court's reasoning suggests that Title VII is limited to heterosexual harassment. Also, the plain language of 42 U.S.C. § 2000e-2 does not limit Title VII to heterosexual harassment. See Rake v. Wade, ___ U.S. ___, ___, 113 S.Ct. 2187, 2192, 124 L.Ed.2d 424, 433 (1993) ("Where the statutory language is clear, our sole function is to enforce it according to its terms."); Reves v. Ernst & Young, ___ U.S. ___, 113 S.Ct. 1163, 122 L.Ed.2d 525, 535 (1993).
Furthermore, merely because McCoy was harassed by a woman instead of a man will not prevent her from establishing a prima facie case of sexual harassment under Henson v. Dundee, 682 F.2d 897 (11th Cir. 1982). Under Henson, McCoy must establish (1) that she is member of a protected group, (2) that she was subjected to unwelcome sexual harassment, (3) that the harassment was "based upon sex," and (4) the harassment complained of affected a "term, condition, or privilege" of employment. Id. at 903.
The first element merely "requires a simple stipulation that the employee is a man or a woman." Id. As to the third element, McCoy must establish that the harassment was "based upon sex" by showing that "but for the fact of her sex, she would not have been the object of harassment." Id. In proving this element, McCoy must show that her harasser "did not treat male employees in a similar fashion." Henson, 682 F.2d at 903. Under this analysis, McCoy can establish that the harassment was "based upon sex" by showing that her harasser only harassed women and, thus, did not treat men in a similar fashion.
Indeed, under Henson, sexual harassment of any kind is in fact "based upon sex" and is considered sexual discrimination, except where the harasser is bisexual and subjects men and women to the same treatment: "Except in the exceedingly atypical case of a bisexual supervisor, it should be clear that sexual harassment is discrimination based upon sex." Id. at 905 n. 11 (emphasis added). See also Bundy v. Jackson, 641 F.2d 934, 942 n. 7 (D.C.Cir.1981) ("Only by a reductio ad absurdum could we imagine a case of harassment that is not sex discrimination where a bisexual supervisor harasses men and women alike."). Stated another way, where an employee "makes sexual overtures to workers of both sexes, ... the sexual harassment would not be based upon sex because men and women are accorded like treatment." Henson, 682 F.2d at 903.
Johnson Controls has not suggested that McCoy's harasser also harassed male employees. Accordingly, Johnson Controls' motion to dismiss will be denied.
III. Sexual Harassment Under 42 U.S.C. § 1981
It is well established that sexual harassment is not actionable under 42 U.S.C. *233 § 1981. Runyon v. McCrary, 427 U.S. 160, 167, 96 S.Ct. 2586, 2592-93, 49 L.Ed.2d 415 (1976). If McCoy intended to bring a claim for sexual harassment under 42 U.S.C. § 1981, such claim is dismissed.
IV. Pendant State Law Claims
McCoy alleges pendant state law claims of (1) intentional infliction of emotional distress, (2) battery, (3) invasion of privacy, (4) ratification of Ivey's and Black's actions, and (5) negligent hiring and retention. On December 16, 1994, the Court dismissed McCoy's federal claims against the individual defendants, Ivey and Black. The Court also dismissed any pendant state law claims with respect to them. See, Order, December 16, 1994 (Dkt. # 19). Johnson Controls does not challenge McCoy's remaining state law claims of ratification and negligent hiring and retention. Accordingly, these claims will proceed. 28 U.S.C. § 1367.
CONCLUSION
Johnson Controls' Motion to Dismiss (Dkt. # 22) is DENIED as to McCoy's sexual harassment claim under Title VII. Johnson Controls' Motion to Dismiss (Dkt. # 22) is GRANTED as to any sexual harassment claim under 42 U.S.C. § 1981. Johnson Controls' Motion for Oral Argument (Dkt. # 30) is DENIED.
SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1573922/ | 707 F.Supp. 394 (1989)
Tony Hanif LEE, Plaintiff,
v.
Darrell KOLB, Defendant.
No. 88-C-504.
United States District Court, E.D. Wisconsin.
January 17, 1989.
Tony Hanif Lee, pro se.
Donald J. Hanaway, Atty. Gen. by Sharon Ruhly, Asst. Atty. Gen., Wisconsin Dept. of Justice, Madison, Wis., for defendant.
DECISION AND ORDER
MYRON L. GORDON, Senior District Judge.
Tony Lee's petition for a writ of habeas corpus brings to mind the cartoon of the two ladies in the jury box; one turns to the other and says, "You can be sure that won't be stricken from my record."
No citations of authority need be cited for the premise that one of a trial judge's responsibilities is to protect the jury from itself. The question in this case is whether the state trial judge adequately insulated Mr. Lee from the devastating impact on the jury of certain highly incriminating hearsay statements.
The prosecution offered the incriminating statements, not for their inherent truth, but to show the defendant's conduct in response thereto. The trial judge instructed the jury to regard the statements only for that limited purpose. The Wisconsin court of appeals reviewed the matter and found no error. The Wisconsin supreme court denied further appeal. Facially, the game was played according to the rules, but in my opinion a realistic appraisal establishes that the defendant's rights under the confrontation clause were acutely *395 violated and that he was denied a fair trial. The issues are of law, and therefore the presumption of correctness afforded the state court's finding under 28 U.S.C. § 2254(d) is not controlling.
Mr. Lee was convicted of first degree murder, party to a crime, for the 1985 killing of Booker Sparks. When Mr. Lee was arrested, he denied involvement in the murder. Later, that same day, Donald Williams was taken into custody and gave a statement, which was recorded, in which he said that he saw Mr. Lee commit the murder. The next day, the prosecutor, Mr. Cook, interviewed the petitioner. He told him of the Williams accusation and played the tape for Mr. Lee which had been made of the Williams statement. The interviews between Mr. Cook and Mr. Lee were also recorded. Mr. Cook made frequent references to the accusation of Mr. Lee by Donald Williams, and in response, Mr. Lee admitted that he was present at the time of the shooting but denied shooting Booker Sparks. Indeed, Mr. Lee then claimed that it was Donald Williams who shot Mr. Sparks.
At trial, the prosecution played before the jury the tape recordings of the interviews of Mr. Lee. The unedited tapes contained Mr. Cook's narration of Mr. Williams' accusations against Mr. Lee. No effort was made to establish Mr. Williams' unavailability or the reliability of the out of court statements.
Prior to the admission of the tapes, the following colloquy occurred:
MR. BURKE: ... At this point I'm asking to exclude those tape recorded conversations with Tony Lee made subsequent to the playing of the tape by Donald Williams. ... [t]he tapes would lead the jury to believe that Donald Williams made accusations against my client. By doing that he, in effect, becomes a witness against my client by inference certainly if not in fact and would deny to my client both his right to confrontation as well as violating rules against hearsay .... (Tr. p. 3)
....
THE COURT: Mr. Cook?
MR. COOK: Your Honor, I believe that the statements that were attributed to Mr. Williams which are on the tape are probably for all intents and purposes hearsay under the rules of evidence. The state clearly is not offering them for the truth of the matter. They are offering them to show the defendant's response. ... (Tr. p. 4)
... I think the way to handle it, because it certainly has a potential for prejudicial effect, would be for the Court to give a curative instruction at the time that the tape is played and also at the end of the case during jury instructions, that any statements attributable to Donald Williams whatsoever are not to be considered as evidence under any circumstances of the truth of the matter and were just offered to show that those statements were made and that some subsequent statements were made in response by the defendant.... (Tr. p. 5)
THE COURT: All right. The Court has had the opportunity to hear the tapes not Williams' tapes but the other tapes and has seen the sequence of the tapes, and how Mr. Lee does his fast shuffle to change his story depending on what he is confronted with.... (Tr. pp. 5-6)
... There is a question whether or not it's hearsay. Yes, it is hearsay, but it's hearsay that is not offered for the truth of the statement but only offered to show what happened next. (Tr. p. 6)
The suggestion is I give an instruction. ... but it will be a general instruction about what hearsay is. Hearsay is something outside the court. And that statement is not made in Court, but it is not hearsay because it is only offered to show what happened next as opposed to some substantive evidence in this case.... (Tr. pp. 6-7)
....
MR. BURKE: ... I would suggest more strongly that the appropriate way to handle this would be for Mr. Cook to have Mr. Williams testify. (Tr. p. 7)
The jury was then called in and the prosecution proceeded to play the unedited tapes. During the first tape that was *396 played for the jury, the prosecutor, Mr. Cook, stated:
MR. COOK: Okay. Now you probably know, I think the officers told you, but Donald Williams said that he saw you shoot this fellow who was lying in the backyard. Do you know that?
....
MR. LEE: Yeah, they told me that, but I didn't believe that.
MR. COOK: Well he said that he saw you pull out a gun, and walk with this fellow, and get out of a green car, and walk this this fellow, and go to the back yard area there where this guy ended up being found, and that you shot him?
MR. LEE: I don't know why he said that. (Tr. p. 32)
The tape being played for the jury then indicated that the recording was being stopped while Mr. Cook played another tape for Mr. Lee of Mr. Williams making his accusations. At that point, the defense counsel, Mr. Burke renewed his objection. The trial judge, then gave the following instruction to the jury:
THE COURT: All right, ladies and gentlemen, let me just say this. There is rules of hearsay. Hearsay is something said outside the Court that is not subject to cross-examination. There are some exceptions to that hearsay rule.
....
If information is offered just to show what happened next, it is not hearsay. In other words, an example would be if an officer knocked on a door and said asked somebody is Joe Blow here, and that somebody said, "Yes, he is." Now that would be hearsay if that person wasn't here that said Joe Blow was there. But it really is not important what that person says, it just shows us what the officer did next. And the officer went inside and saw John Blow. Do you get the idea?
It's a sequence of events. That is one thing that shows why hearsay may be offered, just to allow us to see what happened next. Okay.
Also you are not to take as substantive evidence the statement of Mr. Williams, because it is not here in Court. But it is offered to show you what happened next; okay? And not to take it as substantive evidence or as evidence that it actually happened.
All right, let's proceed. (Tr. 33-34)
The foregoing constituted the only curative instruction given by the trial judge regarding the tapes played for the jury and the narrated out of court statements by Mr. Williams.
After the instruction, Mr. Cook continued playing the rest of the tapes for the jury. During the remainder of the tapes, Mr. Cook repeated Mr. Williams' accusations six more times. On several occasions, Mr. Cook made comments in the presence of the jury which tended to treat the accusations of Mr. Williams as truthful. When asked by Mr. Lee why Mr. Williams would make such an accusation, Mr. Cook responded: "Why? Because he saw you do it. That's why." While responding to an allegation by Mr. Lee that Mr. Williams must have been tricked into making the accusation, Mr. Cook stated: "We didn't trick him into anything. We asked him to tell the truth, and that's what he told us." (Tr. p. 74). The prosecutor also embroidered the accusation of Mr. Williams with certain factual matters which the defendant had admitted. No distinction was made as to facts proved and the hearsay accusation:
MR. COOK: And you ended up with some .38 caliber spent bullets or casings in your pocket, your pants' pocket, and your jacket pocket. And it's clear that Donald Williams said that he saw you out there shooting. And it's clear that there is some tracks that led from your house over to where the body is and back to your house.... (Tr. p. 40)
During closing arguments, in the absence of a limiting instruction by the judge prior to charging the jury, the prosecutor made a final reference to the out of court accusation:
MR. COOK: And then on January 17, in the District Attorney's Office, again he is told that there is some information that implicates him, and he doesn't believe it. *397 Then he's played a tape in which there is an accusation made.
And as the Judge indicated that, that statement of Donald Williams is not to be construed as evidence. It is just an accusation. But I think it's important to show the defendant's response, and that is all it was offered for and nothing else. (Tr. Closing Argument, pp. 42-43)
But, then a few moments later, Mr. Cook, bolstered the credibility of the truth of the matter asserted in the accusation when he added: "... Donald Williams was there. There is no question Donald Williams was there when that murder was committed." (Tr. Closing Argument, p. 44) Finally referring to the "nonhearsay purpose" of showing the effect of the accusation on the accused, Mr. Cook told the jury: "You knew this man [Mr. Lee] was going to lie sooner or later when confronted with evidence that shows that he's responsible for this offense." (Tr. Closing Argument, pp. 44-45). The "evidence" that the prosecutor characterized as showing responsibility for the offense is the very out of court accusation that a few moments earlier he had told the jury not to consider as evidence.
The key issue presented is whether, under these facts, the admission of a directly incriminating out of court statement constitutes a violation of the confrontation clause when it is sponsored by the prosecuting attorney and ostensibly offered for the nonhearsay purpose of showing the effect it had on the accused.
The right to confront one's accusers is a fundamental right secured by the sixth amendment and made applicable to the states by the fourteenth amendment. Pointer v. Texas, 380 U.S. 400, 403, 85 S.Ct. 1065, 1067-1068, 13 L.Ed.2d 923 (1965). The primary interest protected by the confrontation clause is the right of cross-examination. Douglas v. Alabama, 380 U.S. 415, 418, 85 S.Ct. 1074, 1076, 13 L.Ed.2d 934 (1965). "Although the Confrontation Clause and the hearsay rule are generally designed to protect similar values, they are not congruent and stand in some tension." Burns v. Clusen, 798 F.2d 931, 936 (7th Cir.1986). On a number of occasions, the courts have found violations of the confrontation clause, "even though the statements in issue were admitted under an arguably recognized hearsay exception." California v. Green, 399 U.S. 149, 155-56, 90 S.Ct. 1930, 1934, 26 L.Ed.2d 489 (1969); United States v. King, 613 F.2d 670, 673 (1980)
In Douglas v. Alabama, supra, the Supreme Court held that a prosecutor violated a defendant's right to confrontation by reading to the jury a purported confession of a co-perpetrator that incriminated the defendant under the guise of the "refreshing the recollection of the witness" exception to the hearsay rule, when that witness invoked the right against self-incrimination. The Court noted that although the prosecutor's reading of the witness' alleged statement and the witness' refusals to answer were technically not testimony, it nevertheless may have had the effect of testimony on the jury. Douglas, supra, 380 U.S. at 419, 85 S.Ct. at 1077. Because the statements may have had the effect of testimony on the jury, the defendant had the right to adversely test the truthfulness of the matter asserted in those statements. A significant difference between Douglas and the case at bar is that in Douglas the trial court did not issue a limiting instruction.
A limiting instruction that attempts to restrict the jury to consideration of only the admissible aspects of a hearsay statement, is insufficient to prevent a violation of the confrontation clause when the inadmissible aspect of the hearsay statement is "devastating to the defendant", and the declarant has a "recognized motivation to shift blame onto others." Bruton v. United States, 391 U.S. 123, 129-36, 88 S.Ct. 1620, 1628, 20 L.Ed.2d 476 (1967); see also Dutton v. Evans, 400 U.S. 74, 87, 91 S.Ct. 210, 219, 27 L.Ed.2d 213 (1970); United States v. Keplinger, 776 F.2d 678, 695 (7th Cir.1985). In Bruton the Court noted that "[t]he government should not have the windfall of having the jury be influenced by evidence against a defendant which, as a matter of law they should not consider but which, they cannot put out of their *398 minds." Bruton, supra, 391 U.S. at 129, 88 S.Ct. at 1624 (quoting Delli Paoli v. U.S., 352 U.S. 232, 248, 77 S.Ct. 294, 303, 1 L.Ed.2d 278 (1956) (Frankfurter, J., dissenting)).
In the instant case, the out of court declaration by Donald Williams unequivocally put the finger on the defendant. If considered and believed by the jury, such testimony certainly must have ravaged the defendant. Further, the declarant, Donald Williams, made the statement while he was under arrest as a suspect for the very same crime. Thus, the declarant certainly qualifies as one with a recognized motivation for shifting the blame. These two aspects of the case at bar directly implicate both of the key factors that served as the foundation of the Court's reasoning in Bruton.
The scathing aspects of Mr. Williams' accusation against Mr. Lee are magnified by the fact that the prosecuting attorney repeated the accusation nine different times. This apparent sponsorship was further aggravated by the collateral commentary of the prosecutor which intertwined the accusation with factual evidence and thus implied that it was credible.
Was the trial judge's limiting instruction to the jury sufficient to protect Mr. Lee's sixth amendment rights? "In some instances, even the most carefully drafted limiting instructions directing the jury not to consider a statement for its truth will prove insufficient to protect a criminal defendant." United States v. Wright, 783 F.2d 1091, 1101 (D.C.Cir.1986). In this regard, the Supreme Court has stated:
We normally presume that a jury will follow an instruction to disregard inadmissible evidence inadvertently presented to it, unless there is an "overwhelming probability" that the jury will be unable to follow the court's instructions, [citation omitted], and a strong likelihood that the effect of the evidence would be "devastating" to the defendant, [citation omitted].
Greer v. Miller, 483 U.S. 756, 107 S.Ct. 3102, 3110, 97 L.Ed.2d 618 (1987).
The presumption that a jury will follow a limiting instruction "is a pragmatic one, rooted less in the absolute certitude that the presumption is true than in the belief that it represents a reasonable accommodation of the interests of the state and the defendant in the criminal justice process." Richardson v. Marsh, 481 U.S. 200, 107 S.Ct. 1702, 1709, 95 L.Ed.2d 176 (1987).
In my opinion, the confrontation clause requires that, under the facts of the case at bar, the presumption that the jury followed the limiting instruction issued by the trial judge must be abandoned. Although the jury was asked to consider the out of court statements for a purpose other than the truth of the matter asserted in those statements, I hold that the nonhearsay purpose was an inferential step to prove the very truth of the matter asserted in those statements. In other words, the Williams accusation was used to show that the defendant's denial of the accusation was false, thereby tending to prove that the matter contained in the accusation was in fact true. The proximity of the inference sought by the purported nonhearsay purpose to the proof of the ultimate fact of guilt makes the separation into hearsay and nonhearsay purpose artificial and illusory. In this context, a limiting instruction is indeed a transparent wall.
It also bears note that these considerations are further aggravated by the inadequacy of the instruction actually given. The instruction was only given once by the court at the time the tapes were played for the jury. It was not repeated at the close of the evidence when the jury received the judge's other instructions. Further, the instruction as evidenced by the trial judge's hypothetical did not take into account the degree of risk posed to the defendant's sixth amendment rights.
The respondent's reliance on Tennessee v. Street, 471 U.S. 409, 105 S.Ct. 2078, 85 L.Ed.2d 425 (1985), is misplaced. In Street, the Supreme Court decided the issue of "whether [the defendant's] rights under the Confrontation Clause were violated by the introduction of the confession of an accomplice for the nonhearsay purpose of rebutting [the defendant's] testimony that his own confession was coercively derived *399 from the accomplice's statement." Id. at 410, 105 S.Ct. at 2080. In Street the defendant "opened the door" by alleging that his confession was coercively patterned after that of his accomplice; the defendant in effect made his accomplice's confession relevant to a factual question that he put at issue in the case. Id. at 416, 105 S.Ct. at 2082-2083. The case at bar does not present a situation in any way analogous to that in Street. Mr. Lee did not "open any doors."
Finally, it cannot be said that the wrongfully admitted hearsay testimony was "merely cumulative of other overwhelming and largely uncontroverted evidence properly before the jury." Brown v. United States, 411 U.S. 223, 231, 93 S.Ct. 1565, 1570, 36 L.Ed.2d 208 (1972). The prosecutor's repeated narration of Mr. Williams' accusation was an error that was not harmless beyond a reasonable doubt. Parker v. Randolph, 442 U.S. 62, 71 n. 5, 99 S.Ct. 2132, 2138 n. 5, 60 L.Ed.2d 713 (1978); Gaines v. Thieret, 846 F.2d 402, 404 (7th Cir.1988). In fact, not only was the hearsay aspect of the testimony "devastating," but there was little other direct evidence. The state's case rested in large part on the testimony of an informer from the jail who testified that Mr. Lee told him that he committed the murder. No murder weapon was ever found; the state's forensic testimony established that neither the spent cartridges nor the bullets in the victim's body were fired from the weapons found in Mr. Lee's residence; and the swabs taken of Mr. Lee's hands were inconclusive in establishing that he had fired a hand gun at the time of the murder. In short, the state has failed to show that the error was harmless beyond a reasonable doubt.
Having concluded that the admission of the narrated out of court accusations violated Mr. Lee's sixth amendment right to confront a witness against him, the court must fashion appropriate relief "as law and justice require." 28 U.S.C. § 2243. The actual issuance of the writ will be delayed so as to allow the state a reasonable time in which to retry the petitioner if it elects so to do. See Whiteley v. Warden, Wyoming State Penitentiary, 401 U.S. 560, 569, 91 S.Ct. 1031, 1037, 28 L.Ed.2d 306 (1971).
Therefore, IT IS ORDERED that Mr. Lee's petition for a writ of habeas corpus be and hereby is granted. The issuance of the writ is stayed for a period of seventy 70 days from the date of this order to enable the state to commence a retrial of the petitioner. If such retrial is actually commenced within that period, the issuance of the writ shall be permanently stayed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2079153/ | 184 N.J. Super. 99 (1982)
445 A.2d 410
MANALAPAN HOLDING CO., INC., PLAINTIFF-RESPONDENT,
v.
PLANNING BOARD OF THE TOWNSHIP OF HAMILTON, DEFENDANT-APPELLANT.
Superior Court of New Jersey, Appellate Division.
Argued February 17, 1982.
Decided April 2, 1982.
*102 Before Judges MATTHEWS, PRESSLER and PETRELLA.
William C. Baggitt, III, argued the cause for the appellant.
Douglas K. Wolfson argued the cause for the respondent (Greenbaum, Greenbaum, Rowe & Smith, attorneys).
The opinion of the majority was delivered by PRESSLER, J.A.D.
This is an action in lieu of prerogative writs. Defendant Planning Board of Township of Hamilton appeals from a summary judgment declaring the preliminary subdivision application filed by plaintiff Manalapan Holding Co., Inc. (developer) approved pursuant to N.J.S.A. 40:55D-48(c). The issue raised by this appeal raises important questions concerning the construction of that statute and its relationship to N.J.S.A. 40:27-6.3.
Plaintiff is a land developer owning a parcel of land some 45 acres in size in Hamilton Township, which it proposes to develop for single-family residential use. In April 1980 it submitted a sketch plat to the township's land use coordinator, who referred it for review and classification to the township's Development Review Advisory Board (DRAB). DRAB, a committee established by the township's land development ordinances, consisted of five voting members, three of whom are members of the planning board and two are members of the board of adjustment. In addition, those municipal officials whose duties implicate land development are designated as nonvoting members of DRAB. These officials include the township engineer, planner, health officer, land use coordinator, construction official, environmental commission chairman and administrative officer. The functions assigned to DRAB by the ordinance include review of development applications for compliance with ordinance provisions, recommendation for classification of all applications, determination of required planning board and board of adjustment action, discussion with applicants of the technical aspects of the proposed plat, and recommendation of ultimate action to the planning board and board of adjustment.
*103 DRAB considered plaintiff's sketch plat on April 23, 1980 and classified the proposed development as a major subdivision. The minutes of that meeting further indicate DRAB's view of the general acceptability of the plan subject, however, to some specific recommendations regarding sewering and road alignments and locations. It was further then noted that county approval would be required for the proposed storm drainage detention basin.
Plaintiff proceeded accordingly and on June 30, 1980 submitted its formal application for preliminary major subdivision approval to the planning board, which in turn referred it to DRAB. On July 23, 1980 DRAB considered the application, together with memoranda thereon submitted by the engineering and planning departments, and voted unanimously to deem the application complete and to forward it to the planning board for public hearing and consequent action. The minutes of that meeting of DRAB also note the necessity for ultimate county approval of the retention basin as well as sewer capacity approval from the sewer department. It further appears that plaintiff, on the same day it submitted its application to the planning board, also submitted appropriate applications to the Mercer County Planning Board and the New Jersey Division of Water Pollution Control.
The planning board scheduled a public hearing on the application for August 7, 1980. Plaintiff's representatives were present at that meeting and ready to proceed. There were, however, a number of other items on the board's agenda, and in view of its policy of adjourning at 11:30 p.m., it became evident that consideration of this application would not be reached. Accordingly, plaintiff's representative asked that the matter be carried to the next planning board meeting and that it then be accorded a preference status on the agenda. The next scheduled hearing of the planning board was September 11, 1980. Prior to this date, however, the county planning board had apparently advised the township's land use coordinator that while it generally approved the preliminary subdivision application, it nevertheless *104 was insisting upon provision of an on-site storm water detention facility, and accordingly it had approved the application subject to that requirement. The county board further advised that it would not grant final approval until it had reviewed and approved the plans and calculations for such a facility.
Apparently as a result of this advisory statement from the county planning board, the township planning board decided not to go forward with the scheduled September 11 hearing. While the record is not altogether clear as to how that decision was reached and communicated, the minutes of the planning board for that meeting make clear that the cancellation of the hearing on the application had preceded the convening of the meeting, and the certification of plaintiff's general counsel and vice-president submitted to the trial court alleges that
Representatives of the Township had previously informed us of their policy of not proceeding with applications for development until such time as county approval had been received. Presumably in accordance with that policy, representatives of the Township Planning Board contacted me and informed me that the application would not be heard at the September 11, 1980, planning board meeting. Our application for development was in fact taken off the agenda.
On October 7, 1980 plaintiff submitted to the planning board a revision of the plan which accorded with the county planning board requirements and with some apparently routine recommendations previously made by the land use coordinator respecting corner lot lines and storm sewer alignment. The planning board's next regular meeting was October 16, 1980. Although hearing on plaintiff's application had not been scheduled for this meeting, a resolution was then adopted fixing October 30, 1980 as the date of a special meeting for hearing thereon. On October 24, 1980 the planning board secretary, on instruction from the land use coordinator, telephoned plaintiff's representative requesting consent to an extension of the statutory time period. Such consent was not, however, given. Plaintiff then delivered a letter to the planning board on October 30, 1980, advising that the 95-day time period prescribed by N.J.S.A. 40:55D-48(c) had expired on October 26, 1980, and accordingly its application was required to be deemed approved. The letter further pointed out that
*105 The plans have been reviewed by your professional staff and has received favorable review. Therefore we do not feel that approval of these plans is detrimental to the Township and will not cause any harm to the public. We look forward to proceeding toward final approval at a later date.
The response of the planning board was to adopt a resolution at the October 30, 1980 meeting providing that "no plans for final approval will be accepted unless and until they provide us with the information requested and unless and until they submit themselves to a public hearing for preliminary approval." Accordingly, plaintiff instituted this action seeking a declaration of its rights pursuant to N.J.S.A. 40:55D-48(c). The trial court ultimately determined on summary judgment motion that the statutory time period had expired and hence that plaintiff's preliminary subdivision application was entitled to be deemed approved. The planning board appeals.
The sole question before us is whether the trial judge properly determined that the statutory 95-day period had expired prior to October 30, 1980. We are satisfied that this determination was correct.
N.J.S.A. 40:55D-48 governs the procedure for preliminary major subdivision approval. Subparagraph (a), after requiring the local ordinance to state with reasonable specificity the information required to be submitted by a developer on his subdivision application, then requires that
If the application for development is found to be incomplete, the developer shall be notified in writing of the deficiencies therein by the board or the board's designee for the determination of completeness within 45 days of submission of such application or it shall be deemed to be properly submitted.
Subparagraph (b) of N.J.S.A. 40:55D-48 requires the submission of an amended application and a new proceeding in the event the planning board, after public hearing, requires substantial amendment in the layout of improvements. It further stipulates that if the proposed subdivision complies with the local ordinance and the applicable provisions of state statute, the planning board is obliged to grant preliminary subdivision approval. Finally, subparagraph (c) provides, in relevant part, that
*106 Upon the submission of a complete application for a subdivision of more than 10 lots, the planning board shall grant or deny preliminary approval within 95 days of the date of such submission or within such further time as may be consented to by the developer. Otherwise, the planning board shall be deemed to have granted preliminary approval to the subdivision.
Finally, the definitional section of the Municipal Land Use Law, N.J.S.A. 40:55D-1 et seq., defines a "complete application" as
... an application form completed as specified by ordinance and the rules and regulations of the municipal agency, and all accompanying documents required by ordinance for approval of the application for development, including where applicable, but not limited to, a site plan or subdivision plat; provided that the municipal agency may require such additional information not specified in the ordinance, or any revisions in the accompanying documents, as are reasonably necessary to make an informed decision as to whether the requirements necessary for approval of the application for development have been met. The application shall not be deemed incomplete for lack of any such additional information or any revisions in the accompanying documents so required by the municipal agency. An application shall be certified as complete immediately upon the meeting of all requirements specified in the ordinance and in the rules and regulations of the municipal agency, and shall be deemed complete as of the date it is so certified by the administrative officer for purposes of the commencement of the time period for action by the municipal agency. [N.J.S.A. 40:55D-3]
We are persuaded that pursuant to this statutory scheme, plaintiff's application must be deemed to have been complete no later than July 23, 1980. Not only was plaintiff never advised of any deficiencies in its application vis-a-vis local ordinance requirements but it was expressly advised on July 23, 1980 by the "Board's designee for the determination of completeness" that its application was complete. Consequently, the 95-day period expired on October 26, 1980. Since the planning board had taken no action by that date, the statutory approval mechanism was triggered. See N.J.S.A. 40:55D-10(g). And see Gridco, Inc. v. Hillside Tp. Zoning Bd., 167 N.J. Super. 348, 352-353 (Law Div. 1979); Aurentz v. Little Egg Harbor Tp. Planning Bd., 171 N.J. Super. 135 (Law Div. 1979).
It is the planning board's contention that the application could not be deemed complete until plaintiff had acquired county planning board approval of its storm water detention facility. In our view, this argument misconceives the relationship between municipal and county land development functions. As we *107 read N.J.S.A. 40:55D-48(a) in the light of the definitional provision above quoted, we conclude that the completeness of a municipal land development application must be measured by the requirements of local ordinance. We are aware that in respect of particular land developments, approval by other governmental agencies may be required in respect of specific aspects of the project at some point in the planning or construction stage. But these are aspects of the project over which those other governmental agencies have jurisdiction and that jurisdiction, while complementary to municipal jurisdiction, may nevertheless not be indirectly abrogated by the municipality in its preliminary subdivision procedures. We do not address the question of whether a municipality could provide in its subdivision ordinance that a subdivision application will not be deemed complete until the developer submits those other required governmental approvals which are relevant to that planning stage of the project. The simple fact here remains that this township's ordinance did not so require, and it is only information required by the ordinance that can be insisted upon for a completeness determination.
The planning board further argues that the time provisions prescribed by N.J.S.A. 40:55D-48(c) must be regarded as modified by the earlier legislative enactment of N.J.S.A. 40:27-6.3. That section provides in relevant part that
Each subdivision application shall be submitted to the county planning board for review and, where required, approval prior to approval by the local municipal approving authority. County approval of any subdivision application affecting county road or drainage facilities shall be limited by and based upon the rules, regulations and standards established by and duly set forth in a resolution adopted by the board of chosen freeholders. The municipal approval authority shall either defer taking final action on a subdivision application until receipt of the county planning board report thereon or approve the subdivision application subject to its timely receipt of a favorable report thereon by the county planning board.
We are, however, satisfied that the deferral option accorded to a municipality by this provision pending required county planning board approval has itself been implicitly repealed by the Municipal Land Use Law.
*108 We note first that N.J.S.A. 40:55D-37(c) provides that "the municipal planning board shall condition any approval that it grants upon timely receipt of a favorable report on the application by the county planning board or approval by the county planning board by its failure to report thereon within the entire time."
It is evident that the statutory approval mechanisms of the Municipal Land Use Act were intended to preclude the practices to which municipalities theretofore resorted to endlessly protract final determination of land development applications with the consequent result of undue harassment of developers and substantial economic prejudice to their legitimate development plans. The automatic statutory approval was, therefore, designed to encourage prompt consideration and disposition of applications for the advancement of the interests of both the developers and the public. See, generally, Levin v. Parsippany-Troy Hills Tp., 82 N.J. 174, 179 (1980). And see Lizak v. Faria, 180 N.J. Super. 248 (Ch.Div. 1981); Burcam Corp. v. Medford Tp. Planning Bd., 160 N.J. Super. 258 (Law Div. 1978), aff'd as modified 168 N.J. Super. 508 (App.Div. 1979). It is in view of this essential purpose that the complex of land use statutes must be construed. In our view, it would abrogate the intention of the automatic approval provisions of the statutes which explicitly require the municipal agency to take action within a prescribed time if they were construed to permit the municipal agency unilaterally to extend the statutory time period by deferring action. We, therefore, regard N.J.S.A. 40:55D-37(c) and N.J.S.A. 40:55D-48(c), construed in pari materia, as controlling and as having by implication repealed any inconsistent provision of N.J.S.A. 40:27-6.3. Accordingly, a municipality may conditionally approve a preliminary subdivision application pending county approval. It may also, of course, deny approval. But it may not defer action if the consequence of the deferral is the unilateral extension of the 95-day statutory period.
*109 The planning board further argues, and our dissenting colleague agrees, that plaintiff's actions in respect of the scheduled August 7 meeting somehow operated to extend the statutory time period. The contention seems to be that plaintiff either consented in advance to an extension of the statutory time or agreed to a tolling of the time by asking that the matter be carried over. In our view, neither consequence may be fairly ascribed to that event. It is perfectly clear that at the August meeting it became obvious that, by reason of time constraints and the press of other business, plaintiff's application would not be reached. Rather than waiting until 11:30 p.m. for the inevitable adjournment, its representative sensibly requested a preference rescheduling. At that point, most of the 95-day period remained and timely rescheduling of the hearing posed no problem to either side. To infer from these circumstances, particularly in view of the actual rescheduling then arranged for, that this unexceptionable course of conduct in any way affected the statutory time period is contrary to common sense and the obvious import of the situation. We are, furthermore, satisfied that the planning board itself did not then regard the adjournment as having any such consequence. Rather, it made clear by its consequent rescheduling of the hearing for September 11, 1980, and its cancellation thereof, that irrespective of plaintiff's view of the matter, it did not in any event intend to proceed with the application until compliance with its unjustified demand that county approval of the storm water detention facility first be obtained. We are, moreover, persuaded that a fair and contextual scrutiny of the record does not reasonably support any other interpretation of the events of August 7 and thereafter.
Finally, the planning board argues that despite the completeness resolution of July 23, 1980, and despite its failure to have advised plaintiff in writing of any deficiencies vis-a-vis its own land use ordinances, plaintiff's application was not complete until October 7, 1980, when it submitted a revision of its plan in accordance with the county's requirements. Considering the *110 definition of completeness above quoted in light of the operative facts, we are constrained to disagree. If the October submission had any effect at all, it would have been to permit the planning board to give final rather than conditional approval to the application. Plaintiff's right to definitive planning board action was triggered by the July 23, 1980 completeness determination and could not thereafter be adversely affected by proof of compliance with the requirements of other governmental agencies. We also regard N.J.S.A. 40:55D-48(b) as inapposite in this respect. First, that section speaks only to a substantial amendment of the plan, and there is no suggestion here that the revisions of October 7, 1980 constituted a substantial amendment. Indeed, the only proofs in the record are to the contrary. More significantly, however, the provision addresses only such amendments as are required by the planning board itself as a result of and subsequent to hearing. Since there was no hearing here, the provision obviously does not apply.
We are further constrained to note that there is nothing in the record to suggest that the proposed subdivision failed in any respect to comply with all municipal land use requirements applicable to that developmental phase. Again, the contrary is true. Thus, if N.J.S.A. 40:55D-48(b) is applicable at all, its applicable provision is the mandate that subdivision approval be granted to such complying applications. We are hence satisfied that the invocation of the automatic approval provision of the statute does not in any way prejudice the public interest here.
The judgment appealed from is affirmed.
PETRELLA, J.A.D. (dissenting).
The underlying question on this appeal is whether the 95-day provision in § 36 of the Land Use Act, N.J.S.A. 40:55D-48 c, expired or should be applied under the circumstances of this case so as to require the automatic approval of plaintiff's preliminary subdivision application for a 67-lot subdivision of a 44.9-acre tract of land. The appeal implicates the interrelationship of the Land Use Act, N.J.S.A. 40:55D-1 et seq. and N.J.S.A. 40:27-6.3.
*111 Because I am of the opinion that the proper interpretation and application of the relevant statutes require a different result than that reached by the majority, I respectfully dissent. Furthermore, the factual issues here should not have been resolved on a summary judgment motion on the inadequate record in this case. See Jackson v. Muhlenberg Hospital, 53 N.J. 138 (1969). Significantly, the trial judge initially denied summary judgment to plaintiff. It appeared that he may have been troubled by the inadequate record. After a motion for reconsideration the judge changed his mind and granted plaintiff's motion, holding that 95 days had elapsed without action by the municipality or extension of time, and hence plaintiff's application was deemed granted under N.J.S.A. 40:55D-48 c. He then refused reconsideration to defendant.
This is not a case where a municipal agency has unilaterally extended a statutory time period. N.J.S.A. 40:55D-48, in its entirety, reads as follows:
a. An ordinance requiring subdivision approval by the planning board shall require that the developer submit to the administrative officer a plat and such other information as is reasonably necessary to make an informed decision as to whether the requirements necessary for preliminary approval have been met; provided that minor subdivisions pursuant to section 35 of this act shall not be subject to this section. The plat and any other engineering documents to be submitted shall be required in tentative form for discussion purposes for preliminary approval. If the application for development is found to be incomplete, the developer shall be notified in writing of the deficiencies therein by the board or the board's designee for the determination of completeness within 45 days of submission of such application or it shall be deemed to be properly submitted.
b. If the planning board required any substantial amendment in the layout of improvements proposed by the developer that have been the subject of a hearing, an amended application shall be submitted and proceeded upon, as in the case of the original application for development. The planning board shall, if the proposed subdivision complies with the ordinance and this act, grant preliminary approval to the subdivision.
c. Upon the submission to the administrative officer of a complete application for a subdivision of 10 or fewer lots, the planning board shall grant or deny preliminary approval within 45 days of the date of such submission or within such further time as may be consented to by the developer. Upon the submission of a complete application for a subdivision of more than 10 lots, the planning board shall grant or deny preliminary approval within 95 days of the date of such submission or within such further time as may be consented to by *112 the developer. Otherwise, the planning board shall be deemed to have granted preliminary approval to the subdivision.
This statute must be considered along with various other existing statutes, specifically N.J.S.A. 40:27-6.3, which provides:
Each subdivision application shall be submitted to the county planning board for review and, where required, approval prior to approval by the local municipal approving authority. County approval of any subdivision application affecting county road or drainage facilities shall be limited by and based upon the rules, regulations and standards established by and duly set forth in a resolution adopted by the board of chosen freeholders. The municipal approval authority shall either defer taking final action on a subdivision application until receipt of the county planning board report thereon or approve the subdivision application subject to its timely receipt of a favorable report thereon by the county planning board. The county planning board shall report to the municipal authority within 30 days from the date of receipt of the application. If the county planning board fails to report to the municipal approving authority within the 30-day period, said subdivision application shall be deemed to have been approved by the county planning board unless, by mutual agreement between the county planning board and municipal approving authority, with approval of the applicant, the 30-day period shall be extended for an additional 30-day period, and any such extension shall so extend the time within which a municipal approving authority shall be required by law to act thereon.
In addition, N.J.S.A. 40:55D-37 c provides:
Each application for subdivision approval, where required pursuant to section 5 of P.L. 1968, c. 285 (C. 40:27-6.3), and each application for site plan approval, where required pursuant to section 8 of P.L. 1968, c. 285 (C. 40:27-6.6) shall be submitted by the applicant to the county planning board for review or approval, as required by the aforesaid sections, and the municipal planning board shall condition any approval that it grants upon timely receipt of a favorable report on the application by the county planning board or approval by the county planning board by its failure to report thereon within the required time period.
I
There are two aspects to this appeal the factual setting and the interpretation of the relevant statutes. Initially, it is appropriate to deal with the former. Plaintiff has contended that the 95-day time period contained in N.J.S.A. 40:55D-48 c expired October 27, 1980. It is conceded that subsequent to the filing of its application for a subdivision with the Hamilton Township Planning Board ("board" or "defendant") it filed an application for county planning board ("county board") approval. As of July 23, 1980 when the application to the municipality was *113 determined by the local agency to be facially complete, see N.J.S.A. 40:55D-3, county board approval had not yet been received. Defendant scheduled a hearing on plaintiff's plan for August 7, 1980. Plaintiff's application was listed as No. 16 on the agenda. It does not seem to be disputed that the general policy of the board was not to work past 11:30 p.m. At about 8:05 p.m., at the start of the meeting, and before any application had been heard, Mr. Reinhart, vice-president and general counsel of plaintiff and its parent company, Hovnanian Enterprises, advised defendant's chairman that plaintiff "would have no problem with consenting to an extension of time...." The record discloses the following exchange:
Mr. Chairman, my name is Peter Reinhart. I'm the attorney for the one you just mentioned, Manalapan Holding Company and I know we're Number 16. We would have no problem with consenting to an extension of time on that one to another meeting. We have a problem we are trying to work out with the County Planning Board and I think it would be in the interest of this Board as well as interest of time if we can put that off until whenever your next meeting is.
Mr. Hollins you're requesting then that that application ...
Mr. Reinhart be carried to whenever your next meeting is ...
Mr. Hollins that it be put off 'til September ...
Mr. Reinhart whenever your next meeting is ...
It is clear that not only was plaintiff consenting to an extension of time but that it was having "a problem" with the county board and wanted and requested additional time to resolve that issue first. Although it might be speculated that plaintiff's application might not have been reached that night, the record is deficient in that regard, and we have no way of knowing that for sure. It might just as well have been that plaintiff thought there were too many members of the public present. It is more likely, in accord with what plaintiff's attorney said, that because it did not have county board approval, it did not want to take up everyone's time on an application which had not been acceptable to the county board. This impliedly recognized that county board conditions or approval might result in other changes which could further affect the preliminary plan submitted to defendant. In any event, it hardly can be said with certainty *114 that plaintiff's application would not have been heard at all that evening. Hence, the municipality should not be faulted or penalized when the hearing was not held in August because of the applicant's request.
Nor can it be seriously argued that the words "carried to whenever your next meeting is" only evince a request for an adjournment without actually consenting to an extension of the 95-day time limit. Plaintiff was represented by house counsel presumably familiar with land development applications and personally knowledgeable in planning procedures. Consent to extensions of time is not a new concept introduced by the Land Use Act. See, e.g., N.J.S.A. 40:55-1.18, and compare N.J.S.A. 40:55-45 (both sections now repealed). Plaintiff knew that time was needed and it wanted the extension because of the problem with the county board. In requesting the extension plaintiff's general counsel had not requested or mentioned the possibility of proceeding then, or even in September, subject to future county board action.
Furthermore, the record is not at all clear, as the majority strains to conclude, that it was the unilateral decision of the board not to consider the application when the matter arose again in September. The majority accepts without question the affidavit of plaintiff's counsel, which is untested by cross-examination, referring to his "presumptions" about the reasons for the matter not proceeding on September 11. Presumptions are not enough. Where there are questions of fact, affidavits provide an inappropriate basis for their resolution. Such affidavits are of value on a motion for summary judgment only when they demonstrate the absence of a factual dispute. Frank Rizzo, Inc. v. Alatsas, 27 N.J. 400, 405 (1958). Here, the affidavit at best created an issue of fact. Both the briefs and oral argument before the trial court sharpened the contradiction or conflict between the parties as to what actually happened. That dispute is sufficient to preclude summary judgment. Judson v. Peoples Bank & Trust Co., 17 N.J. 67 (1954). Doubts should be resolved in favor of protecting the public interest.
*115 By the September 11, 1980 meeting date plaintiff's problems (however great or small) with the county board were not resolved. It was represented to us at oral argument that it was not until the end of September or early October that plaintiff agreed to modify its plans in accordance with the requirements of the county board, and thus it was not until after that time that a line was drawn on applicant's plans for the detention area requested by the county board. There is nothing in the record to show that that plan with the new line was ever submitted to defendant.[1] In light of that, as well as the request by plaintiff's attorney for an extension of time, I would conclude that plaintiff either consented to an extension of the 95-day time limit of a bare minimum of 35 days from August 7 through September 11, 1980 or, on principles of waiver or estoppel, should be precluded from having timely invoked the statutory 95-day time period in this case.
Indeed, when on October 24, whether sensibly or as a matter of caution, a board employee contacted plaintiff's counsel requesting consent to an extension of the 95 days and plaintiff's appearance at the special meeting on October 30, 1980 for a hearing, plaintiff's counsel waited until October 30 to respond by letter indicating that it was now taking the position that the 95 days had run and that it sought to take advantage of the automatic preliminary approval provisions. Of course, the municipal planning board would not normally be bound by misstatements of clerical assistants. Admittedly, a municipal corporation may be bound, on the concept of estoppel, to good faith, erroneous actions in issuing a building permit based on a debatable interpretation of the zoning ordinance by an employee who acts within the ambit of his authority. See Jantausch v. Verona, 41 N.J. Super. 89 (Law Div. 1956), aff'd 24 N.J. 326 (1957), *116 where a homeowner had completed alterations on the strength of an improperly issued building permit. However, where, as here, an employee makes a good faith representation to an individual, an estoppel may not be invoked where the employee was not authorized to act or where his interpretation was contrary to law. Debold v. Monroe Tp., 110 N.J. Super. 287, 293 (Ch.Div. 1970), aff'd o.b. 114 N.J. Super. 502 (App.Div. 1971), cert. den. 59 N.J. 296 (1971). In Debold it was held that unauthorized representations by the mayor and township attorney which were contrary to law, and reliance upon those representations, created no estoppel against the township. See, also, Weber v. Pieretti, 72 N.J. Super. 184, 201 (Ch.Div. 1962), aff'd 77 N.J. Super. 423 (App.Div. 1962). Here it can hardly even be said that any reliance thereon by plaintiff was to its detriment.
Under the circumstances I would add on a minimum of 35 days from the October 27, 1980 date which the majority accepts as the date the statutory 95 days expired. This would result in December 1, 1980 being the earliest that the 95 days would have expired under N.J.S.A. 40:55D-48 c. However, within that time period the municipality had scheduled and was ready to proceed on October 30, 1980 with a special meeting devoted solely to plaintiff's application. When plaintiff refused and failed to attend that special meeting defendant adopted a resolution noting such refusal. The October 30 resolution also said:
........
WHEREAS, the Planning Board finds as a fact that the application indeed has never been complete for the reference by the Development Review Advisory Board on July 23rd, was subject to the condition that the applicant comply with County Planning Board approval and furnish additional Engineering details, and
The Planning Board further finds as a fact that the applicant itself requested an extension of the August meeting of the Planning Board and the public hearing, and
WHEREAS, the Planning Board finds as a fact that the applicant has not furnished the Planning Board with sufficient information upon which it can make a reasonable judgment as to whether the applicant has complied with the Subdivision Code and with the Development Regulations of the Township of Hamilton;
*117 NOW, THEREFORE, BE IT RESOLVED on this Thirtieth Day of October, 1980 that this matter be continued, that the applicant be informed that we are awaiting the report from the County Planning Board, that we are awaiting the information for the Engineering Department so that they can make a judgment, and
BE IT FURTHER RESOLVED that the Attorney be directed to communicate with the applicant and it's [sic] attorney and indicate to them that no plans for final approval will be accepted unless and until they provide us with the information requested and unless and until they submit themselves to a public hearing for preliminary approval.
In my view, this resolution is fairly construable as a resolution deferring action on plaintiff's application for preliminary approval until the county board reported thereon, and more significantly, until plaintiff submitted to a public hearing. Thus, it complied essentially and substantially with the first option referred to in N.J.S.A. 40:27-6.3 with respect to deferring action.
II
However, the majority chooses to reach for implied repeal of inconsistent provisions of N.J.S.A. 40:27-6.3.[2] Although the Legislature may indeed have been concerned about situations involving claims of undue delay by a municipality in certain cases, it was also fully aware that the public interest had to be protected. It has to be obvious that there is an equal danger of stalling by an applicant who may have a controversial or questionable proposal (this is not to suggest that such was the case here) in order to allow the 95-day period to elapse. The Legislature in its wisdom may have determined it was preferable, on balance, that an application be deemed approved after the specified number of days had run, rather than be deemed denied after the running of a specified statutory time period as was the case in various instances under prior planning and zoning laws. However, the Legislature was also cognizant, as we must be, of the competing public interests here. It thus expressly allowed *118 for an extension of that time. Surely, considering the Legislature's express admonition for liberal construction of the act in furtherance of its broad purposes, N.J.S.A. 40:55D-92, it makes little sense for a planning board to be forced invariably to deny outright an application in situations where the applicant asks for more time. A relatively slight delay may save unnecessary expense and potential problems. After all, an applicant must still obtain final approval. See N.J.S.A. 40:55D-50.
But the result of the majority's reasoning may well be to force automatic denials by planning boards in cases where they may not be warranted or necessary. The case presented when the board scheduled the special meeting could certainly not be viewed as a municipality's effort "to endlessly protract final determination...." Any delay thereafter was a result of plaintiff's refusal to participate in a public hearing.[3] The majority's construction of the implicated statutory provisions here has the further result that essentially unscrutinized development would occur even though there was never a public hearing held and the municipal planning board never had an opportunity to consider the impact of whatever any ultimate county board requirement was. It is an insufficient argument to say that whatever the county did had no bearing in any event. Obviously, action by one governmental unit with respect to a development plan may well conflict with a proposal by another governmental unit. Each is entitled to know about and see what the other governmental unit is requiring. There was no unreasonable or "unjustified demand" made by the planning board.
It is impossible to say with certainty on this record that after there was a change made by the county board the original application was still complete without the board or the court really knowing how any required changes affected the thrust of the application. These were not changes contemplated by N.J. *119 S.A. 40:55D-48 b because they were not required by the local board. Unlike my colleagues, I am not prepared to say that the change required by the county board was either insubstantial, insignificant or irrelevant. Neither the planning board (as far as this record shows) nor this court has ever seen the exhibit or the plan as amended by plaintiff. After all, the citizens, taxpayers and even future developers in the surrounding area in Hamilton Township will have to live for years to come with what is ultimately located on the property and how it is located. Nor is it sufficient to say that only preliminary subdivision approval is involved, especially when such preliminary approval confers certain protected rights. See N.J.S.A. 40:55D-49.
It is difficult to understand why plaintiff took such a hard and fast position with respect to refusing to participate in the October 30 scheduled public hearing when there was not even a suggestion in the record of opposition to its proposal. It chose to gamble on enforcement of the 95-day period and initially lost before the trial judge before he consented to reconsider. It is obvious that one of the intentions of the Land Use Act is also to provide for a public hearing and an airing of the deliberations of the planning board. Allowing things to happen by inaction is fraught with as much potential for mischief as allowing action to be taken without the knowledge of the public. Indeed, it was for such reasons that the Open Public Meeting Law, commonly referred to as the "Sunshine Law," was enacted. N.J.S.A. 10:4-6 et seq.
The Land Use Act does put a burden on the municipal land use agencies to act within prescribed time limits, or consensual extensions thereof. See, e.g., N.J.S.A. 40:55D-10 g, 40:55D-17 c, 40:55D-46 a and c, 40:55D-46.1, 40:55D-47, 40:55D-48 a and c, 40:55D-50, 40:55D-61, 40:55D-67, 40:55D-73 b and 40:55D-76 c. However, insofar as the act was declared "necessary for the welfare of the State and its inhabitants" it must be construed liberally to effectuate the purposes thereof. N.J.S.A. 40:55D-92. First among the purposes of the act listed by the Legislature in N.J.S.A. 40:55D-2 a is:
*120 To encourage municipal action to guide the appropriate use or development of all lands in the State, in a manner which will promote the public health, safety, morals, and general welfare; .... [Emphasis supplied]
Similarly, N.J.S.A. 40:55D-70 d, made applicable to a planning board by N.J.S.A. 40:55D-60, states that no variance or other relief shall be granted a developer unless it can be granted "without substantial detriment to the public good and will not substantially impair the intent and the purpose of the zone plan and zoning ordinance." [Emphasis supplied].
To enable the citizens of the municipality (who, in fact, are the individuals most affected by large-scale developments in their community) to partake in the process, the act provides for public hearings on "each application for development, or adoption, revision or amendment of the master plan." N.J.S.A. 40:55D-10 a. Furthermore, a brief notice of the decision resulting from such a hearing must be published in the official newspaper of the municipality, if one exists, or in a newspaper of general circulation in the municipality. N.J.S.A. 40:55D-10 i. Thus, there is an apparent tension within the act between assuring timely action on the part of the agency charged with reviewing a particular application for approval and maintaining the public safety and general welfare. In my opinion neither the law nor the facts in the instant appeal present an appropriate case for the strict, technical enforcement of the 95-day time limit contained in N.J.S.A. 40:55D-48 c, particularly on a motion for summary judgment.
The majority, however, takes the position that defendant could not defer action under N.J.S.A. 40:27-6.3, concluding that N.J.S.A. 40:55D-37 c and 40:55D-48 c, "construed in pari materia, as controlling as having by implication repealed any inconsistent provision of N.J.S.A. 40:27-6.3." However, the question is not whether sections 37 c and 48 c as provisions of the same act are to be read in pari materia (which of course they must be as part of the same enactment), but whether those sections may be read in pari materia with N.J.S.A. 40:27-6.3. I conclude that they should and must be so read.
*121 It can hardly be said that the Legislature was unaware of the provisions of N.J.S.A. 40:27-6.3 when it referred to that section expressly at least six times in the Land Use Act itself. See N.J.S.A. 40:55D-37 c, 40:55D-47, 40:55D-50, 40:55D-61, 40:55D-67 and 40:55D-76 c. Thus, it incorporated the very provisions of N.J.S.A. 40:27-6.3 within the Land Use Act on numerous occasions. The Legislature, being fully aware of the provisions of the other act, could easily have amended it if that was its remotest intent. Its failure to do so speaks loudly and clearly. It surely would not have gone to the extent of referring to it six times in the Land Use Act if it had intended to change its interpretation. See In re Glen Rock, 25 N.J. 241, 249 (1957), and Kessler v. Zink, 136 N.J.L. 479, 482 (E. & A. 1948). There is a presumption against legislative intent to effect a change of substance by a revision of laws. In re Glen Rock, supra.
Furthermore, N.J.S.A. 40:55D-37 c merely provides that any approval the board grants must be conditioned on county board action. This would only apply if the planning board chooses to approve, rather than to defer or deny. Nor does N.J.S.A. 40:55D-22 b impliedly repeal N.J.S.A. 40:27-6.3 when it states "the municipal agency shall, in appropriate instances, condition its approval upon the subsequent approval of such governmental agency; ...." [Emphasis supplied]. Obviously, what occurred here did not necessarily constitute an appropriate instance. Accordingly, the "shall" need not here be read as mandatory. N.J.S.A. 40:55D-22 b also provides that the decision shall be made within the time provided in the act or within an extension of time agreed to by the applicant "unless the municipal agency is prevented or relieved from so acting by the operation of law." That subsection reads in its entirety:
In the event that development proposed by an application for development requires an approval by a governmental agency other than the municipal agency, the municipal agency shall, in appropriate instances, condition its approval upon the subsequent approval of such governmental agency; provided that the municipality shall make a decision on any application for development within the time period provided in this act or within an extension of such period as has been *122 agreed to by the applicant unless the municipal agency is prevented or relieved from so acting by the operation of law.
The last clause of N.J.S.A. 40:55D-22 b negatives any intent of implied repeal in recognizing that the municipality may at times be prevented or relieved from acting either by the constitution or by statutory or decisional law.
The majority opinion's conclusion that N.J.S.A. 40:55D-37 c and 40:55D-48 c impliedly repealed N.J.S.A. 40:27-6.3 is erroneous and unnecessary. It is a long-established principle of statutory construction that implied repealers are disfavored in the law. See, e.g., Brewer v. Porch, 53 N.J. 167, 173 (1969). Enactment of the Land Use Act with specific references to N.J.S.A. 40:27-6.3 in effect reenacted that section and incorporated it in toto into the Land Use Act. Cf. Caldwell v. Rochelle Park Tp., 135 N.J. Super. 66, 74 (Law Div. 1975). There is no rational reason that the statutes cannot be read in pari materia to result in a unitary and harmonious law to accomplish the overall legislative scheme in a reasonable manner. See Lawrence v. Butcher, 130 N.J. Super. 209, 212 (App.Div. 1974). The Legislature is presumed to be familiar with its prior legislation. In re Mercer Cty., 172 N.J. Super. 406, 409 (App.Div. 1980). It certainly would have been an easy matter to amend N.J.S.A. 40:27-6.3 or expressly list it in § 80, the repealer section, of L. 1975, c. 291. The absence of even a general provision in the Land Use Act prescribing repeal of inconsistent statutes further militates against any implied repealer. The Legislature has frequently used such language when it determined that one statutory scheme was to prevail over another. See, e.g., N.J.S.A. 2C:98-2, N.J.S.A. 13:1D-19 and N.J.S.A. 17:46B-62.
III
In summary, there was an extension of time of at least 35 days and the October 30 resolution was an effective deferring of action under authority of N.J.S.A. 40:27-6.3 because it was adopted before the December 1 date. There is nothing that requires that an extension of the time period in N.J.S.A. 40:55D-48 c can occur only when the period is about to expire.
*123 Thus, I would conclude that the November 27, 1980 publication by plaintiff of a notice that its application was deemed to have received preliminary subdivision approval was ineffective and self-serving. Plaintiff should have submitted to a public hearing on its application or revised application reflecting the county board's change at the scheduled public hearing of October 30, 1980. Having failed to appear at all at the October 30, 1980 special meeting, it cannot now complain that more than 95 days would have run after December 1 even if a minimum of the 35 days between the August and September meeting were added.
I would reverse and remand to the trial judge with instructions to remand the matter to the municipal planning board for a hearing.
NOTES
[1] It was represented at oral argument by defendant's attorney that the plan as modified by the county board had not been submitted to the municipal planning board before the litigation. It cannot be concluded that it has been submitted to date based on the record.
[2] Implied repeal of any inconsistent provision could not have been intended because this section is expressly referred to in N.J.S.A. 40:55D-37 c, 40:55D-47, 40:55D-50, 40:55D-61, 40:55D-67 and 40:55D-76 c.
[3] Query, whether plaintiff could not have participated in the public hearing "without prejudice" and expressly reserved its legal position. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2203107/ | 89 Ill. App.3d 35 (1980)
411 N.E.2d 19
FREDERICK CRABTREE, Plaintiff-Appellee,
v.
ST. LOUIS-SAN FRANCISCO RAILWAY COMPANY, Defendant-Appellant.
No. 78-425.
Illinois Appellate Court Fifth District.
Opinion filed June 11, 1980.
Supplemental opinion filed on rehearing September 26, 1980.
*36 Gundlach, Lee, Eggmann, Boyle & Roessler, of Belleville (Richard M. Roessler, of counsel), for appellant.
John T. Pierce, Jr., of Pratt, Pierce, Bradford & Gitchoff, Ltd., of East Alton, for appellee.
Reversed and remanded.
*37 Mr. JUSTICE KARNS delivered the opinion of the court:
Plaintiff, Frederick Crabtree, brought this action in the Circuit Court of Madison County under the Federal Employers' Liability Act (45 U.S.C. § 51 et seq. (1976)) to recover damages for personal injuries to his lower back sustained as a result of the negligence of defendant, St. Louis-San Francisco Railway Company. The jury returned a verdict for plaintiff in the amount of $315,000 upon which judgment was entered. From this judgment, defendant appeals.
Defendant contends that the trial court committed reversible error in admitting the testimony of Dr. Marshall Alperin and Raymond Stevens, expert witnesses called by plaintiff; that it was error to instruct the jury to determine the present cash value of lost future earnings without any evidence of the mathematical calculation required to assist the jury in performing this function; that counsel for plaintiff was allowed to argue improperly the loss of purchasing power of the dollar based upon inflationary trends; and that the trial court erred in refusing to instruct the jury that any damage award would not be subject to Federal or State income taxation.
On March 26, 1976, plaintiff, then age 39, was employed by defendant as a track laborer. On that day, while attempting to lift a keg of rail spikes by hand onto a rail push cart, plaintiff experienced a sharp pain and a tingling and burning sensation in the lower left side of his back. After plaintiff's injury was diagnosed as a ruptured disc at the L-5, S-1 level of the spine, he underwent surgery for removal of the disc. Plaintiff still experiences numbness and pain in his back and legs and has not worked since his operation.
Dr. Marshall Alperin, a specialist in internal medicine, testified on behalf of plaintiff. He testified that he has conducted pre-employment physical examinations since 1962 and is presently conducting such examinations for approximately 35 industries, including the Illinois Central Gulf Railroad. Over defendant's objection, Alperin was asked whether a man of plaintiff's age who had undergone a low back operation would be hired by any of the corporations for whom Alperin worked. Alperin replied that none of the corporations would hire plaintiff because of the increased risk that the problem might return and become a liability to the company. Also, over objection, Alperin was permitted to testify that for all 35 companies, plaintiff was "industrially unemployable."
1 It is defendant's initial contention that the trial court erred in refusing to strike Dr. Alperin's testimony because, in defendant's opinion, plaintiff failed to establish the physician's qualifications as an expert on matters of hiring and employment practices in industry. Defendant's contention is without merit. Expert testimony is admissible when the witness offered as *38 an expert possesses peculiar knowledge or experience not common to the ordinary layman which renders his testimony an aid to the trier of fact. (People ex rel. Scott v. Steelco Chemical Corp. (1974), 22 Ill. App.3d 582, 317 N.E.2d 729; Ocasio-Morales v. Fulton Machine Co. (1973), 10 Ill. App.3d 719, 295 N.E.2d 329.) Thus, to lay a proper foundation for expert evidence, the expert must be shown to have that special knowledge or experience in the area about which he expresses his opinion. (See Craft v. Acord (1974), 20 Ill. App.3d 231, 313 N.E.2d 515; Abramson v. Levinson (1969), 112 Ill. App.2d 42, 250 N.E.2d 796.) What constitutes such requisite expertise rests within the sound discretion of the trial court. Hardware State Bank v. Cotner (1973), 55 Ill.2d 240, 302 N.E.2d 257.
2 Applying these principles, the trial court did not abuse its discretion in permitting the testimony of Dr. Alperin concerning the employment practices of the 35 companies for whom he worked. The record demonstrates that for the last 18 years Dr. Alperin has conducted pre-employment physical examinations for a variety of industries, including at least one railroad company. One may reasonably intimate that during the normal course of his employment for these companies Alperin has accumulated much expertise in the area of a worker's qualifications for and ability to perform in various industrial positions which would be beyond the common knowledge of an ordinary layman. It would therefore belie all common sense to hold that on the basis of the present record Alperin did not have sufficient knowledge or experience to know whether a physical injury, such as the one suffered by plaintiff, would seriously affect or preclude employment with one of the 35 companies. Although Alperin did not examine plaintiff and was not a physician for defendant, his medical training and extensive experience in conducting pre-employment physical examinations justified admission of his testimony concerning the availability of employment in certain industries for one in plaintiff's physical condition.
Defendant also contends that the trial court erred in admitting the expert testimony of Raymond Stevens apparently on the basis that plaintiff had failed to establish Stevens' competency as an expert witness and, in addition, had failed to lay a sufficient foundation of Stevens' knowledge of custom and practice in the industry. We disagree. Mr. Stevens was called by plaintiff to testify about the custom and practice of various railroads in lifting and moving kegs of rail spikes. He had worked as foreman of "maintenance and track" for the Illinois Terminal Railroad from 1934 to 1972. During this time, he was responsible for all maintenance and construction of the railroad tracks and was familiar with his company's custom of moving kegs of spikes. Mr. Stevens also testified that he has observed the workmen of the Terminal Railroad Association *39 of St. Louis and B & O Railroad many times and was familiar with the manner and custom in which they moved and lifted these kegs. On the basis of his experience and observations, he concluded that the customary method of lifting kegs of spikes was to utilize tie tongs, which method was safer than lifting by hand.
3 The above testimony demonstrates that Stevens was well qualified as an expert on the operations of railroad maintenance and construction and was familiar with the custom and practice of three railroad companies. Although Stevens was not acquainted with the operations of defendant, it was proper for Stevens to testify as to the custom in the industry. Custom and practice are a proper subject of expert testimony in a tort case (see McClure v. Suter (1978), 63 Ill. App.3d 378, 379 N.E.2d 1376) and may be proven, as in the present case, by testimony of specific conduct or habitual practice of other persons or railroads employing it, demonstrating a fairly regular course of conduct or practice. 2 Wigmore, Evidence §§ 379, 461 (Chadbourn rev. 1979).
4 Defendant argues next that the trial court erred in allowing plaintiff's instruction 23a, which listed one element of damages as being "the present cash value of the earnings reasonably certain to be lost in the future" resulting from plaintiff's injury, where plaintiff failed to introduce any specific evidence of how the jury could reduce mathematically future lost wages to present cash value. The simple response to defendant's argument is that there is no requirement in Illinois that plaintiff introduce actuarial or statistical evidence to guide the jury in determining the present cash value of future lost earnings. (See Lawson v. Belt Ry. Co. (1975), 34 Ill. App.3d 7, 339 N.E.2d 381; Wells v. Web Machinery Co. (1974), 20 Ill. App.3d 545, 315 N.E.2d 301; Pennell v. Baltimore & Ohio R.R. Co. (1957), 13 Ill. App.2d 433, 142 N.E.2d 497.) It is the function of the jury to determine the amount of damages arising in the future by computing its present cash value, and in the present case, the jury was so instructed (Illinois Pattern Instructions, Civil, No. 34.04 (2d ed. 1971)). We note that although actuarial testimony is not a prerequisite to the giving of an instruction on present cash value, such evidence is often helpful to juries in reducing damages to monetary figures and could have been presented by defendant had it felt the necessity therefor. Pennell v. Baltimore & Ohio Ry. Co.
Defendant also contends that plaintiff's counsel committed reversible error during his closing argument when he argued, in effect, that the jury should consider future inflationary trends in determining the present cash value of future lost earnings. During closing argument, counsel told the jury that it was their responsibility to reduce future lost wages to present cash value. He indicated that in arriving at this figure the jury must determine what a dollar invested now will get in the future. He added *40 that "the dollar represents only one thing, and that's purchasing power." In explaining the meaning of the dollar's purchasing power, counsel told the jury to consider what the dollar was worth yesterday, what it is worth today and what it will be worth tomorrow.
5 In Kapelski v. Alton & Southern R.R. (1976), 36 Ill. App.3d 37, 343 N.E.2d 207, we relied on Raines v. New York Central R.R. Co. (1972), 51 Ill.2d 428, 283 N.E.2d 230, cert. denied (1972), 409 U.S. 983, 34 L.Ed.2d 247, 93 S.Ct. 322, for the proposition that this court will grant a new trial on the issue of damages on the basis of an allegedly inflammatory argument by counsel concerning the effect of future inflationary trends only where the record demonstrates that the verdict was the product of prejudice and not supported by "other proper evidence." A review of the record reveals ample support for the verdict. At the time of the crippling back injury, plaintiff, age 39, was earning $4.88 per hour. Had plaintiff been able to continue working, he would have been making $6.50 per hour at the time of trial as a result of pay increases. Plaintiff has only a high school education; is considered unemployable for many industrial positions; and continues to experience severe pain in his legs and lower back. Considering the elements of damages properly considered by the jury, including the nature, extent and duration of plaintiff's injury; the pain and suffering resulting therefrom; the reasonable medical expenses; the disability; the value of earnings lost; and the present cash value of future earnings, we can only conclude that the $315,000 verdict was supported by the evidence. In addition, we find no evidence that the verdict was influenced by the alleged improper argument. The statements made by plaintiff's counsel during argument simply stated what would appear to be obvious to the average juror and were not so inflammatory as to result in an excessive or inflated verdict. They were brief and merely stated the obvious.
Lastly, defendant complains of the trial court's refusal to give its tendered instruction No. 6 which stated, "You are instructed that any award made to plaintiff as damages in this case, if any award is made, is not subject to Federal or State income taxes and you should not consider such taxes in fixing the amount of any award made to plaintiff."
Since this case was argued, the Supreme Court of the United States has decided the case of Norfolk & Western Ry. Co. v. Liepelt (1980), 444 U.S. 490, 62 L.Ed.2d 689, 100 S.Ct. 755, holding that it was error, in an action brought for the benefit of his survivors for damages resulting from the death of a railroad fireman under the F.E.L.A., to exclude evidence of the income taxes payable on the decedent's past and estimated future earnings and to refuse to instruct the jury that any award would not be subject to Federal income taxes. In so holding, the decision reached by *41 the court in Liepelt v. Norfolk & Western Ry. Co. (1978), 62 Ill. App.3d 653, 378 N.E.2d 1232, was reversed.
In that case, the administratrix presented the testimony of an economist who estimated the present value of the decedent's lost earnings to be $302,000, after estimating that the lost earnings would have increased approximately five percent per year. The railroad offered the testimony of an expert, which was not allowed in evidence, that the decedent's Federal income taxes would have amounted to $57,000 and computed the present value of future earnings at $138,327. The jury returned a verdict of $775,000, greatly in excess of the plaintiff's expert's estimate of loss of future earnings and any reasonable amount that the jury might award for his children's loss of decedent's guidance, instruction and training.
Admitting that the measure of damages in F.E.L.A. actions is governed by Federal law, the plaintiff argues that the Supreme Court did not intend by its decision to require the instruction here tendered to be given in every F.E.L.A. action as the court was careful to limit its decision to the case before it by holding that it was error to refuse the tendered instruction "in this case." The plaintiff also argues that the Supreme Court addressed two issues in Liepelt. Part I of the opinion considered the exclusion of evidence of income taxes on the decedent's past and estimated future earnings, and part II dealt with the refusal to instruct that any award of damages was not subject to income taxation. Plaintiff argues that the reversal was premised on the first issue only. Further, that in any event the giving of the cautionary instruction without evidence of what the taxes on lost earnings might be would be unfair as it invites the jury to reduce an award without any suggestion as to the taxes on the lost earnings. The plaintiff suggests that the proper instruction should inform the jury that they should neither add to or subtract from an award of damages because of income tax considerations. Plaintiff argues further that the decision was intended to have prospective application only.
We believe that the plaintiff reads the decision in Liepelt too narrowly when he fixes on the words "in this case" in suggesting that the decision was only intended to apply to a case where the size of the award suggested strongly that the jury was influenced by income tax considerations.
As noted, the Supreme Court divided its opinion in Liepelt into two parts. Part I was confined to the exclusion of evidence of the amount of income tax payable on decedent's past and future earnings. Part II, without reference to evidence of taxes payable on lost earnings, held it was error to refuse the tendered cautionary instruction. We see no necessary nexus between the two parts nor any suggestion that the court *42 based its reversal only on the exclusion of evidence of taxes payable on lost future earnings. The plaintiff can hardly complain that the defendant failed to produce evidence that might reduce the estimate of the present value of plaintiff's lost earnings, but, in any event, this evidentiary problem appears unrelated to the cautionary instruction approved in part II of the opinion. In Domeracki v. Humble Oil & Refining Co. (3d cir. 1971), 443 F.2d 1245, 1250-51, the court observed that "[a]lthough some courts and writers have confused the evidentiary issue with the question of a cautionary instruction, we believe that the considerations relating to the former issue have no relevance to the second."
As to the suggestion that the jury should be instructed that they neither add to or subtract from an award because of income tax consideration, we do not believe that the court in Liepelt considered it a problem or real possibility that a jury would be tempted to reduce an award because of a belief that an award of damages for lost earnings would not be subject to income taxes. In any event, the instruction tendered here would satisfy plaintiff's suggestion as it did not emphasize increasing an award but told the jury not to consider income taxes in fixing an award of damages.
Lastly, there is no suggestion that the decision in Liepelt be given prospective application only. When the Supreme Court has intended a decision to have prospective application only, it has said so in clear language. (See Chevron Oil Co. v. Huson (1971), 404 U.S. 97, 30 L.Ed.2d 296, 92 S.Ct. 349, and cases therein cited.) Nothing in the opinion would allow us to give the decision only prospective application. In Chevron Oil Co., the Supreme Court stated that "the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied [citation], or by deciding an issue of first impression whose resolution was not clearly foreshadowed." (404 U.S. 97, 106, 30 L.Ed.2d 296, 306, 92 S.Ct. 349, 355.) We cannot say that the decision in Liepelt established a new principle of law whose resolution was not clearly foreshadowed by past precedent. See Domeracki v. Humble Oil & Refining Co. (3d Cir.1971), 443 F.2d 1245; Burlington Northern, Inc. v. Boxberger (9th Cir.1975), 529 F.2d 284.
6 We are obliged to follow the Supreme Court's decision in Liepelt. We hold, therefore, that it was error to refuse the tendered instruction. However, having rejected defendant's other assignments of error, we do not believe that the case should be remanded for a new trial on all issues. The jury has determined that the negligence of the railroad was the proximate cause of plaintiff's injuries and has awarded plaintiff substantial damages. A new trial should be awarded defendant limited to the issue of the damages properly due plaintiff. (Burlington Northern Inc. v. *43 Boxberger (9th Cir.1975), 529 F.2d 284; Cromling v. Pittsburgh & Lake Erie R.R. Co. (3d Cir.1963), 327 F.2d 142, 152.) As we noted in Thatch v. Missouri Pacific R.R. Co. (1977), 47 Ill. App.3d 980, 362 N.E.2d 1064, appellate courts may limit the issues to be tried upon remandment for a new trial.
The judgment of the Circuit Court of Madison County is reversed and the cause is remanded with directions that judgment be entered for plaintiff on the issue of liability, and a new trial is ordered limited to the issue of damages.
Reversed and remanded with directions.
JONES, P.J., and KASSERMAN, J., concur.
SUPPLEMENTAL OPINION ON REHEARING
Mr. JUSTICE KARNS delivered the opinion of the court:
We have granted the plaintiff's petition for rehearing on the issue of whether we incorrectly concluded that Norfolk & Western Ry. Co. v. Liepelt (1980), 444 U.S. 490, 62 L.Ed.2d 689, 100 S.Ct. 755, should be applied retroactively. Plaintiff cites Ingle v. Illinois Central Gulf R.R. Co. (Mo. App., Eastern Dist., 1980), 603 S.W.2d 32, which held that the guidelines in Chevron Oil Co. v. Huson (1971), 404 U.S. 97, 30 L.Ed.2d 296, 92 S.Ct. 349, required that Liepelt be applied prospectively only.
In Ingle, the test for prospective application stated in Chevron Oil Co. was quoted as follows:
"First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied * * * or by deciding an issue of first impression whose resolution was not clearly foreshadowed * * *. Second, it has been stressed that `we must * * * weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation.' * * * Finally, we have weighed the inequity imposed by retroactive application, for `[w]here a decision of this Court could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the `injustice or hardship' by a holding of nonretroactivity.' * * * (404 U.S. at 106-107, 92 S.Ct. at 355, 30 L.Ed.2d 305-06. Citations omitted)." (603 S.W.2d 32, 34.)
Applying these principles, Ingle reasoned that (1) the Liepelt rule was one *44 of first impression in light of the prior split in the Federal circuits and the Missouri rule barring the nontaxability instruction, (2) the retroactive application of Liepelt would not serve the purpose of preventing excessive judgments where the damages awarded were not excessive, and (3) the retroactive application of Liepelt would produce results substantially inequitable to the plaintiff where the defendant did not raise the question of excessiveness on appeal and there was no suggestion that the defendant was prejudiced by the failure to give the nontaxability instruction.
In response, the defendant has cited Lang v. Texas & Pacific Ry. Co. (5th Cir.1980), 624 F.2d 1275, where it was held that a retroactive application of Liepelt would not result in "manifest injustice." This conclusion was reached even though the trial court had relied on the settled law in the fifth circuit in refusing the nontaxability instruction. The court also noted that in Chevron Oil Co., the Supreme Court had been faced with the question of whether to apply retroactively Rodrigue v. Aetna Casualty & Surety Co. (1969), 395 U.S. 352, 23 L.Ed.2d 360, 89 S.Ct. 1835, where it had held that a Louisiana one-year statute of limitations applied in actions such as the plaintiff's in Chevron Oil Co. The Supreme Court declined to apply Rodrigue retroactively because the plaintiff would have been deprived of any remedy whatsoever. Lang found that no comparable hardship would result in requiring a new trial in which the jury was instructed as to the nontaxability of a personal injury award.
We find Lang persuasive. We also note that the Illinois Appellate Court, as well as other courts, while not expressly considering the retroactivity issue, has retroactively applied Liepelt. Oltersdorf v. Chesapeake & Ohio R.R. Co. (1980), 83 Ill. App.3d 457, 404 N.E.2d 320; Cazad v. Chesapeake & Ohio Ry. Co. (4th Cir.1980), 622 F.2d 72; Seaboard Coastline R.R. Co. v. Yow (1980), ___ Ala. ___, 384 So.2d 13.
7 Liepelt was held controlling in Oltersdorf v. Chesapeake & Ohio R.R. Co. by the same division of the Appellate Court for the First District whose opinion in Liepelt v. Norfolk & Western Ry. Co. (1978), 62 Ill. App.3d 653, 378 N.E.2d 1232, had been reversed only a month earlier. We would feel constrained to follow a prior decision of the appellate court on essentially the same issue, unless that decision was clearly erroneous. Mattis and Yalowitz, Stare Decisis Among [Sic] the Appellate Court of Illinois, 28 DePaul L.J. 571 (1979).
Defendant has presented us with excerpts from the plaintiff's brief and petition for rehearing before the Supreme Court in Liepelt, in which the plaintiff argued that the great majority of State courts and Federal circuits do not permit the nontaxability instruction and that a departure from this consensus should be prospective only. The petition for rehearing advanced the same arguments made before this court. *45 Rehearing was denied April 14, 1980. (445 U.S. 972, 64 L.Ed.2d 250, 100 S.Ct. 1667.) The court's implicit rejection of the prospectivity argument is consistent with our original determination that if the Supreme Court had intended Liepelt to be prospective only, it would have said so, if not in its original opinion, then certainly on rehearing.
We therefore decline to alter our original decision.
JONES, P.J., and KASSERMAN, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1767983/ | 424 So. 2d 440 (1982)
Caroline Jeanette Brister, Wife of/and Anthony Herman GERARD, for Themselves and on Behalf of Their Minor Children Sharon, Douglas, Patrick, Paige, and Sandra
v.
The PARISH OF JEFFERSON, State of Louisiana; the Sheriff, Parish of Jefferson, State of Louisiana; Firemen's Fund Insurance Company, Their Insurer; Robert Kerry, and Deputy Sheriff Sergeant J. Koehler.
No. 5-145.
Court of Appeal of Louisiana, Fifth Circuit.
December 9, 1982.
Rehearing Denied January 17, 1983.
*442 Hugh G. Oliver, Westwego, for plaintiffs-appellants.
Cronvich, Wambsgans & Michalczyk, A. Wes Wambsgans, Metairie, Warren E. Mouledoux, Jr., Asst. Parish Atty., Gretna, Dillon & Cambre, Gerard M. Dillon, New Orleans, Ronald C. Davis, Asst. Atty. Gen., New Orleans, for defendants-appellees.
Before SAMUEL, KLIEBERT and GRISBAUM, JJ.
GRISBAUM, Judge.
This personal injury suit involves the alleged torts of false imprisonment, battery, and invasion of privacy. Plaintiffs, a husband and wife, individually and on behalf of their minor children bring suit to recover damages from a police officer, the Sheriff, Parish of Jefferson, a Jefferson Parish dog pound officer, the Parish of Jefferson, and its insurer for the alleged intentional torts of battery and false imprisonment and for an alleged illegal search of their home. Plaintiffs appeal from the trial court's dismissal of plaintiffs' cause against the dog pound officer and the Parish of Jefferson and its insurer after the close of plaintiffs' case and from the judgment against the plaintiffs and in favor of the defendants, the police officer and the Sheriff, Parish of Jefferson, rendered after trial on the merits. We affirm in part and reverse in part.
In February of 1978 plaintiffs, Anthony Gerald and his wife, owned a dog, Ding-aling. Jefferson Parish dog pound officer, Mr. Robert Kerry, had received numerous complaints from the neighbors that this animal was allowed to roam the streets of the neighborhood. Officer Kerry himself had observed the dog loose on more than one occasion. He also believed that the dog was unlicensed and unvaccinated. On February 23, 1978 defendant Kerry gave Mr. Gerald a citation for having an unlicensed, untagged, and unleashed dog. Several days later, on Sunday, February 26, 1978, Mr. Kerry testified that as he was checking the neighborhood for roaming animals, he again observed plaintiffs' dog loose and stopped by plaintiffs' home at approximately 8 a.m. to check whether plaintiffs had obtained the correct papers on the dog. The following episode ensued. Defendant Kerry was met by one of the Gerald children who asked him to return later because his parents were not awake. Because he was given what he felt to be unresponsive and evasive answers to his request to see the dog's vaccination papers, Kerry called the Jefferson Parish Sheriff's Office for assistance. Defendant Sergeant Koehler responded.
Both Koehler and Kerry went to the Gerald home. According to Koehler and Kerry, when Mr. Gerald came to the door he began yelling at them. Sergeant Koehler testified that he explained the Jefferson Parish Animal Control Ordinance (No. 12146)[1] to Mr. Gerald; however, Mr. Gerald insisted that *443 the dog was not in his possession and that his father-in-law was having her vaccinated. At trial Mr. Gerald testified that he lied about Ding-a-ling and that the dog was actually hidden in the bathroom. Mr. Gerald was advised that if he did not produce the dog or his papers of vaccination, Sergeant Koehler would arrest him. A heated argument followed.
The parties have somewhat different versions of what transpired, but the essential events are agreed upon by all parties. Sergeant Koehler told Mr. Gerald he was under arrest and attempted to effectuate the arrest by taking Gerald's arm. According to Kerry, Mr. Gerald pushed Sergeant Koehler away and attempted to slam the door on Sergeant Koehler. Koehler persisted in his efforts to take Mr. Gerald into custody by grabbing his waistband, but Mr. Gerald retreated into his house with Koehler holding on to his waistband. Again, Sergeant Koehler told Gerald he was under arrest and attempted to lead him back to the front door, but Gerald brushed his hand off of his pants. Sergeant Koehler attempted several times to use his PR24 stick to place Mr. Gerald's arm behind his back. However, due to Mr. Gerald's size and strength, Koehler was not able to gain control of Gerald using this method. The officer attempted again to grab Mr. Gerald's waistband, but the waistband broke, and Gerald's pants fell. Sergeant Koehler testified that Mr. Gerald reached down to pick up his pants and arose threateningly. Fearful that Mr. Gerald would strike him, Sergeant Koehler struck Mr. Gerald once with the PR24 stick. Sergeant Koehler also testified that he struck Mrs. Gerald inadvertently in the stomach as she was holding his arm. Again the police officer tried to lead Mr. Gerald to the front door but was unable to do so. Due to his inability to control Gerald, Sergeant Koehler left the Gerald home and called for additional police assistance.
Mr. Gerald's version of the episode is that as soon as he came to the door Sergeant Koehler started arguing with him. According to Gerald, Sergeant Koehler asked him where the dog was and stepped across the threshold. Immediately, Gerald asked, "What are you doing?" When Gerald asked if he was being arrested because the dog was not there, Gerald was told that he was under arrest. Gerald's reply was that the officer could not arrest him because he had no warrant. When he moved away from the police officer, the officer followed him into the house. At the hallway Sergeant Koehler grabbed his pants; the catch broke, and as he reached down to pick them up, Officer Koehler struck him across the head with a billy club. Gerald and his wife, as well as two of his children, testified that Sergeant Koehler then turned and poked Mrs. Gerald in the stomach and ran out the front door.
Gerald testified that when he did not come out when ordered out of the house over a loudspeaker, the police kicked his back door down and placed him and his wife under arrest. They were escorted out of the house and taken away. The dog catcher then entered the Gerald home, found Ding-a-ling near a laundry room, seized her in the presence of at least one of the Gerald children, and brought her to the animal control center.
ISSUES
The issues are as follows:
1) Whether plaintiffs, husband and wife, are entitled to damages for the intentional tort of false imprisonment?
2) Whether plaintiffs, husband and wife, are entitled to damages for the intentional tort of battery?
3) Whether plaintiffs are entitled to damages for invasion of privacy?
FALSE ARREST AND IMPRISONMENT
False arrest and imprisonment occur when one arrests and restrains another against his will without color of legal authority. Kyle v. City of New Orleans, 353 So. 2d 969, 971 (La.1977); Barfield v. Marron, 222 La. 210, 62 So. 2d 276, 280 (1952). If a police officer acts pursuant to statutory authority in arresting and incarcerating a citizen, he is not liable for damages for false arrest and imprisonment. Kyle, supra. *444 Under Louisiana Code of Criminal Procedure article 213(3), a peace officer may arrest a person without a warrant, when the officer has "reasonable cause to believe that the person to be arrested has committed an offense, although not in the presence of the officer...." This article provides statutory authority for the arrest in this case.[2] The reasonable cause required in article 213(3) exists when the facts and circumstances within the arresting officer's knowledge and of which he has reasonable and trustworthy information are sufficient to justify a man of average caution in belief that the person to be arrested has committed or is committing an offense. See State v. Davis, 407 So. 2d 666, 668 (La. 1981); State v. Elliot, 407 So. 2d 659, 661 (La.1981).
In this case the dog catcher asked the police officer to assist him in enforcing an animal control ordinance. The dog catcher explained he had been to the plaintiffs' home on two occasions and had warned them that a vaccination certificate for the dog had to be produced. He told the officer that he had been to the home only fifteen minutes before and had seen the dog at the house. The police officer, therefore, had reasonable cause to believe that plaintiffs had violated Jefferson Parish Ordinance No. 12146 which requires, among other things, that one have a license and/or proof of vaccination of a dog. Since the police officer had authority for the arrest under Criminal Code of Procedure article 213(3), plaintiffs cannot recover damages for false arrest and imprisonment.
BATTERY
Also to be considered is whether plaintiffs, the husband and wife, can recover for batteries inflicted upon them by the police officer. A lawful arrest is a defense to the intentional tort of battery when reasonable force is used to effect such an arrest. See Kyle, 353 So. 2d 969, 972.[3] However, if an officer uses unreasonable or excessive force, he and his employer are liable for any injuries which result. La.C.C. art. 2320; Kyle, 353 So. 2d 969, 972; Picou v. Terrebonne Parish Sheriff's Office, 343 So. 2d 306, 308 (La.App. 1st Cir.1977); Taylor v. City of Baton Rouge, 233 So. 2d 325, 330 (La.App. 1st Cir. 1970). We must evaluate this officer's actions against the standard of an ordinary, prudent, and reasonable man placed in the same position and with the same knowledge as this officer. Kyle, 353 So. 2d 969, 973; Picou, supra. Since the degree of force employed is a factual issue the trial court's finding is entitled to great weight. Kyle, supra; Canter v. Koehring Co., 283 So. 2d 716, 724 (La. 1973); Picou, 343 So. 2d 306, 309. Kyle sets forth several factors to be considered in making this determination of reasonableness such as the known character of the arrestee, the risk and dangers faced by the officer, and the nature of the offense involved, the chance of the arrestee's escape if the particular means are not employed, the existence of alternative methods of arrest, the physical size, strength, and weaponry of the officer as compared to the arrestee, and the exigencies of the moment. Kyle, supra.
The facts and circumstances of this case support the trial court's finding that the defendant police officer acted reasonably. The record reflects that Mr. Gerald was upset when he came to the door. He responded to Officer Koehler's questions in a belligerent manner and often with evasive answers. When Koehler placed Mr. *445 Gerald under arrest, Gerald resisted and retreated inside his home. Due to Mr. Gerald's size and strength, Koehler's several attempts to effectuate his arrest were of no avail. Officer Koehler testified that he struck Mr. Gerald with the PR24 when Gerald made a fist. Koehler stated that he felt Gerald would strike him. Moreover, Officer Koehler hit Mr. Gerald only once which Koehler stated had little effect upon Gerald; Gerald did not go to his knees nor did he surrender to the officer but continued to resist the officer. This plaintiff's general demeanor, the fact that he weighed over three hundred pounds, combined with the fact that he seemed to be ready to strike this officer, indicate that the officer's one blow to plaintiff Anthony Gerald was not unreasonable. We also accept, as did the trial court, Officer Koehler's version of the episode that in attempting to dislodge Mrs. Gerald's hold on his arm he accidently hit her in the stomach. Canter, supra. Under the facts, the police officer made a lawful arrest and used reasonable force in order to effect the arrest and to overcome plaintiff's resistance.
INVASION OF PRIVACY
Louisiana recognizes tort recovery for invasion of privacy.[4] The right to privacy includes the right to be free from unwarranted intrusion into one's own quarters.[5]Parish National Bank, 397 So. 2d 1282, 1286. In Louisiana in order to recover for an invasion of privacy, plaintiffs must show they have an "actionable" claim not merely an "actual" claim. Parish National Bank, 397 So. 2d 1282, 1286; Jaubert, 375 So. 2d 1386, 1389; Love, 263 So. 2d 460, 464-66; Hamilton, 82 So. 2d 61, 70. An invasion of privacy is "actionable" when the defendant's conduct is unreasonable and seriously interferes with the plaintiff's privacy interest. To determine the reasonableness of the defendant's conduct, this court must balance defendant's interest in pursuing his course of conduct against plaintiff's interest in protecting his privacy. Parish National Bank, supra; Jaubert, supra. "Where a defendant's action is properly authorized or justified by circumstance, it may be found reasonable and nonactionable even though it amounts to a slight invasion of the plaintiff's privacy." Parish National Bank, supra.
Applying the above principles, we find that plaintiffs do not have an actionable claim for invasion of privacy against the police officer and his employer; however, plaintiffs do have an actionable claim against the dog pound officer and his employer.[6] As noted above, the police officer was authorized under La.C.Cr.P. art. 213(3) to arrest the husband and wife; his actions were reasonable under the circumstances and, therefore, nonactionable. However, the dog pound officer had no authority under the Parish Animal Control Statute[7] or any other Louisiana statutes or jurisprudence to enter the home and seize an unlicensed animal. Under the circumstances his actions were not justified. The dog had not bitten anyone nor does the record indicate that the dog was reported as a dangerous or vicious animal. Importantly, at least one of the Gerald children still remained in the home and was present when the officer *446 seized the dog. Considering the specific procedures set forth in the Jefferson Parish Animal Control Ordinance for violation of its provisions, we cannot say the officer was justified in entering the home.[8] When we weigh the importance of the privacy of one's home, against the Parish's interest in having animals properly licensed and leashed when upon public streets, we conclude that the dog pound officer's actions in entering the home to seize the animal were unreasonable.
Plaintiffs allege in their petition for damages that the dog pound officer's actions caused psychic injuries to themselves and their children. They also claim entry into their home without a warrant as an injury in itself as well as damages for humiliation, mental anguish, and extreme mental suffering. The plaintiffs inadequately addressed the issues of psychological injuries at the trial court level. Consequently, the trial court granted a motion to dismiss the plaintiffs' case as to the dog officer and his employer on the grounds that no damages were proven with regards to this defendant's actions. While we agree with the trial court that the plaintiffs presented no evidence of the children's psychological injuries, we do find plaintiffs have shown they were injured by the physical intrusion into their home by the dog catcher.[9] Throughout the proceedings, there is testimony evidencing the Geralds' desire to protect the sanctity of their home. Mr. and Mrs. Gerald made several strenuous objections to the presence of outsiders in their home without a warrant before they were arrested. We conclude that plaintiffs have shown an actionable claim for invasion of privacy against the dog pound officer and his employer and award them $1000.00 under our authority provided in La.C.C.P. art. 2164. We reverse the lower court's dismissal of plaintiffs' claim against the dog pound officer and his employer, the Parish of Jefferson, and award $1000.00 damages for invasion of privacy to plaintiffs against Robert Kerry, the Parish of Jefferson, and its insurer, Firemen's Fund Insurance Company.
For the above reasons, we affirm that part of the trial court's judgment which finds in favor of defendants, Deputy Sheriff Sergeant J. Koehler, and the Sheriff, Parish of Jefferson, and against plaintiffs. We reverse that part of the trial court's judgment which dismisses plaintiffs' claim against Robert Kerry and the Parish of Jefferson and its insurer, Firemen's Fund Insurance Company, and it is now ordered that there be judgment against those defendants, in solido, and in favor of the plaintiffs in the full sum of $1000.00.
AFFIRMED IN PART AND REVERSED IN PART.
NOTES
[1] Several of Jefferson Parish's Animal Control Ordinance's pertinent provisions are:
"Sec. 4-17(c) Dogs at large; violation notices. No dog shall be permitted to run or be upon any street, alleyway, highway, common or public square unless under the immediate control of a competent person and restrained by a substantial chain or leash not exceeding six (6) feet in length ....
Sec. 4-13(a) Registrations, tags and vaccination. It shall be the duty of the owner or keeper of every dog or cat over four (4) months old to register same with the department by purchase of a dog or cat license. Such license shall be dated and indicate the number of the license tag issued for the dog or cat at the time it is vaccinated by a licensed veterinarian or licensed veterinary technologist with appropriate anti-rabies vaccine at the owner's expense ....
Sec. 4-16(c) Public nuisance. Every owner or keeper of animals shall exercise proper care and control of such animals so as to prevent them from creating or becoming a public nuisance. Excessive or untimely barking, howling or yelping so as to disturb the peace and quiet of a neighborhood or its residents or to disturb the health or repose of the residents; attacking or molesting passersby or other animals; being repeatedly at large; ... all shall be deemed to be the creation of a public nuisance and the owner or keeper of an animal causing such public nuisance shall be guilty of a misdemeanor and subject to the penalties of section 4-25 of this article."
[2] Payton v. New York, 445 U.S. 573, 100 S. Ct. 1371, 63 L. Ed. 2d 639 (1980) and State v. Brown, 387 So. 2d 567 (La.1980) prohibit a warrantless, non-exigent arrest in the home. However, State v. Pittman, 397 So. 2d 1297, 1298 (La.1981) held that the Payton rule is not retroactive. The arrest in this case occurred February 26, 1978; Payton and Brown were decided in 1980.
[3] Code of Criminal Procedure art. 220 authorizes the use of "reasonable" force in making arrests; it provides:
"A person shall submit peaceably to a lawful arrest. The person making a lawful arrest may use reasonable force to effect the arrest and detention, and also to overcome any resistance or threatened resistnance of the person being arrested or detained." (Emphasis added)
[4] See, e.g., Parish National Bank v. C.E. Lane, 397 So. 2d 1282, 1285-86 (La.1981); Jaubert v. Crowley Post-Singal, Inc., 375 So. 2d 1386, 1388-89 (La.1979); Lucas v. Ludwig, 313 So. 2d 12, 14-15 (La.App. 4th Cir.1975); Love v. Southern Bell Telephone and Telegraph Co., 263 So. 2d 460, 464-66 (La.App. 1st Cir.1972); Hamilton v. Lumbermen's Mutual Casualty Co., 82 So. 2d 61, 63-64 (La.App. 1st Cir.1955).
[5] Other forms of invasion of privacy recognized in Louisiana include the appropriation of an individual's name or likeness for the use or benefit of the defendant, publicity which unreasonably places the plaintiff in a false light before the public, and the unreasonable public disclosure of embarrassing private facts. Jaubert, 375 So. 2d 1386, 1388.
[6] La.C.C. art. 2320.
[7] Although the Parish claims Section 4-21 provides authority for an authorized employee of the animal shelter department to enter a premises to take possession of and remove animals kept in violation of the provisions of the Parish Code, this article provides removal of "abandoned" or "neglected" animals from buildings or premises.
[8] Section 4-12(c) authorizes the Animal Shelter Advisory Board to constitute a committee of three or more members to hear all complaints involving violations of the provisions of the statute. For example, this committee hears complaints under Section 4-16(c) pertaining to animals considered to be a public nuisance because repeatedly found to be at large. It requires notice to the defendant of a hearing and a right to be represented by counsel. Also to be noted, Section 4-17(c) authorizes the seizure of dogs found at large.
[9] See, Ford Motor Company v. Williams, 108 Ga.App. 21, 132 S.E.2d 206, 211-12 (1963), revd on other grounds 219 Ga. 505, 134 S.E.2d 32 (1963), where an intrusion of privacy was found even though plaintiff was not present at the time of the entry into his home. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1825814/ | 200 B.R. 342 (1996)
In re Isaac I. MERESHIAN dba 4 Seasons Realty and Janna Mereshian, Debtors.
Robert BAKER, Appellant,
v.
Isaac I. MERESHIAN dba 4 Seasons Realty and Janna Mereshian, Appellees.
BAP No. CC-95-1702-VHMo. Bankruptcy No. LA 92-29474 CA. Adversary No. AD 92-04281 CA.
United States Bankruptcy Appellate Panel of the Ninth Circuit.
Argued and Submitted June 20, 1996.
Decided August 20, 1996.
*343 Steven R. Fox, Tarzana, CA, for Appellant.
Jack M. Panagiotis, Santa Monica, CA, for Appellees.
Before: VOLINN, HAGAN and MONTALI,[1] Bankruptcy Judges.
OPINION
VOLINN, Bankruptcy Judge:
Robert Baker, the debtor's former attorney and a creditor, filed an adversary proceeding to preclude debtor's discharge in bankruptcy and to have his debt declared nondischargeable. The lower court granted the debtor's motion for a directed verdict and Mr. Baker appealed. We affirm.
BACKGROUND FACTS
Isaac Mereshian, the debtor,[2] was a real estate broker in southern California. Mr. Baker, plaintiff and now appellant, had represented Mr. Mereshian on an ongoing basis for approximately fifteen years. During this time, according to Mr. Baker, Mr. Mereshian *344 occasionally owed Mr. Baker money for services rendered, but he had always eventually paid in full. By the late 1980s, Mr. Baker became concerned about Mr. Mereshian's ability to pay all of the legal bills he owed. On more than one occasion, Mr. Baker initially declined to represent Mr. Mereshian, but relented when Mr. Mereshian agreed to pay the outstanding charges in full. On at least one of these occasions, Mr. Mereshian paid a portion of the bill owed. In addition, apparently Mr. Mereshian paid some portion of the new charges incurred in the matters. For instance, according to Mr. Baker, at the time of the bankruptcy filing Mr. Mereshian owed $6,000 to $7,000 of the approximately $12,000 to $13,000 in legal fees incurred in one case. Mr. Baker claims that Mr. Mereshian owes him $34,500.
In October, 1990, Mr. Mereshian agreed to a payment plan under which he would pay $1000 per month.[3] It is unclear whether he made any payments under this plan. Eventually, in early 1991, Mr. Baker declined to take other work from Mr. Mereshian until the latter paid his bill in full. In addition, Mr. Baker sued in state court to recover his fees. Presumably, this action was stayed when Mr. Mereshian declared bankruptcy.
In the late 1980s and early 1990s, southern California's real estate market deteriorated and Mr. Mereshian suffered financial difficulties. Mr. Mereshian owned several pieces of real estate encumbered by debt. Within one year prior to bankruptcy, Mr. Mereshian deeded these properties to their respective secured creditors. Mr. Mereshian testified at the hearing that at the time of the transfers, he had no equity in any of the properties.[4]
Mr. Mereshian and his wife filed a joint bankruptcy under Chapter 7 in June, 1992. On their schedules, they did not list their interests in three of the properties transferred, nor did they list the transfers. In addition, they did not list a lawsuit filed by Wells Fargo Bank. According to Mr. Mereshian, he revealed all of the facts regarding the transfers and the lawsuit at the meeting of creditors. Apparently a representative of Mr. Baker's firm attended that meeting.
Following Mr. Mereshian's discharge, Mr. Baker filed an adversary proceeding, alleging that Mr. Mereshian's discharge should be denied pursuant to Section[5] 727(a)(2), (4) and (5)[6] and that his debt to Mr. Baker should be declared nondischargeable pursuant to Section 523.[7]
In May, 1994, approximately one month prior to trial, Mr. Baker asked the bankruptcy court judge to recuse himself; Mr. Baker believed that certain statements allegedly *345 made by the judge, including a statement that the judge thought the lawsuit was immoral, showed prejudice.[8] The court denied this motion and Mr. Baker did not appeal.
In June, 1994, trial was held; both Mr. Mereshian and Mr. Baker testified. Following presentation of Mr. Baker's testimony and exhibits, the trial court granted Mr. Mereshian's oral motion for a directed verdict. In its oral findings, the court stated that Mr. Baker had failed to establish an account stated, that only some of the services were rendered in close proximity to the times when the promises of payments were made, and that Mr. Baker did not reasonably rely nor justifiably rely on the representations, if any. As to the Section 727 causes of action, the court stated in the written findings that (1) Mr. Baker presented only evidence of "some transfers which had no value . . . at the time the transfer was made;" (2) "there was an absence of evidence of intent to hinder, delay or defraud"; (3) "the testimony established that the debtor did not knowingly and fraudulently . . . make a false oath or account;" and (3) that Mr. Mereshian did not hinder delay or defraud the creditors "when defendant did not have any interest in the property in the first place and his creditor was about to foreclose on the subject property." The written findings also awarded costs to Mr. Mereshian. Judgment was entered on June 6, 1995 and Mr. Baker timely appealed.
ISSUES
Did the bankruptcy court err when it denied Mr. Baker's complaint to deny the debtors' discharge pursuant to Section 727 and to have the debtors' debts to Mr. Baker declared nondischargeable pursuant to Section 523?
STANDARD OF REVIEW
Whether a debtor transferred his property with intent to defraud creditors is a finding of fact. Losner v. Union Bank, 374 F.2d 111, 112 (9th Cir.1967) (per curiam). A bankruptcy court's findings of fact are reviewed under the clearly erroneous standard, and its conclusions of law are subject to de novo review. In re Devers, 759 F.2d 751, 753 (9th Cir.1985). Review under the clearly erroneous standard is "significantly deferential, requiring a `definite and firm conviction that a mistake has been committed.'" Granite State Insurance Co. v. Smart Modular Technologies, Inc., 76 F.3d 1023, 1028 (9th Cir.1996) (quoting Concrete Pipe & Prods. v. Construction Laborers Pension Trust, 508 U.S. 602, 621, 113 S. Ct. 2264, 2278-79, 124 L. Ed. 2d 539 (1993)). Under the clearly erroneous standard, the reviewing court may not reverse the district court's findings "simply because it is convinced that it would have decided the case differently." Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S. Ct. 1504, 1511, 84 L. Ed. 2d 518 (1985); see also Service Employees Int'l Union v. Fair Political Practices Comm'n, 955 F.2d 1312, 1317 n. 7 (9th Cir.), cert. denied, 505 U.S. 1230, 112 S. Ct. 3056, 120 L. Ed. 2d 922 (1992). "Where there are two permissible views of the evidence, the fact finder's choice between them cannot be clearly erroneous." Anderson, 470 U.S. at 574, 105 S.Ct. at 1511.
DISCUSSION
The section 727 causes of action. Mr. Baker argues that Mr. Mereshian's discharge should be denied under both Section 727(a)(2), which denies a discharge to one who with intent to hinder, delay or defraud a creditor transfers property of the estate, and under 727(a)(4), which denies a discharge to one who knowingly or fraudulently made a false oath or account. Before a debtor can be denied a general discharge under either of these sections, Mr. Baker must show actual intent.[9]See In re Adeeb, 787 F.2d 1339, 1342 *346 (9th Cir.1986) (stating that "discharge of debts may be denied under section 727(a)(2)(A) only upon a finding of actual intent to hinder, delay, or defraud creditors"). See also 4 Collier on Bankruptcy, ¶ 727.04[1] at 727-59 (15th ed. 1996) (stating that to deny a discharge under Section 727(a)(4), "the statement must contain matter which the debtor knew to be false and the debtor must have included them willfully with intent to defraud").
"Fraudulent intent may be established by circumstantial evidence, or by inferences drawn from a course of conduct." Devers, 759 F.2d at 753-54. Thus, a court may look to all the surrounding facts and circumstances. 4 Collier, supra, ¶ 727.02[3] at XXX-XX-XX.
Here, the debtor transferred certain properties that were subject to security interests greater than the value of the property. Although the debtor did not list these transfers in his schedules, the court below found that the debtor revealed the transfers at the meeting of creditors. Mr. Baker argues that this is insufficient to cure a debtor's failure to list transfers. However, the Ninth Circuit, in a comparable situation, has stated that a "debtor who fully discloses his property transactions at the first meeting of creditors is not fraudulently concealing property from his creditors." Adeeb, 787 F.2d at 1345 (quoting In re Waddle, 29 B.R. 100, 103 (Bankr.W.D.Ky.1983)).[10]
The court below based its findings in part on the fact that the items concealed were of little value to the estate. Mr. Baker cites numerous cases for the proposition that a low value should not stop a court from denying a discharge under one of the provisions of Section 727. See, e.g., In re Hoflund, 163 B.R. 879, 883 (Bankr.N.D.Fla.1993) (court denied discharge despite debtor's claims that the assets had no value because "creditors are entitled to judge for themselves what benefits the estate"). In this case, however, the court used the low value of the assets as one factor to be considered when determining whether the debtor had an intent to defraud. This is appropriate. See 4 Collier, supra, ¶ 727.02[3] at XXX-XX-XX ("The fact that valuable property has been gratuitously transferred raises a presumption that such transfer was accompanied by the actual fraudulent intent necessary to bar a discharge under section 727(a)(2). The fact that the property transferred or concealed is of small value, however, tends to negate fraudulent intent.") In addition, according to Collier, a transfer of the debtor's property is not made with intent to hinder, delay or defraud a creditor if the property is subject to a security interest and the debtor has no equity in it. 4 Collier, supra, ¶ 727.02[3] at 727-17 n. 24 (citing In re McCloud, 7 B.R. 819 (Bankr.M.D.Tenn. 1980)). Similarly, "the omission of property of trivial value, which has little effect on the estate, has been treated as immaterial" for purposes of Section 727(a)(4). Collier, supra, ¶ 727.04[1] at XXX-XX-XX.
Mr. Baker also claims that discharge should be denied pursuant to Section 727(a)(5) which denies a discharge to a debtor who fails to satisfactorily explain any loss of assets. Mr. Baker claims that Mr. Mereshian did not satisfactorily explain the disposition of the real property and of a valuable *347 watch allegedly owned by the debtor.[11] However, the only evidence that the debtor owned a watch was a claim by Mr. Baker that the debtor on an unstated date told Mr. Baker that his watch was worth $10,000.
Whether a loss has been satisfactorily explained is a question of fact and an appellate court must give deference to the trial court which is in the best position to assess the credibility of the witnesses. Apparently, the court below was satisfied with the debtor's explanation of the disposition of the real estate. As to the watch, the court found that the evidence did not show when or if the debtor owned the watch at the time the bankruptcy was filed and, thus, the debtor had not failed to satisfactorily explain the loss of the asset. Although the conclusions of law entered by the court do not specifically address Section 727(a)(5), they contain findings of fact sufficient for the Panel to determine that Mr. Baker's complaint under that section is without merit.
Section 727 is to be construed liberally in favor of debtors and strictly against the creditor. Adeeb, 787 F.2d at 1342. Mr. Baker has not shown that the court's factual findings were clearly erroneous. The court had sufficient legal basis for ruling that the debtor did not have fraudulent intent, which is necessary under both 727(a)(2) and (4), and to find that where, as here, a debtor, without intent to defraud, fails to list certain transactions and reveals them to the trustee at the meeting of creditors, denial of discharge under Section 727(a)(4) is not required. Therefore, the bankruptcy court's decision on the section 727 causes of action is affirmed.
The section 523(a)(2) cause of action. Mr. Baker also argues that, under Section 523(a)(2), Mr. Mereshian's debt to him should be declared nondischargeable because Mr. Mereshian had no intention to pay for the legal services when he incurred the debt. The Ninth Circuit employs a five-part test for determining when a debt is nondischargeable under section 523(a)(2)(A). The creditor must show that: (1) the debtor made the representations; (2) at the time he knew they were false; (3) he made them with the intention and purpose of deceiving the creditor; (4) the creditor relied on such representations; (5) the creditor sustained the alleged loss and damage as the proximate result of the representations having been made. In re Britton, 950 F.2d 602, 604 (9th Cir.1991).
In this case, Mr. Baker has provided no evidence that Mr. Mereshian made promises to pay that he knew were false and with the intention and purpose of deceiving the creditor. In fact, Mr. Baker testified that Mr. Mereshian paid part of his bill. Mr. Baker has presented no evidence to this court that shows that the lower court's finding was clearly erroneous. Therefore, the bankruptcy court's decision on this cause of action is affirmed.
Bias of the bankruptcy judge. Although Mr. Baker has not appealed the lower court's denial of his motion for recusal, he alleges that the court's attitude toward the suit influenced the outcome. He states in his opening brief that the trial judge's views "colored the entire case below and lead the lower court to grant a directed verdict despite Appellant's uncontroverted evidence." However, as discussed above, the "uncontroverted evidence" presented is not sufficient as a legal matter to find for Mr. Baker.
On the question of bias, appellant does not provide any legal arguments to guide the Panel. However, the Supreme Court has stated:
[O]pinions formed by the judge on the basis of facts introduced or events occurring in the course of the current proceedings, or of prior proceedings, do not constitute a basis for a bias or partiality motion unless they display a deep-seated favoritism or antagonism that would make fair judgment impossible. Thus, judicial remarks during the course of a trial that are critical or disapproving of, or even hostile to, counsel, the parties, or their cases, ordinarily do not support a bias or partiality challenge. They may do so if they reveal an opinion that derives from an extrajudicial source; and they will do so if they *348 reveal such a high degree of favoritism or antagonism as to make fair judgment impossible. . . . Not establishing bias or partiality, however, are expressions of impatience, dissatisfaction, annoyance, and even anger, that are within the bounds of what imperfect men and women, even after having been confirmed as federal judges, sometimes display.
Liteky v. U.S., 510 U.S. 540, 555-56, 114 S. Ct. 1147, 1157, 127 L. Ed. 2d 474 (1994). Here, the lower court's statements do not appear to "display a deep-seated . . . antagonism that would make fair judgment impossible." Therefore, Mr. Baker's complaints regarding the lower court's conduct are without merit.
CONCLUSION
We believe that the bankruptcy court permissably found that the facts in this case did not show an intent to defraud as required by the bankruptcy code. As stated above, the Panel may not reverse the bankruptcy court on factual questions simply because we might have reached a different conclusion based on the evidence. Here, the appellant has not presented any evidence that indicates the lower court's findings were clearly erroneous; therefore, the judgment of the bankruptcy court is AFFIRMED.
NOTES
[1] Honorable Dennis Montali, Bankruptcy Judge for the Northern District of California, sitting by designation.
[2] Mr. Mereshian's wife, Janna, is a co-debtor.
[3] At some point, Mr. Mereshian asked the state bar to have an arbitration hearing over the fees. It is unclear why the arbitration failed.
[4] In addition, Mr. Mereshian claimed he never had ownership in one of the properties; he said that his name was on the deed because he applied for a loan on behalf of a friend.
[5] Unless otherwise stated, all references to "sections", "§" and "rules" refer to the U.S. Bankruptcy Code, 11 U.S.C. § 101 et seq.
[6] Section 727 provides in pertinent part, that the court will grant the debtor a discharge unless:
(2) the debtor, with intent to hinder, delay, or defraud a creditor or an officer of the estate charged with custody of property under this title, has transferred, removed, destroyed, mutilated, or concealed, or has permitted to be transferred, removed, destroyed, mutilated, or concealed
(A) property of the debtor, within one year before the date of the filing of the petition; or
. . . .
(4) the debtor knowingly and fraudulently, in or in connection with the case
(A) made a false oath or account;
(B) presented or used a false claim;
. . . .
(5) the debtor has failed to explain satisfactorily, before determination of denial of discharge under this paragraph, any loss of assets or deficiency of assets to meet the debtor's liabilities.
11 U.S.C. § 727.
[7] Section 523 provides in pertinent part that:
A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt
. . . .
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial condition.
11 U.S.C. 523.
[8] In addition, according to unofficial transcripts provided with the motion to recuse, the bankruptcy court judge said that the complaint was "an unseemly complaint to bring," that "the Plaintiff is using the Bankruptcy Court to take advantage of a former client," and that "I question whether or not an attorney should be suing his client for acts that took place during the time they were representing them."
[9] In addition, to succeed in his objection to debtor's discharge under Section 727(a)(2), the plaintiff must prove: "(1) that the act complained of was done at a time subsequent to one year before the filing of the petition; (2) with actual intent to hinder, delay, or defraud a creditor or an officer of the estate charged with custody of the property under the Bankruptcy Code; (3) that the act was that of the debtor or his duly authorized agent; (4) that the act consisted of transferring, removing, destroying or concealing any of the debtor's property, or permitting any of these acts to be done." Matter of Agnew, 818 F.2d 1284, 1287 (7th Cir.1987) (quoting 4 Collier on Bankruptcy, ¶ 727.02[1][b] (15th ed. 1986)).
[10] Adeeb did not hold, nor do we, that a debtor may intentionally omit information called for in the schedules and evade responsibility for such omission simply by producing the information at the first meeting of creditors. In that case, the Ninth Circuit essentially ruled that a debtor may cure a fraudulent transfer made for insufficient consideration where the debtor reveals the transfers at the first meeting and has already, prior to bankruptcy, made a good faith effort to recover the property so transferred. Here, the transfers, for lack of equity, were voluntarily made to secured creditors in lieu of foreclosure; no one questions the lack of equity. Therefore, the debtor presumably has no right to recover the property transferred. The plaintiff's primary complaint seems to be that the transfers should have been revealed, not that they should not have been made.
[11] In his complaint, the plaintiff listed several personal property assets allegedly owned by the debtor but not listed. At trial and on appeal, the only personal property at issue is the watch. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2985090/ | January 9, 2014
JUDGMENT
The Fourteenth Court of Appeals
PENTAIR VALVES & CONTROLS US LP, F/K/A TYCO VALVES &
CONTROLS, LP, Appellant
NO. 14-13-00641-CV V.
JOHN F. JONES, Appellee
________________________________
Today the Court heard appellant's motion to dismiss the appeal from the
judgment signed by the court below on April 22, 2013. Having considered the
motion and found it meritorious, we order the appeal DISMISSED.
We further order that each party shall pay its costs by reason of this appeal.
We further order that mandate be issued immediately.
We further order this decision certified below for observance.
MANDATE
The Fourteenth Court of Appeals
NO. 14-13-00641-CV
Pentair Valves & Controls US LP, f/k/a Appealed from the 234th District Court of
Tyco Valves & Controls, LP, Appellant Harris County. (Tr. Ct. No. 2012-67835).
Opinion delivered Per Curiam.
v.
John F. Jones, Appellee
TO THE 234TH DISTRICT COURT OF HARRIS COUNTY, GREETINGS:
Before our Court of Appeals on January 9, 2014, the cause upon appeal to
revise or reverse your judgment was determined. Our Court of Appeals made its
order in these words:
Today the Court heard appellant's motion to dismiss the appeal from the
judgment signed by the court below on April 22, 2013. Having considered the
motion and found it meritorious, we order the appeal DISMISSED.
We further order that each party shall pay its costs by reason of this appeal.
We further order that mandate be issued immediately.
We further order this decision certified below for observance.
WHEREFORE, WE COMMAND YOU to observe the order of our said
Court in this behalf and in all things have it duly recognized, obeyed, and executed.
WITNESS, the Hon. Kem Thompson Frost, Chief Justice of our Fourteenth
Court of Appeals, with the Seal thereof affixed, at the City of Houston,
.
CHRISTOPHER A. PRINE, Clerk
Fourteenth Court of Appeals
HOUSTON, TEXAS 77002
RECORDS RETENTION SCHEDULE IN CIVIL CASES
(Secretary to complete entire top portion at time opinion is delivered – have signed by authoring judge)
CASE NO.: 14-13-00641-CV
DATE CASE FILED: 7/24/2013
STYLE: Pentair Valves & Controls US LP, f/k/a Tyco Valves & Controls, LP
v. John F. Jones
COUNTY: Harris
DESCRIPTION/SUBJECT OF CASE: Restricted Appeal
PANEL: WJB, TC, MWB
AUTHOR: MWB
PER CURIAM: yes
OPINION ISSUED: January 7, 2014
OPINION DECISION: DISMISSED
RECOMMEND: DESTROY: YES HISTORICAL: NO
COMMENTS:
SIGNED: /s/ Carol M. Porter
DATE: ___________________________
–––––––––––––––––––––**FOR CLERK’S USE ONLY**––––––––––––––––––
MANDATE ISSUED: ___________________________________________________
LETTER TO STATE ARCHIVES (date): __________________________________
COMMENTS: ________________________________________________________
–––––––––––––––––––––**FOR CLERK’S USE ONLY**––––––––––––––––––
(Dispose of 6 years after final disposition)
DATE DESTROYED: _____________________________________________
DATE SENT TO STATE ARCHIVES FOR PERMANENT RETENTION: | 01-03-2023 | 09-22-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/4516838/ | Fourth Court of Appeals
San Antonio, Texas
March 16, 2020
No. 04-20-00060-CV
IN THE INTEREST OF S.T., A CHILD,
From the 45th Judicial District Court, Bexar County, Texas
Trial Court No. 2018-CI-15371
Honorable Mary Lou Alvarez, Judge Presiding
ORDER
The trial court clerk has filed a notification of late record, stating that the appellant failed
to pay or make arrangements to pay the fee for preparing the clerk’s record and that appellant is
not entitled to preparation of the clerk’s record without paying the fee.
It is therefore ORDERED that appellant provide written proof to this court on or before
March 26, 2020 that either (1) the clerk’s fee has been paid or arrangements have been made to
pay the clerk’s fee; or (2) appellant is entitled to appeal without paying the clerk’s fee. If
appellant fails to respond within the time provided, this appeal will be dismissed for want of
prosecution. See TEX. R. APP. P. 37.3(b); see also TEX. R. APP. P. 42.3(c) (allowing dismissal of
appeal if appellant fails to comply with an order of this court).
_________________________________
Irene Rios, Justice
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the said
court on this 16th day of March, 2020.
___________________________________
MICHAEL A. CRUZ,
Clerk of Court | 01-03-2023 | 03-17-2020 |
https://www.courtlistener.com/api/rest/v3/opinions/1270220/ | 51 Mich. App. 710 (1974)
216 N.W.2d 71
PEOPLE
v.
JORDAN
Docket Nos. 15881, 15882.
Michigan Court of Appeals.
Decided March 5, 1974.
Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, William L. Cahalan, Prosecuting Attorney, Dominick R. Carnovale, Chief, Appellate Department, and Robert A. Reuther, Assistant Prosecuting Attorney, for the people.
Theodore B. Sallen (Carl Ziemba, of counsel), for defendant on appeal.
*712 Before: LESINSKI, C.J., and FITZGERALD and CARLAND,[*] JJ.
FITZGERALD, J.
Defendant was tried on two charges of assault with intent to commit murder[1] which were consolidated for trial and appeal. A jury returned verdicts of guilty of the lesser included offense of assault with intent to do great bodily harm less than murder[2] and felonious assault.[3] Concurrent sentences of 5 to 10 years and 2 to 4 years were imposed respectively granting defendant credit for the 176 days already served in prison.
This case arises out of a shooting incident occurring on November 16, 1971. Defendant went to the home of Phyllis Allen, a girl he had previously dated. He was met by Miss Allen's mother who advised him that Phyllis was not home. Defendant then shot John Butler, Phyllis' father, in the jaw and wounded Phyllis' sister, Dorothy, in the arm.
Police officer Fred Bedient went to the Butler home with his partner and attempted to apprehend the defendant peacefully. Officer Bedient met with resistance and was twice fired upon by defendant. At this point, Officer Bedient shot and wounded defendant, subsequently taking him into custody. The two separate counts of assault with intent to commit murder involved defendant's shooting of John Butler and Officer Bedient. Defendant entered defenses of intoxication or, in the alternative, insanity.
Two issues are raised on appeal, the first of which is without merit. Defendant initially argues *713 that the trial court improperly instructed the jury as to the defense of insanity. The use of the term "irresistible impulse" by the court was challenged by defendant as not being in conformity with the Michigan standard of insanity because it was unduly restrictive. By improperly narrowing the standard by which the jury could have found insanity, the defendant was prejudiced notwithstanding the absence of defense counsel's objection. We have reviewed the court's insanity instructions in their entirety and find the elements of the insanity defense as set out in People v Martin, 386 Mich. 407; 192 NW2d 215 (1971), were adequately presented. The jury was informed that the duration of the defendant's insanity was not controlling. Defendant's claim that temporary insanity only was considered is untenable. Since the instructions were almost verbatim to those requested by defendant's counsel, and no objection was made to the charge, any resulting error is harmless. People v Ingram, 36 Mich. App. 160; 193 NW2d 342 (1971).
The second issue is whether the trial court correctly instructed the jury as to the proper consideration to be given evidence of defendant's conduct in determining whether the requisite intent existed. The trial judge instructed the jury of the presumption that one intends the natural and probable consequences of his acts. The presumption that intent can be proved solely from the acts of defendant erroneously casts the burden of proving the absence of such intent upon the defendant. This shift of the burden of proof is a denial of defendant's right to be proved guilty beyond a reasonable doubt.
The people deny that this presumption was created, contending that the jury was merely permitted *714 to infer such intent from defendant's acts. The burden of proof did not shift since the jury was not required to presume intent from defendant's acts, thus permitting them to conclude the absence of the requisite intent. Further, defendant's position is untenable considering that no objection to the instruction was made at trial and no miscarriage of justice resulted.
A conclusive presumption that intent must be found from acts of a defendant is not permitted. This would effectively remove the requisite intent as an element of the crime in direct violation of the criminal statute. In Morissette v United States, 342 U.S. 246, 275; 72 S. Ct. 240, 256; 96 L. Ed. 288, 306-307 (1952), the Court stated:
"A presumption which would permit the jury to make an assumption which all the evidence considered together does not logically establish would give to a proven fact an artificial and fictional effect. * * * [T]his presumption would conflict with the overriding presumption of innocence with which the law endows the accused and which extends to every element of the crime." (Footnote omitted.)
In Mann v United States, 319 F2d 404 (CA 5, 1963), the court's instruction that a person is presumed to intend the natural consequences of his own acts was prefaced by the words "unless the contrary appears from the evidence". On appeal, the Court found this to improperly shift the burden of proof to the defendant, stating at 409:
"If an inference from a fact or set of facts must be overcome with opposing evidence, then the inference becomes a presumption and places a burden on the accused to overcome that presumption. Such a burden is especially harmful when a person is required to overcome a presumption as to anything subjective, such *715 as intent or wilfulness, and a barrier almost impossible to hurdle results."
Michigan courts have recently stated that specific intent cannot be presumed as a matter of law from specific acts of the defendant. People v Williams No 2, 45 Mich. App. 630; 207 NW2d 180 (1973); People v Pepper, 389 Mich. 317; 206 NW2d 439 (1973). Justice LEVIN, dissenting in People v Pepper, 36 Mich. App. 437; 194 NW2d 67 (1971), which was ultimately reversed by the Supreme Court, points out the dangers of failing to properly distinguish between mandatory presumptions and permissible inferences which may be drawn by the jury. In People v Morrin, 31 Mich. App. 301; 187 NW2d 434 (1971), this Court discussed at length the methods of determining malice, a form of intent, from defendant's conduct. There, the presumption of innocence applied to the element of malice as well as to the remaining elements of murder. Consequently, malice aforethought was held to be a permissible inference and not a mandatory presumption.
The trial court included the following remarks in its charge to the jury:
"The intent may be presumed from the doing of a wrongful, fraudulent or illegal act, but this inference or presumption is not necessarily conclusive. The law presumes that every man intends a legitimate consequence of his own act * * *.
"When a specific intent is necessary, it need not necessarily be shown by direct or positive evidence. But it may be inferred from the circumstances. The principle that a man is presumed to have intended the natural and probable consequence of his act applies.
* * *
"An alternative defense is permitted in the law and it is for you to decide which, if any, defense to accept. In *716 any case, there is a presumption at the outset that the defendant intends the consequences of his acts and/or as seen [is sane?] but as seen [?] as evidences offered by defendant which tends to overthrow that presumption. It then rests upon the prosecution to convince you jurors beyond a reasonable doubt that the defendant, in fact, was able to entertain the specific intent to murder, or that he was seen [sane], when any credible evidence, that is evidence that you believe is given on behalf of the defendant, which tends to overthrow the presumption that every man is sane until the contrary is shown, or that every man is presumed to intend the consequence of his act, when any credible evidence is given on behalf of the defendant which tends to overthrow these presumptions. That defendant intended the natural consequence of his act or that he was insane, you jurors act on it, understanding the initiative in presenting the evidence is taken by the defense." (Emphasis supplied.)
Taken in its entirety, the above charge properly informed the jury that reference to the word "presumption" was in reality an allowable inference. The jury was permitted but not required to find from the evidence that defendant did indeed have the specific intent to commit the crime. Furthermore, the charge properly advised the jury of the prosecution's duty to prove all elements of the offense, including that of specific intent, beyond a reasonable doubt. The ultimate burden of proof clearly rested with the prosecution and to this extent the jury was correctly charged.
However, correctly placing the burden of proof upon the prosecution must be distinguished from the burden of going forward with evidence. The jury was instructed that the defendant had the original burden of going forward with at least some evidence to negate specific intent. The presumption that defendant intended the consequences of his acts was applicable unless he offered *717 some measure of contradictory evidence, in which case the burden of going forward then shifted to the prosecution. This is reversible error. Throughout the above portion of the charge, presumptions accompanying insanity and intoxication (or more specifically, intent) were intermingled. As an affirmative defense, the issue of insanity must first be raised by the defendant before the prosecution is required to prove his sanity beyond a reasonable doubt. However, specific intent is an element of assault with intent to murder and assault with intent to do great bodily harm less than murder. As such, the prosecution is required to prove beyond a reasonable doubt the existence of this element as well as the remaining elements of the crime. It is not incumbent upon the defendant to introduce any evidence at any time. By instructing the jury that the presumption that defendant intends the natural consequences of his acts applied until contradictory evidence was submitted by the defendant, the trial judge in effect shifted the burden of proof to defendant. That the due process clause protects the accused against conviction except upon proof beyond reasonable doubt of every element necessary to constitute the crime is fundamental to our criminal justice system. In re Winship, 397 U.S. 358; 90 S. Ct. 1068; 25 L. Ed. 2d 368 (1970).
People v Adams, 48 Mich. App. 595, 601; 210 NW2d 888, 891 (1973), presented a similar claimed error regarding jury instructions on the element of intent. The Court stated:
"The question of intent is one that is hard to establish directly, because grown persons do not always disclose the object they have in view in any act in which they may indulge. And, you have to gather the intent from the character of the act and the circumstances *718 surrounding it. But in connection with all this, unless the testimony satisfies you of something else, you are warranted in holding a party responsible for the natural, probable and legitimate consequences of his act."
Adams is distinguishable on two counts. First, no mention is made of requiring the defendant to initiate the submission of evidence to counter the presumption that a person is presumed to intend the consequences of his acts. Second, the trial court followed the objectionable instructions with additional comments which served to clarify any misconception the jury may have had regarding the burden of proof. This did not occur in the instant case.
Defendant's failure to object to the erroneous instructions is not fatal to his position. It is error for the trial court to give a misleading or erroneous instruction which results in a miscarriage of justice denying defendant a fair trial. People v Kelley, 21 Mich. App. 612; 176 NW2d 435 (1970); People v Guillet, 342 Mich. 1; 69 NW2d 140 (1955).
While felonious assault is a nonspecific intent crime,[4] defendant's conviction on this count could have resulted from a compromise verdict between acquittal and assault with intent to commit murder. Consequently, defendant is entitled to the benefit of a new trial on this count also.
Reversed and remanded.
All concurred.
NOTES
[*] Former circuit judge, sitting on the Court of Appeals by assignment pursuant to Const 1963, art 6, § 23 as amended in 1968.
[1] MCLA 750.83; MSA 28.278.
[2] MCLA 750.84; MSA 28.279.
[3] MCLA 750.82; MSA 28.277.
[4] People v Rohr, 45 Mich. App. 535; 206 NW2d 788 (1973). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1323710/ | 233 Ga. 347 (1974)
211 S.E.2d 300
WOODS
v.
THE STATE.
29370.
Supreme Court of Georgia.
Submitted November 8, 1974.
Decided December 3, 1974.
Marchman, Cueto & Henderson, Charles Marchman, Jr., for appellant.
Fred M. Hasty, District Attorney, Walker P. Johnson, Jr., Assistant District Attorney, for appellee.
UNDERCOFLER, Justice.
Harry Harold Woods, a/k/a Junkie, was indicted and convicted on three counts for violations of the Uniform Narcotic Drug Act. The indictment and the evidence showed that the defendant sold a named person heroin on three different occasions. After his convictions, the jury was unable to agree on what sentences should be imposed, and the trial judge then sentenced the defendant to three consecutive terms of eight years imprisonment. He appeals to this court. Held:
1. Code Ann. § 79A-1105 provides: "In any complaint, information or indictment charging any violation of any provision of this Title, and in any action or proceeding brought for the enforcement of any provision *348 of this Title, it shall not be necessary to negative any exception, excuse, proviso or exemption contained in this Title, and the burden of proof of any such exception, excuse, proviso or exemption shall be upon the defendant." Ga. L. 1967, pp. 296, 373.
(a) The appellant contends that Code Ann. § 79A-1105 is unconstitutional because it shifts the burden of proof of the lack of authority to sell narcotic drugs to the appellant and therefore deprives him of due process and equal protection. There is no merit in this contention.
"Since it is a fundamental principle that `In criminal cases, the law requires that the state shall prove all the essential facts entering into the description of a crime' (Conyers v. State, 50 Ga. 103, 105), we assume that what the defendant has reference to in this regard is the principle that in certain types of offenses, where proof of the offense involves proof of a negative, and where the state has proven all of the other elements of the offense by positive evidence and has shown by evidence of circumstances consistent therewith that the negative is in truth the fact, and especially where the negative relates to a matter peculiarly within the knowledge of the defendant, then the burden may shift to the defendant to prove that the negative does not exist. If this be the effect of the law here involved, it does not invalidate it. See: Conyers v. State, supra; Blocker v. State, 12 Ga. App. 81 (76 S.E. 784); and McHenry v. State, 58 Ga. App. 410 (198 S.E. 818)." Wallace v. State, 224 Ga. 255 (3) (161 SE2d 288).
(b) The appellant contends that Code Ann. § 79A-1105 is invalid because it was impliedly repealed by the subsequent passage of Code Ann. § 26-501 (Ga. L. 1968, pp. 1249, 1266).
Code Ann. § 26-501 provides: "Every person is presumed innocent until proved guilty. No person shall be convicted of a crime unless each element of such crime is proved beyond a reasonable doubt."
Code Ann. § 79A-1105 was not impliedly repealed by the passage of Code Ann. § 26-501 since there is no conflict between the sections.
2. The appellant contends that since the state failed to prove his lack of authority to sell drugs, the verdict and judgment were contrary to law and the principles of *349 justice, contrary to the evidence and without evidence to support it, illegal and unwarranted under the law and evidence, and against the weight of the evidence.
There is no merit in these contentions.
Whether an individual has a license or is otherwise lawfully permitted to have in his possession narcotic drugs under Title 79A is a matter of defense and not an element of the offense. Rautenstrauch v. State, 129 Ga. App. 381 (2) (199 SE2d 613); Ezzard v. State, 229 Ga. 465 (3) (192 SE2d 374); Johnson v. State, 230 Ga. 196 (4) (196 SE2d 385); Chandle v. State, 230 Ga. 574 (4) (198 SE2d 289).
3. Captain Julian E. Seymour testified as a witness for the state that he arranged for an investigation into the sale of heroin and other narcotic drugs in Macon. An objection was made to this testimony and other similar subsequent testimony on the ground that it was immaterial, irrelevant and prejudicial to the appellant. The state contended that this testimony laid the foundation for the testimony of subsequent witnesses and explained why an undercover agent was brought to Macon. The evidence was admitted for that limited purpose.
The testimony was admissible for the limited purpose for which it was allowed and the objection of the appellant was properly overruled.
4. The appellant contends that the trial court erred in sentencing him without making an express finding that he would derive no benefit from being sentenced under the Georgia Youthful Offender Act of 1972. Ga. L. 1972, p. 592 (Code Ann. § 77-345 et seq.).
The appellant further argues that the Georgia Youthful Offender Act of 1972 was patterned after the Federal Youth Corrections Act (18 USC 5005 et seq.) and that in the case of Dorszynski v. United States, 418 U. S. (94 SC 3042, 41 LE2d 855) the United States Supreme Court has held that it is necessary under the federal statute that the record show affirmatively that the trial court considered whether the offender would receive "no benefit" under the Act.
There is no merit in this contention. The Georgia statute is materially different from the federal statute *350 and specifically provides that: "(a) Nothing in this Act shall limit or affect the power of any court to proceed in accordance with any other applicable provisions of law." Code Ann. § 77-360. Therefore, we hold that it is not necessary for the trial court to make a specific affirmative finding under Georgia law that appellant would receive "no benefit" under the Youthful Offender Act of 1972. Code Ann. § 77-359 (b).
Judgment affirmed. All the Justices concur, except Gunter, J., who dissents, and Ingram, J., who dissents from the ruling made in Division 4. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1801494/ | 216 Miss. 664 (1953)
63 So. 2d 115
21 Adv. S. 62
SUPERIOR OIL CO.
v.
BEERY.
No. 38528.
Supreme Court of Mississippi.
February 23, 1953.
Wells, Thomas, Wells & Smith, W.B. Wagner and Murray Christian, for appellant.
*668 Livington & Livingston and Hall & Callender, for appellee.
*673 Green, Green & Cheney, amici curiae.
McGEHEE, C.J.
This is a suit in equity wherein the complainant, Roy Beery, obtained a decree for the cancellation of an oil, *674 gas and mineral lease held by the defendant, Superior Oil Company, as a cloud upon his title to a 15/50th mineral interest in a 50-acre tract of land included in the 320-acre gas drilling Unit No. 39 of the Gwinville Gas Field in Jefferson Davis and Simpson Counties. The principal basis of the suit is that the ten-year primary term of the lease thereon had expired by its terms on December 29, 1949, and it is contended that there had been no production from said 50-acre tract of land thereunder. The decree also awarded unto the complainant the sum of $6,120.87, which represents 8/8ths instead of 1/8th of 15/320ths of the market value of the gas produced from Superior's Dale Well No. 1 on adjacent land in said Gas Drilling Unit No. 39, from the date of the first commercial production from the unit well on February 1, 1947, through November 30, 1950, less taxes and less 15/320ths of the cost of drilling, completing, equipping and operating said well during such period, as located on the adjacent tract of land belonging to L.F. Dale in the 320-acre gas drilling unit.
The oil, gas and mineral lease in question was executed on December 29, 1939, by Bruce Walker and wife to John D. Gholson on this 50-acre tract in which the appellee Roy Beery now owns the 15/50th mineral interest, and the lease was transferred and assigned by Gholson during the year 1940 to the appellant, Superior Oil Company. Thereafter, on June 26, 1944, Bruce Walker and wife conveyed unto the appellee the said 15/50ths mineral interest in their 50-acre tract of land, subject to the outstanding oil, gas and mineral lease then held by the appellant.
The appellant's lease provides that "This lease shall be for a term of ten years from this date (called `primary term') and as long thereafter as oil, gas or other mineral is produced from said land hereunder."
It will be observed from a reading of the foregoing provision in the lease that there is no ambiguity therein. The primary term of the lease is stated in plain *675 and unequivocal language. It therefore becomes unnecessary for the Court to resort to any contemporaneous construction thereof by the parties and to their subsequent conduct in regard to this provision of the contract or to the conduct of the lessee in its subsequent dealings with the appellee Beery. In the absence of ambiguity, we must apply the language of the provision in the contract as written and as agreed upon by the parties thereto, subject to the applicable statutes for the conservation of oil and gas and the orders, rules and regulations of the State Oil & Gas Board, promulgated and adopted pursuant to such statutes.
The appellant's lease itself did not contain a pooling or force majeure clause. It was obtained of course subject to the police powers conferred upon the State Oil & Gas Board by Chapters 117, Laws of 1932, and 305, Laws of 1936, as was likewise the mineral deed from Bruce Walker and wife to the appellee, the lease having been executed during the year 1939 and the mineral deed in 1944, prior to the passage of Chapter 256, Laws of 1948.
The appellee sued specifically for the value of 1/8th of 15/320ths of the gas produced from the Dale well from the time it came into commercial production on February 1, 1947, until December 29, 1949, the date on which the lease was to expire by its terms, and for 8/8ths of the gas produced by said well thereafter prior to the trial. However, the amended bill of complaint contained a general prayer for the award of such damages as the court should find the complainant was entitled to recover. The trial court, however, awarded to the complainant 8/8ths of 15/320ths of the market value of the gas produced by the unit well on Dale's land on the basis that the 15/50ths of the 50-acre tract bears to the area of the 320-acre gas drilling unit from the time commercial production began therefrom, upon the theory that the law of co-tenancy was applicable to the situation since it was alleged that the gas had been produced from *676 the unit well on the Dale tract under and by virtue of the authority of the pooling agreements signed by the co-tenants of the appellee in the 50-acre tract, who owned the remaining 35/50ths mineral interest therein, executed on January 28, 1948, and March 25, 1948, subsequent to the granting of the permit to drill the Dale well, the filing and approval of the plat or map of the 320-acre gas drilling Unit No. 39, the pooling of the leases by the owners thereof pursuant to the orders of the Board of August 11, 1947, and September 11, 1947, and the granting and allocation of the allowables on December 9, 1947, effective December 26, 1947.
Although the appellee sued specifically for the market value of 1/8th of the royalty on the basis of his mineral acreage in the 320-acre unit, prior to the expiration of the primary term of the lease and for 8/8ths of such value thereafter, he predicates his right to recovery upon one of three stated grounds: (1) that he was entitled to recover on the ground that the appellant, as lessee of the 50-acre tract, had violated its duty under its lease not to impair the value thereof, in that it had drained, and is still draining, gas from the 50-acre tract through the unit well on the Dale tract; (2) that the lessee falsely, fraudulently, wrongfully and unlawfully represented to the State Oil & Gas Board that all of the lands proposed to be included in gas drilling Unit No. 39 had been lawfully pooled, and that the lessee thus obtained a full gas allowable on the 320 acres, including the 50-acre tract in question; and (3) that he is entitled to the recovery sued for under the law of co-tenancy for the reason that Bruce Walker and his several vendees (other than his vendee Beery) of mineral interests in the 50-acre tract had executed the amendments to the lease of the appellant hereinbefore mentioned, on January 28, 1948, and March 25, 1948, whereby they authorized the said lessee to pool this lease with the other lessees in the 320-acre unit and to pool their undivided 35/50ths of the minerals under the 50-acre tract with those of other *677 mineral owners and lessees in the drilling unit, and that it was pursuant to this authority that the appellant operated the unit well, obtained the allowables therefor and converted to its own use the appellee's rightful portion of the production of gas from the unit well.
As to the first contention, the only assumed obligation found in the lease whereby the lessee expressly agreed to protect the rights of the appellee and his co-tenants in the leased premises, that is to say the 50-acre tract, from drainage, is in the following words: "In the event a well or wells producing oil or gas in paying quantities should be brought in on adjacent land and within 150 feet of and draining the leased premises, Lessee agrees to drill such offset wells as a reasonably prudent operator would drill under the same or similar circumstances."
The Dale well was drilled at a distance of approximately 1,000 feet from the 50-acre tract in question which is situated in the SW 1/4 of Section 28, and it would seem that no obligation implied by law to protect the leased premises from drainage was violated where the same lessee also held a lease on the Dale tract and drilled the well thereon under the express authority of the Dale lease, and where under the conservation laws of the State, subject to which the appellee had purchased his mineral interest, the lessee of the 50-acre tract was prohibited from drilling an offset well thereon. In other words, since no express provision of the lease from Walker to Gholson was violated, it would seem that there would be no liability on the first theory of the amended bill of complaint, since the obligation implied by law to protect against drainage is inapplicable where the lawful rules and regulations of the State Oil & Gas Board for the conservation of oil and gas are complied with.
As to the second theory of liability relied on, it was necessary that the lessee who drilled the unit well should obtain an allowable for the entire 320 acres embraced *678 in the unit since the lessee would become liable to all of the owners of the respective tracts therein for their portion of the gas produced, on the basis of the allowable for all of the land in the unit on an acreage basis. Then, too, the issue of fraud and misrepresentation in regard to the establishment of the unit became foreclosed and res judicata under the decision of Superior Oil Company v. Beery decided on June 9, 1952, and reported in ___ Miss. ___, 59 So. 2d 689, which involved an appeal to this Court from the Circuit Court of Jefferson Davis County, wherein the validity of the establishment of the gas drilling Unit No. 39 was challenged. Moreover, the appellant asserts, and the record shows that as an oil and gas lessee it is one of the three "owners" who procured the unitization of the unit area, and then owned the gas under the 50-acre tract subject to the right of the appellee as a mineral vendee of the lessor to collect annual rental under the lease prior to production, to collect a 1/8th royalty from the production of gas from the land on the basis of his 15 mineral acres, and subject to his right to the reversionary interest in fee of the minerals in the event there had been no production from the land under the lease during the primary term thereof.
We shall discuss the third theory of liability hereinbefore mentioned later in this opinion, other than to the extent of now stating that neither the appellee nor his co-tenants in the 50-acre tract were co-tenants in the sense of being entitled to share in the production from the unit well on the Dale tract except upon the theory that the 50-acre tract has been legally unitized or pooled with the other tracts in the 320-acre gas drilling Unit No. 39.
This brings us directly to a determination of whether or not this provision of the lease was actually complied with under the facts and circumstances hereinafter stated, within the meaning of Chapter 117, Laws of 1932, and Chapter 305, Laws of 1936, when read in connection with the lawful orders, rules and regulations of the *679 State Oil and Gas Board, promulgated during the year 1947, long prior to the expiration of the 10-year primary term of the lease in question on December 29, 1949.
The appellant also held the oil, gas and mineral lease on the Dale tract of land on which the well was completed on July 15, 1945, but due to the lack of pipe-line facilities to the Gwinville Gas Field, it so happened that this well, which later became the unit well for gas drilling Unit No. 39 was not placed in commercial production until February 1, 1947. Prior to the complete establishment of Unit No. 39, embracing the Dale tract of 160 acres, the Bruce Walker tract of 50 acres, and lands belonging to other separate owners, all of the 1/8th royalty was paid by the appellant to Mr. Dale, as owner and lessor of the land on which the well had been drilled.
On August 11, 1947, the State Oil & Gas Board adopted a rule and regulation which provided for a spacing unit of 320 contiguous surface acres for gas wells in the Gwinville Gas Field. On that same day, the State Oil & Gas Supervisor, acting on behalf of the State Oil & Gas Board, requested the appellant, as driller and operator of the Dale well, to file with the Board a plat or map of the lands to be included in the 320-acre unit for production of gas by this producing well, and for which a permit to drill had been granted in appellant's favor. This plat or map was accordingly filed on August 22, 1947, and was thereafter duly approved by the State Oil & Gas Board, together with the designation of such drilling unit.
On September 11, 1947, the State Oil and Gas Board adopted a state-wide rule and regulation which provided for gas drilling units of not less than 320 contiguous surface acres, upon which no other drilling or producing well could be located. This rule recognized that the Board could grant an exception thereto, and also to the rule adopted on August 11, 1947, as aforesaid, in regard to the Gwinville Gas Field, if such an exception "is necessary to prevent waste or to prevent the confiscation *680 of the property of the applicant." However, for reasons hereinafter stated, the granting of an exception would not have been justified on either of such grounds in the instant case.
At the time of the adoption of these orders of August 11, 1947, and September 11, 1947, the British Oil Producing Company and R.J. St. Germain, respectively, were also holders of oil, gas and mineral leases on different tracts of land covered by the plat or map that was ordered filed by the appellant, Superior Oil Company, and all of these oil, gas and mineral lessees were ordered by the Board to pool their leases, so as to develop 320 acres as a unit for the production of gas in the area to be embraced in gas drilling Unit No. 39.
These orders of the Board found and adjudicated as a fact the efficient drainage area of a gas well in the Gwinville Gas Field to be 320 acres; they provided for the establishment of such drilling units; they regulated the spacing of the wells; they provided the formula by which the well allowables would be determined, and allocated the same on an acreage basis; and they required that "the rights of all owners in the drilling unit upon which the well is located shall first be pooled." The term "owner" is then defined in the order of September 11, 1947, as "The person who has the right to drill into and to produce from a field or pool, and to appropriate the production either for himself, or for himself and another." Pursuant to this order of the Board, an operating agreement was duly entered into by these three lessees whereby the appellant was to operate the Dale Well No. 1 as the unit well on behalf of these owners of the leases, and also of course for the benefit of all parties interested as royalty owners in the lands involved.
On December 9, 1947, a 320-acre allowable for the production of gas was granted for gas drilling Unit No. 39, as requested by the appellant when it filed its plat or map on August 22, 1947, covering the SE 1/4 of Section 29 and SW 1/4 of Section 28 in Township 9 North, Range *681 18 West in Jefferson Davis County comprising the 320 contiguous surface acres. The order granting such allowable recited that the operators had filed the map or plat of the unit showing the acreage assigned to the same. The 320-acre allowable was allocated to the separately owned tracts on an acreage basis in the unit and the first monthly allowable was accordingly assigned and became effective on December 26, 1947, according to the orders of the State Oil & Gas Board in regard thereto. The foregoing acts of the State Oil & Gas Board and of the owners having the right to drill for the production of gas under their leases, completed the establishment of the said gas drilling Unit No. 39 and had the effect of unitizing the leases and pooling the same for the production of all gas thereafter from the well on the Dale tract of land.
When this unit had been thus established by the granting of the permit to drill, the filing of the plat or map of the lands to be included in the unit and the approval thereof, the pooling of the leases by the owners as required by the State Oil & Gas Board, and the granting of the 320-acre allowable and allocating the same to each separate tract of land therein on an acreage basis, in compliance with a valid exercise of the police powers of the State through the agency of the State Oil & Gas Board for the conservation of oil and gas, the owners of the leases, Superior Oil Company, British American Oil Producing Company and R.J. St. Germain, were thereafter deprived of the right to drill a well on any other tracts of land on which they held leases, other than the well on the Dale tract. While they were required to permit all of the other leases than the one on the Dale tract to expire by their terms, there was substituted for the right that they otherwise had to drill their leases the right to participate in the production of the unit well on the Dale tract and to receive the same proportion of the gas that they would have been entitled to receive if the well had been on a *682 tract on which they held a lease instead of the tract on which the Dale well was located. Thus it followed that the appellant, Superior Oil Company, was required to permit its lease on the Bruce Walker 50-acre tract to expire on December 29, 1949, unless the same was continued in force by the production of gas from the said 50-acre tract through the unit well on the adjacent Dale tract.
Likewise, there was substituted for the right of the appellee and his co-tenants in the 50-acre tract in which he owned 15/50ths of the minerals, to have a well drilled thereon during the 10-year primary term of the lease held by the appellant thereon, the right to receive the same amount of gas from the unit well as he would have been allowed to receive under the proration authorized by Chapter 305, Laws of 1936 if a well had been drilled on the 50-acre tract prior to the expiration of such primary term on December 29, 1949. This fact is uncontroverted in the record.
We recognize that as held in the case of Armstrong v. Bell, 199 Miss. 29, 24 So. 2d 10, and 3 Summers Oil & Gas, Permanent Ed. 486, Section 601, and in the cases of Koenig v. Calcote, 199 Miss. 435, 25 So. 2d 763, and Bailey v. Federal Land Bank, 207 Miss. 764, 43 So. 2d 375, the appellee had the right to receive the annual rents prior to production under the lease as provided for in his mineral deed from Bruce Walker and wife; the right to receive any royalties from production under the lease; and the reversionary fee interest in the minerals in place, to the extent of 15/50ths of the 50-acre tract in the event there was no production under the lease of the appellant during the life thereof. But the question here is whether or not the 50-acre tract was placed in production prior to the expiration of the primary term of the appellant's lease thereon in virtue of the unitization and pooling of all of the leases in Unit No. 39 and the allocation of the *683 320-acre allowable to each tract embraced in the unit on an acreage basis, prior to December 29, 1949.
All of the oil, gas and mineral lessees in the unit have received their pro rata 7/8ths of the gas produced by the Dale well from and after the time the leases were unitized and pooled in the manner hereinbefore stated, and on the basis that their leased acreage bears to the 320-acre drilling unit. Likewise, all of the mineral or royalty owners, other than the appellee who refused the same except for compensation, have received their 1/8th royalty from the production of the unit well on the basis that their acreage bears to the 320-acre drilling unit. Moreover, all of these mineral or royalty owners, other than appellee, have recognized the right of the State Oil & Gas Board to unitize their interests, and at the request of the oil, gas and mineral lessees they signed, without additional compensation, pooling agreements consenting to the development of their acreage as a unit along with that belonging to other mineral owners, and they thereby undertook to consent to the pooling of their mineral acreage with that of other mineral owners and the oil, gas and mineral lessees.
Included among those who thus signed what were termed amendments to the original oil, gas and mineral leases were the co-tenants of the appellee in the 50-acre tract, who owned 35/50ths of the minerals in place under the 50-acre tract, subject to the original oil, gas and mineral lease held by the appellant thereon. But in our opinion, the subsequent execution of this pooling agreement by the co-tenants of the appellee on January 28, 1948, and March 25, 1948, after the unitizing or pooling of the leases in the unit had been completed, was an unnecessary procedure in view of the fact that we later held in the cases of Superior Oil Company v. Foote on June 9, 1952, reported in ___ Miss. ___, 59 So. 2d 85, and Griffith, et al. v. Gulf Refining Co., 215 Miss. 15, 60 So. 2d 518, decided October 6, 1952, and Hassie Hunt Trust, et al. v. Proctor, et al., 215 Miss. 84, 60 So. 2d 551, decided October *684 13, 1952, that those having the exclusive right to drill for and produce oil or gas represent the royalty owners in the drilling and spacing of wells in compliance with the rules and regulations of the State Oil & Gas Board.
In the Foote case, supra, the appeal was from an order of the State Oil & Gas Board which undertook to "integrate" the interests of all lessees and mineral owners in the units there involved, the order having been rendered in a proceeding under Chapter 256, Laws of 1948, as amended by Chapter 220, Laws of 1950. But as a jurisdictional prerequisite for the Board to entertain the petition for integration, it was required that there should be two or more separately owned tracts of land embraced within an established drilling unit, and it was therefore necessary for the Board to find and adjudicate that the units had been theretofore duly and legally established. The Board did so find and we affirmed its action in so doing. We then pretermitted a decision of the question of whether or not the effect of the integration, which, according to all definitions to be found in standard dictionaries, means the same thing as to unitize or to pool, would be to extend the primary term of the lease, or whether the expiration of the date of the primary term prior to "compulsory" integration would have the effect of entitling the mineral owner, on whose tract of land no well had been drilled and was in production thereon, to receive 8/8ths of the gas instead of 1/8th after the expiration of the primary term of the lease which the mineral owner had given, or subject to which he had bought minerals under the lands described therein.
We are now confronted with the necessity of deciding this precise question in the instant case. In this connection, we are of the opinion that where the lands were unitized by the lessees and the leases were pooled, and the establishment of a gas drilling unit was completed under the authority of Chapter 117, Laws of 1932, Chapter *685 305, Laws of 1936, and the orders, rules and regulations of the State Oil & Gas Board thereunder, the procedure had the same effect as would result from the integration of the mineral interests and the leases under the subsequent statutes of 1948 and 1950. In other words, we are of the opinion that if the lands in a drilling unit are unitized for the purpose of conserving oil and gas and of preventing waste and the drilling of unnecessary wells, and for the protection of the correlative rights of all persons included in the unit, all interests are thereby unitized; that they are thereby pooled; and that they are thereby integrated; that is to say, that to unitize is to pool, and that to pool the leases, as authorized by these two former statutes and the rules and regulations promulgated by the State Oil and Gas Board pursuant thereto, is to integrate the interests of the respective parties involved in the unit.
At any rate, this Court held in the case of Green, et al. v. Superior Oil Company, et al., ___ Miss. ___, 59 So. 2d 100, decided May 26, 1952, that where the wells were drilled and production begun on the units under the statutes in effect prior to Chapter 256, Laws of 1948, the applicable legislation is Chapter 117, Laws of 1932 and Chapter 305, Laws of 1936. All of the proceedings had and done in the instant case up to and including the making of the first monthly allowable and the effective date thereof was prior to the expiration of the primary term and during the year 1947, and therefore long prior to the expiration of the lease here involved, on December 29, 1949; and hence the governing statutes are those of 1932 and 1936, as held in the case of Green, et al. v. Superior Oil Company, et al., supra. In other words, we think that the decision in the Green case went a long way toward deciding the issue now before us. It cited the case of California Company v. State Oil & Gas Board, 200 Miss. 824, 27 So. 2d 542, 28 So. 2d 120, which held that "the 1932 and 1936 statutes had the effect of vesting in the Board the power to prescribe rules for the *686 spacing of oil and gas wells, and to regulate the drilling for and the production of oil and gas." And in the Green case, the Court further stated: "We also think that the same statutes by necessary implication authorize the Board to establish drilling units."
If the Board had the authority to establish drilling units and to require the oil, gas and mineral lessees to pool their leases, we think that it inevitably follows that each lessee is entitled to participate to the extent of 7/8ths of the production from the unit well on the basis that its leased acreage bears to the 320-acre drilling unit, less their pro rata share of the expense of drilling and operating the well and severance taxes, and that this cannot be true if all of the mineral owners in the unit other than Dale are given 8/8ths of the production of gas after the primary term of their leases expire, and on the basis that such mineral owner's acreage bears to the entire unit area. For instance, if the appellee is permitted to recover 8/8ths of 15/320ths of the value of the production of the gas from the Dale well, then the appellant would receive nothing from the appellee's 15 mineral acres, nor could the British-American Oil Producing Company and R.J. St. Germain, as oil, gas and mineral lessees receive 7/8ths of the production of the gas from the unit well on the basis that their leased acreage bears to the 320-acre unit, if their lessors could claim 8/8ths after the expiration of the primary term.
Moreover, unless the 160-acre tract on which the Dale well is located could share on behalf of Dale 1/8th of 160/320th of the gas drained from the 50-acre tract, upon the theory that the 160 acres has been unitized and pooled with the 50-acre tract, then he would be entitled under the law of capture to 1/8th of all the gas produced from the well on his 160 acres.
Thus, it will be seen that the correlative rights of the British-American Oil Producing Company and R.J. St. Germain, as lessees of other tracts in the unit, and those *687 of the appellant as the lessee of the 50-acre tract, and the royalty rights of all mineral owners, other than appellee, could not otherwise be protected and enforced; and that the result would be that the police powers of the state which are authorized to be exercised by the State Oil & Gas Board under Chapter 117, Laws of 1932, and Chapter 305, Laws of 1936, and under such reasonable orders, rules and regulations as the State Oil & Gas Board may adopt, would necessarily have to yield to the alleged right of the appellee to take 8/8ths of 15/320ths of the gas produced from the unit well on the ground that no well was drilled on the 50-acre tract, prior to the expiration of the primary term of the lease thereon, even though there is substituted for the right of the appellee to have had a well drilled on the 50-acre tract during the primary term of the lease the equivalent right of receiving the same amount of gas from the unit well that he would have been entitled to receive had a well been drilled on the 50-acre tract prior to the expiration of such primary term.
The right substituted in favor of the appellee, as above stated, has the effect of not taking away any valuable right of the appellee in violation of due process of law; whereas, on the other hand, if the oil and gas lessees are not permitted to share in the production of gas from the unit well on the basis that their leased acreage bears to the entire 320-acre unit, they are deprived of a constitutional right in violation of due process of law in that they were forbidden under the conservation laws of the State, as declared by the statutes last above mentioned and under the orders, rules and regulations of the said Oil & Gas Board adopted pursuant thereto, to drill a well on their leased acreage in the unit a right granted unto said lessees under and by virtue of the contract provisions of their leases. They were required to pool their leases by the State Oil & Gas Board under the statutes and the orders, rules and regulations aforesaid, *688 and they had to do this whether their leases contained a pooling clause or not, because only one of the lessees could drill a well on any tract contained in the 320 acres in compliance with the public policy of the State for the conservation of its natural resources.
But it is urged by the appellee that the lessees could have protected themselves against this contingency by inserting a pooling clause in the respective leases, or by purchasing the right to pool from the mineral owners as an amendment to each original lease, or that they could have inserted in the original lease a force majeure clause. But we are of the opinion that the lessees were given the right to pool their leases, and were in fact required to do so, by the statutes involved and by the orders, rules and regulations of the State Oil & Gas Board thereunder; and that it was a reasonable exercise of the police powers of the state when the said Oil & Gas Board, the delegated agency of the legislature, adopted its spacing rule on September 11, 1947, requiring that "the rights of all owners in the drilling unit upon which the well is located shall first be pooled", and then defining the term "owner" in the said order as "The person who has the right to drill into and produce from a field or pool, and to appropriate the production either for himself, or for himself and another."
The observation last above made is true as a reasonable conclusion, because the State Oil & Gas Board usually has jurisdiction of oil, gas and mineral lessees when they undertake to drill an oil or gas well in the State, since they are thereby engaged in local activities and are subject to the jurisdiction of the Board, whereas it frequently occurs that the royalty owners in an oil or gas field in this State usually reside in a number of different states, and it would be difficult for the Board to require them to do anything in regard to observing the conservation laws in the development of an oil or gas field. Moreover, such mineral or royalty owners by the *689 execution of the oil and gas leases have divorced themselves from the operations for the production of oil or gas, reserving unto themselves only the right to receive the annual rental provided for in the lease, the royalty to accrue under the lease, and the reversionary interest in fee in the event there is no production from the land during the life of such lease.
It was insisted at the bar either in this case or the companion case of Superior Oil Company v. Alfred Foote, et al., No. 38,562, which has been considered along with the instant case, that the land or mineral owner whose property is under an oil, gas and mineral lease, is entitled to have a well drilled on the particular tract of land covered by the lease, as contemplated by the lease contract. Such right is only nominal at most, however, when it does not appear that it would be any advantage or convenience to the land or mineral owner to have the well located on his land instead of on an adjacent tract, and when he is given the right to receive the same amount of oil or gas from the unit well on the adjacent tract as he would have been allowed to receive under proration if a well had been drilled on his tract during the primary term of the lease. In other words, his damage, if any, resulting from failure to drill on his land under such circumstances would be de minimis. Moreover, in the case of Pace, et al. v. State, ex rel. Rice, Attorney General, et al., 191 Miss. 780, 4 So. 2d 270, this Court recognized that it would be to the disadvantage of a 99-year lessee of sixteenth section lands for an oil, gas and mineral lessee of a sixteenth section to have the right of ingress and egress to the leased premises to explore for oil and gas and to develop the land for the production thereof, and the Court declared that the surface lessee would be entitled to compensation for the damage that may be sustained to his surface rights on account thereof.
It follows from what is said in the foregoing paragraph that a land or mineral owner is not deprived of any *690 valuable property right in violation of due process of law because of the failure to produce oil or gas from his tract of land by a well thereon, when he is allowed to receive the equivalent thereof from a unit well on adjacent land in furtherance of the public policy of the State in the conservation of its natural resources. We recognize that in the absence of such laws enacted in the exercise of the police powers of the State, the appellee would have been entitled to the reversionary interest in his minerals after December 29, 1949, if no production of oil, gas or other mineral was had from a well on his mineral acres. But Chapter 305, Laws of 1936, made it the "duty of the Board to prorate and regulate the gas well production from each common source of supply ..., for the protection of public and private interest, and to adjust the correlative rights and opportunities of each owner of gas in a common source of supply ..." These conservation laws and regulations are based upon the theory that an individual having a right under given circumstances may exercise even the higher right of giving up the asserted right in the interest of the public welfare. Such was the philosophy of the moratorium statutes under which holders of mortgages and deeds of trust, giving unto them the right to foreclose in the default of a payment of an indebtedness, were denied the right to do so upon compliance with certain requirements not provided for in the contract of security.
(Hn 1) An attribute of sovereignty, such as the police power of the state to conserve its natural resources, needs no constitutional sanction for its valid exercise; it is a power inherent in the existence of a government.
As to whether or not the reversionary interest in fee in and to the 15/50ths of the minerals under the 50-acre tract became vested in the appellee at the expiration of the 10-year primary term of the lease in question because of the failure of the lessee to produce oil, gas or other mineral from the tract prior to December 29, 1949, it *691 should be observed that the theory of the conservation laws in the spacing of gas wells is that one gas well will efficiently drain a 320-acre unit. Moreover, it is alleged in the amended bill of complaint that the Dale well was in fact draining gas from the 50-acre tract prior to December 29, 1949, which is the equivalent of alleging that it was producing gas from said tract. The precise contention of the appellee, however, is that it was not producing gas under the lease thereon, but we are of the opinion that when leases on various tracts of land are pooled in a unit, the gas from each separate tract is being produced by the unit well so far as the particular tract is concerned under and by virtue of the lease thereon, and that likewise the gas from each of the other tracts in the unit is being produced by such well under and by virtue of the lease on each of such tracts, all of which have been pooled into a whole or unitized; and that therefore the gas, the value of which is sued for in this case, was being produced prior to the expiration of the primary term of the lease under and by virtue thereof.
While the appellee does not sue specifically for the benefits resulting from the unitization or pooling of the leases, and does not concede that he ratifies the same, he does sue for 15/320ths of the value of the gas upon the stated ground that to such extent he has been damaged in that the gas produced by the unit well in part has been drained from the 50-acre tract. It is unnecessary for us to hold that the bringing of the suit had the effect of ratifying the unitization or pooling of all of the mineral interests in the unit, or that we base our decision upon any theory of ratification, but we think that the facts alleged and proved do sustain the theory that the gas, the value of which is sued for as damages to the complainant, was in fact drained or produced from the 50-acre tract through the unit well, and that all of the lands in the unit were placed in production under the theory and philosophy of the conservation laws, and also *692 in reality, prior to the expiration of the primary term of the lease in question.
We are not unmindful of the holding of the numerous authorities cited by the appellee to the effect that the Court must give effect to the terms of the lease as written, but for the many reasons hereinbefore stated we have reached the conclusion that there was no failure of production of gas from the 50-acre tract under and by virtue of the lease thereon prior to the expiration of the primary term thereof. None of the mineral owners whose interests are involved in the unit are entitled to any portion of the production of gas from the Dale well except upon the theory that it was producing gas from their several tracts of land under and by virtue of the oil and gas conservation laws. The extent of their participation in the production from the unit well is controlled by the terms of the leases on each respective tract which declare the extent to which they are entitled to participate in any production. Beyond question, it is true that Dale would be entitled to 1/8th of all the production from the unit well unless his land has been pooled with the other tracts in the unit, since the State Oil & Gas Board has not recognized the unit except as embracing 320 acres. No factual basis is disclosed in the record that would have justified the granting of exceptions as to any particular tract in the unit since the same is composed of two quarter sections which make a perfect unit of 320 contiguous surface acres, and no complaint is made as to the size or shape of the unit as approved and established, or as to the location of the unit well thereon.
In the case of Griffith, et al. v. Gulf Refining Company, supra, the appellants were mineral owners and had signed no pooling agreements. The Gulf Refining Company held a lease on 250 acres and obtained an allowable upon that acreage to drill and develop the same as a unit. Griffith and others were mineral owners *693 under 90 acres thereof and the Gulf Refining Company drilled its well on the remaining 160 acres and sought to deny to the appellants, Griffith and others, the right to participate in the production of the well on the 160 acres in which they held no mineral interest. The Court held that the appellants were entitled to participate in the production of the well on the basis that their mineral interest bears to the 250-acre drilling unit. It is true that the Court did not hold that this was the extent of the right of the appellants, Griffith and others, that being all they sued for, but the Court did recognize that all persons owning the mineral interests in an established drilling unit were entitled to participate in the production from the unit well, on the basis of their respective acreage. Such was the right of the appellee in the instant case, and the remaining question still is whether this was the full extent of his right or whether he is entitled to 8/8ths of 15/320ths or 1/8 thereof.
In the case of Hassie Hunt Trust, et al. v. Proctor, et al., 215 Miss. 84, 60 So. 2d 551, the appellant, Hassie Hunt Trust, drilled a producing oil well on the north 30 acres of a 40-acre tract on which 30 acres it held an unquestioned lease, whereas the appellees, Proctor and others, held a lease on the south 10 acres of the 40-acre tract. There was no pooling agreement, but the Court held that when the appellant drilled on the 30 acres and obtained an allowable on the 40 acres as a drilling unit it became liable to account to the appellees for 1/4th of 7/8ths of the production from the 40 acres, less 1/4th of the cost of drilling, equipping and operating the well and less 1/4th of the operator's 7/8ths of the severance taxes.
It is true that neither of these two cases involved the question of the right of a mineral owner to receive 8/8ths of the production after the expiration of the primary term of a lease, but the point is that the Court nevertheless allowed Griffith and others in one case, *694 as mineral owners, and Proctor and others in the other case, as lessees, a part of the production upon the ground that the unit well was producing gas from their portion of the land in each instance, even though it was located on an adjacent tract; and that is the issue we have before us in determining whether or not there was production from the 50-acre tract in question while the same was under a lease.
The Court cites the case of Placid Oil Company v. North Central Texas Oil Company, 19 So. 2d 616, from the Supreme Court of Louisiana, in the Griffith and Hassie Hunt Trust cases, supra. That case involved a dispute over the ownership of the 1/8th royalty. Briefly the facts were that Parten owned the royalty in Tract A and the North Central Texas Oil Company owned the royalty in Tract B. Each tract was under lease to Hunt Oil Company and contained forty acres. The spacing rules provided for 80-acre drilling units consisting of two adjacent 40-acre tracts. The lessee applied for a permit to drill and filed a plat of the 80-acre drilling unit comprising both Tracts A and B. The permit was issued and the well was drilled on the tract owned by Parten. He claimed all of the royalty because the well was on his tract and there was no pooling order as to the royalty and no voluntary agreement. The Court held that the royalty owners in each tract were entitled to their share of the production from the unit well. The lessee had been ordered by the Commissioner of Conservation to combine the two 40-acre tracts and the Court held that the effect of the Hunt Oil Company obtaining the permit to drill and the order of the Board to combine the two tracts into a unit "was in fact a unitization of the two 40-acre tracts", and the Court further said:
"The effect of the order was to substitute for the right of every owner of a mineral interest in a tract of land having an area less than 80 acres to receive all of his proportionate share of any oil or gas that might *695 be produced from the Bodcaw sand through a well drilled upon the land in which he owned the mineral interest the right to receive only his proportionate share of any oil or gas produced from the Bodcaw sand through a well drilled upon an 80-acre drilling unit embracing the land in which he had his mineral interest."
But especially in point is the case of Hardy v. Union Producing Company, (La.) 20 So. 2d 734, wherein the Court said: "Plaintiffs' argument is not tenable because the defendants in reality have not failed to perform any obligation of their contract. There was no obligation resting upon the defendants to drill a well during the primary term of the lease in the circumstances of this case according to a reasonable interpretation of the contract. If the contract should be annulled, plaintiffs could not drill a well on their 47-acre tract of land because it forms a part of the 640-acre drilling unit on which a well drilled by the Southern Production Company, Inc., is producing gas in paying quantities. Plaintiffs, as the owners of the leased premises, are entitled to receive the same revenue as they would receive if the well located in the Northeast Quarter of the Northwest Quarter of Section 11 was located on their 47 acres in Fractional Section 10. In other words, if the well of the Southern Production Company, Inc., was located on plaintiffs' 47-acre tract of land in Fractional Section 10, the production would be prorated among all the owners of the mineral rights in the drilling unit in the same proportion in which the production is now being distributed....
"So in this case, the clause in the lease requiring defendants to drill a well on the leased premises within the primary term of five years is not applicable where a well producing gas in paying quantities has been drilled on land within the drilling unit of which the leased land forms a part and where the lessee is prohibited by orders of the Department of Conservation from drilling a well on the leased premises. In other words, the right *696 of defendants to drill a well on the 47-acre tract covered by the lease was in effect taken away from them by the orders of the Commissioner of Conservation, with, however, the right reserved to them, as well as to the plaintiffs, to share in the production of the gas produced from the unit in proportion to their ownership. Defendants' hands were literally tied as the result of the orders issued by the Commissioner of Conservation and they could do nothing whatsoever to prevent the primary term of the lease from expiring without drilling a well thereon."
We think that whether a drilling unit has been established under constitutional provision or under valid statutes of the Legislature and the orders, rules and regulations enacted and adopted pursuant to the constitutional police power of the State, the effect of the unitization or pooling of leases should be the same. Moreover, (Hn 2) it is the duty of the Court to give our conservation statutes, and the measures adopted thereunder by a state agency created by the Legislature to carry out the public policy of the State, such a construction as would reasonably render the same constitutional and valid. The Court sustained their constitutionality on the former appeals involving this and other gas drilling units in the Gwinville Gas Field. Unless requiring oil and gas lessees to pool their several leases in a given area and to develop the area as a unit with only one producing well thereon has the effect of unitizing or pooling the respective interests of the mineral owners in the area, then the requirement for the pooling of the leases cannot be upheld as constitutional unless such action has the effect of placing all of the lands in the unit in production and extending the primary terms of the leases. Otherwise, only the lessee on the tract on which the producing well is drilled could receive any benefit from the leases in the unit.
In the instant case, the appellant, Superior Oil Company, expressly concedes in the concluding paragraph of *697 its original brief that a judgment should be entered here in favor of the appellee, Roy Beery, for 1/8th of 15/320ths of the market value of the gas produced from the Dale well from the date of first commercial production on February 1, 1947, to November 30, 1950, less severance taxes paid thereon, and we must therefore assume that the appellant would further concede that the appellee is entitled to the same relief from and after November 30, 1950, as to the gas being produced from the Dale well. But compare Wood Oil Company, et al. v. Corporation Commission, et al. (Okla.) 239 P.2d 1023.
The appellant contends that it has been willing at all times to settle with the appellee according to its above concession, but it made no tender of this portion of the gas except on condition that the appellee would sign an amendment to the original lease, and this portion of the gas was not unconditionally tendered unto the appellee in the pleadings. We are of the opinion that the defendant, Superior Oil Company, could not have relieved itself of the cost in the trial court proceedings without having made an unqualified tender of the amount to which it now concedes the complainant was entitled to receive.
From the foregoing views, it follows that the decree of the trial court in cancelling the appellant's claim under its lease and awarding the complainant 8/8ths of 15/320ths of the gas produced from the Dale well from and after the same came into commercial production was error, and that the cause should be reversed and remanded in order that it be ascertained what sum of money the complainant is entitled to receive on the basis of 1/8th of 15/320ths of the gas from and after commercial production on February 1, 1947, by the unit well.
But it is strongly urged on behalf of the appellee that to thus limit the portion of gas that he is entitled to receive from the date the unit well came into commercial production, and throughout the period that the same may remain in production, is to hold that the State Oil *698 & Gas Board had the power and authority prior to the enactment of Chapter 256, Laws of 1948, to force him to pool his mineral interest with other such interests in the established unit, and that there is no provision in the prior statutes whereby such power and authority is expressly conferred upon the Board. In response to this contention, it may be said that it is likewise true that neither the Acts of 1932 nor 1936 expressly authorized the establishment of gas drilling units as large in area as 320 acres or that the oil and gas lessees in such an area could be required to pool their leases and develop the area through production from only one well. (Hn 3) Nevertheless, we upheld the right of the Board to exercise such authority as a necessary incident to the prevention of the waste of gas and to protect the common source of supply thereof under the 1932 Act, and to prorate and regulate the gas well production from each common source of supply for the protection of public and private interests, and to adjust the correlative rights and opportunities of each owner of gas in a common source of supply under the Act of 1936, when we decided the cases of Green, et al. v. Superior Oil Co., ___ Miss. ___, 59 So. 2d 100; Superior Oil Company v. Beery, ___ Miss. ___, 59 So. 2d 689; Superior Oil Company v. Foote, ___ Miss. ___, 59 So. 2d 85; Superior Oil Company v. Morgan, et al., ___ Miss. ___, 59 So. 2d 105; Superior Oil Company v. Foote, ___ Miss. ___, 59 So. 2d 844, and Hutchins, et al. v. Humble Oil & Refining Company, ___ Miss. ___, 59 So. 2d 103.
In the Green case, supra, we said: "In California Company v. State Oil & Gas Board, 1946, 200 Miss. 824, 27 So. 2d 542, 28 So. 2d 120, this Court held that the 1932 and 1936 statutes had the effect of vesting in the Board the power to prescribe rules for the spacing of oil and gas wells, and to regulate the drilling for and production of oil and gas. We also think that the same statutes by necessary implication authorized the Board to establish *699 drilling units. This interpretation is supported by the California Company case, where the court implied the power to provide for the spacing of wells. See also Cities Service Gas Company v. Peerless Oil & Gas Company, 1950, 203 Okla. 35, 220 P.2d 279, affirmed in 340 U.S. 179, 71 S. Ct. 215, 95 L. Ed. 190; ..." And what we are now holding is that the effect of the establishment of a drilling unit of a given area and the prevention of the drilling of more than one well thereon is to necessarily pool the rights of the oil and gas lessees and all of the mineral rights in such area, because any other result would mean that only the oil and gas lessee that drilled the unit well could receive any portion of the 7/8ths of the gas produced therefrom, and only the owners of the minerals under the particular tract on which the well is drilled could receive any portion of the royalties from production, since it is only upon the theory that all other interests of the oil and gas lessees and of all other royalty interests have been pooled with the Dale tract that they can participate in the production from the Dale well.
However, it is further urged that the oil and gas lessees could pay the royalty owners enough to get them to voluntarily agree to the pooling of their mineral interests. But this contention overlooks the fact that the operation of a unit well for production of gas in a given area would be left to the will and pleasure of the mineral owners, some of whom may not be willing to agree to anything at any price. We think that when the Court, in the cases above enumerated, upheld the orders of August 11, 1947, and September 11, 1947, the last of which orders defined an "owner" who could be required to pool, as "The person who has the right to drill into and to produce from a field or pool, and to appropriate the production either for himself, or for himself and another," it then followed that we must go further and hold that (Hn 4) requiring the oil and gas lessees to pool *700 their leases in an established unit has the effect of extending the primary term of such leases, (a question that we pretermitted in those cases), since we are confronted with the fact that a well can be drilled only on one tract covered by a lease in the unit; that the pooling of the leases also has the effect of pooling the mineral interests of the royalty owners, for the reason that in no other way can the constitutional rights of the other oil and gas lessees in the unit be protected. As hereinbefore stated, (Hn 5) no valuable right will be thereby taken from the mineral owner since there is substituted for his right to have a well drilled on the tract under which he owns his minerals the right to receive the same portion of gas from the unit well that he would have been entitled to receive if a well had been drilled on his acreage, or on the tract in which he owns an undivided mineral interest, during the primary term of the lease; and it appears that Chapter 256, Laws of 1948, as amended by Chapter 220, Laws of 1950, merely spelled out how and by what procedure the several interests in an established drilling unit could be unitized, pooled or integrated from and after the enactment of these two later statutes, and which statutes do not affect the instant case.
Moreover, under these two later statutes if the owners of two or more separately owned tracts cannot agree, then the right is given to the State Oil & Gas Board to "integrate" the several interests, and in such event there is no defense available to the objector if the unit has been legally established and one of the owners of a separately owned tract in the unit is unwilling to agree to his mineral interest being unitized, pooled or integrated with the others.
Under the conservation laws hereinbefore discussed, an oil and gas lessee in a proposed drilling unit may obtain an exception to the general spacing rule where the granting of such an exception would prevent waste or the confiscation of the property of the applicant, but in *701 the instant case neither of the oil and gas lessees requested that an exception be granted, and it does not appear from the record that an exception would have been justified on the grounds above stated. We do not think that it was contemplated that the owner of an undivided mineral interest in one of the several tracts involved in a unit would be entitled to have an exception granted and a well drilled on the tract for the benefit of his undivided interest where his co-tenants in the tract are exercising their right to receive a portion of the production from the unit well. Again we say that the appellee cannot claim a portion of the value of the total production from the 50-acre tract without according to Dale the right to receive a portion of the gas drained from the 50-acre tract. This cannot be if the appellee receives 8/8ths of the gas produced from his mineral interest therein.
Moreover, we rejected the contention (by a failure to respond thereto on Suggestion of Error) in the case of Hassie Hunt Trust, et al. v. Proctor, et al., supra, that Proctor and others could have petitioned for an exception as to the 10 acres on which they held a lease in a 40-acre oil drilling unit there involved, there being no reason for the granting of such an exception. Nor did we hold in the case of Griffith, et al. v. Gulf Refining Co., et al., supra, wherein the appellants were mineral owners, that an exception should have been obtained for a well on the 90-acre tract which was a part of the 250-acre unit on which the permit for a well had been issued to drill as a unit.
This opinion has been prolonged to great length, both because of the importance of the questions involved and the necessity for studying nearly seven hundred pages of briefs and a voluminous record in this and the companion case with the view of obtaining the benefit of the thought and research given to each case by all of the several firms of attorneys interested. Naturally, it has *702 been impossible to discuss herein more than a few of the cases relied on in the briefs, but we have undertaken to discuss the controlling issues in the light of all the cases deemed to be of most value and in the light of the views of the participating judges as expressed in conference.
Reversed and remanded.
Roberds, Kyle, Holmes, Arrington, Ethridge and Lotterhos, JJ., concur. Lee, J., dissents. Hall, J., who considered himself disqualified, took no part.
LEE, J., dissenting:
Under the terms of the contract here involved, the lease was for a term of ten years, "and as long thereafter as oil, gas or other mineral is produced from said land hereunder." There was no provision for production by operation of law, as might be contemplated from forcible pooling. The only kind of production allowed for was "hereunder," that is, under this lease contract. Obviously the draining of gas from this land incidental to a well nearby was not within the contemplation of the parties at the time of the execution of the lease. And since no well was drilled on this acreage during the ten-year period, there was no production from this land "hereunder." Consequently, on December 29, 1949, the expiration date of this lease, Beery's 15/50ths reversionary interest became complete.
In the case of Koenig v. Calcote, et ux, 199 Miss. 435, 25 So. 2d 763, Calcote and wife, on October 4, 1935, executed a deed to Koenig for an undivided one-half interest in all oil, gas and minerals under 238 acres, subject to an outstanding oil and gas lease held by Sun Oil Company, executed on October 12, 1934, for a primary term of ten years. The land was not in production at the expiration of the primary term. This Court held that Koenig, under his deed, acquired "An undivided one-half interest in the reversionary fee in the minerals in place *703 and that upon the forfeiture of the outstanding oil and gas lease in favor of Sun Oil Company, this interest ripened into a fee simple title in a one-half undivided interest in all of the oil, gas and other minerals in place ..." See also Bailey v. Federal Land Bank, 207 Miss. 764, 43 So. 2d 375; 3 Summers Oil & Gas, Permanent Edition, Section 601, p. 486; Parten v. Webb, 1 So. 2d 76, 197 La. 197; 31A Texas Jurisprudence, Section 158, p. 276; Earp v. Mid-Continent Petroleum Corporation, 27 P.2d 855, 91 A.L.R. 188.
But the majority opinion holds that the State Oil & Gas Board had the power, under Chapter 117, Laws of 1932, and Chapter 305, Laws of 1936, to adopt its orders of August 11, 1947, and September 11, 1947, and thereby integrate and forcibly pool Beery's interest in this particular drilling unit.
It should be borne in mind that the Constitution of 1890, which, by Section 6, Article 3, thereof, recognizes the police power of the State, also contains a prohibition against the impairment of contracts, for Section 16, Article 3 thereof provides as follows: "Ex post facto laws, or laws impairing the obligation of contracts, shall not be passed."
It is my view, with the greatest deference, that neither of the foregoing chapters delegated to the Board the power to force owners in a given unit to pool their interests. To this end, an analysis of the applicable provisions of those chapters is in order.
The powers granted to the Board are set out in Section 5 (a), Chapter 117, supra, the applicable part of which is as follows: "The Board hereby created shall have authority to adopt and promulgate such rules and regulations as may be reasonable and proper and as it may deem necessary for the conservation of crude oil or petroleum and/or natural gas produced in the State of Mississippi and to provide such rules and regulations for the drilling, development, sinking, deepening, abandonment *704 and operation of oil and gas wells as may be necessary to prevent the waste of such products and to protect the common source of supply."
In this grant of power, nothing whatever is said about pooling, forced pooling, or integration.
Evidently in an effort to encourage the discovery and production of gas, by Section 38 of said chapter, the percentage of the open flow capacity that gas wells may be allowed to produce, and the sizes of tracts and the volume of flow permitted were fixed for 160, 80, 40, 20, 10, 5, and less than 5, acres. And the twelfth paragraph of said Section 38 provides for the location of the well on a given acreage, and for the drilling of offset wells, and that "such offset well or wells shall be allowed to produce the same percentage of open flow capacity as the well or wells so offset."
Not only is there no provision in Chapter 117, supra, which authorizes forced pooling, but, on the contrary, the language of Section 40 thereof is at complete variance with the idea of forced pooling, and, in my opinion, is positive proof that forced pooling was not within the contemplation of the Legislature, because that section encourages voluntary agreements between operators and royalty holders and declared that, when such agreements are approved by the Board, they shall not be held to violate the statutes relating to monopolies or contracts and combinations in restraint of trade. This section is as follows: "Agreements made in the interest of conservation of oil and gas, or the prevention of waste, between and among operators owning separate holdings in the same oil and gas pool, or in any area that appears from geological or other data to be underlaid by a common accumulation of oil and gas, or both, or between and among such operators and royalty owners therein for the purpose of bringing about the development and operation of said pool, or area, or any part thereof, as a unit of establishing and carrying out a plan for the cooperative development and operation thereof, when such *705 agreements are approved by the Board, are hereby authorized and shall not be held or construed to violate any of the statutes of this State relating to monopolies or contracts and combinations in restraint of trade."
Chapter 305, supra, merely amended Section 9, Chapter 117, supra, so as to provide a detailed method for the proration of gas and oil production.
It is true that in California Company v. State Oil & Gas Board, 200 Miss. 824, 27 So. 2d 542, it was held that the Board had the power to prescribe the general rule and regulation as to the spacing of oil and gas wells and to provide for exceptions thereto under given circumstances. In other words, the Board could prescribe the requisite number of acres for a gas unit. The opinion dealt solely with the proposition of spacing, and neither expressed nor implied that the Board could coerce or require the owners in a unit to pool their interests. Compare Dailey v. Railroad Commission, 133 S.W.2d 219, where the Court of Civil Appeals of Texas said: "If it be assumed that the conservation statutes authorize the Commission to require pooling of acreage and that such pooling is not inhibited by the fundamental laws of both the state and nation, upon which question we do not pass, a complete answer to the pooling contention is that the spacing rule in question does not provide for the pooling of lands... . The Commission can not arbitrarily require any pooling of acreage where it has no rule or regulation prescribing and defining pooling ..."
As against the contention that forcible integration and pooling should be implied, I find myself impressed by the fact that, although amendments to this effect were introduced in the Legislature during the 1940, 1942, 1944 and 1946 Sessions, in each instance, such amendments failed of passage. While there is authority to the contrary, "Courts construing a statute will take judicial notice of an attempted amendment thereof which failed *706 of passage, as indicative of legislative policy ..." 31 C.J.S., Evidence, Section 16, pp. 528-9.
Moreover, the first enactment of the Legislature, which expressly authorized forcible pooling and integration, is found in Section 10 (a), Chapter 256, Laws of 1948. It was there provided that when the persons owning the drilling rights and the rights to share in the production from an established drilling unit "have not agreed to integrate their interests, the Board may, for the prevention of waste or to avoid the drilling of unnecessary wells as to a drilling unit of forty acres in area or less, but as to no drilling unit of greater area, require such persons to integrate their interests and to develop their lands as a drilling unit. (Emphasis supplied.) That section not only did not delegate to the Board authority to require integration of drilling units of more than forty acres, but actually prohibited such forced integration. And it was not until the passage of Chapter 220, Laws of 1950, under Section 3 thereof, after the expiration of the lease in this case, that the Legislature delegated to the Board the power to integrate interests without reference to the number of acres in the unit.
Besides, if the Acts of 1932 and 1936, supra, in fact authorized compulsory integration and pooling of interests, then the subsequent Acts of 1948 and 1950, supra, were indeed vain and useless enactments. On the contrary, the very passage of these later Acts, to me, is convincing proof that the Legislature deemed that it had not, by the earlier Acts, delegated to the Board the power to compel owners in a given unit to pool their interests.
Thus, if it can be said that the effect of the August 11, 1947, and September 11, 1947, orders of the Board was to integrate and pool Beery's interest in this unit, then such orders should be declared ineffectual to accomplish those purposes, because the Board had not theretofore been invested with such power by the Legislature.
*707 In Price v. Harley, 142 Miss. 584, 107 So. 673, it was said that: "The obligation of a contract imports, for the most part, its binding force upon the obligor to perform the duty agreed on, according to the nature and effect of the contract ... The nature, construction, and effect of a contract are governed by the laws existing when and where it was made ..."
The majority opinion advances the proposition that the requirement of 320 acres for a drilling unit prohibited the appellant from carrying out its contract, and, unless the orders of August 11, 1947, and September 11, 1947, pooled these interests, it would be unjustly deprived of its property rights.
One answer to this contention is that the Board could, and did, make exceptions to the spacing pattern. It appears that, in this same field, Gulf Refining Company drilled 22 wells, and 20 of them were exceptions; Humble Oil & Refining Company drilled 32 wells, and six of them were exceptions; and that appellant drilled 17 wells, but that not one of them was an exception. In other words, the appellant, according to this record, made no effort whatsoever to obtain exceptions, and thereby prevent the confiscation of its property rights.
Another answer is that appellant made a solemn contract by which it agreed that, if it did not produce gas and oil from the land under this lease within ten years, its rights therein would cease. See Section 16, Article 3, Constitution of 1890, supra.
In Harmon v. Fleming, 25 Miss. 135, wherein two slaves were hired for a year and both of them died during the year, it was held that, since the parties knew, at the time of making the contract, that the slaves were subject to death before the expiration of the service, in the absence of a stipulation for an abatement of price in the event of death, there was no legal right to demand an abatement. The opinion stated the common law rule as follows: "Where the law casts a duty on a party, the performance shall be excused, if it be rendered impossible *708 by the act of God. But where a party, by his own contract, engages to do an act, it is deemed to be his own fault and folly, that he did not thereby expressly provide against contingencies, and exempt himself from liability in certain events; and in such case, therefore, that is, in the instance of an absolute and general contract, the performance is not excused by an inevitable accident or other contingency, although not foreseen by, or within the control of the party."
In Piaggio v. Somerville, 119 Miss. 6, 80 So. 342, it was held that the risk from unrestricted submarine attacks did not release from the contract to deliver a shipload of lumber, for it was said that: "the rule is that when a party by his own contract creates a duty or charge upon himself he is bound to discharge it, although so to do should subsequently become unexpectedly burdensome or even impossible; the answer to the objection of hardship in all such cases being that it might have been guarded against by a proper stipulation."
In Chism, et ux. v. Hollis, et al., 152 Miss. 772, 118 So. 713, as regards the enforcement of contracts, this Court said: "This lease imposes a possible burden on appellants' land. The parties were legally capacitated to contract. This Court does not make contract for such parties, and, under such circumstances, cannot substitute its opinion of what would be advantageous to the parties for their solemn agreement, and, whether wise or unwise, the parties must remain bound thereby. To hold otherwise would, in a measure, constitute the Court the guardian of the unwise. This step we cannot take."
In Bradley v. Howell, 161 Miss. 346, 134 So. 843, this Court said: "The province of courts in respect to contracts extends not a single step farther than the enforcement thereof as made by the parties, and courts must be careful that they go no farther. If the court should fail in enforcement, it would be only failure or omission; but, if upon any procedure or pretext the court *709 should go farther and make a contract between parties which they themselves never made or agreed upon and thereupon enforce the same as made by the court, this would be oppression."
In Browne v. Bryan Lumber Company, 188 Miss. 71, 194 So. 296, where the contract for the sale of crossties provided that they were to be shipped by water, it was held that even though it became impossible for the seller to ship by water, such fact did not relieve performance of the contract as regards his liability to a broker for his commission, and cites Harmon v. Fleming, supra, and Piaggio v. Somerville, supra, with approval.
The lease contained no provision for the preservation of the rights of appellant in event of governmental intervention or limitation or frustration whereby the performance of the contract might become impossible of fulfillment. In my opinion, such failure on the part of the appellant so to stipulate does not justify this Court in making for it a contract which it did not see fit to make for itself. Harmon v. Fleming, supra; Piaggio v. Somerville, supra.
The case of Berline v. Waldschmidt, 156 P.2d 865, decided by the Supreme Court of Kansas on March 10, 1945, is directly in point. In that case Berline acquired a lease which had been executed by Waldschmidt on May 27, 1939, for one-half of the minerals on a 5-acre tract. The lease was to run for a period of five years and as long as oil and gas should be produced from the premises. This lease was also subject to an outstanding oil and gas lease, and Berline had no right to develop under his lease until after the expiration of the prior lease on November 15, 1943. He sought an extension because he was prevented by governmental rules and regulations from drilling. The opinion of the Court, in applying the doctrine of commercial frustration, said that: "it is predicated upon the fundamental premise of giving relief in a situation where the parties could not reasonably *710 protect themselves by the terms of their contract against contingencies which later arose, and that it never applies to give such relief where the risk of the event that has supervened to cause the alleged frustration was reasonably foreseeable and could and should have been anticipated by the parties and provision made therefor within the four corners of the agreement which it is contended should be supplemented through operation and application of the doctrine. If the events relied upon as bringing the doctrine into force and effect appear to have been reasonably foreseeable and controllable by the parties they may not invoke its principles as a defense to escape their obligations and the contract is enforceable in accordance with the provisions to be found therein."
The opinion further referred to the laws in force in that state at the time of making the contract to-wit: "On the date of the execution of the mineral deed there was in force and effect (Laws 1939, Ch. 227, now G.S. 1943 Supp. 55-602 to 55-509 (b), incl.), regulating the production of oil in Kansas, and giving the Corporation Commission of the State authority to make and enforce rules, regulations and orders, in connection therewith. Prior to that time and as early as 1931 Kansas had recognized the necessity of conservation and elimination of waste and from that time down to 1939 comprehensive legislation had been enacted regulating and insuring the production of crude oil and natural gas without waste... . So, at that time, it must be concluded the appellant knew, or if he did not know he was bound to know, that the laws of Kansas permitted the spacing of oil wells in a manner similar to that subsequently provided for by the federal legislation which resulted in the situation described in his petition." See also Gas Ridge, Inc. v. Suburban Agricultural Properties, Inc., 150 Fed.2d 363, a Texas case.
*711 The difference in the relative positions of the appellant and the appellee is that spacing, under the Acts of 1932 and 1936, supra, was reasonably foreseeable at the time of the execution of the lease. Appellant should have, therefore, anticipated that it would meet with just such a situation as now obtains, and to that end, should have contracted against such eventuality. So, while spacing, or a pattern for drilling, was reasonably foreseeable, there was no provision in either of those Acts whereby the several owners of interests in a drilling unit could be forced to pool their interests. As I see it, no restriction or limitation whatever on their freedom of contract is to be found in those Acts. Thus, the appellee could not reasonably foresee that his contract would be impaired and his interest forcibly pooled, inasmuch as the Legislature, in those Acts, delegated no such power to the Board.
The appellant knew about Beery's interest prior to, and at the time of, drilling the well, if it made any investigation of the land records. It knew that, in accordance with the contract, he would have a 15/50ths reversionary fee interest on December 29, 1949. It was in the same position in this regard as Hassie Hunt Trust was in Hassie Hunt Trust v. Proctor, 215 Miss. 84, 60 So. 2d 551, namely that the Proctors were claiming a lease on the south ten acres of the forty involved. In that case, this Court held that the Hassie Hunt Trust was liable to the Proctors for a 1/4th interest in the production from the oil well, less 1/4th of the cost of drilling and maintenance thereof. In my opinion, if the Court should follow that case, it would be necessary to affirm this one.
The appellant has changed its position completely since the original hearing before the State Oil & Gas Board, and which was heard by this Court under the style of Superior Oil Company v. Beery, ___ Miss. ___, 59 So. 2d 689. The appellant recognized the necessity of obtaining voluntary pooling agreements, and secured *712 such agreements from all interested parties except Beery. Failing in this particular, it then sought forcible integration, under the provisions of Chapter 220, Laws of 1950. In the case now before us, however, it now contends that it was unnecessary to obtain such pooling agreement from Beery, and on the contrary, his interest had theretofore been pooled by operation of law. The majority opinion holds, however, that these positions are not inconsistent.
In Superior Oil Company v. Foote, 214 Miss. 857, 59 So. 2d 85, the Court upheld the validity of Section 10, Chapter 256, Laws of 1948, as amended by Section 3, Chapter 220, Laws of 1950, under which the State Oil & Gas Board was authorized to require the owners in an oil or gas drilling unit to pool and integrate their interests to prevent waste or the drilling of unnecessary wells. In the opinion in that case the Court said this: "The Board's order integrated the interests of appellees and all other owners, and correctly stated that it did not adjudicate what those interests were, that is, whether the establishment of the drilling units or the order of integration had the effect of extending or reinstating the primary terms of the leases. Hence we do not consider or decide those questions. We review only the order."
In Green v. Superior Oil Company, ___ Miss. ___, 59 So. 2d 100, the Court said: "This is essentially a companion case to Superior Oil Company v. Foote, 214 Miss. 857, 59 So. 2d 85. It involves substantially the same issues as were raised in the Foote case, concerning the validity of an order of the State Oil and Gas Board requiring appellants to pool and integrate their interests in two gas drilling units in the Gwinville Field with all of the other owners in the units. We have studied carefully the record in the present case, and for purposes of the decision refer to and adopt the opinion in the Foote case referred to above. A few additional comments *713 concerning the present facts and points argued here are pertinent.
The court there disclaimed any purpose of deciding the issue now presented in the following words: "Appellants also state that Superior should have reasonably foreseen that spacing rules would at some time be adopted by the Board, when Superior obtained its leases in the late 1930's, and should have incorporated in its leases pooling clauses; that having failed to do this Superior cannot be relieved of its duties as lessee and of the terms of the leases by the compulsory pooling order of the Board; and that impossibility arising subsequent to the making of a contract does not excuse nonperformance of it as to events reasonably foreseeable. 17 C.J.S., Contracts, Section 463; 1 A.L.I., Restatement, Contracts, Sec. 288. Appellants rely upon Berline v. Waldschmidt, 1945, 159 Kan. 585, 156 P.2d 865. However, this argument presupposes that under the statutes the Board's actions extended the primary terms of the leases, and we do not consider or express any opinion upon that point in this case. The Board's order directed the integration of appellants' interests whether they were unleased, or subject to leases. In the latter event, appellants' interest would consist in part of a possibility of reverter."
In Superior Oil Company v. Griffith, 214 Miss. 891, 59 So. 2d 104, on the authority of Hutchins v. Humble Oil & Refining Company, ___ Miss. ___, 59 So. 2d 103, and Superior Oil Company v. Foote, supra, the Court reversed the judgment of the circuit court and upheld the order of the Board and said: "but likewise without adjudicating the effect of such order upon the nature or extent of the rights of the respective owners."
In Hutchins v. Humble Oil & Refining Company, supra, it was said: "We are therefore without power in this proceeding to adjudicate the effect of the order upon *714 the property rights of appellants, regardless of its importance to them."
In Superior Oil Company v. Beery, supra, in construing the case of Superior Oil Company v. Foote, supra, the Court said: "In that case, the Court did not decide whether the establishment of the drilling units or the order of integration had the effect of extending or reinstating the primary terms of the leases. Neither do we decide that question in this case, but leave the same for consideration and decision, when and if such question may be properly before us."
Although this Court, in five decided cases, said that it was not deciding whether the establishment of drilling units or the orders of integration had the effect of extending or reinstating the primary terms of the leases, the majority opinion now says: "In other words, we think that the decision in the Green case (59 So. 2d 100) went a long way toward deciding the issue now before us."
But even assuming that, under the Green case, supra, the 1932 and 1936 Acts, by necessary implication, authorized the Board to establish drilling units, this is a far cry from the further step of compelling the holders of interests in such drilling units to pool their interests. In other words, although the Board, under such assumption, had the power to designate a certain 320 acres as a gas drilling unit, it still was without power to compel the drilling of a well, and was without power, until the enactment of Chapter 220, Laws of 1950, to require the affected parties to pool their interest. After the designation of the unit, the parties could take it or leave it alone.
While the Legislature, by the Acts of 1932 and 1936, granted to the Board, in my opinion, very limited powers, the effect of the majority opinion is to hold that such powers were, in fact, unlimited, and that the Board, under the guise of preventing waste and avoiding the *715 drilling of unnecessary wells, can do just about whatever it desires.
I am unwilling to approve or justify the impairment and destruction of the rights of citizens, based and founded upon solemn written contracts, by invoking the police power of the State, unless and until the sovereign, through its Legislature, shall make that purpose clear and decisive. In the sincere and earnest belief that the wrong result has been reached in this case, I must, with the greatest deference, respectfully dissent.
ON SUGGESTION OF ERROR
Apr. 27, 1953 29 Adv. S. 34 64 So. 2d 357
ROBERDS, J.
Appellee again argues that the 1932 and 1936 conservation statutes did not authorize the State Oil & Gas Board to promulgate rules and orders establishing drilling units, and that therefore there was accomplished no pooling of all the mineral interests in Unit No. 39. However, that question in substance had already been decided adversely to this contention in the following cases: Superior Oil Company v. Beery, 59 So. 2d 689 (Miss. 1952); Green v. Superior Oil Company, 59 So. 2d 100 (Miss. 1952); Superior Oil Company v. Foote, 214 Miss. 857, 59 So. 2d 85, 844 (1952); Superior Oil Company v. Griffith, 214 Miss. 891, 59 So. 2d 104 (1952), suggestion of error sustained in part, 214 Miss. 900, 60 So. 2d 505; Hutchins v. Humble Oil & Refining Company, 59 So. 2d 103 (Miss. 1952); Superior Oil Company v. Morgan, 59 So. 2d 105 (Miss. 1952). To the same basic effect are Griffith v. Gulf Refining Company, 215 Miss. 15, 60 So. 2d 518 (Miss. 1952), Hassie Hunt Trust v. Proctor, 3 Adv. S. 5, 60 So. 2d 551 (Miss. 1952), and Humble Oil & Refining Company v. Welborn, 15 Adv. S. 1, 62 So. 2d 211 (Miss. 1953).
(Hn 6) Appellee's contention that the Court has placed an unwarranted construction upon the habendum clause *716 in his lease ignores the fact that this provision must be read in the light of the statutes, the rules of the Board, and of the acts of the Board and lessees in creating the unit, and that this case is decided by those factors, and not by the terms of the lease. The present decision, holding that the effect of the establishment of the drilling unit is to pool all interests in the unit and thereby to extend the terms of all leases then in effect, is a logical and necessary step in the light of all of the foregoing cases, and is essential in giving practical effect to the establishment of the unit. In brief, production on the unit is the equivalent of production on appellee's land.
(Hn 7) Appellee suggests that we should take judicial notice of the fact that bills to amend the conservation statutes, in order to expressly confer the power of compulsory pooling on the Board, failed of passage in the 1940, 1942, 1944, and 1946 sessions of the Legislature, but this circumstance, if it exists, is not persuasive of legislative intent as to an already existing statute. Sears Roebuck & Company v. State Board of Optometry, 213 Miss. 710, 726, 57 So. 2d 726 (1952).
It is argued that the remedy of compulsory pooling is a judicial or quasi-judicial function, and for a compulsory order to be constitutionally valid, it must have been granted after notice and hearing to the parties affected by it; that no notice was given to appellee prior to the creation of the unit, and that therefore its creation is void as being violative of the due process clause.
Appellee concedes that in making regulations for spacing and for proration of production the Board acts in a legislative capacity, citing California Company v. State Oil & Gas Board, 200 Miss. 824, 27 So. 2d 542 (1947). And in that case the Court also held that in the granting of an exception to the spacing rules the Board was acting in a legislative and not a judicial capacity.
The first Beery case, 59 So. 2d 689, adopted and followed the decision in Superior Oil Company v. Foote, 214 Miss. 857, 59 So. 2d 85, 94 (1952). It held that the *717 present Unit No. 39 had been established prior to the 1950 integration order based on the 1950 statute. The Foote opinion then held: "The only answer to that proposition which the appellees seriously argue is that Sec. 9 (b) requires a notice and hearing before the Board before the establishment of a drilling unit for each particular unit on the ground; and that no such notice and hearing was held for the establishment of Units 32 and 33. However, the joint operating agreement of August 4, 1948, designating Unit 33, and the designation of Unit 32 of May 18, 1948, were made at a time when appellees' and other owners' mineral interests were under admittedly effective leases owned by the parties to those instruments designating the units. Those lessees owned the exclusive right to drill for and produce gas. (Hn 8) And in the drilling and spacing of wells, the lessee represents the royalty owners. 31-A, Texas Jur., Oil and Gas, Sec. 426, p. 746." This decision, applicable to the law and the rules in effect prior to the repeal of the 1932 and 1936 statutes, is res judicata on the question of notice and hearing.
In Griffith v. Gulf Refining Company, 215 Miss. 15, 60 So. 2d 518, 521 (Miss. 1952), it was there also held that where the unit was created without formal notice and hearing, under the laws prior to the 1948 Act, the lessee in the spacing and drilling of wells represented the royalty owners. A similar result was reached in Hassie Hunt Trust v. Proctor, 215 Miss. 84, 60 So. 2d 551 (Miss. 1952).
The foregoing principle established in these cases as to the creation of pooled units under the 1932 and 1936 statutes represents a practical and equitable result. The general rule is that in the drilling and spacing of wells the lessee represents the royalty owners. The Board was authorized to establish rules for spacing and for drilling units, which it did, after notice and hearing prior to the field-wide rules. There are two or more tracts within the unit, and once the unit is established no other well *718 could be drilled in it under the rules of the Board. The location of the well was fixed and approved. There was nothing left for the Board to pass upon in ordering integration of the unit. The responsibility for drilling the well and for paying the royalty owner his share of production is on the lessee alone. The royalty owner's only concern is that he obtain his pro rata portion of the production. Hence under the 1932 and 1936 laws notice and hearing to lessors prior to creation of a particular unit on the ground would serve no useful purpose, after the field-wide rules were made. Gulf Refining Company v. Griffith, 2 Adv. S. 27, 60 So. 2d 525, 526 (Miss. 1952).
Moreover, on this record there would have been no basis for the granting of an exception to the spacing rules, so as to allow the drilling of a well on the 50-acre tract in which appellee had a 15/50th interest subject to lease. An exception could be granted under the statutes and rules prior to the 1948 law only to prevent waste or to avoid confiscation of property. It was not necessary to prevent waste. The Board had already adjudicated that one well would efficiently drain 320 acres, and there is no showing to the contrary. As was held in the first Beery case, and in Superior v. Foote, 214 Miss. 857, 59 So. 2d 85, 95, the 1947 rules "for the Gwinville Field are premised on the finding by the Board that such rules are necessary to prevent waste."
The only other basis for an exception would be in order to prevent confiscation of appellee's property. The Board's rule for exceptions before the 1948 Act was similar to Rule 37 of the Texas Railroad Commission. The Supreme Court of Texas, in Gulf Land Company v. Atlantic Refining Company, 131 S.W.2d 73, said "The term `confiscation' evidently has reference to depriving the owner or lessee of a fair chance to recover the oil and gas in or under his land, or their equivalents in kind. It is evident that the word refers principally to drainage." The orders of August and September, 1947, required *719 appellant and other lessees in the unit to pool all interests. This was done. As the result of this pooling, which was done at the command of the Board, appellant, appellee and others in the unit were able to recover the gas in or under their lands or its equivalent in kind. There was, therefore, no basis for an exception to the Board's rules, for neither appellant nor appellee could show that the Board's orders would result in confiscation. It is undisputed that there was substituted for appellee's right to have a well on his land the right to receive the same amount from the unit well as he would have been allowed to receive under the proration statutes. The allowable production from a well is apportioned according to the acreage content of the unit on which the well is drilled. In other words, there could not possibly exist any confiscation of appellee's property because he is receiving in Unit 39 exactly the same amount of gas as he would have been allowed to receive if he had obtained an exception.
Moreover, as the Court observed in the original opinion, the statutes dealing with exceptions to the drilling rules do not contemplate that the owner of an undivided mineral interest, here 15/50ths in a 50-acre tract subject to lease, would be entitled to have an exception granted and a well drilled on the tract for the benefit of his undivided interest only, where all of his co-tenants in the tract are participating in unit production and are not therefore eligible to join in a request for an exception. Appellee seeks in this suit in equity to participate in the production from the unit well located on lands other than his (which he could not do at common law), but he does not want to also assume the responsibilities and duties incurred by those within the unit. This inequitable position in a converse situation was condemned in the Griffith and Hassie Hunt cases.
Appellee next argues that the express repeal of the 1932 and 1936 statutes, by Chapter 256, Laws of 1948, destroyed any pooling of appellee's interest which may *720 have occurred by virtue of the earlier statutes and rules. The 1948 Act, approved by the Governor on April 9th, went into effect thirty days thereafter, on May 9, 1948. Prior to the effective date of the 1948 statute, Unit 39 had been created and established. Superior Oil Company v. Beery, 59 So. 2d 689 (Miss. 1952).
Section 21 of Chapter 256 repeals only the 1932 and 1936 statutes and not established drilling units. Nor is an implication of the latter type of result warranted by the enactment in Section 10 of a compulsory pooling statute for future use. Section 21 does not have the scope imputed to it by appellee. The statute repeals the 1932 and 1936 laws and "all other laws and parts of law in conflict herewith." It does not repeal completed actions of the Board prior thereto. It is a general repealing statute, and in effect operates as a declaration of what would be the legal effect of the act without that provision. It does not warrant an implication of a more extensive repeal. 50 Am. Jur., Statutes. Section 520. The same text in Section 526 says that (Hn 9) the repeal of a statute does not affect rights which have accrued and vested under the repealed statute, and that construction is to be avoided which will give a retrospective operation to a repealing statute.
Unit No. 39 was created and established before the effective date of the 1948 Act. Section 21 has prospective operation only and is not retrospective. It was not designed to cancel accrued or vested rights and to have retrospective operation. Nor do its terms warrant such a reading as would raise that serious constitutional issue. And of equal significance, the suggested interpretation would result in the cancellation of every unit created and every act done by the Board prior to the 1948 Act. We do not think that this was the legislative intent.
(Hn 10) Appellee says finally that the pooling order of the Board of September 20, 1950, made under the 1950 statute, was held valid in Superior Oil Company v. Beery, 59 So. 2d 689, and that such order rendered res judicata *721 the matter of when Unit 39 was pooled; and that when the Board in September 1950 integrated Unit 39 under the 1950 statute, this was res judicata that there had been no integration prior to that date.
However, the original decision of this Court on appeal from the 1950 integration order expressly held that Unit 39 had been "legally established" prior to the order of September 1950. That case did not consider or adjudicate whether the effect of the establishment was to extend the lease. That question was expressly pretermitted, and that is the question here. Hence the integration order of September 20, 1950, and this Court's decision concerning it, in 59 So. 2d 689, is not res judicata of the issue decided here, since the present issue was not considered in the first Beery case. Moreover, the petition of Superior Oil Company in the first Beery case asked the Board for "the establishment or re-establishment, designation or re-designation, approval or re-approval of gas drilling Unit No. 39." The final order of the State Oil & Gas Board, dated September 20, 1950, which was there affirmed, adjudicated that the lands in question "have been heretofore duly and legally established as gas drilling and producing Unit No. 39"; and that the same was "reapproved". Hence appellee's argument that the order of 1950 adjudicated that prior thereto there had been no unit established has no factual basis in the record. The order itself, on the contrary, reflects an adjudication that the unit had previously been legally established as a gas drilling and producing unit.
Suggestion of error overruled.
McGehee, C.J., and Kyle, Holmes, Arrington and Ethridge concur. Hall, J., took no part.
LOTTERHOS, J., Dissenting.
It is my opinion that the suggestion of error should be sustained.
*722 The gist of the holding of the Court in the original decision and in the majority opinion on the suggestion of error is that when Unit No. 39 was established under the authority of Chap. 117, Laws of 1932 and Chap. 305, Laws of 1936, it necessarily followed that there was a forced pooling of all mineral interests therein for production in and from said unit, and that, therefore, the lease on Beery's mineral interest was extended beyond the primary term, in spite of the refusal of Beery to agree to pooling, upon the theory that, because of said forced pooling of his interest, there was production under the lease from the land in which he owns an interest.
The fallacy in that holding lies in the fact that the establishment of a drilling unit is not the same thing as the creation of a pooling arrangement with respect to the several mineral interests. It appears clear that when a drilling unit is established, the particular acreage is set aside as the area upon which one well may be drilled by those having the right to drill under leases; and that the establishment of such unit does not in and of itself change the property rights of the interested parties nor force integration of mineral interests within the unit. The difference and distinction between the establishment of a drilling unit on the one hand and forced pooling of mineral interests on the other, is well illustrated by the provisions of Chap. 256, Laws of 1948. Of course, that statute does not apply in substance to the case at bar, because it was enacted after the pertinent events in this case had occurred. However, it is convincing upon the distinction between the terms referred to.
Sec. 4(g) of said Chap. 256 defines the word "owner" as "the person who has the right to drill into and produce from any pool, and to appropriate the production either for himself or for himself and another or others." In other words, the lessee is the owner. Sec. 6(c) grants to the board authority to make rules, regulations, and orders for several purposes, including "(11) To regulate the spacing of wells and to establish drilling units." *723 Sec. 9(a) authorizes the board to regulate the drilling and location of wells in any pool and the production therefrom so that "each owner" shall have the right to recover his fair share of the oil and gas in the pool. Sec. 9(b) directs the board to "establish a drilling unit or units for each pool," for the prevention of waste and to protect and enforce the correlative rights of "the owners" in the pool. The sections referred to up to this point concern the establishment of drilling units, and it will be noted that they concern and affect "the owners", that is, the lessees having the right to drill. This statute contemplates and provides for the creation of drilling units, in so far as the above mentioned sections apply, without regard to whether there is or shall be a pooling or integration of mineral interests.
We now come to Sec. 10(a) of this statute, which has to do with pooling. It is there provided that when separately owned tracts of land are embraced "within an established drilling unit", the "person owning the drilling rights therein" (the lessee), and the "rights to share in the production therefrom" (the royalty owners), may validly agree to integrate their interests and develop their lands as a drilling unit. It will be noted that, as a condition precedent to the right of the persons having the drilling rights and the persons having the right to share in production to validly agree to integrate their interests, there must be an established drilling unit. This is recognized in the decisions of this Court which have upheld forced pooling under said Chap. 256, Laws of 1948, as amended by Chap. 220, Laws of 1950. Said Sec. 10(a) of the 1948 statute further provides that if "such persons" have not agreed to integrate their interests the board may, as to a drilling unit of 40 acres in area or less, require "such persons" to integrate their interests and to develop their lands as a drilling unit. It is to be observed that Sec. 10(a), in dealing with integration of interests or pooling of interests, either by voluntary agreement or by directive of the board, deals with *724 and affects both the lessee, as the person owning the drilling rights, and the royalty or mineral owners, as those having the right to share in the production from the drilling unit. Sec. 10(c) of the act provides that if "the persons owning the drilling or other rights in separate tracts embraced within a drilling unit fail to agree upon the integration of the tracts and the drilling of a well on the unit," and it develops that the board is without authority to require integration, then "the owner" (that is, the lessee), of each tract embraced within the drilling unit may drill on his tract, but the allowable production from such tract shall be reduced in proportion to the acreage of such tract.
If, under the 1948 act, forced integration can be provided only upon a showing that precedently a drilling unit has been established, it then follows that the establishment of the drilling unit is something separate and distinct from the pooling and integration of mineral interests. This Court has held in The Superior Oil Company v. Foote, 214 Miss. 857, 59 So. 2d 85, and in other cases cited in the original opinion and in the majority opinion on the suggestion of error, that under the 1932 and 1936 statutes the board had authority to establish drilling units and that it did establish drilling units. This proposition is now settled and, it appears, correctly, since these statutes authorized the board to regulate drilling, development, etc., in order to prevent waste and protect the common source of supply. However, in each of these cases concerning gas units in the Gwinville field, the Court expressly excluded from the decision any consideration and any action with respect to property rights as between lessors and lessees, or with respect to the extension of primary terms of leases. In other words, the Court declined at that time to determine whether those acts and transactions which served to establish drilling units under the statutes of 1932 and 1936, also served to enforce integration and pooling of mineral interests within such units. That question is squarely *725 presented to the Court in the case now under consideration and other pending cases.
The 1932 and 1936 statutes granted to the board general power only with respect to the regulation of drilling and development, without specifying details. This Court has held that in the exercise of that power the board established certain drilling units based on spacing regulations. In my opinion, those statutes of 1932 and 1936 did not empower the board to force integration and pooling of interests. Furthermore, the board did not consider that it possessed that power, nor did it attempt to exercise such power. The effect of the original opinion in the case at bar is to hold that those statutes of 1932 and 1936 empowered the board to force integration, and that the board did in fact force integration, even though it entered no order nor took any action which purported to exercise such power. That holding is, in my view, erroneous.
It is recognized that when Unit No. 39 was established, Superior was confronted with a difficult situation, in that only one well could be drilled on the 320 acres, and there was no pooling provision in its lease. It appears that Superior was in danger of not being able to extend its lease beyond the primary term, because the spacing regulations and the establishment of the unit prevented it from drilling a well upon the land included within its lease. That situation in which Superior found itself seems to have had great weight with the Court, as shown by the original opinion.
It is to be kept in mind that although the board had promulgated spacing regulations requiring drilling units of 320 acres, yet that the actual establishment of the drilling unit was the result of voluntary action of Superior and other interested lessees in taking appropriate steps to designate and establish the unit and obtain board approval thereof. When the unit was so established and when it appeared that only one well could be drilled upon the unit, it seems that Superior had several courses of *726 action open to it. It might obtain pooling agreements from its lessors and royalty owners. It attempted to do so but was unable to obtain such agreement from Beery. Another recourse was to apply to the board for an exception to the established unit. It appears that this effort was not made. The board's spacing order contained in the regulation of August 11, 1947, provided for exceptions, "in order to prevent waste or to prevent the confiscation of property"; and that upon the granting of an exception the board would limit production or use other means to offset any advantage which the person securing the exception might have over other producers by reason of the drilling of the well as an exception, and so that the producer of the well drilled as an exception would be allowed to produce no more than his just and equitable share. For aught that appears, Superior might have obtained an exception in order to drill upon the tract in which Beery is interested, to prevent the confiscation of its property by loss of the right to extend the primary term of the lease by drilling.
The other course of action which was open to Superior was to proceed to pool or integrate its interest as lessee with similar interests of other parties, and proceed to develop the unit as established, receiving its proper portion of the production, whatever that might be. That was the course which Superior followed when it was unable to come to an agreement with Beery with respect to integration of his mineral interest.
Great weight has been given in the original opinion to the fact that Beery is and will be entitled to receive the same material benefits from royalties from the well drilled on the adjoining tract in the unit, as he would have received if a well had been drilled on the tract in which he owns a mineral interest. The argument based thereon is very persuasive, when this case is viewed upon a practical basis. However, it seems to me that Beery owned and owns a definite title to fifteen mineral acres, which was subject to a lease, expiring on a fixed day, *727 unless prior to that date there was production from a well drilled thereon. The property right, including the full mineral interest in said fifteen acres from and after the date of expiration of the primary term, could not be taken away from him and such taking justified upon the ground that the party taking his property was prepared to pay to him an amount of money equal to what he would have received if the lessee had drilled upon the land in which he was interested. In this connection, reference is made to the dissenting opinion of Justice Lee on the original decision of this case. (21 Adv. S. 88, 63 So. 2d 131).
There are other propositions involved in this case, but it is not deemed necessary to set forth my views thereon, since, in my opinion, the suggestion of error should be sustained for the reasons stated.
Lee, J., joins in this dissent.
ON MOTION TO RETAX COSTS
June 8, 1953 34 Adv. S. 180 65 So. 2d 455
ARRINGTON, J.
(Hn 11) This motion is controlled by the decision in the case of The Superior Oil Company v. Alfred Foote, et al., No. 38562, this day decided.
Motion to retax costs of transcript on basis of 25¢ per 100 words sustained, on condition that the Chancery Clerk furnish a correct, amended statement of costs.
All Justices concur, except Hall, J., who took no part. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2373061/ | 783 S.W.2d 674 (1989)
GILL SAVINGS ASSOCIATION, Appellant,
v.
CHAIR KING, INC., Appellee.
No. C14-88-0351-CV.
Court of Appeals of Texas, Houston (14th Dist.).
December 21, 1989.
Rehearing Denied January 18, 1990.
*675 Paul Curl, San Antonio, Joanne Vorpahl, Houston, Thomas B. Black, San Antonio, for appellant.
Dennis G. Herlong, Houston, for appellee.
Before PAUL PRESSLER, CANNON and ELLIS, JJ.
OPINION
PAUL PRESSLER, Justice.
Appellee sued for damages resulting from its eviction from the West Oaks Central Shopping Center. Following a non-jury trial, the trial court awarded the appellee actual and punitive damages and attorney's fees. We affirm on liability, modify the award of attorney's fees and reverse and remand on damages.
Since the parties disagree as to the facts, they are reconstructed allowing for both versions. Chair King sells pool, patio, dinette and bar furniture. In May 1985 the *676 company opened its fourth Houston store in West Oaks Central Shopping Center, which was owned by Westoaks Central, Ltd. and financed by Gill Savings Association. N.B.C. Bank-Heights had financed Chair King's inventory and signed an agreement with Westoaks subordinating its landlord lien to N.B.C. Bank-Heights' first lien on all of the inventory and fixtures. This subordination agreement required that the bank be given a copy of any notice of lease default by Chair King in order to give the bank the option of curing the default.
West Oaks Central was newly constructed, and there were difficulties resulting from construction defects, the maintenance and the dearth of tenants. In January 1986 Westoaks defaulted on its loan and assigned the rents to Gill Savings. Gill Savings essentially took over the management of the center and foreclosed on it in October 1987. Shortly after moving into the center, Chair King submitted a "punch list" of defects, most of which it claims were never remedied. After repeated requests for repairs, particularly a ladder allowing access to the roof in order to service the air conditioners, Chair King notified Gill Savings and Westoaks that it considered the lease to have been breached and that it would, therefore, withhold rent. Chair King offered to place the rent into an escrow account. Gill Savings did not then demand the rent or evict Chair King but, instead, agreed to the escrow arrangement. For reasons that are disputed, the escrow account was never opened.
Meanwhile, Gill Savings was negotiating to rent space in the center to Toys `R' Us, a national toy store chain, which evidently had specific requirements that could be met only by Chair King's space. Gill Savings contacted Chair King's president, Marvin Barish, to see if he were interested in moving the store to a comparable space in the center. Discussions were continuing when, on April 8, 1987, Westoaks sent a demand letter for the delinquent rent to Chair King. Gill Savings allegedly instigated the letter, and its counsel prepared it. Westoaks did not send a copy to N.B.C. Bank-Heights as required by the subordination agreement. Barish claims he was told by Gill Savings not to worry about the letter. On April 20th, representatives from Gill Savings met with Barish and his son to discuss the terms of the proposed move, which would include the abatement of the delinquent rent, a rental rate of fifty cents per square foot, and payment of both moving expenses and finishing costs. Given a choice between spaces previously occupied by W. Bell and Denhome, Chair King chose the W. Bell space.
The Gill Savings' representatives, Jae Carpenter and Jonathan Shapiro, discussed the proposed terms with their loan committee. They then called Barish and told him their "best deal" was the Denhome space at sixty-five cents per square foot and a slightly lower amount than requested for the tenant finish. Barish rejected those terms. As he was leaving town for a week, he understood that Carpenter would continue talking with the loan committee. Carpenter maintains, however, that his final comment to Barish was that if the offer were unacceptable, other alternatives would have to be considered. Gill Savings then hired a moving company and evicted Chair King during the early morning hours of May 3rd, the day before Barish's return.
Upon his return, Barish obtained a temporary injunction requiring that his company be reinstated in its old space and that its inventory be returned. The inventory was not returned until May 26th, and some of it was lost or damaged. The store did not reopen until the 30th. Under the terms of the injunction, Chair King was ordered to move out permanently by September 1987. It has since been unable to open another store in the west Houston market.
Chair King thereupon sued Gill Savings for fraud, breach of contract and numerous other torts. The trial court found for Chair King and made extensive findings of fact and conclusions of law. Gill Savings' liability was assessed at $144,309 actual damages and $355,277 punitive damages. Gill Savings appeals the judgment on twelve points of error.
Many of Gill Savings' points of error challenge the trial court's findings of *677 fact and conclusions of law. The trial court's findings of fact are reviewable for legal and factual sufficiency of the evidence by the same standards which are applied in reviewing the legal or factual sufficiency of the evidence supporting a jury's answer to a jury question. Okon v. Levy, 612 S.W.2d 938, 941 (Tex.Civ.App. Dallas 1981, writ ref'd n.r.e.). In a no evidence point of error, only the evidence and inferences that support the challenged finding will be considered, and all contrary evidence and inferences will be disregarded. Davis v. City of San Antonio, 752 S.W.2d 518, 522 (Tex.1988). In a factual sufficiency point of error, all of the evidence will be considered and the finding will be set aside only if the evidence is so weak or the finding so against the great weight and preponderance of the evidence that it is clearly wrong and unjust. Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965). Conclusions of law drawn from the findings of fact are reviewed to determine their correctness. Mercer v. Bludworth, 715 S.W.2d 693, 697 (Tex.App.Houston [1st Dist.] 1986, writ ref'd n.r.e.).
In its first point of error, Gill Savings argues that the eviction was valid, the alleged defects did not justify the withholding of rent, the eviction was not tainted with fraud or barred by estoppel and the related findings of fact and conclusions of law are not supported by the evidence.
This case began as a landlord/tenant dispute over certain alleged defects. The trial court found that there were numerous material defects in the leased premises and that these unrepaired defects made the "lease unsuitable for its intended purpose." Marvin Barish testified that after moving into the store, he submitted a list of fifteen problems, two of which were fixed during the next two years. He also identified several photos, taken two years after the store opened, of roof leaks, fallen ceiling tiles and roofing materials that had come through the ceiling. Continued lack of access to the air conditioning equipment on the roof as required by the Uniform Building Code was the last straw, and Barish notified West Oaks in May of 1986 that Chair King considered this a breach of the lease and would withhold rent until the ladder was provided. Late in May he wrote the management company, listing nine defects, including the access problem and leaks in the roof, air conditioners, side door and patio doors. Only the access problem was ever resolved. Chair King placed into evidence a Gill Savings internal memorandum dated January 27, 1987, in which someone sent to inspect the property detailed numerous problems with the center and stated that the general atmosphere was one of disaster. A February 11, 1987, market research report from an independent company, introduced to contradict the memorandum, stated only that the center was clean and had good eye appeal.
The manager of the West Oaks store corroborated Barish's testimony. He added that he was the one who cleaned up any water damage or tile that had fallen. At times it was quite messy because the tile would get saturated and fall "all over the place." He also stated that some furniture got "waterlogged" from the water upstairs.
Barish's decision to stop paying rent brought matters to a head. It was also the basis for Chair King's estoppel and fraud claims. The requisites of promissory estoppel are: (1) a promise, (2) forseeability of reliance thereon by the promisor, and (3) substantial reliance by the promisee to his detriment. English v. Fischer, 660 S.W.2d 521, 524 (Tex.1983). The elements of fraud 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 the truth and as a positive assertion; (4) that he made it with the intention that it should be acted upon by the other party; (5) that the other party acted in reliance upon it; and (6) that he thereby suffered injury. Stone v. Lawyers Title Ins. Co., 554 S.W.2d 183, 185 (Tex.1977).
Instead of repairing the defects (although Gill Savings asserts some repairs were made and others were not the landlord's responsibility), demanding the rent or evicting Chair King according to the *678 terms of the lease, Jae Carpenter agreed to an offer to escrow the rent until the repairs were made. A signature card for an escrow account was mailed to the parties for signatures. However, the account was never opened. Barish maintained the card was incorrectly signed by the Gill Savings people and was supposed to be corrected. Jae Carpenter testified that Barish did not want to put the entire amount of money due into the escrow account.
Negotiations then began over the proposed move to another space in the center. Those were continuing when Chair King received the demand letter for the delinquent rent from Westoaks. Vincent Salvaggio, a principal in Westoaks, testified that he was at home ill during most of this period and that Jae Carpenter called and told him a letter needed to be written to Chair King asking them to give up the space. Carpenter testified that Gill Savings' attorneys actually prepared the letter because the Westoaks staff had been drastically reduced and because the attorney's fees for the letter would be paid by Gill Savings out of the assignment of rents account. Clearly, Gill Savings and Carpenter instigated the demand letter. Marvin Barish testified he was told by Carpenter not to worry about the letter. Gill Savings maintains, however, that Barish actually conversed with Jonathan Shapiro, who claims he did not tell Barish to ignore the letter.
Barish asserts that Carpenter and Shapiro agreed to certain terms, which he was led to believe needed only "rubber stamp" approval by the Gill Savings loan committee. Just before he left town, he called to check on the status of the deal and spoke to Shapiro. Barish told Shapiro to get his best offer and put it in writing and claims that Shapiro said he would do that. Barish was thus under the impression that negotiations would continue upon his return and had no idea that an eviction was in progress. Shapiro did not recall making that statement.
Several witnesses testified that Gill Savings directed the eviction, and it appears to have been carried out so as not to arouse Chair King's suspicion. Carpenter and Shapiro testified they thought that if Chair King were forewarned, the inventory would be moved out of reach, thus jeopardizing Gill Savings' position. Furthermore, NBC Bank-Heights was not given notice of the default as required by the subordination agreement. Obviously, had the rent been paid, Gill Savings would have been frustrated in its efforts to get Chair King out of the space. The move was critical because negotiations with Toys `R' Us had progressed to the point that the latter had signed a lease for the Chair King space on April 24th (approximately eight days prior to the eviction). It is interesting to note that Toys `R' Us had also drafted an indemnity agreement to protect itself in the event of any lawsuits involving Chair King. To all appearances, Gill needed Chair King out, and that was not being accomplished quickly enough.
Most of the witnesses at trial were interested parties who disagreed about the facts. In a non-jury case, the trial judge is the finder of fact. It was her responsibility to weigh the evidence and judge the credibility of the witnesses. The trial judge may accept or reject the testimony of any witness in whole or in part, and while an appellate court may not have reached the same findings, it may not substitute its judgment for that of the trial court. Glassman and Glassman v. Somoza, 694 S.W.2d 174, 178 (Tex.App.Houston [14th Dist.] 1985, no writ). In this case, the judge found all the elements of fraud and estoppel. Given the standards by which we are to review her findings of fact and conclusions of law, there is sufficient evidence to support her conclusion that Chair King was entitled to recover on those claims. Therefore, point of error one is overruled.
In point of error two, Gill Savings complains of the trial court's failure to grant the damages sought in its counterclaim for rent and argues that there was either no evidence or no substantial evidence to support the findings of fact and conclusions of law relevant to this issue. Chair King asserted the following defenses regarding the counterclaim, and the trial court upheld them all: material breach of the lease, *679 breach of implied warranty of habitability, breach of express warranties, actual eviction, constructive eviction, fraud, waiver and estoppel. Gill Savings is estopped from asserting any right to rent as found by the trial court.
Estoppel is the effect of the voluntary conduct of a party whereby he is absolutely precluded, both at law and in equity, from asserting rights which might perhaps have otherwise existed, either of property, of contract, or of remedy, as against another person, who has in good faith relied upon such conduct, and has been led thereby to change his position for the worse, and who on his part acquires some corresponding right, either of property, of contract, or of remedy. Finkelstein v. Southampton Civic Club, 675 S.W.2d 271, 278 (Tex.App.Houston [1st Dist.] 1984, writ ref'd n.r.e.) (quoting Farmer v. Thompson, 289 S.W.2d 351 (Tex.Civ.App. Fort Worth 1956, writ ref'd n.r.e.)).
During the year in which Chair King withheld the rent, Westoaks and Gill Savings showed little interest in collecting it. The agreement to escrow rent was not executed. Although Gill Savings instigated the demand letter sent by Westoaks, there was testimony that Gill Savings told Chair King not to worry about it. Chair King was never told in plain language to pay up or get out. The loan committee even agreed at one point to a fifty percent abatement of the past due rent should Chair King move within the center. Furthermore, the ongoing negotiations concerning the move had the effect of lulling Marvin Barish into thinking Gill Savings wanted Chair King to remain in West Oaks Central. Indeed, he left town for a week never suspecting that Gill Savings was contemplating an eviction. Gill Savings' conduct caused Barish to remain at West Oaks Central and put his inventory in jeopardy, thinking that some resolution was forthcoming. Because of this conduct, Gill Savings relinquished its right to the rent. Point of error two is overruled.
Gill Savings' next five points of error concern the trial court's award of $144,309 in actual damages. This amount was based on the court's findings that Gill Savings caused Chair King to incur damages of $144,309, that Gill Savings caused Chair King to lose profits of $144,309 and that $144,309 would compensate Chair King for damages resulting from being deprived of its right to occupy, use and enjoy its leased premises. Gill Savings attacks this award on several grounds, including the sufficiency of evidence of lost profits and mitigation and the admission of both an expert's report and summaries of sales and expenses from the West Oaks Central store.
Chair King's allegations of damages encompassed a variety of items including increased costs of operations, impairment of capital value, lost net profits, loss of credit and costs associated with the trespass and conversion (specifically damage to the inventory that was removed and stored). The alleged damages totalled $2,102,626. The trial court's award bears no relation to that amount nor does it approximate any figure presented at trial. Even Chair King is hard-pressed to explain how the court arrived at the $144,309 figure.
When the parties reconvened to hear the court's verdict, the judge first sought information from Marvin Barish about the value of the property that was removed and stored, making it appear that her award would be based, at least in part, on the alleged damage to that property. She took a brief recess and then made the following pronouncement:
The total actual damages that I have figured up, and that I believe that he actually suffered, and as a result of this act by Gill Savings coming in and locking you out, and taking your property, and that I believe that you suffered as a direct result of their actions, and the total of actual damages is a hundred and forty-four thousand three hundred and ninety dollars.
The judge also stated that she had "broken it down to where I can explain how I came up with these oddball figures" and indicated she would explain her calculations in her findings of fact and conclusions of law. According to appellant, she did not prepare her own findings and conclusions, however, *680 but instead signed some prepared by Chair King. There is thus no explanation of her figures.
Chair King's expert testified that the company's lost profits and expenses from May 1987 through the time of trial in February 1988 were $253,116 and $62,377, respectively. Future lost profits were calculated from March 1, 1988, through February 1998 at $1,787,134. If the trial court based her award solely on lost profits, the award bears no relation to these figures. In effect, although there is evidence of lost profits, the evidence does not support the award. The fact that the judge who tried this case is no longer in office prevents us from sending this case back for more detailed findings of fact. Therefore, we reverse the damages and remand that part of the case for the trial court to determine.
Relative to damages, Gill Savings also complains that the trial court erred in admitting the report of Chair King's expert into evidence, as well as summaries of sales and expenses from the West Oaks Central store. This should be addressed by the judge who will determine the damages. Gill Savings further argues that the trial court's findings and conclusions relating to mitigation of damages are not supported by sufficient evidence. Again, this will be an evidentiary issue to be considered on re-trial. Therefore, points of error three, four, five and seven are overruled, while point of error six regarding the factual sufficiency of the evidence to support lost profits is sustained.
In point of error eight, Gill Savings argues that the trial court erred in holding in favor of Chair King because there is no evidence or, alternatively, insufficient evidence of at least one element of each cause of action pled by Chair King. However, the award for fraud and estoppel has been upheld and provides a predicate for an award of actual damages. See McAllen State Bank v. Linbeck Constr. Corp., 695 S.W.2d 10, 21 (Tex.App.Corpus Christi 1985, writ ref'd n.r.e.). Point of error eight is overruled.
Gill Savings next maintains that the trial court erred in awarding exemplary damages in the amount of $355,227. Findings of actual damages and their amount are a necessary predicate for any finding of exemplary damages. Luce v. Singdahlsen, 636 S.W.2d 571, 575 (Tex.App.Fort Worth 1982, writ ref'd n.r.e.). Since a determination of actual damages has been remanded, the exemplary damages will be redetermined as well. Point of error nine is sustained.
In point of error ten, Gill Savings argues that there is no evidence or, alternatively, insufficient evidence to support the trial court's award of attorney's fees to Chair King. The trial court awarded Chair King $62,662.50 in attorney's fees for trial of the case and $25,000 in the event of an appeal. This award was based entirely on the testimony of Chair King's attorney. He stated that his fees were $54,862.50 and that Chair King had paid $7,800 and $14,900 to other attorneys for services in the bankruptcy and temporary injunction proceedings. The attorney did not testify as to appellate fees. The trial court's award included the $54,862.50 and the $7,800 fees but not the $14,900 fees. Gill Savings raised several objections to this award.
It first asserts that attorney's fees are not allowed in a fraud case. Although the recovery in this case is in tort, an award of attorney's fees is permissible since there was a claim for and a finding of breach of contract, and the tort complained of arose out of that breach. Wilson v. Ferguson, 747 S.W.2d 499, 504 (Tex.App. Tyler 1988, writ denied). Gill Savings also argues that Chair King's attorney did not segregate the time spent on causes of action in which attorney's fees are recoverable from those in which fees are not recoverable. However, when, as here, the causes of action involved in a suit are dependent upon the same set of facts or circumstances and thus are intertwined to the point of being inseparable, the party suing for attorney's fees may recover even though under one or more of the causes of action such fees are not recoverable. Village Mobile Homes, Inc. v. Porter, 716 S.W.2d 543, 552 (Tex.App.Austin 1986, writ ref'd n.r.e.).
*681 Gill Savings next contests the $7,800 awarded for the fees expended in the bankruptcy proceedings and the $25,000 awarded for the possible appeal of this case. No one from the firm that charged $7,800 for handling the bankruptcy matter testified in support of those fees. Barish testified that the fees were paid, and his attorney testified that they were reasonable and necessary. Chair King argues that the trial court also took judicial notice of the fees under TEX.CIV.PRAC. & REM. CODE ANN. § 38.004 (Vernon 1986). However, since attorney's fees relating to bankruptcy proceedings do not fall within § 38.001, judicial notice, if taken, was improper. See Kaiser v. Northwest Shopping Center, Inc., 544 S.W.2d 785, 788 (Tex.Civ.App.Dallas 1976, no writ). As the $7,800 has no support in the evidence, the judgment is modified to delete those fees. As there was no evidence to support the award for future appellate services, the judgment will also be reformed to delete that fee of $25,000. Chrysler Corp. v. Schuenemann, 618 S.W.2d 799, 807 (Tex. App.Houston [1st Dist.] 1981, writ ref'd n.r.e.). Except for the reductions of $7,800 and $25,000, the award of attorney's fees is affirmed. Point of error ten is sustained in part and overruled in part.
In point of error eleven, Gill Savings complains of the trial court's refusal to allow its expert witnesses to testify while allowing Chair King's expert to do so. This complaint arose primarily due to the sequence of events that occurred once the case was remanded from the bankruptcy court on November 21, 1987. On December 4th, Chair King filed an amended petition alleging multiple causes of action and five separate counts of damages. On December 7th, Chair King filed interrogatories requesting, among other things, the identity and opinion of expert witnesses. Gill Savings maintains that it could not respond until it knew the identity of Chair King's expert witnesses. Meanwhile, trial was set for February 16, 1988, a fact that Gill Savings asserts it discovered by accident on January 4th. Gill Savings immediately sent interrogatories to Chair King. Chair King orally disclosed its expert during a deposition on January 15th and in writing on January 21st. Gill Savings then verbally designated its experts on the 19th and in writing on the 22nd.
A party is required to supplement discovery not less than thirty days prior to trial. TEX.R.CIV.P. 166b(6). Failure to supplement according to Rule 166b(6) automatically results in loss of the opportunity to offer the testimony. TEX. R.CIV.P. 215(5). However, Rule 215(5) gives the trial court discretion to admit the testimony for good cause, and the court's determination of good cause can be set aside only if that discretion is abused. Morrow v. H.E.B., Inc., 714 S.W.2d 297, 297-98 (Tex.1986). Obviously, Gill Savings got caught in a time crunch, but once it had notice of the amended petition and the damages sought, there was no reason to delay finding experts and responding to Chair King's interrogatories. The need to do so became urgent on January 4th when Gill Savings learned of the trial setting. Since Gill Savings did have time to designate its expert witnesses, the court did not abuse its discretion in refusing to allow them to testify. Point of error eleven is overruled.
Lastly, Gill Savings asserts that the trial judge's prejudical and partisan attitude caused her to render an improper judgment in this case. Gill Savings cites as harmful the accumulation of the errors previously discussed, numerous other procedural errors committed by the trial court to Gill Savings' detriment and her intense questioning of Gill Savings' witnesses. Gill Savings actually acquiesced to the questioning at least once when the court apologized for interrupting one defense witness with questions. Counsel's response was "Please, Judge, you're making as much progress as I could." The trial court also encouraged the parties to object when they thought she was asking an improper question. A review of the entire statement of facts shows that, while her methods were somewhat unorthodox, the trial court did not prejudice Gill Savings' case to the extent that harmful error occurred. Point of error twelve is overruled.
*682 The judgment as to liability is affirmed; the judgment is modified to delete $32,800 in attorney's fees; and the damage award is remanded for a new trial. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1241173/ | 229 Ga. 399 (1972)
191 S.E.2d 857
TRIMBLE
v.
THE STATE.
27259.
Supreme Court of Georgia.
Submitted July 11, 1972.
Decided September 7, 1972.
Glenn Zell, for appellant.
Lewis R. Slaton, District Attorney, Carter Goode, Joel M. *401 Feldman, Morris H. Rosenberg, Arthur K. Bolton, Attorney General, Harold N. Hill, Jr., Executive Assistant Attorney General, Courtney Wilder Stanton, Richard S. Gault, Assistant Attorneys General, for appellee.
UNDERCOFLER, Justice.
Larry Trimble was convicted of the offense of rape and sentenced to life imprisonment. He appeals. Held:
The trial court gave the following charge on alibi: "Lady and gentlemen, alibi as a defense involves the impossibility of the presence of the accused at the scene of the offense at the time of its commission and the range of *400 the evidence in respect to time and place must be such as reasonably precludes the possibility of the presence of the accused at the time and place of the offense. If you believe that a crime was committed as charged in this indictment but you do not believe that this defendant was present at the time and place of such offense, you should acquit him upon that ground. Alibi as a defense should be established to the reasonable satisfaction of the jury and not beyond a reasonable doubt. When testimony on the subject of alibi is offered on the trial of a case it is the duty of the jury to take that testimony along with all the other evidence in the case in determining the guilt or innocence of the defendant and if considering that testimony along with all the other evidence in the case the jury should entertain a reasonable doubt as to the guilt of the defendant it is their duty to give him the benefit of that doubt and acquit. The law being that before you can convict you must believe the defendant guilty beyond a reasonable doubt. If the defense of alibi should prevent you from believing the defendant guilty beyond a reasonable doubt then and in such an event you should acquit him of the offense charged."
The appellant contends that the emphasized portion of this charge shifts the burden of proof from the State to the defendant and relieves the State of proving the accused guilty beyond a reasonable doubt which is in violation of the due process clause of the Fourteenth Amendment of the Federal Constitution.
The contentions of the appellant are without merit for the reasons stated in Young v. State, 225 Ga. 255 (167 SE2d 586); Chaffin v. State, 225 Ga. 602 (170 SE2d 426) and Thornton v. State, 226 Ga. 837 (178 SE2d 193).
Judgment affirmed. All the Justices concur, except Hawes, Gunter and Jordan, JJ., who dissent.
GUNTER, Justice, dissenting.
This appeal involves another attack on a trial court's charge on alibi in a criminal case. The contention is made that the charge to the jury on this subject shifted the burden of proof from the State to the accused in violation of due process.
This is the second time that this issue has been presented since I have been a member of the court. I approved the charge attacked in the case of Johnson v. State, 228 Ga. 860 (188 SE2d 859) (decided April 6, 1972), believing that the charge given in that case, which was quite different from the charge given in the case at bar, did not shift the burden to the accused. After serious consideration and more legal research I now feel that I should have indicated in some way in that case that our "requirement" that a trial court charge the jury on alibi if that issue is in the case should be abolished. I am fully convinced that under the due process clause of our Constitution and the Federal Constitution the burden of proving his alibi can not be placed upon a defendant. Evidence of alibi should be admitted just as all other evidence in the case, and no specific instruction with respect to alibi should be "required."
The case of Fletcher v. State, 85 Ga. 666 (11 S.E. 872), decided in 1890 by this court, seems to have established the "requirement" that the trial judge specifically charge on alibi when that issue was in the case. It seems to me that this "requirement" led this court into an absolute burden-shifting position, because in 1922 this court held: "The burden of establishing the defense of alibi, when set up as a defense by the defendant, rests upon him; and in order to establish an alibi the state of facts relied on must be such that, if true, it was impossible for him to have been at the scene of the crime when it was committed." Collier v. State, 154 Ga. 68, 79 (113 S.E. 213). Having adopted that legal stance at least 50 years ago which was, in my opinion, violative *402 of due process, this court has maintained that legal position to a somewhat lesser degree to the present time. The maintenance of this position has created the great conflict now existing on this subject between this court on the one hand and the Court of Appeals of Georgia, the United States District Court for the Northern District of Georgia, and the United States Court of Appeals for the Fifth Circuit on the other hand. See in this connection: Thornton v. State, 226 Ga. 837 (178 SE2d 193) (1970); Smith v. High-tower, 227 Ga. 144 (179 SE2d 242) (1971); Parham v. State, 120 Ga. App. 723 (171 SE2d 911) (1969); Merneigh v. State, 123 Ga. App. 485 (181 SE2d 498) (1971); Smith v. Smith, 321 FSupp. 482 (1970); Thornton v. Stynchcombe, 323 FSupp. 254 (1971); Smith v. Smith, 454 F2d 572 (1971); and Bassett v. Smith, No. 71-2513 in the United States Court of Appeals for the 5th Circuit, decided July 17, 1972. After perusing these decisions one can readily understand why Professor Agnor said, "Thus the Federal Court lets them out as quick as the Supreme Court keeps them in." Mercer L. Rev., V. 23, No. 1 (Winter 1972), p. 125.
As the first step in attempting to resolve this serious conflict on the subject, I would clearly and plainly overrule Fletcher v. State, 85 Ga. 666, supra, and its successor decisions, thereby abolishing the "requirement" that a trial court must charge the jury on the subject of alibi if that issue is in the case. Henceforth there would be no required instruction to the jury on this subject at the trial level.
That part of the charge in the case at bar, namely, "alibi as a defense should be established to the reasonable satisfaction of the jury" is, in my opinion, a burden-shifting charge and is constitutionally impermissible as violative of due process under the Georgia Constitution and the Federal Constitution. Johnson v. Bennett, 393 U.S. 253 (89 SC 436. 21 LE2d 415) (1968); Bennett v. Stump, 393 U.S. 1001 (89 SC 483, 21 LE2d 466) (1968).
I respectfully dissent. I am authorized to state that Justices Hawes and Jordan join me in this dissent. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2365665/ | 155 F. Supp. 2d 490 (2001)
Samuel M. LANGERMAN
v.
Tommy G. THOMPSON,[1] Secretary, Department of Health and Human Services
Civil Action No. 99-3011.
United States District Court, D. Maryland.
August 17, 2001.
*491 *492 Samuel M. Langerman, Washington, DC, pro se.
Andrea Leahy-Fucheck, Office of the U.S. Attorney, Baltimore, MD, for defendant.
MEMORANDUM OPINION
CHASANOW, District Judge.
Pending and ready for resolution in the employment discrimination action are Plaintiff and Defendant's cross motions for summary judgment. Plaintiff, Samuel M. Langerman, brings sex and race discrimination claims pursuant to Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. ("Title VII") against Defendant the National Institutes of Health ("NIH"). No hearing is deemed necessary, and the court now rules pursuant to Local Rule 105.6. For the following reasons, the court shall GRANT Defendant's motion and DENY Plaintiff's motion.
I. Background
The following facts are undisputed or presented in the light most favorable to Plaintiff Samuel M. Langerman. In 1992, Plaintiff, a white male, applied for the *493 position of supervisory equal employment specialist ("supervisory specialist") in NIH's Office of Equal Opportunity ("OEO"). The supervisory specialist serves as chief of OEO's Complaints Management and Adjudication Branch and is responsible for processing all aspects of an Equal Employment Opportunity ("EEO") discrimination complaint, which includes coordinating complaint hearings, investigations, writing and reviewing proposed dispositions, and performing supervisory responsibilities. At the time he applied for the position, Plaintiff, who holds a law degree, had managed an Equal Employment Opportunity ("EEO") complaints program for four years, had training as a supervisor and an EEO adjudicator, and was certified as an EEO investigator. From 1973 to 1976, he also supervised a staff of six, but not in an EEO office.
Diane Armstrong, the former director of OEO, and an African American female, began the process of soliciting for the supervisory specialist position by preparing and sending to an administrative officer a "recruitment action." Attached to the recruitment action was a five-page detailed description of the major duties of the position ("position description"). Otis Watts, former OEO deputy director and Armstrong's direct superior, prepared a crediting plan for the position. A crediting plan contains two components: (1) criteria for determining basic eligibility; and (2) job-related criteria used to rate qualifications to identify the best qualified candidates. A crediting plan is generally derived from a job analysis. A personnel specialist and "subject matter expert" must approve the job analysis and crediting plan before a particular vacancy can be announced. No written job analysis was prepared for the supervisory specialist position. Watts, as the subject matter expert, and NIH Personnel Management Specialist Wanda Faux developed and/or reviewed the crediting plan. Faux explained that she used the same procedures to evaluate the crediting plan for the supervisory specialist position that she would have used had there been a written job analysis, which included reviewing the position description and other materials. She further stated that while NIH procedure requires a written job analysis, it was not unusual for one not to be done. Also, Armstrong, as the "selecting official" for the position should have reviewed the crediting plan before a job vacancy announcement was posted but failed to do so.
The crediting plan consisted of the following four "knowledge, skills or ability" ("KSA") categories that a Qualification Review Board ("QRB") used to rank and evaluate applicants: (1) ability to direct activities to implement a strong EEO complaints management and adjudication program; (2) ability to communicate orally and in writing; (3) knowledge and understanding of laws, regulations, and procedures governing EEO complaints processing and adjudication; and (4) ability to manage and motivate staff. Armstrong selected a five-member QRB, consisting of the following individuals: (1) Martha Pine, a white female; (2) Richard Sherbert, a white male; (3) Raymond Becich, a white male; (4) Kenneth Cooke, a black male; and (5) James Pike, a white male.
According to the Public Health Service ("PHS") Merit Promotion Program, at least three members of the QRB should be experts in, or have significant knowledge of, the discipline or occupational category of the position being filled. They must also be familiar with promotion program requirements. None of the members had ever served on a QRB dealing with a supervisory specialist position.
The QRB met on September 10, 1992 and rated and ranked the applicants. *494 Faux provided to the QRB members materials of the applicants who met the minimum qualifications for the position, a copy of the crediting plan, position description and vacancy announcement. She also served as technical advisor to the QRB and was present during this meeting. The QRB rated 22 applicants, and selected and listed 18 of the applicants on the Merit Promotion Certificate ("promotion certificate"). Plaintiff made the promotion certificate and was rated as highly qualified, earning a final score of 33, as did Linda Morris, the African American female who received the supervisory specialist position. Armstrong testified in the EEOC administrative proceeding that she gave the panel no instruction as to what type of person to recommend. Further, Faux stated that she heard no comments regarding race or gender during the QRB meeting. Despite NIH Merit Promotion Plan procedures requiring that completed ranking or rating forms be kept for two years, the QRB's individual rating work-sheets were discarded. However, Faux compiled and maintained the final cumulative ratings for each candidate.
Generally, the QRB only reviews, ranks and rates applications, but Armstrong also asked the panel to interview the candidates they certified. She further asked another African American male, Dr. Leamon Lee, to join the QRB as part of the interview panel. Of the 18 applicants certified, the QRB interviewed 15 candidates, including Plaintiff and Morris. The QRB composed and asked each applicant four questions during the interviews, and selected five "top candidates" from among the pool. Armstrong was provided the entire certified list of 18, which included a note listing the top five candidates. Plaintiff failed to make the top five list, which consisted of all African American females. The QRB's interview notes were discarded.
After receiving the list, Armstrong considered only the top five candidates chosen by the interview panel for the position. The instructions on the face of the Certificate of Promotion request that the selecting official consider all candidates certified, and Faux testified during the administrative proceeding that Armstrong as the selecting official should have considered all the names on the promotion certificate. She also stated, however, that Armstrong's failure to do so was not "procedural error."
After consulting with Deputy Director Watts, Armstrong selected Morris, who at the time had served as an EEO specialist for 12 years, the last six of which were served in the department where the vacancy existed. She reported to the former supervisory specialist, Carlos Delgado, and for one month in early 1992, served as acting supervisory specialist or branch chief in his place. Armstrong stated that she selected Morris because of her NIH experience and interaction with management officials, and her accomplishments while working with the Complaints Management and Adjudication Branch.
II. Standard of Review
It is well established that a motion for summary judgment will be granted only if there exists no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). In other words, if there clearly exist factual issues "that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party," then summary judgment is inappropriate. Anderson, 477 U.S. at 250, 106 S. Ct. 2505; *495 see also Pulliam Inv. Co., Inc. v. Cameo Properties, 810 F.2d 1282, 1286 (4th Cir. 1987); Morrison v. Nissan Motor Co., Ltd., 601 F.2d 139, 141 (4th Cir.1979); Stevens v. Howard D. Johnson Co., 181 F.2d 390, 394 (4th Cir.1950). The moving party bears the burden of showing that there is no genuine issue of material fact. Fed. R.Civ.P. 56(c); Pulliam, 810 F.2d at 1286 (citing Charbonnages de France v. Smith, 597 F.2d 406, 414 (4th Cir.1979)).
When ruling on a motion for summary judgment, the court must draw all reasonable inferences in favor of and construe the facts in the light most favorable to the non-moving party. Tinsley v. First Union Nat'l Bank, 155 F.3d 435, 437 (4th Cir. 1998). A party who bears the burden of proof on a particular claim must factually support each element of his or her claim. "[A] complete failure of proof concerning an essential element ... necessarily renders all other facts immaterial." Celotex, 477 U.S. at 323, 106 S. Ct. 2548. Thus, on those issues on which the nonmoving party will have the burden of proof, it is his or her responsibility to confront the motion for summary judgment with an affidavit or other similar evidence. Anderson, 477 U.S. at 256, 106 S. Ct. 2505.
In Celotex, the Supreme Court stated:
In cases like the instant one, where the nonmoving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may properly be made in reliance solely on the "pleadings, depositions, answers to interrogatories, and admissions on file." Such a motion, whether or not accompanied by affidavits, will be "made and supported as provided in this rule," and Rule 56(e) therefore requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the "depositions, answers to interrogatories, and admissions on file," designate "specific facts showing that there is a genuine issue for trial."
Celotex, 477 U.S. at 324, 106 S. Ct. 2548. However, "`a mere scintilla of evidence is not enough to create a fact issue.'" Barwick v. Celotex Corp., 736 F.2d 946, 958-59 (4th Cir.1984) (quoting Seago v. North Carolina Theatres, Inc., 42 F.R.D. 627, 632 (E.D.N.C.1966), aff'd, 388 F.2d 987 (4th Cir.1967)). There must be "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." Anderson, 477 U.S. at 249-50, 106 S. Ct. 2505 (citations omitted).
III. Analysis
Plaintiff presents no direct evidence of discrimination, and thus the court turns to the framework as outlined in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973), to analyze his claims. Plaintiff may establish a prima facie case of discriminatory failure to hire or promote based on race and sex by showing that: (1) he is a member of a protected category; (2) he applied for the position in question; (3) he was qualified for the position; and (4) he was rejected under circumstances giving rise to an inference of unlawful discrimination. Brown v. McLean, 159 F.3d 898, 902 (4th Cir.1998) (citing McDonnell Douglas, 411 U.S. at 802, 93 S. Ct. 1817; Alvarado v. Board of Trustees of Montgomery Cmty. College, 928 F.2d 118, 121 (4th Cir.1991)); see also 42 U.S.C. § 2000e-2(a)(1) (listing race and sex among the protected categories). In cases where the position sought was filled, the fourth prong is most easily satisfied by showing that someone outside of the plaintiff's protected group ultimately was selected for the position. See e.g., Equal Employment Opportunity Commission v. Sears Roebuck and Co., 243 F.3d 846, 851 (4th Cir.2001) (showing made in *496 failure to hire case as defendant continued to seek applicants after rejecting Hispanic male plaintiff and then selected "less qualified" white female); Evans v. Technologies Applications & Serv. Co., 80 F.3d 954, 960 (4th Cir.1996) (failure to promote case in which female plaintiff showed position was filled by male, which raised an inference of sex discrimination).
Once a plaintiff establishes a prima facie case of discrimination, the defendant must advance a legitimate, nondiscriminatory reason for the employment decision at issue. Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 120 S. Ct. 2097, 2106, 147 L. Ed. 2d 105 (2000) (citation omitted). The presumption of discrimination drops out once a defendant has advanced such a reason. Id. A plaintiff must then be allowed to show by a preponderance of the evidence that the reasons offered by the defendant were not its true reasons, but pretext for unlawful discrimination. Id.; Monroe v. Burlington Indus., Inc., 784 F.2d 568, 571 (4th Cir.1986) (citing Texas Dep't of Cmty. Affairs v. Burdine, 450 U.S. 248, 253, 101 S. Ct. 1089, 67 L. Ed. 2d 207 (1981); McDonnell Douglas, 411 U.S. at 804, 93 S. Ct. 1817; Cuthbertson v. Biggers Bros., Inc., 702 F.2d 454, 458 (4th Cir.1983)).
Plaintiff establishes a prima facie case of race and sex-based discrimination. He is a white male. He applied for the supervisory specialist position and was qualified for it as the QRB rated him highly qualified and selected him to interview for the position. He was rejected and the employer selected Morris, a black female.
The burden then shifts to Defendant to advance a legitimate, non-discriminatory reason for selecting Morris as the supervisory specialist, which it does by stating that of the five finalists selected by the QRB interview panel, Armstrong found Morris to be the most qualified. See Jefferies v. Harris County Cmty. Action Ass'n, 693 F.2d 589, 590 (5th Cir.1982) ("[T]he promotion of a better qualified applicant is a legitimate and nondiscriminatory reason for preferring the successful applicant over the rejected employee who claims that the rejection was discriminatory.") (citing Burdine, 450 U.S. at 253, 101 S. Ct. 1089). QRB member Pike testified that the panel constructed four standard questions that they asked each of the 15 interviewees.[2] Paper no. 19, Defendant's exhibit 11 at 153. The panel reached a consensus that, based on their individual judgments, five candidates stood out from the rest. Plaintiff was not among the these five. Armstrong received the applications of all individuals on the promotion certificate, but only reviewed the five applications the board identified as the top five. Although instructions on the face of the promotion certificate request that selecting officials consider all the applications before making a decision, Faux, as personnel management specialist testified that Armstrong committed no error in restricting her consideration to the five top candidates. Plaintiff presents no evidence to contradict Faux's assertion. Armstrong testified that in reviewing the applications, she was looking for a candidate who had "in-depth experience" in complaints processing and who had experience interacting with management officials. Armstrong *497 found Morris best suited for the position. Morris had gained EEO experience at both the NIH and the National Cancer Institute. She also had experience interacting with management officials and had been awarded twice for reducing the backlog of complaints and for settling complaints that had been problematic to the office. She also had training as an EEO investigator. Further, Morris had worked as an EEO specialist for 12 years, the last six of which were served in the office where the supervisory specialist position existed. In fact, she worked directly under the former supervisory specialist/branch chief, and once assumed his duties for a month during her tenure there.
Plaintiff argues that Defendant has failed to articulate a legitimate, non-discriminatory reason because the QRB's interview notes were destroyed and thus there is no way to prove based on the interview that Morris was the best candidate for the position.[3] Although the QRB members could not recall the specific responses of each interviewee, they nevertheless have articulated a legitimate, nondiscriminatory reason for selecting the top five candidates for the supervisory specialist position. As the Court stated in Burdine, a "defendant need not persuade the court that it was actually motivated by the proffered reasons ... the defendant [needs only] clearly set forth ... the reasons for the plaintiff's rejection." 450 U.S. at 254-55, 101 S. Ct. 1089; see also Obi v. Anne Arundel County, 142 F. Supp. 2d 655, 660 (D.Md.2001) (defendant must "merely articulate some legitimate reason for its action") (citing E.E.O.C. v. Clay, Printing Co., 955 F.2d 936, 941 (4th Cir.1992) (quoting E.E.O.C v. Western Electric Co. Inc., 713 F.2d 1011, 1014 (4th Cir.1983))). Defendant meets this burden as the record shows that after each interview, the QRB panelists arrived at a consensus as to which five candidates provided the best responses to the questions. Paper no. 19, Defendant's exhibit 8 (Pike affidavit) ("We [the QRB interview panel] determined that there were five true highly qualified candidates and they were referred to the selecting official ...."); id. exhibit 9 (Sherbert affidavit) ("there was a consensus on the top five that we referred"). This is sufficient evidence that the QRB selected those it deemed to be the top five candidates in a nondiscriminatory fashion.
A. The Selection Process
Plaintiff argues that assuming Defendant does present a non-discriminatory reason for not selecting him, it is pretext for discrimination. To show pretext, Plaintiff essentially attacks the selection process at several stages: (1) from the creation of the crediting plan through the selection of the QRB; (2) the interview process; and (3) Armstrong's selection of Morris. The court addresses each argument in turn.
1. Crediting Plan and QRB members
Plaintiff argues that the crediting plan employed by the QRB was poorly designed and prohibited its members from being able to make meaningful distinctions among applicants. He argues that a combination of a "faulty" crediting plan and unqualified evaluators placed five black females lacking his experience on par with him.
With respect to the crediting plan, Plaintiff contends that under the first KSA, the crediting plan listed experience managing an EEO counseling program as "highly *498 satisfactory experience," but did not list the broader experience of "managing a total complaints program", i.e., handling the pre-complaint processing phase and the formal processing and adjudication phases. Thus, QRB members gave no credit for Plaintiff's experience in that area. The crediting plan also listed as highly satisfactory experience "collecting, analyzing and organizing data that support procedural or policy changes which address affirmative employment planning and implementation." Plaintiff appears to argue that based on the position description, this criterion is not related to the position and should not have been included on the crediting plan.
Plaintiff also points out that Defendant did not create a written job analysis for the supervisory specialist position and Armstrong, as the selecting official should have, but did not, review the crediting plan before a job vacancy announcement was posted. However, Faux testified that she used the same procedures to evaluate the crediting plan that she would have used had there been a written job analysis, which included reviewing the position description and related documentation. In addition, Eduardo Ribas, the current director of the Human Resource Program Support Division, Office of Human Resource Management, NIH, who is in charge of policy oversight of the NIH Merit Promotion Program, provided an affidavit stating that although the promotion program requires a job analysis be documented, that requirement is satisfied if there exists a copy of the position description and the position description cover sheet, which there was in this case. Also, while Armstrong did not review the crediting plan before the vacancy was announced, Watts, Armstrong's direct superior, apparently did as he drafted the plan.
With respect to the qualifications of the QRB members, the PHS Merit Promotion Program requires that a QRB be "composed of at least three members who are expert in or have significant knowledge of, the discipline or occupation category of the position being filled." In addition, QRB members must be familiar with promotion plan requirements. Plaintiff argues that the five members who served on the QRB for the position he applied for were not qualified because none of them had ever served on a QRB dealing with an EEO complaints manager. Plaintiff also makes much of the fact that some QRB members could not remember who asked them to serve on the QRB for the supervisory specialist position, Faux or Armstrong. According to the PHS Merit Promotion Program, a servicing personnel officer should select members of the QRB. However, Armstrong chose the QRB.
Nevertheless, even assuming that the QRB members lacked the knowledge Plaintiff claims they should have had about the supervisory specialist position or the promotion plan, and that there existed deficiencies in the crediting plan, does not automatically lead to the conclusion that Defendants unlawfully discriminated against Plaintiff. In a disparate treatment case such as this, Plaintiff must show that he was treated less favorably than other applicants because of his race or sex. See International Bhd. of Teamsters v. United States, 431 U.S. 324, 335 n. 15, 97 S. Ct. 1843, 52 L. Ed. 2d 396 (1977). To the extent any deficiencies in the selection process existed, they affected all candidates equally. There is absolutely no evidence that the selection process was designed to, or in fact did, discriminate against white men in general or Plaintiff in particular because he is a white male. See Obi, 142 F.Supp.2d at 664 (plaintiff's argument that the selection process did not allow his *499 qualifications to receive full consideration failed as, inter alia, he offered no evidence that defendant's selection process operated against him invidiously because of his race or national origin). Likewise, assuming NIH failed precisely to follow its own procedures with respect to devising the crediting plan or selecting QRB members does not implicate Title VII unless Plaintiff shows that Defendant's failure to do so was the result of unlawful discrimination. Vaughan v. Metrahealth Companies, Inc., 145 F.3d 197, 203 (4th Cir.1998) ("The mere fact that an employer failed to follow its own internal procedures does not necessarily suggest that the employer was motivated by illegal discriminatory intent.") (citing Randle v. City of Aurora, 69 F.3d 441, 454 (10th Cir.1995)); Obi, 142 F.Supp.2d at 668 (citing Vaughan for this proposition). Plaintiff fails to show that the crediting plan or the alleged unqualified QRB acted unlawfully to discriminate against him as he presents no evidence that he was treated or his skills were assessed any differently than other applicants.
More importantly, it is difficult to discern, based on the record, how Plaintiff was discriminated against or injured at all by the alleged deficiencies in the crediting plan or unqualified QRB members. As Plaintiff admits, the QRB used the crediting plan to rate and rank him and found him highly qualified for the supervisory specialist position. His name was placed on the promotion certificate and he was interviewed along with 14 other candidates. While Plaintiff argues that other candidates lacked his experience of managing a total complaints program, he does not argue or present evidence that they were unqualified for the position.
2. Interview Process
Plaintiff also claims there were errors with respect to the interview process. He claims that the QRB interview panel failed to employ clearly defined uniform standards or criteria in determining which candidates to recommend to Armstrong. However, it is uncontradicted that the interview panel devised a standard set of four questions to ask each candidate during the interviews, and that after each interview, the panelists discussed their impressions of each candidate. They then held a general discussion concerning all candidates after the interviews were complete and selected the five top candidates accordingly. Paper no. 16, Plaintiffs exhibit C3 at 218-19. Plaintiff opines that without clearly defined uniform standards to apply to each applicant, it is unlikely that a final group consisting of five black females was accidentally selected. Plaintiff points out that QRB member Becich stated that he believed both Langerman and Morris were equally qualified, and that it came down to a "judgment call" as to with whom Armstrong could work better. Plaintiff suggests that this reference to a "judgment call" means that the panel felt Armstrong could work better with a black female. However, to draw such a conclusion based Becich's statement would be nothing more than speculation and conjecture. "As courts are not free to second-guess an employer's business judgment, a plaintiff's mere speculations are insufficient to create a genuine issue of fact regarding [an employer's] articulated reasons for [its decisions] and avoid summary judgment." Brown v. Brody, 199 F.3d 446, 458-59 (D.C.Cir.1999) (internal quotation marks omitted) (citing Branson v. Price River Coal Co., 853 F.2d 768, 772 (10th Cir.1988)).
In fact, Becich stated that the panel did not take sex or race into account in making its decision. Paper no. 16, Plaintiff's exhibit A7. Pike also testified during the EEOC proceeding that Armstrong did not *500 instruct the panel to select any particular type of person. Paper no. 19, Defendant's exhibit 11 at 157. Cooke stated that the QRB did not discuss race at all, but merely tried to determine who in their judgment would be the best person for the job. Paper no. 16, Plaintiff's exhibit C4 at 9-10 ("the five finalists represented the cream of the crop"); see also id. Plaintiff's exhibit C5 at 32 (Sherbert's administrative hearing transcript) (we asked the four questions and the follow up questions, and based on candidates' responses, chose who we believed to be the best person for the job). Other than bald assertions about not being selected because of his race and sex, Plaintiff presents no evidence that any candidate's race or gender played a role in the interview process.
To be sure, the interview process involved subjectivity, as it largely consisted of choosing candidates based on the QRB's perception of how well they answered questions.[4] However, the fact that the QRB's interview process was "subjective" or even "haphazard" does not mean it was unlawfully discriminatory. Vaughan, 145 F.3d at 204. "[I]n filling an upper-level management post, some degree of subjectivity is inevitable, as the decision maker must balance employees' different strengths and qualifications, predicting all the while who will be the best ambassador for the company and most effectively serve its business needs." Id. Moreover, an employer is free to create its own standards for selecting candidates for a position as long as such standards are not a mask for discrimination. See e.g., Beall v. Abbott Laboratories, 130 F.3d 614, 619-20 (4th Cir.1997) (citing Palucki v. Sears, Roebuck & Co., 879 F.2d 1568, 1571 (7th Cir.1989)).
The Fourth Circuit has advised that if individuals, who are not members of a plaintiff's protected category under Title VII, employ any degree of subjectivity in the process of comparing and evaluating the plaintiff's credentials with other candidates, "the legitimacy and nondiscriminatory basis of the articulated reason for the [employment] decision [at issue] may be subject to particularly close scrutiny ...." Page v. Bolger, 645 F.2d 227, 230 (4th Cir.1981). In this case, however, the six-member interview panel consisted of five men and four whites. As Defendant points out, it is difficult to imagine based on the record that this panel would conspire to keep a white male off the list of top five candidates solely because he is a white male.
While Plaintiff is undoubtedly upset that he did not make the top five list, he must bear in mind that Title VII is only designed to remedy discrimination based on one's sex, race or other protected category. 42 U.S.C. § 2000e-2(a). The statute is not meant to remedy every procedural flaw that exists in an employer's selection process. Moreover, courts do not sit as "`super personnel departments' determining, without regard to [a defendant's] ability to assess the full dimension of its employees' qualifications ... whether its perception of an employee's qualifications is erroneous." Mackey v. Shalala, 43 F. Supp. 2d 559, 567 (D.Md.1999) (citing Evans v. Technologies Applications & Services Co., 875 F. Supp. 1115, 1120 (D.Md.1995), aff'd by published opinion, 80 F.3d 954 (1996)). Plaintiff fails to show that in selecting the top five *501 candidates, the panelists considered any unlawful criteria, or that their reason for selecting the finalists, i.e., their interview performances, served as a mask to discriminate against him.
3. Armstrong's selection of Morris
As already explained, Armstrong did not consider Plaintiff's application or the application of any other candidates who were not among the top five selected by the QRB. Although the promotion certificate requested that Armstrong consider all applications before making a decision on the vacancy, see Paper no. 16, Plaintiff's exhibit A4 ("Please consider each candidate before making a selection for your vacancy"), Faux, NIH personnel management specialist, testified, and Plaintiff presents no evidence to the contrary, that Armstrong's failure to do so was not procedural error.
Plaintiffs main contention with respect to Morris is that he is better qualified because he has a law degree, supervisory experience, and experience managing a total complaints program. However, a law degree was not listed as a requirement for the position and Plaintiff fails to explain how it is relevant other than a conclusory statement in his opposition memorandum that "[s]urely, a candidate with a law degree ... brings a little something extra to a position that requires interpreting and applying EEO laws ...." Also, while Plaintiff supervised a staff from 1973 to 1976, he admits that he never supervised an EEO office. In contrast, prior to being selected for the position, Morris already had performed the supervisory specialist position for one month and Armstrong was familiar and pleased with her work. A defendant is free to choose among equally qualified individuals for a position as long as the selection is not based on illegal criteria. Mackey, 43 F.Supp.2d at 566 (citation omitted) Further, "it is the perception of the decision maker and not the self-assessment of the Plaintiff that is relevant." Id. (citing Beall, 130 F.3d at 620). Armstrong considered Morris the best qualified of the candidates she considered for the position, and selected her for that reason. Nothing in the record suggests otherwise. Thus, Plaintiff fails to show that Armstrong's reason for selecting Morris was pretext for discrimination.
B. Destruction of documents
Plaintiff also argues that he is disadvantaged because several documents used to assess the candidates during the selection process were destroyed. He primarily focuses on the individual rating sheets the QRB filled out during their initial meeting and notes taken during the interviews.
Plaintiff claims that without the individual rating sheets, he cannot show that one or more of the black females should not have made the promotion certificate. However, it is uncertain exactly what information Plaintiff would derive from the individual rating sheets that he cannot glean from the cumulative QRB evaluation scores, which shows the combined score each applicant received after compiling the scores from their individual rating sheets. After QRB members rated an applicant, Faux totaled the scores for that applicant and transferred that number to a separate sheet. Paper no. 19, Defendant's exhibit 5 at 115-117. Further, she reviewed the individual candidate's score with each QRB member before she transferred the score. She stated that she followed this procedure to eliminate errors during the transfer. Since the cumulative scores are available, and there is no evidence that Faux committed errors in transferring scores, it *502 is unclear exactly why Plaintiff requires the individual rating sheets.
Also, there is no indication, as Plaintiff appears to suggest, that the individual rating sheets were destroyed as a cover up for discrimination. He points out that PHS merit program procedures require that rating forms be kept as merit promotion documentation for two years. However, Faux stated, and there is no evidence to the contrary, that it was routine practice to keep only the cumulative scores of applicants and to discard the individual rating sheets. Further, she testified that she discarded the rating sheets before she knew Plaintiff had filed a discrimination complaint. In addition, Ribas, who is responsible for policy oversight of the NIH Merit Promotion Program, stated that his "method of documenting the rating scores for each candidate would be to file the cumulative rating sheets for the entire promotion case and ... not to maintain the individual candidate rating sheets." Id. exhibit 7 ¶ 8.
Plaintiff also argues that because the QRB interview panelists destroyed their interview notes, he cannot show he performed better in his interview than other applicants. However, Plaintiff's argument is based on the notion that panelists' notes contained detailed accounts of the interviews or some systematic, numerical rating of each interviewee. There is no evidence that this is so. The record is devoid of any specifies as to what the panelists wrote down or evidence that their notes would be helpful in detailing the specific reasons the panel selected the top five finalists.[5] In sum, Plaintiff has failed to show that Defendant's proffered reason for his non-selection was pretext for discrimination.
IV. Conclusion
For the foregoing reasons, the court shall GRANT Defendant's motion for summary judgment and DENY Plaintiff's motion.
NOTES
[5] In fact, during the administrative proceeding, Plaintiff asked one QRB member, Dr. Lee, whether he remembered anything about "the people who just missed making the final list." Paper no. 16, Plaintiff's exhibit C6 at 62. After Dr. Lee responded that he did not, Plaintiff asked him would his "notes have reflected this sort of information," to which he responded, not that he recalls. Id.
[2] The QRB interview panel asked each applicant the following four questions: (1) What is the most difficult professional problem you have faced, and how did you handle it; (2) Briefly describe several recent situations where you have had to remain neutral and negotiate a settlement; (3) Please discuss your concept of managing a service group and planning and operating a service operation; and (4) How do you view your role as a representative of management. Paper no. 19, Defendant's exhibit 1 at 7.
[3] The court will discuss later in more detail Plaintiff's arguments regarding Defendant's destruction of certain documentation related to the interview process.
[4] Plaintiff points out that two panelists stated that the QRB did not rest solely on the interviewees' responses to the interview questions in selecting the top five candidates. Pine stated that in addition to the four questions, panelists also considered the KSAs that had been developed for the position. Paper no. 16, Plaintiff's exhibit C7 at 85. Dr. Lee stated that in addition to the questions, the panelists also considered the candidates' application materials. Id. exhibit C6 at 65.
[5] In fact, during the administrative proceeding, Plaintiff asked one QRB member, Dr. Lee, whether he remembered anything about "the people who just missed making the final list." Paper no. 16, Plaintiff's exhibit C6 at 62. After Dr. Lee responded that he did not, Plaintiff asked him would his "notes have reflected this sort of information," to which he responded, not that he recalls. Id. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1380755/ | 233 Ga. 724 (1975)
213 S.E.2d 612
PATTERSON
v.
THE STATE.
29319.
Supreme Court of Georgia.
Argued October 16, 1974.
Decided February 5, 1975.
Rehearing Denied February 18, 1975.
Bennett, Saliba & Wisenbaker, James T. Bennett, Jr., Byrd, Groover & Buford, Denmark Groover, Jr., Fred L. Belcher, for appellant.
Vickers Neugent, District Attorney, Arthur K. Bolton, Attorney General, Lois F. Oakley, for appellee.
HALL, Justice.
Eugene Patterson was convicted and sentenced to ten years' imprisonment for the August 7, 1972 armed robbery of the Bank of Ray City in Ray City, Georgia.
Briefly, the state's evidence showed that the Bank of Ray City had been robbed at approximately 10:15 a. m. on August 7, 1972, by three black men, one of whom wore a wine colored shirt, and one of whom wore a gold colored shirt. They wore no masks. Patterson was identified positively at a pre-trial lineup and at trial by two of the bank's employees as the gold-shirted robber. Additionally, the state introduced evidence that two shirts matching the foregoing descriptions and two stocking masks had been found the next day in a ditch, and the gold shirt bore a laundry tag with a number that matched a record of the Big B Cleaners in nearby Valdosta, Georgia, showing that such a tag had been affixed to a gold shirt which was brought to the laundry some five months before by someone giving the name Mary Patterson. Patterson's evidence showed that his wife's name was Mary. Another state witness testified that shortly after 10:00 a. m. on August 7 she had seen an automobile of the same body style as a 1972 Grand Prix Pontiac, of the color "Shadow Gold," driven by a black man, stop near her house a block or two from the bank, and pick up two other black men one of whom wore a wine colored shirt, and then proceed in the direction of the bank. It was shown that on the day of the robbery Patterson's brother Willie owned a 1972 Shadow Gold, Grand Prix Pontiac. A witness testified that he had seen Patterson driving Willie's car on numerous occasions, and saw him driving it on the morning of the robbery. Another witness testified that on the day of the robbery Willie was not driving his own car, but was driving Patterson's pickup truck.
Patterson testified in his own behalf with supporting witnesses that he was elsewhere at the time of the robbery, and that there was another Mary Patterson who lived in Valdosta.
1. Enumeration 5 complains of the admission of all *725 testimony concerning Willie's Grand Prix automobile, on the grounds that it is irrelevant, immaterial, and harmful, and that nothing connects Patterson to the automobile nor the automobile to the robbery. The brief evidentiary summary above shows that this enumeration is without merit. The state's evidence concerning the automobile tended to show that the robbers used such an automobile and that Patterson had access to such an automobile and was actually driving it on the day of the robbery. If an item of evidence has a tendency to establish a fact in issue, that is sufficient to make it relevant and admissible. Green, The Georgia Law of Evidence, § 61 (1957). "Every fact or circumstance serving to elucidate or throw light upon the issue being tried, constitutes proper evidence in the case." Georgia Savings Bank &c. Co. v. Marshall, 207 Ga. 314 (1) (61 SE2d 469). This general objection to the admission of evidence concerning Willie's automobile is without merit.
2. Enumeration 3 urges error in the admission of four items of testimony concerning the gold shirt. First, the testimony of the witness Rouse, an employee of the Big B Cleaners, was objected to on the ground that she had no independent recollection of the person who brought the shirt in for cleaning and could not testify as to who it was whose name she had written as Mary Patterson. The gist of this objection is that Rouse could not testify that Patterson's wife brought the shirt in, and that this gap in the proof renders the evidence inadmissible; but this misconceives the nature of circumstantial evidence which by definition points only indirectly toward the conclusion sought by the state. "The question of admissibility of circumstantial evidence is largely in the discretion of the trial court; and where facts are such that the jury, if permitted to hear them, may or may not make an inference pertinent to the issue, according to the view which they may take of such facts in connection with other facts in evidence, it is not error to permit the jury to hear them." Bond v. State, 104 Ga. App. 627, 632 (122 SE2d 310). This testimony was properly admitted.
Next, Patterson urges that the testimony of Greeson, an agent with the Division of Investigation, concerning a certain gold shirt, was improperly admitted because there *726 was no competent connection between the shirt and Patterson, and because Greeson's testimony was hearsay. Greeson testified that after the shirts and stocking masks were found the Sheriff of Berrien County reported that fact to Greeson and as a result of the report Greeson took the items to the bank for viewing by the bank employees and traced the laundry tag in the yellow shirt to the Big B Cleaners, getting a name from them. He testified that other witnesses described a Pontiac as the robbers' possible vehicle, and that his investigation of recent Pontiac purchasers turned up the same name as the laundry ticket Patterson. Further investigations resulted in Greeson's arresting appellant Patterson. The state offered this testimony under the authority of Code § 38-302 allowing hearsay to be admitted as original evidence to explain conduct, to explain Greeson's steps in pursuing the investigation. The admission of it on this basis was not error. The link between Patterson and the yellow shirt did not rest on Greeson's testimony, but was independently brought out by the witnesses from the laundry; by the bank witnesses who positively identified Patterson and testified to his wearing a gold shirt; and by Patterson himself who testified that he owned such a shirt and that he would not say definitely that the state's exhibit 9 (the gold shirt) was his, but that it might be. Therefore, the state did not utilize Greeson's testimony with reference to the shirt for more than it claimed in offering it to explain his conduct and its admission for this purpose was not error.
Specific objection is made to the following testimony of Greeson concerning his interrogation of Patterson: "And, I also told him [Patterson] that the shirt had been placed in the cleaners at Valdosta by a Mary Patterson, which was his wife." This is claimed to be hearsay and a conclusion by Greeson. This was not hearsay because it was not offered to tell the jury that Patterson's wife took the shirt to the cleaners, but to tell the jury that Greeson argued to Patterson that Patterson's wife evidently took the shirt to the cleaners. "[W]e should exclude from hearsay out-of-court statements offered in proof, not because of the fact asserted in such statement but merely as proof that such a statement was made." Green, supra, *727 § 218. Under the same analysis, this testimony is not subject to the objection that it was a conclusion of the witness.
Finally, objection is made that the witness Harris, who owned Big B Cleaners, testified "that's the shirt" when shown the state's exhibit 9, thus identifying it as the shirt to which the dry cleaning tag had initially been affixed, and that the trial court refused to strike the sentence. Any error in refusing to strike this sentence was harmless, since Harris readily admitted that he had no independent recollection from which he could say that the shirt put in the cleaners on the Mary Patterson ticket was actually the shirt found in the ditch.
For the foregoing reasons, there is no merit in Enumeration 3. To Patterson's argument that the state may not prove its case by piling inference on inference (concerning the robber, the shirt, the laundry, and Patterson's wife) we answer that this is not solely a circumstantial evidence case: two eyewitnesses positively and unswervingly identified Patterson as one of the three bank robbers. The "shirt evidence" need not be independently adequate to convict, to be admissible in this case.
3. Enumeration 4, in conclusory fashion, alleges error in the admission of state's exhibits 7, 8, 9 and 10 the laundry ticket, the wine colored shirt, the gold colored shirt, and the stocking masks on grounds that their connection with Patterson is too tenuous to allow their admission. What goes before is adequate to show that the items were properly admitted. The stocking masks were not used in this crime, but as they were found with the shirts which were identified by the bank employees, there was no error in admitting them.
4. The court instructed the jury that although Patterson was not compelled to give testimony, he had been sworn, examined and cross examined, and his evidence should be weighed with all the other evidence in deciding guilt or innocence. In his Enumeration 7, Patterson urges that, having called attention to his having testified, the court should have gone further and instructed the jury that his evidence had the same standing as any other witness' despite his being accused *728 of crime. Nothing in the record indicates that Patterson requested such an instruction, and Georgia law does not require that such be given. Jester v. State, 131 Ga. App. 269 (205 SE2d 444).
5. Enumeration 8 concerns the following instruction: "Now, the law makes it your duty to reconcile conflicting evidence if there be such in this case, so as to make all the witnesses speak the truth, and perjury be imputed to none of them. But, if there be any evidence in this case, in such irreconcilable conflict that this cannot be done, it would then be duty [sic] to believe that evidence which is most reasonable to you, and which is most credible to you." (Emphasis supplied.) Patterson contends that for the italicized word "evidence" the court should have said "witnesses," because otherwise the jury are not told that if testimony of some witnesses is in irreconcilable conflict with others', they may disregard testimony least worthy of belief. We do not think this objection is well taken. The instruction as a whole informs the jury adequately that witnesses' testimony is evidence, and tells them how to weigh conflicting evidence. Therefore, they were told in effect that if witnesses disagree, they should believe the most credible and reasonable.
6. Enumeration 9 complains that the court erred in failing to charge the jury correctly with respect to consideration of evidence admitted for a limited purpose. The charge given was as follows: "Now, I charge you that there has been admitted into evidence here, for certain limited purposes, only [sic] certain evidence, about which I instructed you at the time. I further charge you that such evidence admitted for a limited purpose only, is by no means conclusive as to the issue involved, but it is to be considered by you, along with all the other evidence in this case. And, you can give it whatever credit and weight that you believe it is entitled to receive." Patterson argues the charge was incomplete, and in instructing the jury to consider such evidence with the other evidence, the court did not limit the purpose for which it could be considered. The record does not indicate that such a limiting instruction was requested, and in the absence of a request, there was no error in failing to supplement the instruction *729 as Patterson urges. Central of Georgia R. Co. v. Brown, 138 Ga. 107, 110 (74 S.E. 839).
7. In Enumeration 10, Patterson enumerates as error the following charge on alibi: "Now, alibi as a defense involves the impossibility of the presence of the accused at the scene of the offense at the time of its commission. And, the range of the evidence in respect to time and place must be such as to reasonably show the impossibility of the presence of the accused at the time and place of the offense.
"If you believe that a crime was committed, as charged in this indictment, but you do not believe that this Defendant was present, or was involved as a coconspirator at the time and place of such offense, you should acquit him upon that ground.
"Alibi as a defense should be established to the reasonable satisfaction of the jury, and not beyond a reasonable doubt. When testimony on the subject of alibi is offered on the trial of a case, it is the duty of the jury to take that testimony, along with all other evidence in the case, in determining the guilt or innocence of the defendant."
The state relied in its brief upon Trimble v. State,[1] 229 Ga. 399 (191 SE2d 857), a four to three decision of this court. We hold the charge to be erroneous.
"In a criminal case a charge to the jury that alibi must be established by the defendant to the reasonable satisfaction of the jury is error for the reason that it shatters the presumption of innocence, creates confusion in the minds of the jury, shifts the burden of persuasion to the defendant on the issue of his presence at the crime and requires him to establish his innocence, is inconsistent with the principle that the state must prove the defendant's guilt beyond a reasonable doubt, and thereby violates fundamental rights incorporated in the due process clause of the Fourteenth Amendment of the United States Constitution." Parham v. State, 120 Ga. *730 App. 723 (171 SE2d 911); Mosley v. Smith, 470 F2d 1320, cert. den. 412 U.S. 932; Smith v. Smith, 454 F2d 572, cert. den. 409 U.S. 885; Thornton v. Stynchcombe, 323 FSupp. 254. See also the dissenting opinion of Justice Gunter in Trimble, supra, pp. 401-402, and that part of Justice Jordan's concurring opinion and Justices Gunter's and Ingram's dissenting opinions involving the law on alibi in Grace v. State, 231 Ga. 113, 116-128 (200 SE2d 248).[2]
For the reasons stated above this court on a four to three vote held on December 3, 1974, that the conviction must be reversed because of the reversible error in the alibi charge. On rehearing the state took the new position that the instruction with respect to alibi was requested by defendant's counsel, although this alleged fact was nowhere reflected in the record. The state submitted a certificate of the trial judge in support of its position. The defendant's counsel responded that he made no such request and that none was filed with the clerk as required by Code Ann. § 70-207 (b).
*731 Where the correctness of the record is called into question the matter is to be resolved by the trial court. Code Ann. § 6-805 (f). Cf. Code Ann. § 6-805 (g) ("... in case of the inability of the parties to agree as to the correctness of such transcript, the decision of the trial judge thereon shall be final and not subject to review...") The trial court has certified that the alibi charge given was requested, and that concludes the matter in this court despite defendant's attorney's challenge, in his court despite correctness of that information. Because the charge was requested, reversible error cannot flow from its use despite our ruling above that the charge as given was constitutionally infirm.
Defendant's attorney argues now that even assuming he requested the charge, nonetheless he may not for this procedural reason be barred from complaining of it, because its infirmity is of constitutional magnitude. Translated, this argument urges that one may not waive a constitutional right. This is not the law. A criminal defendant may in a procedural setting implement choices which have the effect of waiving basic constitutional guarantees. The right to counsel may be waived (Williams v. Gooding, 226 Ga. 549 (176 SE2d 64)); a host of constitutional guarantees may be waived by the entry of a valid guilty plea. Brown v. Caldwell, 229 Ga. 186 (190 SE2d 52). In Johnson v. Zerbst, 304 U.S. 458 (58 SC 1019, 82 LE 1461), and recently in Schneckloth v. Bustamonte, 412 U.S. 218 (93 SC 2041, 36 LE2d 854), the United States Supreme Court has discussed extensively the standards for valid waivers of certain constitutional protections. There is nothing in those opinions which undercuts the long standing rule that error may not be enumerated upon the giving of a charge requested by defendant's counsel.
8. The verdict was supported by the evidence and Enumerations 1 and 2 raising the general grounds are without merit.
Enumeration 6 having been withdrawn, and all other enumerations of error being without merit, the conviction is affirmed.
Judgment affirmed. All the Justices concur, except Nichols, C. J., and Undercofler, P. J., who concur in *732 Divisions 1-6 and 8, with Footnote 2 in Division 7 and with the judgment, and Gunter, J., who dissents as to Division 7 and the judgment of affirmance.
GUNTER, Justice, dissenting.
I would reverse the judgment in this case. I think that the charge on alibi given in this case was a burden-shifting charge and therefore violative of due process of law. A majority of this court now adopts this position, but this conviction is affirmed because the trial judge has certified, outside of the record originally certified to this court by the clerk of the trial court, that appellant's counsel requested the charge on alibi that was given.
Code Ann. § 70-207 (b) provides that the trial judge shall file with the clerk of the trial court all requests to charge submitted to him, whether given in charge or not. If appellant's counsel in fact requested the alibi charge given, it was not filed with the clerk of the trial court by the trial judge as the statute requires. Appellant's counsel contends in his brief that he did not request the charge given, and the clerk of the court did not certify it as a part of the record in the case.
Code Ann. § 6-805 (f) provides that if anything material to either party is omitted from the record on appeal or is misstated in the record, the trial judge may direct that the omission or misstatement be corrected, and, if necessary, that a supplemental record shall be certified and transmitted "by the clerk of the trial court." I do not interpret this statutory provision to mean that the trial judge can merely file his own certificate in the appellate court as to what transpired in the trial court. *733 This statutory provision also provides that if the "record does not truly or fully disclose what transpired in the trial court and the parties are unable to agree thereon, the trial court shall set the matter down for a hearing with notice to both parties, and resolve the difference so as to make the record conform to the truth."
I think that burden-shifting charges are constitutionally infirm and are a denial to an accused person in a criminal case of his right to have the state prove his guilt beyond a reasonable doubt. I would reverse this conviction.
I respectfully dissent.
NOTES
[1] Trimble was later released on federal habeas corpus. Trimble v. Stynchcombe, 481 F2d 1175.
[2] All seven Justices of this court approve the following charge on "alibi" based upon Special Charge 6, Pattern Jury Instructions Criminal, prepared by Committee on Pattern Jury Instruction, Council of Superior Court Judges of Georgia: "Now, the defendant in this case contends that he was not present at the scene of the offense at the time of its commission. In that connection I charge you that alibi as a defense involves the impossibility of the accused's presence at the scene of the offense at the time of its commission. Presence of the defendant at the scene of the crime(s) alleged or his involvement as a co-conspirator is an essential element of the crime(s) set forth in this indictment, and the burden of proof as to such issue rests upon the State as I have instructed you already. Any evidence in the nature of an alibi should be considered by the jury in connection with all other facts in the case, and if, in doing so, the jury should entertain a reasonable doubt as to the guilt of the accused, they should acquit." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1740818/ | 905 F. Supp. 335 (1995)
Janice L. ECKLUND, Plaintiff,
v.
FUISZ TECHNOLOGY, LTD., Andrea Blake, Defendants.
Civ. A. No. 95-469-A.
United States District Court, E.D. Virginia, Alexandria Division.
November 7, 1995.
*336 *337 Candace S. McCall, Fairfax, VA, for plaintiff.
Jeffrey L. Tarkenton, David & Hagner, P.C., Washington, DC, for defendants.
MEMORANDUM OPINION
BRINKEMA, District Judge.
Before the Court is defendants' Motion for Summary Judgment, in which they argue that same sex harassment in the work place cannot be remedied under federal civil rights law, specifically Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e. Because the Title VII claim is the only federal cause of action in plaintiff's lawsuit, defendants further argue that the Court should decline to exercise supplemental jurisdiction over the remaining counts of plaintiff's complaint which allege constructive discharge, intentional infliction of emotional distress, and assault and battery. As an afterthought, they also argue that there are no material facts in dispute as to these state law claims.
I. Facts
The plaintiff began working as a receptionist at defendant Fuisz Technology in 1991. She alleges that during the two and a half years she worked at Fuisz Technology, defendant Andrea Blake, another employee of the corporation, repeatedly sexually harassed her. This harassment included offensive sexual comments and jokes and unwanted stroking of the plaintiff's hair and body. Plaintiff claims she complained about this conduct to defendant's human resources officer but that no one took any action to remedy the situation. Instead, she was told that Blake was a "valuable employee."
Plaintiff further alleges that Blake hugged her and forcibly kissed her at a company softball game in front of other employees in May, 1992, partially undressed in front of her at work, and made explicit comments about sexual acts. Plaintiff claims that she eventually resigned as a result of Blake's continued offensive behavior.
II. Same Sex Discrimination
The core of defendants' Motion for Summary Judgment is their argument that same sex discrimination does not state a claim under Title VII. Although the district courts which have addressed this issue are almost evenly split, we conclude that the arguments supporting plaintiff's position that same sex discrimination is cognizable under Title VII are more persuasive.
First, we find that the literal language of Title VII supports our view. Title VII prohibits employers from discriminating "against any individual with respect to compensation, terms, conditions, or privileges of employment because of such individual's ... sex." Title 42 U.S.C. § 2000e-2(a)(1).
Second, the administrative agency charged with enforcing Title VII has read the statute as we do. The Equal Employment Opportunity Commission ("EEOC") has clearly stated that Title VII protects victims of same sex discrimination in the workplace:
*338 Example 1 If a male supervisor of male and female employees makes unwelcome sexual advances toward a male employee because the employee is male but does not make similar advances toward female employees, then the male supervisor's conduct may constitute sexual harassment since the disparate treatment is based on the male employee's sex.
See EEOC Compliance Manual § 615.2. Several district courts throughout the country have found the EEOC's interpretation of Title VII to be persuasive.[1]
Moreover, this view is not inconsistent with the United States Supreme Court's approach to Title VII. Specifically, the Court has used gender-neutral language to articulate the definition of sex discrimination under Title VII in Meritor Savings Bank, FSB v. Vinson, 477 U.S. 57, 64, 106 S. Ct. 2399, 2404, 91 L. Ed. 2d 49 (1986). "When a supervisor sexually harasses a subordinate because of the subordinate's sex, that supervisor `discriminates' on the basis of sex." Id. In our view, it is significant that the Court used the terms "supervisor" and "subordinate" to articulate the definition of sexual harassment under Title VII rather than requiring cross-gender discrimination to give rise to a viable claim under the statute.
Plaintiff argues persuasively that the identity of the harasser in a Title VII suit is not relevant to whether the action is cognizable under Title VII. She supports her argument with cases including Thomkins v. Public Service Elec. & Gas Co., 422 F. Supp. 553 (D.N.J. 1976), rev'd and remanded, 568 F.2d 1044 (3rd Cir.1977), which concluded that an offending supervisor could be "either male or female with homosexual, heterosexual, or bisexual tendencies" because the class for purposes of Title VII was defined by reference to those subjected to harassment and suffered adverse employment consequences as a result of this conduct. (Plaintiff's Brief, p. 4 n. 3). She points by analogy to the area of racial discrimination arguing: "a black person who discriminates against persons darker than he, for instance, is discriminating against those blacks as much as a white person who discriminates against blacks" (Plaintiff's Brief, p. 10). See Parrott v. Cheney, 748 F. Supp. 312, 316 (D.Md.1989) (Court noted that same race discrimination is possible in a case in which black employee brought an action against black supervisor).
The Fifth Circuit is the only appellate court to have addressed the same sex discrimination issue. Garcia v. Elf Atochem North America, 28 F.3d 446 (5th Cir.1994) (citing Giddens v. Shell Oil Co., 12 F.3d 208 (5th Cir. Dec. 6, 1993) (unpublished opinion)). In Garcia, the Court noted in dicta at the end of the opinion that "[h]arassment by a male supervisor against a male subordinate does not state a claim under Title VII even though the harassment has sexual overtones. Title VII addresses gender discrimination." Garcia, 28 F.3d at 451-52 (citing Goluszek v. Smith, 697 F. Supp. 1452 (N.D.Ill.1988)). There is no further elaboration of the reasoning behind this assertion. Like the district court in Goluszek, the Fifth Circuit fails to cite any binding authority or legislative history to support its conclusion.
Goluszek is the case upon which virtually all courts have relied in holding that same sex discrimination does not state a claim under Title VII. However, Goluszek does not persuade this Court and can easily be distinguished on its facts. It involved a (heterosexual) male employee who was taunted by (heterosexual) male co-workers about his single status and lack of girlfriends. In Goluszek, the plaintiff was being harassed about sexually-related matters; he was not actually being harassed because he was male. That factual distinction is critical to appreciate Ecklund's position. This plaintiff's allegations, if proven, would clearly establish that she was harassed solely because she is female, *339 and that is the very evil against which Title VII protects.[2]
In the instant case, plaintiff alleges that she experienced sexual harassment in her work place over the entire length of her employment at defendant Fuisz Technology. Sexual harassment under Title VII can take two forms: (1) quid pro quo harassment in which a supervisor demands sexual favors in return for job benefits or (2) hostile environment harassment. See Rabidue v. Osceola Refining Co., 805 F.2d 611, 619-20 (6th Cir. 1986).
Defendants Blake and Fuisz Technology argue that plaintiff "does not allege any instances of quid pro quo sexual harassment." (Defendants' Brief, p. 4). To state a viable quid pro quo sexual harassment claim, a plaintiff must show that a "supervisor" demands sexual consideration in return for job benefits. Raney v. District of Columbia, 892 F. Supp. 283, 286 (D.D.C.1995). The record shows that defendant Blake was a research microscopist who did not have any type of authority over the plaintiff (Defendants' Brief, Exhibit No. 2, Affidavit of Catherine A. Kunz). Specifically, Blake had no power to hire, fire, promote, or evaluate the plaintiff. Because Blake was not in a position to grant or withhold job benefits to the plaintiff, a quid pro quo harassment claim cannot be sustained.
However, the plaintiff can still maintain a "hostile or abusive work environment" claim. See Harris v. Forklift Systems Inc., 510 U.S. ___, 114 S. Ct. 367, 126 L. Ed. 2d 295 (1993). In Meritor Savings Bank, FSB v. Vinson, 477 U.S. 57, 66, 106 S. Ct. 2399, 2405, 91 L. Ed. 2d 49 (1986), the Supreme Court held that "a plaintiff may establish a violation of Title VII by proving that discrimination based on sex created a hostile or abusive working environment." To prevail in a hostile environment sexual harassment action, a plaintiff must prove that
(1) the employee was a member of a protected class; (2) the employee was subjected to unwelcome sexual harassment in the form of sexual advances, requests for sexual favors, or other verbal or physical conduct of a sexual nature; (3) the harassment complained of was based upon sex; (4) the charged sexual harassment had the effect of unreasonably interfering with the plaintiff's work performance and creating an intimidating, hostile, or offensive working environment that affected seriously the psychological well-being of the plaintiff; and (5) the existence of respondeat superior liability.
Rabidue v. Osceola Refining Co., 805 F.2d 611, 619-20 (6th Cir.1986).
To maintain either type of sexual harassment claim, a plaintiff must show that "but for" the plaintiff's sex, the plaintiff would not have been subject to harassment. Rabidue, 805 F.2d at 620. In this case, it is clear that "but for" the plaintiff's gender, she would not have been the object of Blake's harassment.[3] The facts as alleged in this case show that a female employee, plaintiff, was continuously sexually harassed by another female employee of Fuisz Technology, Blake. Blake apparently used offensive, sexually explicit language and physically *340 touched Ecklund over a two year period. Had Blake been a male employee and engaged in this type of behavior, there is no question that the plaintiff would have alleged a viable claim under the "hostile or abusive environment" prong of Title VII.
For these reasons, the Court holds that same sex discrimination in the form of sexual harassment may state an actionable claim under Title VII and that plaintiff has alleged sufficient facts to make out such a claim.
III. Blake Improperly Named as Defendant
Defendants argue that Blake is improperly named as a defendant in this case because Title VII limits liability in discrimination cases to "employers." Blake was not the plaintiff's supervisor, and therefore she does not qualify as an "employer" under Title VII. See Paroline v. Unisys Corp., 879 F.2d 100, 104 (4th Cir.1989) reversed in part, vacated in part 900 F.2d 27 (1990). Therefore, Blake is dismissed as a defendant on all Title VII claims.
IV. Pendent State Claims
At the outset, the defendants argue that all three pendent state claims should be dismissed because the Title VII claim is invalid. This Court has found that the same sex discrimination claims are cognizable under Title VII. Therefore, this Court retains supplemental jurisdiction over the constructive discharge claim, the intentional infliction of emotional distress claim, and the assault and battery claim.
(a) Constructive Discharge Claim
Defendants also argue that the plaintiff cannot sustain a claim for constructive or wrongful termination in contravention of public policy because the Virginia legislature specifically amended the Virginia Human Rights Act to prohibit such actions.[4] In Lockhart v. Commonwealth Education Systems 247 Va. 98, 439 S.E.2d 328 (1994), the Virginia Supreme Court applied the public policy exception to the employment at-will doctrine established in Bowman v. State Bank of Keysville, 229 Va. 534, 331 S.E.2d 797 (1985) to terminations that violate the state's public policy against employment discrimination:
We recognize that the Virginia Human Rights Act does not create any new causes of action. Code § 2.1-725. Here, we do not rely upon the Virginia Human Rights Act to create new causes of action. Rather, we rely solely on the narrow exception that we recognized in 1985 in Bowman, decided two years before the enactment of the Virginia Human Rights Act. Without question, it is the public policy of this Commonwealth that all individuals are entitled to pursue employment free of discrimination based on race or gender.
Id., at 105, 439 S.E.2d 328.
Although the Virginia Legislature may have recently tried to overrule Lockhart by stating that causes of action to enforce the public policies reflected in the Virginia Human Rights Act are exclusively limited to those provided by the statute, the new statute merely restates the original statute using slightly different language.[5] The Virginia Supreme Court carefully avoided the restrictions in the old statute in relying instead on its own precedent in Bowman. Because Bowman predates the Va.H.R.A., this line of cases is clearly unaffected by the revised statute.
The plaintiff has alleged that she was "constructively" discharged by defendant Fuisz Technology. She claims that she complained to her supervisors about defendant Blake's sexual harassment and was told that Fuisz *341 Technologies would take no action to help her. Whether these conditions were so intolerable as to constitute a constructive discharge must be resolved at trial. However, defendant Blake was not the plaintiff's supervisor and cannot be considered her employer. Therefore, she must be dismissed from this claim.
(b) Intentional Infliction of Emotional Distress and Assault and Battery
The pendent state claims of intentional infliction of emotional distress and assault and battery remain as to defendant Blake because supervisor status is not a necessary element of these claims.
V. Summary Judgment on the Merits
Almost as an afterthought, defendants raised for the first time in their rebuttal papers a claim that they should be granted Summary Judgment on the merits because plaintiff has failed to come forward with cogent evidence to rebut their pleadings. Because discovery is over we assume that the parties have developed all the evidence supporting their positions. However, neither defendants nor plaintiff have submitted deposition excerpts or other evidence to support their position. Plaintiff has formally affirmed the truth of all allegations in the complaint. Because these are specific factual assertions, not mere opinions or beliefs, this affirmation appears to be sufficient to counter defendants' motion, particularly in the absence of any deposition or other evidence supporting defendants' position.
For these reasons, defendant Fuisz Technology's Motion for Summary Judgment is DENIED in all respects and defendant Blake's is GRANTED as to Counts I and II and is DENIED in all other respects.
NOTES
[1] See EEOC v. Walden Book Co., 885 F. Supp. 1100, 1103 (M.D.Tenn.1995); Pritchett v. Sizeler Real Estate Mgmt. Co., 1995 WL 241855 (E.D.La. 1995); McCoy v. Johnson Controls World Serv. Inc., 878 F. Supp. 229, 232 (S.D.Ga.1995); Prescott v. Independent Life & Accident Insurance Co., 878 F. Supp. 1545 (M.D.Ala.1995); Polly v. Houston Lighting & Power Co., 825 F. Supp. 135 (S.D.Tex.1993); Marrero-Rivera v. Dept. of Justice, 800 F. Supp. 1024 (D.Puerto Rico 1992); Joyner v. AAA Cooper Transportation, 597 F. Supp. 537 (M.D.Ala.1983); Wright v. Methodist Youth Services, Inc., 511 F. Supp. 307 (N.D.Ill.1981); Barnes v. Costle, 561 F.2d 983 (D.C.Cir.1977).
[2] We are mindful that three district courts in this circuit have found that same sex discrimination is not actionable under Title VII. See Mayo v. Kiwest Corp., 898 F. Supp. 335, 1995 U.S.Dist. LEXIS 13770 (E.D.Va. August 8, 1995); Benekritis v. Johnson, 882 F. Supp. 521 (D.S.C.1995); Hopkins v. Baltimore Gas & Elec. Co., 871 F. Supp. 822, 834 (D.Md.1994). The last case is pending before the Fourth Circuit as this opinion is being written. Until the Fourth Circuit provides guidance, we respectfully part company with our colleagues on this issue.
[3] Although plaintiff alleges that Blake is bisexual, there are no allegations that Blake harassed any male employees at Fuisz Technologies. See Amended Complaint ¶ 15. If the plaintiff had alleged that Blake sexually harassed both male and female employees, there would be no "disparate treatment" and therefore no actionable claim in this case:
`Only by a reduction ad absurdum could we imagine a case of harassment that is not sex discrimination where a bisexual supervisor harasses men and women alike.' Bundy, 641 F.2d [934] at 942 n. 7. [1981] Thus, it is fair to read Bundy to stand for the proposition that only in the rare case when the supervisor harasses both sexes equally can there be no sex discrimination. If, however, the supervisor singles out one sex, then the protections of Title VII are invoked.
Raney, 892 F.Supp. at 288.
[4] The amendment states (in relevant part):
causes of action based upon the public policies reflected in the [Virginia Human Rights Act] shall be exclusively limited to those actions, procedures and remedies, if any, afforded by applicable federal or state civil rights statutes or local ordinances."
Va.Code § 2.1-725(D).
[5] The old statute stated:
Nothing in this chapter creates, nor shall it be construed to create, an independent or private cause of action to enforce its provisions. Nor shall the policies or provisions of this chapter be construed to allow tort actions to be instituted instead of or in addition to the current statutory actions for unlawful discrimination.
Va.Code Ann. § 2.1-725 (1994). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2431360/ | 842 S.W.2d 629 (1992)
EXXON CORPORATION, Petitioner,
v.
Oscar PEREZ, Respondent.
No. D-1366.
Supreme Court of Texas.
September 9, 1992.
Michael A. Hatchell, Molly H. Anderson, Ramey, Flock, Jeffus, Crawford, Harper & Collins, Tyler, Nicholas Vincent, William A. Snapp, Houston, for petitioner.
Portia J. Bott, Thornton, Summers, Biechlin, Dunham & Brown, Inc., San Antonio, Roland L. Leon, Thornton, Summers, Biechlin, Dunham & Brown, Corpus Christi, Baldemar Gutierrez, Alice, for respondent.
PER CURIAM.
The Motion for Rehearing of Oscar Perez is overruled and the following is substituted as the court's opinion.
We revisit the former Workers' Compensation Act (the Act) to consider whether the trial court erred by refusing to include within the charge a question and accompanying definition on Oscar Perez's status as Exxon's borrowed servant. The court of appeals found no error and affirmed the trial court. We disagree.
*630 This cause arises from a personal injury suit brought by Perez in 1987 against Exxon for injuries he sustained while cutting pipe for Exxon under the supervision of Exxon's maintenance supervisor. Trial was before a jury which delivered a verdict in Perez's favor. Based on the jury's verdict, the trial court entered judgment against Exxon, awarding Perez actual and exemplary damages.
Exxon complains that because the trial court failed to submit a question and definition [1] to the jury regarding Perez's status as its borrowed servant, it was denied a viable affirmative defense. Specifically, Exxon asserts that since it was a subscriber under the Act and was covered by a workers' compensation policy, it would have been insulated from common-law negligence liability had the jury answered affirmatively to its proposed borrowed servant question. See Tex.Rev.Civ.Stat.Ann. art. 8306, §§ 3a, 3c, art. 8309, § 1 (Vernon 1967), repealed by Act of Dec. 13, 1989, 71st Leg., 2nd C.S., ch. 1, § 16.01(7) to (9), 1989 Tex.Gen.Laws 1, 20, 22-23, effective Jan. 1, 1991 (current version at Tex.Rev. Civ.Stat.Ann. art. 8308-1.03(18), 3.05, 3.08, 3.23-3.26 (Vernon Supp.1992)).
The court of appeals held that a contract between Exxon and Perez's employer, Hancock Construction & Services Co. (Hancock), was determinative of Perez's job status and that, consequently, the trial court did not err by refusing Exxon's proposed question. In reaching this conclusion, the court of appeals relied on the case of Producer's Chem. Co. v. McKay, 366 S.W.2d 220 (Tex.1963). In Producer's Chemical we recognized that whether a general employee of one employer may, in a particular situation, become the borrowed servant of another employer is often a difficult question. Id. at 225. A contract between two employers providing that one shall have the right of control over certain employees is a factor to be considered, but it is not controlling. Id. at 226. This court has held that a contract will not prevent the existence of a master-servant relationship where the contract is "a mere sham or cloak designed to conceal the true legal relationship between the parties." Newspapers, Inc. v. Love, 380 S.W.2d 582, 590 (Tex.1964); see also Swift v. Aetna Casualty & Surety Co., 449 S.W.2d 818, 821 (Tex.Civ.App.Houston [14th Dist] 1970, no writ) (contract not conclusive); Highlands Underwriters Ins. Co. v. Martinez, 441 S.W.2d 666, 667-68 (Tex.Civ.App. Waco 1969, writ ref'd n.r.e.) (same). Where the right of control prescribed or retained over an employee is a controverted issue, it is a proper function for the factfinder to consider what the contract contemplated or whether it was even enforced. Humble Oil & Refining Co. v. Martin, 148 Tex. 175, 178, 222 S.W.2d 995, 997-98 (1949); Halliburton v. Texas Indemnity Ins. Co., 147 Tex. 133, 137, 213 S.W.2d 677, 679 (1948); Martinez, 441 S.W.2d at 668. Because the record in the present case is replete with evidence[2] of Exxon's right of control over Perez, the court of appeals erred by concluding that the contract between the parties was conclusive. See Carr v. Carroll Co., 646 S.W.2d 561, 563 (Tex.AppDallas 1982, writ ref'd n.r.e.); cf. Continental Ins. Co. v. Wolford, 526 S.W.2d 539, 541-42 (Tex.1975) (no evidence that worker was an employee).
Further, we have held that unless an employee gives timely notice of his reservation of common-law claim, an employer who pleads and proves subscriber status is immune from liability for common-law negligence and the employee's exclusive remedy is under the Act. See Puga v. Donna Fruit Co., Inc., 634 S.W.2d 677, 680 (Tex. 1982); Bell v. Humble Oil & Refining Co., 142 Tex. 645, 181 S.W.2d 569 (1944). Here, *631 the record reveals that Exxon pleaded and provided evidence at trial of its subscriber status in compliance with the Act. Additionally, Exxon pleaded and presented evidence that Perez was its borrowed servant and that he was therefore subject to the Act and possessed no common-law right of action. See Carr, 646 S.W.2d at 563. Consequently, Exxon was denied a viable affirmative defense when the trial court refused to submit a question and accompanying definition regarding Perez's status as a borrowed servant to the jury. So long as matters are timely raised and properly requested as part of a trial court's charge, a judgment cannot be permitted to stand when a party is denied proper submission[3] of a valid theory of recovery or a vital defensive issue raised by the pleadings and evidence. Texas & Pac. Ry. Co. v. Van Zandt, 159 Tex. 178, 182, 317 S.W.2d 528, 530 (1958); see also Island Recreational Dev. Corp. v. Republic of Tex. Sav. Ass'n, 710 S.W.2d 551, 555 (Tex.1986); Garza v. Alviar, 395 S.W.2d 821, 824 (Tex.1965).
Accordingly, pursuant to Tex.R.App.P. 170, without hearing oral argument, a majority of this court grants Exxon's application for writ of error, reverses the judgment of the court of appeals, and remands this case to the trial court for new trial.
NOTES
[1] Exxon's proposed question and accompanying definition were taken from 1 State Bar of Texas. Texas Pattern Jury Charges PJC 6.02 (1987). Although we do not necessarily approve of this particular charge as offered in this case, it is not "affirmatively incorrect." See Placencio v. Allied Indus. Intl Inc., 724 S.W.2d 20, 21 (Tex. 1987) (citations omitted).
[2] For example, Perez testified that Exxon's foreman not only supervised the job-site but also instructed Perez as to precisely where and how the pipe should be cut, thereby providing evidence that by directing even "the details" of the work, Exxon possessed the right of control. See Anchor Casualty Co. v. Hartsfield, 390 S.W.2d 469, 471 (Tex.1965).
[3] See Tex.R.Civ.P. 277 and 278. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2182865/ | 146 S.W.3d 778 (2004)
Bill SWOR, Appellant,
v.
TAPP FURNITURE COMPANY, Dian Emerson, and Jay Emerson, Appellees.
No. 06-04-00035-CV.
Court of Appeals of Texas, Texarkana.
Submitted July 13, 2004.
Decided October 6, 2004.
*779 Cary A. Hilburn, Hilburn & Hilburn, PC, Shreveport, LA, for appellant.
W.T. Allison II, Sulphur Springs, for appellees.
Before MORRISS, C.J., ROSS and CARTER, JJ.
OPINION
Opinion by Justice ROSS.
Bill Swor sued Dian Emerson, Jay Emerson, and Tapp Furniture Company (collectively, the Emersons) to recover a fee for finding a buyer to purchase a funeral home business, Tapp Funeral Home, owned by the company. Swor alleged causes of action for breach of contract, *780 quantum meruit, promissory estoppel, tortious interference with contractual relations, and civil conspiracy. The Emersons filed a motion for summary judgment on their affirmative defenses claiming that, because Swor had no real estate license or written commission agreement, he violated Sections 19 and 20(b) of the Real Estate License Act[1] and was barred from bringing an action to recover a real estate commission. In response, Swor filed a motion for summary judgment, contending that no evidence existed to support the Emersons' affirmative defenses. The trial court granted the Emersons' motion and denied Swor's. Swor appeals, contending the trial court erred in granting the Emersons' motion and in denying his no-evidence motion.
To prevail on a motion for summary judgment, a movant must establish that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. TEX.R. CIV. P. 166a(c). Summary judgment for a defendant is proper when the defendant negates at least one element of each of the plaintiff's theories of recovery or pleads and conclusively establishes each element of an affirmative defense. Science Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex.1997); Wornick Co. v. Casas, 856 S.W.2d 732, 733 (Tex.1993).
The movant has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex.1985). However, once the movant establishes that it is entitled to summary judgment, the burden shifts to the nonmovant to show why summary judgment should not be granted. Casso v. Brand, 776 S.W.2d 551, 556 (Tex. 1989). In reviewing a summary judgment, we accept all the nonmovant's proof as true and indulge every reasonable inference in the nonmovant's favor. Science Spectrum, Inc., 941 S.W.2d at 911. All doubts about the existence of a genuine issue of a material fact must be resolved against the movant. Johnson County Sheriff's Posse, Inc. v. Endsley, 926 S.W.2d 284, 285 (Tex.1996).
A no-evidence summary judgment is essentially a pretrial directed verdict. We therefore apply the same legal sufficiency standard in reviewing a no-evidence summary judgment as we apply in reviewing a directed verdict. Wal-Mart Stores, Inc. v. Rodriguez, 92 S.W.3d 502, 506 (Tex.2002). We must determine whether the nonmovant produced any evidence of probative force to raise a fact issue on the material questions presented. Id.; Woodruff v. Wright, 51 S.W.3d 727, 734 (Tex.App.-Texarkana 2001, pet. denied). We consider all the evidence in the light most favorable to the party against whom the no-evidence summary judgment was rendered, disregarding all contrary evidence and inferences. Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex.1997). A no-evidence summary judgment is improperly granted if the nonmovant presents more than a scintilla of probative evidence to raise a genuine issue of material fact. Jackson v. Fiesta Mart, Inc., 979 S.W.2d 68, 70-71 (Tex.App.-Austin 1998, no pet.). More than a scintilla of evidence exists when the evidence "rises to a level that would enable reasonable and fair-minded people to differ in their conclusions." Havner, 953 S.W.2d at 711; see King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex.2003).
In general, an order granting a summary judgment may be appealed, but an *781 order denying a summary judgment may not. Novak v. Stevens, 596 S.W.2d 848, 849 (Tex.1980). However, an exception to this rule exists when both parties file motions for summary judgment and the court grants one and overrules the other. Tobin v. Garcia, 159 Tex. 58, 316 S.W.2d 396, 400 (1958). On appeal, the proper disposition is for the appellate court to render judgment for the party whose motion should have been granted. Members Mut. Ins. Co. v. Hermann Hosp., 664 S.W.2d 325, 328 (Tex.1984); McLemore v. Pac. Southwest Bank, FSB, 872 S.W.2d 286, 289 (Tex. App.-Texarkana 1994, writ dism'd by agr.). Each party must clearly prove its right to judgment as a matter of law, and neither party may prevail simply because the other party failed to make such proof. Bd. of Adjustment of City of Dallas v. Patel, 887 S.W.2d 90, 92 (Tex.App.-Texarkana 1994, writ denied); James v. Hitchcock Indep. Sch. Dist., 742 S.W.2d 701, 703 (Tex.App.-Houston [1st Dist.] 1987, writ denied). The proper disposition on appeal is for the appellate court to render judgment for the party whose motion should have been granted. McLemore, 872 S.W.2d at 289.
Swor testified in his deposition that Dian, president of Tapp Furniture Company, expressed to him an interest in selling Tapp Funeral Home. She asked Swor to find financing for her son and another employee to purchase the funeral home. Swor testified that, when that deal did not materialize, Dian orally agreed to pay him a fee of ten percent of the sale price, if he introduced a buyer. Swor introduced Jeff Orwosky as a potential buyer. Dian and Orwosky entered into a contract for Orwosky to purchase the funeral home for $1.2 million.
The oral agreement of the finder's fee between Swor and Dian did not specifically reference the selling of the real estate. The absence of a specific reference to real estate raises a fact issue as to whether "a funeral home" necessarily includes both assets and associated real estate. David Gavin Co. v. Gibson, 780 S.W.2d 833, 834 (Tex.App.-Houston [14th Dist.] 1989, writ denied). Hall v. Hard established that whether the nature of an agreement contemplates the sale of real estate is a fact question which, if not submitted to the jury, would preclude summary judgment. 160 Tex. 565, 335 S.W.2d 584, 590 (1960).
Swor, however, admitted in his deposition he had agreed that all assets, including the real estate of the funeral home, were for sale. He had the appraisal district records of the funeral home, as well as the financing statements of the business, which generally include the profit/loss margin and a list of all assets, liabilities, and capital. According to Swor's testimony, he was also presented a copy of a contract entered into between Orwosky and Dian. The contract outlined all the assets involved in the sale. Those included inventory, supplies, equipment, furniture, fixtures, vehicles, and real estate.
During his deposition, Swor responded to questioning by the Emersons' counsel as follows:
[Counsel]: ... I assume that in order to do that you had to have some financial information from the funeral home?
....
[Swor]: I had financial statements on Mike and Oscar.
[Counsel]: Anything else?
[Swor]: Copies of '00 and '01 financial statements of the funeral home.
[Counsel]: Well, did you have appraisal district records
[Swor]: Yes.
[Counsel]: for the funeral home and the parking lot and the other improvements?
*782 [Swor]: Yeah, I had that.
[Counsel]: All right. And actually, you even had a plat of the property, didn't you, real estate?
[Swor]: .... Oh, yeah, that's attached to the appraisal.
....
[Counsel]: Well, tell me, what was thewhat was the sale supposed to involve?
[Swor]: It was an asset sale.
[Counsel]: Well, what assets were being sold?
[Swor]: All assets of Tapp Funeral Home.
[Counsel]: And what were they?
[Swor]: Whatever they had that were assets.
[Counsel]: Was the inventory going to be sold?
[Swor]: I don't really know. Mymy objective in the whole deal was to put two people together, and it was up to them to make the decision on what they sold and what they didn't sell.
....
[Counsel]: Well, inventory and equipment was going to be sold, wasn't it?
[Swor]: Sure. Everything that was an asset.
....
[Counsel]: It's going to cover vehicles, furniture, equipment, and fixtures
[Swor]: Right.
[Counsel]: inventory and supplies
[Swor]: Uh-huh.
[Counsel]: and real estate?
[Swor]: Sure.
The fee for handling the sale of property consisting in part of real estate is considered a real estate commission. Id. at 588; Gibson, 780 S.W.2d at 834. Additionally, the definition of real estate broker is so broad that it covers compensation labeled as "finder's fee." Terry v. Allied Bancshares, Inc., 760 S.W.2d 45, 47 (Tex. App.-Fort Worth 1988, no writ); see TEX. OCC.CODE ANN. § 1101.002 (Vernon 2004). Swor expected to be compensated for assisting in a transaction contemplating a sale of real estate. Therefore, the Real Estate License Act applied to Swor, as a broker.
The Texas Legislature requires that a real estate dealer secure a license from the Texas Real Estate Commission. TEX. OCC.CODE ANN. § 1101.351. It is a criminal offense to engage in the business of a real estate broker, or salesperson, without having procured such license. TEX. OCC.CODE ANN. § 1101.756 (Vernon 2004); Hall, 335 S.W.2d at 589. In addition, Section 19 of the Real Estate License Act denies the use of the courts to real estate brokers for the recovery of a commission unless the broker seeking recovery alleges and proves that he or she was a duly licensed real estate broker, or salesperson, at the time the alleged cause of action arose. TEX.REV.CIV. STAT. ANN. art. 6573(a), § 19 (repealed) (current version at TEX. OCC.CODE ANN. § 1101.351). Further, Section 20(b) of the Act provides that an action may not be brought for the recovery of a commission for the sale or purchase of real estate unless the agreement on which the action is brought is in writing and signed by the party to be charged. TEX. REV.CIV. STAT. ANN. art. 6573(a), § 20(b) (repealed) (current version at TEX. OCC. CODE ANN. § 1101.559).
It is undisputed that no written agreement existed in the instant case and that Swor was not a licensed real estate broker or salesperson at the time the alleged cause of action arose. The burden was on the dealer or broker to prove that no real estate was included in the transaction. Hall, 335 S.W.2d at 588. Hence, *783 Swor could recover a commission only by showing that he "was not employed to procure prospects or property for the purpose of effecting a transaction that involved any real estate." See Gibson, 780 S.W.2d at 834. It is clear Swor failed to demonstrate he was not employed to procure any real estate.
We must next determine whether the contract is divisible between nonrealty assets and realty assets. In McFarland v. Haby, the Austin Court of Appeals held that, where part of the consideration is illegal because it violates a statute, the entire agreement is void if the contract is entire and indivisible. 589 S.W.2d 521, 525 (Tex.Civ.App.-Austin 1979, writ ref'd n.r.e.). Swor does not advance any arguments or offer any evidence to suggest that the contract was anything but entire and indivisible.
Applying the rule from McFarland to the findings that the oral agreement between Dian and Swor is indivisible and inseparable, and that Swor violated the Real Estate License Act, the finder's fee is void and unenforceable. Further, if there is no signed written agreement, as in this case, public policy as expressed in Sections 19 and 20(b) preclude any action to recover a commission, whether in tort or in contract. See Trammel Crow Co. v. Harkinson, 944 S.W.2d 631, 636 (Tex.1997). Therefore, Swor's claims in quantum meruit, promissory estoppel, tortious interference, and civil conspiracy likewise fail.
Because the trial court properly granted the Emersons' motion for summary judgment, it also properly denied Swor's motion.
We affirm the trial court's judgment.
NOTES
[1] See TEX.REV.CIV. STAT. ANN. art. 6573(a), §§ 19, 20(b), repealed by Act of May 22, 2001, 77th Leg., ch. 1421, § 13, 2001 Tex. Gen. Laws 4570, 5020 (effective June 1, 2003) (current version at TEX. OCC.CODE ANN. §§ 1101.351, 1101.559 (Vernon 2004)). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2427676/ | 380 S.W.2d 582 (1964)
NEWSPAPERS, INC., Petitioner,
v.
Gerald Witt LOVE et al., Respondents.
No. A-9629.
Supreme Court of Texas.
March 4, 1964.
Dissenting Opinion March 11, 1964.
Rehearing Denied June 24, 1964.
*583 Gay & Meyers, Austin, for petitioner.
Byrd, Davis & Eisenberg, Austin, for respondents.
NORVELL, Justice.
The crucial issue in this case is whether the relationship of C. E. Cargile to Newspapers, Inc. was that of a servant or an independent contractor. The trial court rendered judgment upon jury findings in favor of Gerald Witt Love et al., the plaintiffs in the district court, and against Newspapers, Inc. upon the theory that Cargile was the servant of Newspapers, Inc. and his negligence was one of the proximate causes of plaintiffs' injuries sustained in a wreck in which automobiles driven by Otis Franklin and by Gerald Witt Love and a pickup truck driven by C. E. Cargile were involved. This judgment was affirmed by the Court of Civil Appeals. 367 S.W.2d 185.
In the trial petition it was alleged that prior to and at the time of the collision Cargile "was an authorized agent, servant or *584 employee of Newspapers, Incorporated, and he was then acting for and on behalf of Newspapers, Incorporated, and within the scope of his employment or within the authority delegated to him by Newspapers, Incorporated."
The evidence shows that Cargile was employed by Newspapers, Inc. as publisher under a written contract which constituted Cargile an independent contractor in distributing the newspapers published by petitioner.[1] The allegations of the petition above set out were sufficient to admit evidence tending to show this written contract was intended as a subterfuge by the contracting parties or that it had been abandoned by them.[2] Such evidence was adduced as hereinafter pointed out, so that the complaint that there was no evidence that the written contract between the parties was inoperative and not controlling must be overruled. Humble Oil & Refining Co. v. Martin (1949), 148 Tex. 175, 222 S.W.2d 995.
We are, however, of the opinion that in view of the evidence adduced upon the trial the independent contractor or servant issue was improperly submitted to the jury and accordingly the judgment against Newspapers, Inc. must be reversed and the cause as to the petitioner remanded for another trial.[3]
Special Issue No. 1 which embodied respondents' master-servant theory was answered *585 by the jury in the affirmative. This issue read as follows:
"At the time and on the occasion in question, do you find from a preponderance of the evidence that the relationship between C. E. Cargile and Newspapers, Inc. was such that Newspapers, Inc. retained or exercised the power to control, not merely the end sought to be accomplished, but also the means and details of its accomplishment, not merely what should be done, but how and when it shall be done?" (Italics added)
Special Issue No. 2 was an inferential rebuttal issue embodying petitioner's theory that Cargile was an independent contractor. The jury answered that, "He (Cargile) was not an independent contractor." This issue and the accompanying definition read as follows:
"At the time and on the occasion in question, do you find from a preponderance of the evidence that C. E. Cargile was not an independent contractor within the meaning of the following definition? * * *
"You are instructed that the term `independent contractor,' as used in the foregoing special issue, means a person who undertakes to do work for another person, using his own means and methods, without submitting himself to the contract of such other person in the details of such work, except as to the result of the work."
Cargile's relationship to Newspapers, Inc. was either that of a servant or that of an independent contractor. This was a controlling point in the case and the jury must have understood that it was. Any error relating to the submission of the masterservant theory would consequently affect the independent contractor issue. It can hardly be maintained that a judgment could be supported by an unfavorable answer to an inferential rebuttal issue when the primary issue upon which a party must depend for a recovery is improperly and prejudicially stated.
Petitioners objected to the submission of Special Issue No. 1 because of the use of the words "retained or exercised" and asserted that, "the true test is whether or not the alleged employer has the power (right) to control and the usurpation of such power does not make the relationship one of employer and employee."
There are cases which speak of the right of control or exercise of control of the details of the work as being the test of the existence of a master-servant relationship. As indicated by the Court of Civil Appeals, the case of King v. Galloway, Tex.Com. App., (1926) 284 S.W. 942, relied on by petitioner, quotes a definition from Street on Personal Injuries, §§ 11 and 12 which embodies the words "retains or exercises the power of control," but the actual holding of the case is embodied in the following quotation:
"In the first place, it must be borne in mind that on the question of control, the test is not the exercise thereof, but the right to exercise such control. In this connection, we quote from Labatt, p. 240, 19 A.L.R., as follows:
"`In every case which turns upon the nature of the relationship between the employer and the person employed, the essential question to be determined is not whether the former actually exercised control over the details of the work, but whether he had a right to exercise that control.'"
The A.L.R. note referred to by Judge Powell in the Commission's opinion was prepared by C. B. Labatt, the author of the "Commentaries on the Law of Master and Servant", and the cases cited in the monograph generally support the proposition that it is the right of control rather than the exercise thereof that determines the masterservant relationship. See, Annotation "General discussion of the nature of the relationship of employer and independent contractor," 19 A.L.R. 226, 1. c. 240, § 7.
*586 In Standard Insurance Company v. McKee (1947), 146 Tex. 183, 205 S.W.2d 362, Mr. Justice Smedley, writing for this Court, said:
"The record contains evidence of elements bearing upon the relation between respondent and the oil company from which it could reasonably be inferred that respondent continued to be an independent contractor during the time when the well was being finished. We believe, however, that the solution of the question presented in this case is correctly reached by the application of the test of right of control, which, according to our decisions and most of the modern cases, is used as the supreme test. Ochoa v. Winerich Motor Sales Co., 127 Tex. 542, 94 S.W.2d 416; Blankenship v. Royal Indemnity Co., 128 Tex. 26, 95 S.W.2d 366; Southern Underwriters v. Samanie, 137 Tex. 531, 155 S.W.2d 359; Industrial Indemnity Exchange v. Southard, 138 Tex. 531, 160 S.W.2d 905; Dennis v. Texas Employers' Ins. Ass'n, Tex.Civ.App., 116 S.W.2d 492; Khoury v. Edison Electric Illuminating Co., 265 Mass. 236, 164 N.E. 77, 60 A.L.R. 1159; Northwestern Mutual Life Ins. Co. v. Tone, 125 Conn. 183, 4 A.2d 640, 121 A.L.R. 993; 27 Am.Jur., p. 486, Sec. 6." (Italics added)
The "right of control" and "the exercise of control" (or the exercise of the power of control) are two separate concepts. Following the pattern suggested by Special Issue No. 1, we could by separate questions inquire (a) if the relationship between Cargile and Newspapers, Inc. was such that Newspapers, Inc. retained the power to control, etc., and (b) if the relationship between Cargile and Newspapers, Inc. was such that Newspapers, Inc. exercised the power to control, etc. We may accept the theory that the evidence received from the witnesses, Behrman and Wheeless was admissible in connection with the statement attributed to Phil Granath, (hereinafter mentioned), to show that the terms of the written contract were not intended to control the relationship between Newspapers, Inc. and its distributors. This evidence would, however, have to be related to the theory of "right of control," i. e., whether the written contract was a subterfuge or had been superseded by a subsequent agreement which controlled the relationship of the parties. When, however, we turn to the concept of "exercise of control," it should be pointed out that neither Behrman nor Wheeless testified to any exercise of control by Newspapers, Inc. over Cargile. Cargile's deposition was taken before petitioner was made a party to this suit; consequently he was not subject to examination by Newspapers, Inc. However, the statements of Cargile in this deposition relate to his opinions or conclusions as to the relationship between him and Newspapers, Inc. and not to any definite or specific acts of control exercised by Newspapers, Inc. over Cargile's actions other than such as were consistent with an independent contractor relationship such as directing when Cargile should pick up his papers and when he should deliver them.
We, therefore have an issue which the jury could have answered in the affirmative if they believed petitioner exercised control over Cargile as to the details of the work, yet there is no competent evidence that such control was actually exercised by Newspapers, Inc. As above pointed out, the "right of control" is an entirely different concept.
All the evidence relating to incidents of actual exercise of control of the details of the work by Newspapers, Inc. to relate to control exercised over F. V. Wheeless and Mayes Behrman, former distributors for Newspapers, Inc. They are referred to as district circulation managers. This designation is also used with reference to Cargile, although Newspapers, Inc. seems to prefer the term of "route carrier." It was the position of Newspapers, Inc. and the testimony of its City Circulation Manager, Phil Granath, that all district circulation managers, including Cargile, operated under the *587 form of contract heretofore mentioned which by its provisions constituted them independent contractors. Granath also testified that the operations of Newspapers, Inc. in connection with their district distributors, were wholly consistent with the provisions of the contract they had signed with Newspapers, Inc.
Behrman and Wheeless gave an entirely different version of the actual relations between the publisher and its district managers. As pointed out by the Court of Civil Appeals, Behrman testified that Granath, the city circulation manager, told him that he "should know by now that (the written) contract is not worth the paper it is written on. It is meant to protect the company." Both Behrman and Wheeless testified to numerous incidents of control which are set forth in the opinion of the Court of Civil Appeals and from which it could be contended that the written contract was a subterfuge or had been superseded or modified by a subsequent contract under which the publisher retained the right of control as to details. It was strongly argued to the jury that the nature of efficient newspaper distribution was such that it could be carried out only by exercising a detailed control over operations and methods.
While, as above pointed out, this evidence may be a basis for contending that the securing of contracts and going through the procedure of appointing independent contractors was a sham and a subterfuge, and could have been received by the Court under an instruction as to its purpose, it appears in an entirely different aspect when relied upon to support the thesis that the publisher exercised control over the details of the work done by Cargile. Unless we can say that the entire method of distribution employed by Newspapers, Inc. was a subterfuge, it can hardly be maintained that because the publisher assumed control over the details of the work insofar as Behrman and Wheeless were concerned, it also assumed control over the details of Cargile's operations. An employer may leave an efficient independent contractor alone as detailed supervision may not be necessary to secure the objectives sought to be obtained by the contract. Further, the evidence showed that no one except his wife aided Cargile in carrying out his distribution duties. His route was essentially a rural one and he did practically all the work himself. On the other hand, Wheeless had 24 boys and 5 men who delivered papers for him. Behrman had 16 to 22 carrier boys working for him and never delivered any papers personally unless there was an emergency caused by an illness of a carrier boy or some similar situation. It appears that there was a substantial difference between the operations conducted by Cargile on one hand and Behrman and Wheeless on the other. The assertion of control over the more complicated operations of a distributor using numerous carrier boys is hardly evidence of an exercise of control over a rural route carrier such as Cargile.
Respondents argue that district managers were required to employ young boys rather than men as carriers, that such carriers were required to sign contracts, that the district circulation managers were required to see that the carrier boys were around early in the morningto wake them up if necessary, to make certain, in some instances, that newspapers were placed on the porches of the residences of customers, and the like. These matters all relate to the use of carrier boys,and Cargile employed none.
In Texas & Pacific Ry. Co. v. Reed (1895), 88 Tex. 439, 31 S.W. 1058, one question involved was whether or not one Ed Moore, a night yardmaster or foreman, had the power to employ Reed, the plaintiff. Evidence of the custom of other railroads and the practice at stations other than Toyah, where Moore was the yardmaster, was admitted as throwing light on Moore's authority. It was held that a dissimilarity of conditions rendered such evidence inadmissible. This Court said:
"We think, however, that testimony of witnesses who know the fact that the *588 yard foreman at Toyah and at stations on defendant's line of a like character were accustomed to employ and discharge hands was, in view of the conflicting evidence in the case, admissible as having a tendency to show that Moore, at the time of the accident, had the authority in question. But the conditions at large stations, where much freight and many cars were to be handled, are so different from those at small places that we are of opinion that the practice of the latter raises no presumption that the same practice existed at the former. In no case, however, should a witness be permitted to testify as to the fact of the existence of the foreman's authority at any station, unless he knows of his own knowledge of the authority being communicated, or has knowledge of the existence of the fact by being present when such foreman actually employed or discharged hands."
See also, Wigmore on Evidence, (3rd Ed.) § 379.
In the present case, testimony (admitted over objection) showing exercise of control over Wheeless and Behrman was incompetent to show actual control over Cargile as to the details of the work.
As above mentioned, there are a number of cases which, in defining the legal status of a servant, use the phrase "exercise of control," along with the words "right of control." In most applications of a definition thus worded, no harm could result, but in some instances, such as the case now before us, a grave misunderstanding of the nature of the master-servant relationship in the minds of a jury could take place. Quite obviously, in cases such as this one where a written contract is involved, the sporadic action of some zealous or over-active supervisor is directing the details of the work covered by a written or clearly stated oral contract, would not destroy the contract. A building contractor agreeing to construct a residence for a man and wife in accordance with written plans and specifications does not cease to be an independent contractor insofar as the building of the house is concerned, simply because the wife may, despite the written contract, give minute instructions as to how she wants her fireplace constructed.
We are concerned with a contractual species of agency and the actual agreement between the parties must control the question of vicarious liability. Sir John Salmond, in his "Law of Torts" (6th ed.), p. 12, said, "Reason demands that a loss shall lie where it falls unless some good purpose is to be served by changing its incidence; * * *." It is generally considered that when one commits a wrong which causes another harm, this is a good reason for shifting the loss from the person injured to the one committing the wrongful act. When, however, one's servant commits the wrongful act and liability is asserted against the master, we have two situations in which liability may be imposed. The first situation is the one in which the harmful act is directed by the principal. A different principle of law is then applicable from that presented here. Newspapers, Inc. was exercising no control over the way Cargile was driving his automobile at the time of the accident. The second situation is premised upon the contractual relationship existing between those said to be master and servant.
The difference between a specific exercise of control and liability arising out of a contractual master-servant relationship giving rise to a right of control was made rather clear by Holmes some years ago when he pointed out that, "[I]t is plain good sense to hold people answerable for wrongs which they have intentionally brought to pass, and to recognize that it is just as possible to bring wrongs to pass through free human agents as through slaves, animals, or natural forces. This is the true scope and meaning of `Qui facit per alium facit per se,' and the English law has recognized that maxim as far back as it is worth while to follow it." "Agency," Oliver Wendell Holmes, *589 Jr., 4 Harvard Law Review 345, 1. c. 347. On the other hand in discussing the doctrine that charges the master with liability for the servant's wrong because of the existence of the master-servant relationship, Holmes said, "I assume that common-sense is opposed to making one man pay for another man's wrong, unless he actually has brought the wrong to pass according to the ordinary canons of legal responsibility, unless, that is to say, he has induced the immediate wrong-doer to do acts of which the wrong, or, at least, wrong, was the natural consequence under the circumstances known to the defendant. * * * I therefore assume that common sense is opposed to the fundamental theory of agency. * * *" 5 Harvard Law Review 1, 1. c. 14. Holmes does suggest some policy basis for the rule holding the master liable for his servant's torts even in the absence of an immediate and specific exercise of control over the servant's actions, and a number of rationalizations have been advanced to support such rule including, among others, the thesis that each business enterprise which benefits from the services of others should bear the losses occasioned by its operations. See, Philip Mechem "Outlines of the Law of Agency," §§ 349-363; John H. Wigmore, "Responsibility for Tortious Acts: Its History." 7 Harvard Law Review 315, 383 and 441; William O. Douglas, "Vicarious Liability and Administration of Risk", 38 Yale Law Journal 584 and 720; Clarence Morris, "The Torts of an Independent Contractor", 29 Illinois Law Review 339.
The doctrine which holds the master liable for the torts of his servant committed in the course of his employment is essentially a policy doctrine and except for acts personally directed by the principal, the liability of the master is founded upon the contractual arrangement with the servant, either expressed or implied which vests in him the right to control the details of the work. Glasgow v. Floors, Inc., of Texas (1962), 356 S.W.2d 699, no wr. hist.; Philip Mechem, "Agency" §§ 413-416. Certainly if the right of control of details has a contractual basis, the circumstance that no actual control was exercised will not absolve the master of liability. Ballard & Ballard Company v. Lee's Administrator (1909), 131 Ky. 412, 115 S.W. 732; Philip Mechem "Agency" § 415. Conversely, an occasional assertion of control should not destroy a settled relationship agreed to by the parties.
In Smith Bros. v. O'Bryan (1936), 127 Tex. 439, 94 S.W.2d 145, it was pointed out that various definitions of the terms "independent contractor" and "master-servant" relationship have been employed. It was said that:
"The definitions formulated by the courts in many instances include, or give emphasis to, some evidentiary element which may not in all cases be a controlling factor. This is due to the fact that the presence of certain evidentiary facts is held to be controlling in certain cases, while dominant weight has been given to certain other evidentiary facts in other cases; and definitions have often been formulated in the particular case to more clearly meet the situation presented in that case."
This circumstance should be considered in passing upon the accuracy of any definition of the master-servant relationship. For example, in Southern Underwriters v. Samanie (1941), 137 Tex. 531, 155 S.W.2d 359, it was said:
"The evidence as to the contract of employment, which was oral, throws little light on the question whether the lumber company in its employment of Samanie retained the right of control over him. It becomes necessary in the solution of the question first presented to consider not only the evidence as to the terms of the contract when made, but also the evidence with reference to the control that was actually exercised, for it is relevant and admissible as tending to prove what the contract really contemplated. Lone Star Gas Co. v. Kelly, Tex.Com.App, 46 S.W.2d *590 656; Note, 20 A.L.R. pp. 684, 725; 27 Am.Jur., p. 488, § 6."
Similarly, in Halliburton v. Texas Indemnity Ins. Co. (1948), 147 Tex. 133, 213 S.W.2d 677, the contract was oral and indefinite in that it could not be clearly said from the terms of the contract alone whether the parties contemplated that Halliburton should be a servant or an independent contractor. This Court said:
"Whether, under the terms of the contract, the supervisory control was exercised after the cars were loaded, or while in the process of being loaded, was a controverted fact. In other words the character of control prescribed, or retained, by Kirby Lumber Corporation, was a controverted issue. The acts of control actually exercised by the supervisors were therefore pertinent in assisting a jury in determining what the contract really contemplated."
In cases where there is no express contract of employment or the terms of the employment are indefinite, it may not be objectionable to include the highly important evidentiary element of "exercise of control" in the definition or issue relating to the master-servant relationship. In such cases the "exercise of control" may be the best evidence available to show the actual terms of the contract. The fact remains, however, that the "right to control" remains the supreme test and the "exercise of control" necessarily presupposes a right to control which must be related to some agreement expressed or implied. This is fundamental. See, Comment under § 1 of the American Law Institute's Restatement of the Law of Agency.
In the present case we have a written contract which, unless it was a subterfuge to begin with or has been modified by a subsequent agreement expressed or implied, definitely fixed Cargile's status as that of an independent contractor. Whoever prepared the contract undoubtedly had in mind the decision rendered in Carter Publications, Inc. v. Davis, Tex.Civ.App. (1934), 68 S.W.2d 640, wr. ref. See also, Mid Continent Freight Lines, Inc. v. Carter Publications, Inc., Tex.Civ.App.(1960), 336 S.W.2d 885, wr. ref., and authorities therein cited. The wording was chosen with the deliberate intention of creating an independent contractor relationship. We think that the effect of the Carter-Davis decision was to establish a rule in Texas that the distribution of newspapers to individual purchasers thereof may be accomplished through the medium of independent contractors, provided, of course, that such distribution is effected under a contract similar in terms to the one considered by the court in Carter-Davis.
In order for there to be any certainty in business relationships and operations, it is essential that valid contracts not inhibited by considerations of public policy be scrupulously enforced. All business and mercantile activities are for the most part premised upon the legal recognition and judicial enforcement of rights, liabilities and obligations which are brought into existence through privately negotiated contracts. This does not mean, however, that the courts will enforce fictitious contracts.
It has been definitely established that a form of written agreement will not prevent the existence of a master-servant relationship when such contract is a mere sham or a cloak designed to conceal the true legal relationship between the parties.
The position and effect of a written agreement in connection with the existence of an independent contractor status, as contrasted with that of a servant, was considered in Texas Company v. Wheat (1943), 140 Tex. 468, 168 S.W.2d 632, wherein the case of Gulf Refining Co. v. Rogers (1933), Tex.Civ.App., 57 S.W.2d 183, wr. dis., was discussed and distinguished.
In the Wheat case the Court of Civil Appeals had held that there was a fact issue as to whether the legal relationship of master and servant existed between Texas *591 Company and Gossen, a gasoline filling station operator. 159 S.W.2d 238. This Court reversed and held that the written instruments involved, namely a Lease Contract, Letter Modifying Rental Clause and a Sales Contract, did not make Sam Gossen the servant of Texas Company. Gossen was the operator of a gasoline filling station and testified in some detail as to the practices employed in operating the station in accordance with the provisions of the contracts which he had with Texas Company. Under the view taken by this Court, such testimony did not tend to show that the plan of operations was contrary to the provisions of the written contracts. This Court said:
"Whether or not the relation of master and servant existed between the Texas Company and Gossen so as to make the doctrine of respondent superior applicable, depends on whether the Texas Company had the right to control Gossen in the details of the work to be performed in the operation of the service station. Carter Publications, Inc., v. Davis, Tex.Civ.App., 68 S.W.2d 640, 641, writ refused; Lone Star Gas Co. v. Kelly, Tex.Com.App., 46 S.W.2d 656.
"The contract between the company and Gossen on its face, as evidenced by the written instruments, created the relation of landlord and tenant, and not the relation of master and servant, and we find nothing in the evidence to indicate that the contract, as written, was intended as a subterfuge or sham to conceal the existence of a different relationship. * * *
"In the case of Gulf Refining Co. v. Rogers, Tex.Civ.App., 57 S.W.2d 183, relied on by plaintiffs, there was evidence that the contract between the company and the operator of the service station was a subterfuge, and that the company not only reserved the right to control the details by which the station was to be operated, but actually assumed and exercised such control not only as to the manner in which the work was to be performed, but as to who should be employed to do the work. That case is clearly distinguishable from the case at bar."
In Elder v. Aetna Casualty & Surety Co. (1951), 149 Tex. 620, 236 S.W.2d 611, this Court reversed the Court of Civil Appeals holding that there was "no evidence that the contract (creating an independent contractor relationship) was a subterfuge, nor that it had ever been repudiated by appellant or the publisher." 230 S.W.2d 1018. The petitioner's contention (as stated by this Court) was that the Express Publishing Company, the newspaper publisher, "used the contract as a mere cloak to exercise such control over (Elder) in the details of his work as a delivery boy as to create a master-servant relationship despite the contract." This Court held that there was some evidence supporting this position and the case was remanded for a jury trial. The decision in the Elder case in no way militates against the position taken here. The evidence in Elder related directly to the control imposed upon the newspaper carrier boy. Control over others was not involved, nor was the manner of jury submission.
From these authorities we take it that the terms of the agreement between the parties is of importance in determining the existence of a master-servant relationship and that the essential inquiry is whether or not the employer has the contract right to control the opposite contracting party in the details of the work to be performed. See, Williams v. Texas Employers' Ins. Ass'n (1948), Tex.Civ.App., 218 S.W.2d 482, ref. n. r. e.
In the absence of evidence showing a different relationship between the parties, the fact that the alleged servant was performing services peculiar to the principal's business or affairs establishes prima facie that the relationship of master *592 and servant exists between them. McAfee v. Travis Gas Corporation (1941), 137 Tex. 314, 153 S.W.2d 442; 38 Tex.Jur.2d 492, Master and Servant § 241. When, however, the parties, as in this case, have entered into a definite contract that expressly provides for an independent contract relationship and does not vest in the principal or the employer the right to control the details of the work, evidence outside the contract must be produced to show that despite the terms of the primary contract the true operating agreement was one which vested the right of control in the alleged master. Under such circumstances, the exercise of control is evidentiary only. The true test remains the right of control. Texas Company v. Wheat (1943), 140 Tex. 468, 168 S.W.2d 632; 38 Tex.Jur.2d 490, Master and Servant § 240. The exercise of control in cases such as this is not an ultimate test of the master and servant relationship. To hold that it was, would be to practically destroy contract rights and relationships based thereon. The assumption of an exercise of control must be so persistent and the acquiescence therein so pronounced as to raise an inference that at the time of the act or omission giving rise to liability, the parties by implied consent and acquiescence had agreed that the principal might have the right to control the details of the work.
As above pointed out, such evidence of actual exercise of control by Newspapers, Inc. over the details of Cargile's work was lacking. Yet, the jury could have returned an affirmative answer to Special Issue No. 1 had they believed some actual control, ever so slight in nature, was exercised over the details of Cargile's operations. In view of the testimony of Wheeless and Behrman, the inclusion of the evidentiary inquiry as to "exercise" of control, in Special Issue No. 1 was clearly prejudicial to the petitioner.
Other matters discussed by the Court of Civil Appeals need not arise upon another trial.
The judgments of the District Court and the Court of Civil Appeals are reversed and this cause remanded to the District Court for another trial.
CALVERT, C. J., and SMITH and WALKER, JJ., dissenting.
CALVERT, Chief Justice (dissenting).
A careful reading of the Court's opinion will disclose that the judgments of the Court of Civil Appeals and trial court have been reversed for one reason and one reason only: the erroneous and prejudicial wording of Special Issue No. 1. Admissibility of the testimony of the witnesses, Behrman and Wheeless, is discussed, but only as incidental to the holding that the wording of Special Issue No. 1 was erroneous. This is manifest from two sentences, one near the beginning and one near the end of the opinion. The first: "We are, however, of the opinion that in view of the evidence adduced upon the trial the independent contractor or servant issue was improperly submitted to the jury and accordingly the judgment against Newspapers, Inc. must be reversed and the cause as to the petitioner remanded for another trial." The second: "In view of the testimony of Wheeless and Behrman, the inclusion of the evidentiary inquiry as to `exercise' of control, in Special Issue No. 1 was clearly prejudicial to the petitioner." There is also much talk in the Court's opinion about written contracts which are used as a subterfuge or which have been abandoned, but no such issues were submitted and reversal has not been ordered because of failure to submit them. Indeed, it could not have been because there was no request for the submission of such issues and no objection for failure to submit them.
Special Issue No. 1 is quoted in the Court's opinion. It inquired whether the jury found that the relationship between Cargile and Newspapers, Inc. was such that Newspapers "retained or exercised the power to control, not merely the end sought to *593 be accomplished, but also the means and details of its accomplishment, not merely what should be done, but how and when it shall be done." A careful analysis of the opinion will disclose that what the Court has held is that whether Newspapers "exercised the power to control" is an evidentiary and not an ultimate issue; that the "essential inquiry" in the case is whether Newspapers had "the contract right to control"; and that while the testimony of Behrman and Wheeless that Newspapers directed and controlled the details of their work would have been admissible if the issue had been worded correctly, it was not admissible as proof that Newspapers "exercised the power to control" Cargile, but may have been appropriated by the jury as such.
I agree with the Court's major thesis that in a suit for damages based upon the doctrine of respondent superior the supreme test of the relationship between the one causing the harm and the one sought to be charged is "right of control." I agree also that Special Issue No. 1 is defective in form and does not properly submit the ultimate issue on this phase of the case, although submission in the form used is understandable in light of former expressions of this Court in Elder v. Aetna Casualty & Surety Co., 149 Tex. 620, 236 S.W.2d 611, and other cases. But a mere defect in an issue does not authorize reversal of a judgment based on the jury's answer. Under our Rules of Civil Procedure, judgments may be reversed only for errors committed by trial courts and Courts of Civil Appeals, which errors must have been properly preserved for review.
A trial judge does not commit error, as that term is used in procedural law, by merely drafting a special issue in imperfect or defective form; he commits error only when he overrules a proper objection to the issue and refuses to correct it to meet the objection. The first sentence of Rule 274, Texas Rules of Civil Procedure, prescribes the requisites of a proper objection. That sentence reads: "A party objecting to a charge must point out distinctly the matter to which he objects and the grounds of his objection."[1] We have said that "The purpose of that rule is to give the trial court an opportunity to correct any errors in the charge so that the case may be properly submitted." Missouri Pacific Railroad Co. v. Kimbrell, 160 Tex. 542, 334 S.W.2d 283, 285. If the Rule is to serve its intended purpose, the opportunity given the trial judge must be a fair and reasonable one; and to that end, the requirement that the grounds of the objection be stated distinctly is to afford the trial judge an opportunity fairly and reasonably to evaluate the purported defect. In other words, the purpose of the Rule is defeated if a party may successfully urge on appeal a ground for his objection substantially different from the ground given the trial court. By like token the purpose of the Rule is defeated and the trial judge is unfairly found guilty of error if an appellate court may supply a ground of objection substantially different from that given by the objecting party. That, in my judgment, is what the Court has done in this case; and we have compounded our wayward action by holding the Court of Civil Appeals to have erred in failing to reverse on a ground not reasonably presented to it, or, for that matter, to us. The crucial question here, then, is: did Newspapers distinctly point out in its objection the grounds on which we have held Special Issue No. 1 defective? Or, to be more charitable, did Newspapers' objection, fairly and reasonably interpreted, advise the trial judge that it objected to Special Issue No. 1 on the grounds on which we have held it defective? I think not.
The objection cannot be properly or fairly evaluated by taking the first part of it out of context with the second part. The trial judge had to evaluate the objection as a whole. That part of the objection which *594 relates to the question under discussion reads as follows:
"* * * and this defendant further objects and excepts to said Special Issue No. 1 for the reason that it would seek to make this defendant liable for the acts of C. E. Cargile if this defendant either retained or exercised the power to control, whereas the true test is whether or not the alleged employer has the power to control and the usurpation of such power does not make the relationship between the parties one of employer and employee or principal and agent or master and servant; and accordingly even if such special issue were answered in the affirmative no judgment could properly be rendered against this defendant thereon in view of the fact that such affirmative answer might merely mean that this defendant was exercising and professing to have the power to control which in fact it did not have under its agreement with said C. E. Cargile, and such usurpation of the right to control would not change the relationship actually existing between the parties."
If I may be credited with any power of logical analysis whatever, even the first part of the objection did not reasonably suggest to or advise the trial judge that the issue was defective because it submitted an evidentiary rather than an ultimate issue; or because the wording of the issue was such that the jury might consider testimony of actual control over Behrman and Wheeless as proof of actual control over Cargile; or because the jury could answer affirmatively if only sporadic acts rather than a persistent course of actual control over Cargile were proved. What the first part of the objection plainly said to the trial judge was that the issue was defective because the true test of the relationship between Newspapers and Cargile was "power to control," and that no amount of proof of actual control ("usurpation of such power," said the objection) could make the relationship that of employer and employee, principal and agent or master and servant. Then, lest the first part of the objection be misunderstood, explanation of what was meant was deemed necessary. "Accordingly," said the last part of the objection, even if the issue were answered in the affirmative, no judgment could be rendered for the plaintiff "in view of the fact that such affirmative answer might merely mean that this defendant was exercising and professing to have the power to control which in fact it did not have under its agreement with said C. E. Cargile, and such usurpation of the right to control would not change the relationship actually existing between the parties." The only agreement which Newspapers claimed to have with Cargile was the written contract, the same in all particulars as the written contract entered into with all district managers. Thus, the second part of the objection said that the grounds thereof were that the issue was defective in submitting "actual control" because no "power to control" was reserved in the written contract, and no usurpation of power to control could change the relationship fixed by the contract.
With this analysis of Newspapers' objection, it seems quite clear to me that the trial court did not err in overruling it. The grounds of the objection were clearly unsound. As stated in the objection, the true test of the relationship between the parties is "power to control," but it is totally unsound to say that no amount of proof of actual control can establish "power to control" and a relationship of employer and employee, principal and agent or master and servant. It is equally unsound to say that because "power to control" is not reserved in a written contract, "power to control" may not be established by exercise of "actual control" or usurpation of the "power to control." To establish the unsoundness of these grounds of the objection, I need cite only Elder v. Aetna Casualty & Surety Co., 149 Tex. 620, 236 S.W.2d 611, our latest decision on the subject, although the law books are full of decided cases to the same effect. But rather than accept my *595 interpretation of Newspapers' objection, let us pursue the matter in the appellate courts and see what Newspapers says it meant by its objection.
The question raised by the objection was briefed in the Court of Civil Appeals under Newspapers' 7th Point of Error. After stating that Cargile was operating under a written contract making him an independent contractor, the statement and argument under the point continues: "Appellees, however, undertook to show that appellant exercised some control over Cargile beyond that retained in the written contract and that he was an employee for whose conduct appellant was liable. * * *" Special Issue No. 1 and a part of the objection thereto are quoted, followed by this paragraph:
"The issue as submitted to the jury permitted an affirmative answer if appellant no matter how wrongfully exercised[2] control over the details of the work. There is thus presented the right to control under the agreement between the parties as opposed to the exercise of the power to control, despite the fact that no such right is retained or exists."
In arguing the question as it had thus stated it, Newspapers cited and quoted from a number of decided cases in which it had been held that proof of acts of actual control was not legally sufficient to overcome a written contract establishing an independent contractor relationship. It then discussed other cases in which it had been held that proof of acts of actual control was sufficient to establish a master-servant or employer-employee relationship, the last of which is Halliburton v. Texas Indemnity Ins. Co., 147 Tex. 133, 213 S.W.2d 677, in which there was no written contract between the parties. In its opinion in the case the Court stated that evidence of actual control "is relevant as tending to prove what the contract really contemplated." With reference to that case, Newspapers said:
"It is quite plain that the Court's statement that the control actually exercised by the employer was relevant applied only to a situation where the character of control which the employer had was controverted. It would have no application to this case or any other case where the control to be exercised by the employer is specifically set out in a written contract."
Finally, Newspapers summed up its argument under the point of error in these words:
"To recapitulate, it is appellant's position that since the contract was in writing and since it set out such control as appellant had over Cargile the jury should have been permitted to consider only the right of control which appellant had and that they should not have been permitted to consider any control actually exercised beyond that which had been rightfully reserved. The trial court should therefore have sustained appellant's objection to the special issue and limited the jury's consideration to the right of control which appellant had retained."
The Court of Civil Appeals overruled the point of error just as the trial court overruled the objection, no doubt for the same reason. Newspapers was not asserting that the trial court erred in overruling its objection for the reasons this Court has given. It was asserting a totally different and legally unsound reason, the same unsound reason which I have stated was given as grounds for its objection in the trial court.
The question was briefed by Newspapers in this Court under its Second Point of Error. The point of error reads as follows:
"The Court of Civil Appeals erred in holding that petitioner's exception to *596 Special Issue No. 1 was properly overruled although said issue permitted the jury to find that Cargile was petitioner's `agent' (defined to mean servant) if it exercised control over him, even though such exercise of control may have been wholly without right and in violation of the written contract between petitioner and Cargile."
In discussing this point of error (which on its face interprets the objection to Special Issue No. 1 as I have interpreted it), Newspapers again made the meaning of its objection clear. It states:
"* * * In those cases where there is doubt as to the terms of the contract then the control actually exercised may be looked to in order to ascertain the terms. In a case such as this, however, where the terms of the contract are admitted it is the contract which determines the relationship."
Again:
"If there is doubt as to the right of control, then the control actually exercised is evidentiary of the right. Where, as here, the contract is clear the control actually exercised is immaterial."
And again:
"From the above authorities it is abundantly clear that Special Issue No. 1 should have been limited to the right of control which petitioner actually possessed; and that the control which it exercised could be considered only as evidence of the relation if there had been some doubt as to the terms of the contract."
And once again:
"Under the above authorities they [the jury] should not have been allowed to consider control exercised over Cargile, and much less were they entitled to consider control allegedly exercised over Behrman and Wheeless."
It thus appears, quite clearly, that Newspapers has in the Court of Civil Appeals and in this Court, interpreted their own objection exactly as I interpret it and contrary to the way it is interpreted by the Court. Appealing litigants are entitled to fair treatment at the hands of this Court, but trial courts and Courts of Civil Appeals are also entitled to fair treatment. It is not fair treatment of those courts to hold that they have committed error in disposing of a matter when we do so upon reasons or grounds never presented to them. Nor, may I add, is it within our authority or competence under our Rules of Civil Procedure to reverse a judgment of a Court of Civil Appeals on grounds or for reasons not urged in this Court.
In two cases considered simultaneously with consideration of this case on rehearing we have held that in the absence of objection a trial court judgment may not be reversed because of the wording of a special issue, even though the wording is patently erroneous and may serve to predicate or excuse liability on a legally unsound ground. See Allen v. American National Ins. Co., Tex., 380 S.W.2d 604, and Continental Casualty Co. v. Street, Tex., 379 S.W.2d 648. It seems to me that our holding here is incompatible with our holdings in those cases. I can see no purpose in requiring objection to an issue if we may reverse on grounds not stated in the objection and not urged on appeal as a basis for reversal.
I add at this point that how the Court can have held that the jury probably appropriated evidence that Newspapers exercised control over Behrman and Wheeless as proof that it also exercised control over Cargile is hardly understandable. Cargile testified fully with respect to acts of control exercised by Newspapers over his operations, both by deposition and in person as a witness on trial. He was examined closely with respect to such matters. The only evidence of control, of any substance, over Behrman and Wheeless not otherwise *597 in the record as to Cargile related to the use of carrier boys. As pointed out in the Court's opinion, this evidence could not possibly be applied to Cargile's operations to show actual control since he did not use carrier boys; it may possibly have been considered by the jury as proof of "right of control," but could hardly have been considered as proof of exercise of actual control over Cargile.
In writing on rehearing the Court recognizes that the ultimate issue in this case and in other cases of this type is whether at the time of the event upon which liability must be predicated the relationship between the one causing the harm and the one sought to be charged was that of servant (employee or agent) or of independent contractor. I agree. I also agree that this matter may be submitted in separate special issues or disjunctively in one special issue.
I am somewhat concerned that the Court's opinion may be misleading in its statement that the focal point of inquiry relates to the agreement between the parties as it actually existed at the time of the event. It should be pointed out that the Court is not speaking of an express contractual agreement, either written or oral, but uses the term in its broadest sense as including a consensual relationship arising out of the acts and conduct of the parties. This is clearly inferable from the Court's holding that a persistent course by the employer of actual control of the conduct of one made an independent contractor by a written contractual agreement can convert the relationship into that of master and servant. This interpretation of the language in the opinion on rehearing leaves Elder v. Aetna Casualty & Surety Co., 149 Tex. 620, 236 S.W.2d 611, and other cases of like holding in full authoritative force.
Newspapers' first point of error in this Court asserts that the evidence adduced on trial is legally insufficient to support the judgment for respondents, and seeks a reversal and rendition of judgment that the plaintiffs take nothing. That point has been overruled. I agree with that action. Petitioners have five other points of error which the Court has not considered or decided; therefore, I do not feel called upon to evaluate their merit in this dissent.
For the reasons stated earlier in this opinion, I respectfully dissent.
WALKER and SMITH, JJ., join in this dissent.
ON MOTION FOR REHEARING
NORVELL, Justice.
The philosophic basis for vicarious liability under the doctrine of respondeat superior does not rest upon one universally accepted theory. However, as pointed out by Philip Mechem, the rule "must satisfy some instinct of public policy, else it would not have survived so long and so vigorously." Mechem, Outlines of Agency, § 351.
Mechem also discusses various notions advanced to support the respondeat superior rule, including, among others, the Enterpriser or "Entrepreneur" theory which proceeds upon the premise that as every industry takes a more or less predictable annual toll, both of property and in flesh and blood, such toll or loss should be treated as a business cost. Mechem, § 359. This would logically raise the question of what is an industry or enterprise. Business operations may involve a myriad of activities. What is the component we should select as being the unit upon which vicarious liability should be imposed as a matter of policy? Is newspaper distribution a part of newspaper publishing, or is it an enterprise separate and apart therefrom? Is there a valid distinction between the operator of a newsstand on a city street and a distributor of newspapers in a rural area? In solving these problems, it has been suggested that some weight should be given to the practices and customs of the occupations involved and the general public attitude toward such gainful activities.
*598 Usually, we do not think of one in domestic service as being in any other category than that of a servant; nor do we ordinarily consider a television repairman as being anything other than an independent contractor in his relationship to the householder who requires his services. This is true even though the employer, in one instance, gives no direction as to cleaning a house, or, in the other instance, the employing householder is quite specific as to the details of testing tubes, amplifiers and the like. The concept of control is often an elusive thing, Mechem §§ 414 et seq., and under certain circumstances the prevailing legal test of "control of the details of the work" may leave something to be desired in differentiating between the servant and the independent contractor.
However that may be, it is certain that in a contractual agency, vicarious liability is founded upon the status created by the agreement. Important legal rights and consequences are predicated upon the relationship thus created, such as liability for social security taxes, the right to workmen's compensation benefits, the responsibility of the master for the torts of the servant, and the like. As long as we say that newspaper distribution may be accomplished by either the employment of an independent contractor or a servant, it becomes highly important that the jury as the trier of facts be properly instructed in regard to the distinguishing feature between the servant and the independent contractor, which under present standards depends upon whether or not the employer has the right to control the details of the work. It is not determined by sporadic acts of control.
The focal point of inquiry relates to the actual operative agreement as it existed at the time of the event upon which liability is sought to be imposed. If such agreement at that time created the status of master and servant between the parties, then the law, as a matter of public policy, will hold the master accountable for the wrongful acts of the servant. We again emphasize that this is not a case where the supposed master was directly controlling the actions of the servant at the time of the commission of the act upon which the claim of liability is based.
It was stated at the beginning of the original opinion that the crucial issue in this case is whether the relationship of C. E. Cargile to Newspapers, Inc., was that of a servant or an independent contractor. A highly important evidentiary matter bearing directly upon the crucial or controlling issue is whether the written contract between Newspapers, Inc., and Cargile was a subterfuge or whether it had been abandoned in whole or in part insofar as the right to control the details of the work is concerned. While it is not our purpose to prescribe any set form of issue which should be submitted in this case or in those presenting similar factual situations, it has been suggested that when one of two alternatives must be correct, it is permissible to use an alternative or "rather than" form of submission, with correct instructions and definitions of terms and a proper placing of the burden of proof. Rule 277, Texas Rules of Civil Procedure; Rice v. Thompson, Tex.Civ.App. (1951), 239 S.W.2d 137, n. r. e. Of course, two separate issues may be employed as was done in this case. Cf. McDonald, Texas Civil Practice, § 12.06. As indicated in Smith Bros. v. O'Bryan, (1936) 127 Tex. 439, 94 S.W.2d 145, the evidentiary elements of a case have an important bearing on the form of submission which should be employed.
We adhere to the views set forth in our original opinion, and respondent's motion for rehearing is overruled. Labatt, Master and Servant (2d ed.), § 64.
NOTES
[1] In a supplemental brief filed in this Court it is argued that there was no showing that a written contract between Newspapers, Inc. and Cargile was in existence at the time of the collision (April 11, 1959) which gave rise to this action, and that if such written contract did exist, its terms violated the anti-trust laws of this State. Article 7426, Vernon's Ann. Tex.Stats. Phil Granath, the City Circulation Manager for Newspapers, Inc., testified that Cargile had distributed papers for the publishing company for a number of years and had worked under a contract essentially the same as that introduced in evidence which bore the date of February 1, 1960. Cargile didn't know the whereabouts of his contract covering the year 1959 and didn't remember for sure whether he had one or not. The Court of Civil Appeals in its opinion states categorically that, "He (Cargile) had a written contract with Newspapers, Inc." at the time of the collision and set forth the terms thereof. In our opinion this was a correct statement of the record. It does not appear that the contention of "no written contract" was seriously urged in the courts below. The Court of Civil Appeals based its ruling that the testimony of the witnesses Wheeless and Behrman was admissible upon the premise that such witnesses who admittedly served as district circulation managers under a written contract were "similarly situated" to Cargile. In this Court respondents reurge this argument which was accepted by the Court of Civil Appeals. As to the testimony of Wheeless and Behrman, see infra this opinion.
As to the anti-trust laws it should be noted that this is not a suit upon a contract said to be invalid because of a statutory inhibition. If the written contract evidences the mutual understanding of the parties as to who should control the means and details of the work in question, the fact that a part of the contract is invalid could not bring about a different legal relationship from that agreed upon by the parties. See, Carter Publications, Inc. v. Davis, Tex.Civ.App., 68 S.W.2d 640, wr. ref.
[2] There was no direct allegation in respondents' petition that the contract between Newspapers, Inc. was a sham or subterfuge. Knowledge of the existence of the contract was a matter concerning which the respondents may have had no personal knowledge. The allegation was that Cargile was the servant of Newspapers, Inc. and acting within the scope of his authority. Under the system of pleading permitted by the Texas Rules of Civil Procedure, proof of the written contract was admissible to counter the allegation of the master-servant relationship. When this was done the respondents were entitled to offer competent and relevant evidence tending to show that the written contract was a mere subterfuge. See Rules 47, 78, 79, 83, 84, 85, 90, 91, 92 and 93.
[3] Otis Franklin and C. E. Cargile were defendants in the District Court but neither perfected an appeal to the Court of Civil Appeals.
[1] Emphasis supplied throughout unless otherwise indicated.
[2] Emphasis the briefer's. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1669283/ | 323 So.2d 100 (1975)
MISSISSIPPI STATE HIGHWAY COMMISSION
v.
S.B. GRESHAM and John C. Dunlap et al.
No. 48640.
Supreme Court of Mississippi.
February 24, 1975.
Rehearing Granted and Appeal Reinstated July 21, 1975.
Dwight N. Ball, Oxford, for appellant.
Fant, Crutcher, Moore & Spencer, Holly Springs, for appellees.
INZER, Justice.
ON MOTION
On January 23, 1975, appellees filed a motion to docket and dismiss the appeal of the appellant, Mississippi State Highway Commission, from a judgment rendered in a Special Court of Eminent Domain convened in vacation in the Circuit Court of Marshall County. In due time, appellant *101 answered the motion resisting the dismissal of its appeal. The judgment appealed from was rendered on June 13, 1974, and the court adjourned on the same day without entering any order for an extension of time to file a motion for a new trial.
On June 19, 1974, appellant mailed notice to the court reporter at his post office address which reads as follows:
Please be advised that the Mississippi State Highway Department is appealing the above captioned case to the Mississippi Supreme Court. We request that you prepare and transcribe the entire record as taken for the purpose of our appeal to the Mississippi Supreme Court. Please advise immediately if there is anything else that we need to do in order to accomplish this appeal. Thank you.
On June 20, 1974, the court reporter acknowledged receipt of the notice to transcribe the notes and informed the appellant that upon receipt of notice from the clerk that the appeal has been perfected by filing a bond for costs the notes would be transcribed in the time required by law. Apparently, no further correspondence was had between appellant and the court reporter. No copy of the notice given to the court reporter has been filed with the clerk.
On July 1, 1974, the appellant filed a motion for a new trial in the eminent domain court. Appellees filed a motion to strike this motion for the reason that it was not timely filed. On December 30, 1974, an order was entered by the court denying the motion because it was not timely filed.
On January 2, 1975, a notice of appeal was filed with the circuit clerk by the appellant, hence this motion to docket and dismiss the appeal for the reason that the appeal was not perfected within the forty-five day limitation set forth in Section 11-51-5, Mississippi Code 1972 Annotated.
Appellant, in its original answer, conceded that the proceedings subsequent to June 20, 1974, did not stay the time for perfecting the appeal, but contended that when it gave notice to the court reporter as provided in Section 11-27-29, Mississippi Code 1972 Annotated, its appeal was perfected and it was not required to do anything further.
However, in a supplemental answer, appellant changes its position and asserts that its motion for a new trial did stay the time for perfecting its appeal and the trial court was in error in holding that its motion for a new trial was not timely filed. Consequently, appellant contends that its appeal was perfected when it gave notice of appeal on January 2, 1975. Under these circumstances it is difficult to understand which proposition appellant is relying upon, but we will consider whether appellant perfected its appeal under either of these propositions.
The question of whether the motion for a new trial was timely filed was settled in Mississippi State Highway Commission v. Taylor, 293 So.2d 9 (Miss. 1974), wherein we stated:
Eminent domain proceedings now under Mississippi Code Annotated section 11-27-1 (1972) et seq., may be in term time or, as in the instant case, in vacation. Of course, trial in vacation does present the practical problem of how counsel may prepare a motion for a new trial [which ordinarily, as held in Boydstun v. Presley, 244 Miss. 390, 141 So.2d 561 (1962), must be filed before the court term adjourns], or a bill of exceptions, and tender such during the trial which, as in this case, often lasts only a day. Absent any alleviating section dealing with the time logistics in the recently enacted eminent domain chapter, the situation is somewhat anomalous. Bills of exceptions and motions for a new trial may by agreement of court and counsel be filed subsequent to the term *102 or date of trial in a special court, provided such consent is made a matter of record. Williams v. Ramsey, 52 Miss. 851 (1875). See also May v. Layton, 213 Miss. 129, 55 So.2d 460 (1951), where an additional day was allowed within which to file a bill of exceptions where the delay was not occasioned by any default by a party litigant.
Following the rationale of Williams, supra, and May, supra, where circumstances do not permit preparing and tendering to the judge a motion for a new trial, and/or a bill of exceptions during a trial or term, it is permissible for counsel to obtain an order signed by the judge taking such matters under advisement and continuing the cause for a reasonable time in which counsel may prepare, tender and file such post trial items. 293 So.2d at 11, 12).
It is clear from the foregoing statement that the motion for a new trial in this case was not timely filed, and it did not stay the time for perfecting the appeal. The eminent domain court adjourned without an order being entered granting appellant additional time to file a motion for a new trial. The court was without jurisdiction to entertain the motion filed after adjournment and the trial court was imminently correct in so holding.
We hold that the motion for new trial was not timely filed and did not stay the time for appellant to perfect its appeal.
As to appellant's contention that its appeal was perfected when it gave notice to the court reporter, we refer to the pertinent part of Section 11-27-29, supra, which reads as follows:
Every party shall have the right to appeal directly to the supreme court from the judgment entered in the special court of eminent domain, whether tried in county court or circuit court, by giving notice within ten (10) days from the date of the judgment or final order entered by the court to the court reporter to transcribe the record as taken and by posting bond in the penal sum of three hundred dollars ($300.00), except that no bond shall be required of the state of Mississippi or any political subdivision thereof. Such bond shall be conditioned to pay all costs that may be adjudged against him, and said notice to the court reporter shall be given and the bond shall be posted as is otherwise required by law for appeals to the supreme court. (Emphasis added).
In answer to this contention appellees argue that this notice to the court reporter did not perfect the appeal, but only preserved the right of the appellant to appeal. It is contended that in order to perfect that appeal the appellant was required to file a petition in accordance with Section 11-51-15, Mississippi Code 1972 Annotated, or to file with the clerk of this Court the record within forty-five days as required by Section 11-51-5, supra. Appellee also points out that four return days had passed since appellant contends that its appeal was perfected. However, appellant has made no effort to bring up a record in this cause and consequently the appeal must be dismissed in accordance with our decision in Harris v. Sykes, 207 So.2d 344 (Miss. 1968).
It is obvious that Section 11-27-29, supra, is not written in clear and unambiguous language. However, it is clear from the statute that when either party desires to appeal from a judgment of an eminent domain court and desires a copy of the notes of the court reporter, he must give notice to the court reporter within ten days from the date of the final judgment. It is also clear that this notice must be given in the manner as otherwise required by law for appeals to this Court. This means that the notice must be given in accordance with the provisions of Section 9-13-33, Mississippi Code 1972 Annotated. The *103 pertinent part of this section reads as follows:
In all cases in which the trial is noted by the official court reporter, any person desiring to appeal the case shall notify the court reporter in writing within ten (10) days after adjournment of court of the fact that a copy of the notes is desired. The notice must be handed to the court reporter personally or mailed to him at his usual place of abode. In either case the attorney making the request shall file with the clerk of the court a copy of the notice with a statement of how the notice was served, and a copy thereof shall in like manner be served upon appellee's attorney, and the said notice shall designate the portions of the record, proceedings, testimony and evidence to be contained in the record of appeal. (Emphasis added).
Appellant complied with the requirement relative to mailing to the court reporter at his usual place of abode a written notice that a copy of the notes was desired. However, he failed to comply with the requirement that a copy of the notice be filed with the clerk of the court stating how the notice was served and he also failed to serve a copy upon the appellees' attorney. Under the decisions of this Court, it was not necessary that a copy of the notice be filed with the clerk within ten days. The notice was so worded that had a copy of it been filed with the clerk of the court within the forty-five days allowed by Section 11-51-5, supra, it would have amounted to notice of appeal. Mississippi State Highway Comm'n v. Brown, 250 Miss. 773, 162 So.2d 508 (1964).
Appellant could also have perfected its appeal by filing a petition for appeal with the clerk of the court within forty-five days or by filing the record in this Court within forty-five days. Oswalt v. Austin, 192 Miss. 653, 6 So.2d 924 (1942). Having failed to meet any of the above requirements, we are constrained to hold that appellant did not perfect its appeal within the time allowed by law and must be dismissed. Furthermore, although four return days have now passed since appellant contends its appeal was perfected on June 20, 1974, no effort has been made to bring up the record. This, too, would be sufficient grounds to dismiss the appeal in accordance with the provisions of Section 11-3-13, Mississippi Code 1972 Annotated, and the decisions of this Court construing that section.
We deem it appropriate to point out that if it was the intention of the legislature by the provisions of Section 11-27-29, supra, to limit the time of appeal from a final judgment of an eminent domain court to ten days, the statute as written does not accomplish this purpose. If such is the desire of the legislature, we suggest an amendment to the statute clearly setting out the time and the method of appeal from such judgment.
For the reasons stated, we are of the opinion that the appeal in this case must be dismissed.
Appeal dismissed.
All Justices concur, except SMITH, J., who took no part.
ROBERTSON, Justice:
ON PETITION FOR REHEARING
The Mississippi State Highway Commission has filed a Petition for Rehearing to our decision sustaining the appellees' Motion to Docket and Dismiss the Commission's appeal. Under our Rule 14, we called on the Appellees to reply, and appellees have timely filed their answer and brief in support thereof.
Although the Commission did attach a copy of its Notice to the Court Reporter *104 to transcribe his notes to its Answer to the Motion to Docket and Dismiss, it was not until the Commission filed its Petition for Rehearing that it mentioned the fact that a copy had been filed with the circuit clerk. Upon reexamining the Notice, we do find this notation typed thereon:
"cc: Edwin Callicut", and this stamped thereon:
"FILED
EDWIN CALLICUTT, JR.
Circuit Clerk
by /s/ E.C. D.C.
_____________________
Jun 24 1974"
Even though the notice to the court reporter does not contain the certificate required by Section 9-13-33, Mississippi Code 1972 Annotated, of how the notice was served on the clerk, nor does it show a copy of the notice served upon appellees' attorney, we do feel that the appellant has complied with our opinion sustaining the motion to docket and dismiss when we said:
"The notice was so worded that had a copy of it been filed with the clerk of the court within the forty-five days allowed by Section 11-51-5, supra, it would have amounted to notice of appeal."
We, therefore, grant the petition for rehearing and reinstate the appeal.
On February 18, 1975, the appellant filed a petition for writ of certiorari, praying that a writ of certiorari be directed to the court reporter "requiring him to certify the record and to send up all the proper proceedings in this cause." In view of our sustaining the motion to docket and dismiss, we denied the petition for writ of certiorari. Since we are granting the Petition for Rehearing and reinstating the appeal, we feel that it would be proper to grant a writ of certiorari, not directed to the court reporter but to the circuit clerk because it is the clerk's duty to prepare the record, except for the transcript of the court reporter's notes, which writ will require the circuit clerk to prepare the record and send up to this Court as soon as possible.
Petition for rehearing granted and appeal reinstated.
This petition for rehearing was considered by a conference of the Judges En Banc.
All Justices concur, except SMITH, J., who took no part. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2288219/ | 441 Pa. 17 (1970)
Commonwealth
v.
O'Neal, Appellant.
Supreme Court of Pennsylvania.
Argued April 23, 1970.
October 9, 1970.
Before BELL, C.J., JONES, COHEN, EAGEN, O'BRIEN, ROBERTS and POMEROY, JJ.
John W. Packel, Assistant Defender, with him, Vincent J. Ziccardi, Acting Defender, for appellant.
James D. Crawford, Deputy District Attorney, with him Albert L. Becker and Carol B. Feldbaum, Assistant *18 District Attorneys, Richard A. Sprague, First Assistant District Attorney, and Arlen Specter, District Attorney, for Commonwealth, appellee.
OPINION BY MR. JUSTICE EAGEN, October 9, 1970:
On December 15, 1959, the appellant, Henry O'Neal, was convicted by a jury in Philadelphia of murder in the second degree. Post-trial motions were refused and on May 11, 1960, a prison sentence of four to ten years was imposed. No appeal was then filed.
In 1963, O'Neal was granted parole, but in July, 1968, following his arrest and conviction for another criminal offense, he was recommitted as a parole violator and is presently incarcerated under the sentence imposed in 1960.
Following proceedings instituted on September 23, 1968, seeking post-conviction relief, O'Neal was granted the right to file a direct appeal from the 1960 judgment of sentence as if timely filed. This appeal is now before us.
The record discloses that O'Neal was charged with fatally stabbing Wilbur Trapp in the back with a knife on April 11, 1959. At trial he plead self-defense. O'Neal's own trial testimony, which was corroborated to some extent by other testimony, tended to establish that Trapp had pursued him for some distance from a local bar, cornered him, and threatened his life with a knife, and that in order to save himself from death or great bodily harm, it was necessary for him to stab Trapp. If this testimony were believed by the jury in toto, O'Neal should have been acquitted. Moreover, even if the testimony were not completely accepted, and only certain material portions of it were believed by the fact-finding tribunal, the guilty verdict should have been that of voluntary manslaughter. However, there was substantial trial testimony which established that *19 the stabbing occurred while O'Neal was the aggressor, and after he pursued Trapp from the bar in order to avenge a friend whom Trapp had just cut with a knife during an argument in the bar. This testimony, if believed by the jury, amply warranted the conclusion that the stabbing was committed with malice and in the absence of provocation, excuse or necessity. Commonwealth v. Winebrenner, 439 Pa. 73, 265 A. 2d 108 (1970), and Commonwealth v. Commander, 436 Pa. 532, 260 A. 2d 773 (1970). Hence, under the proof, the determination of the degree of guilt or lack of guilt was strictly for the jury under proper instructions from the court.
With the foregoing, O'Neal presently voices no disagreement. However, he does urge that in one important respect the court's instructions to the jury were incorrect, and were so confusing in general that a fair determination of the issues was precluded.
The specific portion of the charge, the correctness of which is challenged, is this: "[W]hen the Commonwealth makes out a case of felonious homicide against a defendant, the killing is presumed to be malicious and murder of the second degree until the contrary appears in evidence. If the Commonwealth seeks to prove that the killing amounts to murder of the first degree, it then has the burden of raising that crime from second degree to first degree murder, and it must do so by proof of factors establishing beyond a reasonable doubt the higher degree of guilt. On the other hand, if the defendant contends that the homicide is not murder of the second degree but only manslaughter, then the burden is upon the defendant to prove the essential facts which would reduce the crime to manslaughter, unless they have already appeared in the evidence. However, the defendant's burden is to establish those facts only by the preponderance or the weight of the evidence, and not beyond a reasonable doubt."
*20 It is primarily argued that in creating the presumption of malice and in placing the burden upon O'Neal of reducing the crime from murder to manslaughter, this, in effect, constituted a shifting of the burden of proof and required the accused to prove his innocence, at least as to murder in the second degree, and is therefore violative of due process.
We note, initially, that the instruction complained of antedates our decision in Commonwealth ex rel. Johnson v. Myers, 402 Pa. 451, 167 A. 2d 295, cert. denied, 366 U.S. 921, 81 S. Ct. 1099 (1961), by almost two years. In that case, we broke with prior law and expressed our disapproval of an instruction in a murder case to the effect that all felonious homicide is presumed to be murder in the second degree. However, such disapproval was short lived. In Commonwealth v. Jordan, 407 Pa. 575, 181 A. 2d 310 (1962), we were confronted with a like instruction that malice is presumed once a prima facie case of felonious homicide is made out. We there approved such an instruction and rejected anything to the contrary in Johnson. Thus, our disapproval voiced in Johnson of this presumption language was not the law at the time of appellant's trial (Commonwealth v. Wucherer, 351 Pa. 305, 41 A. 2d 574 (1945)) and is not the law in Pennsylvania today (Commonwealth v. Brown, 438 Pa. 52, 265 A. 2d 101 (1970)). Moreover, the thoughtful analysis of the presumption of malice in this context, contained in Mr. Justice HORACE STERN'S opinion in Commonwealth v. Wucherer, supra, convinces us of its continuing validity and its compatibility with the Commonwealth's burden of establishing every element of the crime beyond a reasonable doubt.[1] The presumption of malice under *21 the circumstances is only a presumption of fact, i.e., it is a prima facie inference which is rebuttable by other proof. "Such a presumption does not mean that the jury must conclude, upon proof of a felonious homicide, that malice existed, but that, upon such proof being made, and in the absence of extenuating circumstances, a jury is warranted in determining that malice has been sufficiently shown to justify a conviction of murder; whether, under all the evidence in the case, malice did in fact exist, is for the jury's ultimate decision." Commonwealth v. Wucherer, supra, at 311, 41 A. 2d at 577.
In Commonwealth ex rel. Johnson v. Myers, supra, we also disapproved of the use of the word "burden" in describing defendant's task once the presumption of malice arises. However, if Johnson itself did not make it clear that our disapproval of this language was limited to future jury instructions on this point, our opinion in Commonwealth v. Jordan, supra, did. See Commonwealth v. Kaminsky, 434 Pa. 38, 252 A. 2d 695 (1969), a post-Johnson case, where we determined that it was error to so charge the jury. But, as noted before, the instant trial took place prior to Johnson and thus Johnson does not control. Nor are we persuaded that this ruling should now be given retroactive effect.
O'Neal further argues that on two occasions in the course of his instruction, the trial judge equated "felonious killing" with murder. Murder, of course, is a type of "felonious killing" but "felonious killing" embraces both murder and manslaughter. IV Blackstone, Commentaries, 190-191; 1 Wharton, Criminal Law *22 and Procedure §§ 187, 271; P.L.E., Homicide § 1. And the trial judge made this quite clear in his instruction. Moreover, viewing the two challenged portions of the judge's charge in context (as we must: Commonwealth v. Lopinson, 427 Pa. 284, 234 A. 2d 552 (1967)), we do not find that a "felonious killing" was made to appear the equivalent of murder. While the trial judge spoke of murder as being a felonious killing (and this, of course, is true), he went on to elaborate in great detail on all the other necessary elements which must be established before murder of the first or second degree exists. When the jury instructions are read in their entirety, the meaning is clear and no error is evident.
We have considered each and every assignment of error and are unpersuaded that the present appeal has merit.
Judgment affirmed.
Mr. Justice COHEN concurs in the result.
NOTES
[1] The United States Supreme Court's recent decision in In re Winship, 397 U.S. 358, 90 S. Ct. 1068 (1970), which held that the Due Process Clause of the Fourteenth Amendment protects an accused against conviction, except upon proof beyond a reasonable doubt of every fact constituting the crime with which he is charged, effects no basic change in Pennsylvania law. It merely adds a constitutional dimension to our long adhered to rule that the Commonwealth must prove every element of the crime beyond a reasonable doubt. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2583316/ | 62 N.Y.2d 19 (1984)
Seymour C. Post, Respondent,
v.
120 East End Avenue Corporation, Appellant.
Court of Appeals of the State of New York.
Argued February 20, 1984.
Decided May 8, 1984.
Leon Brickman for appellant.
Jay R. Fialkoff for respondent.
Chief Judge COOKE and Judges JASEN, JONES, WACHTLER, MEYER and KAYE concur.
*22SIMONS, J.
We are asked to interpret recently enacted RPAPL 753 (subd 4) (L 1982, ch 870). The section applies to holdover tenants in residential dwellings in New York City and the new subdivision 4 provides: "In the event that such proceeding [a summary proceeding to recover possession] is based upon a claim that the tenant or lessee has breached a provision of the lease, the [Civil] court shall grant a ten day stay of the issuance of the warrant [to remove], during *23 which time the respondent [tenant] may correct such breach." The question arises in an appeal from an order of Special Term of Supreme Court granting plaintiff tenant a preliminary injunction in a declaratory judgment action and denying defendant's cross motion to dismiss the complaint.
Plaintiff, a psychiatrist, is a residential tenant pursuant to a proprietary lease in a building owned by defendant at 120 East End Avenue. Several years ago, he was required to vacate his private office and he began to schedule patients' visits either at his office at Columbia University Medical School, where he is an associate professor, or at his 14-room apartment in defendant's building. In June, 1981, defendant sent a notice to plaintiff stating that use of the premises for professional purposes without its consent violated terms of the lease which required that the apartment be used only as a private dwelling. It demanded that plaintiff discontinue seeing patients in the apartment immediately. There followed correspondence and conferences at which plaintiff admitted using his apartment to see patients intermittently, but stated that he was actively seeking office space. The situation did not change and on December 9, 1981, defendant again formally demanded that plaintiff stop seeing patients in the apartment. Finally, on February 23, 1982, defendant served a notice on plaintiff declaring that he was in violation of the residential covenants of the lease and that if he did not cure the violation by March 26, 1982, his lease would be terminated as provided by its terms. Before the time to cure expired, plaintiff instituted this Supreme Court action seeking a declaration of his rights and an order permanently enjoining defendant from interfering with his right to quiet enjoyment. He pleaded four causes of action alleging (1) that he had not breached the terms of the lease, (2) that any default was not material, (3) that defendant was estopped from enforcing the requirements of residential use only and (4) that defendant had waived the default. These claims present disputed issues of facts.
On March 15, 1982, plaintiff obtained a show cause order from Supreme Court which contained a temporary restraining order. Defendant served a cross motion, returnable *24 on the same day, seeking dismissal of plaintiff's complaint. On September 30, 1982, the court denied defendant's cross motion and granted plaintiff a Yellowstone preliminary injunction staying further proceedings by defendant until determination of the parties' claims at trial.
Subsequent to the submission to Special Term, but before its order was executed, the Legislature amended RPAPL 753 by adding the new subdivision 4, effective July 29, 1982. The parties did not submit the application of the new subdivision to Special Term because it became effective after argument of the motion and defendant did not move for reargument. The Appellate Division affirmed the order and granted leave to appeal on a certified question (95 AD2d 697). That court considered the amended statute, the majority holding that it had no application because plaintiff's violation could not be cured in 10 days as the statute provided, the two dissenting Judges contending that the violation could be cured within 10 days. The dissenters therefore believed that the Yellowstone injunction should not have been granted because plaintiff's rights could be protected in Civil Court summary proceedings.
We agree that the new statute should be considered in the determination of this appeal. It is procedural and remedial in nature and it should be liberally construed to spread its beneficial effects as widely as possible. More importantly the statute will apply in any subsequent Civil Court proceedings, should this complaint be dismissed (see Klausner v Frank, 95 AD2d 653, 654; Nunez v 164 Prospect Park West Corp., 92 AD2d 540; McKinney's Cons Laws of NY, Book 1, Statutes, § 54, pp 108-109).
Yellowstone injunctions became commonplace following our decision in First Nat. Stores v Yellowstone Shopping Center (21 N.Y.2d 630). That appeal involved a controversy between a landlord and a commercial tenant over which of them was required to bear the expense of a sprinkler system required by government orders. The landlord, contending that the cost properly belonged to the tenant, implemented provisions in the lease which provided that if the tenant did not cure a breach within 10 days the tenancy could be terminated. The tenant instituted legal *25 proceedings but failed to obtain a temporary restraining order. Long before the dispute was legally resolved, the lease terminated because of the tenant's failure to cure or to toll the cure period. We held that under such circumstances the courts were powerless to revive the expired lease. As a result, tenants developed the practice of obtaining a stay of the cure period before it expired to preserve the lease until the merits of the dispute could be settled in court. The alternative for the tenant was to stand on his rights without correcting the violation, wait for the landlord to start summary proceedings in Civil Court and then defend against the landlord's claim in that court. If he won, well and good; if he lost he forfeited everything because the lease had terminated. The remedy for this all or nothing result was to obtain a stay to toll the running of the cure period and the expiration of the lease. Because Civil Court does not have jurisdiction to grant injunctive relief, stay applications necessarily were made in Supreme Court in conjunction with an action for declaratory judgment. Once the merits had been decided by Supreme Court the stay terminated. If the tenant prevailed he had no further need for a stay. If he lost, he either cured the default during whatever part of the cure period remained or the lease expired and he was subject to removal by summary proceeding. These preliminary injunctions, known as Yellowstone injunctions, have been criticized as a means of stalling indefinitely the termination of a breached tenancy and they have been praised as a protection against arbitrary action by a landlord (see Batista, "Yellowstone" Revisited: The Pendulum Has Swung, NYLJ, Dec. 29, 1983, p 1, cols 3, 4; and cf. Wallach, "Yellowstone" Revisited II A Different View of Doctrine, NYLJ, Feb. 21, 1984, p 1, cols 3, 4). Whatever their merits, the courts have granted them routinely to avoid forfeiture of the tenant's interest and in doing so they accepted far less than the normal showing required for preliminary injunctive relief. An applicant rarely has been required to demonstrate a likelihood of success, irreparable injury, and that the equities favored preliminary relief as those terms are traditionally understood. Indeed, the courts have not professed to require such evidence (see Ameurasia Int. Corp. v Finch Realty Co., 90 AD2d 760; *26 Finley v Park Ten Assoc., 83 AD2d 537; Podolsky v Hoffman, 82 AD2d 763). The threat of termination of the lease and forfeiture, standing alone, has been sufficient to permit maintenance of the status quo by injunction. It is this history which presumably led to amendment of the statute.
RPAPL 753 (subd 4) provides that in a summary proceeding in Civil Court the court shall, after adjudicating the merits, grant a losing tenant a 10-day period within which to cure the default. In effect it gives the losing tenant what he would receive with a Yellowstone injunction in a Supreme Court action after losing, a period of time to cure the violation before being subject to removal. Thus defendant contends that the statute provides full protection to tenants, eliminating any possibility that a satisfactory preliminary showing can be made that the equities of the situation warrant injunctive relief (see, e.g., Klausner v Frank, 95 AD2d 653, supra; Nunez v 164 Prospect Park West Corp., 92 AD2d 540, supra; and see Newmann v Mapama Corp., 96 AD2d 793 [Silverman, J., concurring]). Specifically, it contends that plaintiff's injunction must be vacated and its complaint dismissed because he can obtain full relief in Civil Court.
There is, however, one notable distinction between the Yellowstone remedy and the statutory remedy. A Yellowstone injunction prevents expiration of the lease by tolling the running of the cure period, a necessary precondition to terminating the lease; the statute does not do so by its terms. Thus before Civil Court can acquire jurisdiction the lease has expired and, under the ruling of Yellowstone, it cannot be revived. Troubled by this conceptual problem, unresolved by the language of the amendment, some courts have been reluctant to deny Supreme Court jurisdiction to grant injunctive relief (see, e.g., Wilen v Harridge House Assoc., 94 AD2d 123; cf. Schuller v D'Angelo, 117 Misc 2d 528). Acknowledging that under the statute the tenant presumably continues in possession after expiration of the lease if he cures within the 10-day period, the courts have been unable to determine by what right or under what terms he did so after the lease had expired.
*27Notwithstanding these problems, the interpretation urged by defendant appears to be precisely what the Legislature intended. The sponsor's stated purpose for the bill was to permit tenants to remain in possession by curing the violation after the rights of the parties have been adjudicated.[*] Notably, the amendment provides not only for a mandatory stay of removal but also provides that the tenant shall have an opportunity to cure. Although it makes no provision for reviving the lease, this omission was not unanticipated. The correspondence in the Governor's bill jacket indicates that the legislation was opposed by some objectors for just this reason (see Letter of Counsel for New York State Builders Association, Inc., dated July 19, 1982). Moreover, if the legislation was not intended to authorize the continuation of the lease, the amendment was unnecessary because existing RPAPL 753 (subd 1) grants Civil Court the discretion to stay removal proceedings while the tenant relocates, not for just 10 days, but for six months. Unless the Legislature intended the tenancy to continue the amendment is surplusage. Thus, although the lease may contain a conditional limitation which permits it to be terminated if the tenant fails to cure, we interpret the statute as impressing its terms on residential leases and, in effect, authorizing Civil Court at the conclusion of summary proceedings to impose a permanent injunction in favor of the tenant barring forfeiture of the lease for the violation in dispute if the tenant cures within 10 days. Under this interpretation the statute would necessarily protect against any other losses incident to forfeiture, including in this case, the loss of plaintiff's stock in the cooperative which could result from the termination of his lease. To this extent the statute limits our holding in First Nat. Stores v Yellowstone Shopping Center (21 N.Y.2d 630, supra).
*28There are sound policy reasons for interpreting the statute in this way. Civil Court has jurisdiction of landlord tenant disputes (see CCA 204) and when it can decide the dispute, as in this case, it is desirable that it do so (Lun Far Co. v Aylesbury Assoc., 40 AD2d 794). Yellowstone injunctions have impaired the effectiveness of summary proceedings, however, by enabling tenants to go into Supreme Court where delay may be encountered because of crowded calendars and the pretrial proceedings available in plenary actions. Moreover, if the landlord prevails in Supreme Court, he must still go into Civil Court to evict the tenant. Under the amended statute the tenant's claims may properly be alleged as defenses to the summary proceedings and complete relief may be obtained in Civil Court. The procedure adopted is expeditious and it permits both parties to avoid the expense and duplication of effort involved in proceeding in two courts.
The rationale of our decision necessarily presumes that Civil Court can grant full relief and that the tenant will be unable to make the necessary showing to invoke the equitable powers of Supreme Court. If the tenant is unable to obtain complete relief in Civil Court, then the jurisdiction of Supreme Court is still available (see Wilen v Harridge House Assoc., 94 AD2d 123, supra). The Judges of the Appellate Division differed on whether this violation could be cured in 10 days and thus whether the tenant could proceed in Supreme Court. That was a matter which had not been presented to Special Term for the simple reason that the statute had not yet been enacted when the case was submitted to it. The complaint does not contain any allegation concerning the time or the arrangements necessary to cure; plaintiff alleges only that he has been seeing a few patients on an intermittent basis. It is not possible, therefore, to determine whether the statute permits the parties to obtain complete relief in Civil Court thus requiring vacatur of the preliminary injunction and dismissal of the complaint.
Plaintiff objects to the amendment being considered for the first time by the Appellate Division. It is settled law, however, that a court applies the law as it exists at the time of appeal, not as it existed at the time of the original *29 determination (Mayer v City Rent Agency, 46 N.Y.2d 139, 149; Kelly v Long Is. Light. Co., 31 N.Y.2d 25, 29; Matter of Tartaglia v McLaughlin, 297 N.Y. 419, 424; Quaker Oats Co. v City of New York, 295 N.Y. 527, 536) and new questions of law may be raised for the first time on appeal if they could not have been presented to the trial court (Telaro v Telaro, 25 N.Y.2d 433, 439; Cohen and Karger, Powers of the New York Court of Appeals [rev ed], §§ 161, 162). That is the case here because the statute had not been enacted at the time of submission. The amended statute should be applied to this appeal but because the facts have not been developed, we reverse and remit the matter to the Supreme Court for further proceedings (see Gilpin v Mutual Life Ins. Co., 299 N.Y. 253, 263; Cohen and Karger, Powers of the New York Court of Appeals [rev ed], § 168).
Accordingly, the order of the Appellate Division should be reversed, with costs, the certified question answered in the negative and the matter remitted to Supreme Court for further proceedings.
Order reversed, with costs, question certified answered in the negative and case remitted to Supreme Court, New York County, for further proceedings in accordance with the opinion herein.
NOTES
[*] The Memorandum of Senator Leon Bogues was as follows: "Real Property Actions and Proceedings Law: § 753. This bill provides for a ten day stay before the court shall issue a warrant upon a claim that the tenant or lessee has breached a provision of the lease. The cause of the breach may, for various reasons, be temporary in nature correctable within the ten day period. This bill which deals only with residential tenants will allow a cure of a breach of the lease after a determination is made that a breach actually exists. Many tenants have the reasonable expectation that they will have an opportunity to cure once they have been advised by the court that, in fact, they have breached the lease provision. Under existing law, there is no such opportunity." (NY Legis Ann, 1982, p 280.) | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2637672/ | 224 P.3d 14 (2010)
2010 WY 9
In the Matter of the Termination of Parental Rights to WDW, a minor child:
JLW, Appellant (Respondent),
v.
CAB, Appellee (Petitioner).
No. S-09-0097.
Supreme Court of Wyoming.
January 28, 2010.
*16 Representing Appellant: John M. Burman, Director, Legal Services; Marci Day, Student Director, Legal Services. Argument by Ms. Day.
Representing Appellee: Juan Leo DeHerrera, DeHerrera & Bach Law Center, PC, Rawlins, Wyoming.
Before VOIGT, C.J., and GOLDEN, HILL, KITE, and BURKE, JJ.
BURKE, Justice.
[¶ 1] JLW (Father) appeals the district court's order terminating his parental rights pursuant to Wyo. Stat. Ann. § 14-2-309(a)(iv). He claims the district court failed to satisfy the social study requirements detailed in Wyo. Stat. Ann. § 14-2-314. He also contends there was insufficient evidence to support the district court's finding that he was an unfit parent. We affirm.
ISSUES
[¶ 2] Father presents the following issues:
1. Whether the District Court erroneously exercised its discretion in terminating the parental rights of [Father] after:
a. Failing to direct that a social study should be made upon the filing of the petition for termination as required by Wyo. Stat. Ann. § 14-2-314 and rendering a judgment in favor of termination without having reviewed the completed home study.
b. Ordering a home study for the purpose of the possible adoption of WDW by his step-father rather than for the purpose of determining whether termination would be appropriate.
2. Whether the District Court erred in finding that [Mother] established that [Father] was unfit to have custody and control of the minor child, WDW, for the purposes of Wyo. Stat. Ann. § 14-2-309(a)(iv), because:
a. [Mother] failed to carry the evidentiary burden of proving [Father] was unfit to have custody and control by clear and convincing evidence.
FACTS
[¶ 3] Father and CAB (Mother) are the parents of WDW who was born in May 1999. Mother filed for divorce shortly after the birth and a default divorce decree was entered in October 1999. Mother was awarded sole custody of WDW. Father was ordered to pay $300 per month in child support. The divorce decree did not provide Father with any visitation rights. It did, however, specifically provide that Father could petition for visitation rights in the future.
[¶ 4] Mother married CB in June 2005. CB wants to adopt WDW and, as an initial step in the adoption process, Mother sought to obtain Father's consent to the adoption. Father refused to give consent. Mother then filed a petition to terminate Father's parental rights. Father contested the petition. The district court appointed a Guardian ad Litem for WDW and a bench trial was held in September 2008.
[¶ 5] At the beginning of trial, Father's attorney advised the court that the social study mandated by Wyo. Stat. Ann. § 14-2-314 had not been ordered. Father's counsel did not seek a continuance. Instead, she suggested that the district court order the social study after trial if the court felt that it was necessary. The court accepted the suggestion and trial proceeded as scheduled.
[¶ 6] The evidence presented at trial established that Father was in jail at the time of WDW's birth and had been incarcerated on numerous occasions since that time. At the time of trial, Father was serving a five to seven year sentence for aggravated burglary, a felony. He began serving the sentence in 2006. Father has two other felony convictions and additional felony charges are currently pending in Utah. Father has struggled with drug and alcohol abuse when not in prison. Father never voluntarily paid child support. Support payments were garnished *17 from his wages during those periods of time when Father was not in prison.
[¶ 7] Father has never met WDW. He has made sporadic attempts to establish contact. On occasion, he requested visitation. Mother rebuffed those requests, claiming that visitation was not authorized by the divorce decree and that Father was not current in his child support obligations. Over the years, Father sent approximately 70 letters to WDW. Most of the letters were sent while Father was in prison. He has sent WDW two gifts.
[¶ 8] At the close of the evidence, the district court took the matter under advisement and ordered the social study. On January 12, 2009, the district court entered its decision letter finding generally against Father and concluding that his parental rights should be terminated. In the decision letter, the district court noted that it had not yet received the social study. The social study was filed with the court on January 15, 2009. The Order Terminating Parental Rights was entered on February 20, 2009. Father filed a timely appeal.
DISCUSSION
Social Study
[¶ 9] Father's first issue centers around Wyo. Stat. Ann. § 14-2-314 (LexisNexis 2005) which states:
Upon the filing of a petition by anyone other than an authorized agency as defined by W.S. 14-2-308(a)(ii)(A), the court shall direct that a social study be made by the appropriate county office of public assistance and social services or by any authorized agency to aid the court in making a final disposition of the petition. The social study shall state the factual information pertaining to the allegations in the petition, the social history and the present situation and environment of the child and parent. The social study shall not be excluded as evidence by reason of hearsay alone. The social study shall be made available to any party to the action upon request.
Father contends that the district court did not comply with the statute. His complaint is threefold. First, he contends that the district court erred in failing to order the social study when the petition for termination was filed. Second, he claims that the district court erred in terminating his parental rights "before receiving a completed social study." Finally, he asserts that the social study was inadequate because it did not contain sufficient information regarding Father's present situation.
[¶ 10] The facts relating to the social study are not in dispute. The social study was not ordered when the petition for termination was filed. The district court and the parties were aware of that oversight prior to the commencement of trial. Father, through counsel, suggested that the trial proceed without the social study. The court accepted Father's suggestion and ordered the social study after trial. Prior to receiving a completed social study, the court, by decision letter, notified counsel of its intention to terminate Father's parental rights. In footnote two of the decision letter, the court stated:
The Court has not received a completed social study at this point. However, keeping in mind that [Father] is incarcerated by the Wyoming Department of Corrections and that [Mother] has raised [WDW] and his brother for their entire lives and has worked at the Carbon County Child Development Center for several years, the Court believes that the information contained in a completed social study will only be cumulative of the evidence presented at trial. The Court seeks to end the delay in issuing its opinion caused by waiting on the social study. Therefore, the Court issues its opinion here realizing that the statute mandates the social study, but finding its absence to be harmless.
[¶ 11] The social study was filed with the court on January 15, 2009. More than a month later, on February 20, 2009, the district court entered its Order Terminating Parental Rights. We will first address Father's claim of error relating to the timing of the social study.
[¶ 12] The statutory language is mandatory and the social study should have been ordered when the petition was filed. Father, however, intentionally and knowingly *18 waived any objection to the lack of timely compliance.[1] It was Father's counsel who asked the court to proceed with trial:
THE COURT: But in any event, we apparently all agree that preparation of a social study is mandatory under 14-2-314, and it has not been done in this case. Is that correct?
[PETITIONER'S COUNSEL]: That's correct, Your Honor.
[GUARDIAN AD LITEM]: Yes, Your Honor.
[RESPONDENT'S COUNSEL]: And, Your Honor, ... the statute requires both the appointment of a guardian ad litem and a social study ... I would propose that we take evidence today, and if the Court feels it is necessary to [order] a social study for further proceedings that it reserve its judgment.
THE COURT: And that is what we will do.
[RESPONDENT'S COUNSEL]: Beyond that, I don't have any further comment.
[¶ 13] Father's contention that his parental rights were terminated prior to the filing of the social study is not correct. Father's rights were terminated on February 20, 2009 when the district court entered the Order Terminating Parental Rights. The social study was filed on January 15, 2009. Although the decision letter was filed prior to receipt of the social study, the decision letter did not terminate Father's parental rights. "A court's decision letter or opinion letter, made or entered in writing, is not a judgment." W.R.C.P. 54(a); see also Broadhead v. Broadhead, 737 P.2d 731, 733 (Wyo.1987).
[¶ 14] We cannot ascertain from the record whether the district court reviewed the social study prior to entry of the termination order. It is possible that the court reviewed the social study and concluded that it supported the termination decision. It is also possible that the district court entered the termination order without reviewing the social study. Under either scenario, Father has failed to establish prejudicial error. To establish prejudicial error, Father must show "that the outcome of his trial would have been more favorable had the error not occurred." RK v. State ex rel. Natrona County Child Support Enforcement Dep't, 2008 WY 1, ¶ 18, 174 P.3d 166, 171 (Wyo.2008).
[¶ 15] Father complains that the social study was inadequate because he "was never personally interviewed, and the study does not talk about [Father]'s present situation or what efforts he has made to improve his present situation since being incarcerated." Father's statement is accurate. Critically, however, he fails to identify any information that should have been included in the social study that was not presented to the district court during trial.
[¶ 16] Father was present at trial. He testified regarding his social history, current situation, and self-improvement efforts. He admitted that he had never met WDW and testified as to efforts he had made to establish contact. He conceded that he is currently in prison and that additional felony charges are pending against him. He admitted to past problems with drug and alcohol abuse but testified regarding his current sobriety. He advised the court that he is attending Alcoholics Anonymous/Narcotics Anonymous meetings, as well as "Thinking for a Change" in order to be able to maintain sobriety when he is released from prison. He told the court that he is providing GED tutoring to other inmates. In short, he fully apprised the court of his social history, his relationship with WDW, and his current situation. The district court opted to issue its decision letter without the benefit of the social study in order to avoid further delay and because the court was convinced that information contained in the social study would merely be cumulative of the evidence *19 presented at trial. Having reviewed the social study, we conclude that the district court was correct. The information in the social study was cumulative and nothing in the study contradicted the trial evidence. Father has failed to establish prejudicial error.
Sufficiency of Evidence
[¶ 17] Father challenges the sufficiency of the evidence supporting termination of his parental rights. We apply our traditional principles of evidentiary review when a party challenges the sufficiency of the evidence supporting termination. BA v. Laramie County Dep't of Family Servs., 2007 WY 128, ¶ 7, 163 P.3d 844, 847 (Wyo. 2007); CDB v. DJE, 2005 WY 102, ¶ 4, 118 P.3d 439, 440 (Wyo.2005); BSC v. Natrona County Dep't of Family Servs., 2004 WY 167, ¶ 11, 102 P.3d 890, 894 (Wyo.2004). We examine the evidence in the light most favorable to the party prevailing below, assuming all favorable evidence to be true while discounting conflicting evidence presented by the unsuccessful party. MN v. State, Dep't of Family Servs., 2003 WY 135, ¶ 5, 78 P.3d 232, 234 (Wyo.2003). This Court then reviews the supporting evidence to ascertain if it clearly and convincingly satisfies the statutory elements required to support termination. EBH v. Hot Springs Dep't of Family Servs., 2001 WY 100, ¶ 14, 33 P.3d 172, 178 (Wyo.2001). Evidence is clear and convincing if it would persuade a trier of fact that the truth of the contention is highly probable. LP v. Natrona County Dep't of Public Assistance and Social Servs., 679 P.2d 976, 982 (Wyo.1984). This Court may examine all of the properly admissible evidence in the record, but we do not reweigh the evidence. Street v. Street, 2009 WY 85, ¶ 9, 211 P.3d 495, 498 (Wyo.2009). In applying our standard of review, we keep in mind that the right to associate with one's family is fundamental and strictly scrutinize petitions to terminate parental rights. RLA v. State of Wyo., Dep't of Family Servs., 2009 WY 109, ¶ 13, 215 P.3d 266, 268 (Wyo.2009).
[¶ 18] The district court found clear and convincing evidence to support the termination of Father's parental rights under Wyo. Stat. Ann. § 14-2-309(a)(iv).[2] In order to prevail under Wyo. Stat. Ann. § 14-2-309(a)(iv), a petitioner must establish, by clear and convincing evidence, that 1) the parent is incarcerated due to a felony conviction, and 2) he is unfit to have custody and control of the child. See DKM v. RJS, 924 P.2d 985, 987 (Wyo.1996).
[¶ 19] Father concedes that he is currently incarcerated for the commission of a felony, but claims that the evidence was insufficient to prove he is an unfit parent. The term unfit is not defined in the termination statutes. We have, however, previously recognized that "fitness includes the ability to meet the ongoing physical, mental and emotional needs of the child." RLA, 14, ¶ 215 P.3d at 269, citing CDB, ¶ 7, 118 P.3d at 441. Whether a parent is fit to have custody and control of a child is a decision that must be made within the context of a particular case and depends upon the situation and attributes of the specific parent and child. RLA, ¶ 14, 215 P.3d at 269.
[¶ 20] Father points to evidence in the record that is favorable to his position in an effort to challenge the district court's finding of unfitness. He notes that the crime for which he is currently in prison does not, by itself, warrant a finding of unfitness. He asserts that he made numerous requests of Mother to allow visitation and contends that Mother improperly refused those requests. He points to the numerous letters he has sent over the years to WDW as evidence of his efforts to establish a positive relationship. *20 He also notes that he is currently living a drug- and alcohol-free lifestyle. He claims that he will be a better parent when released because of the efforts he has made to improve while in prison. He alleges that he will be released from prison in 2010. All of this evidence is favorable to Father's position. Unfortunately for Father, it is not the only evidence that was introduced at trial.
[¶ 21] There is significant evidence in the record that was unfavorable to Father's position. All of the evidence introduced at trial was properly considered and weighed by the district court. The court presented its analysis in a thorough and well-reasoned decision letter. In this appeal, Father essentially asks this Court to reweigh that evidence. That is not a proper task for this Court. We must review the evidence in the light most favorable to the prevailing party and determine whether that evidence clearly and convincingly satisfies the statutory elements required to support a termination of parental rights. CDB, ¶ 4, 118 P.3d at 440. We conclude that it does.
[¶ 22] The district court specifically found that Father's incarceration for aggravated burglary does not, by itself, demonstrate unfitness. Compare CDB, ¶¶ 7-8, 118 P.3d at 441 (holding that underlying crime of sexual abuse of the daughter, without more, demonstrated unfitness). The court, however, determined that the amount of time that Father has spent in prison has had an impact on his fitness as a parent:
[F]ive to seven years is a very long time to a child, particularly considering that [WDW] is already nine years old and [Father] has never met him in person. [Father] has already failed to provide childcare through half of [WDW]'s minority. It is uncontested that at the earliest time that [Father] could be released from incarceration, he will have already missed all of [WDW's] childhood and [WDW] will be an adolescent.
[¶ 23] While on occasion Father asked Mother for visitation, he never initiated legal action to obtain visitation rights. According to the district court, the failure to pursue visitation weighed against Father's fitness:
[T]his Petition Requesting Stalking Protection Order also demonstrates [Father]'s immature and misdirected behavior toward obtaining visitation with [WDW]. Instead of seeking visitation through the proper channels, [Father] chose to repeatedly harass [Mother] and her family. Therefore, the Court concludes that [Father]'s failure to visit [WDW] and his failure to pursue the proper channels for obtaining that visitation are factors demonstrating his parental unfitness.
[¶ 24] Father never voluntarily paid child support. Support payments that were made resulted from garnishment of his wages. Although Father is currently sober, it is undisputed that he has struggled with drugs and alcohol throughout his adult life. It is appropriate for a district court to consider a parent's history and pattern of behavior over time in determining whether rights should be terminated. BA, ¶ 19, 163 P.3d at 849; CL v. DFS, 2007 WY 23, ¶ 26, 151 P.3d 1102, 1108-09 (Wyo.2007); RS v. DFS, 2004 WY 87, ¶ 16, 94 P.3d 1025, 1029 (Wyo.2004). According to the district court:
[T]he Court holds serious concerns regarding [Father]'s prior use of drugs and alcohol. As is often the case, [Father]'s alcohol abuse is a substantial factor contributing toward his criminal activity. Consequently, the Court is also concerned about [Father]'s continued promises to his son and [Mother], none of which he has fulfilled. [Father]'s drug and alcohol use has led to his recurring incarceration, which in turn has prevented him from accomplishing the promises he has made. As [Father] stated at trial, he recently "planned to do something, but then got arrested." There is no doubt that [Father] has been on a repetitive, destructive pattern of behavior that has contributed to his failure to fulfill his responsibilities.
While it is appropriate to consider the history of the parent, focus should be maintained on [his] current status. [BA], ¶ 19. After all, "[t]he statute unambiguously requires a finding of present unfitness." Id. at FN 4. [Father] is currently living an alcohol and drug-free life, ostensibly due to his imprisonment. The Court *21 has no reason to doubt the sincerity with which he cares about his son, his well-written letters to both [Mother] and [WDW] evince such. However, the Court holds serious concerns regarding [Father]'s repeated difficulties and his limited attempts at personal improvement. Simply put, [Father]'s extended history of drug and alcohol abuse and his minimal attempts to remedy his struggles are factors demonstrating his parental unfitness.
[¶ 25] Although Father contends that he will be released from prison in 2010, the evidence indicates that additional felony charges are still pending against Father in Utah. The district court summed up the evidence as follows:
From the evidence presented, there is no question that [Mother] has performed an admirable job of raising [WDW] without involvement by [Father]. [Father], however, has contributed little financial support, no physical support, and the consequences of his actions have hindered his opportunities to parent. His past acts demonstrate his inability to make sound decisions and live a law-abiding life. His only attempts at obtaining visitation in the past centered on harassing and threatening [Mother] and her family. By the time he is released from his current incarceration, he will have missed the bulk of [WDW]'s minority. While [Father] may mean well, his actions are not consistent with those of a fit parent.
. . .
This Court agrees with the Wyoming Supreme Court in believing "that parents should not be given numerous chances after failing to adequately care for their children.... Having children is not just a right, but a right with attendant responsibilities." [BA], ¶ 27. [Father] has utterly failed to fulfill any of his attendant responsibilities through the first nine years of [WDW]'s life and his most recent criminal acts and incarceration provide no hope for positive change.
[¶ 26] The district court's decision is supported by clear and convincing evidence. We find no error in the district court's determination that Father's parental rights should be terminated.
[¶ 27] Affirmed.
NOTES
[1] A "waiver" is the intentional relinquishment of a known right that must be manifested in a clear and unequivocal manner. Jensen v. Fremont Motors Cody, Inc., 2002 WY 173, ¶ 16, 58 P.3d 322, 327 (Wyo.2002). Father contends that he "has an existing right to have a social study completed." Whether that right belongs to Father is questionable. "It is further noted that the statutes involved, §§ 14-2-308 through 14-2-319, are for the primary benefit of the child." RDW v. GJS, 716 P.2d 353, 358 (Wyo.1986), overruled on other grounds by Clark v. Alexander, 953 P.2d 145, 154 (Wyo.1998).
[2] Wyo. Stat. Ann. § 14-2-309(a)(iv) states:
(a) The parent-child legal relationship may be terminated if any one (1) or more of the following facts is established by clear and convincing evidence:
. . .
(iv) The parent is incarcerated due to the conviction of a felony and a showing that the parent is unfit to have the custody and control of the child[.]
Mother also sought termination pursuant to Wyo. Stat. Ann. § 14-2-309(a)(i). In its decision letter the district court found termination under Wyo. Stat. Ann. § 14-2-309(a)(i) inappropriate because Mother did not establish, by clear and convincing evidence, that Father had left WDW "in the care of another." See SLB v. JEO, 2006 WY 74, ¶ 19, 136 P.3d 797, 802 (Wyo.2006). | 01-03-2023 | 11-01-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2438779/ | 547 S.W.2d 582 (1977)
Dr. C. F. SPARGER, Petitioner,
v.
WORLEY HOSPITAL, INC., et al., Respondents.
No. B-5721.
Supreme Court of Texas.
January 12, 1977.
On Rehearing March 2, 1977.
Stokes, Carnahan & Fields, Richard E. Stokes, Jr., Amarillo, for petitioner.
Anderson, Henley, Shields, Bradford, Pritchard & Miller, L. W. Anderson, Dallas, Buzzard & Comer, Ross N. Buzzard, J. B. McGuire, Jr., Pampa, for respondents.
POPE, Justice.
This is a medical malpractice case. The plaintiff Sylvia Caldwell sued Worley Hospital, Inc. and Dr. C. F. Sparger for injuries resulting from the failure to remove a sponge from Mrs. Caldwell's abdominal cavity after an operation. The trial court rendered judgment on a jury verdict for plaintiff *583 against Worley Hospital only. The court of civil appeals reversed that judgment and held that Dr. Sparger under the captain of the ship doctrine was liable as a matter of law and that the defendants were jointly and severally liable. 529 S.W.2d 639. We reverse the judgment of the court of civil appeals and affirm the judgment of the trial court.
The jury by its verdict found that someone in the group comprising Dr. Sparger, Dr. Bellamy, and the surgical nurses was negligent with respect to the sponge that was found in Mrs. Caldwell's abdomen. The jury found that this negligence was the proximate cause of Mrs. Caldwell's injury. The jury refused to find that Dr. Sparger failed to exercise ordinary care by looking for the sponge in question before closing the incision in plaintiff's abdomen. The jury did find that Wanda Ensey, Marjie Holland, Geneva Finney, (nurses) or any of them, failed to make a correct sponge count and this negligence was the proximate cause of Mrs. Caldwell's injury. The jury refused to find that in watching after the sponges the three nurses were the borrowed servants of Dr. Sparger.
The plaintiff did not sue the nurses, and Dr. Bellamy has gone out of the case by reason of an instructed verdict in his favor. The jury answers exonerated Dr. Sparger from every act of negligence for which he was charged and found instead that the nurses were negligent. Dr. Sparger is therefore before us with an application for writ of error in which he insists that the court of civil appeals should not have held him vicariously liable as a matter of law for the negligence of the nurses under the so-called captain of the ship doctrine. Worley Hospital's application contends that Dr. Sparger must bear the sole liability since the captain of the ship doctrine made the nurses his exclusive employees. The issue presented is whether Dr. Sparger is liable as captain of the ship notwithstanding the finding that the nurses were not his borrowed servants.
If this was anything but a malpractice case, the question before us would be resolved by the jury's refusal to find that Dr. Sparger had borrowed the Worley Hospital's nurses so as to make them his employees. Mrs. Caldwell sought to hold Dr. Sparger vicariously liable for the improper sponge count by submitting the following special issue concerning the employment relationship between the surgeon and the assisting nurses:
SPECIAL ISSUE NUMBER FOUR:
Do you find from a preponderance of the evidence that in watching after the lap packs Wanda Ensey, Marjie Holland and Geneva Finney were borrowed employees of Dr. Sparger?
A "Borrowed Employee", as used in this charge, means one, who, while in the general employment of the hospital, is subject to the right of the physician to direct or control the details of the particular work inquired about, and is not merely cooperating with suggestions of said physician.
An employee in the general employment of one employer may be temporarily loaned to another so as to become a borrowed employed [sic] of the second employer. Under these circumstances, a person may serve two masters simultaneously and at times only momentarily.
Answer "Yes" or "No"
ANSWER: No
Texas has long recognized that a general employee of one employer may become the borrowed servant of another. J. A. Robinson Sons, Inc. v. Wigart, 431 S.W.2d 327 (Tex.1968); Producers Chemical Company v. McKay, 366 S.W.2d 220 (Tex. 1963). Restatement (Second) of Agency § 227 (1958). Under the borrowed servant doctrine the essential inquiry would be whether or not the surgeon had the right to control the assisting nurses in the details "of the specific act raising the issue of liability." J. A. Robinson Sons, Inc. v. Wigart, supra at 330. The right of control is ordinarily a question of fact. See J. A. Robinson Sons, Inc. v. Wigart, supra; Newspapers, Inc. v. Love, 380 S.W.2d 582 (Tex.1964).
*584 The principle of borrowed servant cuts across the entire law of principal and agent and employer and employee, and is therefore also applicable to the legal relationships between a physician or surgeon and a nurse. Physicians and surgeons are and should be subject to the usual rules applicable to borrowed servants. In some jurisdictions, however, there has been imposed upon the medical profession, a special and more onerous form of vicarious liability. Our question is whether they should have an extra liability imposed upon them.
The phrase "captain of the ship", was first employed in the medical malpractice context in the case of McConnell v. Williams, 361 Pa. 355, 65 A.2d 243 (1959). It was used in that case as an apt analogy but in some jurisdictions the phrase has grown into a separate and independent concept of agency which specially applies to medical malpractice cases. Rockwell v. Stone, 404 Pa. 561, 173 A.2d 48 (1961); Yorston v. Pennell, 397 Pa. 28, 153 A.2d 255 (1959); Mazer v. Lipschutz, 327 F.2d 42 (3d Cir. 1963); Young, Separation of Responsibility in the Operating Room: The Borrowed Servant, the Captain of the Ship and the Scope of Surgeons' Vicarious Liability, 49 Notre Dame Lawyer 933 (1974).
In naval parlance, the captain of a ship is in total command and is charged with full responsibility for the care and efficiency of the ship and the welfare of all hands. His authority over his own ship and crew is supreme. The captain does not, however, assume personal responsibility for the acts of misconduct or for the criminal deeds committed by the individual men aboard his ship. The court in McConnell did not in fact, impose liability upon the surgeon under its handy phrase which characterized him as the captain of the ship. The court instead ruled that "[i]t is for the jury to determine whether the relationship between defendant and the interns, at the time the child's eyes were injured, was that of master and servant. . . ." The court remanded the cause for the factual determination. Other medical malpractice cases have treated the disputed borrowed servant issue in the same manner, as one of fact.
Similes sometimes help to explain a factual situation, but in legal writing, phrases have a way of being canonized and of growing until they can stand and walk independently of the usual general rules. Mr. Justice Frankfurter once wrote concerning such phrase-making in judicial opinions: "The phrase . . . is an excellent illustration of the extent to which uncritical use of words bedevils the law. A phrase begins life as a literary expression; its felicity leads to its lazy repetition; and repetition soon establishes it as a legal formula, undiscriminatingly used to express different and sometimes contradictory ideas." Tiller v. Atlantic Coast Line R. Co., 318 U.S. 54, 68, 63 S. Ct. 444, 452, 87 L. Ed. 610 (1942). The result in the use of captain of the ship is that a surgeon or physician may be held liable, not as others upon the basis of the general rule of borrowed servant, but as captain of the ship.
The jurisdiction which first employed the metaphor has now retreated from the concept so that occurrences in the operating room might be brought back to the confines of the more general borrowed servant concept. The court in Thomas v. Hutchinson, 442 Pa. 118, 275 A.2d 23 (1971), said that the captain of the ship example was intended as an adaptation of the familiar borrowed servant principle that applies generally in the law of agency. See Note, Malpractice-Vicarious Liability of an Operating Surgeon, 10 Duquesne L.Rev. 117 (1971). Hence, where there are inconsistent factual inferences concerning the servant's employer which can be reasonably drawn from evidence, the issue should be resolved factually as any other borrowed servant issue. Buzan v. Mercy Hospital, 203 So. 2d 11 (D.Ct.App.Fla.1967); Danks v. Maher, 177 So. 2d 412 (La.Ct.App.1965); Campbell v. Thornton, 333 N.E.2d 442 (Mass.1975); Synnott v. Midway Hospital, 287 Minn. 270, 178 N.W.2d 211 (1970); Nichter v. Edmiston, 81 Nev. 606, 407 P.2d 721 (1965); Tonsic v. Wagner, 458 Pa. 246, 329 A.2d 497 (1974); Annot., 12 A.L.R. 3d 1017, 1021 (1967).
*585 This court has not previously addressed the question of the adoption of the captain of the ship doctrine as a basis for a surgeon's liability in addition to his responsibility under the borrowed servant doctrine. In Webb v. Jorns, 488 S.W.2d 407 (Tex. 1973), the application of the captain of the ship doctrine was not an issue since the physicians conceded that they were subject to liability for actions of any of the persons under their supervision in the operating room. 488 S.W.2d at 411. In McKinney v. Tromly, 386 S.W.2d 564 (Tex.Civ.App.1965, writ ref'd n. r. e.), the court approved the doctrine. The judgment in that case, however, was not grounded upon the mere presence of the surgeon in the operating room but, as the opinion stated, upon the admitted fact that the doctor had absolute right of control of all personnel in the operating room during the operation. Later, Harle v. Krchnak, 422 S.W.2d 810 (Tex.Civ.App.1968, writ ref'd n. r. e.), followed McKinney without discussion.
We now disapprove McKinney and Harle insofar as they suggest that a surgeon's mere presence in the operating room makes him liable as a matter of law for the negligence of other persons. We disapprove the captain of the ship doctrine and hold that it is a false special rule of agency. Operating surgeons and hospitals are subject to the principles of agency law which apply to others. Tonsic v. Wagner, supra; Bilonoha v. Zubritzky, 233 Pa.Super. 136, 336 A.3d 351 (1975). The state of the facts may in some cases be such as to make one a surgeon's employee or borrowed servant as a matter of law, but that is not the factual situation before us in this case.
The question remains whether the facts show that, as a matter of law, the nurses were the borrowed servants of Dr. Sparger. Three nurses had assignments in the operating room during the operation. They were hired by and were the general employees of the hospital and were assigned by the hospital for the operation. Dr. Sparger did not participate in their selection. Marjie Holland was the "circulating nurse." As such, she served in that part of the operating room that was designated as the nonsterile field. Wanda Ensey was the "scrub nurse" who was required to remain in the sterile field so that she could assist the surgeon throughout the operation. Geneva Finney was positioned at the foot of the operating table, but she had no responsibilities concerning the sponges.
The duties of the circulating and scrub nurses were detailed in the hospital's Policy & Procedure Manual. There were general instructions which applied to both nurses.[1] There were specific duties assigned to the circulating nurse[2] and specific duties assigned *586 to the scrub nurse.[3] The procedures for the sponge counts were intended for use regardless of the surgeon who was performing an operation in the Worley Hospital.
The mistake in leaving the sponge in plaintiff's abdomen was explained in this way. The circulating nurse had prepared the operating room by laying out the necessary supplies and equipment. She remained in the non-sterile area of the operating room during the operation. The scrub nurse stood within the sterile field and assisted the surgeon by handing him instruments, clamps, and sponges. Before surgery began, the scrub nurse in front of the circulating nurse counted the sponges which had been laid out. The circulating nurse recorded that count. When Dr. Sparger was ready to close the inner layer of tissue, the scrub nurse counted the unused sponges, and the circulating nurse counted the used ones. The total was reported by the scrub nurse as tallying with the record.
Wanda Ensey, the scrub nurse, testified that Dr. Sparger did not direct her and Mrs. Holland to make the sponge count. Mrs. Ensey stated that the two nurses knew how to perform the sponge count, because it was part of the manual regulations which they followed. Reasonable minds might differ as to the facts which presented the borrowed servant issue.
We conclude, therefore, as did the trial court, that plaintiff should have judgment against Worley Hospital since the jury made a finding that it was hospital's employees who were negligent. Since the captain of the ship idea is a false issue and the jury found as a fact that the nurses were not the borrowed servants of Dr. Sparger, plaintiff was not entitled to a judgment against Dr. Sparger.
The judgment of the court of civil appeals which rendered judgment against both Dr. Sparger and Worley Hospital is reversed and the judgment of the trial court that plaintiff recover against Worley Hospital is affirmed.
SAM D. JOHNSON, J., dissents.
YARBROUGH, J., not sitting. He was not a member of the Court when the cause was orally argued before this Court.
SAM D. JOHNSON, Justice (dissenting).
This dissent is respectfully submitted.
As early as Moore v. Ivey, 264 S.W. 283 (Tex.Civ.App.Galveston 1924), rev'd on basis of jury misconduct, 277 S.W. 106 (Tex. 1925), Texas courts have indicated that a surgeon was negligent as a matter of law if a sponge or other foreign object was left in the patient. See McKinney v. Tromly, 386 S.W.2d 564 (Tex.Civ.App.Tyler 1964, writ ref'd n. r. e.); Thompson v. Barnard, 142 S.W.2d 238 (Tex.Civ.App.Waco 1940), aff'd, 138 Tex. 277, 158 S.W.2d 486 (1942).
Language in McKinney v. Tromly, supra, reveals that the court's decision was not based only on a finding that the facts established as a matter of law that the surgeon had the right to control the nurse. The court quoted with approval the following language from Aderhold v. Bishop, 94 Okl. 203, 221 P. 752 (1923):
"`We can conceive of no instance in which the application of the doctrine of respondeat superior could exercise a more salutary influence than in cases of damage arising out of surgical operations. The patient is helpless under the influence *587 of an anaesthetic, and absolutely at the mercy of the surgeons performing the operation, and they are charged with the duty to see that no preventable injury results to their patient. * * * If the operating surgeons were not made liable for the negligent performance of the duties of those working under him, the law in a large measure would fail in affording a means of redress for preventable injuries sustained from surgical operations.'" 386 S.W.2d 564 at 565-66. [Emphasis added.]
This language implies that a surgeon may be liable for the negligence occurring in the operating room. This responsibility appears to be a conceded fact in many if not most instances. Webb v. Jorns, 488 S.W.2d 407, 411 (Tex.1972). The special relationship that exists between the surgeon and the patient in the operating room justifies the imposition of such liability.
This special relationship arises from the conscious selection by the patient of a particular surgeon, the reliance by the patient on the skill and judgment of the surgeon, the inability of the patient to control any of the actions occurring during surgery, the expectation that the surgeon selected will control the operation, the patient's expectation that the surgeon will require the operating room personnel to follow proper medical procedures, the expectation that the surgeon will protect the patient from the negligence of the operating room personnel, and the responsibility accepted by the surgeon to require the application of proper medical procedures and to exclude unqualified personnel from the operating room. This special relationship is not the only justification for the imposition of liability on the surgeon for negligence in the operating room. The knowledge of such potential liability will prompt the surgeon to initiate every possible safeguard to prevent negligence in the operating room.
Whether the doctrine is known as "captain of the ship" or by some other label, this writer would hold that a surgeon may be liable for any negligence occurring in the operating theater. Liability may be imposed on the theory that the surgeon had the right to control the negligent individual or, if there was no right to control, on the theory that the surgeon was negligent in failing to insist on the right to control.
Rather than retain the historic position of this state, that of the courts of civil appeals in Harle v. Krchnak, 422 S.W.2d 810 (Tex. Civ.App.Houston [1st Dist.] 1967, writ ref'd n. r. e.), and McKinney v. Tromly, supra, the majority asserts that the surgeon may be held liable as a matter of law only if the facts necessarily lead to the conclusion that the operating surgeon had the right to control the nurses during the course of the operation.
Even applying the standard adopted by the majority, an examination of the evidence in the instant case leads inevitably to the conclusion that the operating surgeon, Dr. Sparger, as a matter of law had the right to control the actions of the nurses with respect to the sponge counts during the course of the operation. Indeed, in the opinion of this writer, such evidence is overwhelming.
With respect to his relationship with the nurses, Dr. Sparger testified as follows:
"Q And during the course of the operation, or the course of treatment or operation, the Surgeon is in charge of the patient?
"A In charge of all the medical aspects of the patient.
"Q And you issued orders to the Nurses in connection with the care and treatment of the patient, and they are supposed to follow them?
"A In regard to the medical aspects.
"Q Now, in connection with an operation, a Surgeon issues orders to the Nurses during the operation, does he not?
"A Correct.
"Q And they are supposed to follow them?
"A Yes, sir.
"Q And you are supposed to tell the Nurses what to do, and what not to
*588 "A Correct, in regard to the medical aspects.
". . .
"Q You certainly wouldn't want a janitor, or a typist, or somebody, or a clerk up there, helping you in the Operating Room, would you?
"A No, sir.
"Q You want a Registered Nurse, don't you?
"A As far as the circulation, yes.
"Q And you want somebody that has had experience, and has had training?
"A That is true, and it is a requirement.
"Q And do you know the Nurses, or did you know the Nurses before you went to Worley Hospital that were assisting you in this operation?
"A Yes, sir.
"Q That is Mrs. Ensey, and Mrs. Holland?
"A Yes.
"Q And you don't question their ability in any way, or their capabilities, do you?
"A No.
". . .
"Q Now, you have also told us that you did not ask either Mrs. Ensey or Mrs. Holland for a sponge count, but that they voluntarily gave you one, is that correct?
"A That's right, at the time of the procedure.
"Q All right. Andbut if they didn't voluntarily give you one, you would have certainly asked for one, wouldn't you?
"A Correct.
". . .
"Q All right. Now isn't it true that your judgment controls the surgical process from the beginning to end during an operation?
"A The medical aspects of the operation.
". . .
"Q If there is any conflict or disagreement in judgment between you and somebody else, including the Nurses, or even Dr. Bellamy, who is assisting you, your judgment would control, would it not?
"A If there is any conflict, that is true, if there is any conflict
"Q Yes. That's right. In other words, you are in charge of the operation, and everybody is supposed to do what you tell them?
"A That's right, medically speaking." [Emphasis added.]
Dr. Sparger also testified that he requested a sponge count after closing the peritoneum but prior to closing the skin. With respect to the sponge counts, Mrs. Ensey, the operating room technician, testified as follows:
"Q Now, do you know whether the hospital Regulations required another count after [the time that Dr. Sparger had begun to close the peritoneum]?
"A No, I don't think they did. I am sure they didn't, . . ."
Mrs. Ensey also testified regarding the relationship between the nurses and Dr. Sparger:
"Q Are you instructed to follow the doctors' orders at all times?
"A Yes.
"Q Do you follow them?
"A Yes. I try my best.
"Q And you are supposed to follow all the orders he gives you?
"A Yes.
"Q And he tells you what to do and what not to do?
"A Yes."
Mrs. Holland, the operating room supervisor and a registered nurse, testified as follows:
"Q All right. Then when we got downwhen we got down to this second count that you made at the peritoneum, that you have told us about, one, you counted when they *589 came out of the bucket, and you counted them on the floor with Mrs. Finney, neither one of those doctors directed you to do that?
"A No, sir. It is accepted that you do that.
"Q Neither one of those doctors ordered you to do that?
"A You just know they expect it of you.
"Q Well, I am asking you, did either one of those doctors order you to do that?
"A No.
"Q All right. In fact, those Orders and Regulations that control you in that work come from your Worley Hospital Regulations, don't they?
"A Well, the doctors just expect you to have a sponge count for them. It is just the way they expect it. . . .
". . .
"Q Now, in connection with the Operating Room, is the Surgeon, who is performing the operation, is he supposed to give you orders as to what to do, and know what not to do?
"A Yes, sir.
"Q And you are supposed to follow those orders?
"A Yes, sir.
"A Without question?
"A Yes, sir." [Emphasis added.]
It is undisputed that the Hospital had established standard procedures to be followed by the nurses in the operating room. However, it is obvious that Dr. Sparger had the right to alter the procedures followed by these nurses in this case, and did in fact alter the procedures by requesting a second sponge count.
From the testimony of both the surgeon and the nurses, it is inconceivable that the nurses would have refused to obey an order issued during the course of the operation by the operating surgeon, Dr. Sparger, on the grounds that it conflicted with procedures set forth by the Hospital.
The facts therefore establish as a matter of law that, as to the nurses, the operating surgeon, Dr. Sparger, not only had the right to control but also exercised such control during the course of the operation. The majority asserts: "The state of the facts may in some cases be such as to make one a surgeon's employee or borrowed servant as a matter of law, but that is not the factual situation before us in this case." With all due respect, such is precisely the situation before us in this case, and the quoted testimony makes that fact crystal clear. Under the majority's own standard, during the course of the operation the nurses were the operating surgeon's borrowed servants as a matter of law and the operating surgeon is therefore liable for their negligence.
ON MOTION FOR REHEARING
POPE, Justice.
The motion for rehearing of Worley Hospital, Inc. is granted for the purpose of remanding this cause to the court of civil appeals. The cause is remanded so that court may rule on the question whether the jury's refusal to find that the nurses were borrowed employees of Dr. Sparger was against the great and overwhelming weight of the evidence, a point over which this court has no jurisdiction. See Stanfield v. O'Boyle, 462 S.W.2d 270 (Tex.1971).
The judgment of the court of civil appeals is reversed and the cause is remanded to that court for further consideration of the state of the evidence.
YARBROUGH, J., not sitting.
NOTES
[1] "OPERATING ROOM NURSING DUTIES
"Each nurse is responsible for the room to which she is assigned in every detail. This includes maintenance of asepsis, prompt, and exact preparation for all her cases, accuracy in recording, and readiness of all special supplies needed and requested for each case.
"The nurse is responsible for all counts. This includes sponges, needles (both from the rack and traumatic sutures), penrose drains, peanut sponges, umbilical tapes, screws, and any other similar articles which may be brought into the operative field. All counts are taken before the case begins, and are recorded in writing on the operative record. All these must be accounted for before the closure of the operative incision. NO OTHER NEED IS MORE IMPORTANT! If the counts are correct, this is so written on the operative record and signed by the circulating nurse taking the counts. If there is a discrepancy in the counts, the surgeon is immediately notified and a search is made for the missing article. If the missing item is not found after a thorough search, an x-ray is taken of the patient. In this event, an x-ray is mandatory and cannot be refused by the surgeon. There is no charge to the patient for this x-ray; it is paid for by the hospital. . . . counts are taken on each case; one before the case begins; one prior to the closure of the peritoneum or the first layer of tissue . . .."
[2] "DUTIES OF THE CIRCULATING NURSE
"1.-3. * * *
"4. Check sponge count, needle count, instrument count with scrub before the case is started.
"6.-10. * * *
"11. Place dirty sponges where they can easily be seen by the scrub nurse and the anesthetist. Keep sponges counted and be ready to be closed and in a C-Section when the uterus is ready to be closed also."
[3] "DUTIES OF THE SCRUB NURSE
"1. Dust the room before starting the case.
"2. Help circulating nurse in opening supplies.
"3. When possible pull own sutures for the case.
"4. At least 15 minutes before surgery is scheduled start to scrub and set up.
"5. Check doctors card and set up tables. Sponge count is to be taken before the incision is made.
"6. Try to anticipate the doctors' needs as your surgery progresses.
"7. Any break in technique is to be brought to the attention of the doctors IMMEDIATELY!!
"8. Sponge count is taken as the doctor is ready to close the peritoneum. . . . All vaginal surgery is to have a count before the patient leaves the room. All cases require sponge count." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2419449/ | 949 S.W.2d 534 (1997)
METRO TEMPS, INC. and Metromarketing Services, Inc., Appellants,
v.
TEXAS WORKERS' COMPENSATION INSURANCE FACILITY; Wm. Rigg Co.; and Employers Insurance of Wausau, Appellees.
No. 03-96-00265-CV.
Court of Appeals of Texas, Austin.
July 24, 1997.
*535 Thomas Herter, Houston, for appellants.
Evelyn T. Ailts, Phillips & Akers, Houston, for Employers Ins.
Gregory C. Mathis, Austin, Jeff Nobles, Houston, Haynes & Boone, L.L.P., for Texas Workers.
Thomas Wade Jefferies, Hohmann, Werner & Taube, Austin, for Wm. Rigg Co.
Before POWERS and JONES, JJ., and HILL,[*] Chief Justice.
HILL, Chief Justice (Assigned).
Metro Temps, Inc. and Metromarketing Services, Inc., appeal from the trial court's orders dismissing their claims as to Texas Workers' Compensation Insurance Facility ("TWCIF"), Wm. Rigg Co. ("Rigg"), and Employers Insurance of Wausau ("Wausau"), the appellees, based upon the appellants' failure to exhaust their administrative remedies. The appellants contend in two points of error that the trial court erred in granting the appellees' pleas to the trial court's jurisdiction because they were not required to exhaust their administrative remedies and because the Harris County trial court erred in granting the appellees' motions to transfer venue from Harris County to Travis County.
We affirm because we conclude that where, as here, a party has claims that must be brought before an administrative body, combined with additional claims that the administrative body has no authority to adjudicate, and where the determination of those additional claims is dependent in part upon the resolution of an issue or issues that the administrative body has the authority to adjudicate, the district court is without jurisdiction to consider such additional claims until the exhaustion of administrative remedies of those issues over which the administrative body has the authority to adjudicate. We also hold that by failing to present us with the record before the transferring court, the appellants have preserved nothing for review with respect to the claimed error regarding the transfer of venue from Harris to Travis County.
The appellants' petition alleged that Metro had obtained a workers' compensation policy through TWCIF, placed by Rigg as agent and issued and serviced by Wassau. TWCIF is a non-profit, unincorporated association of insurers created by statute to provide insurance coverage for employers that are unable to obtain insurance in the voluntary market. Tex. Ins.Code Ann. art. 5.76-2, §§ 2.01, 4.01 (West Supp.1997).
The appellants asserted that the binder to the policy provided that "no modifier and no surcharge will apply, subject to change at anniversary rate date." They indicated that certain modifiers and surcharges were applied before the anniversary date, resulting in a premium charge of $621,600, when the *536 correct charge should have been approximately $50,000.
Metromarketing sought a declaratory judgment that it is not responsible for any part of the premium charged. Metro sought a declaratory judgment that it did not owe the $621,600 premium, that the rate charged and premium claimed constituted a breach of contract by all of the appellees, and asking for a declaration of the amount due from Metro under the policy. The appellants also alleged actions against the appellees for: (1) breach of contract through raising the rates and applying modifiers and surcharges prior to the anniversary date, indicating that the appellants had suffered consequential damages and that TWCIF's action was not taken in good faith; (2) fraud in attempting to collect the $621,600 premium and in improperly attempting to hold Metromarketing liable for any of such premium, again indicating that the appellants had suffered consequential damages and that TWCIF's action was not taken in good faith; and (3) conspiracy of the appellees to wrongfully charge the appellants the $620,600 premium, again indicating that TWCIF's action was not taken in good faith. The appellants asserted that they were entitled to punitive damages and attorney's fees.
All of the appellees filed pleas to the jurisdiction of the trial court, urging that the appellants were required to exhaust their administrative remedies under section 2.08 of article 5.76-2 of the Texas Insurance Code and that their failure to do so deprived the trial court of jurisdiction. The trial court sustained the plea to the jurisdiction as to all of the appellees.
Section 2.08(a) of article 5.76-2 of the Texas Insurance Code provides that an insured aggrieved by an act or decision of the facility (TWCIF) may appeal to the board (the State Board of Insurance, as per section 1.01(1) of the same article) not later than the 30th day after the affected party had actual notice that the act occurred or the decision was made. Neither of the appellants made such an appeal.
The appellants contend in point of error number one that the trial court erred in sustaining the appellees' pleas to the jurisdiction because the appellants were not required to exhaust their administrative remedies. They argue that their claims are outside the authority of the Insurance Board to adjudicate and consequently they are not required to exhaust their administrative remedies as to those claims.
Article 5.76-2, section 2.08(a) of the Texas Insurance Code provides an administrative remedy for an insured that is aggrieved by an act or decision of the facility. In addition to their claims that the Board of Insurance has no jurisdiction, the appellants have claims regarding the amount of the premium they were charged, and, in the case of Metromarketing, whether a premium was due at all, over which the Board of Insurance does have jurisdiction. We also note that the resolution of those issues might well determine the remainder of the appellants' claims. Where, as here, the administrative remedies are available for a portion of the plaintiff's claims and the resolution of that portion of the claims may be determinative of the claims over which the administrative body has no jurisdiction, the trial court does not have jurisdiction over the claims outside the jurisdiction of the administrative body until the plaintiff has exhausted its administrative remedies with respect to the claims over which the administrative body does have jurisdiction. See Producers Assistance Corp. v. Employers Ins. of Wausau, 934 S.W.2d 796, 801 (Tex.App.Houston [1st Dist.] 1996, no writ). Because the appellants chose not to exhaust their administrative remedies, the trial court did not err by granting the appellees' pleas to the jurisdiction and dismissing the appellants' claims.
The appellants rely on this court's opinion in Montgomery v. Blue Cross & Blue Shield of Texas, Inc., 923 S.W.2d 147 (Tex.App. Austin 1996, writ denied), and on Northwinds Abatement, Inc. v. Employers Insurance of Wausau, 69 F.3d 1304 (5th Cir.1995). In Montgomery, this Court overruled in part its prior opinion in Testoni v. Blue Cross & Blue Shield, 861 S.W.2d 387 (Tex.App.Austin 1992, no writ) and held that it was unnecessary to file extracontractual causes of action at the agency level and that res judicata did not bar an action in district court based *537 upon those claims. Montgomery, 923 S.W.2d at 152. This ruling was based upon the agency's lack of jurisdiction to consider such claims. Id. at 151-52. In Northwinds, the Fifth Circuit held that the claims over which the administrative body did not have jurisdiction would be abated while the plaintiff pursued its administrative remedy with respect to those portions of its claim that the administrative body was empowered to adjudicate. Northwinds, 69 F.3d at 1311.
We find neither of these authorities to be inconsistent with our opinion in this case. In both Montgomery and Northwinds, the plaintiffs pursued their administrative remedies with respect to those portions of their claims that the agency had the authority to adjudicate. Montgomery, 923 S.W.2d at 148; Northwinds, 69 F.3d at 1309-10. In Montgomery, dismissal was not in order because such claims had been pursued and settled. Montgomery, 923 S.W.2d at 148. In Northwinds, abatement, rather than dismissal, was appropriate because Northwinds was pursuing its administrative remedy as to such claims while also pursuing its extra-contractual claims in district court. Northwinds, 69 F.3d at 1309-10. In the case at bar, dismissal is in order because the appellants did not pursue their administrative remedies as to those claims that the Board of Insurance could have adjudicated, thereby depriving the district court of jurisdiction over their additional claims.
We note that the court in Producers Assistance also considered both Montgomery and Northwinds in its opinion. See Producers Assistance, 934 S.W.2d at 800-01. We overrule point of error number one.
The appellants urge in point of error number two that the Harris County district court erred in granting the appellees' motion to transfer venue from Harris County to Travis County. Our record does not include the pleadings before the Harris County trial court when it granted the motion to transfer venue and plea to the jurisdiction, nor a statement of facts, if any. Consequently, nothing is presented for review. We overrule point of error number two.
The order dismissing the appellants' causes of action against the appellees is affirmed.
NOTES
[*] Before John G. Hill, Chief Justice (former), Court of Appeals, Second District of Texas. Sitting by assignment. See Tex. Gov't Code Ann. § 74.003(b) (West 1988). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1131727/ | 262 So. 2d 339 (1972)
261 La. 1110
Theodora Milloit POOLE and Weldon W. POOLE, Plaintiffs-Appellees-Respondents,
v.
William J. GUSTE, Jr. and Roy F. GUSTE Defendants-Appellants-Relators.
No. 51422.
Supreme Court of Louisiana.
May 1, 1972.
Rehearing Denied June 5, 1972.
*340 William McM. King, Covington, for defendants-applicants.
Robert L. Kleinpeter, Baton Rouge, Marian Mysing Livaudais, F. Pierre Livaudais, Covington, for plaintiffs-respondents.
TATE, Justice.
The essential issue concerns the plaintiffs', the Pooles', claim that their estate enjoys a servitude of drain into and through a canal which is on the adjacent property of the defendants, the Gustes.
The Gustes built levees which both previous courts found prevented the flow of the surface water from the Poole property into the canal on the Guste property. Upon finding that the Poole estate was owed a servitude of drain by the Guste estate, the trial court issued a mandatory and prohibitory injunction ordering the defendants Guste to cease obstructing the drainage and to remove their levees in two places. The court also awarded damages. The court of appeal affirmed. 246 So. 2d 353 (1971).
We granted certiorari, 258 La. 760, 247 So. 2d 861 (1971), primarily because we felt that the case might present significant issues as to the modification, Civil Code Articles 752, 795, of a natural servitude of drain, Civil Code Article 660, and as to the creation of a conventional servitude of drain by either the ten- or the thirty-year acquisitive prescription, Civil Code Articles 765, 3504. Under the present facts and pleadings, however, these issues are not presented by this litigation. The issues remain principally factual and, as we shall note, were correctly resolved by the previous courts.
As the excellent analysis of the evidence by the previous courts shows in more detail, the preponderant evidence proves the following relevant facts:
1. The parties own adjacent tracts of land.[1] Relevantly to present purposes, the Pooles (plaintiffs) own Section 30, and the Gustes (defendants) own Section 29. The Poole Section 30 is west of the section line boundary, and the Guste Section 29 east of it.
2. In 1916, by agreement of the ancestors in title of the parties, the "Dendinger Canal" was constructed, approximately 30 feet wide and 6 or 7 feet deep. Pertinently to present purposes, it is situated in the Guste land, just east of the section line between Section 30 (Poole) and Section 29 (Guste). This north-south canal empties at its south end into the Main (or Bedico) Canal. The latter flows east-west and empties into streams which eventually flow into Lake Pontchartrain, which is 1 to 2 miles below the present tracts.
3. Prior to the construction of the Dendinger Canal, the natural drainage of the surface waters on the portion of the Poole tract in Section 30 was southeasterly into and across the Guste property in Section 29. This drainage was of rainwater, other waters draining onto the Poole property *341 from the north, and tidal overflow water. (The latter, at high tide, after the Canal was built, flowed onto the Poole land from the south (through the Dendinger Canal) and from the west (from a natural creek.) When the tide ebbed, the waters then drained southeasterly from the Poole land into the Dendinger Canal.[2]) As the trial court noted, a reasonable inference from the evidence is that much of this pre-Canal drainage occurred at a draw or natural drain at a place we designate as the "bridge site". (This place of drain is more particularly designated in the trial court judgment.)
4. The Dendinger Canal was constructed in accordance with a written agreement in 1916 by the ancestors in title of both parties. By this agreement, the canal was constructed within Section 29 (Guste) for the purposes of affording the Pooles' predecessor in title (Dendinger) the free use of the canal to transport timber down the canal for a period of (only) ten years, i. e., until 1926. The evidence further shows that this agreement was not renewed and that, in fact, the predecessor owner of the Poole estate ceased using the the canal for timber-floating purposes after 1924. From 1924 on, the sole function of the canal was for drainage purposes (aside from its occasional use for fishing and recreation by members of the public).
5. After the construction of the Dendinger Canal in 1916, the principal change in drainage was that surface waters from the Poole tract flowed into and down the canal instead of across the surface of the Guste land. The drainage into the Dendinger Canal occurred principally at the place called the "bridge site" or "the gap".[3]
(When the Dendinger Canal was dug, the dirt was thrown on the west bank of the canal, forming a "spoil bank". When the canal was constructed, a gap was left in this spoil bank; when a road was constructed on top of the spoil bank, a bridge was built at this gap. The gap left a clear avenue of drainage from the Poole property into the Dendinger Canal, the spoil bank preventing southeasterly drainage formerly occurring at other places along the boundary section line.)
6. In 1965, the defendants (who had purchased the property in 1959) constructed a 7' high, north-south levee along the section line between Sections 29 and 30 (i. e., between the Poole property and the Dendinger Canal). This levee used the old spoil bank as a base; but, in constructing the levee, the Gustes filled in the gap at the bridge site through which water had formerly drained from the Poole land, thus completely blocking off the latter's property from the Dendinger Canal. (Actually, in building the levee, the Gustes constructed it partially on Poole property.)
The Dendinger Canal remained, but the Gustes now use it as part of their internal drainage system for the improvement of their tract for use in intensive agricultural cultivation. A levee was also constructed across the south end of the Dendinger Canal, closing it off where it had formerly emptied into the Main (Bedico) Canal.[4] (The Gustes did so in order to prevent the tidal flow of water from that canal into their property. A new interior canal was dug was just inside of and parallel to this south levee to facilitate the internal drainage of this improved tract.)
*342 Under the well-supported findings of fact by the trial and intermediate courts, these courts correctly found that the estate of the plaintiffs Poole enjoys a servitude of drain onto the estate of the defendants Guste and through it (via the Dendinger Canal) to the Main (or Bedico) Canal to the south of both properties. The servitude due by the Guste estate to the Poole estate is in part a natural servitude of drain, Civil Code Article 660, and in part a "conventional" servitude of drain acquired by acquisitive prescription,[5] Civil Code Articles 709 and 765 or 3504.
A natural servitude of drain is due by a servient (or "below") estate to receive the waters which run naturally from a dominant (or "above") estate, Civil Code Article 600.[6] A conventional servitude of drain (the right "of passing water collected in pipes or canals through the estate of one's neighbor", Article 714) may be created by contract, Article 709, or, being continuous[7] and apparent,[8] may be acquired by prescription.[9]
In the present case, the Poole estate is owed a conventional servitude of drain onto the Guste estate at the bridge site and through the Dendinger Canal on the Guste property. This results from drainage into the canal at this point, and the canal's use for this purpose without title, for a period well in excess of thirty years before the construction, in 1965, of the Guste levees which obstructed the Poole drainage into and through the Guste estate. This servitude was, at the least, acquired by the thirty-years' acquisitive prescription provided by Article 3504 (quoted in Footnote 9).
In so holding, we expressly do not determine:
(1) Whether the period of thirty years' prescriptive use necessary for acquisition under Article 3504 commenced in 1916, when the canal was first used for drainage *343 purposes (although expressly created for timber-floating purposes only),[10] or instead in 1926, when the contractual right of the Poole estate to use the canal (i. e., for timber-floating purposes) terminated;[11]
(2) Whether the conventional servitude acquired by prescription might, also, have been acquired under Article 765 by the ten-years' simple unopposed and uninterrupted use following termination of the timber-floating servitude in 1926, see Levet v. Lapeyrollerie, 39 La.Ann. 210, 1 So. 672 (1887) and decisions cited in Footnote 9, or whether, since use was without title, thirty years' acquisitive use under Article 3504 was required,[12] Comment, Acquisitive Prescription of Servitudes, 15 La.L.Rev. 777 (1955);[13]
*344 (3) To what extent the servitude of drain from the Poole property onto the Guste estate at the bridge site is a natural servitude of drain under Article 660 (being the use of a natural drainwhich, at least before the Dendinger Canal spoil bank, was not created by the industry of man) through which surface waters were passed onto the Guste estate, not increased in volume (although some waters were perhaps diverted into drainage at that point rather than at others nearby), Nicholson v. Holloway Planting Co., 255 La. 1, 229 So. 2d 679 (1969), Broussard v. Cormier, 154 La. 877, 98 So. 403 (1923); and to what extent, if any, such more burdensome use of the natural servitude of drain exceeded or was contrary to it, Articles 660, 790, Planiol, Civil Law Treatise, Volume 1, Section 2903 (Louisiana State Law Institute Translation, 1959), so as to alter it or substitute for it a conventional servitude created by acquisitive prescription, Articles 765, 790, Johnson v. Wills, 220 So. 2d 134 (La.App.3d Cir. 1969), certiorari denied 254 La. 132, 222 So. 2d 883 (1969), noted 30 La.L.Rev. 192-93 (1969).
We should at this point note that we find no support in the Civil Code, the jurisprudence, or the commentators for the contentions of the defendants Guste (a) that the timber-floating servitude of 1916 cannot be enlarged beyond its original use by acquisitive prescription, nor that (b) the Poole land cannot be the dominant estate and the Guste property the servient estate unless we find that overall (i. e., as between the 5000-acre Guste tract and the 2000-acre Poole property), irrespective of individual patterns along particular points of the boundary, one estate is upper to the other.[14]
Having found the Poole estate is due a servitude of drain by the Guste estate, the previous courts correctly held the plaintiffs Poole, as owners of the dominant estate, to be entitled to injunctive relief requiring the defendants Guste, as owners of the servient estate, to remove the obstacles they had erected to the drainage of waters from the dominant through the servient estate. Articles 660, 777. See Sowers & Jamison v. Shiff, 15 La.Ann. 300 (1860); Leonard v. Kleinpetre, 7 La.Ann. 44 (1852); Hays v. Hays, 19 La. 351 (1842); Johnson v. Wills, 222 So. 2d 134 (La.App. 3d Cir. 1969), certiorari denied 254 La. 132, 222 So. 2d 883 (1969).
The trial court thus correctly granted a mandatory injunction ordering the Gustes to remove their levees at (1) the bridge site leading from the Poole tract onto the Guste tract and (2) at the south end or mouth of the Dendinger Canal (since otherwise the Dendinger Canal would not drain the Poole property as before.)[15]
The defendant Gustes further contend that, even if the Poole property is due a *345 servitude of drain by the Guste estate, the plaintiff Pooles are not entitled to the equitable remedy of injunctive relief. The defendants' argument is based upon limitations to the remedy of equity recognized in common-law jurisdictions,[16] based on the historical use in them of injunctions by the chancery court where the damage-remedy in the regular courts was inadequate. Cf. James, Civil Procedure, Section 1.4 (1965). These doctrines are not necessarily applicable to Louisiana, with its different civilian procedural background, and where the injunction has historically been recognized as a remedy available to protect possession of property, cf. La.C.Civ.P. Art. 3663(2), including (see cases previously cited) the continued use of a servitude of drain over another's land.
In further urging that injunction does not lie, the defendant Gustes likewise suggest that equity does not require the issuance of a mandatory injunction which would compel them to spend large sums of money to remedy their disturbance of the Poole drainage. Young v. International Paper Co., 179 La. 803, 155 So. 231 (1934), cited in support, held that, where negligible further harm would be caused by reason of continuing drainage of wastes into a servient estate (whereas to cease such waste would cause the industrial plant to close and thus cause grossly disproportionate hardship to the drainor), injunctive relief would be denied. See also Adams v. Town of Ruston, 194 La. 403, 193 So. 688.
The relegation of a landowner to compensatory damages instead of to injunctive relief for violation of his property right was permitted, so far as we know, in only the two cited cases concerning very exceptional situations, 27 La.L.Rev. 440 (1967), 22 La.L.Rev. 316 (1962), 3 La.L.Rev. 281-82 (1941), and never so as to deny protection of a servitude due by a servient estate to a dominant estate. See Esnard v. Cangelosi, 200 La. 703, 8 So. 2d 673 (1942), noted 5 La.L.Rev. 141 (1941). In any event, the substantial damage here caused the dominant Poole estate by the blocking of drainage from it, and its substantial interference with the right of the Pooles to use their own property for their own purposes (the profitable growing of timber), Article 667, make inappropriate any consideration here of whether such a balancing of the equities is ever permissible to deny an owner protection of his property right by, in effect, granting his offending neighbor the right to pay damages instead of terminating such neighbor's continuing disturbance.
We further find unsupported by any authority the defendant Gustes' contentions (a) that recognizing the property rights of the owners of the dominant estate (thus causing them to lose at least some of the most profitable use of their own servient estate) violates due process or equal protection guarantees of the state and federal constitutions, (b) that they are entitled to cause this damage to the Poole estate in *346 order to protect their own (the Guste) property from tidal flow,[17] and (c) that the Pooles should be denied relief because, by their improving and reconstructing a rice irrigation canal (the Peters Canal) on their own property, they could furnish proper drainage from their own property instead of through the Guste property as they were entitled because of the servitude of drain.
The court of appeal affirmed the trial court award to the plaintiffs Poole of $4,511.37 for timber damages sustained through the obstruction of the drainage. We find no error in this award, under the facts set forth in the opinions of the previous courts, and in their finding that suit for such damages was timely brought within a year of the time the Pooles learned of the damage, Article 3537.
For the foregoing reasons the judgments of the trial court and of the court of appeal are affirmed. The defendants are to pay all costs of these proceedings.
Affirmed.
SUMMERS, Justice (dissenting).
Many important factual aspects of this case have not been mentioned in the majority opinion. After the use of the canal for floating logs was discontinued in 1924, the canal became clogged to such an extent in places that cattle could walk across it. It served no drainage function at the time relators acquired the property in 1959. One of the Poole witnesses agreed with this. He said the only flow water in the canal at the time the levee was built consisted of tidewater and standing water caused by rain falling directly into the canal.
This fact, in my opinion, destroyed any servitude of drainage, if one was in fact ever acquired. A servitude of drain is not such unless it serves a drainage function.
What has not been emphasized in the majority opinion, and what is of such overriding significance in this case, is the fact that the greatest part of the lands involved are tidal overflow lands. A detailed investigation of the land and a review of the tidal overflow history of the area, including past hurricane surges, revealed that during the years 1961-1965, the lands involved were subject to flooding on 237, 195, 148, 218 and 259 days for each of the respective years. A protection levee with a crown elevation of 6 or 7 feet was recommended.
It was established by uncontradicted expert testimony that to open the levee system at the points ordered by the trial court and court of appeal would open the Guste property to flood water and render it useless, or by moving the levee at an expenditure of $50,000 flooding could be avoided.
At the same time, unimpeached expert testimony established that a canal on the Poole property called the Peters Canal, immediately adjacent to the float-road canal, would perform the identical function as the float-road canal since it too opened to the Bedico Canal and thence to Lake Pontchartrain, if only the Pooles would open their own unused Peters levee at one point. But the court of appeal and this Court refused to recognize this fact or require the Pooles to alleviate a problem partially of their own making. Because of the refusal of the Pooles to open this levee at nominal costs, 5,000 acres of Guste property must remain unproductive or the expenditure of $50,000 is necessary. I fail to see the equity of this result. Adams v. Town of Ruston, 194 La. 403, 193 So. 688 (1940); Young v. International Paper Co., 179 La. 803, 155 So. 231 (1934).
*347 Important, too, is the fact that no court has reached a conclusion as to the over-all dominance between the two estates. Rather their opinions seem to be concerned more with individual points along the boundary line between the Poole and Guste properties.
Article 660 of the Civil Code is concerned with servitudes which originate from the natural situation of the places and prescribes:
It is a servitude due by the estate situated below to receive the waters which run naturally from the estate situated above, provided the industry of man has not been used to create the servitude.
The proprietor below is not at liberty to raise any dam, or to make any other work, to prevent this running of the water.
The proprietor above can do nothing whereby the natural servitude due by the estate below may be rendered more burdensome.
This article of the code as interpreted by this Court in Broussard v. Cormier, 154 La. 877, 98 So. 403 (1923), and more recently in Nicholson v. Holloway Planting Co., 255 La. 1, 229 So. 2d 679 (1969), convinces me that the over-all dominancy between two large estates is the controlling factor and not isolated points of drainage disproportionately small to the whole property. Where these isolated points create drainage problems the proprietor above (assuming the Poole property to be the superior estate) should be compelled to adjust the drainage within his estate and absorb the problem within the estate itself. He should not be permitted to impose upon his neighbor such a hardship as this case presents.
Visual inspection, upon which reliance was placed, is not reliable where the question of drainage concerns large, flat, tidal overflow, marshy areas. The only reliable testimony in these cases is duly qualified expert opinion based upon detailed evaluation studies and other supporting data. The only testimony in this latter category was expressed by Robert Berlin, surveyor admitted by the Pooles to be "eminently qualified," who was shown to be an expert in the use and interpretation of aerial photography.
He undertook an over-all drainage study, in the course of which he prepared one large aerial photograph whereon he superimposed the elevation data and general direction of drainage of the two properties. In his opinion the Guste estate was the dominant estate and the direction of drainage was south and westerly. By contrast, the surveyor presented on behalf of the Poole interest was never asked which estate was dominant. His testimony concerned drainage at isolated points along the boundary.
In these circumstances the Guste property as the dominant estate owes no obligation to the Poole property except to "do nothing whereby the natural servitude due by the estate below may be rendered more burdensome." La.Civil Code art. 660. This the Gustes have not done. To the contrary they have relieved the Poole property of any water flow from the Guste property.
Even assuming that the Guste property is the servient estate, the exceptional circumstances of this situation demand a contrary result. In Mailhot v. Pugh, 30 La.Ann. 1359 (1878), the defendant conceived a plan for the defense of his plantation from floods which this Court considered intelligent and systematic. He wanted, and sought, the cooperation of the neighboring plantation owner in the construction of a common system of protection levees but the plaintiff refused, just as the facts of this case disclose that the Gustes sought the cooperation of the Pooles. Defendant then built a protection levee between the two estates and plaintiff sued for damage to his crop caused by the water the levee threw back on his property. In this context the broader question of the servitude *348 of drain owed to an upper estate was presented. Our predecessors, relying upon Dalbon contre Graveson of the French tribunals, quoted from that decision, saying:
The owner of the lower ground has the right to build dikes or other works to guarantee his property against innundation, even though he aggravates thereby the damages which may be caused to the superior proprietor. (Translation supplied.)
The Court then observed that the French court in its opinion explains that the principles governing such cases are different from those regulating natural servitudes, and that works to guard against innundations of one's property from floods or torrents (hurricane surges) are regulated by other principles than those which regulate natural servitudes (La.Civil Code art. 660). Every one can preserve his property from floods even though the works will surely damage his neighbor, the court continued on French authority. Journal du Palais, 1813, p. 384; Duvernoy contre Sampso, Idem.1861, p. 888.
Quoting from Chardon, treating the obligations of the proprietor, the court recognized that all works may be executed which are judged appropriate to guard properties, against flood disasters whether it be by dikes or other structures. And the failure of the neighbor to do likewise makes his damage due to his indolence and not to the vigilance of the proprietor who erects protective works.
Summarizing, the court noted:
So Demolombe, reiterating what had been taught by his predecessors with striking unanimity, that a proprietor has a right to protect himself from damage by an overflow by the erection of works of his own land, even though they should cause the overflow to be more hurtful to his neighbor.
Demolombe was again quoted. He observed that it was inconceivable that the law would impose upon proprietors the obligation to let their property be damaged by floods without being able to do anything about it. These principles, he wrote, which allow the proprietor to protect his lands conform with reason and equity and have always been recognized in the ancient Roman and French jurisprudence and were at that time consecrated by unanimous accord. Tome 11, No. 30.
What these authorities so wisely expound is that the law of drain servitude does not and cannot apply to flat marsh and swamp where tide is the prevailing cause of water flow. The reason for this should be obvious. Tidal waters alternately rise and fall. Consequently these waters run both ways, in and out of the lands so affected. Drainage laws on the other hand were enacted to govern the flow of water in one direction. The rule of Article 660 cannot apply to lands periodically and so frequently subject to overflow and innundation by storm and tide.
The vast reaches of lowlands, swamp and marsh which dominate the coastal regions of Louisiana can never be protected against the frequent surges of hurricanes or the ravages of floods by wind or tide and turned to agricultural or industrial uses under the narrow view the Court articulates today. It is an unrealistic application of the law detrimental to a substantial area of our State. Despite the fact that this case lends itself so well to the sound rule of law expounded by the jurisconsults and tribunals of France, no reference to that position has been made by the majority.
I respectfully dissent.
NOTES
[1] The Guste tract includes about 5000 acres and is being developed for intensive-cultivation agricultural purposes. The Poole tract includes about two thousand acres. Its principal use in the area of present interest is for the growing of timber on "pine islands", naturally elevated portions of the property. The Poole complaint is that the interference with drainage of these islands has adversely affected the production of timber.
[2] The excess waters from the west, forced over ridges in the Poole property at high tide, could not return westerly because of the ridges.
[3] The trial court injunction ordered the Guste levee opened at the site of this former gap, and it further ordered the south end of the Dendinger Canal opened so that water flowing into the Dendinger Canal could flow out of it into the Main (Bedico) Canal. As the text of the opinion shows, both of these openings were closed by the defendants when they constructed their levee.
[4] The trial court injunction ordered the new levee opened at this point, too. See Footnote 3.
[5] Our Civil Code classifies predial (or "landed" or "real") servitudes, Article 646, as (see Article 659) 1. "natural" (arising from the natural situation of places, Article 660-663). 2. "legal" (specific obligations imposed by law, Articles 664-708), and 3. "conventional" (or "voluntary", i. e. one growing out of an act or inaction of man, Articles 709-822). See Planiol, Civil Law Treatise, Volume 1, Section 2891 (Law Institute translation, 1959). A servitude acquired by prescription is, technically, a "conventional" servitude because its creation is governed by the provisions of the chapter entitled "Of Conventional or Voluntary Servitudes". Articles 709, 765. See Yiannapoulos, Predial Servitudes, 29 La.L.Rev. 1, 43 (1968).
[6] Civil Code Article 660 provides:
"It is a servitude due by the estate situated below to receive the waters which run naturally from the estate situated above, provided the industry of man has not been used to create that servitude.
"The proprietor below is not at liberty to raise any dam, or to make any other work, to prevent this running of the water.
"The proprietor above can do nothing whereby the natural servitude due by the estate below may be rendered more burdensome."
[7] See Civil Code Article 727:
"* * * Continuous servitudes are those whose use is or may be continual without the act of man. Such are aqueducts, drain, view and the like. * * *" (Italics ours.)
[8] See Civil Code Article 728:
"* * * Apparent servitudes are such as are to be perceived by exterior works such as a door, a window, an aqueduct * * *" and such as a canal.
[9] See Civil Code Article 765:
"Continuous and apparent servitudes may be acquired by title, or by a possession of ten years. * * *"
See Civil Code Article 3504:
"A continuous apparent servitude is acquired by possession and the enjoyment of the right for thirty years uninterruptedly, even without a title or good faith."
See also: Levet v. Lapeyrollerie, 39 La.Ann. 210, 1 So. 672 (1887); Wild v. LeBlanc, 191 So. 2d 146 (La.App.3d Cir. 1966); Hale v. Hulin, 130 So. 2d 519 (La.App.3d Cir. 1962). Cf., Acadia Vermillion Rice Irrigating Co. v. Broussard, 175 So. 2d 856 (La.App.3d Cir. 1965), noted 40 Tul.L.Rev. 397.
[10] There is French authority that, when a servitude is accorded by title, the owner of the dominant estate may nevertheless claim a different or more extensive servitude by its possession of thirty years or more. (The possession of a servitude is, generally, the "use" made of the servitude. Civil Code Article 743 and interpretative jurisprudence, such as John T. Moore Planting Co. v. Morgan's Louisiana & T. R. & S. S. Co., 126 La. 840, 53 So. 22 (1910).) See 2 Toullier, Droit Civil Francais (1833 edition) (Italics ours.):
P. 186: "Possession of a servitude of drain commences on the day in which the necessary works for the qualification of the right and for its exercise are completed. It does not suffice that, since time immemorial, the waters originating in the estate above pass into the estate below. This natural flow does not presuppose, does not establish any right, other than that directed against the owner of the lower estate to receive the waters.
"But if he makes, either on his own estate, or in the estate above, apparent works destined to facilitate the flow and the course of these waters in order to render them useful for his property, these works manifest an intention to acquire a right, and the prescription begins to run from the day the works are completed. And, if possession has been continued without interruption for thirty years, a servitude has been acquired."
P. 206: "If I enjoyed a more extensive right than that accorded to me by title, if I have done more than what I was allowed to do, I have in all cases preserved my right: the more is included in the less. But I have not prescribed for the more, and I may be always forced to decrease the use of the servitude, unless the servitude is continuous and apparent, prescriptible without title."
P. 107: "If my title gives to me the right to draw water during the night only, and I used it during the day only, my right has prescribed; and I did not acquire the right to draw water during the day, because the servitude is discontinuous.... But if, instead of a right to draw water there was an acqueduct, or any other continuous and apparent servitude, by losing the right limited by my title, I would have acquired another right by possession of thirty years."
Cf., Civil Code Article 797 (quoted in Footnote 11) which might be interpreted to mean that the owner of a servitude cannot acquire prescriptive title for more extensive use than justified by the title, except in the case of a continuous apparent servitude (such as the present); also, Article 800.
[11] Cf., Civil Code Article 736 (one using a servitude pursuant to title cannot avail himself of prescription). See also Civil Code Articles 790 and 791 (which, although speaking of prescriptive extinguishment through non-usage, refer to acts "contrary to the servitude" as indicating non-use thereof) and Civil Code Article 797: "If he to whom a servitude is due enjoys a right more extensive than that which is given him by the act establishing the servitude, he will be considered as having preserved his right of servitude; because the less is included in the greater.
"But he can not thus prescribe for the surplus, and can be compelled to confine himself to the exercise of the servitude granted by his title, unless it be a continuous apparent servitude, which he has acquired by prescription."
[12] But see Kennedy v. Succession of McCollam, 34 La.Ann. 568 (1882) (good faith use without title is all that is required).
[13] If the cited Kennedy decision (Footnote 12) is correctly decided, it may well be that the thirty-year prescription of Article 3504 is reserved for bad-faith use of continuous, apparent servitudes without any title at all, or for prescriptive acquisition of such servitudes by use more extensive than that granted by a contractual servitude, see Footnote 10.
[14] In making the (b) contention, the Gustes point out that in the northern parts of the two estates some of the Guste waters drain onto the Poole properties. This water is eventually drained back onto the Guste property at the bridge site. As the trial court noted: "The relevant question is which way the water ultimately left the Poole property". Since the water drained from the Poole land through the gap at the bridge site into the Dendinger Canal, the Poole estate enjoyed a servitude of drain onto the Guste land at that point, as previously held. See also Civil Code Article 746, which recognizes that reciprocal conventional servitudes may exist between two estates; likewise, by analogy, so may reciprocal natural servitudes.
[15] In the conference of this court, it was suggested that, by adequate pumps or other means (such as re-routing the waters through the Guste property), the Gustes might without removing their levee at the mouth of the Dendinger Canal, nevertheless still receive the drainage of the waters from the Poole tract. See Civil Code Article 777 and, e. g., 31 La.L.Rev. 216 (1971). Since such relief was not requested before this or the previous courts, we do not discuss it, there further being insufficient evidence as to these alternatives. Implicit in our affirmance is the right of the Gustes to secure modification of the servitude from the trial court, providing the Poole servitude of drain is fully recognized and no other rights are adversely affected. See Civil Code Article 777.
[16] Because the Pooles forcibly opened the levees to drain their lands while the litigation was pending, the defendants suggest, for instance, that relief should be denied under the "clean hands" doctrine of equity in common-law jurisdictions, i. e., that one himself guilty of an evil practice should be denied injunctive relief. Although the doctrine was referred to in Rhodes v. Miller, 189 La. 288, 179 So. 430 (1938), it was nevertheless there held that the plaintiff's own wrongful conduct did not bar him from a suit for annulment of marriage. City of New Orleans v. Levy, 233 La. 844, 98 So. 2d 210 (1957) is also relied upon by the defendants Guste; this simply holds that the courts will not sanction unjust and illegal discriminatory enforcement of zoning (Vieux Carre) ordinances and will, in those cases, refuse misuse of injunctions.
[17] The defendants rely on Mailhot v. Pugh, 30 La.Ann. 1359 (1878). This decision concerned an extraordinary flood and an exceptional and pressing emergency in which tort recovery was denied because of the plaintiff's contributory negligence. The decision is factually and legally distinguishable. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1132149/ | 448 So. 2d 681 (1984)
Isabel MITCHELL
v.
Willie CLARK, Jr. et al.
No. 83-C-1204.
Supreme Court of Louisiana.
February 27, 1984.
Rehearing Denied March 23, 1984.
*683 C. William Gerhardt, Shreveport, for applicant.
Barry G. Feazel, S. Judd Tooke, Walker, Feazel & Tooke, Shreveport, for respondents.
W. Orie Hunter, Jr., in pro. per.
DIXON, Chief Justice.
Isabel Mitchell brought this suit against Willie Clark, Jr., her nephew, and W. Orie Hunter, Jr., Clerk of Court of Caddo Parish, to have Hunter directed to change the conveyance records to show Mitchell as the owner of a piece of immovable property instead of Clark, as the record now appears.[1] Mitchell alleges that she is the true owner of the property and has been since its purchase from Harriet Holmes in 1958.
Over defendant's pretrial exception and objection at trial, the trial judge admitted evidence pertaining to Mitchell's ownership of the property. Following Cosey v. Cosey, 376 So. 2d 486 (La.1979), the trial judge held that neither Mitchell nor Clark were bound by the authentic act transferring the property because neither had signed that authentic act, and found that Mitchell had paid the purchase price for the home and had paid the taxes and all other costs relating to the property. He ordered the clerk to transfer the property into Mitchell's name.
The court of appeal reversed, sustaining the defendant's exception of no cause of action, and held that parol evidence was not admissible to prove Mitchell's title.
Isabel Mitchell negotiated with Holmes (who lived in Kansas City) for the purchase of a piece of immovable property located at 1718 Rex Street, Shreveport, Louisiana. She presented the sum of $1200.00 cash to an agent of Holmes as the purchase price, and specifically stipulated that Willie Clark be named the vendee.
Holmes, acting on Mitchell's instructions, executed a deed in authentic form conveying the property to Willie Clark, a single man who lived in Atlanta, Georgia. Neither Clark nor Mitchell signed the authentic act. Clark did not even know of the transaction. The deed was recorded in the Caddo Parish Conveyance Records on July 9, 1958.
Since that sale, Mitchell has paid all expenses related to ownership of the home, has made improvements to the home and has lived in the same as her own. Clark did not learn that he was the beneficiary of this sale until some time in 1981. It was then that he sought to occupy the home as owner, prompting this action by the plaintiff.
In response to Mitchell's petition to have the vendee's name changed from Clark's to hers, Clark filed an exception of no cause of action. He stated that Mitchell's petition failed to allege any fraud, error or counter letter which would permit parol evidence to be adduced at trial in attacking an authentic act. He argued that Mitchell was precluded from offering parol evidence to create title in one who never owned the land, and that she had no case without the parol. The exception was overruled.
The defendant did not appear at trial, but was represented by counsel. He objected *684 to the admission of parol evidence, but the objection was overruled. The judge treated the defendant's absence at trial, and consequent failure to testify, as a confession under oath that the allegations of the plaintiff's petition were true. Because a verbal sale of an immovable is recognized when confessed under oath, provided actual delivery has been made (C.C. 2275),[2] the trial judge recognized Mitchell as the true vendee and ordered Hunter to transfer the property into her name.
When a witness known to the defendant in a civil proceeding is not called by the defendant to testify, our courts have inferred or presumed that the witness would not have testified in favor of the defendant. Bates v. Blitz, 205 La. 536, 547, 17 So. 2d 816, 820 (1944). The trial judge was allowed to presume, by the defendant's absence, that his testimony would not support his own case, but he was in error to give this rebuttable presumption the effect of a judicial confession. Crawford v. Deshotels, 359 So. 2d 118, 122 (La. 1978).
Clark took a devolutive appeal. A five judge panel, with one judge dissenting, reversed and sustained the exception of no cause of action. Mitchell v. Clark, 431 So. 2d 817 (La.App.1983). The court of appeal was convinced that parol evidence should not be admitted to prove title in one who never had title. It quoted Barbin v. Gaspard, 15 La.Ann. 539, 540 (1860): "... plaintiff claims title ... by virtue of a sale, but is without any evidence in writing, ... and relies on testimonial proof to establish her demand. Evidence of this kind is insufficient to establish title ..."
Mitchell then sought review by this court.
The trial judge correctly denied Clark's exception of no cause of action, and correctly permitted Mitchell to produce whatever documents that might support her position. Mitchell was a party to the transaction that resulted in naming Clark the vendee of the Rex Street property, but Mitchell was not a party to the authentic act by which the property was actually transferred. Clark was a party neither to the transaction nor the act. Written evidence, therefore, was admissible.
But the trial judge should not have permitted the oral or testimonial proof of any facts relating to the land purchase because this litigation concerns the ownership of an immovable whose sale was effected by a written act. No mutual error in the description of lands is claimed. Nor is this an action by a vendor who alleges fraud or error, or by an heir or a creditor who argues that no sale has taken place and that the property remains in the vendor's estate.
By paying the purchase price, Mitchell had a right to demand that a deed translative of title be executed in her favor; she chose, instead, to have the property transferred to her nephew. The property was conveyed in accordance with the plaintiff's instructions. She brings this action not based on error, but based on a change of mind.
Mitchell contends that when she paid the purchase price, she intended that Clark have the property only after her death. She had the property put into Clark's name to ensure that he received it without the expense and bother of succession proceedings. "A gift during the life of the donor, not to take effect until after the death of the donor and not in the proper form for a donation mortis causa, is a donation causa mortis reprobated by the law of this state." Succession of Simpson, 311 So. 2d 67, 73 (La.App.1975), writ denied, 313 So. 2d 839 (La.1975); Succession of Sinnott v. Hibernia National Bank, 105 La. 705, 715, 30 So. 233, 238 (1901); see C.C. 1467, 1469, 1570.
*685 Both lower courts were correct in determining that Mitchell's gift was not in proper form to have its desired effect. It lacked the formality required of a donation of an immovable inter vivos, and was the reprobated donation causa mortis not honored under our law. C.C. 1467. Mitchell's intention, to own the property during her lifetime and then convey it automatically by her death, could not be satisfied.
In two separate articles the Civil Code requires a writing to transfer immovable property. "Every transfer of immovable property must be in writing..." C.C. 2275. "All sales of immovable property shall be made by authentic act or under private signature." C.C. 2440. The writing provides reliable evidence of the parties' consent. It provides certainty and diminishes the possibility of fraud. 35 La. L.Rev. 779 (1975).
However, in the absence of a writing, a verbal sale of an immovable is effective if the delivery has been made and if the sale is confessed by the contesting parties under oath. C.C. 2275; Barbin v. Gaspard, supra. The answers of a party when interrogated under oath supply the place of written proof. Wright-Blodgett Co. v. Elms, 106 La. 150, 30 So. 311 (1901).
Louisiana courts have admitted parol evidence to show error in the description of lands when, because of accident or negligence, the instrument does not express the meaning and intention of the contracting parties. Agurs v. Holt, 232 La. 1026, 95 So. 2d 644 (1957); Palangue v. Guesnon, 15 La. 311 (1840). "The reception of parol evidence to establish a clerical error, ... is no infringement of the rule which demands that title to real estate be evidenced in writing only." Levy v. Ward, 33 La.Ann. 1033, 1035 (1881).
That action, sometimes called an action for reformation of a deed, seeks to correct the mutual error or mistake that occurred in the preparation of the instrument. The property description is changed to describe the property which the vendor intended to sell and which the vendee intended to purchase. Brulatour v. Teche Sugar Co., 209 La. 717, 25 So. 2d 444 (1946); Waller v. Colvin, 151 La. 765, 92 So. 328 (1922).
Parol evidence is admissible to invalidate a sale when the vendor was induced to sell by fraud or error. Baker v. Baker, 209 La. 1041, 26 So. 2d 132 (1946); LeBleu v. Savoie, 109 La. 680, 33 So. 729 (1903). It is also admissible to show that a sale did not take place, and that the property continues to belong to the pretended vendor. Hodge v. Hodge, 151 La. 612, 92 So. 134 (1922).
Parol evidence can be used by a creditor to bring back into the estate of the debtor property which the debtor has fraudulently transferred, as in a revocatory action. C.C. 1970. It may be used by forced heirs to annul simulated contracts of those from whom they inherit. C.C. 2239.
However, parol "... is insufficient to create a title in one who never owned the property or to show that the vendee was in reality some other person than the person named in the act of sale." Scurto v. LeBlanc, 191 La. 136, 184 So. 567 (1938); Ceromi v. Harris, 187 La. 701, 706, 175 So. 462, 464 (1937). This rule applies whether the party proffering the parol is an heir of the alleged vendee, Eberle v. Eberle, 161 La. 313, 317, 108 So. 549, 551 (1926), or a creditor of the alleged vendee, Hoffmann v. Ackermann, 110 La. 1070, 1076, 35 So. 293, 295 (1903).
It is the policy of this state that acts appearing to transfer immovable property be read and interpreted from the face of the instrument. "... there would be no security whatsoever for purchasers of real estate, if they were not entitled to rely upon the title deeds to such property, as being exactly what they purport to be." Beard v. Nunn, 172 La. 155, 159, 133 So. 429, 430 (1931).
"The courts have been unwilling to throw themselves open to a potential contest of veracities every time property is sold." 29 Tul.L.Rev. 29 (1954). "What the plaintiff alleges may be true; yet it is far better that he suffer the penalty of his own *686 negligence than that the door to fraud and perjury be thrown open and titles to real estate be rendered insecure." Hackenburg v. Gartskamp, 30 La.Ann. 898, 901 (1878).
As with any other writing, "... where a party to an authentic act alleges that he executed it through fraud or error, he is permitted to introduce parol testimony to support such allegations." Unity Industrial Life Ins. Co. v. Dejoie, 202 La. 249, 260-61, 11 So. 2d 546, 549 (1942).
But an authentic act only binds parties to the act and their representatives in suits between the parties or their representatives. Smith v. Chappell, 177 La. 311, 148 So. 242 (1933). "In any controversy, therefore, between a party to the act and a stranger, the party to the act is as free to avail himself of parol evidence for contradicting or varying the act as the stranger is...." Commercial Germania Trust & Savings Bank v. White, 145 La. 54, 58, 81 So. 753, 755 (1919).
In Cosey v. Cosey, supra, Sidney Cosey entered into a bond for deed contract during the existence of his first marriage for the purchase of immovable property. His last payment for that property was made during that marriage, but the act of sale was executed and recorded only after Cosey had divorced and remarried. During this second marriage the vendor transferred title, naming Cosey and his second wife as vendees.
After Cosey's death, plaintiff, a child of the first marriage and sole heir of Cosey, sought a judgment decreeing that the property belonged to the community previously existing between his parents and belonged to him alone. The trial judge held that the second wife was to return the property, since she had been unjustly enriched. The court of appeal reversed, finding that the property was a part of the second community. On rehearing, this court reversed and held that Cosey and his first wife had owned the property, and that the second wife, the named vendee, owned no interest in it.
Neither the plaintiff nor the defendant in Cosey had signed the authentic act transferring the property, so neither was bound by it, and either could introduce evidence to refute it. However, because the authentic act effected the transfer of immovable property, only written evidence was admissible to prove any rights with respect to the property. C.C. 2276: "Neither shall parol evidence be admitted against or beyond what is contained in the acts, nor on what may have been said before, or at the time of making them, or since."
The plaintiff in Cosey, using written evidence only, showed that the property in question had been paid for in full during the existence of the community between his parents. He did not show, however, that title to the property was transferred during the marriage, or that his mother was ever a title holder of that property.
Because the plaintiff was able to substantiate his case with written evidence receipts for payment, marriage and birth certificates, and a dated letter acknowledging payment in fullthe rule excluding parol (oral) evidence was inapplicable in the Cosey case. Cosey is distinguishable from the case now before us: (1) the land had been paid for, and the right to the deed had been acquired during the first community; (2) plaintiff Cosey was a forced heir (as noted in footnote 1 at 376 So. 2d 489) and was entitled to attack what can be analogized to a "simulated contract" (C.C. 2239) of his father.
The admissible evidence in this case establishes that Mitchell paid Holmes for the lot, and that Holmes followed Mitchell's instructions and executed a deed to Clark. The inadmissible evidence establishes that Mitchell's intentionto make a gift of immovables to take effect upon Mitchell's deathcould not be accomplished in the way attempted.[3]
*687 We cannot give relief to the plaintiff without abrogating the consistent rule of property that excludes parol evidence to prove that one not named in the deed is the real vendee.
The judgment of the court of appeal is amended and, as amended, affirmed, and there is now judgment in favor of defendants, Willie Clark, Jr. and W. Orie Hunter, Jr., dismissing plaintiff's suit at her cost.
LEMMON, J., dissents.
NOTES
[1] The relevant portions of the petition are:
"2. On July 5, 1958, the plaintiff paid cash to Mrs. Harriett Holmes, for the conveyance of certain immovable property in Caddo Parish, Louisiana; it was plaintiff's desire and intent when purchasing said property to place it in the name of the defendant, WILLIE CLARK, JR., to herself live in the property until her death and have the property go to the said WILLIE CLARK, JR., upon her death; accordingly, the property was transferred into the name "Willie Clark" by deed which is recorded at Book 839, Page 729 of the Conveyance Records of Caddo Parish, Louisiana; a copy of said deed is attached hereto and made a part hereof by reference.
3. Since said purchase, the plaintiff has paid all expenses related to the home located at the property referred to in Paragraph 2 above and has even added improvements to said home, living there since that time.
4. The said defendant, WILLIE CLARK, JR., did not learn of the home being placed in his name until 1981. At that time, he made demands upon the plaintiff to allow him to live there, which demands were rejected and he was refused access to said home."
[2] "Every transfer of immovable property must be in writing; but if a verbal sale, or other disposition of such property, be made, it shall be good against the vendor, as well as against the vendee, who confesses it when interrogated on oath, provided actual delivery has been made of the immovable property thus sold." C.C. 2275.
[3] It could have been argued that Mitchell accomplished a stipulation pour autrui in favor of Clark which became irrevocable when Clark sought to occupy the house as owner. However, such a holding is not essential to a decision ending the case. The difficulty with this case as it stands (we approve what amounts to a donation mortis causa in a "form ... abrogated" by C.C. 1570) would not be dissolved.
Under C.C. 1890. "... any person may buy for another, and the person in whose favor the purchase is made may avail himself of it, if he pleases." Smith v. Kemper, 4 Mart. (O.S.) 409, 442 (La.1816). The stipulation by Mitchell was in writing, and clearly expressed the intent that Clark should benefit. Fontenot v. Marquette Casualty Co., 258 La. 671, 247 So. 2d 572 (1971).
It is of no consequence that Clark did not sign the act of sale. "... The acceptance of a contract need not be expressed in it, nor is it indispensable that the act be signed by the party in whose favor it is made. The acceptance may result from his acts in availing himself of its stipulations, or in doing something which clearly indicates his acceptance...." Balch v. Young, 23 La.Ann. 272, 272-3 (1871). Clark's intent to occupy the house as his own could serve as acceptance of the contract in his favor.
Nor is it of consequence that Clark was not aware of the stipulation in his favor for twenty-eight years. "The law does not provide for an express acceptance of or consent to a stipulation pour autrui by the beneficiary, nor does it prescribe any particular form ... The law does not stipulate a time in which the assent ... should be made to appear ..." First State Bank v. Burton, 225 La. 537, 549-50, 73 So. 2d 453, 457 (1954).
Once Clark learned of and accepted the stipulation in his favor, he could argue that the stipulation could no longer be revoked. C.C. 1890. "The third party beneficiary's right arises immediately upon execution of the contract, and express consent is only necessary to prevent revocation." Merco Manufacturing, Inc. v. J.P. McMichael Construction Co., 372 F. Supp. 967, 973 (W.D.La.1974). "Stipulations in favor of third persons ... are favored in our law...." Andrepont v. Acadia Drilling Co., 255 La. 347, 357, 231 So. 2d 347, 350 (1969). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1249062/ | 110 Ga. App. 267 (1964)
138 S.E.2d 435
MELAVER et al.
v.
GARIS.
40787.
Court of Appeals of Georgia.
Decided September 17, 1964.
*268 Bouhan, Lawrence, Williams & Levy, Walter C. Hartridge, III, for plaintiffs in error.
Joseph J. Bergen, contra.
NICHOLS, Presiding Judge.
1. Special ground 1 of the amended motion for new trial complains of the admission into evidence over defendants' objection of a doctor's bill for professional services rendered the plaintiff following the alleged injury sued for. The plaintiff contends that such evidence would focus the attention of the jury upon the dollar mark set forth therein when the suit is based upon pain and suffering only. "It has long been the rule in this State that where the relevancy or competency of evidence is doubtful, it should be admitted and its weight left to the determination of the jury. Dalton v. Drake, 75 Ga. 115; Talbotton Railroad Co. v. Gibson, 106 Ga. 229, 236 (32 S.E. 151); Nugent v. Watkins, 129 Ga. 382, 385 (58 S.E. 888); Crozier v. Goldman, 153 Ga. 162, 165 (111 S.E. 666); Purser v. McNair, 153 Ga. 405 (112 S.E. 648); Central of Georgia R. Co. v. Keating, 177 Ga. 345, 352 (170 S.E. 493); Fitzgerald v. Vaughn, 189 Ga. 707, 709 (7 SE2d 78)." Lovejoy v. Tidwell, 212 Ga. 750, 751 (95 SE2d 784). "The court admitted the bill complained of and the others for the limited purpose of bearing upon pain and suffering as it considered these bills relevant to show not only the amount of medical expense incurred, but the number and duration of plaintiff's treatments as illustrative of pain allegedly suffered by plaintiff." Such evidence was admissible for such purpose and this ground of the amended motion for new trial is without merit.
*269 2. Special grounds 2, 3 and 4 complain of excerpts from the court's charge which have reference to defendants' liability resulting from constructive knowledge of the defects caused by their vehicles and those of their customers. Under the decision in Kelisen v. Savannah Theatres, 61 Ga. App. 100, 104 (5 SE2d 712), such charges were authorized. These special grounds of the amended motion for new trial are without merit.
3. The defendants contend that the verdict for plaintiff was not authorized because the plaintiff failed to carry the burden of proving that the defendants created the condition which caused the plaintiff's injury, and that it was nowhere established that cars parked on that portion of the city sidewalk on which plaintiff fell, and that there was no evidence demonstrating either that the defendants authorized persons to park in any driveway area or that such parking, even if it had been authorized, caused the depression in the city sidewalk which produced the plaintiff's injury. There was evidence that customers' cars usually parked there when trading at defendants' store. There was evidence that such added weight superimposed by the parked cars could have caused the depression in the concrete at the point where plaintiff fell, and under the decision in Kelisen v. Savannah Theatres, 61 Ga. App. 100, supra, it is not necessary in the present case to prove that the defendants actually created the defect. See also 88 ALR2d 331, 383. Under all the evidence in this case it was a jury question as to whether the defect had existed for a sufficient length of time to charge the defendants with constructive knowledge.
While the evidence did not demand a verdict for the plaintiff such verdict was authorized, and the trial court did not err in overruling the motion for new trial, as amended, and the motion for judgment non obstante veredicto.
Judgment affirmed. Hall and Russell, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1331069/ | 258 S.C. 236 (1972)
188 S.E.2d 186
The STATE, Respondent,
v.
Simpson Eugene SHAW et al., Appellants.
19400
Supreme Court of South Carolina.
April 19, 1972.
*237 Messrs. R. Kirk McLeod, Sol., and Robert W. Burkett, Asst. Sol., of Sumter, for Respondent.
Messrs. James M. Connor, and William E. Jenkinson, of Kingstree, and Matthew J. Perry, of Jenkins, Perry & Pride, Columbia, for Appellants.
April 19, 1972.
LEWIS, Justice.
Appellants, Simpson Eugene Shaw, Truman Michum, and Eugene James, were jointly indicted for rape and assault and battery of a high and aggravated nature. Shaw and Mitchum were convicted of rape with a recommendation of mercy, each receiving a sentence of twenty-five (25) *238 years. James was convicted of assault and battery of a high and aggravated nature and received a sentence of ten (10) years. All have appealed, assigning error in the admission into evidence of certain articles seized by the officers during their investigation of the crime and the refusal of the trial judge to direct a verdict of not guilty.
The prosecutrix testified that, while she was walking from a nightclub to her home, late at night, the three appellants, riding in the automobile of appellant Shaw, stopped and forced her into the vehicle. She was then taken to a secluded area where, according to her statement, she was raped by all of the appellants. She was subsequently put out of the automobile in the early morning hours without her slacks. There was also testimony that appellant Mitchum threatened her with a pistol and that appellant James also had a weapon. She also testified that, after she left the automobile, appellant James caught hold of her hand in an attempt to further molest her, and that she pulled away from him and ran to her aunt's house. She reported the incident to the officers within a few hours thereafter.
After the prosecutrix reported the crime, an officer went to the home of appellant Shaw to arrest him. While there, the officer looked into Shaw's automobile and saw, in plain view, the missing slacks of the prosecutrix and a wallet belonging to appellant Mitchum, which he seized. Subsequently, an officer went to the home of James and, with the cooperation of James' parents, obtained a .22 calibre pistol. Neither officer had a search warrant when the slacks, wallet, and pistol were seized. All of these items were admitted in evidence at the trial. Appellants contend that, since these articles were obtained by the officers without a search warrant, their seizure was illegal and were therefore inadmissible in evidence.
The pistol in question was admitted in evidence without objection. Since timely objection at the trial was not made to its admission, appellants waived *239 their right to raise the question on appeal. McCreight v. MacDougall, 248 S.C. 222, 149 S.E. (2d) 621.
Assuming, as contended, that the remaining articles (the slacks and wallet) were illegally seized, no legal prejudice resulted to appellants from their admission. The presence of the slacks of the prosecutrix in Shaw's automobile and the presence of Mitchum's wallet in the vehicle with the slacks inferably placed Shaw and Mitchum with the prosecutrix on the occasion in question. This was all that the introduction of these items tended to establish. Subsequently, both testified and admitted that they were present and had sexual relations with the prosecutrix, but claimed that it was with her consent. Appellant James admitted that he was there, but denied that he molested her. Appellants therefore freely admitted everything that the introduction of these items established and no prejudice could have resulted from their admission in evidence.
The further contention of appellants that the trial judge erred in refusing to direct a verdict of not guilty is without merit. They concede that the testimony upon the issues affecting guilt was in conflict, but argue that it did not reach the degree of persuasion required in criminal cases, that is, beyond a reasonable doubt.
The conflicting evidence presented factual issues as to the guilt of appellants. These issues were properly submitted to the jury for determination and this Court has no authority to weigh the conflicting testimony to determine whether, in its view, the jury properly concluded that the guilt of appellants was established beyond a reasonable doubt. The weight to be accorded the testimony was for the jury to determine and not this Court.
Judgment affirmed.
MOSS, C.J., and BUSSEY, BRAILSFORD, and LITTLEJOHN, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2539982/ | 716 F. Supp. 2d 220 (2010)
The PENSION COMMITTEE OF the UNIVERSITY OF MONTREAL PENSION PLAN, et al., Plaintiffs,
v.
BANC OF AMERICA SECURITIES, LLC, Citco Fund Services (Curacao) N.V., the Citco Group Limited, International Fund Services (Ireland) Limited, Pricewaterhousecoopers (Netherland Antilles), John W. Bendall, Jr., Richard Geist, Anthony Stocks, Kieran Conroy, and Declan Quilligan, Defendants.
No. 05 Civ. 9016(SAS).
United States District Court, S.D. New York.
March 10, 2010.
*221 Scott M. Berman, Esq., Anne E. Beaumont, Esq., Amy C. Brown, Esq., Philip A. Wellner, Esq., Robert S. Landy, Esq., Lili Zandpour, Esq., Friedman Kaplan Seiler & Adelman LLP, New York, NY, for the Plaintiffs.
Lewis N. Brown, Esq., Dyanne E. Feinberg, Esq., Terence M. Mullen, Esq., Elizabeth A. Izquierdo, Esq., Gilbride, Heller & Brown, P.A., Miami, FL, Eliot Lauer, Esq., Michael Moscato, Esq., Curtis, Mallet-Prevost, Colt & Mosle LLP, New York, NY, for the Citco Defendants.
OPINION AND ORDER
SHIRA A. SCHEINDLIN, District Judge.
I. INTRODUCTION
A group of investors brings this action to recover losses stemming from the liquidation of two British Virgin Islands based hedge funds in which they held shares: Lancer Offshore, Inc. ("Lancer Offshore") and OmniFund Ltd. ("OmniFund") (collectively, the "Lancer Funds"). Although the action involves the claims of ninety-six plaintiff investors, on February 1, 2008, I ordered that the case would proceed initially on the claims of twenty plaintiffs ("Plaintiffs"). The only remaining defendants are the Lancer Funds' former administrator, Citco Fund Services (Curacao), N.V. ("CFS-Curacao"), its parent company, The Citco Group Limited, and former Lancer Offshore directors who *222 were officers of CFS-Curacao (collectively, the "Citco Defendants").
In preparation for trial, both Plaintiffs and the Citco Defendants have retained experts. On February 22, 2010, I granted in part and denied in part several motions in limine to exclude and/or limit the proposed testimony of several of those witnesses.[1] Plaintiffs now move to exclude the proposed testimony of another expert witness, Boris Onefater. For the reasons discussed below, that motion is denied.
II. BACKGROUND
A. Scope of Proposed Testimony
The Citco Defendants have retained Onefater as an expert on the "industry standards of care for prime brokers of hedge funds during the time period from 1997 to 2002."[2] During that period, Banc of American Securities ("BAS"), which was originally a defendant in this case but has since settled, acted as prime broker for the Lancer Funds. At trial, Onefater intends to opine that BAS, as broker of the Lancer Funds, failed to comply with industry standards,[3] that its failure to do so resulted in BAS providing "misleading and inaccurate information . . . to the Lancer Funds' administrator and auditor," and that this information "was ultimately conveyed to the fund's [sic] investors through monthly NAV statements and the audited financial statements."[4]
B. Relevant Qualifications
Onefater is the founder and President of Constellation Investment Consulting Corp. ("Constellation Investment"), "an investment management consulting firm with a particular focus on hedge funds, fund of funds, regulated investment companies, retail, institutional and global asset managers, and service providers including prime brokers, custodians and fund administrators."[5] He received a Bachelor of Science degree, with a double major in Accounting and Science, from New York University in 1988 and became a Certified Public Accountant in 1990.[6]
For the majority of his career, he was employed by, and later a partner at, Deloitte & Touche LLP ("Deloitte"), a large and well-known professional services firm.[7] At Deloitte, he "had responsibility for all services that Deloitte offered to its hedge fund and fund of fund [sic] clients[.]"[8] Of relevance to this Daubert motion, Onefater, in his capacity as a partner at Deloitte, was also retained by financial firms on multiple occasions to advise them in setting up, and/or improving, their prime brokerage businesses.[9] From 2001 to 2005, *223 for example, he worked with Merrill Lynch to build their prime brokerage capability including helping them to establish "internal control and reporting requirements."[10]
Upon leaving Deloitte in 2006, Onefater became Chief Operating Officer, Chief Financial Officer, and later Chief Executive Officer of Dreman Value Management, LLC ("Dreman")an investment manager.[11] In that capacity, he oversaw several of Dreman's hedge funds and their relationships with a variety of service providers, including prime brokers.[12] He founded Constellation Investment in 2008.
III. APPLICABLE LAW
The standard for the admissibility of expert testimony is established by Rule 702 of the Federal Rules of Evidence, which states:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.
For expert testimony to be admissible under Rule 702, three requirements must be met. First, the witness must be "qualified as an expert by knowledge, skill, experience, training, or education[.]"[13] Courts within the Second Circuit have "liberally construed expert qualification requirements."[14] In McCullock v. H.B. Fuller Co., for example, the Second Circuit allowed an expert to testify as to matters within his general expertise even though he lacked qualifications as to certain technical matters within that field.[15]
Second, the expert's knowledge must be of the type that will "assist the trier of fact to understand the evidence or to determine a fact in issue[.]"[16] Thus, expert witnesses are generally not permitted to address issues of fact that a jury is capable of understanding without the aid of expert testimony.[17] It is also well-established *224 that expert witnesses are not permitted to testify about issues of law which are properly the domain of the trial judge and jury.[18]
Third, the proposed expert testimony must be based "on a reliable foundation."[19]
In this inquiry, the district court should consider the indicia of reliability identified in Rule 702, namely, (1) that the testimony is grounded on "sufficient facts or data"; (2) that the testimony "is the product of reliable principles and methods"; and (3) that "the witness has applied the principles and methods reliably to the facts of the case."[20]
Although the Supreme Court has instructed district courts to focus "on the principles and methodology" employed by the expert, and "not on the conclusions that they generate,"[21] it has recognized that "conclusions and methodology are not entirely distinct from one another."[22] Accordingly, "nothing in either Daubert or the Federal Rules of Evidence requires a district court to admit opinion evidence that is connected to existing data only by the ipse dixit of the expert."[23]
"[A] judge assessing the proffer of expert. . . testimony under Rule 702 should also be mindful of other applicable rules."[24] Importantly, Rule 403 of the Federal Rules of Evidence states that relevant evidence "may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury." "Expert evidence can be both powerful and quite misleading because of the difficulty in evaluating it. Because of this risk, the judge in weighing possible prejudice against probative force under Rule 403 . . . exercises more control over experts than over lay witnesses."[25]
In sum, district courts are charged with acting as "gatekeeper[s] to exclude invalid and unreliable expert testimony."[26] However, trial judges, whom are given "broad discretion" in making these determinations,[27] should remember that they are ruling *225 on the admissibility of evidence and not its weight or credibility. "As the Supreme Court has explained, `[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.'"[28]
IV. DISCUSSION
Plaintiffs request that Onefater be precluded from testifying on the ground that his experience provides an insufficient basis for his proposed testimony. They make two arguments as to why Onefater's experience is inadequateneither of which is sufficient to exclude Onefater's testimony.
First, Plaintiffs contend that Onefater's lack of direct (e.g., being employed by a prime broker), as opposed to indirect (e.g., acting as a consultant for a prime broker), experience in the prime brokerage industry renders him unqualified to testify.[29] However, Rule 702 does not distinguish between direct and indirect experience, and courts in the Second Circuit generally take a liberal approach to the qualifications requirement.[30] The only category of experience that courts are generally wary of is experience gained as a litigation consultant and expert witness. Plaintiffs, for example, cite two circuit cases, Kline, Inc. v. Lorillard, Inc.[31] and Tokio Marine & Fire Insurance Co., Ltd. v. Grove Manufacturing Co.,[32] for the proposition that Onefater's "lack of any direct work experience, educational background, or formal training, renders [him] unqualified to testify as an expert."[33] However, in both cases, the court was concerned not just that the expert witness lacked direct experience in the relevant field, but that the indirect experience that the expert did have was developed solely as an expert witness.[34]
In this instance, in contrast, Onefater has accumulated significant experience working with prime brokers outside of the litigation context. Although Onefater has not been directly employed with a prime broker, he has been retained as a consultant to assist financial firms in developing their prime brokerage businesses,[35] and *226 has overseen the work of prime brokers as an executive for an investment manager.[36] In particular, the fact that industry participants have retained Onefater for his prime brokerage expertise outside of the litigation context strongly supports the proposition that he has sufficient expertise to testify about the practices of prime brokers.[37]
Second, Plaintiffs argue that even if Onefater is generally qualified as a prime brokerage expert, he has not demonstrated that this general experience has educated him about the specific industry practices that he describes in his expert report.[38] Onefater intends to opine that BAS failed to follow industry procedures in four respects:
(a) failing to question pricing and valuation provided by the Investment Manager under circumstances where follow-up inquiry was required and failing to provide specific disclaimers regarding information relevant to the pricing and value of the funds' assets; (b) failing to identify and report to internal compliance the month-end trades entered into not just by the Lancer Funds, but also by the accounts of affiliated account holders, which potentially impacted the market price of thinly-traded securities; (c) failing to question and report to their internal compliance department excessive cross trading of securities between fund accounts and personal accounts; (d) failure to question transactions in which the fund made a "sell out for zero" or "sell off for zero" and then physically claimed the certificates.[39]
Plaintiffs contend that Onefater's experience does not qualify him to testify about at least three of these subjects because they "involve purely internal brokerage processesmonitoring and reporting to prime broker's internal compliance departmentof which Onefater does not claim to have first-hand knowledge or experience."[40]
*227 Plaintiffs are correct that although an expert is permitted to support his opinions by reference to his experience, he must demonstrate that this "experience is a sufficient basis for" these opinions.[41] However, contrary to Plaintiffs' assertions, Onefater's expert report and deposition testimony indicate that he has in fact had exposure to the various internal procedures followed by prime brokers. As part of his consulting business at Deloitte, for example, Onefater investigated the capabilities and procedures of various prime brokers to assist Deloitte's clients in selecting the brokers that best met their specific needs.[42] In addition, Onefater has participated in industry conferences[43] and informal meetings[44] with industry participants on a regular and continuing basis throughout his career.[45] This significant exposure has provided Onefater with the type of experience that would permit him to testify reliably about the internal practices of prime brokers. To the extent that Plaintiffs are able to point to areas where his experience is less robust, these concerns go to "his testimony's weight and credibilitynot its admissibility" and are "properly explored on cross-examination."[46]
V. CONCLUSION
For the aforementioned reasons, Plaintiffs' motion in limine to exclude Onefater's proposed testimony is denied. The Clerk of Court is directed to close this motion (Docket No. 340).
SO ORDERED.
NOTES
[1] See generally Pension Comm. of Univ. of Montreal Pension Plan v. Banc of Am. Secs., LLC, et al., 691 F. Supp. 2d 448 (S.D.N.Y. 2010).
[2] Expert Report of Boris Onefater ("Onefater Report"), Exs. A and B to Declaration of Phillip A. Wellner ("Wellner Decl."), counsel for Plaintiffs, ¶ 2.
[3] See id. ¶ 4.
[4] Id. ¶ 6.
[5] Id. ¶ 7.
[6] See id. ¶ 10.
[7] See Curriculum Vitae of Boris Onefater ("Onefater CV"), Ex. C to Wellner Decl.
[8] Onefater Report ¶ 8.
[9] See id. ¶ 11; Excerpts of Deposition of Boris Onefater ("Onefater Dep."), Ex. F to Wellner Decl., and Exs. 1 and 2 of Declaration to Terrence M. Mullen ("Mullen Decl."), Counsel for Citco Defendants, at 99:4-13 ("Q. So how much . . . time did you spend in your consulting practice when the prime broker was your client? . . . A. That was I mean substantial portion of my time. Probably in the years between 1999 through 2002, 2003, it was an overwhelming majority of my time. I would probably say 60 to 70 percent of my time was spent with prime brokerage clients.").
[10] Onefater Report ¶ 14. Accord Onefater Dep. at 97:10-18 ("And then in around 2000, 2001 a former client of mine from Merrill came to me and I'd worked with him before, they recognized my expertise in the industry and Merrill was embarking upon a, one of the top three projects that Merrill Lynch had, which was to build out a global prime brokerage capability, and they wanted to see if I could assist them in that buildout.").
[11] See Onefater CV; Onefater Dep. at 130:6-14.
[12] See Onefater Dep. at 130:7-136:8.
[13] Fed.R.Evid. 702.
[14] TC Sys., Inc. v. Town of Colonie, N.Y., 213 F. Supp. 2d 171, 174 (N.D.N.Y.2002). Accord United States v. Brown, 776 F.2d 397, 400 (2d Cir. 1985) ("The words `qualified as an expert by knowledge, skill, experience, training or education' must be read in light of the liberalizing purpose of the Rule[.]" (quoting Fed. R.Evid. 702)).
[15] See 61 F.3d 1038, 1042-43 (2d Cir.1995) (holding that an industrial engineer's testimony that a plaintiff was within the "breathing zone" of hot-glue fumes "easily qualifie[d] for admission under Daubert "despite the engineer's lack of education on fume dispersal patterns, knowledge regarding the fumes' chemical constituents or the glue vapor's concentration level, or "experience performing or interpreting air quality studies").
[16] Fed.R.Evid. 702.
[17] See Andrews v. Metro N. Commuter R.R. Co., 882 F.2d 705, 708 (2d Cir. 1989) (stating that expert testimony is inadmissible when it addresses "lay matters which [the trier of fact] is capable of understanding and deciding without the expert's help").
[18] See In re Rezulin Prods. Liab. Litig., 309 F. Supp. 2d 531, 548-49 (S.D.N.Y.2004) ("[I]n deciding whether the proposed testimony will be helpful to the fact-finder, courts in this Circuit analyze the testimony to determine whether it `usurp[s] either the role of the trial judge in instructing the jury as to the applicable law or the role of the jury in applying that law to the facts before it.'" (quoting United States v. Lumpkin, 192 F.3d 280, 290 (2d Cir.1999))); In re Initial Pub. Offering Secs. Litig., 174 F. Supp. 2d 61, 64 (S.D.N.Y.2001) (Scheindlin, J.) ("In fact, every circuit has explicitly held that experts may not invade the court's province by testifying on issues of law." (collecting cases)).
[19] Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 597, 113 S. Ct. 2786, 125 L. Ed. 2d 469 (1993).
[20] Amorgianos v. National R.R. Passenger Corp., 303 F.3d 256, 265 (2d Cir.2002) (quoting Fed.R.Evid. 702).
[21] Daubert, 509 U.S. at 595, 113 S. Ct. 2786.
[22] General Elec. Co. v. Joiner, 522 U.S. 136, 146, 118 S. Ct. 512, 139 L. Ed. 2d 508 (1997).
[23] Id.
[24] Daubert, 509 U.S. at 595, 113 S. Ct. 2786 (quotation marks omitted).
[25] Id.
[26] Bickerstaff v. Vassar Coll., 196 F.3d 435, 449 (2d Cir.1999) (quotation marks omitted). Accord Louis Vuitton Malletier v. Dooney & Bourke, Inc., 525 F. Supp. 2d 558, 561, 565 (S.D.N.Y.2007) (Scheindlin, J.) (discussing district court's "special obligation" to gatekeep with respect to expert evidence).
[27] McCullock, 61 F.3d at 1042.
[28] Amorgianos, 303 F.3d at 267 (quoting Daubert, 509 U.S. at 596, 113 S. Ct. 2786) (citation omitted).
[29] See Plaintiffs' Memorandum of Law in Support of Motion to Exclude the Expert Testimony of Boris Onefater ("Pl. Mem.") at 4 ("[Onefater's] lack of any direct work experience, educational background, or formal training renders Onefater unqualified to testify as expert" (citations omitted)).
[30] See TC Sys., 213 F.Supp.2d at 174.
[31] 878 F.2d 791 (4th Cir. 1989).
[32] 958 F.2d 1169 (1st Cir.1992).
[33] Pl. Mem. at 1.
[34] See Tokio Marine & Fire Ins., 958 F.2d at 1174 (holding that the district court "judge concluded, supportably, that [the expert] was `more a professional witness than an expert in crane defects'" (quotation marks and citations omitted)); Kline, 878 F.2d at 800 ("There was no indication, for example, that [the expert's] general business education included any training in the area of antitrust or credit. Similarly, [the expert] admitted that she lacked any other experience in such matters. Although it would be incorrect to conclude that [the expert's] occupation as a professional expert alone requires exclusion of her testimony, it would be absurd to conclude that one can become an expert simply by accumulating experience in testifying." (emphasis added)).
[35] See Onefater Report ¶¶ 11, 14; Onefater Dep. at 99:4-13 ("Q. So how much . . . time did you spend in your consulting practice when the prime broker was your client? . . . A. That was I mean a substantial portion of my time. Probably in the years between 1999 through 2002, 2003, it was an overwhelming majority of my time. I would probably say 60 to 70 percent of my time was spent with prime brokerage clients."); id. at 97:10-18 ("And then in around 2000, 2001 a former client of mine from Merrill came to me and I'd worked with him before, they recognized my expertise in the industry and Merrill was embarking upon a, one of the top three projects that Merrill Lynch had, which was to build out a global prime brokerage capability, and they wanted to see if I could assist them in that buildout.").
[36] See Onefater Dep. at 130:7-136:8.
[37] Courts often scrutinize the qualifications of professional witnesses because they are retained by counsel with the aim of obtaining a successful litigation outcome. However, outside of the litigation context, experts are generally retained with the aim of obtaining a successful market outcome-in this case, setting up a prime brokerage business. Thus, the fact that Onefater was in high demand as an advisor and consultant suggests that his knowledge of prime brokerage businesses was valued by the industry.
[38] Plaintiffs' brief suggests that they are actually making two distinct arguments in this context. First, that Onefater's lack of knowledge about the specific industry standards he describes in his expert report renders him unqualified, see Pl. Mem. at 6-8; and second, that this lack of knowledge renders his proposed testimony unreliable, see id. at 9-10. However, the underlying complaint is the same as to both arguments: Onefater does not have knowledge of the particular industry standards about which he opines. Compare id. at 7 ("Neither Onefater's report nor his testimony offers a sufficient connection between his interactions with prime brokers, whether as clients or otherwise, and the expertise he purports to have in the Alleged Industry Practices.") with id. at 9 ("Onefater has not explained how the Alleged Industry Practices, which he asserts governed BAS's conduct, are derived from his experience.").
[39] Onefater Report ¶ 5.
[40] Pl. Mem. at 7.
[41] Fed.R.Evid. 702 Advisory Committee Note.
[42] See Onefater Dep. at 69:9-21 ("And let's say that in this instance, and I'm going to use, you know, Lehman as an example, in this case Lehman would be a viable candidate, as well as Merrill and a number of others, and then what you would do is you would go and visit those prime brokers, have them explain their infrastructure system, how they work, and then based upon all those, based upon the information gathered, you'd sit down with a client and you'd lay it all out[.]").
[43] See id. at 12:14-22 ("There were a number of conferences that I've attended numerous, and I probably couldn't even begin to count how many, where prime broker representatives talked about services that they provide, standard of care that they had with respect to their clients, what they offered, what types of services they made available to their clients, the latest technology, the latest trading programs."); id. at 13:3-6 (stating that he recently "set up a prime brokerage panel" for a conference).
[44] See id. at 153:4-8 ("I've met with the various teams from prime brokerages where we talked about industry events and the expectations of what hedge funds and administrators are expecting of a prime broker."); id. at 154:3-9 ("I'm sure there were others because on a periodic basis we, I mean we met with different prime brokers. So on a frequent basis we'd get together and discuss industry events.").
[45] Plaintiffs argue that these meetings cannot provide a reliable basis for Onefater's testimony because he was unable to recall the specifics of many of those meetings at deposition. However, these lapses in memory are traditionally challenged through cross-examination and do not render his opinion testimony unreliable. See Amorgianos, 303 F.3d at 267 (quoting Daubert, 509 U.S. at 596, 113 S. Ct. 2786) (citation omitted).
[46] McCullock, 61 F.3d at 1043 (citation omitted). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1138777/ | 315 So. 2d 268 (1975)
STATE of Louisiana
v.
Earl Ray ROBINSON.
No. 55939.
Supreme Court of Louisiana.
June 23, 1975.
*269 Donald R. Brown, Dimos, Brown & Erskine, Monroe, for defendant-appellant.
William J. Guste, Jr., Atty. Gen., Barbara Rutledge, Asst. Atty. Gen., J. Carl Parkerson, Dist. Atty., Brian E. Crawford, Asst. Dist. Atty., for plaintiff-appellee.
DIXON, Justice.
The defendant was convicted of possession of a controlled dangerous substance (marijuana) with intent to distribute (R.S. 40:966). Harold Lee Jackson, arrested with the defendant, was charged in the same bill of information. The defendants were tried together on October 3 and 4, 1974; only defendant Robinson is before us. He bases his appeal on two specifications of error.
The evidence shows that police had become suspicious that defendant's residence in Monroe, Louisiana was an outlet for drugs. Surveillance of the residence was established; police sent an informer to the front door to purchase marijuana. The informant made the purchase. On the basis of this information a search warrant was obtained. The warrant was executed at approximately 11:20 p. m. of July 25, 1974, the same day upon which the informant had purchased the marijuana, and the officers found five bags of marijuana. Both defendants were present at the time of the search and both were placed under arrest.
The first assigned error attacks the trial judge's conclusion that a witness offered by the State as an expert was sufficiently qualified to testify that the green vegetable matter seized in the defendant's apartment was in fact marijuana.
The witness had only been employed by the police for approximately seven months. However, during this period she had performed the tests used to determine whether or not a sample was marijuana many times. She had received training in these procedures for a period of one month under the supervision of the director of the Northwest Crime Lab in Shreveport. In addition to this specialized training the witness had majored in medical technology in college and had taken several courses in chemistry. The testimony of the witness shows that she was thoroughly familiar with the tests used to determine whether a substance is or is not marijuana. The trial judge correctly concluded that the witness was qualified to testify on this question. R.S. 15:466.
This assigned error is without merit.
Defendant's second assigned error is that the trial judge erred in denying the defense *270 motion for a directed verdict at the close of the State's case. The motion was based on the contention that the State "had not carried the burden of proof." The argument is that the State failed to offer any evidence that the defendant had possessed this marijuana with the intent to distribute it.
Proof of intention may be based on circumstantial evidence. The intention of the defendant may be inferred from the nature and facts of the case. R.S. 15:455. State v. Triplett, La., 285 So. 2d 532 (1973).
In this case the defendant had five plastic bags of marijuana hidden under his bed in the house. The witness from the crime lab testified that the marijuana in the bags weighed fifty-seven grams, or approximately two ounces. Defendant argues that possession of this quantity of marijuana is "no evidence" of intention to distribute.
When Officer Davis was asked why he decided to charge the defendants with possession with intent to distribute, he stated that he did so because of the quantity involved. He also testified that he relied on the fact that an informant had purchased a bag of marijuana, similar to the ones seized, from this residence on the day of the search.
The marijuana in question is not a substantial amount. However, the evidence of this sale, although not directly connected to the defendant, is some evidence that the marijuana at this residence was in fact for sale or distribution. The evidence concerning the activities of the informant was relevant to the question of intent, and it was information within the personal knowledge of Officer Davis. The evidence that a sale took place at this address on the day in question is some evidence that the defendant possessed the seized marijuana with the intent to distribute.
Although the motion for a directed verdict actually presents nothing for review, because of the argument made by defendant we have examined the record and find some evidence to support the verdict.
This assigned error is without merit.
Accordingly, the conviction and sentence are affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1186424/ | 566 P.2d 426 (1977)
STATE of New Mexico, Plaintiff-Appellant,
v.
Lupe GARCIA, Defendant-Appellee.
No. 2822.
Court of Appeals of New Mexico.
May 17, 1977.
Rehearing Denied May 31, 1977.
Writ of Certiorari Denied June 23, 1977.
*427 Toney Anaya, Atty. Gen., Ernesto J. Romero, Asst. Atty. Gen., Santa Fe, for plaintiff-appellant.
Jack Smith, Albuquerque, for defendant-appellee.
OPINION
WOOD, Chief Judge.
This appeal by the State involves the legal sufficiency of an affidavit for a search warrant. The trial court granted defendant's motion to suppress the evidence seized in the search pursuant to the warrant. It did so on the basis that the information recited in the affidavit was stale and therefore did not supply probable cause for issuance of the warrant. We discuss: (1) reliability of information supplied to the judge issuing the warrant, (2) staleness of the information in the affidavit, and (3) reliability of the informants.
Reliability of the Information Supplied to the Judge
The appeal was originally assigned to the "Legal" calendar on the basis that "staleness" would be determined by the affidavit contained in the district court file. Defendant moved for reassignment of the case to the "Limited" calendar, claiming that the staleness issue had been determined on the basis of evidence presented at the suppression hearing. After hearing argument on the motion to reassign, there was a question as to whether the trial court had tried the truthfulness of the affidavit. Our concern was based on State v. Baca, 84 N.M. 513, 505 P.2d 856 (Ct.App. 1973). Accordingly, we granted the motion and reassigned the case to the "Limited" calendar. See N.M.Crim.App. 207(b) and (c).
In Baca, supra, defendant contended that he had a right to challenge the truthfulness of the allegations in the affidavit. Baca points out that the decisions in other states are in conflict as to when such attacks are permissible. Baca states:
"Although we incline to the view that an attack is permissible if the claim is that the allegations are perjurious, we do not decide the question of when attacks should be allowed. Whenever other jurisdictions have allowed an attack, it has been directed to the truthfulness of the affiant's allegations. In this case, defendant did not attack the truthfulness of the statements made by the officers who signed the affidavit; the attack was on the truthfulness of the information received from an informer."
The transcript of the suppression hearing shows that there was no attack on the truth of the affiant's allegations. Accordingly, the question of when such attacks should be allowed is not an issue in this case.
Staleness of the Information in the Affidavit
The affidavit sought a warrant to search a described premises, and the defendant, for heroin and paraphernalia used in connection with heroin. The affidavit sets forth information that the affiant officer received from three informants. The affidavit recites that informant I "has personally purchased heroin from the above subject at above premises the latest being approximately one month ago."
Defendant relies upon this one-month delay to support his contention of no probable cause because of stale information. The significance of this time factor depends on whether there was an isolated transaction or a continuing series of events. United States v. Johnson, 461 F.2d 285 (10th Cir.1972); United States v. Harris, 482 F.2d 1115 (3rd Cir.1973). See footnote 9 in Andreson v. Maryland, 427 U.S. 463, 96 S. Ct. 2737, 49 L. Ed. 2d 627 (1976); footnote 2 in United States v. Harris, 403 U.S. 573, 91 S. Ct. 2075, 29 L. Ed. 2d 723 (1971). As stated in State v. Austria, 524 P.2d 290, 294 (Haw. 1974):
*428 "If there is a reasonable basis in the affidavit for the conclusion that the criminal activity alleged by the informer is of a continuing, ongoing nature, the passage of time between the informer's last observations of that activity and the issuance of the warrant is less significant than when no such showing is made in the affidavit."
The affidavit contains a reasonable basis for concluding that defendant was engaged in criminal activity of a continuing, ongoing nature. The affidavit recites:
1. Informant I last observed heroin sales by defendant at the described premises between August 10 and September 10, 1976.
2. Informant I had been at the described premises on numerous occasions, and on those prior occasions defendant had heroin for sale. Also, that informant I had seen heroin on the premises on numerous occasions.
3. All three informants, independently of one another, state that defendant uses heroin and needs heroin daily to supply his habit. These statements were based either on the informant's personal observations or admissions by defendant.
The foregoing shows a continuing activity in connection with heroin up to the date of the affidavit, which was September 10, 1976.
Affidavits are to be read with common sense. United States v. Harris, 403 U.S. 573, 91 S. Ct. 2075, 29 L. Ed. 2d 723, supra; State v. Bowers, 87 N.M. 74, 529 P.2d 300 (Ct.App. 1974). The above information was sufficient for the judge who issued the search warrant to conclude there was a probability of criminal conduct. State v. Bowers, supra. The affidavit does not show stale information.
Reliability of the Informants
Defendant asserts that one cannot base probable cause on the continuing conduct recited in the affidavit. He asserts that the continuing conduct supplied by the informants cannot be considered because the reliability of the informers is not shown. Once the continuing conduct is eliminated, defendant asserts the only information left to support probable cause is a one-month-old purchase by one informer. We disagree.
Although Hudson v. State, 89 N.M. 759, 557 P.2d 1108 (1976) does not refer to United States v. Harris, 403 U.S. 573, 91 S. Ct. 2075, 29 L. Ed. 2d 723, supra, it does follow the approach used in Harris. That approach is to determine whether there was a substantial basis for believing there is a factual basis for the information furnished. In this case the question is whether there is a substantial basis for believing the information received from the informants was based on fact rather than rumor or speculation.
Here, we have informant I's purchase of heroin (See State v. Archuleta, 85 N.M. 146, 509 P.2d 1341 (Ct.App. 1973)), his past observations of heroin on the premises and his observations of sales from the premises during the month prior to issuance of the search warrant. We also have all three informants stating, either on the basis of personal observations or admissions from the defendant, that defendant is a daily heroin user. The affiant also states that the informants have provided information in the past which led to the arrest of several persons for possession and trafficking in heroin. See United States v. Harris, 403 U.S. 573, 91 S. Ct. 2075, 29 L. Ed. 2d 723, supra. The judge who signed the warrant could conclude from the foregoing that the informants were reliable.
Defendant complains of other statements in the affidavit. We need not consider them. The statements in the affidavit discussed in this opinion show a substantial basis for believing the informants.
The trial court erred in granting the motion to suppress on the basis that the information in the affidavit was stale. The order granting the motion is reversed. The cause is remanded with instructions to deny the motion to suppress.
IT IS SO ORDERED.
HENDLEY and HERNANDEZ, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1186428/ | 952 P.2d 1052 (1998)
152 Or. App. 181
Craig BAUMANN, Appellant
v.
NORTH PACIFIC INSURANCE COMPANY, a corporation, Respondent
9602-01135; CA A94399.
Court of Appeals of Oregon.
Argued and Submitted September 24, 1997.
Decided January 21, 1998.
Robert E.L. Bonaparte argued the cause for appellant. With him on the briefs was Bonaparte, Elliott, Ostrander & Preston, P.C.
*1053 Gene D. Kennedy, Portland, argued the cause for respondent. With him on the brief was Seidl & Rizzo.
Before De MUNIZ, P.J., and DEITS, C.J.,[*] and HASELTON, J.
De MUNIZ, Presiding Judge.
Plaintiff insured appeals the trial court's entry of summary judgment in favor of defendant insurer. Plaintiff assigns error to the trial court's interpretation of the "owned property" exclusion in his insurance policy to exclude coverage for the environmental cleanup costs he incurred. We affirm.
Plaintiff is the owner of real property in Milwaukee, Oregon (the property). Defendant provided homeowner's insurance[1] to plaintiff. In October 1995, plaintiff contracted with Goodman Bros., Inc. (Goodman) to decommission an underground fuel oil storage tank located on the property. A soil sample was taken from the ground beneath the tank after the tank had been removed. On October 26, 1995, Goodman reported to plaintiff and to the Oregon Department of Environmental Quality (DEQ) that it had detected soil contamination. OAR XXX-XXX-XXXX. On October 27, 1995, DEQ notified plaintiff that he would be responsible for the cleanup of any petroleum contamination from the tank. OAR XXX-XXX-XXXX through OAR XXX-XXX-XXXX. That same day, plaintiff notified defendant of the contamination.
Plaintiff complied with DEQ's order by completing the cleanup of all contamination resulting from the release of the heating oil from the underground storage tank, employing Goodman as an environmental cleanup expert to remove the contamination. Goodman used hand augers to bore holes into the ground to determine the extent of the contamination. The soil contamination extended 14 feet below the surface. The area groundwater level was 45.5 feet below the surface.
During the site cleanup, Goodman removed six tons of contaminated soil and transported it to a recycling facility. On November 17, 1995, Goodman completed the cleanup. In January 1996, Goodman filed a final report with DEQ (Goodman's report) in support of plaintiff's request for a ruling that the decommission, removal, and cleanup of the underground storage tank was complete and that no further action would be required. Goodman's "Journal of Cleanup Activity" details the decommission of the underground tank and the cleanup of the contamination. The "Summary-Conclusions-Recommendations" section states that there was no evidence of groundwater involvement. However, a statement appearing at the bottom of the "Journal of Cleanup Activity" notes that "[t]he contaminated water * * * [was] transported to the Goodman facility for future recycling." On January 16, 1996, Goodman filed an addendum report stating that "no water was removed from this site and no water entered the excavation or any of the boreholes."
After the cleanup was completed, plaintiff sought indemnification from defendant for the costs he incurred in removing the contamination. Defendant denied coverage, asserting the owned property exclusion in plaintiff's insurance policy. Plaintiff's lawsuit followed. Defendant moved for summary judgment, and the trial court granted defendant's motion.
Plaintiff assigns error to the trial court's entry of summary judgment in favor of defendant. The trial court's order granting defendant's motion provides, in part:
"1. The record demonstrates that all property damage at issue was confined solely to the property owned by plaintiff; and on property owned by plaintiff.
"Therefore, the Court concludes that defendant has no duty to indemnify plaintiff because the owned property exclusion in defendant's insurance policy applies."
In an appeal from an order granting summary judgment, we must determine whether, viewing the evidence in the light most favorable *1054 to the party opposing the motion, there is a genuine issue of material fact and whether the moving party is entitled to judgement as a matter of law. Jones v. General Motors Corp., 325 Or. 404, 420, 939 P.2d 608 (1997); Seeborg v. General Motors Corp., 284 Or. 695, 699, 588 P.2d 1100 (1978).
We first address an issue raised by plaintiff at oral argument. Plaintiff argues that summary judgment should not have been granted because there is a material issue of genuine fact as to whether third-party property was damaged by the contamination. In support of that assertion, plaintiff, at oral argument, pointed to the statement in Goodman's report to DEQ that "the contaminated water * * * was removed from the site."[2] Plaintiff contends that contamination of groundwater constitutes damage to third-party property. Defendant counters that plaintiff is barred from raising this issue because he failed to raise it in the trial court. We agree with defendant.
Before we may address whether a trial court committed an error, the adversely affected party must have preserved the alleged error in the trial court and raised the issue on appeal by an assignment of error in its opening brief. ORAP 5.45(2);[3]Ailes v. Portland Meadows, Inc., 312 Or. 376, 380, 823 P.2d 956 (1991). To determine whether an issue is preserved for appellate review, a finding that the issue was raised in the trial court below is essential. State v. Hitz, 307 Or. 183, 188, 766 P.2d 373 (1988). The purpose of this rule is to allow the trial court to understand and correct any error. State v. Brown, 310 Or. 347, 356, 800 P.2d 259 (1990). Plaintiff did assign error to the granting of summary judgment. However, the issue presented at oral argument, that the statement in Goodman's report creates an issue of material fact, was not presented to the trial court or in plaintiff's opening brief on appeal. Whatever merit the issue might have, it was not raised until oral argument. That is too late. We therefore decline to consider the argument. See State v. Wrenn, 150 Or.App. 96, 100-101, 945 P.2d 608 (1997).
We now turn to the arguments raised in plaintiff's brief. Under the policy, liability coverage excludes claims for "property damage to property owned by the insured." Plaintiff argues that the meaning of the owned property exclusion is ambiguous and therefore should be construed against defendant. Defendant argues that the exclusion's meaning can be easily defined by the plain meaning of the words "owned property" and is not ambiguous. See Martin v. State Farm Fire and Casualty Co., 146 Or.App. 270, 932 P.2d 1207, rev. den. 325 Or. 491, 941 P.2d 1021 (1997).
The Oregon Supreme Court has established a specific framework for interpretation of insurance policies. Hoffman Construction Co. v. Fred S. James & Co., 313 Or. 464, 836 P.2d 703 (1992). While employing this framework, "[t]he primary and governing rule of the construction of insurance contracts is to ascertain the intention of the parties." Id. at 469, 836 P.2d 703 (citing Totten v. New York Life Ins. Co., 298 Or. 765, 770, 696 P.2d 1082 (1985)). We begin with the terms and conditions of the policy itself. ORS 742.016(1).[4] If the term at issue is not defined in the policy, the next step is to look to the plain meaning of the term. Id. at 474, 836 P.2d 703. If there is more than one plausible interpretation of the term's plain meaning, each interpretation must be scrutinized in the light of the specific context in which the term is used in the policy and also *1055 in the broad context of the policy as a whole. Id. at 475, 836 P.2d 703. If, after scrutiny, both proffered interpretations remain reasonable, the rule of interpretation against the drafter applies. Id.
Applying this framework, we begin with the terms and conditions of the policy. The insurance policy does not define the term owned property. Therefore, we must examine the plain meaning of the term. Plaintiff and defendant offer competing interpretations of the term. Defendant claims that its plain meaning includes damage to property owned by the insured or that serves as his or her residence. Plaintiff contends that soil cleanup is essential to prevent potential damage to groundwater and cannot constitute property damage to plaintiff's own property within the plain meaning of the term. Alternatively, plaintiff argues that contamination of an insured's property constitutes third-party property damage, and is not within the meaning of owned property, because such contamination damages the state's regulatory interest in maintaining a clean environment.[5] We conclude that neither of plaintiff's suggested interpretations is reasonable in context or in the context of the policy as a whole. Because only defendant's interpretation of owned property is reasonable, no ambiguity exists.
In determining the reasonableness of plaintiff's suggested interpretations, our initial step is to scrutinize each interpretation in the context of its use in the policy. Hoffman, 313 Or. at 474, 836 P.2d 703. The policy provides, in relevant part:
"DEFINITIONS
"* * * * *
"G. occurrence means:
"1. an accident, including continued or repeated exposure to substantially the same harmful conditions, which results, during the policy period, in:
"* * * * *
"b) property damage[.]
"* * * * *
I. property damage means physical injury to, destruction of, or loss of the use of tangible property.
"* * * * *
"SECTION II LIABILITY COVERAGES
"COVERAGE EPERSONAL LIABILITY
"If a claim is made or a suit brought against an insured for damages because of * * * property damage caused by an occurrence to which this coverage applies, we will:
"A. pay up to our limits of liability for the damages for which the insured is legally liable.
"* * * * *
"SECTION II EXCLUSIONS
"* * * * *
"B. Coverage E Personal Liability, does not apply to:
"* * * * *
"2. property damage to property owned by an insured;
"3. property damage to property rented to, occupied or used by, or in the care of the insured." (Emphasis in original.)
We reject plaintiff's argument that the potential for third-party property damage should be covered. Under the policy's terms, for liability coverage to arise, actual damage must have occurred to the property of a third party. The policy's definition of property damage does not encompass the threat or potential for harm.
For the same reason, plaintiff's alternative interpretation, that damage to the state's regulatory interest constitutes third-party damage, also fails. Under the policy's definition, "property damage" does not result unless an "occurrence" produces damage to tangible property. A regulatory interest is not tangible property.
*1056 We next examine plaintiff's interpretations in the light of the policy as a whole. Both of the interpretations suggested by plaintiff conflict with the provisions of the following section. In Section I, regarding property coverages, the policy states, in relevant part:
"SECTION IEXCLUSIONS
"A. We do not insure for loss or damage caused by any of the following excluded events as described in 1. through 11. below. Loss or damage will be considered to have been caused by an excluded event if that event (1) directly and solely results in loss or damage; or (2) initiates a sequence of events that results in loss or damage, regardless of the nature of any intermediate or final event in that sequence.
"1. Ordinance or Law, meaning any ordinance or law:
"* * * * *
"c. requiring any insured * * * to * * * clean up, remove, contain, treat, detoxify, or neutralize * * * the effects of pollutants.
"Pollutant means any * * * liquid * * * contaminant, including * * * chemicals and waste. Waste includes materials to be recycled, reconditioned, or reclaimed.
"This exclusion applies whether or not the property has been physically damaged." (Emphasis in original.)
Because of the absolute pollution exclusion found in the property exclusion section of the policy, giving effect to either of plaintiff's interpretations would override the policy's coverage provisions for damage to the insured's own property. Specifically, it would nullify the pollution exclusion by extending third-party property liability coverage to first-party property damage and would eliminate the distinction between the two types of coverage. Oregon law requires that insurance provisions be interpreted reasonably to avoid nullification of other parts of the policy. Hoffman, 313 Or. at 474, 836 P.2d 703. Plaintiff's interpretations do not withstand scrutiny in the light of the policy as a whole.
Plaintiff both owns and occupies the property that suffered damage. Because neither of plaintiff's interpretations of the owned property exclusion is plausible, we conclude that no genuine issue of material fact exists regarding damage to third-party property and that defendant is entitled to judgment as a matter of law. Accordingly, the trial court did not err in granting summary judgment for defendant.
Affirmed.
NOTES
[*] DEITS, C.J., vice Richardson, S.J.
[1] First-party property insurance provides coverage for the cost of remedying physical damage to an insured's own property. Liability coverage is intended to provide indemnity for costs incurred by the insured to remediate damage to property owned by a third party. Defendant asserts that plaintiff is bringing his claim under the liability portion of his policy.
[2] This report was attached as an appendix to defendant's motion for summary judgment submitted to the trial court below and to its brief submitted to this court.
[3] ORAP 5.45(2) provides:
"No matter assigned as error will be considered on appeal unless it was preserved in the lower court and assigned as error in the party's opening brief; provided that the appellate court may consider errors of law apparent on the face of the record."
See also ORAP 5.45(1) ("Assignments of error are required in all opening briefs of appellants and cross appellants.").
[4] ORS 742.016(1) provides, in part:
"Except as provided in ORS 742.043 [relating to oral binders], every contract of insurance shall be construed according to the terms and conditions of the policy."
[5] Plaintiff argues that the state's regulatory interest in maintaining a clean environment is derived from ORS 465.200(11), which defines environment as "the waters of the state, any drinking water supply, any land surface and subsurface strata and ambient air." (Emphasis supplied.) | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1678911/ | 530 So. 2d 1138 (1988)
LOUISIANA STATE BAR ASSOCIATION
v.
Edward C. ALKER.
Nos. 87-B-0884, 87-B-2023.
Supreme Court of Louisiana.
September 12, 1988.
*1139 Thomas O. Collins, Jr., G. Fred Ours, New Orleans, Gerard F. Thomas, Jr., Natchitoches, Roland J. Achee, Shreveport, Robert J. Boudreau, Lake Charles, Robert M. Contois, New Orleans, Frank J. Gremillion, Baton Rouge, Carrick R. Inabnett, Monroe, Harvey Lewis, New Orleans, Alfred S. Landry, New Iberia, Philippi P. St. Pe Metairie, for applicant.
Edward C. Alker, Metairie, for respondent.
LEMMON, Justice.
These are consolidated disciplinary proceedings by the Louisiana State Bar Association against a currently disbarred attorney.[1] The specifications concern respondent's misconduct relative to seven separate clients prior to his disbarment.
After two separate hearings, which respondent failed to attend, the commissioner appointed by this court submitted findings of facts and conclusions of law, recommending that respondent be disbarred. The Association generally concurred in the findings and conclusions, except as delineated below, and concurred in the recommendation of disbarment, but requested that restitution be required as a condition of reinstatement.
The evidence as to each client will be reviewed separately.
The Anweiler Matter
The specifications as to this client alleged that respondent charged excessive fees in settling a worker's compensation case in violation of DR 2-106, failed to render an accounting of the client's funds and converted the funds to his own use in violation of DR 1-102 and DR 9-102, and entered into business transactions with his client wherein he and the client had differing interests in violation of DR 5-104 of the Code of Professional Responsibility.[2]
Respondent contracted with the client to handle a claim against Avondale Shipyards for an on-the-job injury aboard a vessel on drydock. The contract provided for a contingency fee of 40% of the recovery. The *1140 documents indicated two different accident dates and two different locations for the accident. No suit was ever filed under the Jones Act or the Louisiana Worker's Compensation Act.
The claim was settled for $35,000 by a joint petition for worker's compensation compromise almost three years after the accident. In the receipt and release, the client agreed to pay attorney's fees to respondent of $7,500, in addition to the $4,500 fee for the worker's compensation settlement.[3] The release stated that the additional fee was for legal services over two years, including evictions, land leases, property negotiations and other business transactions. The release further stated that the claim against Avondale was really a Jones Act claim which was treated as a compensation settlement "because it was expedient".
Respondent deposited the check in his bank account, but never rendered an accounting of the disbursement of the settlement funds to the client. He apparently withdrew his fee, but never disbursed the full amount of the settlement funds (whether the fee due was $4,500 or $12,000).[4] Instead, respondent borrowed $10,000 from the proceeds of the settlement. He eventually repaid the client $5,000 and gave the client a note for $5,000. The client ultimately filed suit to collect on the note.[5] The client also denied that he owed respondent any amount for other legal services.
The commissioner found that respondent's failure to render an accounting of the disbursement of the funds and his failure to pay the full amount of the client's portion of the settlement proceeds to the client constituted a violation of DR 9-102(B)(3) and (4). In addition, the commissioner concluded that respondent's borrowing $10,000 from the client out of the settlement funds constituted a violation of DR 5-104(A) by entering into a business transaction with differing interests without the consent of the client after full disclosure.
After reviewing the record, we conclude that the Association proved by clear and convincing evidence the violations found by the commissioner. As to the business transaction, respondent in his answer stated that the client acquiesced in the loan because the interest rate was higher than could be obtained from a financial institution. It is unclear how fully informed the client was when he entered into this transaction. However, DR 5-104(A) generally prohibits a lawyer from entering into a business transaction with the client when they have differing interests. See Louisiana State Bar Association v. Bosworth, 481 So. 2d 567 (La.1986). When charged with violating DR 5-104(A), an attorney who wishes to avail himself of the exception (consent after full disclosure) has the burden of proof by a preponderance of the evidence. Here, respondent failed to prove the client's consent after full disclosure.
The commissioner further concluded that the Association failed to prove respondent charged an excessive fee, noting the nebulous nature of the claim involved. The Association contests this finding.
While the claim was settled by the filing of a petition for worker's compensation compromise, the release contained a settlement of all claims arising from the accident and referred to other legal services for which respondent was to receive $7,500. Because of the release signed by the client, as well as the general confusion surrounding the claim from the outset and the prescription issue and other problems *1141 with the litigation, we conclude that the specification of charging an excessive fee was not proved by clear and convincing evidence.
The Sumlin Matter
The specifications in this matter alleged commingling and conversion of the clients' settlement funds in violation of DR 1-102 and DR 9-102.
Respondent negotiated settlements of the clients' personal injury claims. In April, 1985, respondent received two settlement drafts from one insurer in the amounts of $3,500 and $10,000. He deposited the drafts in his bank account and prepared an accounting statement of the disbursement of the funds. The statement indicated that the sums of $475 and $1,140 were withheld for payment of Dr. Philibert's bills, but these bills were never paid.
In September, 1986, respondent received a check in the amount of $13,026.64 in settlement of a judgment against another insurer. He did not deposit the check in a trust account, but converted the funds into cashier's checks to pay costs, attorney's fees and medical bills. A check in the amount of $250.00 payable to Dr. Philibert was not sent to the physician, but was cashed and endorsed by respondent "not used for purposes intended". The record does not indicate how the $250 was used.
The commissioner concluded respondent's withholding of the sums of $475 and $1,140 from his clients' funds to pay medical bills which were never paid constituted conversion of the funds in violation of DR 9-102 and DR 1-102. The record clearly establishes these violations.
As to the $250 withheld from the 1985 settlement, the commissioner concluded that commingling and conversion had not been proved, noting that respondent had rendered a handwritten accounting and that the record does not establish the ultimate disposition of the $250. The Association contests this conclusion.
When the Bar Association proves that the attorney failed to deposit his client's funds in an identifiable bank account, the burden is on the attorney to show there was no conversion of the funds to his own use. Louisiana State Bar Association v. Krasnoff, 488 So. 2d 1002 (La. 1986); Louisiana State Bar Association v. Williams, 512 So. 2d 404 (La.1987). Here, the record shows that respondent was in possession of $250 belonging to his client, and his failure to show the disposition of the funds results in failure to meet his burden of proof that the funds were not converted. We therefore conclude that respondent converted $250 of the clients' funds to his own use.
The Riley Matter
This specification charged respondent with mishandling and converting the client's funds received in settlement of a worker's compensation claim in violation of DR 1-102 and 9-102.
In August, 1984, respondent received a settlement draft in the amount of $15,856.19. He deposited the draft in his bank account, but did not disburse or account for the funds, telling the client that the draft had not cleared the bank.[6] Approximately one year later, respondent received another check for the client in the amount of $9,143.81. Respondent also deposited this check in his bank account. When the client confronted respondent with a copy of the cancelled 1984 draft, respondent gave the client $8,000 in cash, in addition to a note for $4,875, and later paid additional sums.[7] At the time of the commissioner's hearing, respondent had still not paid the client the total amount due him.
The commissioner concluded that respondent did not render an accounting for the proceeds of the settlement drafts and did not pay the client the full amount of funds *1142 due him from the settlement.[8] The commissioner further concluded that respondent's handling of the settlement proceeds violated DR 1-102 and DR 9-102 and constituted conversion. The record clearly establishes these violations. Furthermore, the misconduct was aggravated by respondent's lying to his client about the status of the 1984 draft.
The Young Matter
The specifications concerning this client charged respondent with commingling and converting the client's funds in violation of DR 1-102 and 9-102 and with charging an excessive fee in violation of DR 2-106.
Respondent was employed to collect the proceeds of two life insurance policies after the death of the client's husband. Although the insurers did not contest the claim, respondent entered into an employment contract calling for a 40% contingency fee.
Respondent received two drafts after a routine demand upon the insurers, one for $25,000 and one for $5,000, and deposited them in his bank account. When the client protested the amount of the fee, respondent offered to pay her $12,000 as her full share of the settlement proceeds. The client rejected the offer and obtained other counsel, who filed suit to recover the funds. The client has never received any of the proceeds of the policies.
The commissioner concluded that respondent was guilty of conversion of the client's funds in violation of DR 9-102 and of attempting to charge a clearly excessive fee in violation of DR 2-106.
The record clearly supports a conclusion that respondent attempted to charge an excessive fee for his services. As to the conversion of the client's funds, a check representing the proceeds of a compromise belongs in part to the client and in part to the lawyer and must be deposited in a trust account. DR 9-102(A)(2). The lawyer must also promptly and unconditionally tender the portion which represents the client's share of the funds. DR 9-102(B)(4). If there is a dispute between the lawyer and the client over the amount of the fee, the lawyer, in addition to unconditionally tendering the amount which is undisputedly the client's share of the funds, must maintain the disputed portion of the fee in the trust account until the dispute is resolved. DR 9-102(A)(2).
Here, respondent violated DR 9-102(A)(2) by withdrawing the disputed portion of the fee from the bank account.[9] Respondent was only entitled to withdraw the amount of his fee that was undisputedly earned and was required to leave the disputed portion of the fee in the trust account until the dispute was settled. Respondent further aggravated the situation not only by using the disputed portion of the fee for his own purposes, but also by refusing to turn over unquestionably to the client the portion of the funds which undisputedly belonged to the client. Indeed, respondent's attempt to hold the client's share of the funds as leverage to settle the fee dispute with the client was particularly reprehensible.
The Hargesheimer Matter
These specifications charge respondent with improper handling and conversion of a client's funds received from the sale of the client's truck in violation of DR 9-102 and with charging excessive fees for handling several criminal matters in violation of DR 2-106.
Respondent received $12,000 cash and a $4,000 note from the purchaser of the client's truck. Respondent deposited the cash in his bank account on May 7, 1985. At the commissioner's hearing both the client and his mother testified that respondent had tendered $2,000 or less from the truck sale and that the mother had repeatedly sought an accounting. Respondent *1143 presented no verifiable documentation of additional funds paid to the client.[10]
The commissioner found that respondent commingled and converted the client's funds in violation of DR 9-102(B)(4) and failed to render an accounting in violation of DR 9-102(B)(3).[11] The record clearly supports these violations.
As to the excessive fee issue, respondent represented the client in several criminal matters, including three in district court and two in parish court. Respondent attempted to charge a fee of $64,650 for services in these matters. He gave the client a bill which showed only dates and hours, with no reference to any particular case or the type of services which were rendered.
The commissioner, although questioning the correctness of the fee, concluded that the evidence was insufficient to establish that respondent had attempted to charge an excessive fee. The Association contests this finding.
In the first case involving a misdemeanor charge of possession of marijuana which allegedly occurred on June 7, 1985, respondent appeared in court twice for arraignment and once to enter a guilty plea. No motions were filed. In the second case involving misdemeanor charges of aggravated assault and simple battery on a police officer on May 6, 1985, respondent appeared for arraignment on August 23, 1985, and the state dismissed the charges on October 21, 1985. No motions were filed. In the third case involving a felony charge of illegal possession of a sawed-off shotgun on May 6, 1985, relator filed a motion for continuance and tried a motion to suppress before being replaced as counsel. The two cases in parish court involved charges of driving while intoxicated, speeding (25 miles over the speed limit) and driving with an expired license, all of which allegedly occurred on June 7, 1985. Respondent filed motions, but did not complete the representation.
The client testified that respondent presented the bill for $64,650 when he demanded that respondent pay the balance due from the sale of the truck.
Respondent was served with a pleading in this proceeding which alleged that he had attempted to charge an excessive fee of approximately $64,000 for handling several criminal cases for this client between March 15 and June 23, 1985. The evidence presented by the Association consisted of respondent's bill, the records of the criminal cases, and the testimony of the client and his mother. Most of the bill encompassed dates before the crimes were allegedly committed, and there was little evidence of other services rendered by respondent.[12] The services shown by this record to have been performed by respondent on the five criminal cases for which he was accused of charging an excessive fee clearly does not warrant a $64,650 fee.
Once the Association made this prima facie showing of an excessive fee, respondent had the burden of going forward with evidence that services were performed which justified the fee. Respondent's failure to produce such evidence warrants the conclusion that he attempted to charge an excessive fee.
The Brumfield Matter
In this matter respondent was charged with commingling and converting funds from an insurance settlement draft and failing to render an accounting in violation of DR 1-102 and 9-102.
*1144 The insurance settlement draft for $3000 was payable to and endorsed by the client. Respondent cashed the draft in April or May of 1985, but did not pay the client his share of the funds until December, 1985, at which time an accounting was also rendered. Respondent's letter to the Association states that he tried to contact the client by letter on July 12, August 19 and December 11 (the latter by registered mail) in order to disburse the funds. The client denied receiving any of the letters. Significantly, the client admitted he had lived out of state for part of the time and may have been difficult to reach until December.
The commissioner found that the Association failed to prove any ethical violation as to this client. The Association contests this finding. After reviewing the evidence, we conclude that respondent failed to deposit the client's funds in an identifiable bank account in violation of DR 9-102(A). However, in view of respondent's attempts to contact the client during the time the client was admittedly difficult to find, we further conclude the Association did not prove by clear and convincing evidence that respondent failed to pay the funds timely upon request of the client as required by DR 9-102(B)(4).
The Cook Matter
The specifications as to this client allege that respondent was guilty of dishonest conduct prejudicial to the administration of justice in violation of DR 1-102, neglecting a legal matter entrusted to him in violation of DR 6-101, and knowingly making false statements in a pleading in violation of DR 7-102.
Respondent was hired by Mr. Cook to handle the adoption of Mrs. Cook's two children from a previous marriage and to have their names changed. Respondent was paid $3,500 for his services, but never filed a petition for adoption. On October 5, 1979, respondent prepared an Act of Adoption which was executed by the parties. On December 21, 1980, respondent filed a petition to change the name of each child, alleging that Mr. Cook had adopted the children.[13] Mr. Cook died on October 5, 1981. In February, 1984, respondent filed the Act of Adoption in the district court.
Mrs. Cook filed a complaint with the Association in January, 1985. Respondent's handwritten response asserted that the work had been completed and filed in court in February, 1984. A subsequent typewritten response explained that he had drafted a suit for step-parent adoption based on the legal father's failure to support the children, but learned that the legal father had in fact provided child support and would contest the adoption. He asserted his belief that Mr. Cook's health would not have permitted him to go through a court battle over the adoption and averred that Mr. Cook himself "stopped the adoption proceedings".
The commissioner found that respondent had been requested to prepare the adoption proceedings on many occasions and had neglected the legal matter entrusted to him in violation of DR 6-101(A)(3). The commissioner further found that the Act of Adoption which respondent ultimately prepared was one which respondent should have known was patently invalid and that this action constituted deceitful and dishonest conduct which was prejudicial to the administration of justice in violation of DR 1-102. The evidence clearly establishes these violations. Furthermore, respondent has made no effort to return the fee which he had collected for the services he failed to perform.
Discipline
Disciplinary proceedings are not primarily to punish the lawyer, but to protect the courts and the public from unprofessional conduct. Louisiana State Bar Association v. Alker, 491 So. 2d 1328 (La. 1986). A penalty for misconduct by a lawyer deters future misconduct, protects the public from such misconduct, and maintains confidence in the legal system.
*1145 Misuse of a client's funds is a serious act of misconduct. In Louisiana State Bar Association v. Hinrichs, 486 So. 2d 116 (La. 1986), this court established guidelines for determining the appropriate penalty in cases of commingling and conversion of clients' funds. Disbarment is usually appropriate when one or more of the following elements are present: the lawyer acts in bad faith and intends a result inconsistent with his client's interest; the lawyer commits forgery or other fraudulent acts in connection with the violation; the magnitude or the duration of the deprivation is extensive; the magnitude of the damage or risk of damage, expense and inconvenience caused the client is great; the lawyer either fails to make full restitution or does so tardily after extended pressure of disciplinary or legal proceedings.
Here, the evidence showed a pattern in which respondent failed to account for clients' funds and delayed or totally failed in paying the funds to the client. He converted the funds of five clients to his own use. In one case he lied to the client about the status of an insurance draft, and in another he withheld the client's share of life insurance proceeds and used the withheld funds as leverage in attempting to collect an excessive fee. In one case he borrowed funds from a client without full disclosure and has failed to repay the funds. In another he failed to pay the client's funds promptly, finally giving a note (which remains unpaid) in partial payment. Various amounts are still owed to at least five clients who have suffered considerable damage and inconvenience, and some have filed civil actions to recover these debts. Additionally, respondent attempted to charge excessive fees in two cases and deceitfully filed a notarial act in another which he should have known was patently invalid.
Moreover, respondent's mishandling of clients' funds represents a continuation of the pattern of misconduct for which he was disbarred in Louisiana State Bar Association v. Alker, supra. In addition to prior disciplinary offenses and a pattern of misconduct, other aggravating factors include substantial experience in the practice of law, vulnerability of the victims, multiple offenses, and indifference in making restitution. Standards for Imposing Lawyer Discipline § 9.22 (1986).
Disbarment is clearly warranted in this case.
The Association further contends that respondent should be required to make restitution in the amount of $62,715.[14]
A requirement of restitution in the order of disbarment arguably might encourage more prompt or more diligent efforts at restitution. Nevertheless, the extent and the timing of restitution (or efforts to make restitution) are normally important factors to be considered in reviewing a lawyer's application for reinstatement, which may be filed no earlier than five years after disbarment. Articles of Incorporation, Louisiana State Bar Association art. 15, § 12(a).[15]
The requirements for reinstatement include proof of the lawyer's fitness to resume practice and of his good moral character. Because the fact of restitution is relevant to a determination of the *1146 present fitness of a lawyer to practice law and may be indicative of his moral character and his rehabilitation during the period after disbarment, the preferable time for weighing the entire matter of restitution is in the reinstatement proceeding, rather than in the disbarment proceeding. Additionally, every lawyer may not realistically be able to make full restitution, and each application for reinstatement should be considered on an individual basis.[16]
We therefore decline at this time to impose a requirement that respondent must make restitution before applying for reinstatement. If and when respondent applies for reinstatement, he must set out in his petition a statement of the status of restitution of funds and the extent and timing of his efforts at restitution. This court will determine at that time the weight to be given restitution efforts or the lack thereof.
Decree
Accordingly, the five-year minimum period which must elapse after disbarment before respondent may apply for reinstatement is extended until five years have elapsed since the finality of this judgment. All costs are assessed against respondent.
NOTES
[1] Jurisdiction over respondent falls under this court's original jurisdiction. La. Const. art. V, § 5(B). The decision in Louisiana State Bar Association v. Krasnoff, 502 So. 2d 1018 (La. 1987), held that this court may exercise jurisdiction over a disbarred attorney for misconduct which occurred prior to disbarment, when the misconduct had not been included in the prior proceeding, in order to promote judicial efficiency and to fulfill the purpose of disciplinary proceedings of protecting the public and the administration of justice.
[2] The Code of Professional Responsibility has been replaced by the Rules of Professional Conduct, effective January 1, 1987. The alleged misconduct, however, occurred before the adoption of the new rules.
[3] The maximum permissible fee on a $35,000 recovery in a worker's compensation case was $4,500. See La.R.S. 23:1141.
[4] The commissioner found that, although the evidence was unclear, respondent charged a fee of at least $7,000 and as much as $12,000.
[5] When the attorney fails to render an accounting of a client's funds and does not appear at the hearing in the disciplinary proceeding, it is difficult to determine the amount of funds which are still owing to the client. Here, in his suit against respondent the client sought recovery of the $7,500 excess fee and the $5,000 unpaid balance on the note, indicating that respondent probably paid him the remainder of the settlement proceeds.
[6] By December, 1984, the balance in the account fell below $1,500, indicating that respondent had converted these funds to his own use.
[7] At the commissioner's hearing, the client admitted receiving the $8,000, in addition to $1,500 previously borrowed from respondent and to $500 and $1,000 subsequently paid to the client and his wife respectively.
[8] Again, because of the absence of an accounting and respondent's failure to appear at the hearing, it is difficult to determine the amount still owing to the client. Apparently the $4,875 note represented the deficit in the disbursement of the settlement proceeds.
[9] Because respondent's bank account during this period fell far below the $30,000 level, it is clear that respondent withdrew both the client's share of the funds and the disputed portion of the fee and converted these to his own use.
[10] Respondent sent the Association a handwritten note, purportedly written by the client on August 23, 1985, to the effect that respondent had paid all but $336 of the proceeds of the sale of the truck. However, except for proof of payments totaling less than $2,000, respondent never provided any other accounting for the funds or proof of other payments.
[11] Again, because of the absence of an accounting or an appearance by respondent, it is difficult to determine the amount which is still owing to the client. If $2,000 of the $12,000 cash proceeds has been paid, the balance of $10,000, minus any fees and costs, is still owing.
[12] Respondent also handled a bankruptcy case for this client, but on a contract basis for a fixed fee (and not on an hourly rate). After payment of an advance deposit, the client owed a balance of $1,800 (according to the bankruptcy petition) at the time of the filing.
[13] The commissioner found that this statement, although false, was inadvertently included in the pleading and did not constitute knowingly making a false statement. The Association concurred in this finding.
[14] The Association suggests the following amounts of restitution are appropriate:
Anweiler$7,500 (the excessive fee) Sumlin$1,863 (the amount not paid to the doctor) Riley$7,000 ($25,000 less a one-third fee, less $8,000 and $1,500 payments) Young$29,500 ($30,000 less a $500 fee) Hargesheimer$13,350 ($16,000 less $1,000, less $1,650 fee for criminal cases) Cook$3,500 (the entire unearned fee)
[15] See also art. 15, § 12(c), relating to applications for reinstatement. Section 12(c) provides in pertinent part:
"The information required concerning the petitioner may include any or all of the following matters in addition to such other matters as may be reasonably required to determine the fitness of the petitioner to resume the practice of law: criminal and civil judgments; disciplinary judgments; copies of income tax returns together with consents to secure original returns; occupation during disbarment and information in connection therewith; financial statement; statement of restitution of funds which were the subject matter of disciplinary proceedings. (emphasis added)
[16] While the making of, or the failure to make, restitution is a matter for serious consideration by the court on an application for reinstatement to the bar, the weight of authority does not make it the controlling consideration. Annot., 70 A.L.R. 2d 268 (1960).
There should be no hard and fast rule governing the subject of restitution, but each case should be considered and dealt with in the light of its own circumstances. In Re Harris, 88 NJL 18, 95 A. 761 (1915). Nevertheless, in cases involving misappropriation of funds, restitution is an important consideration. While restitution alone will not ordinarily justify reinstatement, it is only under exceptional circumstances that reinstatement should be allowed in the absence of restitution or of a diligent and timely effort to accomplish restitution. In Re Dawson, 131 So. 2d 472 (Fla.1961). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1750571/ | 379 Mich. 182 (1967)
150 N.W.2d 818
SUN OIL COMPANY
v.
TRENT AUTO WASH, INC.
Calendar No. 10, Docket No. 51,441.
Supreme Court of Michigan.
Decided June 6, 1967.
Robert E. Childs, for plaintiff.
Anthony A. Vermeulen, for defendant.
ADAMS, J.
On September 28, 1962, Clara Williams gave a warranty deed to Sun Oil Company by which she conveyed to that company two lots. Contained in her deed is the following agreement:
"Grantor agrees that property now owned by grantor lying north of and adjacent to the within described premises shall not be used for or in connection with the operation of a gasoline service station or filling station for the sale of gasoline, motor fuel, petroleum products, automotive accessories or automotive services generally." (Emphasis added.)
On February 1, 1964, Clara Williams executed a land contract to defendant, Trent Auto Wash, *186 Inc. It is admitted that the land contract covered "that property now owned by grantor lying north of and adjacent to" the lots Clara Williams conveyed to Sun Oil Company. The defendant also "admits that it had knowledge of the alleged covenant; that plaintiff's agents informed it that plaintiff would attempt to enforce said covenant, and that defendant intends to construct underground storage tanks and above ground pumps," et cetera.
It is unnecessary to determine whether the above agreement is a covenant running with the land to afford plaintiff the relief it seeks. The agreement relates to the property purchased by Trent Auto Wash and it is equally clear that it was intended for the benefit of the adjacent property of Sun Oil Company. The agreement does not relate to any activities on the part of Clara Williams, but, rather, contemplates a restriction upon the use of property retained by her. Whatever she could not do, chancery may also enjoin those in privity with her and with notice of the restriction from doing.
The principle is stated by the Lord Chancellor in the case of Tulk v. Moxhay (1848), 2 Ph 774 (41 Eng Rep 1143), affirming 11 Beav 571 (50 Eng Rep 937):
"The question does not depend upon whether the covenant runs with the land * * * if there was a mere agreement and no covenant, this court would enforce it against the party purchasing with notice of it; for if an equity is attached to the property by the owner, no one purchasing with notice of that equity can stand in a different situation from the party from whom he purchased."
The principle of Tulk has been widely recognized and followed in numerous cases. In the case of Langenback v. Mays (1950), 207 Ga 156 (60 SE2d 240), the defendants sold to plaintiffs a small tract of land on which several tourist cabins were located, *187 and orally agreed not to use their remaining land for a tourist camp. The defendants constructed a tourist camp in violation of their contract and, when enjoined from operating it, executed an instrument purporting to be a lease to their daughter for the tourist camp. The daughter operated the business with actual knowledge of the injunction granted against her parents. The supreme court of Georgia's opinion states:
"Equity will enforce a lawful restrictive agreement concerning land against a person who takes with notice of the contract. In such a case, the person violating the agreement, though not a party to it, is a privy in conscience with the maker. 31 Yale Law Jour 127, 131; Francisco v. Smith, 143 NY 488 (38 N.E. 980); Rosen v. Wolff, 152 Ga 578 (110 S.E. 877)."
In the case of Thodos v. Shirk (1956), 248 Iowa 172 (79 NW2d 733), plaintiff, owner of certain lots in a subdivision, brought an action in equity asking that defendants be enjoined from using their property as a trailer court in violation of the restrictive covenant in their deed which provided: "No building shall be placed or erected on said premises except for residence purposes." The court in discussing the doctrine of equitable servitudes said (p 179):
"Since the doctrine of equitable servitudes rests upon the theory of a servitude imposed upon the land, enforceable against all subsequent purchasers of the land who are charged with notice actual or constructive, the requirement of the special words such as `and assigns' is unnecessary in the deed. The sole test for the running of the burden in equity is the intention of the parties to impose a servitude upon the land as distinguished from a personal promise of the present owner."
*188 In Hodge v. Sloan (1887), 107 NY 244 (17 N.E. 335), a grantee bound himself by a covenant in his deed to limit the use of land purchased so as not to interfere with the trade or business of the grantor and the property was subsequently sold to defendant without covenant on his part but with notice of the covenant in the deed to his grantor. The court said (p 250):
"There seems no reason why he and his grantee, taking title with notice of the restriction, should not be equally bound. The contract was good between the original parties, and it should in equity at least bind whoever takes title with notice of such covenant. By reason of it the vendor received less for his land, and the plain and expressed intention of the parties would be defeated if the covenant could not be enforced as well against a purchaser with notice, as against the original covenantor. In order to uphold the liability of the successor in title, it is not necessary that the covenant should be one technically attaching to and concerning the land and so running with the title. It is enough that a purchaser has notice of it."
In the case of Coomes v. Aero Theatre and Shopping Center, Inc. (1955), 207 Md 432 (114 A2d 631), the complainant and his grantee intended that land should be restricted to uses not in conflict with the use of complainant's remaining land. The restrictive covenant read:
"Subject also the further restriction that the grantees or their tenants therein will not engage in any business which shall compete with or be of a similar nature of those businesses conducted and maintained on the property known as the Aero Theatre and Shopping Center, Inc."
Defendants, who took from plaintiff's grantee, had notice of the restriction at time of conveyance. The *189 restriction was held binding on them. The court said (p 437):
"We reaffirm the doctrine [the doctrine of Tulk] that if the owner of land enters into a covenant concerning its use, subjecting it to an easement or personal servitude, and the land is afterwards conveyed to one who has notice of the covenant, the grantee will take the land bound by the covenant and will be compelled in equity to specifically execute it or will be restrained from violating it; and it makes no difference, with respect to this liability in equity, whether or not the covenant is one which runs with the land. Thruston v. Minke, 32 Md 487, 494; Halle v. Newbold, 69 Md 265, 270 (14 A 662); Newbold v. Peabody Heights Co., 70 Md 493 (17 A 372, 3 LRA 579); Peabody Heights Co. of Baltimore City v. Willson, 82 Md 186 (32 A 386, 1077, 36 LRA 393); Clem v. Valentine, 155 Md 19 (141 A 710); Turner v. Brocato, 206 Md 336 (111 A 2d 855); 2 Pomeroy, Equity Jurisprudence (5th ed), § 689. * * *
"While most courts have accepted the theory that restrictive agreements should be enforced as an easement or servitude, Mr. Tiffany took the view that the more satisfactory theory is that equity regards such an agreement as vesting in the promisee a right to specific enforcement by means of an injunction or otherwise, not only as against the original promisor, but also as against a subsequent holder of the property, if not a purchaser for value without notice. He argued that if the right to equitable relief could not thus be asserted as against a subsequent holder of the property, the result would be that the promisee could be deprived of such right, in practically every case, by a collusive transfer on the part of the promisor. 3 Tiffany, Real Property (3d Ed), § 861. * * *
"It is understood, however, that it is not necessary that the expression of intention shall take any particular form. Of course, if the promise purports to bind successors by the use of such words as `successors' *190 or `assigns', little question can arise as to the existence of the necessary intention. But as the language employed becomes less plain and precise, the conclusion that the successors were intended to be bound must rest in a correspondingly greater degree upon an inference drawn from the circumstances under which the promise was made. The circumstances of a particular transaction may yield such an inference without the aid of any specific language in the terms of the promise."
For further annotated statements of the equitable doctrine, see Pomeroy's Equity Jurisprudence (5th ed), §§ 689 and 1295; Tiffany, Real Property (3d ed), § 859; Thompson on Real Property (1962 Replacement), § 3170; 20 Am Jur 2d, Covenants, Conditions, and Restrictions, § 26; 23 ALR2d p 520 et seq.
The agreement between Clara Williams and Sun Oil Company is not so ambiguous as to be incapable of enforcement against those who have taken with notice of it. The commitment is that "that property * * * shall not be used for or in connection with the operation of a gasoline service station." There is nothing personal as to Mrs. Williams in this language. It clearly refers to the land. While the time of the commitment is not expressed, this is no insuperable obstacle. Courts are quite accustomed to making determinations of what is a reasonable time in terms of the presumed intent of the parties. Finally, if the agreement is not enforced by equity, it becomes completely vitiated. Obviously, plaintiff has no adequate remedy at law. If equity cannot grant relief, a covenantor need only convey the land to destroy today the covenant he made yesterday or, as in Mrs. Williams' case, the covenant made by her a short 16 months before her conveyance to defendant.
*191 Both the trial judge and the Court of Appeals disposed of this matter by holding that the covenant or agreement of the parties ran with the land, a determination I do not regard as necessary for disposition of this case. The chancellor also recognized the equitable doctrine as being applicable if the covenant did not run with the land. I would remand to him for such hearing as may be required to apply that doctrine. Determination of possible questions such as a change in circumstances relating to the lands in question may be necessary. Other aspects of the transaction not presently before us may bear upon the equities of the parties. This is a traditional equity action which does not lend itself to summary disposition. Upon the conclusion of a full hearing, the chancellor will be in a position to shape a proper decree.
I agree that the covenant does not violate CL 1948, § 750.151 (Stat Ann 1962 Rev § 28.348).
I would remand, with costs to abide final result.
KELLY, BLACK, and T.M. KAVANAGH, JJ., concurred with ADAMS, J.
O'HARA, J. (dissenting).
Two questions are presented by this appeal on our leave granted from the Court of Appeals (2 Mich. App. 389). The first is whether the restrictive covenant here involved is personal and limited in its application to the grantor who executed it, or whether it is a covenant running with the land and binding upon subsequent purchasers. The second is what is the effect, if any, of the covenant upon a purchaser who takes with notice thereof. The relevant facts are as follows:
Appellant Sun Oil Company bought 3 lots in a desirable location in St. Clair Shores. It built and equipped a filling station upon them and leased out its operation. In the fractional plat there was *192 a total of 9 lots. The 6 remaining after Sun's purchase were owned by a Clara Williams. They were adjacent to and north of the 3 Sun had previously purchased. Thereafter Sun Oil bought 2 of those lots as a protective measure against the erection of competitive filling stations upon any of the remaining 4. To this end it required that its grantor, Mrs. Williams, include in the warranty deed conveying the 2 lots the following reservation:
"Grantor agrees that property now owned by grantor lying north of and adjacent to the within described premises shall not be used for or in connection with the operation of a gasoline service station or filling station for the sale of gasoline, motor fuel."
It is stipulated that the remaining lots constitute "the property" which is the subject of this litigation.
Subsequent to this conveyance, appellee Trent purchased the 4 lots on land contract. Prior to the purchase, its attorney examined the reservation affecting the 4 lots and Trent was advised by counsel for Sun that Sun would seek to enforce it.
The case was tried in the circuit court on a stipulated record. No fact questions are involved. The trial judge found the restrictive covenant to be a covenant running with the land and hence binding upon the subsequent purchaser. The court added in its opinion:
"Even if this be considered under defendant's theory to be a personal covenant, defendant having admittedly taken title with knowledge of its existence, then equity will enforce its observance by enjoining defendant's violation of said covenant for defendant is `privy in conscience with the maker of restrictive agreement.'"
*193 The Court of Appeals affirmed. Its rationale was that the restriction was not clear and unambiguous. Therefore, that case precedent holding that such restrictions cannot be extended beyond the plain meaning of the words used in them did not control. From this premise the court proceeded to a determination of "the nature of the subject matter, and the apparent purpose in making the agreement," citing Moore v. Kimball (1959), 291 Mich. 455, 461. Thereupon, the court found that purpose "patently is the limitation of competition on this land." In expanding its opinion, our able intermediate Associates used the following language:
"We acknowledge that our decision is not in accord with the case of Lowe v. Wilson (1952), 194 Tenn 267 (250 S.W.2d 366) or the authorities cited therein for we are not persuaded that blind adherence to such a technical rule is required by or desirable (in our view) for the jurisprudence of Michigan." (Emphasis this Court's.)
In its conclusionary paragraph the court adds:
"Finally we mention that our view is not in accord with that expressed in 5 Restatement of Property, § 537. We do not share the concern there expressed in the comment (f) on that section (p 3221) anent the social harm involved."
We are compelled to disagree. First, we do not believe that to hold with appellant we adhere blindly to a technical rule. Rather, we believe we follow wise precedent efficacious as applied to transactions involving the transfer of and limitations upon the use of real property. We might well agree that the apparent purpose of appellee Sun in phrasing the restriction was to limit competition on the lots not owned by it and contiguous to those which it purchased from grantor Williams. Such unilateral intention *194 on its part, however, in our view is not sufficient to establish that such was the intention of the grantor and binding upon subsequent grantees. If Sun intended the restriction to be a covenant running with the land, it was Sun's obligation to phrase the restriction or to insist upon phrasing that would create no ambiguity at the peril of having any ambiguity resolved in favor of the free use of land. To follow the Court of Appeals, we would do violence to the rule enunciated in Bastendorf v. Arndt, 290 Mich. 423, 426 (124 A.L.R. 445):
"Where restrictions are ambiguous, it is axiomatic that uncertainties are resolved in favor of the free use of property. Kelly v. Carpenter, 245 Mich. 406; Phillips v. Lawler, 259 Mich. 567."
We agree with the Court of Appeals that the restrictions "might be read as an undertaking on the part of the covenantor that the property would never be used or it might be read as an undertaking that it would not be used so long as the grantor had title." (Emphasis added by the Court of Appeals.) To read "never" into the restriction here involved is to resolve the ambiguity against the free use of property and is to abrogate the salutary rule of Bastendorf to the exact contrary. We follow the established rule.
Next we consider the language of the learned chancellor that even if the covenant be interpreted as a personal covenant, appellant having taken with notice equity will enforce its observance. We have no quarrel with the statement of principle. We believe, however, it contains an omission that would render its application inequitable rather than equitable. The omission is the answer to the question "notice of what?" It is stipulated that appellee had notice that a restriction had been included in the deed from Mrs. Williams to Sun and made applicable *195 to the lots not conveyed which she retained. Even the plenary power of equity cannot decree the effect of notice to be greater than that which the thing noticed creates. A purchaser with notice of the restriction, as was appellee Trent, is as the chancellor held "privy in conscience with the maker of [the] restrictive agreement." Equity would have no great problem in knowing what the "conscience" of Sun was. It wanted to keep filling stations off 4 lots that it did not buy that were contiguous to 2 lots it did buy, all owned by the same person. We cannot, however, span the wide gap from Sun's "conscience" to Mrs. Williams' "conscience" on the language of the deed. In examining the conveyance of the 2 lots from Mrs. Williams to Sun, counsel for Trent had a right to conclude that the restriction was personal to the grantor under well-settled law, and that when the lots passed to Trent the restriction no longer applied. Trent could well have been "privy in conscience" to Mrs. Williams and still be free to use the 4 lots it purchased as it chose. Having held the covenant personal and not binding on appellant Trent, we do not reach or pass upon its contention that if it were valid, the intended use was not in fact violative of the language of the restriction.
Appellant Trent further urges that if the restriction does run with the land and thus is binding upon it, the limitation is in restraint of trade and violative of the applicable State statute.[*] Strictly *196 speaking, for decisional purpose in this Court, we need not pass upon it. However, because the Court of Appeals held the restriction binding on Trent, it had to pass upon this issue. It is important to the jurisprudence of our State and likelihood exists that the question will arise. For this reason we here approve the position of the Court of Appeals and for the reasons assigned.
The judgment of the Court of Appeals affirming the circuit court is reversed. The cause should be remanded to the circuit court with directions to vacate its judgment, to dissolve the permanent injunction, and to enter judgment for defendant-appellant Trent Auto Wash, Inc. Appellant may tax costs of all courts.
DETHMERS, C.J., and SOURIS, J., concurred with O'HARA, J.
BRENNAN, J., did not participate in the decision of this case.
NOTES
[*] CL 1948, § 750.151 (Stat Ann 1962 Rev § 28.348), which reads: "All contracts, agreements, understandings and combinations made, entered into, or knowingly assented to, by and between any parties capable of making a contract or agreement which would be valid at law or in equity, the purpose or object or intent of which shall be to limit, control, or in any manner to restrict or regulate the amount of production or the quantity of any article or commodity to be raised, or produced by mining, manufacture, agriculture or any other branch of business or labor, or to enhance, control or regulate the market price thereof, or in any manner to prevent or restrict free competition in the production or sale of any such article or commodity, shall be illegal and void, and every such contract, agreement, understanding and combination shall constitute a criminal conspiracy. And every person who, for himself personally, or as a member, or in the name of a partnership, or as a member, agent or officer of a corporation, or of any association for business purposes of any kind, who shall enter into or knowingly consent to any such void and illegal contract, agreement, understanding or combination, shall be deemed a party to such conspiracy.
"All parties so offending shall be guilty of a misdemeanor, punishable by imprisonment in the county jail for not more than 6 months or by a fine of not more than $250. And the prosecution for offenses under this section may be instituted and the trial had in any county where any of the conspirators become parties to such conspiracy, or in which any one of the conspirators shall reside: Provided, however, That this section shall in no manner invalidate or affect contracts for what is known and recognized as common law and in equity as contracts for the `good will of a trade or business'; but all such contracts shall be left to stand upon the same terms and within the same limitations recognized at common law and in equity." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1775463/ | 525 So. 2d 174 (1988)
Mrs. Myrtha THOMPSON, et al., Plaintiffs-Appellants,
v.
Grady WOODS, Defendant-Appellee.
No. 87-131.
Court of Appeal of Louisiana, Third Circuit.
March 2, 1988.
*175 Gilbert F. Stampley, New Orleans, for plaintiffs-appellants.
Edward Saal, Jr., Gueydan, for defendant-appellee.
Before FORET and DOUCET, JJ., and SWIFT, J. Pro Tem.[*]
G. WILLIAM SWIFT, Jr., Judge Pro Tem.
Mrs. Myrtha Thompson Woods and her husband, Lawrence Woods,[1] filed this suit against their nephew, Grady Woods, seeking to set aside a purported credit sale of their family home dated May 3, 1962, on grounds of fraud and simulation. The defendant answered and asserted a reconventional demand for damages to the dwelling allegedly resulting from poor maintenance by the plaintiffs while in possession thereof under a usufruct reserved in the deed. Following a trial on the merits, the court rejected plaintiffs' demand to set aside the sale and also denied defendant's reconventional demand. Plaintiffs filed a devolutive appeal. We affirm the trial court's ruling.
FACTS
On or about November 17, 1947, Myrtha Thompson Woods purchased from her brother, James Thompson, Lots One and Two of Block Number 36 in Gueydan, Louisiana, which he had inherited from their father, Horace Thompson. Plaintiffs built a home and moved on the subject property in 1950. The materials used in the construction of the home were purchased on credit from Gueydan Lumber Company, Inc. On February 7, 1950, plaintiffs executed an installment note in favor of the lumber company in the amount of $1,636.62, plus 8% interest, which was secured by a mortgage on the property. The note was subsequently turned over to one of the company's major stockholders, LP. Saal.
*176 Lawrence Woods, made sporadic payments on the note, but never made them on time. It appears that Mr. Saal made subsequent advances to Mr. Woods, over and above what was already owed. This practice continued until a decision was made by the creditor to foreclose on the property.
To prevent the foreclosure plaintiff Woods approached Grady Woods and indicated their desire to sell the mortgaged property. The defendant agreed to purchase the property and assume plaintiffs' debts to LP. Saal. As additional consideration, he agreed to allow the plaintiffs to remain in their home and to use the premises throughout their lifetime.
In pursuance with this agreement plaintiffs purportedly signed the credit deed in the presence of two witnesses and LP. Saal, Jr., as notary public, on May 3, 1962, conveying to Grady Woods Lot Number One and the West Half of Lot Number Two of Block Number 36 in Gueydan, together with the improvements thereon. The consideration recited in the deed was $2,700.00, evidenced by a bearer note to be paid in monthly installments of $35.00, beginning June 3, 1962. Also included in the deed was a reservation by the plaintiffs of a usufruct over all of the property for the duration of their natural lives.
The note was delivered to Mr. LP. Saal, in the presence of the plaintiffs, and the payments were made by Grady Woods to Mr. Saal until it was paid in full on June 12, 1971. Mr. LP. Saal, Jr. testified that he retained the prior mortgage note, with the consent of the plaintiffs, and saw that the mortgage was properly cancelled from the conveyance records.
The plaintiffs remained in peaceful possession of the property until 1984, when the defendant allegedly attempted to evict them from the premises. Mrs. Thompson and her son, Robert Woods, testified it was at this time that they first became aware of the fact that the defendant's name appeared as the owner of the property in the Vermilion Parish conveyance records.
Plaintiffs alleged in their petition that the deed was a nullity due to fraudulent acts, which included affixing plaintiffs' signature on the deed without their consent and concealing the document until a dispute arose between the parties. In the alternative, they contend that the sale was a simulation without consideration and that the parties never intended to convey ownership of the property.
Grady Woods' position is that the plaintiffs were fully aware of the entire transaction. The deed was duly executed in authentic form and the consideration for the sale was his payment of their indebtedness to LP. Saal and allowing them to remain on the property as usufructuaries. Furthermore, he asserts the plaintiffs breached their agreement, resulting in the devaluation of the property in the amount of $10,000.00. As the defendant has neither appealed nor answered this appeal, that issue is not before us.
FORGERY IN THE EXECUTION OF THE MAY 3, 1962 CREDIT SALE
The Louisiana Civil Code requires that all sales of immovable property shall be made by authentic act or by act under private signature. LSA-C.C. Art. 1839 and Art. 2440. The requirements for an authentic act appear in LSA-C.C. Art. 1833, which provides:
"An authentic act is a writing executed before a notary public or other officer authorized to perform that function, in the presence of two witnesses, and signed by each party who executed it, by each witness, and by each notary public before whom it was executed.
To be an authentic act, the writing need not be executed at one time or place, or before the same notary public or in the presence of the same witnesses, provided that each party who executes it does so before a notary public or other office authorized to perform that function, and in the presence of two witnesses and each party, each witness, and each notary public signs it.
If a party is unable or does not know how to sign his name, the notary public *177 must cause him to affix his mark to the writing."[2]
A review of the testimony elicited during the trial shows that an authentic act was properly executed by the parties and that the plaintiffs signed the act with full knowledge of its contents. Mr. LP. Saal, Jr. testified that he prepared the deed as per the instructions of the parties and that the plaintiffs executed the document in his presence after he explained the terms and consequences.
Helen Gaspard Hayes, one of the witnesses to the sale, testified that plaintiffs signed the deed in her presence and in the presence of Cephronia Thibodeaux Prather, and the notary public, LP. Saal, Jr. She also said that, due to Lawrence Woods' inability to read and write, his name was written out by Mr. Saal in plaintiffs' presence and thereafter, Mr. Woods made his "X" mark. Cephronia Thibodeaux Prather, the other witness to the sale, also said that Lawrence Woods "made his mark" on the deed. She further testified that the document was signed in her presence and that of Mrs. Hayes and the notary.
In support of her contention that she did not sign the deed, the plaintiff asserts that she has never spelled her name Me rtha, as appears on the instrument. Instead, she said she always signed as Myrtha. The only document with her signature that was introduced into evidence, other than the subject deed, was the act of mortgage executed by the plaintiffs on February 7, 1950. In the mortgage plaintiff signed her name Myrtha Thompson Woods, but other than the spelling of the first name, the signature and handwriting appear to be identical to that used in the subject deed. Although her signature does not appear thereon, other documents introduced into evidence reflect that plaintiffs name had been previously spelled Me rtha. The deed from plaintiffs brother, James Thompson, dated November 17, 1947, was introduced by plaintiffs during the trial to prove Mrs. Woods' ownership of the subject property. Her name was spelled Me rtha therein. In addition to the foregoing, defendant introduced a certified copy of a cash sale from plaintiff's sister, Margaret Pitre, and plaintiffs nephew, Whitney Willis, in which they transferred their interest in the subject property to Me rtha Thompson. Thus, it appears that on at least two other real estate transactions of record, plaintiffs name was spelled Me rtha.
In the absence of a forgery an authentic act is full proof of the agreement contained therein. A person denying the validity of a signature on a notarized instrument bears the burden of proof that the signature is a forgery. LSA-C.C. Art. 1835.[3]Succession of Velasquez-Bain, 415 So. 2d 1013 (La.App. 4 Cir.1982), on appeal after remand, 471 So. 2d 731 (La.App. 4 Cir.1985); Coleman v. Egle, 376 So. 2d 983 (La.App. 1 Cir.1979), writ den., 379 So. 2d 15 (La.1980). In the present case the trial judge ruled that Lawrence and Myrtha Woods signed the deed with knowledge of its contents and they are bound by its terms. Of course, on review an appellate court may not disturb a trial court's evaluations of credibility and factual determinations unless the record reveals that the trial court's decision is manifestly erroneous or clearly wrong. Arceneaux v. Domingue, 365 So. 2d 1330 (La.1978). After reviewing the record, we hold that plaintiffs have not met the required burden of proof to establish forgery, and certainly the trial judge's conclusions as to the validity of the deed were not manifestly erroneous.
SIMULATION
We now turn to the plaintiffs' contention that the sale was a simulation due to a lack of consideration and because the parties never intended to convey ownership of the subject property.
A simulated sale is one which, by mutual agreement of the parties, does not result in the transfer of property. Although *178 such a sale is usually clothed in legal formalities, it does not express the true intent of the parties. LSA-C.C. Art. 2025; Wilson v. Progressive State Bank & Trust Co., 446 So. 2d 867 (La.App. 2 Cir. 1984). In order to determine whether or not a sale is simulated the court must determine whether the parties acted in good faith, whether there was an actual intention to transfer property, and whether any consideration was given for the transfer. Hall v. Allred, 385 So. 2d 593 (La.App. 3 Cir.1980), writ denied 393 So. 2d 735 (La. 1980); Phillips v. Nereaux, 357 So. 2d 813 (La.App. 1 Cir.1978), on rehearing, 361 So. 2d 228 (La.App. 1st Cir.1978).
Generally, the party alleging a simulation has the burden of proof to establish it with reasonable certainty. However, La. C.C. Art. 2480 provides in part as follows:
"In all cases where the thing sold remains in the possession of the seller, because he has reserved to himself the usufruct, or retains possession by a precarious title, there is reason to presume that the sale is simulated, ..."
See also Russell v. Culpepper, 344 So. 2d 1372 (La.1977); Boagni v. Waterbury, 403 So. 2d 856 (La.App. 3 Cir.1981).
Applying the foregoing to the facts of the instant case, we agree with the trial court that the sale executed by the plaintiffs was not a simulation. They remained in possession of the subject property because in the deed they reserved a lifetime usufruct of the premises. This usufruct was specifically outlined and made part of the sales contract executed by the parties. In such a case the codal presumption of simulation is applicable and the burden of proof shifts to the vendee to establish the actuality of the sale by a preponderance of the evidence.
From our review of the record it is quite clear that the defendant's $2,700.00 note was delivered to LP. Saal, Sr. in return for the cancellation of plaintiffs' mortgage note dated February 7, 1950, and that defendant's note was ultimately paid by him. Under our jurisprudence if any consideration is given for the conveyance, no matter how small, the transaction will not be set aside as a simulation. Furthermore, the assumption of a vendor's liability is valid consideration to support the conveyance of property, and such transactions will not be set aside as a simulation. Russell v. Culpepper, supra; Waterbury v. Waterbury, 496 So. 2d 1374 (La.App. 3 Cir.1986), writ denied 499 So. 2d 88 (La.1987); Roy v. Roy, 382 So. 2d 253 (La.App. 3 Cir.1980).
In our opinion there was ample consideration for the conveyance of the subject property to defendant and the plaintiffs had every intention of transferring title to the subject property. When plaintiffs defaulted on the mortgage held by LP. Saal, Sr., they elected to make this sale to the defendant to prevent foreclosure proceedings and the loss of their property. The defendant executed a promissory note in an amount to retire the plaintiffs' outstanding mortgage, which was cancelled. By virtue of the usufruct which they reserved in the sale, Lawrence Wood remained on the property until his death and Myrtha Thompson continues to reside on the property.
We conclude that the cancellation of the 1950 mortgage note together with the privilege of remaining on the subject property rent free constituted valid consideration and that defendant has met his burden of proof in establishing the validity of the sale. Consequently, we find no merit in plaintiffs' contention that the sale was a simulation.
For the reasons assigned, the judgment of the trial court is affirmed. The costs of this appeal are assessed to plaintiff-appellant, Myrtha Thompson.
AFFIRMED.
NOTES
[*] Judge G William Swift, Jr., Retired, participated in this decision by appointment of the Louisiana Supreme Court as Judge Pro Tempore
[1] This plaintiff was deceased at the time this appeal was taken.
[2] This article reproduces the substance of former C.C. Art. 2234 (1870), which was in effect at the time of the transaction, and does not change the prior law.
[3] This article reproduces the substance of former C.C. Art. 2236 (1870) which was in effect at the time of the sale, but it does not change the law. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1825674/ | 200 B.R. 734 (1996)
In re Paul W. WINCHELL, Debtor.
Paul W. WINCHELL, Plaintiff,
v.
TOWN OF WILMINGTON, Defendant.
Bankruptcy No. 90-12887-CJK.
United States Bankruptcy Court, D. Massachusetts.
September 18, 1996.
*735 Nina M. Parker, Boston, MA, for Debtor.
Jeffrey A. Schreiber, Danvers, MA, James E. Coppola, Jr., Marblehead, MA, for Town of Wilmington.
MEMORANDUM OF DECISION ON CROSS MOTIONS FOR SUMMARY JUDGMENT
CAROL J. KENNER, Bankruptcy Judge.
By his complaint in this adversary proceeding, the Plaintiff and Debtor, Paul Winchell, seeks a determination that the Defendant, the Town of Wilmington, Massachusetts, is not entitled to postpetition interest on its prepetition claim for real estate taxes. Pursuant to his confirmed plan of reorganization, under which the Debtor was obligated to pay the Town's priority tax claim in full, the Debtor has paid the amount that was due on the date of his bankruptcy filing. He now seeks a determination that no further amount is due. The Town has responded with a counterclaim, by which it seeks a declaration that the Debtor remains obligated for postpetition interest on the claim and that confirmation of the Debtor's plan did not extinguish the Town's statutory lien for such interest.
The adversary proceeding is before the Court on the parties' cross motions for summary judgment. For the reasons set forth below, the Court holds that confirmation of the plan did extinguish the Town's lien and that the Debtor's personal liability for postpetition interest on the tax has been discharged.
FACTS
The parties have submitted a joint stipulation of undisputed facts in support of these cross motions. The facts set forth therein, which are the only facts of which the Court has evidence, are as follows.
The Debtor has at all relevant times owned one hundred percent of the beneficial interest in Wilfab Associates Trust, a Massachusetts nominee trust. The trust owns the real estate located at 235 Andover Street, Wilmington, Massachusetts ("the property"). During fiscal year 1990, which includes the period between July 1, 1989, and June 30, 1990, the Debtor himself held legal title to the property. On June 4, 1990, when the Debtor filed his petition for relief under Chapter 11 of the Bankruptcy Code, the Debtor was indebted to the Town for real estate taxes on the property in the amount of $52,901.51. This amount was due and payable on May 1, 1990, and constituted the final installment of the real estate taxes for fiscal year 1990. This tax had been assessed to the Debtor for the property on or about January 1, 1989. At the time of the bankruptcy filing, the property had a value of $1.2 million.
The Town received notice from the Bankruptcy Court of the Debtor's Chapter 11 filing. Despite repeated requests from the Debtor to do so, the Town did not file a proof of claim for real estate taxes.
On July 19, 1993, the Debtor filed an Amended Plan of Reorganization in his Chapter 11 case. In relevant part, the plan provided:
The claims of governmental taxing authorities and of those claimants having priority under Section 507(a)(6) [sic] of the Bankruptcy Code shall be [p]aid in full by the Debtor on the Effective Date. . . . The Town of Wilmington is owed the sum of $52,901.51 for real estate taxes.
Debtor's Amended Plan of Reorganization, Article IV. The plan also provided:
As of the Confirmation, the property of the estate created under Section 541 of the Bankruptcy Code shall be vested in Paul W. Winchell individually and Wilfab Associates Trust free and clear of any and all claims except as otherwise provided herein or in the order of the Bankruptcy Court confirming the Plan.
Debtor's Amended Plan of Reorganization, Article XIII, ¶ 13.2. Copies of the Amended Plan and of the Disclosure Statement filed in support thereof were served on the Town on or about September 10, 1993, but the Town filed no objection to the plan.
On October 21, 1993, the Court entered an order confirming the Amended Plan of Reorganization. In relevant part, the Confirmation Order provided:
*736 15. The property of the estate of Winchell created under Section 541 of the Code shall be, and hereby is, vested in Winchell and all property of Winchell, including the aforesaid property of the estate, shall be held by Winchell free and clear of all claims, liens, and encumbrances, except as otherwise provided in the Plan.
. . . . .
17. Except as expressly provided in the Plan, the Debtor shall be, and hereby is, discharged from any claims or debts, as defined in Section 101(5) and Section 101(12) of the Bankruptcy Code, that arose before the date of this order and any debt or claim of a kind specified in Section 502(g), 502(h), and 502(i) of the Bankruptcy Code, whether or not a proof of claim based on such debt was filed or deemed filed under Section 501 of the Bankruptcy Code, or such claim was allowed under Section 502 of the Bankruptcy Code or the holder of such claim has accepted the Plan.
Confirmation Order, ¶¶ 15 and 17.
On or about November 1, 1993, the effective date of the plan, the Debtor tendered a certified check to the Town in the sum of $52,901.51 for payment of the Town's claim for prepetition real estate taxes. The Town accepted the payment, but, by letter dated November 16, 1993, took the position that the Debtor remained obligated for an additional $26,758.28, representing postpetition interest on the claim.
On December 30, 1993, the Debtor filed his Application for Final Decree after Consummation of Reorganization and served the application on all creditors. Wilmington filed no objection to the application, and, on January 18, 1994, the Court entered the Final Decree. In the Final Decree, the Court ordered and decreed that
Paul W. Winchell d/b/a Wilfab Associates Trust, the Debtor, be, and it hereby is, discharged from all of its unsecured debts and liabilities provided for by the Plan of Reorganization, except as provided in the Plan of Reorganization or the Order confirming the Plan of Reorganization, but excluding such debts as, under the Bankruptcy Code[,] are not dischargeable.
Final Decree After Consummation of Proceedings.
On or about August 26, 1994, the Town notified the Debtor that it intended to publish a notice of tax taking with respect to the property on August 31, 1994, to recover the postpetition interest on the prepetition tax claim. On August 31, 1994, the Town published a lien for the postpetition interest.
DISCUSSION
On a motion for summary judgment, the judgment sought shall enter if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. F.R.Civ.P. 56(c). In this instance, the parties have agreed as to the material facts. The Court need only decide, on the agreed facts, which party is entitled to judgment as a matter of law. The adversary proceeding presents two discreet issues: whether the Town's prepetition lien survived confirmation of the plan of reorganization; and, if the lien did not survive, whether confirmation of the plan extinguished the Debtor's personal liability for postpetition interest on the claim.
a. Effect of Confirmation on Lien
Under Massachusetts law, "taxes assessed upon land . . . shall with all incidental charges and fees be a lien thereon from January first in the year of assessment." G.L. c. 60, § 37. Accordingly, when the Debtor commenced his bankruptcy case, the Town had a statutory lien on the property to secure payment not only of the taxes but also of "all incidental charges," including interest. The Debtor argues that this lien was extinguished upon confirmation of the plan by the confirmation order itself and by operation of 11 U.S.C. § 1141(a) and (c). Citing Matter of Penrod, 50 F.3d 459 (7th Cir.1995), the Town responds that the confirmation of a plan of reorganization cannot extinguish a lien whose holder, like the Town, did not participate in the reorganization by filing a proof of claim or otherwise and thus agree to allow its rights to be altered.
The Court begins with § 1141(c) of the Bankruptcy Code. It states:
*737 Except as provided in subsections (d)(2) and (d)(3) of this section and except as otherwise provided in the plan or in the order confirming the plan, after confirmation of a plan, the property dealt with by the plan is free and clear of all claims and interests of creditors, equity security holders, and of general partners in the debtor.
11 U.S.C. § 1141(c). Subject to exceptions, this subsection creates a general rule that, upon confirmation, the property dealt with in the plan is free and clear of all claims and interests of creditors, including liens. 11 U.S.C. § 101(37) (defining "lien" as "interest in property to secure payment of a debt"); Matter of Penrod, 50 F.3d at 463 ("interest" as used in § 1141(c) includes liens). Notably, the rule applies not to all property owned by the Debtor or by the estate but only to "the property dealt with by the plan."
The Town argues, by reference to Penrod, that where the Town did not file a claim in this case and the plan was silent as to its lien, the lien is not "property dealt with by the plan," such that the default rule of § 1141(c) does not apply, and its lien passed through bankruptcy unaffected. In Penrod, the Seventh Circuit Court of Appeals was asked to determine the effect of confirmation upon a creditor's lien as to which the plan and the order confirming it were silent but for which the creditor had filed a proof of claim. The Seventh Circuit held that, by operation of § 1141(c), a lien as to which the plan is silent is deemed extinguished. Matter of Penrod, 50 F.3d at 462-463. However, the court explained that this default rule applied only because the lien creditor had filed a claim and thus participated in the reorganization. In dicta, the court stated that had the creditor not filed a claim, "his lien would not be `property dealt with by the plan,' and so the section [§ 1141(c)] would not apply." Matter of Penrod, 50 F.3d at 463. Consequently, confirmation of the plan would have left the lien intact and unaffected. Matter of Penrod, 50 F.3d at 463 ("liens pass through bankruptcy unaffected . . . unless they are brought into the bankruptcy proceeding and dealt with there").
It is this dicta that the Town urges the Court to accept as dispositive with respect to the effect of confirmation on its lien. However, in so arguing, the Town overlooks an important difference between this case and the facts to which the dicta was addressed. In both its holding and its dicta, Penrod was governed by the general rule of § 1141(c). But the general rule was subject to an exception for contrary provisions in the plan or the order confirming it. 11 U.S.C. § 1141(c) ("except as otherwise provided in the plan or in the order confirming the plan,. . . ."). Insofar as the plan and confirmation order are contrary to the general rule, they displace the general rule and govern.
This case is governed by the exception. The confirmed plan provided:
As of the Confirmation, the property of the estate created under Section 541 of the Bankruptcy Code shall be vested in Paul W. Winchell individually and Wilfab Associates Trust free and clear of any and all claims except as otherwise provided herein or in the order of the Bankruptcy Court confirming the Plan.
Debtor's Amended Plan of Reorganization, Article XIII, ¶ 13.2. And, in paragraph 15, the confirmation order provided:
The property of the estate of Winchell created under Section 541 of the Code shall be, and hereby is, vested in Winchell and all property of Winchell, including the aforesaid property of the estate, shall be held by Winchell free and clear of all claims, liens, and encumbrances, except as otherwise provided in the Plan.
These provisions are contrary to the general rule in that they extend the scope of the default rule beyond that specified in § 1141(c), which reaches only "property dealt with by the plan." Under the plan and the confirmation order, the default rule encompasses (at least) all property of the Debtor's estate. Being in that respect contrary to the general rule of § 1141(c), the confirmed plan and the confirmation order displace the general rule and govern. The Town does not dispute that the property at issue belonged to the Debtor at the commencement of the case and, pursuant to 11 U.S.C. § 541(a)(1), became an asset of his bankruptcy estate. In re Eastmare Development Corp., 150 B.R. 495, 498-503 (Bankr.D.Mass.1993) (where *738 debtor owns entire beneficial interest in nominee trust, the res is deemed property of his bankruptcy estate). Therefore, by virtue of the above language from the plan and from the order confirming it, the Town's lien has been extinguished.
The fact that the Debtor did not file a proof of claim in the case does not change this result. With certain exceptions not applicable here, the provisions of a confirmed plan bind any creditor, regardless of whether or not they have filed claims or otherwise participated in the case. 11 U.S.C. § 1141(a).[1] The Court concludes that the Debtor is entitled to judgment as a matter of law as to the continued validity of the statutory lien: the lien was extinguished upon confirmation of the plan.
b. Personal Liability for Postpetition Interest on Tax Claim
The second issue is whether the confirmed plan extinguished the Debtor's personal liability for postpetition interest on the prepetition tax claim. The Town argues that no liability was extinguished because, under § 1141(d)(2), the confirmation of a plan does not discharge an individual debtor from any debt excepted from discharge under § 523, which, the Town argues, includes the debt for interest on the Town's prepetition claim for real estate taxes. 11 U.S.C. §§ 1141(d)(2), 523(a)(1)(A), and 507(a)(8)(B). Citing In re Heisson, 192 B.R. 294 (Bankr.D.Mass.1996), the Debtor responds that § 1141(d)(2) does not apply to a plan that pays a one hundred percent dividend on the tax claim; that a "debt" excepted from discharge under § 523(a)(1) does not, under the Bankruptcy Code, include postpetition interest; and that, under the Code, postpetition interest is simply disallowed, "a casualty of bankruptcy." Id. at 296. He also argues that only prepetition interest on an unsecured tax claim can have priority under § 507(a)(8)(B) and thus fall within the scope of claims excluded from discharge by § 523(a)(1)(A).
Putting aside for the moment the issue of whether § 1141(d)(2) applies in this case, the Court will first determine whether the tax at issue, and the interest thereon, falls within the exception from discharge set forth at 523(a)(1)(A). In relevant part, section 523(a)(1)(A) provides:
A discharge under section . . . 1141 . . . of this title does not discharge an individual debtor from any debt
(1) for a tax or a customs duty
(A) of the kind and for the periods specified in section 507(a)(2) or 507(a)(8) of this title, whether or not a claim for such tax was filed or allowed.
11 U.S.C. § 523(a)(1)(A). The Town contends that its tax is of the kind and for the period specified in § 507(a)(8)(B): "a property tax assessed before the commencement of the case and last payable without penalty after one year before the date of the filing of the petition." 11 U.S.C. § 507(a)(8)(B). The tax at issue fits this description: it is a property tax; it was assessed on or about January 1, 1989, a date before the commencement of the case; and, having been due on May 1, 1990, it was last payable without penalty after one year before the filing of the petition. Thus the tax itself is of the kind and for the period specified in § 507(a)(8)(B). Accordingly, it falls within the scope of debts excepted from discharge under § 523(a)(1)(A). And the same is true of postpetition interest on the tax.[2]
Section 1141(d)(2) provides simply that "[t]he confirmation of a plan does not discharge *739 an individual debtor from any debt excepted from discharge under § 523 of this title." 11 U.S.C. § 1141(d)(2). By the plain and categorical language of this provision, postpetition interest on a prepetition tax claim that falls within section 523(a)(1)(A) should be excepted from discharge. However, in Heisson, Judge Queenan disagreed on two grounds: this conclusion renders § 1129(a)(9)(C) meaningless; and, in any case, § 1141(d)(2) excepts from discharge only a "debt," which is a liability on a claim, which, as against an insolvent estate, cannot include postfiling interest. 11 U.S.C. § 502(b)(2).
This Court respectfully disagrees as to the latter argument because it overlooks the distinction between "claims" and "allowed claims." Under sections 1141(d)(2) and 523(a), certain "debts" are excepted from discharge. 11 U.S.C. §§ 523(a) and 1141(d)(2). Debt is defined as "liability on a claim," 11 U.S.C. § 101(12), and claim is defined as "right to payment, whether or not such right is . . . matured [or] unmatured." 11 U.S.C. § 101(5)(A). It is true that under § 502(b)(2) of the Code, the Court must deny any claim (or portion thereof) for interest not matured as of the date on which the bankruptcy case was commenced, such that no creditor can have an "allowed claim" for postpetition interest. 11 U.S.C. § 502(b)(2). But sections 1141(d)(2) and 523(a) do not limit their exceptions from discharge to "allowed claims," a term that the drafters of the Code used where they saw fit. See, for example, 11 U.S.C. §§ 726(a) and 1129(b)(2). Rather, the exceptions from discharge extend to "debts," which are defined as rights to payment, "whether matured or unmatured."[3] Moreover, § 523(a)(1)(A) expressly states that claims of the kind and for the periods specified in § 507(a)(8) are excepted from discharge "whether or not a claim for such tax was filed or allowed." 11 U.S.C. § 523(a)(1)(A) (emphasis added). Therefore, the Court does not read § 502(b)(2) as a limitation on the exceptions from discharge and, accordingly, rejects this argument as a basis for the holding in Heisson.
That holding is better supported by Heisson's first argument alone. The first argument that 1141(d)(2) cannot apply to priority taxes that the debtor pays in accordance with 1129(a)(9)(C) without rendering the latter section meaningless is based on an apparent conflict between § 1141(d)(2) and § 1129(a)(9)(C). Under § 1129(a)(9)(C) of the Bankruptcy Code, a Chapter 11 plan must provide, with respect to each tax claim specified in § 507(a)(8) of the Code, for cash payments of a value, as of the effective date of the plan, equal to the full allowed amount of the claim.[4] Section 1129(a)(9)(C) pertains to claims those of the kind and for the periods specified in § 507(a)(8) that, as against individual debtors, sections 1141(d)(2) and 523(a)(1)(A) except from discharge, even to the extent of postpetition interest. Yet by § 1129(a)(9)(C), the Code requires payment of only the "allowed amount of the claim," which, under § 502(b)(2), clearly excludes postpetition interest.
Can § 1129(a)(9)(C) and § 1141(d)(2) be reconciled? Judge Queenan took the position that they could not, that § 1141(d)(2) cannot apply to a tax claim as to which the Debtor has made payment to the extent required by § 1129(a)(9)(C) without rendering the latter section meaningless:
Section 1141(d)(2) does not apply to a plan . . . which pays a 100% dividend. . . . To *740 treat section 1141(d)(2) as trumping section 1129(a)(9)(C) would make the latter section meaningless. Section 1141(d)(2) must, therefore, be construed to refer only to the unpaid portion of a claim under a plan paying less than a 100% dividend.
In re Heisson, 192 B.R. at 296.
This Court agrees. Section 1129(a)(9)(C) is quite specific as to the treatment that a Debtor must afford priority tax claims in order to obtain confirmation of its plan. Moreover, it requires that, if such claims are not to be paid in full on the effective date of confirmation,[5] the Debtor must pay interest on the claim at whatever rate will ensure that the entire stream of payments on the claim, when discounted to present value (as of the effective date of the plan), is equal in value to the allowed amount of the claim. This effectively requires that the Debtor pay postconfirmation interest on the allowed amount of the claim from the effective date of confirmation. In view of the specificity of § 1129(a)(9)(C), of the fact that it expressly requires payment of interest on the claim, and of the fact that it specifies what interest is required, the Court must conclude that Congress meant thereby to prescribe what would be required for satisfaction of priority tax claims, such that any further liability for interest on such claims must be deemed discharged. Therefore, where the Debtor pays a priority tax claim pursuant to and in accordance with a confirmed chapter 11 plan that conforms to § 1129(a)(9)(C), the Debtor's liability on the claim is satisfied, and any remaining liability for interest on the claim is deemed discharged.
In this case the Debtor paid the full allowed amount of the claim on the effective date of the plan. This was all that the plan required, and the plan thus afforded the Town all that was due it under § 1129(a)(9)(C). The Court concludes that the Debtor's personal liability for postpetition interest on the prepetition tax claim has been discharged.
CONCLUSION
For the reasons set forth above, judgment will enter for the Debtor as to the continued validity of the Town's statutory lien and as to his personal liability for postpetition interest on the debt.
NOTES
[1] In relevant part, § 1141(a) provides:
Except as provided in subsections (d)(2) and (d)(3) of this section, the provisions of a confirmed plan bind . . . any creditor . . . whether or not the claim or interest of such creditor . . . is impaired under the plan and whether or not such creditor . . . has accepted the plan.
11 U.S.C. § 1141(a).
[2] Bruning v. United States, 376 U.S. 358, 84 S. Ct. 906, 11 L. Ed. 2d 772 (1964) (under former Bankruptcy Act, postpetition interest on undischarged tax debt remained a personal liability of the debtor after bankruptcy); In re Hanna, 872 F.2d 829, 830-831 (8th Cir.1989) (under present Bankruptcy Code, postpetition interest on nondischargeable taxes is nondischargeable); In re Burns, 887 F.2d 1541, 1543 (11th Cir.1989) (same); In re Stahly, 117 B.R. 410, 413-414 (Bankr.N.D.Ind.1989) (same); and In re Torres, 143 B.R. 183, 187 (Bankr.N.D.Ill.1992) (interest on tax is discharged only if the underlying tax is discharged).
[3] Moreover, although § 502(b)(2) requires that claims for postpetition interest be "disallowed," the term is inaccurate. Under § 726(a)(5), unsecured creditors are entitled to postpetition interest on their claims, provided the estate has sufficient assets to first pay all claims of higher priority. 11 U.S.C. § 726(a). In effect, creditors' rights to postpetition interest are merely subordinated.
[4] Section 1129(a)(9)(C) provides as follows:
(a) The court shall confirm a plan only if all of the following requirements are met:
(9) Except to the extent that the holder of a particular claim has agreed to a different treatment of such claim, the plan provides that
(C) with respect to a claim of a kind specified in section 507(a)(8) of this title, the holder of such claim will receive on account of such claim deferred cash payments, over a period not exceeding six years after the date of assessment of such claim, of a value, as of the effective date of the plan, equal to the allowed amount of such claim.
11 U.S.C. § 1129(a)(9)(C).
[5] Section 1129(a)(9)(C) permits debtors to pay these claims over a period extending not longer than six years from the date of assessment. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1957822/ | 404 So. 2d 1018 (1981)
Curtis QUINN
v.
Gerald BRANNING, Justice Court Judge of District # 2 of Neshoba County, Mississippi and State of Mississippi.
No. 52790.
Supreme Court of Mississippi.
August 19, 1981.
Rehearing Denied in Part and Granted in Part October 15, 1981.
Laurel G. Weir, Thomas L. Booker, Philadelphia, for appellant.
Bill Allain, Atty. Gen., by Karen Gilfoy, Asst. Atty. Gen., Jackson, for appellees.
Before ROBERTSON, P.J., and WALKER and LEE, JJ.
*1019 LEE, Justice, for the Court:
Curtis Quinn was convicted in the Justice Court of the Second District of Neshoba County, Mississippi, for a violation of Mississippi Code Annotated section 97-15-13 (Supp. 1980). Within the time provided by law, he filed a petition for writ of certiorari in the Circuit Court of Neshoba County, praying that a writ of certiorari issue to Gerald Branning, Justice Court Judge of said district, requiring him to certify the record and all proceedings in said cause to the circuit court. That court, Honorable Marcus D. Gordon, presiding, denied the writ and dismissed the petition, and Quinn has appealed to this Court.
The sole question presented is whether or not Mississippi Code Annotated section 97-15-13 (1972) is a local and private law in violation of Section 87 of the Mississippi Constitution (1890) and is unconstitutional in that it is vague and indefinite. Prior to 1974, Section 97-15-13 provided the following:
If any person shall be guilty of hunting or racing in or on, or shooting in, on, or across any street or public highway, he shall, on conviction thereof, be fined not more than five hundred dollars ($500.00) or imprisoned not longer than ninety (90) days in the county jail.
If any person shall willfully shoot any firearms or hurl any missile at any traffic light, highway marker, or other sign for the regulation of street or highway travel, such person, upon conviction, shall be fined not more than fifty ($50.00) or imprisoned not longer than thirty (30) days in the county jail.
*1020 It shall be the duty of all sheriffs, deputy sheriffs, constables and peace officers of this state to enforce the regulations as set out in this section. Game wardens are hereby authorized to enforce the prohibitions of this section against hunting in or on and shooting in, on or across any street or public highway.
The said section was amended only as to the first paragraph by Chapter 569, General Laws of 1974, effective April 24, 1974, which amendment follows:
If any person shall be guilty of hunting or racing in or on, or shooting in, on or across any street or public highway, or railroads within the boundaries of a hunting club unless permission is granted within a county wherein highway 15 and I20 intersect, he shall, on conviction thereof, be fined not more than five hundred dollars ($500.00) or be imprisoned not longer than ninety (90) days in the county jail.
The appellant contends that the words "unless permission is granted within a county wherein highway 15 and I20 intersect" makes the section local and private in nature and is vague and indefinite, thereby rendering the section unconstitutional.
It is common knowledge and we take judicial notice of the fact that Mississippi State Highway 15 and Interstate Highway I20 intersect only in Newton County, Mississippi. The violation charged and the conviction of appellant occurred in District # 2, Neshoba County, Mississippi. Therefore, the provision which the appellant complains about does not relate to or affect him. We have held that it is the Court's duty in passing on the constitutionality of a statute to separate the valid from the invalid part, if this can be done, and to permit the valid part to stand unless the different parts of the statute are so intimately connected with and dependent upon each other as to warrant a belief that the legislature intended them as a whole, and that if all cannot be carried into effect, it would not have enacted the residue independently. Lovorn v. Hathorn, 365 So. 2d 947 (Miss. 1979); Wilson v. Jones County Board of Supervisors, 342 So. 2d 1293 (Miss. 1977).
In Lovorn, supra, the question of the constitutionality of Mississippi Code Annotated section 37-7-203 (1972) as amended, was under consideration by this Court. The suit involved the election of trustees in the Louisville Municipal Separate School District and the offensive part of the statute provided "... in any county in which a municipal separate school district embraces the entire county in which Highways 14 and 15 intersect, one trustee shall be elected from each supervisors district". We said:
We hold that the part of said statute under consideration here which reads "in which Highways 14 and 15 intersect" is unconstitutional, that such offensive language be stricken from the act and that the remaining portion of the statute is constitutional. We further hold that the chancellor erred in finding the entire portion of the statute to be unconstitutional and the decree is reversed and judgment entered here on said question. (365 So.2d at 950)
We now hold in the case sub judice that the part of Mississippi Code Annotated section 97-15-13 (1972), as amended, which reads "unless permission is granted within the county wherein highway 15 and I20 intersect" is unconstitutional, that such offensive language be stricken from the act and that the remaining portion of the statute is constitutional. We note, however, that the 1974 amendment limits the violation to streets, public highways and railroads within the boundaries of hunting clubs in the state, and that the law previous thereto making it a violation to hunt or race on, or shoot on or across any street or public highway in the state of Mississippi has been completely changed. Extending the coverage of the act to those areas enumerated before the 1974 amendment may be accomplished only by the Mississippi State Legislature.
There being no error in the judgment below, it is affirmed.
AFFIRMED.
*1021 PATTERSON, C.J., SMITH and ROBERTSON, P. JJ., and SUGG, WALKER, BROOM, BOWLING and HAWKINS, JJ., concur.
ON PETITION FOR REHEARING
ROBERTSON, Presiding Justice, for the court:
The Petition for Rehearing is denied in part and granted in part and the appellant discharged.
In our opinion in the case at bar we held that MCA § 97-15-13 (Supp. 1980), after deleting this unconstitutional portion "unless permission is granted within a county wherein highway 15 and I20 intersect," is constitutional.
We did state, however, in our opinion:
"We note, however, that the 1974 amendment limits the violation to streets, public highways and railroads within the boundaries of hunting clubs in the state, and that the law previous thereto making it a violation to hunt or race on, or shoot on or across any street or public highway in the state of Mississippi has been completely changed. Extending the coverage of the act to those areas enumerated before the 1974 amendment may be accomplished only by the Mississippi State Legislature."
On Petition for Rehearing, appellant, Curtis Quinn, has called our attention to the fact that, in view of the above caveat in our opinion, the affidavit against Quinn does not state an offense under the statute. The affidavit charged Quinn with "unlawfully hunting or shooting on public road with loaded gun". In our opinion, the affidavit does not charge an offense under MCA section 97-15-13 (Supp. 1980), which, after deleting the unconstitutional part, would read:
"If any person shall be guilty of hunting or racing in or on, or shooting in, on or across any street or public highway, or railroads within the boundaries of a hunting club, he shall, on conviction thereof, be fined not more than five hundred dollars ($500.00) or be imprisoned not longer than ninety (90) days in the county jail."
The Petition for Rehearing is granted in this respect, and since the affidavit does not charge an offense under the statute the conviction is reversed and the appellant discharged.
Denied in part, granted in part, conviction reversed and appellant discharged.
All Justices concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2617943/ | 8 Cal. 2d 405 (1937)
FRED T. BUENEMAN et al., Appellants,
v.
CITY OF SANTA BARBARA (a Municipal Corporation) et al., Respondents.
L. A. No. 14753.
Supreme Court of California. In Bank.
February 27, 1937.
Burnett Wolfson and Earl I Swetow for Appellants. *406
J. W. Henderson and Henderson, Henderson & Carey, Amici Curiae on Behalf of Appellants.
J. F. Goux, City Attorney, and Maxwell Nichols, City Attorney, for Respondents.
Harold P. Huls, City Attorney of Pasadena, Leroy A. Garrett, Deputy City Attorney of Pasadena, Ray L. Chesebro, City Attorney of Los Angeles, Leon T. David, Assistant City Attorney of Los Angeles, and Louis Burke, City Attorney of Montebello, Amici Curiae on Behalf of Respondents.
EDMONDS, J.
This appeal presents for decision the constitutionality of an ordinance of the City of Santa Barbara which imposes a license fee upon every person who engages in the laundry business in that city where the actual work is not done therein. The demurrer of the respondents was sustained and plaintiffs were denied leave to amend their complaint. The question to be determined, therefore, is whether the appellants' complaint states a cause of action.
The complaint alleges that for a long time prior to August, 1933, and subsequent thereto, the plaintiffs have been engaged in the general laundry, towel and linen supply business, some of which was transacted in the City of Santa Barbara. However, it is alleged that appellants do not maintain or have a fixed place of business in that city, nor do they do any of the laundry work therein.
The complaint further alleges that the respondent city adopted an ordinance which became effective in August, 1933, imposing a license fee of $200 per year for revenue and not for any other purpose upon "every person in the City of Santa Barbara who conducts or carries on or engages in the business of, or solicits orders for or accepts orders for, or maintains a regular delivery or distribution system for customary or usual delivery to and from regular customers as such a laundry or a towel or linen supply service or a dry cleaning service, or any one or more of said three classes of business, where the plant or establishment used for the actual work of laundering or dry cleaning, or of both where both laundry and dry cleaning services are involved, is not maintained within said City of Santa Barbara at a fixed and regular place of business within said City". It also alleges that no tax is imposed upon any person conducting a like *407 business where the plant or establishment is maintained within the city; that by another section of the ordinance the carrying on of business by one whose plant is outside the city limits without payment of the license fee is made a misdemeanor, and that every day or part thereof on which he carries on the business he is guilty of a separate offense, punishable by not exceeding $300 fine or 90 days in jail, or by both fine and imprisonment. It appears from the complaint that plaintiffs have refused to pay the tax and secure the license provided for in the ordinance for the reason that they believe it to be unconstitutional and void; that respondents have arrested and threaten to continue to arrest appellants' employees; that such arrests and threats have interfered with their business and will continue to hamper and hinder their business, and that unless the respondents are restrained from enforcing the ordinance appellants will suffer irreparable damage. Appellants charge that the ordinance violates the Fourteenth Article of the Amendments to the Constitution of the United States, and also sections 13 and 21 of article I of the Constitution of California, in that it denies to appellants the equal protection of the laws and grants privileges and immunities to one class of citizens which are not accorded to all citizens similarly situated.
Only two points are presented for consideration: first, whether an action may be maintained to restrain the enforcement of a license ordinance; and, second, whether this ordinance falls within the constitutional inhibitions.
[1] Concerning the first point, while "an injunction cannot be granted to prevent the execution of a public statute by officers of the law for the public benefit" (sec. 526, subd. 4, Code Civ. Proc., sec. 3423, subd. 4, Civ. Code), it has been uniformly held that this provision does not apply to an unconstitutional statute or ordinance. "A suit for injunction in behalf of one specially interested, to prevent the attempted execution of a void statute and the exercise of an office claimed to have been created thereby, but in fact and in law nonexistent, is a proper remedy to obtain the relief required." (Wheeler v. Herbert, 152 Cal. 224, 228 [92 P. 353].) In the more recent case of Jones v. City of Los Angeles, 211 Cal. 304, 306 [295 P. 14], the court said: "It is settled that where a penal statute causes irreparable damage to property rights, the injured party may attack its constitutionality by an action to enjoin its enforcement. Hence, if the ordinance *408 is unconstitutional in its application to these plaintiffs, they are entitled to the decree which they seek." The same conclusion is reached in other cases. (Bramman v. City of Alameda, 162 Cal. 648 [124 P. 243]; Abbey Land & Imp. Co. v. County of San Mateo, 167 Cal. 434 [139 P. 1068, Ann. Cas. 1915C, 804, 52 L.R.A. (N. S.) 408]; E. A. Hoffman Candy Co., Inc., v. Newport Beach, 120 Cal. App. 525 [8 PaCal.2d 235]; City of Danville v. Quaker Maid, Inc., 211 Ky. 677 [278 S.W. 98, 43 A.L.R. 590]; Thompson v. Smith, 155 Va. 367 [154 S.E. 579, 71 A.L.R. 604].)
[2] Also, while ordinarily equity will not enjoin a criminal prosecution, yet where persons have been arrested and further arrests and prosecutions are threatened under a void municipal ordinance, the enforcement of which seriously interferes with property rights, it will entertain a suit brought to test the validity of the enactment. (Carey v. Atlanta, 143 Ga. 192 [84 S.E. 456, L.R.A. 1915D, 684, Ann. Cas. 1916E, 1151].) The complaint clearly shows that the business of plaintiffs, which is a perfectly lawful one, is being interfered with by the steps which have already been taken to enforce the ordinance. Plaintiffs under the circumstances shown must either comply with the terms of the ordinance or defend each person who is arrested for a violation of it. In such a situation a court of equity will entertain the suit.
[3] The second question is the principal point of controversy. With the great improvement in means of transportation, business which was formerly conducted entirely within the limits of a city now spreads over a territory limited only by the cost of economical distribution and without regard to the boundary lines of political subdivisions. The desire of the legislative body of a city to keep the business of its residents for those who maintain stores, factories or other business establishments within its boundary is a natural one. At least efforts to protect the merchants of a city from outside competition commenced in California as early as 1877. In the case of Ex parte Frank, 52 Cal. 606 [28 Am. Rep. 640], an ordinance of the city of San Francisco was considered. By that ordinance a merchant whose goods were located within the city paid a quarterly license fee of $100, while a merchant doing the same volume of business but whose goods were outside the corporate limits when offered for sale was required to pay a license fee of $2,000 for the same period. The ordinance was held to be void. In the case of In re *409 Hines, 33 Cal. App. 45 [164 P. 339], an ordinance identical in principle with the one here considered was held void. Its provisions were said to have been "plainly devised as a protective tariff for the benefit of laundries located in the city of Venice". The ordinance there attacked fixed a license fee of $12 per annum for every laundry located within the city. It also fixed a license fee of $120 per annum for every person operating a wagon or other vehicle for the delivery of laundry work to and from any laundry situated outside the limits of the city. The court said that its provisions "attempt to create and enforce a discrimination not based upon differences in the nature of the business being transacted or differences in the manner of conducting the same business, or any other difference other than the mere fact of difference in destination of the goods collected and delivered by wagons collecting for laundries located outside of the city and the destination of goods collected for delivery to laundries within the city". The same conclusions were reached in the cases of In re Hart, 36 Cal. App. 627 [172 P. 610], and In re Riley, 39 Cal. App. 58 [177 P. 854]. In each of these cases the ordinance was held void.
The case of Town of St. Helena v. Butterworth, 198 Cal. 230 [244 P. 357], arose over the attempt to enforce an ordinance imposing a license fee of $15 per quarter for every traveling salesman or merchant carrying his goods in an automobile or other vehicle operated over the streets of the town of St. Helena for sale to the merchants of the town and who did not maintain a fixed place of business within it. For those merchants maintaining business establishments within the corporate limits the ordinance fixed a license tax from $5 to $15 per quarter, determined by the amount of business done. No license was imposed on any merchant selling at wholesale only from a place of business outside the limits of the town but making no deliveries with his own conveyance. The ordinance was held void. The court said: "It discriminates between the wholesale merchant whose place of business is outside the town of St. Helena and who ships his goods to the merchants in the town by any other method than by personal delivery in a wagon, truck, automobile or other vehicle, and the wholesale merchant whose place of business is outside St. Helena, and who uses those means of delivering his goods within the town. The wholesale merchant in the first class is exempted; the merchant in others *410 is placed under the burden of the tax. We are unable to perceive any rational reason for such discrimination in favor of the one class as against the other."
An ordinance of the city of Sacramento was challenged in the case of In re Robinson, 68 Cal. App. 744 [230 P. 175]. That ordinance imposed a license tax upon a solicitor selling or taking orders for merchandise for future delivery unless he was employed by a regularly established business house located within the city. The amount of the license was fixed at $200 per quarter. The court said: "It will be observed that the boundary line of the incorporation known as the city of Sacramento determines the applicability of the provisions of the ordinance relating to the payment of a license fee. It is not the character of the business transacted. It is the place of the location of the storehouse or warehouse or headquarters from which a solicitor draws his supplies that determines whether or not he, the solicitor, is subject to the pains and penalties of the ordinance. If he draws his supplies and fills his orders from a house situated within the exterior limits of the city of Sacramento, then he is free from all the provisions of the ordinance, but if he fills his orders from a house situated outside the city limits, whether it be in or outside of the state of California, then he must necessarily pay the sum of two hundred dollars per quarter, and also give a bond to protect the persons from whom he may have taken orders." The ordinance was said to discriminate between persons doing exactly the same kind and character of business and conducting it in the same manner.
The respondents rely principally upon Ex parte Haskell, 112 Cal. 412 [44 P. 725, 32 L.R.A. 527], and E. A. Hoffman Candy Co. v. City of Newport Beach, supra, as sustaining their position. In the Haskell case this court upheld an ordinance imposing a license tax upon "persons, outside of those conducting regular places of business", selling different articles to persons other than merchants. In other words, the ordinance laid a tax on itinerants, and the court held the manner in which such persons conduct business is so different from the method of the ordinary merchant as to furnish a reasonable basis for classification. Also, the court said that when the legislative body of a city has seen fit to impose a heavier license upon the business when so conducted than where carried on in a different way the ordinance is not on its face necessarily unreasonable. "Indeed," the court said, *411 "the right to make such discriminating distinctions, based upon like grounds, is amply sustained by authority, and in many cases involving a much greater disparity between the rates charged than is exhibited here".
It, therefore, appears that the decision in this case was based upon a recognition of the right of the legislative body of the city to classify the different kinds of business conducted within the city for the purposes of taxation. In affirming this right the court said: "The very power to license for purposes of regulation and revenue involves the right to make distinctions between different trades and between essentially different methods of conducting the same general character of business or trade. And that is all that is done here." But the right to make such distinctions is not broad enough to allow a municipality to tax persons doing a particular kind of business within the city and to entirely exempt other persons doing the same kind of business in essentially the same way. Nothing in the reasoning or decision of the Haskell case may be said to do so.
In the case of E. A. Hoffman Candy Co. v. City of Newport Beach, supra, the court sustained an ordinance which imposed a license tax of $12 per annum upon places of business within the city and a further tax of $10 per annum for each automobile or vehicle operated over the streets of the city by a person not having a business establishment within it. But the court, while recognizing that a discrimination for purposes of taxation solely because of the different sites of the principal places of business of those who sell goods or furnish service within the city and for no other reason "has been held illegal without deviation in decision", said that the case of California Fireproof Storage Co. v. City of Santa Monica, 206 Cal. 714 [275 P. 948], controlled its decision. However, in the latter case the ordinance, which was upheld, taxed all persons operating motor propelled vehicles within the city. It is clear that an ordinance which taxes those having their places of business within a city equally with those who may come into the city to transact the same kind of business does not discriminate. On the contrary, it places all on exactly the same basis.
[4] But respondents insist that the ordinance must be upheld under the decisions of the Supreme Court of the United States. However, each one of such cases which has been cited in support of the ordinance is based upon facts *412 essentially different from those presented by the Santa Barbara ordinance.
The case of State Board of Tax Commissioners of Indiana v. Jackson, 283 U.S. 527 [51 S. Ct. 540, 75 L. Ed. 1248, 73 A.L.R. 1464], is cited by respondents as the leading case on the subject. In that case the court by the narrow margin of a five to four decision upheld a statute of Indiana imposing a license tax upon chain stores. But that statute, the court held, was based on distinctions other than the ownership of stores, the difference consisting "in organization, management, and type of business transacted". In the later case of Liggett Co. v. Lee, 288 U.S. 517 [53 S. Ct. 481, 77 S. Ct. 929, 85 A.L.R. 699], the court emphasized this when it said that its decision in the Jackson case was based upon a fundamental difference in the form of merchandising between a chain of stores and the ordinary individually operated store. It is to be noted also that the statute placed a license tax upon all stores, whether owned by a chain or by individuals. The Santa Barbara ordinance exempts the local laundry entirely.
The case of Louisville Gas & Elec. Co. v. Coleman, 277 U.S. 32 [48 S. Ct. 423, 72 L. Ed. 770], is of interest in this connection. In that case the court passed upon a statute in Kentucky which levied a tax upon the indebtedness secured by a mortgage lodged for record where the indebtedness did not mature within five years. In holding the statute unconstitutional the court stated that there are certain general and fundamental rights which must be recognized under the equal protection clause. It recognized the power of the state to classify for purposes of taxation, and that its right to classify for such purposes is of wide range and flexibility. But it pointed out that the classification " 'must be reasonable, not arbitrary, and must rest upon some ground of difference having a fair and substantial relation to the object of the legislation, so that all persons similarly circumstanced shall be treated alike' ".
It is certain, the court said, that one who secures priority for his lien for a period less than five years enjoys the same privilege as one who secures such priority for a shorter period. "The former reasonably may be required to pay proportionately less than the latter; but to exact, as the price of a privilege which, for obvious reasons, neither safely can forego, a tax from the latter not imposed in any degree upon the former *413 produces an obvious and gross inequality." The tax imposed by the Santa Barbara ordinance upon one class of laundry owners while exempting all others produces that same obvious and gross inequality. For mere difference in classification does not meet constitutional requirements. Classification "must always rest upon some difference which bears a reasonable and just relation to the act in respect to which the classification is proposed, and can never be made arbitrarily and without any such basis". (Gulf, Colorado & Santa Fe Ry. Co. v. Ellis, 165 U.S. 150, 155 [17 S. Ct. 255, 41 L. Ed. 666].)
Respondents point to Armour & Co. v. Virginia, 246 U.S. 1 [38 S. Ct. 267, 62 L. Ed. 547], where a statute imposing a state license tax on persons selling goods within Virginia but manufactured without the state was upheld. By that statute the amount of the tax to be paid by each merchant was determined by the aggregate sum of purchases of merchandise to be sold or offered for sale, but "manufacturers taxed on capital by this state, who offer for sale at the place of manufacture, goods, wares, and merchandise manufactured by them" were excluded from its operations. It is clear that the state imposed its tax burdens upon all merchants with particular provision for those who were also manufacturers. Those manufacturers who were taxed on capital and sold their products at the place of manufacture were not required to pay an additional license tax. Merchants who were manufacturers and who were not taxed on capital paid a license tax based on the value of the goods purchased by them and the value of merchandise manufactured by them. Obviously all manufacturers were thus taxed. That those in the different classifications were taxed in different ways and in different amounts is unimportant. The constitutional requirements were met.
In the case of Richmond Linen Co. v. Lynchburg, 160 Va. 644 [169 S.E. 554], the court reviewed an ordinance of the city of Lynchburg imposing a license tax upon laundries soliciting general laundry work within the city and having it done outside the city. But the ordinance by its terms did not apply to a laundry located in the city of Lynchburg paying the regular license fee. The court in upholding the ordinance said that the outside laundries could not complain because the tax imposed upon them was not the same as that fixed for the establishments within the city limits because *414 "equality in taxation ... is a dream unrealized". Here again all in the same business were taxed, although in different amounts.
The case of Singer Sewing Machine Co. v. Brickell, 233 U.S. 304 [34 S. Ct. 493, 58 L. Ed. 974], is also strongly relied upon by respondents. In that case a state law for revenue purposes required each person selling or delivering sewing machines to pay a license tax of $50 annually for each county in which he sold or delivered such articles. It also fixed an additional tax of $25 annually for each wagon or team used in delivering or displaying sewing machines but exempted merchants selling them at regularly established places of business. The court upheld the statute upon the ground that "there is an evident difference, in the mode of doing business, between the local tradesmen and the itinerant dealer, and we are unable to say that the distinction made between them for the purposes of taxation is arbitrarily made".
The difference in the mode of doing business was also the basis for the decision in Rost v. Van Deman & Lewis Co., 240 U.S. 342 [36 S. Ct. 370, 60 L. Ed. 679, Ann. Cas. 1917B, 455, L.R.A. 1917A, 421]. A statute of Florida imposed a license tax in a basic amount upon merchants and required an additional amount from those giving coupons, profit sharing certificates or trading stamps. It was upheld upon the ground that the method of doing business of the merchants who give something away with articles sold is of a particular character which gives a reasonable basis for classification. It appeared to the court that these merchants "tempt by a promise of a value greater than that article and apparently not represented in its price, and it hence may be thought that thus by an appeal to cupidity [they] lure to improvidence". This, the court held, authorized the legislature to classify such merchants as a separate group and to tax them accordingly.
Questions which arise when legislative bodies impose taxes based upon a classification of businesses or occupations are always difficult to solve. Those difficulties stand out in the many cases decided by closely divided courts. There is little difference in opinion concerning the fundamental principles involved. The application of those principles to particular situations brings the difference in views. *415
The very basis of constitutional government is equal protection of the law. The power to tax is the power to destroy. If taxes may be arbitrarily levied, there is no protection for either personal or property rights. Constitutional provisions, it was said in Bell's Gap R. R. Co. v. Pennsylvania, 134 U.S. 232, 237 [10 Sup Ct. 533, 535, 33 L. Ed. 892], were not intended "to prevent a state from adjusting its system of taxation in all proper and reasonable ways". But what have been termed clear and hostile discriminations against particular persons and classes cannot be upheld.
There can be no doubt that the Santa Barbara ordinance is an attempt to discriminate in favor of laundries within the city. That legislation of such character may discriminate is not denied. There may be discrimination founded upon a reasonable classification of all persons transacting the same kind of business. But discrimination cannot go to the extent of being a mere subterfuge for legislation directed against a particular group of taxpayers. Justice Field in the case of County of Santa Clara v. Southern Pac. R. Co., 18 Fed. 385, 399, stated the rule with clarity and vigor. He said: "Unequal taxation, so far as it can be prevented, is, therefore, with other unequal burdens, prohibited by the (Fourteenth) amendment. There undoubtedly are, and always will be, more or less inequalities in the operation of all general legislation arising from the different conditions of persons, from their means, business or position in life, against which no foresight can guard. But this is a very different thing, both in purpose and effect, from a carefully devised scheme to produce such inequality; or a scheme, if not so devised, necessarily producing that result."
The judgment is reversed.
Thompson, J., Waste, C.J., Shenk, J., and Curtis, J., concurred.
SEAWELL, J.,
Dissenting.
I dissent.
I am of the opinion that the rule enunciated in Ex parte Haskell, 112 Cal. 412 [44 P. 725, 32 L.R.A. 527], E. A. Hoffman Candy Co. v. City of Newport Beach, 120 Cal. App. 525 [8 PaCal.2d 235, California F. S. Co. v. Santa Monica, 206 Cal. 714 [275 P. 948], and Richmond Linen Co. v. Lynchburg, 160 Va. 644 [169 S.E. 554], is controlling. Those cases, in my opinion, clearly establish that the ordinance of *416 Santa Barbara under consideration herein does not unlawfully discriminate between classes, and is a reasonable exercise of municipal power. Once it is conceded, as does the majority opinion, that the power exists to classify between inside and outside businesses, then the sole question is whether the particular ordinance is reasonable. The mere fact that inside business is not taxed at all under the present ordinance is immaterial. The question is simply one of degree.
Langdon, J., concurred. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2364837/ | 409 F. Supp. 312 (1976)
M. S., on behalf of herself and all others similarly situated
v.
Robert WERMERS et al.
No. CIV 75-5015.
United States District Court, D. South Dakota.
March 5, 1976.
*313 Ben Stead, Black Hills Legal Services, Inc., Rapid City, S. D., for plaintiff.
John K. Konenkamp, Deputy States Atty., Rapid City, S. D., for defendants.
MEMORANDUM OPINION
BOGUE, District Judge.
Plaintiff in this action is identified as M. S. and is alleged to be a fifteen-year old, unmarried female who attempted, without written parental consent, to procure contraceptive services and supplies from the defendants through the Pennington County Health Department. The complaint further alleges that plaintiff was precluded from obtaining such services and supplies because of defendants' policy of requiring written parental consent for such services and supplies. Additionally, it is alleged that the defendants, through the Pennington County, South Dakota Health Department, offers family planning services, contraceptive services and supplies to the public at a nominal charge of $2.00, or free of charge. Complaint further alleges that these services as provided through local, state and federal funds, including funding through the United States Department of Health, Education and Welfare and that all residents of Pennington County are eligible to receive these services, but minors are not provided contraceptive services and supplies without parental consent.
The complaint urges that jurisdiction of this matter is conferred by 28 U.S.C. § 1343 because plaintiff's cause of action arises under 42 U.S.C. § 1983 in that defendants, while acting under color of state law, have deprived plaintiff and all others similarly situated of rights secured by the Constitution of the United States. Plaintiff additionally urges that this Court has authority to grant the declaratory relief requested pursuant to 28 U.S.C. §§ 2201 and 2202 and Rule 57 of the Federal Rules of Civil Procedure.
The complaint specifically urges that plaintiff should be permitted because of the nature and circumstances of this case to proceed without appointing a guardian ad litem under the provisions of Rule 17(c) of the Federal Rules of Civil Procedure.
From the file and records in this action, together with the testimony taken in the May 16, 1975 and February 9, 1976 hearings before this Court, it is now abundantly clear that the policy of defendants has been and now is to provide family planning services, contraceptive services and supplies to the public at a nominal fee, or, if they establish indigency, at no charge. However, as to prescription *314 contraceptives for sexually active unmarried minors it is necessary to have the approval of parents. In other words, the plaintiff, whomever she may be, desires prescription contraceptives at government expense without first obtaining parental approval. She is already able to obtain non-prescription contraceptives without parental approval at the expense of the taxpayers.
This opinion will deal solely with the issue of the necessity of a guardian or guardian ad litem to represent a minor plaintiff's interest. Rulings on all other issues herein will be reserved until this issue is ultimately resolved.
Rule 17 of the Rules of Civil Procedure requires every action to be prosecuted in the name of the real party in interest, and that the capacity of an individual, other than one acting in a representative capacity, to sue or be sued shall be determined by the law of his domicile. Rule 17(c) of the Rules of Civil Procedure further provides:
Whenever an infant or incompetent person has a representative, such as a general guardian, committee, conservator, or other like fiduciary, the representative may sue or defend on behalf of the infant or incompetent person. If an infant or incompetent person does not have a duly appointed representative he may sue by his next friend or by a guardian ad litem. The court shall appoint a guardian ad litem for an infant or incompetent person not otherwise represented in an action or shall make such other order as it deems proper for the protection of the infant or incompetent person. (Emphasis added.)
For the purpose of this opinion, this Court takes judicial notice of the fact that the term "infant" is to be considered synonymous with the term "minor."
Section 15-6-17(c) of the South Dakota Compiled Laws requires that "if an infant or incompetent person does not have a general guardian, he may sue by a guardian ad litem. The court shall appoint a guardian ad litem for an infant or incompetent person not otherwise represented in an action or shall make such other order as it deems proper for the protection of the infant or incompetent person and may make such appointment notwithstanding an appearance by a general guardian." (Emphasis added.) Also, S.D.C.L. § 26-1-3 provides that "a minor may enforce his rights by civil action, or other legal proceedings, in the same manner as a person of full age, except that a guardian must be appointed to conduct the same."
Counsel for plaintiff urges that he is competent to adequately protect the interests of the minor plaintiff in this case without the appointment of a guardian ad litem. This Court rejects this contention. It is manifest from the records and testimony in this case that much confusion and misunderstanding exists today even within the ranks of the medical profession as to the physical and psychological side effects of prescription contraceptives such as birth-control pills and I.U.D.s. Birth-control pills can interfere with a young girl's normal physiology and growth. Some of the side effects of the pill are nausea, vomiting, spotting, irregular periods, amenorrhea, blood clots, headaches, high blood pressure, depression and weight gain. I.U.D. complications are hemorrhage, infection and pain. Each female is individual and her needs for contraception are too.
In view of the many complex medical matters attendant upon the use of prescription contraceptives and in view of the possible exposure of plaintiff to serious risks, and in view of the further fact that there is presently ready availability of non-prescription contraceptives to any sexually active unmarried minor female, this Court finds that informed consent by the plaintiff has not been established to the satisfaction of this Court as to the commencement of this action and that the interests of the minor plaintiff need additional protection, therefore, a guardian ad litem must be appointed to represent and protect the interests of the plaintiff herein before this action may proceed further.
*315 An order of this Court will follow this opinion directing the making of an application to this Court for an appointment of a guardian ad litem for plaintiff herein not later than March 15, 1976. Upon the receipt of such application a time and place for hearing of such application will be set by this court with notice to the parents of the plaintiff required to be given at least five days in advance of such hearing.
In the event that application for a guardian ad litem is not made as ordered, then this Court will forthwith dismiss this action.
This Memorandum Opinion shall constitute this Court's findings of fact and conclusions of law as to the issue of the necessity of the appointment of a guardian ad litem for the minor plaintiff. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2364839/ | 325 S.W.2d 244 (1959)
Robert L. BALDWIN
v.
STATE of Tennessee.
Supreme Court of Tennessee.
April 8, 1959.
*245 William C. Sugg and Fred I. Womack, Fayetteville, for plaintiff in error.
James M. Glasgow, Asst. Atty. Gen., for the State.
NEIL, Chief Justice.
This is an appeal from the Criminal Court of Lincoln County from a conviction, and sentence to the State penitentiary of Robert L. Baldwin, on the charge of having carnal knowledge of a female over the age of 12 years and under 21 years. The appeal is solely upon the technical record.
Immediately following the trial and conviction of the defendant, a motion for a new trial was seasonably made and overruled. An appeal was perfected by the execution of a proper bond. No bill of exceptions was ever tendered the trial judge, and, of course, none was signed and authenticated by him. After the lapse of time allowed by the court for filing such bill of exceptions, the trial judge revoked the appeal bond and ordered that the defendant be taken in custody and committed to the State penitentiary, which order was duly complied with.
Thereupon the defendant filed a petition, addressed to the Chief Justice, seeking writs of certiorari and supersedeas on the ground that the action of the trial judge was illegal and void because he had lost jurisdiction of the case. Upon a full hearing of counsel and the Assistant Attorney General, the contention of the defendant was upheld and the writ of supersedeas was issued and the defendant released from the penitentiary. We now have the case on direct appeal with assignments of error.
The sole question for determination is whether or not certain affidavits, which were filed in support of the defendant's motion for a new trial, are a part of the technical record. These affidavits relate to the misconduct of the Sheriff. The substance of these affidavits is that after the jury was sworn to try the case the Sheriff entered the jury room, conversed with individual jurors and made prejudicial statements about the defendant to this effect, "that he had been mixed up in trouble like this before" and that "he should be in the penitentiary."
Some time after the record was filed with the Clerk of this Court, and after it had been set down for argument (March *246 21, 1959) the trial judge filed an affidavit, which reads as follows:
"I hereby certify that the affidavits of jurors filed by the defendant, Robert L. Baldwin, as exhibits to his motion for new trial were all the evidence introduced before me on the hearing of his motion for new trial.
"This the 8th day of March, 1959.
/s/ Robert S. Brady
Judge"
The same was duly verified before the Clerk of the Circuit Court.
The Assistant Attorney General has moved the Court to strike the aforesaid affidavit of the trial judge on the ground that he was without any legal authority to file it, because he lost jurisdiction of the case when the defendant perfected his appeal to this Court. Contention is made by the State that this is an effort to amend the record, and especially the motion for a new trial after the defendant's appeal had been granted and perfected.
Excepting the affidavit of the trial judge, the record fails to show that the exhibits to the motion for a new trial were all the evidence introduced on the motion for a new trial.
We think the motion to strike the affidavit of the trial judge must be sustained. It is regrettable that the technical record is not accompanied with a proper bill of exceptions. The affidavit of Juror Albert Buntley, filed as an exhibit to the defendant's motion for a new trial, the substance of which we have referred to, was extremely prejudicial. But we cannot consider it in the absence of a bill of exceptions. "A motion for a new trial is a pleading and does not take the place of a bill of exceptions." Kochn v. Hooper, 193 Tenn. 417, 246 S.W.2d 68. In that case certain "special requests" by defendant's counsel were copied in the motion for a new trial, and it was contended that it was error not to consider them. In response to this insistence it was said:
"To refute this insistence, all that is necessary is to quote with approval, the last edition of Caruthers' History of a Lawsuit, which considers the Act of 1945, and states the present rule of practice to be: `A motion for a new trial is a pleading, and is not evidence of what occurred on the trial.'"
While the motion for a new trial is a part of the technical record as provided by Code Section 27-112, T.C.A. (Public Acts of 1945), yet it is held in Wileman v. Mayor, etc., 29 Tenn. App. 172, at page 178, 195 S.W.2d 325, at page 327, "To determine whether any ground of the motion (for a new trial) should have been sustained, the evidence must be preserved by a bill of exceptions." (Certiorari denied). In Broestler v. State, 186 Tenn. 523, 212 S.W.2d 366, 368, the Court holds: "The evidence in a case forms no part of the technical record." The statute (§ 27-112, T.C.A.) upon which the defendant relies, does not require that a motion for a new trial, or any exhibit thereto, be considered as evidence in the case.
It has been the rule in this Court for many years that a bill of exceptions to become a part of the record must be complete in every particular, including all the evidence in the case and the ruling of the trial judge upon every controversial issue. When it is once signed and thus authenticated no one may take anything from it or add to it.
"To have the rule to mean less or more is to make it mean nothing. If it can be added to for one purpose, it can be for all purposes. If it (the bill of exceptions) may be amended in one particular, it may be in every. And so the entire bill of exceptions could be, and often would be, changed throughout." Cosmopolitan Life Ins. Co. v. Woodward, 7 Tenn. App. 394, 409.
*247 In this case the Clerk of the Circuit Court undertook to supply certain exhibits to the evidence and the record after the same had been signed by the Special Judge and supported by the latter's affidavit, to the effect that they were considered on the trial and were inadvertently omitted from the bill of exceptions. The right to file such affidavits was rejected on the authority of Shelby County v. Bickford, 102 Tenn. 395, 52 S.W. 772, 775, the Court speaking, as follows:
"* * * Even the trial judge cannot, after appeal, amend and insert in the bill of exceptions omitted recitals, though parties agree to its being done. Kennedy v. Kennedy, 16 Lea, 736. The effort here is, by affidavits filed in this court, to supply the bill of exceptions and incorporate into the record here evidence which was never made a part of the record in the court below. This practice is vicious in itself, contrary to established rules, and would lead to harmful results in the future."
We feel that the foregoing authorities are conclusive of the question made on the State's motion to strike the affidavit of the trial judge from the record. But additional authority is found in Hayes v. State, 130 Tenn. 661, 172 S.W. 296, wherein complaint was made about the misconduct of the jury on the motion for a new trial. It was held that the point could not be considered because the bill of exceptions did not show that it contained all the evidence in the case. In a recent case Johnson v. State, 201 Tenn. 11, 296 S.W.2d 832, 833, contention was made that the case should be reversed because the trial judge erred in not granting a new trial because of newly discovered evidence. This contention was overruled on the ground that "the affidavits were attached to the motion for a new trial only, and it does not appear that they constituted all the evidence heard on the motion for a new trial. Odeneal v. State, 128 Tenn. 60, 157 S.W. 419."
It is earnestly and persuasively argued by defendant's counsel in considering the affidavits attached to the motion for a new trial: "On their face they show that nothing could be added to them by incorporating them in a bill of exceptions."
Conceding that this argument of counsel is meritorious as applicable to the case at bar we are not privileged to make an exception to the general rule to which we have adhered to for many years. For us to do so would wreck the rule relating to appellate practice and procedure in that other exceptions would be insisted upon from time to time with the result that no record could be considered as complete in any case.
The assignments of error are overruled, and the judgment of the trial court is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2384099/ | 875 S.W.2d 766 (1994)
S & A MARINAS, INC., Appellant,
v.
LEONARD MARINE CORPORATION, Appellee.
No. 3-93-419-CV.
Court of Appeals of Texas, Austin.
May 4, 1994.
Rehearing Overruled June 8, 1994.
*767 G. Allen Price and Michael A. McLaughlin, Houston, for appellant.
David W. Evans, Dallas, for appellee.
Before CARROLL, C.J., and KIDD and B.A. SMITH, JJ.
BEA ANN SMITH, Justice.
S & A Marinas, Inc. d/b/a Hurst Harbor Marina appeals from a summary judgment rendered in favor of Leonard Marine Corporation d/b/a Lake Travis Yacht Harbor on S & A Marinas' claim of tortious interference with its alleged contract with the Lower Colorado River Authority (LCRA). We will affirm the summary judgment.
BACKGROUND
S & A Marinas and Leonard Marine operate neighboring marinas on Lake Travis. Both marinas hoped to expand their facilities by leasing additional land from the LCRA. The marinas' proposed areas of expansion overlapped, so the LCRA could grant only one of the requested leases.
The board of the LCRA passed a resolution authorizing its staff to negotiate and execute a fifteen-year lease with S & A Marinas. The facts most favorable to S & A Marinas indicate that in the months following the resolution, it repeatedly attempted to obtain a final lease and was assured that one was forthcoming, and that the LCRA still planned to lease the tract to S & A Marinas. In the meantime, LCRA staff members negotiated and executed a lease with Leonard Marine, which the LCRA board eventually ratified.
S & A Marinas sued the LCRA and two of its employees individually alleging various causes of action. As part of the same case, S & A Marinas sued Leonard Marine for tortious interference with contractual relations between S & A Marinas and the LCRA. The trial court severed the cause of action against Leonard Marine and rendered summary judgment in its favor. S & A Marinas appeals.[1]
DISCUSSION
S & A Marinas raises ten points of error. We will address the first two, which argue respectively that there is a genuine issue of material fact regarding the existence of a *768 contract between S & A Marinas and the LCRA, and that the summary judgment evidence did not establish the absence of a contract as a matter of law. The remaining eight points of error are contingent upon our sustaining the first two. Because of our disposition of the first two points of error, we do not address the other eight.
The dispositive issue in this appeal is whether the resolution authorizing the LCRA staff to negotiate and execute a lease with S & A Marinas constituted a contract between the two entities.[2] It is axiomatic that a cause of action for tortious interference with a contract will not lie in the absence of a contract.[3]Guynn v. Corpus Christi Bank & Trust, 589 S.W.2d 764, 770 (Tex.Civ.App.Corpus Christi 1979, writ dism'd). If a trial court can determine conclusively that no contract exists, summary judgment is appropriate. Gillum, 778 S.W.2d at 565. S & A Marinas concedes that, if the LCRA had the power, after passing the resolution, to decline to lease it the tract for any reason, the resolution does not constitute a contract. We hold that the wording of the resolution itself conclusively establishes that it is not a contract as a matter of law. To hold otherwise would contravene public policy allowing governmental agencies to reconsider action taken with respect to a contract not yet finalized.
By its very terms, the LCRA board's resolution is not a final contract insofar as it contemplates further staff action before contractual relations are finalized.[4] Specifically, it contemplates further negotiation between the LCRA staff and S & A Marinas, as well as the execution of a final contract which would be redundant if, as S & A Marinas contends, the resolution itself is a binding contract. S & A Marinas hopes to bring to trial extrinsic evidence of its course of dealing with the LCRA, of the fact that all material terms had been negotiated, and of the existence of a standard LCRA lease form in support of its contention that "authorized to negotiate and execute" really means "instructed to draw up the standard forms for." However, if the terms of a document purporting to be a contract are clear, the document may be construed as a matter of law without reference to such evidence. See R & P Enters. v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 518-19 (Tex.1980) (examining the terms of a promissory note and excluding extrinsic evidence as to its meaning).[5]*769 Furthermore, whether offer and acceptance have occurred is usually a question of law.[6]See Gilbert v. Pettiette, 838 S.W.2d 890, 893 (Tex.App.Houston [1st Dist.] 1992, no writ).
S & A Marinas correctly states that we must determine whether the LCRA intended to be bound by its resolution. Sun Oil Co. (Delaware) v. Madeley, 626 S.W.2d 726, 727-28 (Tex.1981). Although S & A Marinas contends that there is a fact issue with respect to the LCRA's intent, in the ordinary case the writing alone will be deemed to express the presence or absence of intent to be bound. Id. at 728; R & P Enters., 596 S.W.2d at 518-19. Only if the instrument is capable of multiple meanings and therefore ambiguous is there a fact issue rendering summary judgment inappropriate. R & P Enters., 596 S.W.2d at 519.[7] Mere disagreement over the interpretation of a document is not enough to render the document ambiguous. Sun Oil Co. (Delaware), 626 S.W.2d at 727.
In this case, the resolution is an unambiguous grant of authority. The staff is authorized to negotiate and execute a contract, but is not ordered to do so. The verb "directed" appears in the second, rather than the first, paragraph and cannot be read to refer to "negotiate and execute." Rather, the mandatory language refers to the carrying out of the resolution's terms and purposes which are to authorize the staff to negotiate and execute a contract. By its very terms, the resolution delegates the board's discretion in this matter to the staff rather than mandating a course of action. It does not express the LCRA's intent to be bound and is not open to the interpretation that it creates a binding contract.
Our decision is consistent with public policy objectives of preserving the government's ability to reevaluate its decisions before they become final. The LCRA enjoys considerable discretion in the disposition of its own property:
It has no power to levy taxes, enact laws nor ordinances, as a city has; and its efficient functioning depends in large measure on the sound judgment and good business management of its Board of Directors. They have large control over the operation of its properties, and the income to be derived therefrom, which constitute the only source of revenue to meet its obligations. Of necessity matters relating thereto must be left in large measure to their judgment, experience and discretion....
Lower Colorado River Auth. v. Chemical Bank & Trust Co., 185 S.W.2d 461, 467 (Tex. Civ.App.Austin), aff'd, 144 Tex. 326, 190 S.W.2d 48 (1945). S & A Marinas urges us to hold that a resolution of the LCRA board can, under the proper circumstances, constitute a contract between the LCRA and another party. We decide this issue against a backdrop of strong policy considerations in favor of preserving the LCRA's discretion in this area. The LCRA is bound, of course, by the contracts that it makes, but we are reluctant to expand the definition of a contract in a way that limits the LCRA's ability to reconsider decisions provisionally or tentatively made.
The LCRA has the discretion to reconsider an action it has taken with regard to any matter that has not become final. See *770 Turner v. Joshua Indep. Sch. Dist., 583 S.W.2d 939, 942 (Tex.App.Waco 1979, no writ); see also South Taylor County Indep. Sch. Dist. v. Winters Indep. Sch. Dist., 151 Tex. 330, 249 S.W.2d 1010, 1012 (1952).[8]
A board resolution does not, in and of itself, create vested contractual rights. See Turner, 583 S.W.2d at 942. Nor do those rights arise from the verbal communication of a board's decision to the party affected. Id. Therefore, assurances by various employees of the LCRA to the effect that the lease agreement between S & A Marinas and the LCRA was virtually completed have no bearing on the issue of whether the resolution gave rise to a contract. Given the LCRA's authority to reconsider its actions on a non-final matter, we conclude that rescission of its initial action was within its discretion in this instance insofar as the resolution cannot be construed as a final action.[9] We overrule S & A Marinas' first two points of error and consequently do not address the remaining eight.
CONCLUSION
As a matter of law, the LCRA had a right to decide not to carry out any proposed action with respect to a lease of land to S & A Marinas up until the time such a lease was signed. The LCRA board retained its discretion in the matter by passing a resolution delegating its authority but not rendering a final decision on the merits of S & A Marinas' application. Therefore, as a matter of law, there was no contract with which Leonard Marine could tortiously interfere. Summary judgment in this instance was appropriate and we affirm the judgment of the trial court.
NOTES
[1] In a cross-point, Leonard Marine contends that this cause should be dismissed because S & A Marinas did not timely perfect its appeal. We disagree for the reasons set out in our November 24, 1993 order overruling Leonard Marine's motion to dismiss the appeal. We overrule Leonard Marine's cross-point.
[2] S & A Marinas does not assert a cause of action for tortious interference with prospective contractual relations, which is a valid cause of action that places upon the plaintiff a qualitatively different burden of proof. See Gillum v. Republic Health Corp., 778 S.W.2d 558, 565 (Tex.App. Dallas 1989, no writ). S & A Marinas' appeal depends, therefore, on a claim that the resolution constituted an existing contract.
[3] Our disposition of this case does not depend on a determination of whether the "contract" is enforceable. A contract may be the subject of an interference action even though it is unenforceable between the contracting parties. Exxon Corp. v. Allsup, 808 S.W.2d 648, 654-55 (Tex.App. Corpus Christi 1991, writ denied). Instead we must decide whether the resolution constituted a contract at all.
[4] The resolution reads in pertinent part:
FURTHER RESOLVED that the General manager, or his designee, be and hereby is, authorized to negotiate and execute a fifteen (15) year lease of 9.735 acres, LCRA Tract TS-6, Travis County, to S & A Marinas, Inc. (dba Hurst Harbor Marina) for the continued use and expansion of a commercial marina as recommended in Agenda Item 17 [Exhibit M]; and
FURTHER RESOLVED that the General Manager, officers, and staff be, and they hereby are, authorized and directed to do all things necessary and proper to carry out the terms and purposes of these resolutions.
The agenda item to which the resolution refers states that the annual rent would be reevaluated at five year intervals and that the initial annual rent would be $7,920.
[5] In R & P Enterprises, neither party contended that the note at issue was not a contract, and the case involved merely the construction of the terms of that contract. The rules of construction articulated in that case, however, apply to all written instruments, including the board resolution in this case, and govern the question of whether a contract existed between LCRA and S & A Marinas. See, e.g., University Sav. Ass'n v. Burnap, 786 S.W.2d 423, 425-26 (Tex.App. Houston [14th Dist.] 1990, no writ) (employing R & P Enterprises in its examination of whether a savings association's bylaws vested rights of a contractual nature in a director); Enstar Corp. v. Bass, 737 S.W.2d 890, 893 (Tex.App.El Paso 1987, no writ) (citing R & P Enterprises in its examination of whether a company policy, as embodied in its written Reserve Incentive Program, created contract rights for its employees).
[6] S & A Marinas contends that the resolution constitutes the LCRA's "acceptance" of S & A Marinas' "offer" as communicated by S & A Marinas through the LCRA staff to the LCRA board.
[7] S & A Marinas cites Foreca, S.A. v. GRD Dev. Co., 758 S.W.2d 744 (Tex.1988), for the proposition that intent to form a binding contract is a fact issue. However, that case involved the construction of a patently ambiguous phrase ("subject to legal documentation contract to be drafted by [a party's attorney]"), which could be read either as a condition precedent to a contract or as a directive to memorialize an already enforceable contract. Id. at 744-45. In other words, Foreca states the law applicable to a situation in which the R & P Enterprises rules of construction do not resolve ambiguities inherent in the wording of a document. In Foreca, the phrase appeared in a document initialed by both parties to the "contract" and did not involve, as does this case, a resolution defining the respective powers of an agency's board and staff. If the resolution can be said to constitute an agreement between "parties," those parties would be the board and the general manager of the LCRAnot the LCRA as a whole and S & A Marinas.
[8] Most of the caselaw dealing with the issue of reconsideration of actions taken by governmental entities involves decisions made by school districts or administrative agencies. The LCRA is a conservation and reclamation district created by the state under the authority of Tex. Const. art. XVI, § 59(a). However, the LCRA is an agency in the broader sense of the term, and there is nothing to suggest that it has any less discretion than an agency created by other means. See Chemical Bank & Trust, 185 S.W.2d at 466-67; see also Lower Colorado River Auth. v. McGraw, 125 Tex. 268, 83 S.W.2d 629, 636 (1935) (holding that the LCRA board is a state board contemplated by Tex. Const. art. XVI, § 30).
[9] We do not decide the issue of whether a board resolution could ever vest a party with contractual rights. Rather, we determine that the resolution at issue in this case did not do so. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1116289/ | 573 So. 2d 499 (1990)
Jill GAAR
v.
Randall SOWARDS, Sentry Indemnity Company and United Services Automobile Association.
No. CA 89 0541.
Court of Appeal of Louisiana, First Circuit.
August 31, 1990.
Joseph F. Gaar, Jr., Lafayette, Aaron Frank McGee, Eunice, Alex D. Chapman, Jr., Ville Platte, for plaintiff-appellant.
Iddo Pittman, Jr., Hammond, for defendant-appellee, United Services Auto. Ass'n.
Ann Metrailer, Baton Rouge, for Randall Sowards and Sentry Indem. Co.
David Forrester, Hammond, for Buford-Smith and Assoc., Inc.
Frank Gremillion, Baton Rouge, for John R. Pierce.
Roy Maughan, Paul Provenza, Jr., Baton Rouge, for defendant.
Before LOTTINGER, EDWARDS, CRAIN, ALFORD and LeBLANC, JJ.
*500 CRAIN, Judge.
This is an appeal of a trial court judgment finding uninsured motorist coverage in an amount less than the liability limits based on a prior written request for a reduction in uninsured motorist coverage.
FACTS
On September 20, 1985, Jill Gaar was injured as a result of an automobile accident in Hammond, Louisiana. Randall Sowards was the driver of the vehicle which struck the plaintiff's vehicle. The plaintiff was driving a car owned by the father, J. Frazier Gaar. Randall Sowards was driving a truck owned by John R. Pierce, which was uninsured at the time of the accident. J. Frazier Gaar maintained liability and uninsured motorist coverage through United Service Automobile Association (USAA). In 1977, he signed a selection of UM benefits lower than the limits of his liability coverage. In 1978 he requested an increase in the deductible amounts of his collision and comprehensive coverage. On March 1, 1980, he increased the limits of his liability coverage from 100,000/300,000 to 300,000/500,000, which was in effect at the time of the accident. He did not sign another document representing a selection of lower UM limits nor was there any evidence that he was given the opportunity to sign such a document.
A bifurcated trial was held separating the issues of liability and damages from the issue of the amount of UM coverage.
The trial judge held that the UM coverage available was the amount selected in 1977 ($10,000).
The sole issue for review is whether an increase in the amount of liability coverage would have the effect of a new policy and require that the insurer obtain a new signed selection of lower limits or rejection of UM coverage.
ANALYSIS
La.R.S. 22:1406(D)(1)(a)(i) states in pertinent part:
No automobile liability insurance covering liability arising out of the ownership, maintenance, or use of any motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplied thereto, in not less than the limits of bodily injury liability provided by the policy, ... provided, however, that the coverage under this Subsection shall not be applicable where any insured named in the policy shall reject in writing the coverage or select lower limits. Such coverage need not be provided in or supplemental to a renewal or substitute policy where the named insured has rejected the coverage or selected lower limits in connection with a policy previously issued to him by the same insurer.
A previously executed election of UM coverage cannot be carried over to new contracts because the insured has not signed additional selection forms applicable to the new policies. Sentilles v. State Farm Mutual Automobile Insurance Co., 443 So. 2d 723 (La.App. 4th Cir.1983).
Other courts reviewing the same issue have held that an increase in liability coverage has the effect of a new policy and if a separate UM election is not executed at that time, the UM coverage increases in an amount equal to the face limits of liability. Guilbeau v. Shelter Mutual Insurance Co., 549 So. 2d 1250 (La.App. 3rd Cir.1989); Gilbert v. Waddell, 501 So. 2d 330 (La.App. 4th Cir.1987).
As stated by the court in Guilbeau:
[W]hen the bodily injury limits of a policy are increased, the insurer is agreeing to provide and the insured is agreeing to purchase additional bodily injury coverage not previously provided. If the original selection of lower limits of uninsured motorist coverage is presumed to remain in effect when the bodily injury limits of the policy are increased, this would result in a situation where an insured is found to reject additional coverage before the opportunity exists to accept such additional coverage. We do not believe this was the intent of the *501 legislature when it enacted La.R.S. 22:1406(D)(1)(a). 549 So.2d at 1255.
The trial court erred when it relied on Mouton v. Guillory, 494 So. 2d 1374 as controlling in this case. Mouton is factually distinguishable from the present case. Mouton involved a rejection of UM coverage, not a selection of lower limits. The policy had been amended from its original form but there was no evidence of a change in coverage. The accident occurred within two years from the date of rejection of UM coverage, whereas in the present case the accident occurred eight years after a selection of lower limits with subsequent changes in the amounts of coverage. But most importantly, Mouton involved a renewal of an existing policy, whereas, we now determine that increasing the limits of liability coverage is a new policy and therefore does not fall within the provision of La.R.S. 22:1406 regarding renewal, reinstatement or substitute policies.
We find that the selection of higher limits of liability coverage by J. Frazier Gaar was a new policy and, without rejection or selection of lower limits of UM coverage, La.R.S. 22:1406(D)(1)(a)(i) mandates UM coverage in an amount equal to the liability coverage, which in this case would be $300,000.
The decision of the trial court is reversed and this matter remanded for additional proceedings with respect to liability and damages. All costs of this appeal are assessed against the appellee.
REVERSED AND REMANDED.
EDWARDS, J., concurs.
LeBLANC, J., dissents and will assign reasons.
LeBLANC, Judge, dissenting.
I disagree with the conclusion of the majority that the subsequent selection of higher liability limits converted appellant's existing policy into a new policy. To the contrary, I believe this change merely modified the existing policy, which was then renewed semi-annually for five years by appellant. Under La.R.S. 22:1406(D)(1)(a) (i), an insurer who issues a renewal or substitute policy, although it may constitute a separate contract between the parties, need not present the insured with the option of rejecting or selecting lower limits of UM coverage. Mouton v. Guillory, 494 So. 2d 1374 (La.App. 3d Cir.1986). Accordingly, appellant's initial valid selection of lower UM coverage remained in effect at the time of the accident in question. For these reasons, I respectfully dissent. | 01-03-2023 | 10-30-2013 |
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