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https://www.courtlistener.com/api/rest/v3/opinions/1817025/ | 592 F.Supp. 291 (1984)
STATE OF NEW YORK, Plaintiff,
v.
GENERAL ELECTRIC COMPANY, Defendant.
No. 83-CV-1615.
United States District Court, N.D. New York.
June 26, 1984.
*292 *293 Robert Abrams, Atty. Gen. of State of N.Y., New York City, U.S. Dept. of Justice, Environmental Enforcement Section, Land and Natural Resources Div., Washington, D.C., for plaintiff; Norman Spiegel, Nancy Stearns, Asst. Attys. Gen., New York City, and Nancy B. Firestone, Washington, D.C., of counsel.
Covington & Burling, Washington, D.C., Susan Phillips Read, Corporate Counsel, Environmental Programs, General Elec. Co., Schenectady, N.Y., for defendant; Allan J. Topol, Patricia A. Barald, Corinne A. Goldstein, Washington, D.C., of counsel.
MEMORANDUM-DECISION and ORDER
MINER, District Judge.
I
This action seeking injunctive, declaratory and monetary relief arises out of the allegedly unlawful disposal of certain hazardous wastes by defendant General Electric Company ("GE"). The action is brought by New York State pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601-9657 ("CERCLA")[1], the New York State Real Property Actions and Proceedings Law, N.Y. Real Prop. Acts. Law § 841 (McKinney 1979), and the New York common law of public nuisance. Jurisdiction is predicated upon 28 U.S.C. § 1331, 42 U.S.C. § 9613(b) and the doctrine of pendent jurisdiction. Before the Court is GE's motion to dismiss the complaint[2] for failure to state a claim upon which relief can be granted, Fed.R. Civ.P. 12(b)(6).
II
Defendant GE operates several manufacturing plants in the State of New York, including plants at Hudson Falls and Fort Edward, New York. According to plaintiff's complaint,[3] in the early 1960's GE disposed of between four and five hundred fifty-five gallon drums of used transformer oil from those two plants through sales to the South Glens Falls Dragway, Inc., Allie Swears, and Carl Becker. The oil, which contained hazardous substances including polychlorinated biphenyls ("PCBs") and dibenzofurans, was used at the South Glens Falls Dragstrip ("dragstrip") for purposes of dust control.[4] In 1982 and 1983, chemical analyses of soil samples taken by plaintiff from the dragstrip and its environs revealed PCB[5] contamination as high as 2900 parts a million and dibenzofuran contamination as high as 12 parts a billion. Analysis of air samples taken in June of 1983 indicated PCB contamination in the ambient air as well. This contamination apparently results in release of PCBs into the ambient air by volatilization as well as migration of the contaminants through the *294 soil and towards the groundwater. According to the amended complaint, "[t]hese releases of hazardous substances have caused damage to the soil and ambient air and to other natural resources of the State of New York ... [and] [t]he hazardous chemical contamination ... causes harm and threatens additional harm to the health and safety of the people of the State of New York particularly those living in the Town of Moreau or using the area in and around the South Glens Falls Dragstrip." Amended complaint, ¶¶ 18-19.
On November 30, 1983, pursuant to section 112(a) of CERCLA, 42 U.S.C. § 9612(a), the state presented its claim to defendant for damages to the natural resources and "for the costs of removal, remediation and response with respect to the identification, definition, monitoring, control and abatement of the contamination at and around the South Glens Falls Dragstrip." Amended complaint, ¶ 20. GE has failed to satisfy the claim for these items and accordingly the state "has incurred and continues to incur expenses and costs to respond to ... the contamination at and around the South Glens Falls Dragstrip and has suffered and continues to suffer damages to the natural resources of the State of New York in amounts not yet ascertained ...." Id. ¶ 21.
This relatively simple factual background lays the predicate for three causes of action set forth in plaintiff's amended complaint. The first cause of action alleges that GE is strictly liable under section 107(a)(3) of CERCLA, 42 U.S.C. § 9607(a)(3), "for all damages sustained and to be sustained by the land, wildlife, biota, groundwater, ambient air and other such natural resources of the State and for all costs and expenses incurred or to be incurred by the State of New York for the removal, remediation and response to all contamination at and in the environs of the South Glens Falls Dragstrip ...." Amended complaint, ¶ 23. The second and third causes of action concern alleged violations of state statutory and common law.[6] GE has not moved against these claims on the merits but rather has only taken the position that the dismissal of New York's federal CERCLA claims would require dismissal of the state claims under the jurisprudential considerations of pendent jurisdiction. See United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966).
Plaintiff seeks reimbursement from GE for
all damages sustained to the natural resources of the State including the cost of assessing such injury, destruction or loss and for all the costs and expenses incurred by the State of New York for the removal, remediation and response to all contamination at and around the South Glens Falls Dragstrip as allowed by Section 107(a)(A) and (C) of the Superfund Act, 42 U.S.C. § 9607(a)(A) and (C).
Amended complaint at 11. Moreover, plaintiff seeks a declaratory judgment, 28 U.S.C. § 2201, declaring that GE is liable for all such damages incurred and to be incurred. Finally, plaintiff requests that defendant be ordered to monitor the contamination at the dragstrip and abate completely and permanently the nuisance caused by the migration of the hazardous substances. Defendant now moves to dismiss the complaint on a number of grounds.[7]
*295 III
A. Applicability of section 107
GE argues that there is no basis for liability under Section 107 of CERCLA, 42 U.S.C. § 9607, the relevant subsection of which provides for liability of persons
who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility owned or operated by another party or entity and containing such hazardous substances ....
42 U.S.C. § 9607(a)(3).[8] GE's argument is twofold: First, it argues that because a dragstrip is not a hazardous waste facility there can be found no liability under section 107(a)(3). Second, it contends that liability may not be premised upon section 107(a)(3) because it did not "contract or otherwise arrange for `disposal or treatment'" of the transformer oil within the meaning of the statute. This Court rejects both of defendant's contentions.
Section 107(a)(3) provides for liability of "any person who ... arranged for disposal ... of hazardous substances owned or possessed by such person ... at any facility owned or operated by another ...." 42 U.S.C. § 9607(a)(3) (emphasis added). Section 101(9) of CERCLA defines "facility" in exceptionally broad terms, to include:
(A) any building, structure, installation, equipment, pipe or pipeline (including any pipe into a sewer or publicly owned treatment works), well, pit, pond, lagoon, impoundment, ditch, landfill, storage container, motor vehicle, rolling stock, or aircraft, or (B) any site or area where a hazardous substance has been deposited, stored, disposed of or placed, or otherwise come to be located ....
42 U.S.C. § 9601(9). See 1 Legislative History of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, at 783 (1980) ("[T]he definition of `facility' is necessarily a broad one. It explicitly defines facility as, among other things, any site or area, where a hazardous substance has been deposited, stored, disposed of, or otherwise come to be located").
Arguing that "[t]he legislative history leaves no question as to the reach of Section 107(a)(3)," GE suggests that mere sales of chemicals to an entity other than a hazardous dump site simply are not within the statute's contemplation. Because the dragstrip here at issue was not "a facility owned and operated by another party ... containing such hazardous substances," GE views its actions as not within the statutory proscription. The thrust of its argument is that a covered facility may only be one already containing hazardous substances. This construction, GE argues, is consistent with the legislative history of CERCLA which evinced a congressional concern regarding the problems attendant upon "dump sites," for example, sites such as the "Valley of the Drums" in Kentucky. See, e.g., 126 Cong.Rec. H9154-55 (daily ed. Sept. 19, 1980); 126 Cong.Rec. S14974, S14977 (daily ed. Nov. 24, 1980); H.R.Rep. No. 1016, Part 1, 96th Cong., 2d Sess. 18-20 (1980), U.S.Code Cong. & Admin.News 1980, p. 6119; S.Rep. No. 848, 96th Cong., 2d Sess. 2-5, 7-10 (1980). Since the complaint has not alleged that the dragstrip was ever used for other than its principal purpose, i.e., automobile racing, or that hazardous wastes had previously been disposed *296 of there, GE urges the Court to find no liability. Although not lacking entirely in intuitive appeal, the Court finds GE's hypertechnical construction to be unsupported by the legislative history and contradicted by simple common sense.[9]
First, the broad language employed in section 101(9) dispels any notion that CERCLA was designed to cover only traditional dump sites. That section expressly covers buildings, pipelines, motor vehicles, rolling stock, aircraft and any area where hazardous substances come to be located. 42 U.S.C. § 9601(9)(B). Moreover, the legislative history makes clear Congress' intent to address the problem of hazardous wastes rather than merely a particular category of disposal sites. Indeed, it appears that Congress sought to deal with every conceivable area where hazardous substances come to be located, including not only the Valley of the Drums, but, for example, dirt roads in Texas contaminated with nitrobenzene and cyanide as a result of oiling, 126 Cong.Rec. H9447 (daily ed. Sept. 23, 1980) (remarks of Rep. Eckhardt), radium waste sites scattered throughout Colorado found to be "under restaurants, in empty lots where children play, [and] near factories ...," 126 Cong.Rec. S14975 (daily ed. Nov. 24, 1980) (remarks of Sen. Hart), tanks filled with toxic chemicals abandoned near the Nanticoke River in Maryland, 126 Cong.Rec. H9162 (daily ed. Sept. 19, 1980) (remarks of Rep. Bauman), PCBs dumped into the Hudson River, 126 Cong.Rec. S14963 (daily ed. Nov. 24, 1980) (remarks of Sen. Randolph), and spills of hazardous substances on the George Washington Bridge, 126 Cong.Rec. S14972 (daily ed. Nov. 24, 1980) (remarks of Sen. Randolph).[10]
Finally, plaintiff suggests that the relevant case law has established the invalidity of GE's position. United States v. South Carolina Recycling & Disposal, Inc., No. 80-1274-6 (D.S.C. Feb. 21, 1984), and United States v. Wade, 577 F.Supp. 1326, 20 ERC 1277 (E.D.Pa.1983), according to plaintiff, have both recently held that the phrase "and containing such hazardous waste" means only that the site at which a party is charged with having dumped hazardous substances must in fact contain such substances. While the Court accepts and concurs in the conclusion thus stated by plaintiff, it questions whether the cited cases actually state such a proposition. Both the Wade and South Carolina Recycling courts were addressing themselves not to the question of whether a site must be a preexisting disposal site, but rather whether causation must be proved against a particular waste generator. Reasoning that a requirement that a plaintiff "fingerprint" wastes would eviscerate the purposes of CERCLA, the Wade court held simply that a plaintiff need only prove a *297 defendant's waste was disposed of at the site and that the hazardous substances thereafter be present at the site. 577 F.Supp. 1326, 20 ERC at 1281. In any event, the Court is satisfied that the dragstrip is a covered facility under section 107(a)(3), and that the complaint is not subject to dismissal on these grounds.
GE also argues it is not a responsible party under section 107(a)(3) since it did not "arrange[] for disposal or treatment" of hazardous substances within the meaning of the statute. "Disposal" is defined under section 101(29) of CERCLA, 42 U.S.C. § 9601(29), by reference to section 1004 of the Solid Waste Disposal Act, 42 U.S.C. § 6903, which defines disposal as
the discharge, deposit, injection, dumping, spilling, leaking, or placing of any solid waste or hazardous waste into or on any land or water so that such solid waste or hazardous waste or any constituent thereof may enter the environment or be emitted into the air or discharged into any waters, including ground waters.
42 U.S.C. § 6903(3). Specifically, GE contends that the complaint alleges only that it sold or otherwise supplied used transformer oil to the South Glens Falls Dragway, Inc., and not that it entered into an agreement or arrangement to have the oil deposited or otherwise placed on the dragstrip. At most, GE suggests, the complaint alleges only that it "entered into an agreement to supply oil to the drag strip in the ordinary course of commerce to be used as the drag strip owners saw fit," Memorandum of Points and Authorities in Support of General Electric Company's Motion to Dismiss at 13, and concludes that "Congress never intended to make a supplier liable for the subsequent action of a purchaser in the ordinary course of a business other than waste disposal." Id. Because the conduct giving rise to any response costs here was the application of the oil to the dragstrip by its owners, GE urges that it cannot therefore be held liable.
GE's contention must be rejected for a number of reasons. First, because this is a motion to dismiss, the allegations in plaintiff's complaint must be construed most favorably in plaintiff's behalf. See supra note 3. Section 107(a)(3) imposes liability for response costs upon "any person who by contract, agreement, or otherwise arranged for disposal or treatment of hazardous substances ...." 42 U.S.C. § 9607(a)(3). Here, plaintiffs have alleged that GE disposed of hazardous substances by arranging with the South Glens Falls Dragway to remove the substances from GE's plants with knowledge or imputed knowledge that the substances would be deposited on the land surrounding the dragstrip. The Court is not prepared to hold that the complaint does not allege an arrangement for the disposal of wastes.
Moreover, the legislative history of CERCLA makes clear that "persons cannot escape liability by `contracting away' their responsibility or by alleging that the incident was caused by the act or omission of a third party." S.Rep. No. 96-848, 96th Cong., 2d Sess. 31 (1980). At least as a pleading matter, it appears clear that GE arranged or contracted with other parties to dispose of its waste; accordingly, it is not entitled to avoid liability. Finally, it is equally clear that a waste generator's liability under CERCLA is not to be so facilely circumvented by its characterization of its arrangements as "sales." See United States v. A & F Materials, Co., 582 F.Supp. 842, 20 ERC 1353 (S.D.Ill.1984).
B. Failure to incur response costs
Defendant next argues that plaintiff's complaint must be dismissed because plaintiff has not yet expended funds for the clean-up of the hazardous waste site. See 42 U.S.C. § 9607(a)(4)(A) (providing for recovery of "costs of removal or remedial action incurred" (emphasis added)). Citing Environmental Defense Fund v. Lamphier, 12 Env.L.Rep. 20843 (E.D.Va.1982), and Ohio ex rel. Brown v. Georgeoff, 562 F.Supp. 1300 (N.D.Ohio 1983), GE contends that an action under section 107 may not be maintained unless the plaintiff demonstrates that it has actually begun clean-up operations and expended funds for such *298 clean-up. Moreover, GE suggests that costs of investigation are not response costs under 42 U.S.C. §§ 9601(23)-(25). Finally, GE claims that costs "to be incurred" are not recoverable as costs under a plain reading of section 107.
With respect to this aspect of the motion to dismiss, several points are in order. First, plaintiff's complaint specifically sets forth a claim for damages to the state's natural resources in addition to its claim for response costs, 42 U.S.C. § 9607(a)(4)(C)[11], and there is no requirement that money must be expended by the state before it can seek to recover for damages to natural resources. Second, it is clear that plaintiff has properly alleged recoverable response costs under section 107(a)(4)(A) and (C). Specifically, ¶ 21 of the amended complaint alleges that the state "has incurred and will continue to incur expenses and costs ...." As a pleading matter, that allegation must be construed in the light most favorable to plaintiff and, contrary to GE's suggestion, plaintiff need not particularize the costs thus far incurred.
Finally, those initial response costs undertaken thus far by plaintiff are clearly authorized as costs of response under section 101(23), 42 U.S.C. § 9601(23). Removal action is defined under that section to include "such actions as may be necessary to monitor, assess, and evaluate the release or threat of release of hazardous substances ...."[12]See United States v. Northeastern Pharmaceutical & Chemical Co., 579 F.Supp. 823, 20 ERC 1401, 1425 (W.D.Mo.1984); United States v. Wade, 577 F.Supp. 1326, 20 ERC 1277, 1281 n. 4 (E.D.Pa.1983). Defendant's reliance on Environmental Defense Fund, Inc. v. Lamphier, 12 Env.L.Rep. 20843 (E.D.La.1982) and Ohio ex rel. Brown v. Georgeoff, 562 F.Supp. 1300 (N.D.Ohio 1983) for the proposition that costs of investigation are not recoverable is misplaced. Lamphier held only that costs associated with the investigation of defendant as opposed to the statutorily permitted costs associated with the monitoring, assessing and evaluating of environmental problems were not recoverable. The Brown court specifically noted this distinction. See 562 F.Supp. at 1316.
In a supplemental memorandum submitted prior to oral argument, GE has brought to the Court's attention the decision of the District Court for the Central District of California in Cadillac Fairview/California, Inc. v. Dow Chemical Co., No. CV 83-7996-LTL (C.D.Cal. Mar. 5, 1984), assertedly supportive of the proposition that investigative costs are not recoverable. Citing with approval the decision in D'Imperio v. United States, 575 F.Supp. 248 (D.N.J.1983), the Cadillac Fairview court held that clean-up costs incurred in fencing off a site and conducting chemical analyses, were not recoverable. Slip op. at 31-32. That decision is distinguishable, however, in at least two respects. First, the action before the court entailed interpretation of section 107(a)(4)(B) rather than section 107(a)(4)(A) and (C). That section is applicable to parties other than federal or state governments and establishes significantly different cost recovery criteria. See United States v. Northeastern Pharmaceutical & Chemical Co., 579 F.Supp. 823, 20 ERC 1401, 1425 (D.Mo.1984) ("On its face, section 107(a)(4)(B) intends that a different standard apply to cost recovery by nongovernmental entities ...."). Second, it is clear that the Cadillac Fairview court did not look at all to the strictures of section 101(23) and (25) which expressly provide that costs associated with monitoring, assessing, and evaluating the release or threat of release of hazardous substances *299 are recoverable under section 107(a)(4)(A).[13]
Finally, GE contends that future response costs are not recoverable under CERCLA. The Court declines to reach this particular issue at this juncture since, even if future costs are not recoverable, the foregoing discussion establishes that plaintiff has otherwise stated a claim for costs incurred.[14]
C. Failure to comply with notice provisions
Based on section 112(a) of CERCLA, 42 U.S.C. § 9612(a), GE claims that plaintiff's complaint must be dismissed for failure to comply with that section's sixty-day notice requirement. According to GE, section 112(a) provides that a claim "shall be presented in the first instance to the owner, operator, or guarantor ... of ... [a] facility from which a hazardous substance has been released ..., and to any other person known to the claimant who may be liable ..." under section 107. 42 U.S.C. § 9612(a). Only if such a claim is not satisfied within sixty days of its presentation may suit be brought.[15] While GE received a letter from plaintiff on November 30, 1983 advising it of the substance of the assertion of liability, it claims that such notice was defective in two respects. First, the letter did not request a sum certain, see supra note 15, and second, suit was filed just eight days later. Accordingly, GE argues that the present action must be dismissed.
GE acknowledges that this is a case of first impression, noting that no other court has yet confronted the question of whether failure to comply with the sixty-day notice requirement amounts to a jurisdictional defect.[16] It argues, however, that courts interpreting notice provisions in similar environmental protection statutes have found such requirements to be in fact jurisdictional. See, e.g., City of Evansville v. Kentucky Liquid Recycling, Inc., 604 F.2d 1008 (7th Cir.1979), cert. denied, 444 U.S. 1025, 100 S.Ct. 689, 62 L.Ed.2d 659 (1980) (Clean Water Act, 33 U.S.C. § 1365); Massachusetts v. United States Veterans Administration, 541 F.2d 119 (1st Cir.1976) (same); Friends of the Earth v. Carey, 401 F.Supp. 1386 (S.D.N.Y.1975), aff'd in part on other grounds and rev'd in part, 535 F.2d 165 (2d Cir.1976), cert. denied, 434 U.S. 902, 98 S.Ct. 296, 54 L.Ed.2d 188 (1977) (Clean Air Act, 42 U.S.C. § 1875h-2(b)). Although some courts have adopted a "pragmatic" approach to such notice requirements and refused to dismiss prematurely filed complaints since they could simply be re-filed after the expiration of the notice period, see Susquehanna Valley Alliance v. Three Mile Island Nuclear Reactor, 619 F.2d 231, 243 (3d Cir.1980), cert. denied, 449 U.S. 1096, 101 S.Ct. 893, 66 L.Ed.2d 824 (1981), GE argues that such a *300 line of reasoning is inapplicable to the present suit. The basis for this assertion stems from the statute of limitations contained in section 112(d) of CERCLA, 42 U.S.C. § 9612(d), which provides that no action may be commenced later than three years after the date of discovery of the loss or three years from enactment of CERCLA, whichever is later. Three years from the enactment of CERCLA was December 11, 1983, and that is alleged to be the last date on which a claim could have been filed. GE concludes, therefore, that plaintiff is not entitled to re-file its complaint at the expiration of the sixty-day period. The Court is not persuaded, however, that the December 11th date is controlling. GE argues that because the activities in question took place in the early 1960's, and because there is no allegation in the complaint that the alleged loss was not discovered until some later time, "it must be presumed that December 11, 1983 was the last date on which a claim for damages under CERCLA could be filed." Memorandum of Points and Authorities in Support of General Electric Company's Motion to Dismiss at 23. Construing the complaint's allegations most favorably to plaintiff, including the allegations that sampling was conducted in 1982 and 1983, amended complaint, ¶ 11, it would be unreasonable to presume that discovery was had before those dates. Accordingly, as a pleading matter, it appears that the statute of limitations would not expire until some time in 1985, and GE's attempt to distinguish the "pragmatic" approach to filing requirements therefore loses much of its vitality.[17] In any event, the Court is satisfied that the sixty-day notice requirement is not dispositive for a number of other reasons.
First, and perhaps most importantly, defendant's reliance on the sixty-day notice requirement is misplaced. The first sentence of section 112(a) expressly provides that "[a]ll claims which may be asserted against the Fund [the Superfund] pursuant to section 9611 of this title shall be presented in the first instance to the owner ...." 42 U.S.C. § 9612(a). It is clear, therefore, that the notice provision applies only to actions in which a claim is sought to be made against the Fund; it does not apply when a CERCLA case is merely brought against a responsible party such as GE. Notification in Fund cases is a necessary prerequisite aimed at conserving the assets of the Superfund by encouraging responsible parties to pay clean-up costs before a plaintiff is forced to look to Fund money. Because New York's suit here involves claims for certain costs which may not be asserted against the Fund, but only against GE, the provisions of section 112(a) are not applicable.
Second, the Court is persuaded that in any event, the sixty-day requirement is not jurisdictional. The cases cited by GE, which arose in the context of suits involving other environmental statutes, embodied interpretations of significantly different statutory mechanisms. Unlike the Clean Water Act and the Clean Air Act, which impose notice requirements that are compatible with those statutes' preference for initial administrative rather than private action, see Massachusetts v. United States Veterans Administration, 541 F.2d 119, 121 (1st Cir.1976), the purpose of CERCLA seems only to require notice in order to facilitate negotiated settlements. The fact that sixty days elapsed prior to the instant motions comports with the pragmatic approach to the notice requirement, since the *301 parties were afforded adequate time in which to avoid any court intervention.
Finally, it is apparent that the rule in this circuit embodies the principle that such notice requirements are not jurisdictional. See Council of Commuter Organizations v. Metropolitan Transportation Authority, 683 F.2d 663, 669 (2d Cir.1982); Friends of the Earth v. Carey, 535 F.2d 165, 175-76 (2d Cir.1976), cert. denied, 434 U.S. 902, 98 S.Ct. 296, 54 L.Ed.2d 188 (1977); Conservation Society of Southern Vermont, Inc. v. Secretary of Transportation, 508 F.2d 927, 938 (2d Cir.1974), vacated and remanded on other grounds, 423 U.S. 809, 96 S.Ct. 19, 46 L.Ed.2d 29 (1975), rev'd on other grounds, 531 F.2d 637 (2d Cir.1976).
D. Injunctive relief
Paragraph two of plaintiff's prayer for relief requests that the Court grant injunctive relief in the nature of ordering monitoring and abatement of the contamination here complained of. GE argues that such relief is not available under CERCLA which permits only the recovery of monetary damages, and therefore, that that claim should be dismissed. This Court does not agree. First, even assuming that injunctive relief is impermissible under CERCLA, GE has ignored the fact that plaintiff has pleaded additional state law claims in the nature of nuisance for which injunctive relief clearly is appropriate. At this stage of the litigation, therefore, it would be premature to conclude that injunctive relief is entirely unavailable. Second, the Court is not convinced that, notwithstanding the absence of any express grant of an equitable remedy in CERCLA, the Court is without power to entertain a claim for and order such relief under its inherent equitable powers. Since a finding in plaintiff's favor on the state law claims would render this question academic, however, the Court chooses to defer passing on the question of the availability of such relief until such time as necessary and with the benefit of more thorough briefing by the parties.
E. Claims cognizable under CERCLA
GE's most broadly based argument in support of its motion to dismiss is found in its contention that the present suit does not embody claims cognizable under CERCLA. Downplaying the environmental threat posed by the dragstrip site relative to more substantial threats found at other, larger dump sites, GE insists that the present suit is simply not within the contemplation of the statute. This view is premised on the statute's distinction between "removal"[18] and "remedial"[19] action and GE's claim that the drafters of the statute intended that either type of action could be undertaken only in accordance with a national contingency plan ("NCP") to be developed by the Environmental Protection Agency ("EPA"). Pointing to the legislative history, GE suggests that the act was keyed to the NCP in order to insure that
cost-benefit considerations [be taken] into account, not only in determining whether particular measures are cost effective given a decision to take action under the act, but also in determining whether and when action should be taken at all.
126 Cong.Rec. S15007 (daily ed. Nov. 24, 1980) (remarks of Sen. Helms). Accordingly, GE argues that under the NCP, immediate removal is justified only by "emergency situations which require rapid, immediate response," 47 Fed.Reg. 31,193 (1982), "a condition not even alleged to be the case here." Memorandum of Points and Authorities in Support of General Electric Company's Motion to Dismiss at 4. Absent *302 an emergency, the only response authorized by the NCP, GE suggests, is remedial action or planned removal. This, in turn, GE contends, can only be undertaken at sites listed by the EPA pursuant to 42 U.S.C. § 9605(8)(B) on the national priorities list, that is, those sites which appear to present the most significant threat of harm to human health. See 40 C.F.R. § 300.68(a) (1983).[20] Against this backdrop, GE asserts that New York "has virtually turned CERCLA on its head, far overreaching the statutory scheme created by Congress ... [,] aim[ing] its enforcement arsenal not at a chemical dump site (as contemplated by Congress), but at a mere dragstrip." Memorandum of Points and Authorities in Support of General Electric Company's Motion to Dismiss at 6. Because the dragstrip assertedly does not present the type of situation contemplated by CERCLA and has not been listed on the national priorities list, GE insists that the complaint must be dismissed.
The Court rejects GE's restrictive reading of CERCLA's liability provisions as it is based on a fundamental misapprehension of the statute itself. It is clear that CERCLA's approach to the serious problems generated by the disposal of hazardous wastes embodied a bifurcated remedial scheme. See United States v. Reilly Tar & Chemical Corp., 546 F.Supp. 1100, 1112 (D.Minn.1982). This dual approach entailed imposition of liability on waste generators on the one hand, see 42 U.S.C. § 9607, and the creation of the Superfund, on the other. See 42 U.S.C. §§ 9604, 9605, 9611 & 9612. The liability provisions were an essential element of the statute because the Fund itself could not adequately remedy the pervasive waste problem.[21] It is clear beyond doubt that the liability provisions are independent of the national priorities list of sites eligible for Superfund money, since the "requirement for a National Priorities List was not intended to be a limitation on liability but rather was the result of the great concern voiced in Congress that the limited trust fund monies not be used for ill-conceived or disorganized cleanup efforts." Plaintiff's Memorandum of Law in Opposition to Defendant's Motion to Dismiss Complaint at 20. See, e.g., 126 Cong. Rec. S14982 (daily ed. Nov. 24, 1980) (comments of Sen. Dole); id. at S14978 (comments of Sen. Humphrey); id. at S15007 (comments of Sen. Helms).[22]
The courts that have considered the question consistently have held that the liability provisions of CERCLA are independent of any Superfund requirements. See United States v. Northeastern Pharmaceutical & Chemical Co., 579 F.Supp. 823, 20 ERC 1401, 1425 (W.D.Mo.1984); United States v. Wade, 577 F.Supp. 1326, 20 ERC 1277, 1284 (E.D.Pa.1983); Ohio ex rel. Brown v. Georgeoff, 562 F.Supp. 1300, 1315 (N.D.Ohio 1983); United States v. Reilly Tar & Chemical Corp., 546 F.Supp. 1100, 1118 (D.Minn.1982). The Superfund restrictions advanced by GE as a bar to the present action are simply inapplicable.
Section 104 sets restrictions on the use of Superfund money to prevent improvident *303 or disproportionate use of a limited fund to clean up only a few of the many sites for which no solvent, responsible parties can be found.
Section 107, on the other hand, is intended to impose liability on the responsible parties who created and/or dumped the hazardous wastes. The restrictions contained in § 104 are intended to protect the integrity of the Superfund and not limit the government's replenishing it by recovery from responsible parties. Thus, the fact that government expenditures ... are not authorized by § 104 affects only the availability of Superfund money and not the generator defendants' liability.
United States v. Wade, 577 F.Supp. 1326, 20 ERC 1277, 1284 (E.D.Pa.1983).
F. Expenditure of funds consistent with CERCLA
As a final ground warranting dismissal of plaintiff's complaint, GE argues that under section 107(a)(4)(A) of CERCLA, 42 U.S.C. § 9607(a)(4)(A), states may recover only costs of removal or remedial action which are "not inconsistent with the national contingency plan." In particular, GE alleges that contrary to section 104, the costs incurred by New York have not been incurred pursuant to a cooperative agreement with the federal government, section 104(d), and are therefore not recoverable under section 107. Moreover, GE claims that remedial costs may not be recovered because the dragstrip is not among the EPA's national priorities list of hazardous sites. Again, GE's contentions are unpersuasive.
The fundamental flaw in its position stems from GE's belief that section 107 "must be read in tandem with section 104, which sets standards for what costs are recoverable and the conditions under which such costs may be recovered." Memorandum of Points and Authorities in Support of General Electric Company's Motion to Dismiss at 17. Plaintiffs have demonstrated, however, that every court that has addressed this issue has held that the liability provisions of section 107(a) are separate and independent from the requirements of section 104. See United States v. Northeastern Pharmaceutical & Chemical Co., 579 F.Supp. 823, 20 ERC 1401, 1425 (W.D. Mo.1984); United States v. Wade, 577 F.Supp. 1326, 20 ERC 1277, 1283 (E.D.Pa. 1983); Ohio ex rel. Brown v. Georgeoff, 562 F.Supp. 1300, 1315 (N.D.Ohio 1983); United States v. Reilly Tar & Chemical Corp., 546 F.Supp. 1100, 1118 (D.Minn. 1982). Not only are cooperative agreements irrelevant for purposes of liability, but so too is the national priorities list. Indeed, by authorizing state claims for cost recovery and natural resources damages, section 107 provides the state an essential tool to respond to sites which will never be addressed with Superfund money.
Cadillac Fairview/California, Inc. v. Dow Chemical Co., No. CV-83-7996-LTL (C.D.Cal. Mar. 5, 1984), advanced by GE in its supplemental brief, is not to the contrary. First, that decision involved an interpretation of section 107(a)(4)(B)[23], which is applicable to plaintiffs other than federal or state governments and which establishes cost recovery criteria vastly different from those relevant to governmental entities.[24] In United States v. Northeastern Pharmaceutical & Chemical Co., 579 F.Supp. 823, 20 ERC 1401 (D.Mo.1984), the court expressly held that "[o]n its face, section 107(a)(4)(B) intends that a different standard apply to cost recovery by nongovernmental entities and that such entities must *304 affirmatively show that their actions were consistent." 579 F.Supp. 823, 20 ERC at 1425. Indeed, the Cadillac Fairview court expressly limited its holding to private suits by persons other than federal and state governments. At 23. GE misapprehends the requirements of section 107(a)(4)(A) by suggesting that plaintiff must prove it has incurred costs consistent with the national contingency plan. While that statement reflects an accurate interpretation of section 107(a)(4)(B), it is simply incorrect with respect to section 107(a)(4)(A). Plaintiff here need only incur costs not inconsistent with the NCP, compare supra note 23 with supra note 24, and the burden is on GE to demonstrate that it has not. See United States v. Northeastern Pharmaceutical & Chemical Co., 579 F.Supp. 823, 20 ERC at 1425. That burden has not been satisfied.
Finally, GE has ignored plaintiff's reliance on section 107(a)(4)(C) which allows recovery for damages to natural resources. Nowhere in that section is recovery tied in any way to the NCP or the national priorities list.
IV
On balance, there can be no question that New York has stated a claim for cost recovery and natural resources damages cognizable under CERCLA. Accordingly, GE's motion to dismiss the complaint must be denied.
It is so Ordered.
NOTES
[1] The Act is more commonly known as the "Superfund" Act.
[2] Although the present motion is addressed to the original complaint, plaintiff filed and served an amended complaint four days prior to oral argument. Nonetheless, since the changes embodied in the amended complaint are not substantive ones, with the exception of a new claim for declaratory relief, the Court will consider the motion to dismiss in light of the amended complaint.
[3] Since the present motion is made pursuant to Fed.R.Civ.P. 12(b)(6), the factual allegations contained in the complaint must be taken as true. Kugler v. Helfant, 421 U.S. 117, 125 & n. 5, 95 S.Ct. 1524, 1531 & n. 5, 44 L.Ed.2d 15 (1975); Fine v. City of New York, 529 F.2d 70, 75 (2d Cir.1975). A complaint should not be dismissed for failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957); accord Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974).
[4] Apparently, South Glens Falls Dragway, Inc., was dissolved some time around 1970 and the dragstrip has not been used for organized racing for a number of years. The dragstrip is regularly used, however, by the public for picnics, walks, and dirt-bike riding.
[5] PCBs are deemed a toxic substance under the Toxic Substance Control Act, 15 U.S.C. § 2605(c) and are defined as a hazardous substance under CERCLA, 42 U.S.C. § 9601(14).
[6] In particular, plaintiff's second cause of action alleges that GE knew or should have known that its disposal of contaminated transformer oil was an abnormally dangerous activity for which it would be strictly liable under common law and the New York State Real Property Actions and Proceeding Law, N.Y. Real Prop. Acts. Law § 841 (McKinney 1979). The third cause of action alleges that GE had a duty to exercise reasonable care in its disposal of hazardous wastes and that its failure to do so constitutes negligence and a continuing public nuisance under both common law and the New York Real Property Actions and Proceeding Law, N.Y. Real Prop. Acts. Law § 841 (McKinney 1979).
[7] The United States, as amicus curiae, has joined with plaintiff in opposing the present motion, and with the Court's permission, has submitted a memorandum of law through the Environmental Enforcement Section of the U.S. Department of Justice. The interest of the United States is described in that memorandum as twofold: First, the United States relies to a great extent on the response of states to the widespread problems generated by the disposal of hazardous wastes. Second, the United States is vitally interested in the outcome of actions brought under CERCLA to the extent that its own CERCLA actions may be affected by any adverse rulings.
[8] There was apparently some confusion on the part of plaintiff as to which subsection under § 9607 they were relying upon. While paragraph 23 of the complaint asserted liability pursuant to § 9607(a)(2), the amended complaint clarified the fact that liability is actually asserted pursuant to § 9607(a)(3). Since both parties appear to have focused their attention on the latter subsection, the Court need not address the applicability of the former, apparently cited inadvertantly.
[9] Acceptance of GE's construction would require a conclusion that "first time" dump sites could never be considered covered facilities since prior to any initial placement of wastes such a facility would not be one "containing such hazardous substances." Necessarily, the first party to dispose of wastes at a theretofore unexploited site would never be subject to CERCLA, as only second-comers would be viewed as within the statute's proscriptions. Not only would the early bird catch the worm but it would escape liability as well. Were such a construction to obtain, circumvention of CERCLA would be pervasive and proliferation of waste sites would certainly intensify. Waste dumpers would be ever intent upon seeking new places to dispose of their wastes liability-free, rather than confine their disposal to already existing facilities.
To accord CERCLA's liability provisions any meaning at all, the language "containing such hazardous substances" found in section 107(a)(3) must be construed as referring to facilities that have been, by a depositor's actions, contaminated by waste. Because the South Glens Falls Dragstrip does indeed now contain certain hazardous substances, allegedly originating with GE, it quite properly is a facility within the ambit of CERCLA.
[10] As the Government points out, "the specific problem of improper disposal of hazardous substances onto roads and streets did not escape Congress' attention. For example, the House Report notes a case where `waste oil contaminated with toxic chemicals was laid on 9 roads in East Texas.'" Memorandum of the United States of America as Amicus Curiae at 15 (quoting H.R.Rep. No. 96-1016, 96th Cong., 2d Sess. 19-20, U.S.Code Cong. & Admin.News 1980, p. 6122).
[11] 42 U.S.C. § 9607(a)(4)(C) provides for liability encompassing "damages for injury to, destruction of, or loss of natural resources, including the reasonable costs of assessing such injury, destruction, or loss resulting from such a release."
[12] There is no dispute that plaintiff has in fact undertaken field and laboratory work in order to monitor, assess, and evaluate the release and threat of release of hazardous substances and has incurred expenses as a consequence of these efforts.
[13] Indeed, in D'Imperio v. United States, 575 F.Supp. 248 (D.N.J.1983), upon which the Cadillac Fairview court relied, the court acknowledged that it might be "reading this section [107(a)(B)] too narrowly," when it nonetheless held that the costs of a feasibility study were not recoverable. 575 F.Supp. at 253.
[14] The parties have presented the Court with three cases on the issue of future costs. United States v. Price, 13 Env.L.Rep. 20843 (D.N.J. 1983), urged by GE, apparently holds that future costs are not recoverable. United States v. Northeastern Pharmaceutical & Chemical Co., 579 F.Supp. 823, 20 ERC 1401 (W.D.Mo.1984), and United States v. Wade, 577 F.Supp. 1326, 20 ERC 1277 (E.D.Pa.1983), noted by plaintiff, on the other hand, held that costs "to be incurred" are recoverable. None of the decisions is generous in analysis, although the Wade court reasons that permitting future recovery "better effectuates the purposes of the Act ...." 577 F.Supp. 1326, 20 ERC at 1283. Since there is no need to pass on this question now, the Court defers judgment on this aspect of the complaint pending further briefing by the parties.
[15] A claim is defined in section 101(4), 42 U.S.C. § 9601(4) as "a demand in writing for a sum certain."
[16] In City of Philadelphia v. Stepan Chemical Co., 544 F.Supp. 1135 (E.D.Pa.1982), the court was able to avoid deciding the issue because it concluded that although the satisfaction of the notice provision had not been pleaded, notice had actually been given. The court did note, however, that it was "inclined to reject defendants' mechanistic interpretation of the claims procedure under Section 112(a) ...." Id. at 1144 (footnote omitted).
[17] Plaintiff offers two additional grounds which speak persuasively to the fact that the statute of limitations has not yet run. First, the statute of limitations provision contained in section 112(d) appears to apply only to actions for damages to natural resources and not to claims for removal and remedial action which are also alleged here. See 42 U.S.C. § 9612(d). Damages are defined under CERCLA as "damages for injury or loss of natural resources as set forth in section 9607(a) or 9611(b) of this title." 42 U.S.C. § 9601(6). Second, plaintiff suggests that even as to resource damages, the present action would still be timely based on a theory of continuing nuisance. That is, even if the injury was discovered more than three years ago, because the injurious activity has not yet abated, the wrong is a continuous one and the cause of action must therefore continue to accrue.
[18] Removal action refers to emergency or crisis measures including "spill containment measures; measures required to warn the public of, and protect it from acute damages; temporary evacuation and housing; [and] activities necessary to close an existing public water supply system." S.Rep. No. 848, 96th Cong., 2d Sess. 53-54 (1980). See 42 U.S.C. § 9601(23).
[19] Remedial action deals with "those actions consistent with permanent remedy ... to prevent or minimize the release of hazardous substances so that they do not migrate to cause substantial danger to present or future public health or welfare or the environment." 42 U.S.C. § 9601(24).
[20] According to GE, once a site has been placed on the national priorities list, the federal government may arrange for cleanup activities at the site with financing from the $1.6 billion Superfund. Those cleanup activities must be undertaken in accordance with a national contingency plan. See 42 U.S.C. §§ 9604, 9611.
[21] At the time of CERCLA's passage, the EPA estimated that as many as 30,000 to 50,000 inactive and uncontrolled hazardous waste sites existed in the United States, and estimated that cleanup of the 1200 to 2000 most dangerous sites alone would cost between $13.1 and $22 billion. H.R.Rep. No. 1016, 96th Cong., 2d Sess. 18, 20 (1980), reprinted in 1980 U.S.Code Cong. & Ad.News 6120, 6123.
[22] The Court finds disingenuous GE's omissive reference at various points in its brief to portions of the legislative history assertedly supportive of its position that the present action is not within the contemplation of CERCLA. For example, GE's reference to the statement by Sen. Stafford that "CERCLA was not intended to `clean-up or remedy any and every discharge ...,'" omits the critical preceding language that "[t]he fund should not be used to clean-up or remedy any and every discharge ...." 126 Cong.Rec. S15007 (daily ed. Nov. 24, 1980) (remarks of Sen. Stafford).
[23] Section 107(a)(4)(B) provides for recovery of "any other necessary costs of response incurred by any other person consistent with the national contingency plan...."
[24] Section 107(a)(4)(A) provides for recovery of "all costs of removal or remedial action incurred by the United States Government or a State not inconsistent with the national contingency plan." Section 107(a)(4)(C) provides for recovery of "damages for injury to, destruction of, or loss of natural resources, including the reasonable costs of assessing such injury, destruction, or loss resulting from such release." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1837209/ | 154 B.R. 936 (1993)
In re BRANDED PRODUCTS, INC., Debtor.
FEDDERS NORTH AMERICA, INC., Plaintiff,
v.
BRANDED PRODUCTS, INC., et al., Defendants.
Bankruptcy No. 92-53548-LMC, Adv. No. 92-5189-LMC.
United States Bankruptcy Court, W.D. Texas, San Antonio Division.
April 9, 1993.
*937 Mallory L. Miller, Jr., San Antonio, TX, for debtor and defendant.
Gerry Lozano and Norman L. Nevins, San Antonio, TX, for plaintiff.
Michael Flume, San Antonio, TX, for defendants John Wright & Mike Bonham.
William A. Jeffers, Jr., San Antonio, TX, for defendant Texas Bank, N.A.
DECISION ON PLAINTIFF'S MOTION FOR REMAND AND LIFT STAY, AND IN THE ALTERNATIVE, TO SEVER AND REMAND
LEIF M. CLARK, Bankruptcy Judge.
CAME ON, for hearing, the motion of the Plaintiff, Fedders North America, Inc. ("Fedders"), to remand and lift stay, and in the alternative to sever and remand the above-styled adversary proceeding which Branded Products, Inc. ("Branded"), the debtor, had previously removed to this court from state court. In the context of its motion, Fedders argued that the court should abstain from hearing the matter. The court entertained argument from counsel. At the close of the hearing, the court took the matter under advisement and invited counsel to brief additional issues. This decision resolves those issues.
I. BACKGROUND
On December 14, 1987, Branded and Fedders executed a Fedders Products Distributor Agreement (the "Distributor Agreement"). Pursuant to the Distributorship Agreement, Branded ordered products from Fedders which were paid for by advances on a line of credit established by Branded with Bombardier Capital Corporation.
On September 28, 1989, Branded entered into a Loan Agreement with Texas Bank, N.A. ("Texas Bank"). The Loan Agreement set forth a formula for the advancement of monies to Branded in accordance with the level of Branded's eligible accounts receivable. Branded granted a security interest in its various assets, including its accounts receivable, to Texas Bank to secure the loan. Pursuant to the Loan Agreement, Branded supplied a monthly Accounts Receivable Report to Texas Bank, detailing Branded's eligible accounts receivable. Texas Bank's collateral also included any cause of action Branded may have against Fedders.
In June 1991, pursuant to the Distributor Agreement, Fedders sold numerous air conditioning units (the "Units") to Branded and invoiced Branded for the sale. Thereafter, *938 Branded sold the Units to Builders Square. Branded invoiced Builders Square accordingly. The Builders Square account receivable was listed on the monthly Accounts Receivable Report issued by Branded to Texas Bank.
Subsequently, Builders Square paid Branded, and Branded deposited the proceeds in a bank other than Texas Bank. Texas Bank considered this a violation of the Loan Agreement. Texas Bank requested that Branded cure the alleged default. Branded then delivered a check to Texas Bank for the entire amount of the Builder's Square payment. Texas Bank accepted this payment and applied it to the Branded debt.
Branded, however, never paid the debt it owed to Fedders. Fedders filed suit in state court (the "State Court Action")[1], naming as defendants Branded, Branded's President, Ron Seago, Texas Bank and two employees of Texas Bank, John Wright and Mike Bonham.[2] Fedders alleged eleven claims against the various defendants, including tortious interference with contract, conversion, civil conspiracy, lender liability, constructive trust, unjust enrichment, fraudulent transfer, and breach of duty of good faith. Branded answered and filed a counter-claim, alleging a history of actions on the part of Fedders causing the financial demise of Branded and sounding in fraud, breach of contract, duress and coercion, tortious interference with contract, misrepresentation, deceptive trade practices, and breach of duty of good faith. The court has granted leave to Branded to amend its counter-claim petition, alleging numerous claims against Fedders, including claims for equitable subordination, a determination of secured status and priorities, voidable preference, and fraudulent transfers. Texas Bank, John Wright and Mike Bonham have filed a cross-claim against Branded seeking contribution and indemnification.
Discovery in the state court action has commenced, but has not been concluded. The only action heard in the State Court Action pertained to a discovery dispute. On July 10, 1992, Texas Bank, John Wright and Mike Bonham filed a Motion for Summary Judgment, seeking to dispose of all the issues between Fedders and the Nondebtor Defendants, as well as the claims for contribution and indemnity.
The Summary Judgment Motion, however, has yet to be heard. The State Court Action has been stayed by Branded's filing of its petition for relief under chapter 11 of title 11 of the United States Code on October 1, 1992. On October 15, 1992, Branded removed the State Court Action to this court. On November 3, 1992, Fedders filed the motion currently before the court.
II. JURISDICTION AND THE INTERPLAY BETWEEN 28 U.S.C. § 1334 AND 28 U.S.C. § 1452
At hearing, the parties advanced several arguments on the interplay between the bankruptcy jurisdictional statute, 28 U.S.C. § 1334, and the bankruptcy removal and remand statute, 28 U.S.C. § 1452. Fedders, relying principally upon In re Chiodo, 88 B.R. 780 (W.D.Tex.1988) (recommendation adopted), argued that abstention under § 1334(c) applies in the case of a removed matter, and should be applied here. Branded and the Nondebtor Defendants countered, contending that the court may not remand a removed action under the authority of § 1334(c).
The interplay between the doctrines of abstention and remand in bankruptcy has been much discussed but little understood. The doctrines have been intermixed and confused in dozens of decisions,[3] in no *939 small part because Congress itself codified a judge-made rule of limited application (abstention), then placed it within the bankruptcy jurisdiction statute. In the process, Congress used language so loose that even its sponsors misunderstood the reach of the statute they had just enacted. See discussion infra. A closer examination of the respective remand and abstention statutes may help to clear up some of the confusion.
Section 1452(a) allows a party to remove any claim related to a bankruptcy case to the bankruptcy court if the court has jurisdiction under § 1334. The statute is generous in its authorization of removals, excepting from removal only those proceedings pending before a tax court or those proceedings in which a government agency is enforcing its regulatory or police powers. 28 U.S.C. § 1452(a). Once a cause of action is removed, it automatically comes under the province of the district court. If that court determines that it does not have subject matter jurisdiction over the matter, or is not otherwise properly before the court, it may dismiss the action.[4] On motion of a party, the court may also decide to send the matter back to the tribunal from whence it came, on any equitable ground.
Section 1334, by contrast, defines the jurisdictional bounds of the district court, and, by extension, the bankruptcy court to whom the matter has been referred. Section 1334 is sectioned into four subparts. Subparagraph (a) grants original and exclusive jurisdiction of all cases under title 11 of the United States Code to the bankruptcy courts. Subparagraph (b) grants original, but not exclusive, jurisdiction over all civil proceedings arising under title 11, or arising in or related to cases under title 11. Subparagraph (d) gives the bankruptcy court exclusive jurisdiction over all property of the debtor. Subparagraph (c), enacted in two paragraphs, codifies the so-called discretionary and mandatory abstention provisions, discussed further below.
As a doctrine, abstention under § 1334(c), be it mandatory or discretionary, has no application in the context of a removed action. "[T]he mechanics of abstention are premised on the existence of two proceedings: one in bankruptcy court and a second in state court. Indeed if there were only one proceeding, and the court abstained with respect to it, nothing would go forward. In a removed action, there is perforce only one proceeding once removal has been made." In re Fairchild Aircraft Corp., 4 Tex.Bankr.Ct.Rep. 308, 313, 1990 WL 119650 (Bankr.W.D.Tex.1990), recommendation adopted, slip op. (W.D.Tex. 1990) (citing In re 666 Associates, 57 B.R. 8, 12 (Bankr.S.D.N.Y.1985)). This view contrasts with that of my former colleague, Bankruptcy Judge R. Glen Ayers, Jr., who opined that the only occasion to ever invoke the doctrine of abstention is in the context of removal. See In re Chiodo, 88 B.R. at 785. With all due respect to Judge Ayers' decision, this court believes that premise to be faulty. For example, were a debtor to initiate a compulsory counterclaim via an independent adversary proceeding in the bankruptcy court instead of asserting the claim in a pending state court action, ". . . as the matter no doubt involves the same transaction, abstention (even mandatory abstention) could well apply even though *940 the removal statute had not come into play." See Fairchild, 4 Tex.Bankr.Ct.Rep. at 313 n. 2. When a case is removed to federal court from state court, by contrast, the case file is literally transferred, and there is no case any longer pending in the state court. The federal court can then return the case file to state court by remanding the case.
But federal courts do not effectively respond to removed cases by abstaining from hearing the case, for that would not send the case back to state court. The usual procedural device employed to "abstain" is to dismiss the matter pending before the federal tribunal, so that the parallel matter can proceed in the alternate forum (e.g., state court, administrative board). See 17A C. WRIGHT, A. MILLER, E. COOPER, FEDERAL PRACTICE AND PROCEDURE, Jurisdiction 2d, § 4245, at 102 (2d ed. 1988); Burford v. Sun Oil Co., 319 U.S. 315, 334, 63 S.Ct. 1098, 1107, 87 L.Ed. 1424 (1943); New Orleans Public Service, Inc. v. City of New Orleans, 798 F.2d 858 (5th Cir.1986), cert. den., 481 U.S. 1023, 107 S.Ct. 1910, 95 L.Ed.2d 515 (1987).[5] Invoking abstention in the context of a removed case would result (in the usual case) in eliminating the lawsuit. Remand, on the other hand, preserves the lawsuit, without disturbing original filing dates or such service of process as may have been accomplished before the suit was removed to federal court.[6] Again, removal and remand contemplate one action, the question presented being which tribunal handles it. Abstention, on the other hand, contemplates two actions (or the potential for two actions), the question presented being which action will take precedence and go forward first (or in lieu of the other).
Abstention has not only been confused with remand. It has also on occasion been mistakenly read as a limitation on subject matter jurisdiction in the bankruptcy context (hence the oxymoron mandatory abstention). See 28 U.S.C. § 1334(c)(2); see, e.g., State Bank of Lombard v. Chart House, Inc., 46 B.R. 468, 470-71 (N.D.Ill. 1985). The position of Fedders in this case is but a reflection of that confusion. Fedders in essence argues that this court should abstain because it does not have subject matter jurisdiction over the matter. While the relief accorded in response to a motion to dismiss for lack of subject matter jurisdiction and a motion to abstain would be essentially the same (i.e., dismissal), the confusion is nonetheless pernicious, because it presumes a limitation on the subject matter jurisdiction of the district court not in fact present in section 1334. See In re Wood, 84 B.R. 432, 434 (S.D.Miss.1988) ("[a]bstention is more appropriately characterized as a discretionary exercise of subject matter jurisdiction").
Under traditional notions of abstention, a court declines to assert its otherwise valid subject matter jurisdiction over a particular matter, finding that the matter is better resolved in state court. The doctrine was born a 1941 Supreme Court decision, Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941), and extended two years later in Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). A variant of Burford-type abstention began developing after the Supreme Court's 1971 decision in Younger v. Harris, 401 U.S. 37, 91 *941 S.Ct. 746, 27 L.Ed.2d 669 (1971).[7] Abstention undercuts the practical exercise of otherwise properly invoked federal jurisdiction, depriving the party opposing it of its choice of forum,[8] and imposing duplication of effort and delay on all parties. As such, abstention has been applied gingerly in civil proceedings, with full knowledge that its use bars the door to federal court for a litigant, even though the jurisdiction of that court has otherwise been properly invoked. The Supreme Court has criticized the too-facile application of the abstention doctrine. "This Court repeatedly has stated that the federal courts have a `virtually unflagging obligation' to exercise their jurisdiction except in those extraordinary circumstances `where the order to the parties to repair to the State court would clearly serve an important countervailing interest.'" See Deakins v. Monaghan, 484 U.S. 193, 203, 108 S.Ct. 523, 530, 98 L.Ed.2d 529 (1988) (citing Colorado River Water Conservation District v. U.S., 424 U.S. 800, 813, 96 S.Ct. 1236, 1244, 47 L.Ed.2d 483 (1976); Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 14-15, 103 S.Ct. 927, 936, 74 L.Ed.2d 765 (1983)). By the same token, however, abstention (especially Younger-type abstention), accords comity to state proceedings, vindicating state court procedures and the validity of state court determinations, and so can serve a legitimate end, even in the context of bankruptcy proceedings.
In the bankruptcy context, the closest analog to traditional abstention is what has come to be called by practitioners, jurists, and seminar panelists the "discretionary abstention" provision, found in section 1334(c)(1). Indeed, as written, this particular subsection does not so much authorize discretionary abstention as it clarifies that district courts may apply the doctrine of abstention, as developed in the case law,[9] to proceedings in bankruptcy cases as well.[10] The statutory statement is consistent with the provision for concurrent jurisdiction set out in section 1334(b). See 28 U.S.C. § 1334(b). Given the breadth of potential bankruptcy jurisdiction spelled out in section 1334(b), and the potential for federal adjudication of things like divorce, child custody proceedings, drunk driving charges, license revocation proceedings, and the like, section 1334(c)(1) is at the least salutary, even though its enactment was probably not necessary.[11]
The best that can be said for subsection (c)(1), then, is that we never needed it in the first place, but at least it does not hurt anything, because it simply reiterates and ratifies existing law. Subsection (c)(2) presents quite a different story, however. Section 1334(c)(2) was enacted in 1984 in direct response to the Supreme Court's decision in Northern Pipeline Constr. Co. v. *942 Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982), which held that the existing jurisdictional structure of the bankruptcy courts was unconstitutional because it vested Article III judicial power in Article I judges. Attempting to fix this constitutional infirmity, Congress enacted the Bankruptcy Amendments and Federal Judgeship Act of 1984, first assigning all federal jurisdiction over bankruptcy matters to the district court (in section 1334), then apportioning the exercise of that jurisdiction "into `core' proceedings, over which the bankruptcy courts exercise full judicial powerand `otherwise related' or `non-core' proceedingsover which the bankruptcy courts exercise only limited power" in section 157. Matter of Wood, 825 F.2d 90, 91 (5th Cir.1987). The remedy to the constitutional problem identified in Marathon was thus furnished by the division of authority over certain matters in 28 U.S.C. § 157 between the bankruptcy court and the district court. See In re 666 Associates, 57 B.R. 8, 13 (Bankr. S.D.N.Y.1985). That should have been the end of the matter.
However, Congress, apparently out of concern over whether the division of the jurisdictional grant between core and non-core proceedings in § 157 sufficiently accomplished its goal, saw fit to also enact § 1334(c)(2).[12] Said one of the sponsors of the bill in Congressional hearings, "[m]andatory abstention is important to be consistent with the Marathon decision and the express intent of both the House and Senate in attempting to reestablish a constitutional bankruptcy court. The Supreme Court made it clear that the Article I bankruptcy courts could not adjudicate proceedings involving State-created rights." 130 CONG.REC. S76, 19 (daily ed. June 19, 1984) (comments of Sen. Heflin) (emphasis added). This is a gross misstatement of the holding Marathon, and betrays the legal error that lay behind the enactment of section 1334(c)(2).[13] Other statements of legislative leaders echo that Congress enacted the so-called "mandatory abstention" provision, intending to clarify the jurisdiction of the bankruptcy court, and succeeding instead only to make it murkier.[14]
*943 The Marathon court merely determined that disputes incidentally related to a bankruptcy case, but involving purely "private rights," cannot constitutionally be determined by Article I courts. Such disputes, of course, could be constitutionally settled by Article III courts, to the extent they otherwise have jurisdiction under § 1334. Had the Marathon case been originally brought in a federal district court, there never would have been a Marathon problem. This is because the issue was not one of jurisdiction per se, but of constitutionality. Members of Congress erroneously believed they were following the Supreme Court's lead by enacting section 1334(c)(2). In fact, they enacted a statute which, if in place when the Marathon litigation was initiated, would have prohibited the district court from hearing the case, even though the matter fell within the subject matter jurisdiction of the court.[15]
Comments of Senator Hatch[16] indicate that an additional reason for enacting subsection (c)(2) was to relieve the overburdened district courts which would otherwise "have to" adjudicate matters more properly heard by state courts anyway, but that justification makes little sense, because subsection (c)(1) would already accomplish that result. In form and function (not to mention placement), section 1334(c)(2) operates as a limitation on the subject matter jurisdiction of federal courtsa limitation which is internally inconsistent with both section 1334(b) and the intentions of Congress (at least as that intention has been interpreted by courts since 1984). See, e.g., Robinson v. Michigan Consolidated Gas Co., 918 F.2d 579, 584 (6th Cir.1990); In re 666 Associates, 57 B.R. 8, 13 (Bankr.S.D.N.Y.1985).
All that Marathon ever required was adequate provisions to assure that an Article I court would not adjudicate disputes involving the resolution of "private rights." Section 1334(c)(2) evidently accomplishes that goal by requiring the Article III court to "abstain" from hearing a Marathon-type case, assuring that it will not even be adjudicated in the federal system, much less decided by an Article I tribunal. The problem, of course, is that mandatory abstention in such a context means mandatory dismissal, and so re-institutes the same summary/plenary distinctions and piecemeal litigation that the Bankruptcy Reform Act of 1978 was designed to eliminate. Congress, of course, is free to change its *944 mind, but one has to wonder whether, in 1984 at least, Congress even knew its mind. All the protections against a repeat of Marathon were already in place in section 157. Nothing further was needed. By enacting section 1334(c)(2), Congress gave statutory dignity to a feature of federal jurisprudence whose constitutional underpinnings have always been in doubt, and whose broad application had never previously been endorsed by the highest court in the land. Congress would go far to clear up much unwarranted confusion by simply repealing section 1334(c)(2).
It is at least clear from the foregoing that section 1334(c)(2) can have no application to removed actions. What is more, given the presence of section 1334(c)(1), there is real doubt whether subsection (c)(2) has any practical application at all. We know, for example, that it cannot apply to claims litigation (unless we are also prepared to find that virtually all claims litigation must be heard in state court, as virtually all claims are premised on state law). We also know that all litigation against the debtor is stayed by operation of section 362, to prevent just such piecemeal litigation. And we know from the Supreme Court that the claims adjustment process lies at the core of the bankruptcy court's equity jurisdiction. See Langenkamp v. Culp, 498 U.S. 42, 111 S.Ct. 330, 112 L.Ed.2d 343 (1990). Thus, virtually all non-bankruptcy litigation in which the debtor is the defendant is litigation to which section 1334(c)(2) was never meant to apply.
That leaves litigation initiated by the debtor. Of this type, there are three. First, there is litigation that arises in or under the Bankruptcy Code itself, such as preference actions. These matters are by definition excluded from section 1334(c)(2). Second, there are cases that are not related to the bankruptcy case, that could not conceivably affect the administration of the case. See Matter of Wood, 825 F.2d 90, 91 (5th Cir.1987). These matters are outside the subject matter jurisdiction of the federal court and would be dismissed under section 1334(b), without resort to section 1334(c)(2). Again, by definition, they are not the subject of section 1334(c)(2). Third, there is litigation initiated by the debtor against third parties, but not under any provision of the Bankruptcy Code. These are related proceedings, for which adequate provision has already been made in section 157(c)(1) (to avoid the Marathon problem). True, were the debtor to initiate a child custody proceeding in bankruptcy court, for example, abstention might apply. But the court already has the necessary tools with which to dispose of such rare and unwelcome pieces of litigationin section 1334(c)(1).
Section 1334(c)(2), as a practical matter then, turns out to be a useless appendage on the bankruptcy jurisdictional scheme an appendage over which bench and bar frequently trip. Congress would do well to do us all a favor and simply remove it from the statute, before somebody gets hurt.
Given the foregoing, the court declines to entertain Fedders' motion to abstain, as that motion has no application in this procedural context. It remains, then, to determine whether Fedders' motion to remand is well-taken. That, in turn, requires us to first determine whether the lawsuit in question is one within the subject matter jurisdiction of the federal court. If it is, then we must then turn to the various equitable considerations which are to be examined to determine whether a matter should be remanded. In the process, we will have to examine whether the litigation is core or non-core. Finally, if the matter is remanded, we must then decide the extent, if any, to which we should lift the automatic stay to permit Fedders to proceed.
A. The Court has Jurisdiction Over This Matter
At the outset, Fedders argues that this court does not have subject matter jurisdiction as the action is a non-core proceeding, neither arising under nor related to a case under title 11. To support this position, Fedders argues that any recovery it makes in this case will, in all likelihood, be against Texas Bank, not the debtor. Indeed, Fedders *945 has not filed a proof of claim in this case, and has thus far indicated that it does not intend to.
According to Fedders' description of the case, the critical issue in the case is whether Branded was acting as an agent for Fedders when Branded turned over the funds to Texas Bank. Fedders posits that the court must determine in what capacity Branded owes Fedders. Fedders acknowledges that, if the court finds that Branded was not Fedders' agent, then Fedders' suit is little more than the assertion of a claim against Branded. Now that Branded is in bankruptcy, that claim would be assertable only against Branded's estate and its resolution would be a core matter, over which this court clearly has jurisdiction. 28 U.S.C. § 157(b)(2)(B), § 1334(b); 11 U.S.C. § 502(a). If, on the other hand, the court were to determine that Branded owes Fedders as a mere agent in possession of Fedders' funds and that Branded converted the funds by paying Texas Bank, then only a constructive trust action would lie against Branded, which Fedders suggests would not be a core proceeding. See Mutual Benefit Life Insurance Co. v. Pinetree, Ltd. (Matter of Pinetree, Ltd.), 876 F.2d 34, 36 (5th Cir.1989) (action on constructive trust does not involve property of the estate); see also Vineyard v. McKenzie (Matter of Quality Holstein Leasing), 752 F.2d 1009 (5th Cir.1985); Selby v. Ford Motor Co., 590 F.2d 642 (6th Cir.1979).
A matter falls within the core jurisdiction of the bankruptcy court if it involves a substantive right solely created by the federal bankruptcy law and could not exist outside of bankruptcy. See Matter of Wood, 825 F.2d 90, 97 (5th Cir.1987); 28 U.S.C. § 157(b)(2)(B-N); see also Matter of Candelero Sand & Gravel, Inc., 66 B.R. 903, 906 (D.P.R.1986); In re Pierce, 44 B.R. 601, 602 (D.Colo.1984) (breaches of contract actions, and other similar business torts, cannot be labeled "core" proceedings). Where a matter is not core, it must be at least "related to" the administration of the bankruptcy case for the bankruptcy court to have jurisdiction over the matter.[17]See 28 U.S.C. § 1334(b). Otherwise, the court lacks jurisdiction and the case should be remanded immediately to state court. 28 U.S.C. § 1452(a).
A dispute is related to a bankruptcy case when the outcome will affect the property of the estate available for distribution to creditors. See Pettibone Corp. v. Easley, 935 F.2d 120 (7th Cir.1991). The Fifth Circuit has found that a matter is related to a bankruptcy where the outcome of the proceeding could conceivably have an effect on the administration of the bankruptcy estate. Matter of Wood, 825 F.2d 90, 93 (5th Cir.1987). "[T]here must be a reasonable nexus or logical connection between the civil proceeding for which jurisdiction is sought and the parent bankruptcy proceeding." In re American Energy, Inc. 50 B.R. 175, 179 (Bankr.D.N.D.1985).
Even if the Fedders action against Branded is a non-core proceeding, the action is nonetheless sufficiently related to the Branded bankruptcy case for the court to find that it has jurisdiction over the matter. The outcome of this litigation will have a direct impact on the distribution of the estate. Branded, while acknowledging a debt owed to Fedders, has answered, disputing the amount of that debt on the basis of a claimed offset by Branded, a failure of Fedders to grant certain credits to Branded, and the value of Branded's counterclaim against Fedders, discussed infra. As the lawsuit is currently postured, the net amount of Fedders' state law claim against Branded is at issue, and the determination of that issue would necessarily affect the amount available for distribution to creditors. Because the controversy has a direct impact on the administration of the bankruptcy estate, the adversary proceeding is "related to" a case under title 11. Matter of Wood 825 F.2d at 94. In addition, Branded's counterclaims are rooted *946 in the same operative facts as the Fedders claim, and must be heard lest they be barred under the doctrine of res judicata. Matter of Baudoin, 981 F.2d 736, 744 (5th Cir.1993). In addition, the court in Wood noted that, where a "plaintiff alleges liability resulting from the joint conduct of the debtor and nondebtor defendants, bankruptcy jurisdiction exists over all claims under § 1334." Id.
Thus, the court concludes that it has subject matter jurisdiction over the case as presently postured. It is important to note that, even though Fedders has filed no proof of claim against the debtor in this bankruptcy case, it is nonetheless pursuing a claim against the debtor via the state court action. Purely as a matter of jurisdiction, that matter falls within this court's purview. It is quite a different matter whether Fedders will in fact be permitted to proceed with its claim against Branded via this litigation, however, because a creditor's attempt to liquidate a cause of action against a bankruptcy debtor outside the bankruptcy forum is automatically stayed. The resolution of that important, but nonetheless entirely separate, question, is left for later in this decision. It is enough for the resolution of this particular question that Branded's removal of this lawsuit to this court did not violate this court's subject matter jurisdiction.
B. MOTION TO REMAND, AND IN THE ALTERNATIVE, TO SEVER AND REMAND
Section 1452(a), the bankruptcy removal statute, affords the estate an opportunity to centralize all litigation in one forum, the bankruptcy court. Fairchild, 4 Tex.Bankr. Ct.Rep. at 313 (citing H.REP. No. 595, 95TH CONG., 1ST SESS. 45 (1977); Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 87 n. 40, 102 S.Ct. 2858, 2880 n. 40, 73 L.Ed.2d 598 (1982); A.H. Robins v. Piccinin, 788 F.2d 994, 1014 (4th Cir.1986)). Once an action is removed to the bankruptcy court, the court, upon motion of a party, may remand the matter to state court. Section 1452(b) is broad in scope; the district court may remand on any equitable grounds, without further review. 28 U.S.C. § 1452(b).[18]
The scope of bankruptcy removal is broad indeed.[19] It is considerably broader than that available in nonbankruptcy matters. See Browning v. Navarro, 743 F.2d 1069, 1076 n. 21 (5th Cir.1984). For example, removal of a nonbankruptcy related matter to a federal court is not automatically granted. See Adolph Coors Co. v. Sickler, 608 F.Supp. 1417 (C.D.Cal.1985). Federal courts subject nonbankruptcy removal petitions to evidentiary hearings to determine if invocation of federal jurisdiction is proper. 28 U.S.C. § 1446. A federal court may also summarily dismiss a removal petition without a hearing, upon a mere review of the moving papers. Id. On the other hand, bankruptcy removal is automatic, and the removed matter will be tried by the bankruptcy court, absent a successful motion for abstention or remand. See 28 U.S.C. § 1452(a), (b). In addition, a federal court's decision not to remand a nonbankruptcy civil matter is reviewable for an abuse of discretion. However, where a district court reviews a bankruptcy court's decision not to remand an action removed under the bankruptcy removal statute, the district court's decision is not reviewable, not even for an abuse of discretion. Id. The considerable discretion afforded by statute to the bankruptcy court demonstrates Congress' clear policy favoring consolidation of matters affecting the administration of the bankruptcy estate and disfavoring piecemeal adjudications. See Fairchild, 4 Tex.Bankr.Ct.Rep. at 314.
*947 The Fifth Circuit has indicated some of the equitable grounds a court may consider in deciding a motion to remand in the bankruptcy context. They include:
1. forum non conveniens;
2. a holding that, if the civil action has been bifurcated by removal, the entire action should be tried in the same court;
3. a holding that a state court is better able to respond to questions involving state law;
4. expertise of the particular court;
5. duplicative and uneconomic effort of judicial resources in two forums;
6. prejudice to the involuntarily removed parties;
7. comity considerations;
8. a lessened possibility of an inconsistent result.
See Browning v. Navarro, 743 F.2d 1069, 1077 (5th Cir.1984). Not all the considerations discussed by the Fifth Circuit are applicable to the case at bar, and our discussion will be limited to those which apply.
Initially, of considerable importance in this case is the fact that Branded has chosen this forum. See In re Fairchild Aircraft Corp., 4 Tex.Bankr.Ct.Rep. 312, 314, 1990 WL 119650 (Bankr.W.D.Tex. 1990). Where the debtor chooses to remove an action to the bankruptcy court, that choice is given great weight. See In re El Paso Pharm, 130 B.R. 492, 497 (Bankr.W.D.Tex.1991).
Fedders notes that state law issues dominate the lawsuit as grounds for remand. The central dispute between the parties involves a determination of whether Branded, pursuant to the Distributor Agreement, was an agent of Fedders. If so, then a constructive trust or similar action might lie against Branded for conversion of Fedders' funds. If, on the other hand, the court decides that Branded is not an agent, the dispute might be resolved by the straightforward application of Article 9 of the Uniform Commercial Code. In either case, the application of state law is necessary.
But the mere presence of state law issues cannot, of itself, be sufficient to compel remand, for bankruptcy courts routinely apply and construe state law in claims litigation, lien fights, and the like. The state laws which would come into play here are well settled, requiring little, if any, new interpretation by this court. Nor is there likely to be any potential for this court's resolution of the matter to have any impact on any important state policy.[20] The fact that the law suit may be resolved under state laws does not, of itself, require the court to remand the action. See Matter of Wood, 825 F.2d 90, 96 (5th Cir.1987).[21]
It is not certain whether a state court can hear this matter any quicker than the bankruptcy court. See El Paso Pharm, 130 B.R. at 496 (state courts rarely faster, fairer to the estate, less expensive than claims allowance process); Fairchild, 4 Tex.Bankr.Ct.Rep. at 318 (same). Little discovery between the parties had been undertaken in the state court. Prior to removal, the state court had heard only a discovery dispute. The state court has set the matter on the jury trial docket in May, 1993, but that is no guaranty that the case will in fact be tried in May, even if the case is promptly remanded. This court is prepared to hold a jury trial, but could not likely hear the matter before this fall. Therefore, the equities appear to be balanced regarding whether the matter will be heard faster and with less expense in state court than in federal court.
The current structure of section 157(c), however, adds an additional wrinkle to the prompt adjudication question. If this is indeed only a related proceeding, and if it is also the adjudication of "private rights," *948 (as it certainly appears to be from a facial reading of the pleadings), then it is a Marathon-type lawsuit, which cannot be finally adjudicated by an Article I court (absent the consent of the parties). Section 157(c) provides the sufficient means to assure that Marathon will not be violated, by requiring that in such situations only the district court may enter a judgment adjudicating and disposing of the matter. 28 U.S.C. § 157(c)(2). Unfortunately, that section also assures that a final judgment must await the district court's review of the bankruptcy court's report and recommendation. Id. That additional delay must be factored into the "prompt adjudication" calculus, and tips the scales slightly in favor of remand.
Fedders further argues that remand is appropriate since Fedders has requested a jury trial, regardless whether this matter is determined to be core or noncore. This court has held on previous occasions that a jury demand is not a "magic bullet" with which one can, with certainty, kill any attempts to bring litigation into the bankruptcy court, and reiterates that position here.[22] The provision governing jury trials in bankruptcy is codified at 28 U.S.C. § 1411(a). That section provides that the provisions of the Bankruptcy Code do not affect a litigant's Seventh Amendment right to a jury trial. Section 1411(a) is silent regarding the appropriate forum for these jury trials, however. Are they to be heard in the bankruptcy court or the district court? The circuits are in disarray. Compare In re Ben Cooper, Inc., 896 F.2d 1394 (2d Cir.), vacated, 498 U.S. 964, 111 S.Ct. 425, 112 L.Ed.2d 408 (1990), reinstated, 924 F.2d 36 (2d Cir.), cert. denied, ___ U.S. ___, 111 S.Ct. 2041, 114 L.Ed.2d 126 (1991) with In re Grabill Corp., 976 F.2d 1126 (7th Cir.1992) and In re United Missouri Bank, N.A., 901 F.2d 1449 (8th Cir. 1990) and In re Kaiser Steel Corp., 911 F.2d 380 (10th Cir.1990). The Fifth Circuit has not definitively ruled on this issue. See Matter of Jensen, 946 F.2d 369 (5th Cir.1991).
The Supreme Court has in recent years adopted a strict plain meaning approach to construing the Bankruptcy Code and related statutes. See, e.g., Taylor v. Freeland & Kronz, ___ U.S. ___, 112 S.Ct. 1644, 118 L.Ed.2d 280 (1992); Conn. Nat. Bank v. Germain, ___ U.S. ___, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992); United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989). While section 1411(a) does not specify the proper forum for a bankruptcy trial, section 157 does state that "[b]ankruptcy judges may hear and determine all cases under title 11 and all core proceedings arising under title 11." See 28 U.S.C. § 157(b)(1). A plain reading of this language supports the conclusion that bankruptcy judges are empowered to proceed, as necessary, to determine all core proceedings arising under title 11, without regard to whether a litigant demands a jury trial.
Certainly litigants do not forfeit their Seventh Amendment right to a jury trial merely by litigating in the bankruptcy arena. See M & E Contractors v. Kugler-Morris General Contractors, 67 B.R. 260, 265 (N.D.Tex.1986). Nor does the simple fact that a litigant has requested a jury trial affect the "core" nature of the proceeding. "The subject matter of the claim, not the procedure used to assess factual disputes, determines the `core' status in bankruptcy." See In re Grabill Corp., 976 F.2d 1126, 1128 (7th Cir.1992) (Easterbrook, J., dissenting). To assert that a bankruptcy judge may not conduct jury trials in core proceedings actually conflicts with a plain reading of § 157(b)(1).
Recent circuit courts have placed heavy reliance on the absence of any express *949 grant of authority permitting a bankruptcy judge, as an Article I judge, to conduct a jury trial. However, no statute prohibits it, either. Indeed, bankruptcy judges exercise inherent, uncodified, authority every day to conduct the business of their courts. There is also no express authority for bankruptcy judges to sign orders, yet no one doubts their authority to do just that, simply because they are judges. Similarly, "[t]he [Bankruptcy] Code does not mention testimony, cross-examination, briefs, oral argument, summary judgment or any other ingredient of modern adjudication, yet all agree that bankruptcy judges may take evidence and allow cross-examination." See Grabill, 976 F.2d at 1128 (Easterbrook, J., dissenting).
To argue that a bankruptcy judge cannot conduct jury trials because the Bankruptcy Code does not specifically so provide is to assume that express authorization is necessary in the first place. That assumption, however, is flawed. A quick review of Title 28 will confirm that there is also no express statutory authorization for district judges to conduct jury trials, but no one questions that omission, any more than they would question the right of district judges to hear evidence, sign orders or wear robes. It all goes with the job of being a judicial officer.
The argument has also been advanced that only those courts established under Article III of the Constitution may conduct jury trials. Once again, this argument is flawed by reality: many non-Article III courts conduct jury trials every day. See, e.g., United States v. Raddatz, 447 U.S. 667, 100 S.Ct. 2406, 65 L.Ed.2d 424 (1980) (magistrates may conduct jury trials); Grabill, 976 F.2d at 1129 (Easterbrook, J., dissenting) (judges in District of Columbia, federal territories and military are non-Article III judges and conduct jury trials). Indeed, "[t]he ability to conduct a jury trial is not an exclusive function of an Article III court." See M & E Contractors, 67 B.R. at 266.
Another argument often raised is that bankruptcy judges, as Article I judges, should not be permitted to conduct jury trials since Article I judges do not have life tenure on the bench, like Article III judges.[23] However, this concern, as noted by Judge Easterbrook in his dissent in Grabill, is really much ado about nothing:
Tenure does not insulate the fact-finding process; quite the contrary, juries protect the citizens from tenured officers. The longer the tenure, the greater the need for the leavening effect of the jury. Temporary participants in the judicial process, jurors instill common sense and apply the balm of mercy, bringing law-in-action closer to contemporary beliefs about just outcomes. Why should it be objectionable for arbiters with 14-year terms to use this institution is beyond me. Juries may be less important when judge's terms are shorter, but they are no less appropriate. The higher costs, the lack of discipline, and the inconsistency that lead some to prefer judicial over lay decision do not change with the tenure of the umpire. And if bankruptcy judges with limited tenure are themselves problematic, Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982), the presence of juries ameliorates rather than aggravates. Decision by a jury removes the onus of fact-finding from the non-tenured bankruptcy judge.
See Grabill, 976 F.2d at 1129 (Easterbrook, J. dissenting).
Judge Easterbrook further points out that, rhetoric about life tenure aside, there is no substantial difference between the terms of bankruptcy judges and Article III judges. While Article III judges are appointed for life, subject to good behavior, the average tenure of a federal district judge is 14 years. Bankruptcy judges, who *950 are appointed for 14-year terms, are usually appointed younger and may be reappointed. Usually a bankruptcy judge who seeks reappointment is successful if the judge exhibits "good behavior." See Grabill, 976 F.2d at 1129 (Easterbrook, J., dissenting).
In short, there are no valid arguments against a bankruptcy judge validly conduct a jury trial, at least with respect to the core matters presented by this litigation.
Fedders further argues that it will be denied its right to a jury trial as to those proceedings which are non-core. This point has considerably more strength, as the structure of section 157(c)(1) places the conduct of a jury trial for non-core proceedings by the bankruptcy court in greater doubt. Even in the non-core context, however, the court rejects the notion that a jury demand is a "magic bullet." The fact that a debtor may be entitled to a jury trial does not mandate that the court remand a non-core matter to state court. See In re El Paso Pharm, 130 B.R. 492, 495 (Bankr. W.D.Tex.1991).[24]
It is, however, crippling. The law is not yet settled on this important issue, introducing an element of risk and uncertainty that would not be present were the suit tried in state court. Of course, much of that uncertainty can be eliminated by a request to the district court to withdraw the reference, but that process of itself adds confusion and delay to the adjudication of the lawsuit that would not be present were the matter to return to state court.
Fedders also states that fairness and economy dictate that the action should be remanded. Whether remand would be more fair or economical is in some ways a function of point of view. From the debtor's perspective, the bankruptcy forum is a much more economical forum in which to resolve Fedders' claims against the estate, and to recover Branded's offsets against Fedders. And the bankruptcy court is more likely to apply the doctrine of equitable subordination fairly and correctly than would a state court unfamiliar with the concept. Too, the natural bias against "bankrupts" one might expect from a state court jury might be ameliorated in the bankruptcy forum. As noted previously, the resolution of this lawsuit will control not only the amount, but also the very existence of Fedders' claim against the estate, should it ever be asserted.[25] The bankruptcy court's jurisdiction to determine the allowance of a claim against a bankruptcy estate is original, but it is not exclusive. See 28 U.S.C. § 1334(b). A nonbankruptcy tribunal also has the jurisdiction *951 to hear and determine the allowance or disallowance of a claim, though the bankruptcy court is by far the preferred locale for bankruptcy claims adjudication. See El Paso Pharm, 130 B.R. at 496. The resolution of the dispute at bar necessarily requires a determination of Fedders' and Texas Bank's claims against the estate. If Fedders prevails on the litigation, Texas Bank will have a secured claim; if not; Texas Bank will be paid in full. The most efficient forum for the management of competing claims against the estate is normally the bankruptcy court, not the state court. See In re Fairchild Aircraft Corp., 4 Tex.Bankr.Ct.Rep. 312, 316, 1990 WL 119650 (Bankr.W.D.Tex.1990). Additionally, Branded's counterclaims may result in a recovery for Branded against Fedders, augmenting the estate.
Judicial economy would clearly be disserved were the court to severe the nondebtor defendants from the action and remand only that action to the state court. The evidence to be introduced against the nondebtor Defendants as to their liability to the plaintiff is essentially the same as that which Fedders must introduce in its litigation with Branded. Furthermore, the evidence to be presented regarding the defenses of the nondebtor Defendants is the same as that to be introduced by Branded with respect to a determination of the character of Branded's liability to Fedders. The scarce judicial resources of both the state and federal judiciary would thus be unnecessarily consumed by reviewing the same evidence in separate proceedings. Such duplication of efforts is the antithesis of judicial economy.
Severance of the nondebtor Defendants also raises the specter of inconsistent results in the state and federal forums. For example if severance were allowed, the bankruptcy court may find that Branded was not an agent of Fedders, and the sale of the Units to Builders Square generated an account receivable which was property of Texas Bank. On the other hand, the state court may determine that Branded was an agent of Fedders and that Branded converted the funds. Accordingly, the state court could find that a constructive trust existed and require Texas Bank to turn over the monies to Fedders. Should this occur, the nondebtor Defendants, who are asserting claims for contribution and indemnity, could then be asserting claims against the Debtor's estate arising from the state court decision which the bankruptcy court had found not to exist. Such inconsistent results may impede the smooth administration of the bankruptcy estate in the future, and the court deems it best to avoid this potential problem by not severing any portion of the case.
The court granted leave to Branded to amend its counter-claim to raise core matters under 28 U.S.C. § 157(b) and Bankruptcy Rule 7001. Branded's original counterclaims, as well as the counterclaims it has indicated it yet intends to file, are sufficiently intertwined with the Fedders claim as to require that the same court hear all claims in the case, and, therefore, these too should not be severed.
The concept of judicial economy is an underlying rationale for permitting counterclaims. See O'Donnell v. Archie's Motor Express, 176 F.Supp. 36, 37 (E.D.Pa. 1959). By allowing counterclaims, a court may dispose of all claims between the parties, even those unrelated to the main claim. See Matter of Penn Central Transportation Co., 419 F.Supp. 1376, 1383 (E.D.Pa.1976). The allowance of counterclaims is favored by the judiciary. See Penn. R. Co. v. Mustante-Phillips, Inc., 42 F.Supp. 340, 342 (N.D.Ca.1941) (permitting counterclaim serves to avoid circuity of action, inconvenience, expenses, consumption of court's time, injustice). Where the permissive counterclaim involves may of the same factual or legal issues or the issues result from the same basic controversy between the parties, "fairness and considerations of convenience and economy require that claimant be permitted to maintain the cause of action." See Great Lakes Rubber Corp. v. Herbert Cooper Co., 286 F.2d 631, 634 (3rd Cir.1961). Severance of the counter-claim would defeat the stated goal of judicial economy.
The counterclaim, as amended, addresses certain core matters including lien validity *952 and equitable subordination. Core matters of a bankruptcy case do come within the original jurisdiction of the bankruptcy courts, and would best be heard there. See 28 U.S.C. § 1334(a). However, the state courts share concurrent jurisdiction with the bankruptcy courts, and can try these issues; some education would be required, but the factual issues are not particularly arcane, and the legal issues are easily briefed. While the state court might not be the preferred forum to try such issues, it is certainly a competent forum.
We are thus left with a considerable hodgepodge. Both core and non-core claims are asserted in this litigation, some of which easily belongs in bankruptcy court, such as claims litigation (assuming Fedders in fact wants to proceed to recover against Branded), determinations of lien validity, and equitable subordination claims. By the same token, a good portion of the lawsuit includes claims by Fedders against third parties that, though related to the bankruptcy case, is certainly non-core. There is little doubt that Fedders will be entitled to a jury, because of the nature of its causes of action, and therefore little doubt that the somewhat inefficient mechanism of section 157(c)(1) will have to be invoked (to say nothing of the considerable legal questions). It is an unfortunate result of the 1984 Amendments that remand is often indicated simply because too many unresolved legal issues remain to make trial in federal court efficient, even though the centralization of just such litigation was clearly Congress' intent when it enacted the Bankruptcy Reform Act of 1978. Nonetheless, it is those very uncertainties that lead this court to believe that a remand of this case is the most equitable disposition of the matter.
It remains then, to determine whether, once the case is remanded, Fedders should be permitted to proceed with the litigation.
C. MOTION TO LIFT STAY
Fedders has not filed a claim in this bankruptcy case. Therefore, Fedders is not currently entitled to share in any distribution of assets of this estate. The automatic stay protects the estate from efforts to collect on claims outside the bankruptcy process and no reason has been presented why Fedders should be granted any exception from that protection. It is merely one more creditor trying to recover from the limited assets of a bankruptcy estate, and its claim has no greater dignity than that of any other unsecured creditor of the estate. Its motion for relief from stay, to the extent that Fedders seeks to recover on a claim against Branded, must be denied.
That is only the beginning of the analysis however. Fedders maintains that it seeks to recover on a constructive trust theory, premised on the notion that it is merely reclaiming what is its property, as opposed to property of the estate. To the extent that its request for relief against Branded is thus delimited, the stay can be modified to permit Fedders to proceed. As soon as Fedders attempts to obtain affirmative relief against Branded beyond that, however, it would be in violation of the automatic stay and subject to contempt proceedings in this court.
If Fedders wants now to maintain that it does want affirmative relief against Branded, then the court must reconsider its decision to remand, for then the nature of the proceeding is claims adjudication, a core proceeding which easily and properly belongs in this court, not state court. What is more, should Fedders file a proof of claim in this proceeding (as it would have to if it wants to proceed with litigating a "claim" against Branded), Fedders would also forfeit its jury trial rights, making retention of the case by this court that much easier. See Langenkamp v. Culp, 498 U.S. 42, 111 S.Ct. 330, 112 L.Ed.2d 343 (1990).
Fedders is thus put to a Hobson's choice. It can either substantially trim down the relief it seeks in its lawsuit, and enjoy the advantages of litigating in state court, or it can pursue more complete relief, but find itself litigating in federal court. It is up to *953 Fedders to make its choice.[26]
CONCLUSION
For the reasons stated herein, the court concludes that it should GRANT Fedders' Motion for Remand, and GRANT IN PART Fedders' Motion to Lift Stay. The court concludes that it should DENY the Motion to Sever, as well as the Motion to Abstain. A separate Order to that effect will be entered by the court.
NOTES
[1] The State Court Action was filed on October 25, 1991 in the 166th Judicial District Court of Bexar County, Texas.
[2] Texas Bank, John Wright and Mike Bonham are sometimes referred to herein as the "Nondebtor Defendants."
[3] By way of a small sampling, see generally Lone Star Industries, Inc. v. Liberty Mut. Ins. Co., 131 B.R. 269 (D.Del.1991) (remand appropriate because of predominance of state law issues and likelihood of jury trial); Drexel Burnham Lambert Group, Inc. v. Vigilant Ins. Co., 130 B.R. 405 (S.D.N.Y.1991) (remand appropriate because matter was not sufficiently related to administration of bankruptcy case to warrant retention in federal court, given predominance of state law claims); O'Rourke v. Cairns, 129 B.R. 87 (E.D.La.1991) (remand of medical malpractice claim against debtor estate); In re Micro Design, Inc., 120 B.R. 363 (E.D.Pa.1990) (remand appropriate because bankruptcy court could not conduct jury trial and would have to abstain anyway); Gorse v. Long Neck, Ltd., 107 B.R. 479 (D.Del.1989); Cook v. Griffin, 102 B.R. 875 (N.D.Ga.1989) (remand because state law issues predominate and matter could not have been commenced in federal court but for the bankruptcy petition); Western Helicopters, Inc. v. Hiller Aviation, Inc., 97 B.R. 1 (E.D.Cal.1988); Allen County Bank & Trust Co. v. Valvmatic Intern. Corp., 51 B.R. 578 (N.D.Ind.1985) (district court would have to abstain from hearing removed action).
[4] There is no provision for summary dismissal of or hearings on removal petitions in bankruptcy as there are under the general removal statute. Compare 28 U.S.C. § 1452(a) with 28 U.S.C. § 1446(c)(4), (5). If the court lacks subject matter jurisdiction over the removed action, it may act sua sponte, but in the usual instance, it would be up to a party to bring such a defect to the court's attention, presumably in the context of a motion to remand.
[5] Wright and Miller take note of a proposal by the American Law Institute that a federal court should retain jurisdiction over the matter before it, but stay it pending the resolution of the state proceeding, as an alternative to outright dismissal. Id. at 103. Of course, such retention would also be inconsistent with remand, which removes the case from the federal court's docket and sends it back to state court.
[6] This is not to say that the standards that might be employed by a court faced with a motion to remand under Section 1452(b) are not in fact quite similar to the standards employed when considering a motion for permissive (or discretionary) abstention under Section 1334(c)(1). In fact, this court has acknowledged the similarity of the analysis in prior decisions. See In re Fairchild Aircraft Corp., 4 Tex.Bankr.Ct.Rep. 308, 313, 1990 WL 119650 (Bankr.W.D.Tex. 1990), recommendation adopted, slip op. (W.D.Tex.1990). But the relief accorded in response to the two kinds of motions is different dismissal in one case, transfer via remand in the other. The procedural context dictates which motion is appropriate.
[7] Younger involved an effort to have a federal court enjoin an action taking place in state court. The Court discussed the importance of respecting notions of Federalism by according comity to state tribunals of competent jurisdiction. Id. at 44-45, 91 S.Ct. at 750-51. Students of bankruptcy abstention will readily recognize how this notion has leaked into the current formulation of section 1334(c)(2), discussed infra.
[8] This is especially telling when the matter has come to federal court via the invocation of diversity jurisdiction, but has also been of special importance in years past when individuals seeking to protect their civil rights from infringement could only hope for redress if they were in a federal rather than a state court.
[9] The "interest of justice, or in the interest of comity with State Courts or respect for state law" language echoes Younger and its progeny. See Pennzoil v. Texaco, 481 U.S. 1, 107 S.Ct. 1519, 95 L.Ed.2d 1 (1987); Moore v. Sims, 442 U.S. 415, 99 S.Ct. 2371, 60 L.Ed.2d 994 (1979); Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971).
[10] Actually, this is an important provision in its own right, for abstention is not normally invoked when an action is initiated in federal court pursuant to a federally-created statutory scheme. This is because notions of comity would, in the usual instance, yield to the Supremacy Clause in such cases. Section 1334(c)(1) is, in effect, a statutory exception to federal preemption.
[11] Given the development of Younger abstention over the last twenty years, federal courts would have had little difficulty in abstaining from conducting child custody hearings, for example, with or without section 1334(c)(1). See, e.g., Middlesex County Ethics Comm. v. Garden State Bar Assoc., 457 U.S. 423, 431-32, 102 S.Ct. 2515, 2520-21, 73 L.Ed.2d 116 (1982).
[12] "Congress intended no change in the scope of jurisdiction set forth in the 1978 Act when it later enacted section 1334 of the 1984 Act." See Matter of Wood, 825 F.2d 90, 93 (5th Cir.1987).
[13] Marathon most certainly did not hold that bankruptcy courts could not adjudicate "state-created rights." It held that Article I courts could not adjudicate "private rights." Marathon, 458 U.S. at 83-87, 102 S.Ct. at 2877-80. Bankruptcy courts adjudicate state-created rights all the time, whenever they rule on the allowance of claims, yet few members of Congress would be willing to call the claims allowance process the adjudication of "private rights"unless they are also prepared to accord to bankruptcy judges life tenure and Article III status.
[14] Relevant portions of the legislative history of § 1334(c)(2) read as follows:
As most of my colleagues are aware, the Senate conferees differed over whether to retain the abstention language found in the original Senate bill. The majority of the Senate conferees this Senator includedfelt that the Senate language was too broad, in that it prohibited the bankruptcy courts or district courts from considering any case that was based upon a state law claim. Mandatory abstention in favor of state courts in those cases was required. The House provision on abstention was, however, limited to Marathon type proceedings and the party seeking abstention would have been required to show that the cause could be timely adjudicated in the state court before abstention would have been required.
130 CONG.REC. S88, 90 (daily ed. June 29, 1984) (comments of Sen. Dole) (emphasis added). Senator Hatch commented:
It should be remembered here that we are speaking of adjudication of causes of action that are local in origin and arise completely independent of any title 11 proceeding. Their only relation to the title 11 proceeding is that the debtor, quite apart from the bankruptcy proceeding, may be a responsible party or an injured party according to state law. These adjudications then involve questions of state law and do not raise federal questions. The "federal question" of the amount the debtor bankrupt can or will pay on each claim cannot arise until after the claim has been adjudicated. As a result, to avoid this constitutional problem of the extension of Article III jurisdiction to purely local causes, both H.R. 5174, and the Committee Amendment (No. 3083) provide for abstention in all civil proceedings involving claims or causes derived from state law and incapable of Article III jurisdiction absent the title 11 proceeding.
130 CONG.REC. S88, 96 (daily ed. June 29, 1984) (analysis of Sen. Hatch) (emphasis added). If Senator Hatch's comments are to be believed, all claims litigation should proceed via law suits in state court before being handled in bankruptcy, a reading that would convert bankruptcy into a cumbersome, hyperexpensive and thoroughly impractical remedy completely out of step with the structure of the Bankruptcy Code itself. No court has ever given to section 1334(c)(2) the interpretation here suggested by Senator Hatch.
[15] The doctrine of abstention contemplates that the court has jurisdiction, and thus the discretion on whether to abstain. See Chiodo, 88 B.R. at 785 ("[i]f the court does not have jurisdiction under § 1334(b), abstention under § 1334(c) cannot arise"). Section 1334(c)(2) by definition applies to cases over which the court has jurisdiction, because it applies by its own terms to those cases in which the matter in question is "related to" a case under title 11. See Matter of Wood, supra.
[16] Senator Hatch noted:
In addition to the constitutional question of jurisdiction, allocation of responsibility between the federal and state judiciary (10th Amendment) also supports mandatory abstention. Marathon decided that the bankruptcy judge cannot adjudicate the state claims, and further, that the bankruptcy judge could only provide narrowly circumscribed assistance as an adjunct or magistrate to Article III courts. Therefore, without mandatory abstention in the district courts, already overburdened with judicial responsibility, would have a massive influx of additional cases requiring the district court to adjudicate all of the state court actions with only limited assistance from bankruptcy judges.
As a result, the district court would be adjudicating nondiversity state actions, no matter how small, while the state courts would not be able to consider cases well within their expertise as well as within their case load `budget.' Mandatory abstention for all such adjudications of state-created actions that would otherwise be in a state forum, would prevent this unanticipated case load burden on the district courts.
130 CONG.REC. S88, 96 (daily ed. June 29, 1984) (analysis of Sen. Hatch). One has to wonder just why Congress felt it had to require the district court to abstain, if the primary justification was to accomplish what district judges "already overburdened with judicial responsibility" were already willing and able to do anyway pursuant to section 1334(c)(1).
[17] Absent consent of the parties, "[t]he bankruptcy judge's authority over non-core proceedings which are related to a case under Title 11 is restricted to hearing the case and submitting proposed findings of fact and conclusions of law to the district court who in turn enters final judgment." In re American Energy, Inc., 50 B.R. 175, 178 (Bankr.D.N.D.1985).
[18] If the bankruptcy court makes the initial decision, the parties may obtain appellate review of that decision. No appellate review is available from the district court's decision, however. See 28 U.S.C. § 1452(b) (as amended in 1990).
[19] Section 1452 permits the removal of any action provided (1) the matter is not a Tax Court proceeding; (2) the matter is not an enforcement action by a governmental agency exercising its regulatory or police powers, and (3) the district court has jurisdiction of the claim or cause of action under § 1334. 28 U.S.C. § 1452(a).
[20] See In re Republic Reader's Service, Inc., 81 B.R. 422, 424 (Bankr.S.D.Tex.1987) (abstention only appropriate where state law is unsettled and broad impact on state policy present).
[21] The "predomination of state law" factor takes on greater importance when the cause of action falls more uniquely within the special expertise of state courts, such as might child custody hearings, for example, or when the cause of action arises in an area of unsettled state law.
[22] In fact, if the law were otherwise, the result would defeat Congress' intention to create a tribunal to consolidate disputes relating to a debtor, for their quick and efficient adjudication. See Grabill, 976 F.2d at 1130 (Easterbrook, J., dissenting). "[A]ny creditor who does not like the way the way the bankruptcy judge is proceeding may ask for a trial and get not only a jury but also a different judgeunless the district judge returns the dispute to the bankruptcy judge to consider a motion for summary judgment. The costs of judicial badminton would have to be borne if Congress had specified that bankruptcy judges cannot hold jury trials, but it did not." Id.
[23] The theory is that bankruptcy judges, eager for reappointment after their 14-year tenure, may curry favor with the masses with biased ruling to secure their own futures. The flaw in that argument is that bankruptcy judges are appointed by circuit court judges, not the masses, and reappointment is generally secured by fidelity to the law and impartiality. See Grabill, 976 F.2d at 1130.
[24] A bankruptcy court may indeed not render a final judgment when a claim is deemed to be a non-core but "related to" claim, arising as a cause of action under state law absent consent of the parties. See 28 U.S.C. § 157(c)(1). When a bankruptcy judge hears a non-core matter, the judge submits proposed findings of fact and conclusions of law to the district court, which in turn enters a final judgment. Id. The final judgment is entered only after the district court reviews de novo those matters to which a party has timely and specifically objected. Id.
In the context of a jury trial, the findings and conclusions submitted by the bankruptcy judge would be the jury's verdict, including the instructions to the jury and the jury's responses to the questions presented. The de novo review by the district court, contemplated under 28 U.S.C. § 157(c)(1) is not plenary, but rather is limited to those matters to which the district court is timely directed by the parties. The review is thus no broader than the review which parties might request of the district court via a motion for new trial or a motion for judgment notwithstanding the verdict had the case been tried in the first instance by the district court. The review thus contemplated by section 157(c)(1) need not be construed to conflict with the Seventh Amendment's proscription on retrying jury verdicts other than as permitted under the common law in place as of the enactment of the amendment. The district court need only to remain faithful to its obligation to apply the statute in such as way as to avoid a conflict with the Constitution. In re El Paso Pharm, 130 B.R. 492, 495 (Bankr.W.D.Tex.1991). Under that authority, a jury demand is not fatal, not even to a removed Marathon-type action.
[25] It is certainly conceivable that, at some stage, Fedders might decide that it was in its best interest to file a proof of claim in this bankruptcy case after all. It would then argue, no doubt, that that claim, though untimely, should be allowed as an amendment of the timely "informal claim" that this lawsuit constitutes. We need not discuss here whether such an effort would or would not succeed.
[26] No relief from stay is needed to pursue actions against parties other than Branded. Branded of course does not need relief from stay to pursue its counterclaims against Fedders. Fedders is not granted relief from stay to pursue its claims against Branded by way of setoff or recoupment, at least not without filing a proof of claim in this bankruptcy case first (and thereby submitting itself to the jurisdiction of this court). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2157400/ | 606 F.Supp.2d 86 (2009)
Carl ANDERSON and Alyson Steele, parents and next friends of J.A., a minor, Plaintiffs,
v.
DISTRICT OF COLUMBIA, et al., Defendants.
Civil Case No. 08-580 (RJL).
United States District Court, District of Columbia.
March 30, 2009.
*88 Michael J. Eig, Michael J. Eig and Associates, P.C., Chevy Chase, MD, for Plaintiffs.
Maria L. Merkowitz, Richard Allan Latterell, Office of the Attorney General, Washington, DC, for Defendants.
MEMORANDUM OPINION
RICHARD J. LEON, District Judge.
Plaintiffs Carl Anderson and Alyson Steele filed this lawsuit on behalf of their four-year-old developmentally disabled son, J.A. They seek reimbursement for the cost of educating J.A. at a private school, the Jenny Waelder Hall Center for Children ("Jenny Waelder Hall"), alleging that the District of Columbia Public Schools ("DCPS") failed to provide J.A. with the free appropriate public education due to him under the Individuals with Disabilities Education Act ("IDEA"), 20 U.S.C. §§ 1400 et seq. Plaintiffs and defendants filed cross-motions for summary judgment. Because DCPS provided J.A. with the opportunity to receive a free appropriate public education, the Court GRANTS defendants' motion for summary judgment and DENIES plaintiffs' request for reimbursement of private tuition.
BACKGROUND
In the Fall of 2006, J.A. was referred for special education testing. Administrative Record ("A.R.") at 33. As a result, the DCPS Central Assessment Referral and Evaluations ("CARE") Center conducted a series of evaluations. A.R. at 32-50. Ultimately, a multidisciplinary team ("MDT") classified J.A. as developmentally disabled and developed an Individualized Education Program ("IEP") to meet his needs. A.R. at 244. J.A.'s initial IEP required 24.5 hours of specialized instruction and weekly sessions of 1.5 hours each with an occupational therapist and a speech language pathologist. A.R. at 244. The IEP specified that J.A.'s progress was to be tracked on a monthly basis and identified ten separate goals. A.R. at 246-55. J.A.'s MDT, including *89 his parents, signed off on the document on December 12, 2006. A.R. at 244. The IEP has not been revised since that time.
The team decided to place J.A. at West Elementary School, A.R. at 256, to receive the services outlined in the IEP. However, he failed to make progress. The team held subsequent meetingsincluding meetings in June and August of 2007in which they reviewed the IEP. The June meeting was unsuccessful because J.A.'s teacher had failed to measure his progress on a monthly basis, as required by the IEP. A.R. at 113. An educational advisor, who had conducted her own evaluations of J.A., accompanied the parents to the June meeting and requested that it be rescheduled for a time when J.A.'s teachers and related service providers could be present. A.R. at 113. J.A.'s special education teacher provided a goals update summary, in which she indicated whether the IEP goals had been mastered. A.R. at 114. She also prepared an IEP report card and a progress report. A.R. at 115-17.
The MDT considered those reports at its August meeting and determined that J.A., indeed, had not made progress. A.R. at 215-16. The team, which did not include J.A.'s teachers, discussed changing J.A.'s placement from West Elementary School to Anne Beers Elementary School, a newly-created, self-contained preschool program. Pl. Statement of Material Facts ("Pl. Facts") 7116, 18; A.R. at 215. J.A.'s father stated that he disagreed with the proposed placement and planned to enroll J.A. at a private school. A.R. at 215. On August 15, 2007, DCPS formally notified J.A.'s parents that J.A. would be moved to Anne Beers. A.R. at 217.
The parents objected to this decision and, on November 1, 2007, they filed an administrative due process request seeking a half-day placement at Jenny Waelder Hall, where they had enrolled J.A. for the 2007-2008 school year. A.R. at 23; Pl. Facts ¶ 21. The due process hearing took place on December 20, 2007, and the Hearing Officer denied the parents' request shortly thereafter. A.R. at 3-6. The officer found that the parents had not met their burden of proof to establish that either the IEP or the proposed placement at Anne Beers was inappropriate. A.R. at 5.
Plaintiffs filed suit in this Court on April 2, 2008, seeking reversal of the Hearing Officer's decision. Now pending are crossmotions for summary judgment. For the following reasons, defendants' motion is GRANTED, and plaintiffs' motion is DENIED.
DISCUSSION
I. Standard of Review
Summary judgment shall be rendered "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The party opposing a motion for summary judgment, however, "may not rely merely on allegations or denials in its own pleading; rather, its response must ... set out specific facts showing a genuine issue for trial." Fed.R.Civ.P. 56(e)(2). In deciding whether there is a genuine issue of material fact, the Court must draw all justifiable inferences in favor of the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
*90 The IDEA guarantees children with disabilities the availability of a free appropriate public education ("FAPE"). 20 U.S.C. § 1400(d)(1)(A). In designing an appropriate education for students with disabilities, the child's parents, teachers, school officials, and other professionals collaborate to develop an IEP to meet the child's unique needs. 20 U.S.C. § 1414(d)(1)(B). When the parent objects "to the identification, evaluation, or educational placement of the child, or the provision of a free appropriate public education to such child," he may seek an impartial due process hearing. 20 U.S.C. §§ 1415(b)(6), 1415(f)(1). If the parent is dissatisfied with the outcome of that hearing, he may appeal the decision to a state court of competent jurisdiction or a federal district court. 20 U.S.C. § 1415(i)(2)(A).
In deciding the appeal, this Court must grant relief as appropriate, based on a preponderance of the evidence. 20 U.S.C. § 1415(i)(2)(C)(iii). While the Court makes an independent determination, it "must also give `due weight' to the administrative proceeding and afford some deference to the expertise of the hearing officer and school officials responsible for the child's education."[1]Simmons v. Dist. of Columbia, 355 F.Supp.2d 12, 16 (D.D.C. 2004) (quoting Lyons v. Smith, 829 F.Supp. 414, 418 (D.D.C.1993)). The burden of proof rests with the party challenging the administrative determination, who must "at least take on the burden of persuading the court that the hearing officer was wrong." Reid ex rel. Reid v. Dist. of Columbia, 401 F.3d 516, 521 (D.C.Cir. 2005) (quoting Kerkam v. McKenzie, 862 F.2d 884, 887 (D.C.Cir.1988)).
II. Analysis
Parents who unilaterally decide to place their disabled child in a private school without the consent of local authorities, as J.A.'s parents did, "do so at their own risk." Florence County Sch. Dist. Four v. Carter, 510 U.S. 7, 15, 114 S.Ct. 361, 126 L.Ed.2d 284 (1993). Parents may receive tuition reimbursement if the Court finds that (1) the public placement violated the IDEA, and (2) the private school placement was proper under the Act. Id. If the public school placement was appropriate, a disabled child's parents are not entitled to reimbursement, and there is no need to analyze the second factor. See Schoenbach v. Dist. of Columbia, 309 F.Supp.2d 71, 77 (D.D.C.2004). The appropriateness of the public school placement turns on two further sub-issues: (1) whether DCPS complied with IDEA's procedural requirements, and (2) whether the IEP was reasonably calculated to provide some educational benefit to J.A. See id. at 78 (citing Bd. of Educ. v. Rowley, 458 U.S. 176, 206-07, 102 S.Ct. 3034, 73 L.Ed.2d 690 (1982)). The answer to both these questions is a resounding yes. How so?
A. Compliance with IDEA Procedural Requirements
Plaintiff's initial challenge is to several alleged deficiencies in the procedure followed by DCPS: (1) the failure to have a complete MDT present at IEP meetings, (2) the failure to provide progress reports, *91 (3) the failure to revise the IEP, and (4) the proposal of an inappropriate program for J.A.[2] Pl. Mot. at 2129. These alleged procedural violations are actionable only if they affect the student's substantive rights. Lesesne ex rel. B.F. v. Dist. of Columbia, 447 F.3d 828, 834 (D.C.Cir. 2006). Because none of the defects identified by plaintiffs affected J.A.'s substantive rights, however, they must be "disregarded as harmless." Razzaghi v. Dist. of Columbia, 2005 WL 3276318, at *8, 2005 U.S. Dist. LEXIS 36771, at *27 (D.D.C. Sept. 28, 2005); see also Roark ex rel. Roark v. Dist. of Columbia, 460 F.Supp.2d 32, 42 (D.D.C.2006).
First, plaintiffs allege that the MDTs convened in June and August of 2007 failed to meet the requirements of 20 U.S.C. § 1414(d)(1)(B), which mandates that the IEP team include a regular educator and a special educator of the child. While it is true that J.A.'s regular education and special education teachers did not participate in the June or August IEP sessions, the August meeting did include a placement specialist for early childhood education at the CARE Center, who had observed J.A. in the classroom; a DCPS speech pathologist; and a special education teacher at the CARE Center. A.R. at 215-17; Hearing Tr. at 153. The team also had written reports from J.A.'s special education teacher, indicating that J.A. was not making progress. A.R. at 114-17.
Plaintiffs argue that the omission of J.A.'s teachers from the IEP meeting "directly resulted in an IEP that is admittedly incomplete and, therefore, inappropriate." Pl. Mot. at 23-24. While the inclusion of J.A.'s teachers certainly would have been ideal, as the IDEA recognizes, the August 2007 team did have adequate substitutes, in the form of written progress reports from J.A.'s special education teacher and the presence of at least one education specialist who had observed J.A. in the classroom. Indeed, given the information presented to the MDT, the Court does not see how the teachers' absence directly resulted in an IEP that was "inappropriate," and therefore a loss of educational opportunity. J.A.'s special education teacher provided relevant information to the team in a written form; the team used that information, in conjunction with their educational expertise and knowledge of J.A., to conclude J.A. was not making progress and changed his placement as a result. Plaintiffs therefore have not demonstrated that this procedural defect caused J.A. any substantive harm. See Roark, 460 F.Supp.2d at 42 (DCPS' failure to send a representative to an MDT meeting, a procedural violation, did not cause substantive harm).
Next is plaintiffs' allegation of a failure to provide monthly progress reports before the June 2007 meeting. Although a more serious procedural deficiency, it, too, should be disregarded as harmless. It is axiomatic that the MDT can not properly review a student's IEP without first receiving the relevant information. While J.A.'s progress reports were not completed in a timely fashion, the MDT did have the necessary information before it made any decisions affecting J.A.'s IEP or placement. Thus, while DCPS indisputably failed to meet the requirements of the IEP by neglecting its obligation to provide monthly progress evaluations, it did correct the defect and implemented a change of placement intended to provide J.A. with an appropriate education. Plaintiffs, who chose to place J.A. in a private school before the change of placement occurred, *92 have pointed to no harm to J.A.'s substantive rights that resulted from this procedural deficiency, and, accordingly, it is of no legal significance. See Razzaghi, 2005 WL 3276318, at *8, 2005 U.S. Dist. LEXIS 36771, at *27-28 (when DCPS failed to meet a procedural requirement but corrected the deficiency and provided student with an appropriate education, plaintiffs were not entitled to reimbursement for private tuition).
B. Suitability of IEP
An IEP must be "reasonably calculated" to confer educational benefits on the child, Rowley, 458 U.S. at 207, 102 S.Ct. 3034, but it need not "maximize the potential of each handicapped child commensurate with the opportunity presented nonhandicapped children." Id. at 200, 102 S.Ct. 3034. Plaintiffs allege both that J.A.'s IEP and his placement at Anne Beers were inappropriate, i.e., they were not reasonably calculated to confer educational benefits. The Hearing Officer rejected both of these arguments, and this Court, giving his decision due weight, does the same.
Plaintiffs do not object to the original IEP per se. Instead, they insist that, in the face of J.A.'s lack of progress, his IEP should have been revised. Pl. Mot. at 27-28. While academic progress is an important factor in determining educational benefit, Lyons, 829 F.Supp. at 418, there is little evidence in the record that the IEP as originally constructed was not reasonably calculated to confer such a benefit. Rather, the information provided to the MDT led the team to conclude that J.A.'s placement at West, not the IEP itself, was the source of his lack of progress. As a result, the team placed J.A. at a school that would more adequately fulfill his need for a small class size and structured environment while still providing the services required by his IEP. Plaintiffs provide no evidence that the original IEPrather than the placement at West Elementary was the source of J.A.'s lack of progress. The Court therefore has no basis to conclude that the IEP should have been revised, and it will not overturn the Hearing Officer's decision on those grounds.
Plaintiffs further argue that the placement at Anne Beers was inappropriate because J.A.'s IEP was based on incomplete information and, "where an IEP is based on incomplete information, it is necessarily inappropriate, as is any placement based on it." Pl. Mot. at 29. Because the Court determined that J.A.'s IEP was based on adequate information, see Part II.A, supra, this argument necessarily fails.
Moreover, the evidence in the record supports the Hearing Officer's conclusion that Anne Beers was an appropriate placement for J.A. DCPS' witnesseseducational specialists with experience at Anne Beerstestified that the school was a structured environment with a low noise level and smaller class size, which administered the services required by J.A.'s IEP. Hearing Tr. at 123-25, 129-31, 170-73. These attributes align almost exactly with those recommended by J.A.'s educational advocate, who suggested a classroom with high structure and low noise level. Def. Mot. at 12; A.R. at 158. Plaintiffs argue, based on a single visit to Anne Beers, that it was not the right place for J.A. A.R. at 156-59. But given the limited basis for this assessment, and the indisputable requirement that courts must "afford some deference to the expertise of the ... school officials responsible for the child's education," Lyons, 829 F.Supp. at 418, this Court will not overturn the Hearing Officer's determination that Anne Beers was an appropriate placement for J.A.
Therefore, because the public school placement proposed by DCPS was appropriate, plaintiffs' request for reimbursement of private school costs must fail.
*93 CONCLUSION
The IDEA "guarantees a free appropriate education, [but] it does not ... provide that this education will be designed according to the parent's desires." Shaw v. Dist. of Columbia, 238 F.Supp.2d 127, 139 (D.D.C.2002) (citing Rowley. 458 U.S. at 207, 102 S.Ct. 3034). "Thus, proof that loving parents can craft a better program than the state offers does not, alone, entitle them to prevail under the Act." Kerkam v. McKenzie, 862 F.2d 884, 887 (D.C.Cir.1988). Jenny Waelder Hall may well be a better environment for J.A., but DCPS has made available a free appropriate public education to this child, and, in such circumstances, DCPS cannot be required to pay for the education his parents would prefer.
Therefore, for the foregoing reasons, the Court GRANTS defendants' motion for summary judgment, and DENIES plaintiffs' motion for summary judgment.
NOTES
[1] Plaintiffs argue that this Court should give the Hearing Officer's decision no deference because his findings of fact and conclusions of law were not "regularly made," due to a lack of detail and a failure to credit plaintiffs' witnesses. Pl. Mot. at 11-20. However, as long as the decision is "sufficiently detailed to permit the district court to understand the basis for the hearing officer's resolution of the parents' claims," the Court should afford it due deference. J.P. ex rel. Peterson v. County Sch. Bd., 516 F.3d 254, 261 (4th Cir.2008). The Hearing Officer's decision meets that low bar, and even if this Court granted his assessment no deference, the administrative record fully supports his conclusions.
[2] The third and fourth "deficiencies" are more properly characterized as questions of whether the IEP was reasonably calculated to provide an educational benefit to the student. The Court will address these allegations in Part II.B. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2157401/ | 53 Cal.App.3d 751 (1975)
125 Cal. Rptr. 832
Estate of MARJORIE W. QUACKENBUSH, Deceased.
SAM KELBER et al., Plaintiffs and Appellants,
v.
RICHMOND QUACKENBUSH, as Co-executor, etc., et al., Defendants and Respondents; JAMES WHITE OIL COMPANY, Claimant and Respondent.
Docket No. 15342.
Court of Appeals of California, Fourth District, Division Two.
December 15, 1975.
*752 COUNSEL
Kelber & Kelber and Bernard Kelber for Plaintiffs and Appellants.
*753 Johnson, Bannon, Wohwlend & Johnston and William D. Johnston for Defendants and Respondents.
No appearance for Claimant and Respondent.
OPINION
TAMURA, Acting P.J.
Under the terms of a lease executed during her lifetime by Marjorie W. Quackenbush (hereinafter decedent), the lessees (Sam and Philip Kelber) were granted a so-called "option to purchase" the leased property.[1] After decedent's death, the executors of her estate notified the Kelbers of their decision to sell the property on terms offered by the Kelbers' sublessee, triggering the Kelbers' exercise of their contractural "right of first refusal." The executors reported the Kelbers' election to purchase to the probate court and petitioned for an order confirming the sale pursuant to Probate Code sections 755, 780 et seq.[2] At the same time the Kelbers petitioned the probate court for a decree directing specific enforcement of the contract pursuant to section 850 et seq. The court denied the petition for specific performance and, instead, invited bids on the property in open court pursuant to section 785. The property was ultimately sold to the Kelbers' sublessee who offered a higher bid in open court and the sale was confirmed over the written objections of the Kelbers.
The Kelbers appeal from the order confirming the sale and from the judgment denying their petition for a decree of specific performance.[3] The issue on appeal is whether the statutory procedure for confirmation of sales, as opposed to the provision authorizing specific enforcement of contracts made by a decedent, was properly applied in the circumstances here presented.
The lease to the Kelbers contained the following provision: "In the event of a contemplated sale of the premises during the demised term, Lessor agrees to give Lessee a notice in writing, at least ten (10) days *754 from the contemplated sale, of substance of terms on which it is proposed to be made ... thereupon, within ten days from the receipt of such notice, the Lessee shall have the right to purchase the premises upon the terms and conditions proposed...."
Following decedent's death, the executors, pursuant to the power of sale contained in the will and in response to an offer by the Kelbers' sublessee to buy the property for $65,000, offered to sell the property to the Kelbers' sublessee for $65,000 cash, subject to various conditions. The letter conveying that offer stated: "[T]he agreement the executors make with you is subject to increased bid in open court and any agreement must be contingent upon such increased bid." In addition, one of the enumerated terms of sale was as follows: "This sale is conditioned upon confirmation of the court ... and shall be returned to that court for confirmation by seller's attorneys at the earliest possible time." Upon receiving notification from the executors of the terms of the contemplated sale, the Kelbers gave the executors written notice that they were exercising their option to purchase the property in accordance with the terms of the lease.
Thereafter, the executors filed a return of sale in the probate court and petitioned for an order confirming the sale of the property to the Kelbers. The Kelbers thereupon filed a petition for a decree directing conveyance of the real property to them for the price of $65,000. The court denied the Kelbers' petition on the ground the statutory provisions governing confirmation of sales of estate property were applicable. The Kelbers' sublessee, the original prospective buyer of the property, submitted in open court a bid of $68,750, an amount sufficient to displace the proposed sale price to the Kelbers. Noting the Kelbers' contractual right of first refusal, the court continued the confirmation hearing for 10 days to give them an opportunity to meet the higher bid. The Kelbers declined to do so, electing to stand upon their position that return of sale and confirmation hearing were improper and that their petition for a decree of specific enforcement should have been granted. The court thereupon confirmed the sale to the Kelbers' sublessee.
The Kelbers renew their contention on appeal. They urge that the statutory procedure for confirmation of sale of real property, specifically the invitation of higher bids in open court, violated their contractual rights. Correlatively, they urge they were entitled to a decree specifically enforcing decedent's contract.
*755 I
(1a) In pertinent part and with exceptions not here relevant, sections 755 and 785 are set out in the margin below.[4] The question is whether the procedures delineated in those sections were applicable in the instant context.
Considering an analogous situation, the court in Richfield Oil v. Security-First Nat. Bank, 159 Cal. App.2d 184, at page 189 [323 P.2d 834], noted: "[A]fter lessor's death, his executor lacked the power to bind the estate by his acceptance of the bid of any party without confirmation by the probate court." As in that case, the instant "option" established no agreed upon price; it provided only that in the event of "a contemplated sale" during the term of the lease, the lessor will give lessee written notice of the "substance of the terms on which it is proposed to be made." After decedent's death the terms on which the property could be sold and the option exercised was subject to the control of the probate court. (See Richfield Oil v. Security-First Nat. Bank, supra, at p. 191.)
The estate of a decedent passes into the custody of the state to be managed until creditors are paid and the rights of devisees and heirs determined. (Estate of Kennedy, 87 Cal. App.2d 795, 797-798 [197 P.2d 844].) (2) The manifest purpose of the statutory procedure for return and confirmation of private sales of real property is to protect the decedent's estate from abuse of executorial discretion. (1b) The *756 instant transaction involved the exercise of considerable discretion by the executors for they alone had determined the terms of the proposed sale. To hold the confirmation procedure inapplicable would frustrate the clear purpose of the statutory arrangement.
Not only were the confirmation provisions of the Probate Code applicable for the reasons set forth above, the offer made by the executors expressly provided: "This sale is conditioned upon confirmation of the court" and "the agreement the executors make with you is subject to increased bid in open court and any agreement must be contingent upon such increased bid." The Kelbers accepted those terms in exercising their "option." The court's acceptance of a bid made at the confirmation hearing was therefore not in derogation of the contract. All of the rights to which the Kelbers were entitled under the contract with decedent were protected. The probate court granted them 10 days (the period specified in the "option to purchase") to match the $68,750 bid. Their failure to do so and the resulting confirmation of the sale to the sublessee extinguished their "option" right.
The fact that the executors' offer to sell the property was pursuant to power of sale contained in decedent's will[5] and, as such, did not require for confirmation a showing of necessity, advantage or benefit to the estate (§ 757),[6] did not preclude the court from inviting bids in open court pursuant to section 785. The clear import of section 785 is that the court's authority to invite a higher bid at the confirmation hearing is cumulative to its duty to inquire into the necessity for and advantage of the sale. (Cf. Parker v. Owen, 96 Cal. App.2d 78, 80 [214 P.2d 417]; Estate of Bradley, 168 Cal. 655, 660 [144 P. 136].) Moreover, a finding of unfairness or inadequate consideration in the proposed sale is not a prerequisite to the acceptance of bids submitted to the court. (Estate of Bradley, supra, 168 Cal. 655, 660.) Hence, even sales pursuant to power of sale are properly subject to bidding at the confirmation hearing. (See Estate of Flaherty, 69 *757 Cal. App. 429, 431 [231 P. 591]: In re Pearsons, 98 Cal. 603, 613 [33 P. 451]; Estate of Durham, 49 Cal. 490, 496.)[7]
II
(3) The Kelbers' contention that the court erred in denying specific performance is likewise without merit. Section 850, upon which the Kelbers rely, provides: "If a person who is bound by contract in writing to convey any real property or to transfer any personal property dies before making conveyance or transfer, and the decedent, if living, might have been compelled to make such conveyance or transfer, or if a person binds himself or his executor or administrator by contract in writing to convey any real property or to transfer any personal property upon or after his death, and the contract is one which can be specifically enforced, the court in which proceedings are pending for the administration of the estate of the decedent may make a decree authorizing and directing the executor or administrator to convey or transfer the property to the person entitled thereto."
Our discussion in the preceding section of this opinion is dispositive of the Kelbers' contention that they were entitled to a decree directing specific enforcement of their contract. Section 850 authorizes specific enforcement of decedent's contracts "to convey any real property." But decedent did not contractually bind either herself or her executors to convey property at the option of the lessees.
Bewick v. Mecham, 26 Cal.2d 92 [156 P.2d 757, 157 A.L.R. 1277], cited by the Kelbers in which a decree specifically enforcing an option contracted by a decedent was upheld, is inapposite. The option contracted by the decedent in that case was subject only to the election of the optionee and the appointment of disinterested arbitrators to fix the price. Unlike the decedent herein, the lessor in that case was contractually bound to convey the property at a determinable price once the other party to the contract chose to purchase it. Strictly speaking, the Kelbers had a mere "right of first refusal," not an option to purchase at a fixed or determinable price. Since the contract between decedent and the Kelbers was not a contract to convey real property, section 850 did not empower *758 the probate court to order specific performance. The Kelbers' petition was properly denied.
The judgment and order are affirmed.
Kaufman, J., and McDaniel, J., concurred.
NOTES
[1] The lease provided that the premises were to be used for the purpose of conducting a gasoline service station business and related activities. The Kelbers had subleased the premises to the James White Oil Company.
[2] Unless otherwise indicated, all section references in this opinion are to the Probate Code.
[3] Both the judgment and the order are appealable under section 1240.
[4] Section 755 provides in pertinent part: "[A]ll sales of property must be reported to the court and confirmed by the court before title to the property passes. The report must be verified. Such report and a petition for confirmation of the sale must be made within thirty days after each sale. The clerk shall set the petition for hearing by the court...."
Section 785, pertaining to the hearing on confirmation of private sales of real property, provides in pertinent part: "Upon the hearing the court must examine into the necessity for the sale, or the advantage, benefit and interest of the estate in having the sale made ... and must examine the return and witnesses in relation to the sale; and if it appears to the court that good reason existed for the sale, that the sale was legally made and fairly conducted, and complied with the requirements of the previous section, that the sum bid is not disproportionate to the value, and it does not appear that a sum exceeding such bid at least 10 percent on the first ten thousand dollars ($10,000) bid and 5 percent on the amount of the bid in excess of ten thousand dollars ($10,000), exclusive of the expenses of a new sale, may be obtained, the court shall make an order confirming the sale and directing conveyances to be executed; otherwise it shall vacate the sale and direct another to be had, of which notice must be given and the sale in all respects conducted as if no previous sale had taken place. But if a written offer in an amount at least 10 percent more on the first ten thousand dollars ($10,000) bid and 5 percent more on the amount of the bid in excess of ten thousand dollars ($10,000) is made to the court by a responsible person, and the offer complies with all provisions of the law, the court shall accept such higher offer, confirm the sale to such person ... or, in its discretion, order a new sale...."
[5] The will provided: "I authorize my executors to sell, with or without notice, at either public or private sale, and to lease any property belonging to my estate, subject to only such confirmation of Court as may be required by law."
[6] Section 757 provides in pertinent part: "When property is directed by the will to be sold, or authority is given in the will to sell property, the executor may sell the same either at public auction or private sale, and with or without notice, as he may determine; but he must make a return of sales and obtain confirmation thereof as in other cases. In either case no title passes unless the sale is confirmed by the court: but the necessity of the sale, or its advantage or benefit to the estate or to those interested therein, need not be shown...."
[7] In the cases cited, the courts referred to former Code of Civil Procedure sections 1517, 1552, 1554, and 1561. Present Probate Code sections 755, 757 and 785 were derived from the former provisions and, in relevant part, are substantially similar thereto. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3961631/ | This is a companion case to that of Hilgenberg v. Herring, 256 S.W. 633, this day decided by this court; this case being similar to that in all matters there presented and decided. In this case a judgment was rendered for Cunningham, plaintiff below, against Hilgenberg, defendant below, from which judgment the defendant prosecuted this appeal. The judgment of the trial court is in all things affirmed, for the reasons assigned in said cause. | 01-03-2023 | 07-06-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1394134/ | 886 P.2d 330 (1994)
120 Idaho 454
George Riley LAWTON and Kimberly Lawton, husband and wife, Plaintiff-Respondents,
v.
The CITY OF POCATELLO, Defendant-Appellant, and
Antonio Baca Garcia and John and Jane Does 1-3, Defendants.
No. 20830.
Supreme Court of Idaho, Pocatello, September 1994 Term.
December 2, 1994.
*333 Jones, Chartered, Pocatello, for appellant. Jesse C. Robison argued.
Racine, Olson, Nye, Cooper & Budge, Pocatello, for respondents. Gary L. Cooper argued.
TROUT, Justice.
This is a personal injury action which arose from a motorcycle accident that occurred in Pocatello, Idaho. The Respondents, George and Kimberly Lawton, recovered from the City of Pocatello (the City) on the theory that it was negligent in the design of the intersection where the accident occurred and that such negligence was a proximate cause of the accident. The City has appealed.
I.
BACKGROUND
The accident giving rise to this appeal took place on Oak Street in Pocatello, Idaho. Because the layout of the streets in the area surrounding the accident site is somewhat confusing, a brief description may be helpful together with reference to a drawing of the site which is appended to this opinion. The accident occurred a short distance east of the point where Jefferson Avenue intersects Oak Street from the north at a right angle. Movement of traffic through this intersection is controlled by a traffic light. Less than 100 feet east of the light, 13th Avenue intersects Oak from the south at a 45 degree angle. A stop sign controls traffic entering Oak Street from 13th Avenue.
On July 30, 1990, George Lawton (Lawton) was driving a motorcycle eastbound on Oak Street. Shortly after he passed through the light at the Oak-Jefferson intersection, he collided with a van driven by Antonio Baca Garcia (Garcia). Garcia, whose view of oncoming traffic was obstructed by vehicles stopped at the Oak-Jefferson intersection, was attempting to cross Oak from a private driveway on its north side to reach 13th Avenue. The collision occurred when Garcia's van crossed the eastbound lane of Oak. Lawton and his wife sued both Garcia and the City. They claimed that Garcia was negligent in failing to yield to the oncoming motorcycle. Garcia admitted his negligence. *334 The Lawtons also sought to hold the City liable for the negligent design of the intersection.
The Lawtons' claim against the City was based on its failure to implement certain safety measures as outlined in the 1972 Traffic Operations Program to Increase Capacity and Safety (TOPICS) report. This report, adopted by the City in an attempt to secure federal highway funds, included a proposal for installing a raised median down the center of Oak Street on the east side of the Oak-Jefferson intersection. The purpose of the median was to prevent left turns onto Oak from 13th Avenue by requiring all traffic exiting 13th Avenue to turn right. However, it would also have prevented the maneuver attempted by Garcia. When federal funds were unavailable, the City directed its city engineer to implement design improvements, including improvements to the Oak-Jefferson area, as available funds allowed. The city engineer ultimately decided not to install a raised median on Oak Street.
Cross-motions for summary judgment by the Lawtons and the City were denied by the district court and the case was tried to a jury. At the close of evidence, the City moved for a directed verdict on the grounds that it was immune from liability and that the plaintiffs had failed to establish a negligence cause of action. The Lawtons moved for a directed verdict on the issue of the City's immunity from liability. The trial court denied the City's motion, but granted the Lawtons', preventing the immunity defense from going to the jury. The jury returned a verdict for the Lawtons allocating fault at seventy percent to Garcia and thirty percent to the City. Damages were assessed at $537,000. The City then made a motion for JNOV and a motion for new trial, both of which were denied. After costs were awarded and the verdict was reduced by the percentage attributable to Garcia's negligence, the total judgment entered against the City was $174,987.59. The City appealed.
II.
GOVERNMENTAL IMMUNITY UNDER IDAHO CODE § 6-904(7)
In granting the Lawtons' motion for directed verdict, the district court concluded, as a matter of law, that the City was not entitled to governmental immunity under the Idaho Tort Claims Act. The City challenges this ruling.
The Idaho Tort Claims Act, I.C. §§ 6-901-929, abrogates the doctrine of sovereign immunity and renders a governmental entity liable for damages arising out of its negligent acts or omissions. However, it preserves the traditional rule of immunity in certain specific situations. See Sterling v. Bloom, 111 Idaho 211, 214-15, 723 P.2d 755, 758-59 (1986). At trial, the City claimed immunity pursuant to both I.C. §§ 6-904(1), (7). Although it is not clear whether it relied on one provision or both, the district court granted the plaintiffs' motion for directed verdict on the issue of immunity. On appeal, the City contends that this issue should have at least gone to the jury.
A directed verdict is proper only where the evidence is so clear that all reasonable minds could reach only one conclusion: that the moving party should prevail. Accordingly, where a non-moving party produces sufficient evidence from which reasonable minds could find in its favor, a motion for directed verdict should be denied. See, e.g., Sidwell v. William Prym, Inc., 112 Idaho 76, 78, 730 P.2d 996, 998 (1986). On appeal, our standard of review is the same. Id. Thus, the proper inquiry is whether, in viewing the evidence in a light most favorable to the City, reasonable minds could find in its favor on the issue of governmental immunity.
In examining the propriety of the district court's ruling, we must first ascertain what the City was required to establish to be accorded immunity under § 6-904(7).[1] Prior to its amendment in 1988, subsection (7), *335 then numbered subsection (8), provided immunity for claims:
Aris[ing] out of a plan or design for construction or improvement to the highways, roads, streets, bridges, or other public property where such plan or design is prepared in substantial conformance with engineering or design standards in effect at the time of preparation of the plan or design, approved in advance of the construction ... by the legislative body of the governmental entity or by some other body or administrative agency, exercising discretion by authority to give such approval.
In Bingham v. Idaho Dep't of Transp., 117 Idaho 147, 786 P.2d 538 (1989), we interpreted this language to require a plan or design that conformed with existing design standards and that was approved in advance of construction. Thus, to gain immunity under former subsection (8), three elements must have been met: the claim must have arisen from (1) a plan or design for construction or improvement; (2) prepared in substantial conformance with existing engineering or design standards; and (3) approved in advance of the construction by the legislative body exercising discretion to give authority for such approval. Burgess v. Salmon River Canal Co., 119 Idaho 299, 307, 805 P.2d 1223, 1231 (1991) (citing Bingham).
In its current form, I.C. § 6-904(7) provides immunity to a governmental entity for any claim which:
Arises out of a plan or design for construction or improvement to the highways, roads, streets, bridges, or other public property where such plan or design is prepared in substantial conformance with engineering or design standards in effect at the time of preparation of the plan or design or approved in advance of the construction by the legislative body of the governmental entity or by some other body or administrative agency, exercising discretion by authority to give such approval. (emphasis added).
The addition by the legislature of the word "or" to I.C. § 6-904(7) clearly indicates that immunity is available under the provision if the governmental entity shows substantial conformance or advance approval. Therefore, under I.C. § 6-904(7) as amended, the City was required to establish (1) the existence of a plan or design that was (2) either prepared in substantial conformance with existing engineering or design standards or approved in advance of construction by the legislative or administrative authority. This interpretation is consistent with common usage of the word "or" and with our prior decisions.[2]See, e.g., Sterling v. Bloom, 111 Idaho 211, 227, 723 P.2d 755, 771 (1986) (use of the disjunctive "or" demonstrates that the two clauses contained in I.C. § 6-904(1) describe mutually exclusive conduct).
In applying this test, it is clear that there was sufficient evidence to raise factual questions regarding subsection (7) immunity and preclude a directed verdict. First, the Lawtons argue that no plan existed because the written TOPICS report was approved for the purpose of gaining federal funding. After it became clear that federal funding was unavailable, the changes actually made to the Oak-Jefferson area were not incorporated into a written plan formulated specifically for that purpose. However, I.C. § 6-904(7) does not require a written plan. The City produced evidence that after it was aware there would be no federal funding, its city engineer was directed to proceed with cost-effective improvements to the area in question. This could plausibly constitute a "plan or design for ... improvement to the ... streets" and we find that a reasonable juror could so conclude.
Second, although the Lawtons produced expert testimony that the modifications made to the area surrounding the accident site did not meet then existing engineering standards, *336 the City's experts testified that the decision not to use a raised median was in compliance with the Manual on Uniform Traffic Control Devices (MUTCD).[3] Viewing this evidence in a light most favorable to the City, we believe that a reasonable juror could conceivably find that there was substantial compliance with existing design standards.
Finally, although the City did approve the 1972 TOPICS report, it is not clear whether a plan or design existed incorporating the actual changes made to the Oak-Jefferson area. Because there is a question as to the existence of a plan, there is necessarily a factual question regarding the issue of advance approval.
In sum, the City produced evidence sufficient to allow a reasonable juror to find the existence of a plan or design that either met existing design standards or was approved in advance of construction. These factual questions should have been submitted to the jury and the district court erred in granting the plaintiffs' motion for directed verdict.
III.
GOVERNMENTAL IMMUNITY UNDER IDAHO CODE § 6-904(1)
It is not clear whether the district court granted the Lawtons' motion for directed verdict based solely on an application of I.C. § 6-904(7), or whether it also applied § 6-904(1). To clarify the matter, either provision might apply in this case depending upon whether the jury finds that the City failed to formulate a plan or design. As we stated in Bingham v. Idaho Dep't of Transp., "the plan or design of a highway is not immune from liability under Subsection (1)." 117 Idaho at 149, 786 P.2d at 540. Thus, if the jury concludes that the City formulated a plan for improvements to the area in question, it would then have to determine whether that plan substantially conformed to existing design standards or whether it received advance approval.
On the other hand, if the jury concludes that no plan or design existed, it would be required to determine whether the City is entitled to immunity under I.C. § 6-904(1). This provision contains two prongs, each of which provides a different degree of governmental immunity.[4] Under the discretionary function prong, a governmental entity is entitled to absolute immunity regarding claims arising from the performance of a "discretionary function." However, under the operational prong a government entity can be liable if it fails to exercise ordinary care in implementing a pre-established policy. Sterling v. Bloom, 111 Idaho 211, 723 P.2d 755 (1986).
In determining whether an action is discretionary or operational we first look at the nature of the challenged conduct. Routine matters not requiring evaluation of broad policy factors will likely be "operational," whereas decisions involving a consideration of the financial, political, economic, and social effects of a particular plan are likely "discretionary" and will be accorded immunity. Ransom v. City of Garden City, 113 Idaho 202, 205, 743 P.2d 70, 73 (1987). We next evaluate the challenged conduct in light of the dual policies served by the discretionary function exception: to permit those who govern to do so without being unduly inhibited by the threat of liability and to limit judicial second-guessing of basic policy decisions entrusted to other branches of government. Id.
*337 In this case, the decision to adopt the TOPICS report was a discretionary function, as was the decision to recognize and utilize the MUTCD. These decisions, involving a consideration of broad policy factors, were clearly legislative in nature. However, the challenged conduct was the decision not to use a raised median at the site of the accident. This determination involved the routine implementation of the City's pre-determined policies as established by the 1972 TOPICS report or the MUTCD. Since it did not involve basic policy considerations, we conclude that the decision was not a discretionary function within the meaning of I.C. § 6-904(1). Cf. Bingham v. Idaho Dep't of Transp., 117 Idaho at 150-51, 786 P.2d at 141-42 (even though they involve an element of choice, no discretionary immunity accorded decisions regarding the placement of street signs and the determination of speed limits since such decisions merely implement Department policy as set forth in the MUTCD).
The jury in this case was instructed that the City could be liable if it were negligent in making improvements to the Oak-Jefferson area and if such negligence were a proximate cause of the accident. Thus, although the granting of the Lawtons' motion for directed verdict on the issue of immunity was improper, the jury was effectively given the correct instruction with regard to § 6-904(1) immunity. Any error claimed by the City as to subsection (1) immunity was harmless.
IV.
JURY INSTRUCTION NUMBER 21
The City contends that the district court committed reversible error by instructing the jury, by way of jury Instruction No. 21, that the violation of a non-mandatory provision of the MUTCD constitutes negligence per se. We agree.
Jury Instruction No. 21 provided in relevant part:
There was in force in the City of Pocatello at the time of the [accident] a certain ordinance adopting the [MUTCD]. The [MUTCD] provided that intersections controlled by traffic lights shall be designed so that no movement that may involve an unexpected crossing of pathways of moving traffic should be indicated during any green or yellow interval, except when [listing certain exceptions].
. . . .
A violation of these provisions constitutes negligence on the part of the City of Pocatello. (emphasis added)
Although not stated specifically, the parties agree that Instruction No. 21 refers to section 4B-16 of the MUTCD, which provides:
4B-16 Unexpected Conflicts During Green or Yellow Interval
No movement that may involve an unexpected crossing of pathways of moving traffic should be indicated during any green or yellow interval, except when:
1. The movement involves only slight hazard;
2. Serious traffic delays are materially reduced by permitting the conflicting movement; and
3. Drivers and pedestrians subjected to the unexpected conflict are effectively warned thereof.
When such conditions of possible unexpected conflict exist, warning may be given by a sign or by the use of an appropriate signal indication as set forth in section 4B-7. The foregoing applies to vehicle-pedestrian conflicts as well as to vehicle-vehicle conflicts. (emphasis added).
Section 1A-5 of the MUTCD provides that the term "should" is "an advisory condition" and that, where it is used, the action it refers to is "recommended but not mandatory." Therefore, the traffic indications described in section 4B-16 are merely recommendations, not mandatory in nature.
Although Instruction No. 21 quotes most of section 4B-16 verbatim, the lead-in to the quoted language states that "[t]he [MUTCD] provided that intersections controlled by traffic lights shall be designed...." This language implies that section 4B-16 is mandatory when, in fact, it is not. Furthermore, the instruction provides that a violation of a *338 non-mandatory provision of the MUTCD is negligence per se.
In Esterbrook v. State, 124 Idaho 680, 863 P.2d 349 (1993), we were presented with a nearly identical situation. The district court in that case had instructed the jury that a violation of certain non-mandatory provisions of the MUTCD constituted negligence as a matter of law. In reviewing the instructions we pointed out that to form the basis of an assertion of negligence per se, the statute or regulation must clearly define the required standard of conduct. Id. at 682, 863 P.2d at 351 (citing Sanchez v. Galey, 112 Idaho 609, 733 P.2d 1234 (1986)). Since the provisions of the MUTCD at issue were optional, they did not define any required standard of conduct. Accordingly, we held that the instructions were erroneous and prejudicial. Id. 124 Idaho at 683, 863 P.2d at 352.
The Lawtons argue that they did not have the benefit of Esterbrook and were relying instead on Curtis v. Canyon Highway Dist. No. 4, 122 Idaho 73, 831 P.2d 541 (1992), a case also dealing with negligence per se instructions based on provisions of the MUTCD. Admittedly, there is language in Curtis which might be interpreted as saying that even non-mandatory provisions of the MUTCD can be the basis of a negligence per se instruction. However, as we stated in Esterbrook, "the Court [in Curtis] was considering mandatory provisions of the MUTCD ... [and] we did not intend to imply that all provisions in the MUTCD were mandatory." Esterbrook, 124 Idaho at 682, 863 P.2d at 351. To further clarify the matter, we hold once again that a non-mandatory provision of the MUTCD cannot be the basis of a negligence per se jury instruction. To the extent Curtis indicates that failure to comply with even non-mandatory provisions is negligence, it is clearly contrary to prior and subsequent case law and is expressly overruled.
When reviewing jury instructions on appeal, this Court must ascertain whether the instructions, considered as a whole, fairly and adequately present the issues and state the applicable law. Reversible error occurs when an instruction misleads the jury or prejudices a party. Manning v. Twin Falls Clinic & Hosp., Inc., 122 Idaho 47, 830 P.2d 1185 (1992). Although the parties to this dispute may not have had the benefit of Esterbrook, that decision is fully consistent with settled principles of tort law and with our standard of review. Instruction No. 21 misstated the applicable law and likely confused the jury. For this reason, in addition to the failure to submit the immunity defense to the jury, the verdict in favor of the Lawtons is vacated and the case is remanded for a new trial.
Although our disposition of the above issues requires that the case be remanded, the City has made additional assignments of error on appeal. We will address each, in turn, to provide further guidance to the district court on retrial.
V.
JURY INSTRUCTION NUMBER 22
The City also contends that the district court erred in giving jury Instruction No. 22. This instruction provided:
There was in force in the City of Pocatello at the time of the [accident] a certain ordinance adopting the [MUTCD]. The [MUTCD] provided that drivers approaching a signalized intersection or other signalized area, such as a mid-block cross-walk, shall be given a clear and unmistakable indication of their right-of-way assignment.
A violation of these provisions constitutes negligence on the part of the City of Pocatello.
Although the City maintains that this instruction was prejudicial and confusing, where a party requests an instruction and the trial court gives that instruction, that party may not thereafter claim that the giving of the instruction was error. See, e.g., Blankenship v. Weidner, 120 Idaho 234, 815 P.2d 432 (1991). In this case, the City requested an instruction nearly identical to Instruction No. 22.[5] Therefore, it may not now *339 claim that the giving of substantially the same instruction was erroneous. See also Anderson v. Gailey, 97 Idaho 813, 555 P.2d 144 (1976) (where instruction given was substantially identical to plaintiffs' requested instruction, plaintiffs were precluded from assigning it as a ground for reversal on appeal).
VI.
EXCLUSION OF EXPERT TESTIMONY AS TO THE CAUSE OF THE ACCIDENT
The City argues that, having given jury Instruction No. 22, the district court erred in prohibiting the City's expert, James Pline, from stating his opinion that the cause of the accident was not related to a failure to give a right-of-way indication to drivers approaching a signalized intersection.
It was established at trial that Pline was intimately familiar with the MUTCD and his technical background qualified him as an expert in traffic engineering. Pline testified that, in his opinion, the points at which Oak Street converges with Jefferson Avenue and 13th Avenue constitute two separate intersections and that only the Oak-Jefferson intersection was "signalized." However, when counsel for the City asked Pline what the existence of one or two intersections had to do with the cause of the accident, the plaintiffs objected. The district court sustained the objection.
Section 4B-12 of the MUTCD, which was the basis for Instruction No. 22, provides that drivers approaching a signalized intersection shall be given a clear indication of their right-of-way assignment. The City argues that Pline would have testified that since Garcia was not approaching the signalized Oak-Jefferson intersection, any failure to give a clear indication of right-of-way in a signalized intersection could not, therefore, have caused the accident. Such a statement is arguably the equivalent of an opinion that the City did not violate section 4B-12 of the MUTCD and, in this form, would have been within Pline's area of expertise.
However, our standard of review is clear: the admissibility of expert opinion testimony is discretionary with the trial court and its rulings will not be disturbed on appeal absent a showing of an abuse of that discretion. Stoddard v. Nelson, 99 Idaho 293, 297, 581 P.2d 339, 343 (1978). The district judge apparently sustained the objection to the City's question on the ground that Pline was not qualified to testify as to the cause of the accident. Given the form of the question[6] and the fact that the City made no offer of proof to clarify the matter, we hold that the district court did not abuse its discretion in sustaining the plaintiffs' objection.
VII.
EVIDENCE OF OTHER ACCIDENTS
At trial, the Lawtons' expert made reference to the reports of other accidents that had occurred in the Oak-Jefferson-13th area both before and after the occurrence of the collision between Garcia and Lawton. The City made a motion in limine seeking an order limiting the plaintiffs from introducing evidence of prior and subsequent accidents. The district court denied this motion and allowed the Lawtons' expert to refer to the other accidents. The City now contends that the admission of this evidence constituted reversible error.
The City's first contention, that "the accident reports were clearly hearsay," is without merit. The reports were not, as the City contends, admitted into evidence. Rather, the accidents reported were referred to by the Lawtons' expert, Kenneth Cottingham, *340 as a basis for his opinion that the design of the accident site was dangerous and did not meet existing standards. An expert may rely on hearsay to form an opinion provided that it is of a type reasonably relied upon by experts in the particular field in forming opinions on the subject. I.R.E. 703. A trial court has discretion in allowing an expert to render an opinion based on inadmissible evidence so long as the opinion is reached through independent judgment. Doty v. Bishara, 123 Idaho 329, 336, 848 P.2d 387, 394 (1992). Accordingly, we find no error in the trial court's dismissal of the City's hearsay objection.
The City also argues that the other accidents were not probative of any issue in this case because none involved a movement identical to that attempted by Garcia. With regard to trial court decisions as to the relevancy of evidence, this Court adheres to a de novo standard of review. Lubcke v. Boise City/Ada County Hous. Auth., 124 Idaho 450, 466, 860 P.2d 653, 669 (1993). Idaho Rule of Evidence 402 provides that all relevant evidence is generally admissible. Evidence is relevant if it has any tendency to make the existence of a material fact more or less likely than it would be without the evidence. I.R.E. 401. Thus, our inquiry is simply whether the evidence of other accidents has any tendency to make a fact material to this dispute appear more or less likely to exist.
Cottingham testified that, in his opinion, the accident site did not meet existing design standards because there were too many points of potential unexpected conflicting movement in close proximity. By way of illustration, he stated that vehicles westbound on Oak Street attempting to turn left onto 13th Avenue would be in "conflict" with eastbound drivers having a green light in their favor. Essentially the same conflict is presented by a driver attempting to cross Oak from the north to reach 13th Avenue. A driver such as Lawton passing through the Oak-Jefferson intersection would not, according to Cottingham, have sufficient time to react to such conflicting movements. Cottingham testified that this design deficiency could be corrected by use of a raised median such as that proposed in the 1972 TOPICS report.
The accidents referred to by Cottingham all occurred in the same area where the collision between Lawton and Garcia took place. Furthermore, all were of a type that would have been prevented or affected by the proposed median. Therefore, the evidence of these other accidents has at least some tendency to make the fact that the street design did not comply with existing standards appear more likely to exist. Since there is no showing that the City was unfairly prejudiced by Cottingham's testimony, we hold that the testimony regarding the other accidents was properly admitted.[7]
VIII.
COMPELLED TESTIMONY
The City contends that the district court committed reversible error when it required counsel for the City, while conducting redirect examination of the City's expert, to inquire about other accidents unrelated to the accident in question. We find no error.
It is fundamental that an issue not raised at trial will not be considered by this Court when raised for the first time on appeal. See, e.g., State v. Doe, 123 Idaho 370, 371, 848 P.2d 428, 429 (1993). Not only is there no evidence that the district court forced counsel for the City to elicit testimony involuntarily, the City did not state an objection *341 to the alleged compulsion at trial. Accordingly, the City cannot now complain about the testimony to which it refers.
IX.
REFUSAL TO INSTRUCT ON DRIVER'S DUTY TO YIELD
The district court did not specifically instruct the jury that Garcia was under a statutory duty to yield to oncoming traffic. The City contends that, because of this, it was somehow hindered in its ability to argue to the jury the extent to which each party was responsible for the accident. According to the City, it was impossible for the jury to quantify the percentage to which Garcia's breach of duty caused the accident when it was not specifically instructed as to what Garcia's duty was. We, on the other hand, have difficulty perceiving how the City could have been prejudiced by a failure to give redundant instructions.
The jury was instructed, in Instruction No. 7, that there was no dispute that Garcia admitted negligence for failing to yield to traffic. There can be no negligence in the absence of a breach of duty. See, e.g., Brizendine v. Nampa Meridian Irrigation Dist., 97 Idaho 580, 583, 548 P.2d 80, 83 (1976). Stating that a party was "negligent" is merely another way of saying that that party breached a duty owed. The duty breached in this instance was the failure to yield to traffic and the jury was effectively so instructed. Therefore, since the instructions given adequately presented the issues and set out the applicable law, no error was committed. Leazer v. Kiefer, 120 Idaho 902, 821 P.2d 957 (1991).
X.
DENIAL OF CITY'S MOTIONS FOR DIRECTED VERDICT AND JUDGMENT N.O.V.
The City finally contends that its motions for directed verdict and judgment notwithstanding the verdict should have been granted since there was no evidence from which the jury could find that it was negligent or that there was a causal link between the design of the accident site and the collision between Garcia and Lawton.
The standard for granting motions for judgment notwithstanding the verdict is the same as that for motions for directed verdict set forth supra; the moving party asks the court to rule, as a matter of law, that there was insufficient evidence upon which a jury could find in the non-moving party's favor. In making such motions, the moving party admits the truth of all the non-moving party's evidence, as well as all legitimate inferences drawn therefrom. Quick v. Crane, 111 Idaho 759, 727 P.2d 1187 (1986). Our standard of review on appeal is the same. Id.
When viewed in a light most favorable to the Lawtons, we cannot say that the evidence in this case is such that reasonable minds could not differ concerning the issues of the City's negligence and causation. Evidence was presented from which the jury could find that the City was aware that the accident site presented safety concerns and that it made plans to implement design changes to remedy the problem. There was also evidence that such design changes would have prevented the maneuver attempted by Garcia and thereby prevented the accident. Accordingly, we hold that, based on the evidence in the record, the district court did not err in denying the City's motions for directed verdict or judgment notwithstanding the verdict.
XI.
CONCLUSION
The verdict in favor of the Lawtons is set aside and the cause remanded for a new trial. No attorney fees on appeal. Costs are awarded as a matter of right to the City.
McDEVITT, C.J., JOHNSON and SILAK, JJ., and REINHARDT, J. Pro Tem., concur.
*342
NOTES
[1] I.C. § 6-904(7) applies to any claim which "arises out of a plan or design for construction or improvement to the highways, roads, [or] streets...." Because it is clearly implicated in this case, we will first analyze the district court's ruling in terms of this subsection. Whether I.C. § 6-904(1) may also apply, or whether the two subsections are mutually exclusive will be discussed later in the opinion.
[2] We are aware that language in Bingham v. Idaho Dep't of Transp., 117 Idaho 147, 786 P.2d 538 (1989), might be interpreted as imposing its requirements on the current version of I.C. § 6-904(7). However, when Bingham was decided we were not faced with an issue requiring the construction of the amended version of the statute. Therefore, any comments in Bingham implying that its requirements apply under the revised statute are merely dicta and are hereby disapproved.
[3] The MUTCD is a national publication promulgated by the Federal Highway Administration. It is widely recognized as the most authoritative work in the area of traffic engineering standards, a fact readily admitted by the Lawtons' own expert. On May 4, 1972, the City of Pocatello adopted the 1971 edition of the MUTCD as providing the controlling specifications for its traffic control signs, signals and devices. Pocatello, Idaho, Ordinance No. 1675 (May 4, 1972).
[4] I.C. § 6-904(1) specifically provides immunity for any claim which:
Arises out of any act or omission of an employee of the governmental entity exercising ordinary care, in reliance upon or the execution or performance of a statutory or regulatory function, whether or not the statute or regulation be valid, or based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a governmental entity or employee thereof, whether or not the discretion be abused.
[5] In fact, the only difference between the City's requested instruction and that given was that, rather than stating that a violation of the MUTCD provision was negligence per se, the City's instruction left it to the jury "to decide whether th[e] provision was mandatory, advisory, or permissive." The City's assignment of error apparently has nothing to do with the fact that instruction number 22 was given in the form of a negligence per se instruction. Rather, the City contests the applicability in this case of the MUTCD provision upon which the instruction is based. Thus, the City's argument that it requested a "different version" of the instruction is without merit.
[6] The question asked of Pline was phrased in the following manner: "[W]hat did the existence of two or one intersection ... have to do with the cause of this accident?"
[7] Three of the accidents referred to occurred after the accident giving rise to this appeal. However, the fact that they did not pre-date the accident in question is not material to the purpose for which they were utilized. The Lawtons claimed that the accident site did not meet existing design standards because drivers eastbound on Oak Street had insufficient time to react to certain points of potential conflicting movement after passing through the Oak-Jefferson intersection. There is no contention that the layout of the accident site was substantially different at the time of the occurrence of the subsequent accidents and it does not appear that the Lawtons were trying to establish notice on the part of the City. Thus, the fact that these accidents took place at the same site, even though later in time, has at least some tendency to make the Lawtons' allegations appear more likely to be true. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1186397/ | 952 P.2d 1241 (1998)
131 Idaho 105
Daryl TUTTLE, Plaintiff-Appellant,
v.
WAYMENT FARMS, INC., an Idaho corporation, and Sudenga Industries, Inc., an Iowa corporation, Defendants-Respondents.
No. 24076.
Supreme Court of Idaho, Twin Falls, November 1997 Term.
January 13, 1998.
*1242 E. Lee Schlender Chtd., Hailey; Raymundo G. Pena, Rupert, for appellant. Raymundo G. Pena argued.
Benoit, Alexander, Sinclair, Harwood & High, Twin Falls, for respondent Wayment Farms, Inc. Thomas B. High argued.
Hall, Farley, Oberrecht & Blanton, Boise, for respondent Sudenga Industries, Inc.
JOHNSON, Justice.
This is a personal injury case. We conclude that the trial court did not abuse its discretion in denying additur or a new trial and in allowing collection of costs from money deposited with the trial court. We conclude that the trial court incorrectly reduced the jury's damage award by the amount of a settlement made by a defendant before trial.
I.
THE BACKGROUND AND PRIOR PROCEEDINGS
On May 9, 1991, Daryl Tuttle (Tuttle) was injured in an accident arising out of his employment with Wayment Farms, Inc. (Wayment). On June 17, 1991, Tuttle sued Wayment, Sudenga Industries, Inc. (Sudenga), the manufacturer of the equipment that caused his injuries, and Wes's, Inc. (Wes's), the seller and installer of the equipment. The trial court granted summary judgment dismissing Tuttle's claim against Sudenga. On appeal, this Court vacated the summary judgment in Tuttle v. Sudenga Industries, *1243 Inc., 125 Idaho 145, 868 P.2d 473 (1994) (Tuttle I) and remanded the case to the trial court for further proceedings.
On June 11, 1993, while Tuttle I was pending before this Court, Tuttle settled with Wes's for $38,500. After this Court issued its opinion in Tuttle I, the case proceeded to trial against Wayment and Sudenga. On March 28, 1995, the jury returned a verdict apportioning negligence that caused Tuttle's injuries, as follows: Wayment 60%, Tuttle 40%, Sudenga 0%, and Wes's 0%. The jury determined Tuttle's damages to be $175,000. After deducting forty per cent of this amount for Tuttle's comparative negligence, the trial court reduced the jury's damage award by an additional $38,500, representing the settlement Tuttle made with Wes's. The trial court awarded costs to Sudenga, as a prevailing party, and ordered payment of these costs out of funds deposited by Wayment in satisfaction of the judgment. Tuttle requested that the trial court increase the award of damages to him by granting an additur or, in the alternative, grant a new trial. The trial court denied both requests.
Tuttle appealed and this Court assigned the case to the Court of Appeals. Following an opinion of the Court of Appeals, this Court granted review.
II.
THE TRIAL COURT DID NOT ABUSE ITS DISCRETION IN DENYING ADDITUR AND A NEW TRIAL.
Tuttle asserts that the trial court should have granted additur or a new trial pursuant to rule 59(a)(5) of the Idaho Rules of Civil Procedure (I.R.C.P.) or a new trial pursuant to I.R.C.P. 59(a)(6). We conclude that the trial court did not abuse its discretion in denying these requests.
We will not overrule the rulings by a trial court concerning request for an additur or a new trial pursuant to I.R.C.P. 59(a)(5) or a request for new trial pursuant to I.R.C.P. 59(a)(6) where the trial court stated the reasons for its ruling with sufficient particularity, unless the bases for the ruling is obvious from the record, and where the trial court did not abuse its discretion. O'Dell v. Basabe, 119 Idaho 796, 806-07, 810 P.2d 1082, 1092-93 (1991). In reviewing an exercise of discretion, this Court must consider:
"(1) whether the trial court correctly perceived the issue as one of discretion; (2) whether the trial court acted within the outer boundaries of its discretion and consistently with the legal standards applicable to the specific choices available to it; and (3) whether the trial court reached its decision by an exercise of reason."
Sun Valley Shopping Ctr. v. Idaho Power Co., 119 Idaho 87, 94, 803 P.2d 993, 1000 (1991).
To uphold a ruling under I.R.C.P. 59(a)(5), it must be evident that the trial court (1) contemplated what it would have awarded if it had been the finder of fact and (2) determined that any difference between the jury award and what the trial court would have awarded is not so great as to show a verdict based on prejudice or passion. Barnett v. Eagle Helicopters, Inc., 123 Idaho 361, 365, 848 P.2d 419, 423 (1993).
To uphold a ruling under I.R.C.P. 59(a)(6), it must be evident that the trial court weighed the evidence and determined that the verdict is supported by that evidence. Bott v. Idaho State Bldg. Auth., 128 Idaho 580, 590, 917 P.2d 737, 747 (1996).
In denying additur or a new trial pursuant to I.R.C.P. 59(a)(5), the trial court concluded "that the disparity in the amount that the court would have awarded, in comparison to the jury verdict of $175,000, is not so inadequate as to appear that the jury award was given under passion or prejudice." This statement fulfills the trial court's responsibility under I.R.C.P. 59(a)(5) and indicates that the trial court did not abuse its discretion in denying additur or a new trial.
In denying a new trial pursuant to I.R.C.P. 59(a)(6), the trial court stated:
The court determines that there is sufficient evidence to support the jury finding of forty percent (40%) negligence on the part of the plaintiff. The plaintiff was aware of the removal of the covers of the auger and had worked around them for some time. Further, the plaintiff was planning on leaving for the weekend and *1244 could have been trying to finish his work too quickly. Furthermore, the plaintiff was attempting to move the tube auger without help. Therefore, the court concludes that there was sufficient evidence to support the jury verdict and that an injustice will not occur if the verdict stands.
This demonstrates that the trial court fulfilled its responsibilities under I.R.C.P. 59(a)(6) and did not abuse its discretion in denying a new trial.
III.
THE TRIAL COURT SHOULD NOT HAVE REDUCED THE JURY'S DAMAGE AWARD BY THE SETTLEMENT AMOUNT PAID BY WES'S.
Tuttle asserts that the trial court should not have reduced the jury's damage award by the $38,500 paid by Wes's in settlement. We agree.
In making the reduction, the trial court relied on both section 6-805 and section 6-1606 of the Idaho Code (I.C.). We first address whether it is appropriate to consider the reduction under both of these statutes.
It is well established that "[a] specific statute ... controls over a more general statute when there is any conflict between the two or when the general statute is vague or ambiguous." Ausman v. State, 124 Idaho 839, 842, 864 P.2d 1126, 1129 (1993). I.C. § 6-805 deals with the effect of the release of one tortfeasor on the liability of others. I.C. § 6-1606 prohibits double recoveries from collateral sources. In terms of the settlement of Tuttle's claim against Wes's, I.C. § 6-805 is a more specific statute than I.C. § 6-1606. Although the trial court reached the same result applying each of these statutes, there is potential conflict between the two because of the difficulty in determining whether the payment by Wes's was an amount received by Tuttle from a "collateral source." This convinces us that I.C. § 6-805 controls in this case. We must then consider which version of I.C. § 6-805 we should apply.
Tuttle filed his lawsuit against Wayment, Sudenga, and Wes's on June 17, 1991. At that time, I.C. § 6-805 provided that a release of one tortfeasor will reduce any ultimate recovery by the amount of the prior settlement and release. See Curtis v. Canyon Highway Dist. No. 4, 122 Idaho 73, 79, 831 P.2d 541, 547 (1992), overruled on other grounds by Lawton v. City of Pocatello, 126 Idaho 454, 886 P.2d 330 (1994). On July 1, 1991, an amended version of I.C. § 6-805 became effective. This version states that a release of one tortfeasor will only reduce the settlement obtained from another tortfeasor if the release so provides. Tuttle and Wes's entered into a settlement and signed a release on June 11, 1993. The release did not state that it would reduce any eventual recovery by Tuttle.
We conclude that it is the version of I.C. § 6-805 that existed at the time Tuttle and Wes's settled that should be applied in this case. Statutes that do not create, enlarge, diminish or destroy contractual or vested rights operate retrospectively. City of Garden City v. City of Boise, 104 Idaho 512, 515, 660 P.2d 1355, 1358 (1983). None of the parties had any contractual or vested rights in the application of the version of I.C. § 6-805 that existed before July 1, 1991. The settlement between Tuttle and Wes's did not occur until almost two years later. Although substantive changes in a statute may not be given retroactive effect, remedial and procedural amendments should be applied retroactively. Jensen v. Shank, 99 Idaho 565, 566-67, 585 P.2d 1276, 1277-78 (1978). In considering whether the 1991 amendment of I.C. § 6-805 was substantive or remedial, we may consider the statement of purpose that accompanied the initial draft of the bill. State v. Talavera, 127 Idaho 700, 705, 905 P.2d 633, 638 (1995). The statement of purpose for the 1991 amendment of I.C. § 6-805 stated:
Joint and several liability was eliminated for most actions arising after 1987. In multiple defendant cases prior to 1987, a single defendant was free to settle and, under Section 6-805, the amount paid in settlement would be credited to all other nonsettling defendants. When joint and *1245 several liability was eliminated, Section 6-805 was not changed, and this has created an irregularity in the law and made settlements more difficult. Under the present system, in multiple defendant cases, each defendant only pays its pro rata share of the total damages and, therefore, should not be entitled to any credit for the pro rata share paid by another defendant in settlement. The proposed amendments to Section 6-805 eliminate this problem and make the section consistent with the prior elimination of joint and several liability.
This makes it clear that the purpose of the amendment was remedial and not substantive. Therefore, the 1991 version of the statute should be applied. This version dictates that the jury's damage award not be reduced by the amount of Wes's settlement because the release did not so provide.
IV.
THE TRIAL COURT DID NOT ABUSE ITS DISCRETION IN ALLOWING SUDENGA TO RECOVER ITS COSTS OUT OF WAYMENT'S DEPOSIT.
Tuttle asserts that the trial court should not have allowed Sudenga to recover the costs the trial court awarded it out of the amount Wayment deposited with the trial court. We conclude that the trial court did not abuse its discretion in doing so.
Once a party has made a deposit of a sum of money with the trial court, the money may be "withdrawn, subject to the further directions of the court...." I.R.C.P. 67. This is a matter left to the discretion of the trial court. In this case, the trial court directed that a portion of the funds deposited by Wayment for the benefit of Tuttle be withdrawn to pay the costs awarded to Sudenga. In doing so, the trial court did not abuse its discretion. Sun Valley Shopping Ctr. v. Idaho Power Co., 119 Idaho at 94, 803 P.2d at 1000.
V.
CONCLUSION
We affirm the trial court's denial of additur or a new trial and allowing Sudenga to collect its costs out of the amount deposited with the trial court.
We reverse the trial court's reduction of the jury's damage award by the amount of Wes's settlement with Tuttle.
Because of the mixed result, we award no costs to Tuttle or Wayment.
We award costs on appeal to Sudenga. Because we conclude that Tuttle brought and pursued his appeal against Sudenga frivolously, unreasonably, and without foundation, we award attorney fees on appeal to Sudenga pursuant to I.C. § 12-121, but only up to the time this Court granted review of the decision of the Court of Appeals because Sudenga has not participated in the proceedings since then before this Court.
TROUT, C.J., SILAK and SCHROEDER, JJ., and WOODLAND, J. Pro Tem., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1767931/ | 588 So. 2d 1309 (1991)
Cleo Clark SHRADER, Plaintiff-Appellee,
v.
LIFE GENERAL SECURITY INSURANCE COMPANY, Defendant-Appellant.
No. 22795-CA.
Court of Appeal of Louisiana, Second Circuit.
October 30, 1991.
Rehearing Denied November 27, 1991.
*1310 Rubin, Curry, Colvin & Joseph by Richard A. Curry, Shannan Sweeney Rieger, Baton Rouge, for defendant-appellant Life Gen. Sec. Ins. Co.
Dimos, Brown, Erskine & Burkett by Donald R. Brown, Frederick B. King, Monroe, for plaintiff-appellee Cleo Clark Shrader.
Before MARVIN, C.J., and SEXTON and NORRIS, JJ.
SEXTON, Judge.
Defendant Life General Security Insurance Company appeals a district court judgment finding insurance coverage for plaintiff's preexisting medical condition where plaintiff's employer replaced its previous group health and accident insurance coverage with coverage from defendant through a multiple employer trust. Defendant also *1311 appeals the district court award of penalties and attorney fees to plaintiff, while plaintiff has answered defendant's appeal, seeking an increase in those damages. The facts of the case are largely undisputed; the only significant issues presented by the case are legal. We amend and affirm as amended.
FACTS AND PROCEDURAL HISTORY
Plaintiff was employed by the G.T. Michelli Company, Inc. as an office manager, and he also helped out with other tasks, including repairing scales. As an employee with Michelli, plaintiff was covered under a group health and accident insurance policy provided to Michelli by Shenandoah Life Insurance Company.
In the autumn of 1988, plaintiff was hospitalized after experiencing chest pain. After being diagnosed with occlusive coronary artery disease, plaintiff underwent surgery for coronary angioplasty.
On January 1, 1989, plaintiff's employer changed his group health and accident coverage from Shenandoah Life to a group policy issued by defendant through United Employers Trust, a multiple employer trust. Defendant's policy contained a provision limiting coverage for preexisting conditions to $7,500.
On January 18, 1989, plaintiff underwent further treatment for a recurrence of severe coronary artery disease, incurring almost $68,000 in medical expenses. Claims for those expenses were submitted to defendant. Initially, defendant denied the claim in its entirety; however, it eventually paid plaintiff $7,500, the limits of its liability under the preexisting condition coverage in its policy.
Plaintiff filed suit against defendant, seeking coverage for his medical treatment and also asking for penalties and attorney fees. The evidence was largely stipulated, but testimony was taken from several witnesses, including Maude Cernadas, the claims manager for defendant, and Lester Dunlap, the life and health director for the Louisiana Commission of Insurance.
After taking the matter under advisement, the district court rendered judgment in favor of plaintiff. It held that because the insurance code does not contain an exemption for policies or certificates of insurance issued by multiple employer trusts, LSA-R.S. 22:215.6 applied to the policy issued by defendant to Michelli. The court further found that defendant had arbitrarily and capriciously denied or delayed payment of the $7,500 which was indisputably owed, even under the restricted coverage contained in defendant's policy, and awarded statutory penalties and attorney fees to the plaintiff. Finally, the court held that defendant did not act arbitrarily or capriciously in refusing to pay those amounts in excess of the $7,500 limit and refused to award penalties or attorney fees on that contested coverage.
Defendant now brings this appeal, arguing that the statute does not apply under the circumstances and that the district court erred in awarding penalties and attorney fees. Plaintiff has answered defendant's appeal, seeking an increase in penalties and attorney fees.
APPLICABILITY OF LSA-R.S. 22:215.6
Where an employer substitutes a group health and accident insurance policy provided by one insurance carrier with coverage provided by another carrier through the auspices of a multiple employer trust, is the substituted policy a "replacement" within the meaning of LSA-R.S. 22:215.6? If so, the "replacement" carrier may not limit the benefits otherwise payable because of a preexisting condition.
Neither defendant nor plaintiff has provided this court with jurisprudence from this or any other jurisdiction involving the same or substantially similar circumstances, nor has our independent research disclosed any; accordingly, this matter appears to be one of first impression in Louisiana.
The relevant portion of the statute provides as follows:
A. Upon the replacement of one carrier by another of any group or blanket health and accident insurance policy for *1312 ten or more members issued for delivery or delivered in this state, any limitation on benefits otherwise payable because of preexisting conditions clauses, if any, in the succeeding carrier's plan shall be the lesser of:
(1) The benefits of the new plan determined without application of the preexisting conditions limitation.
(2) The benefits of the prior plan.
....
Defendant argues that the statute, commonly referred to as the "no loss/no gain" statute, does not apply to the policy in question because: (1) it was not a "replacement" policy within the meaning of the statute, (2) any ambiguity regarding whether the instant policy comes within the purview of the statute should be resolved in favor of an interpretation by the office of the Louisiana Commissioner of Insurance that it does not, and (3) public policy argues against the applicability of the statute to the instant policy. We will address these issues individually.
Replacement of Carrier
Defendant first argues that its policy did not "replace" Shenandoah's policy because it had been previously issued to a multiple employer trust, which Michelli joined in order to procure insurance coverage from defendant. Defendant argues that Michelli did not "replace" its coverage because the policies issued first by Shenandoah and then by defendant were issued to two different entities, the Shenandoah policy to Michelli and defendant's policy to the multiple employer trust. To construe its policy as a replacement, defendant argues, ignores the legal and economic realities of the contractual arrangements among all the parties.
We have been unable to locate a definition of multiple employer trusts in the insurance code (LSA-R.S. 22:1, et seq.) and have not been referred to any by either side.
However, as we appreciate it, a multiple employer trust is an umbrella by which an insurance company issues a group policy[1] to a number of employers who have relatively few employees. The trust has no officers, no board of directors, and no employees. It is simply a fictional creation of the insurance company for the purpose we have described. Of course, the larger base provides a better underwriting basis for the insurance company and thus allows small employers to obtain the more extensive benefits of group health and accident insurance at reduced rates.
It is clear from the record that the employer, Michelli, selected the policy at issue with the $7,500 preexisting coverage exclusion from several options. The cost of that coverage was obviously a consideration. Mr. Lester Dunlap, director of life and health insurance for the Louisiana Commissioner of Insurance, testified that the interpretation given by the Insurance Commissioner's office regarding multiple employer trust policies was economically based, as small employers have enough difficulty obtaining group insurance without having to pay for preexisting condition coverage.
Defendant argues that if Michelli had simply ceased providing insurance coverage for its employees and they had procured their own policies, the statute would not have applied because the new policies would have been issued to the employees rather than Michelli. Under this hypothetical, we agree that the statute would not have applied, but not for the reason proposed by defendant. The reason for the statute's inapplicability under the hypothetical facts is that the replacement policies are of an individual rather than a group nature. The statute expressly applies only to group or blanket policies.
In support of its argument that it issued no replacement policy to Michelli, defendant points out that the actual policy of insurance, a certified copy of which was jointly entered into evidence, was issued to *1313 the trust, while a certificate of insurance, which was similarly entered into evidence by joint stipulation of the parties, was issued by the trust to Michelli as proof of coverage. Lester Dunlap acknowledged that but for a cover sheet on the certificate, it appeared to be identical to the policy. While we have not engaged in a verbatim comparison of the policy to the certificate, we can only discern a difference in type style between the two. Further, Louisiana courts have held that a certificate of group health and accident insurance which was issued to an insured was the policy within the contemplation of LSA-R.S. 22:618.[2]Smith v. North American Company for Life, Accident and Health Insurance, 306 So. 2d 751 (La.1975), overruled on other grounds in Estate of Borer v. Louisiana Health Service & Indemnity Co., 398 So. 2d 1124 (La.1981). See Pugh v. Prudential Insurance Company of America, 546 So. 2d 335 (La.App. 3rd Cir.1989).
While we recognize the substantial benefits to be realized from pooling insurance needs into a trust, we conclude that defendant's policy was indeed a "replacement" of the group health and accident policy previously provided to Michelli within the meaning of LSA-R.S. 22:215.6. We are of the view that LSA-R.S. 22:215.6 was intended to cover the instant circumstances. The language of that statute continues preexisting condition coverage "upon the replacement of one carrier by another." Although there is indeed another entity involved (the employers trust), defendant is nevertheless another carrier clearly visible behind the veil of that entity.
Furthermore, we note that the preamble to Acts 1977, No. 332, § 1, which enacted LSA-R.S. 22:215.6, refers to the "replacement of one group or blanket health and accident insurance plan by another...." While not part of the statute itself, it evidences legislative intent that the statute should apply in situations such as the instant one, regardless of the mechanism or the means by which one carrier is replaced by another.
Commissioner's Interpretation
Defendant's next argument is that any ambiguity in the applicability of the statute should be resolved in favor of the interpretation given by the office of the Louisiana Commissioner of Insurance. The record supports defendant's argument that that office had, at least since 1986, been of the opinion that LSA-R.S. 22:215.6 did not apply when an employer substituted existing group health and accident insurance coverage with coverage provided through a trust.
In support of this argument, defendant argues that the commissioner's approval of defendant's policy for issuance in Louisiana means that the policy conforms to the requirements of the law. Defendant further argues that interpretations placed upon statutes, rules, and regulations by the official charged with the administration and approval of such provisions will be accepted by the courts if they are reasonable and equitable.
While a very persuasive indication of the true meaning of a statute is the contemporaneous administrative construction put on the statute by an agency charged with administering it, an administrative construction cannot be given effect where it is contrary to or inconsistent with the legislative intent. Sales Tax District No. 1 of the Parish of Lafourche v. Express Boat Co., Inc., 500 So. 2d 364 (La. 1987).
We note that Mr. Dunlap, the commissioner's employee, testified that his office's interpretation of the statute, as applied in the context of a multiple employer trust, was developed in the absence of jurisprudential guidance and that he considered it a "highly serious" question. The underlying administrative policy in the development of his office's interpretation had been to have a uniform approach which could be applied in a consistent fashion, regardless of the domicile of the trust.
*1314 As we have previously noted, it is clear from the record that the commissioner's policy with respect to the instant question was primarily based on economic considerations. While laudable, we have concluded that this interpretation is contrary to the expression of public policy of Section 215.6.
Public Policy
Finally, defendant argues that public policy weighs in favor of reversing the district court judgment. Otherwise, many employers would be financially unable to procure group health and accident insurance coverage for their employees. It argues that the insurance coverage provided through the trust, though potentially less comprehensive, was more affordable.[3]
An equally compelling argument can be made that public policy mandates affirming the district court. Otherwise, employers and insurers could circumvent the statute by periodically replacing existing group health and accident insurance coverage with a different trust package. 1 Appleman, Insurance Law and Practice, § 46 at 165-6 (West 1981).
Accordingly, as we have previously indicated, we have concluded that the legislature has evidenced Louisiana public policy through LSA-R.S. 22:215.6 by eliminating preexisting condition exceptions where one carrier is substituted for another in group health and accident insurance policies. This trust is simply another carrier. While we recognize the cost problems attendant to group health and accident insurance for small employers, it is our view that if the legislature had intended to limit the replacement responsibility for small employers in this instance, it would have done so.
ERISA PREEMPTION
Finally, the defendant contends that the group accident and health insurance policy was an ERISA plan and that state law was thus preempted by federal law insofar as plaintiff sought statutory penalties and attorney fees under LSA-R.S. 22:657.
This is a new contention presented for the first time to this court and not raised to the trial court in any fashion. We conclude this contention is an affirmative defense which would defeat plaintiff's claim in part and is thus required to be specially pled.
"A defendant's answer shall set forth ... any ... matter constituting an affirmative defense." LSA-C.C.P. Art. 1005. The listing of specific affirmative defenses in this article is merely illustrative. An affirmative defense raises new matter which, assuming the allegations in the petition to be true, constitutes a defense to the action and will have the effect of defeating plaintiff's demand on its merits. Webster v. Rushing, 316 So. 2d 111 (La.1975).
The purpose of pleading a special defense is to give fair and adequate notice of the nature of the defense so that plaintiff is not surprised. Webster v. Rushing, supra. Here, no mention of this defense was made either in defendant's answer or its first supplemental and amending answer. Indeed, defendant's first answer specifically addressed the issue of plaintiff's claim for penalties and attorney fees and denied the allegations regarding the factual basis for that claim, with no mention of a legal basis for avoiding liability.
Defendant asserts that all of the evidence necessary to determine whether the new coverage constituted an ERISA plan is in the record. The elements which pertinent jurisprudence would have us consider are arguably contained in the instant record.
The general rule is that pleadings may be enlarged by evidence adduced without objection when such evidence is not pertinent to any other issue raised by the pleadings and, hence, would have been excluded if objected to timely. Webster v. Rushing, supra. [emphasis added].
*1315 Here, even though the policy which was entered into evidence may support certain aspects of defendant's argument, the affirmative defense of federal preemption, which was not raised by the pleadings, was not tried either by the express or implied consent of the parties. In other words, the pleadings were not enlarged by the evidence to include this defense even though the insurance policy was entered into evidence in support of other aspects of the case.
We have been unable to locate specific federal jurisprudence indicating that ERISA preemption must be specifically pled. However, we have located jurisprudence which so implies. In Kelley v. Sears, Roebuck and Co., 882 F.2d 453 (10th Cir. 1989), the appellate court found that ERISA preemption had been sufficiently raised at the trial court level where the insurance company had raised the issue in its answer and stipulated pre-trial order and had argued the issue to the district court before raising it on appeal. In Trustees of Amalgamated Insurance Fund v. Geltman Industries, Inc., 784 F.2d 926 (9th Cir.1986), cert. denied, 479 U.S. 822, 107 S. Ct. 90, 93 L. Ed. 2d 42 (1986), another ERISA case, the defendant-employer argued that the trustees of a pension plan could not seek mandatory attorney fees where its motion to confirm calculation of attorney fees and costs was brought under a statute which only provided for a discretionary award of attorney fees. However, the appellate court noted that the trustees, in their reply brief to the employer's opposition to their motion, also referred to and quoted from the statute which provided for the mandatory fees, thus sufficiently raising the issue in the district court.
In the instant case, defendant raises the issue of ERISA preemption of state law for the first time on appeal. Plaintiff had no reason to suspect that this would be an issue in the case. Even though some of the evidence in this case may tend to indicate that the group accident and health insurance plan at issue may arguably be an "employee welfare benefit plan" subject to ERISA, it is apparent that neither party was concerned with this issue when the matter was being litigated below. Other than an introduction of the insurance policy and certificate of coverage, defendant put forward no evidence to assist the district court or this court in evaluating whether the insurance plan is an ERISA plan. By that same token, plaintiff put on no evidence tending to show that the group policy was not an ERISA plan. He had no reason to believe that he needed to do so.
Having concluded that defendant failed to raise federal preemption under ERISA as an affirmative defense, we now turn to a consideration of whether the district court erred in its adjudication of the issues of statutory penalties and attorney fees under LSA-R.S. 22:657.
PENALTIES AND ATTORNEY FEES
Finally, we turn to defendant's contention that the trial court erred in assessing penalties and attorney fees at all and plaintiff's contention that penalties and attorney fees should be assessed on the total award rather than the $7,500 figure upon which the trial court assessed penalties and attorney fees.
All claims arising under the terms of health and accident insurance contracts issued in this state shall be paid not more than thirty days from the date upon which written notice and proof of claim, in the form required by the terms of the policy, are furnished to the insurer unless just and reasonable grounds, such as would put a reasonable and prudent businessman on his guard, exist. Failure to comply shall subject the insurer to a penalty payable to the insured of double the amount of the health and accident benefits due under the terms of the policy or contract during the period or delay, together with attorney fees to be determined by the court. LSA-R.S. 22:657 A.
Whether or not an insurer's reasons for refusing to pay are arbitrary and capricious is a question of fact to be determined from the facts and circumstances of each case. Soniat v. Travelers Insurance Co., 538 So. 2d 210 (La.1989).
*1316 Our consideration of this issue must necessarily be bifurcated into two separate inquiries: whether the defendant arbitrarily and capriciously delayed payment of the undisputed $7,500 for the preexisting condition coverage and whether the defendant arbitrarily and capriciously denied payment for those amounts above the $7,500 limit.
The evidence indicates that plaintiff submitted a claim to defendant dated June 5, 1989, for almost $17,000 worth of medical expenses, clearly in excess of the $7,500 of coverage for preexisting conditions. The defendant's claim worksheet indicates that this portion of the claim was considered on or about July 22, 1989, and that none of those expenses were considered to be covered.
Also in evidence is a letter from plaintiff's attorney to the defendant which defendant stamped "received" on August 7, 1989, indicating that proof of loss had been submitted, but that no payment had been received on the claim. Ms. Cernadas testified that at the time her office had received this letter, she had on file the records from St. Francis Medical Center, where the angioplasty procedures were performed, which included the medical records of Dr. Steven Brazeel, plaintiff's treating physician. Dr. Brazeel's notes, reports, and summaries covered plaintiff's treatment both before and after the effective date of defendant's policy. Finally, Ms. Cernadas conceded that her office was in possession of at least one "consultation report" by Dr. David Burkett, the cardiologist who treated plaintiff for coronary artery disease in the fall of 1988 and again in early 1989.
The claim worksheet to which we referred above was prepared on July 22, resulting in a denial of plaintiff's claim. The letter from plaintiff's counsel was received by defendant on August 7 and then by Ms. Cernadas' office the next day. On August 9, 1989, Ms. Cernadas sent a letter to plaintiff's counsel, indicating that the claim had been denied. A subsequent claim worksheet prepared on August 11, 1989, showed that $7,500 of plaintiff's claim had been paid pursuant to the preexisting condition coverage, though there is no evidence in the record that plaintiff or his counsel was ever advised of this payment.
On August 17, 1989, another letter from defendant's claims department sent directly to the plaintiff advised him that his policy provided no coverage for preexisting conditions and that his claim was therefore denied. Three letters of the same or extremely similar nature were generated by defendant's claims department on September 13, 1989, involving claims in March, April, and May of that year.
Ms. Cernadas testified that after she had written the August 9 letter denying coverage, she subsequently authorized payment of the $7,500, which check was issued on August 17 and mailed directly to St. Francis Medical Center. She testified that the original denial of coverage indicated on the July 22 worksheet was due to a lack of information, but admitted that no other information was received between July 22 and August 11, when plaintiff's counsel called to question the August 9 letter indicating a denial of coverage.
The district court concluded that more than 30 days elapsed between defendant's receipt of plaintiff's written demand and proof of loss and its payment on the claim and that the defendant's failure to pay was arbitrary and capricious. We cannot say that this factual conclusion is clearly wrong. Accordingly, we find no merit to defendant's arguments regarding penalties and attorney fees for defendant's failure to pay $7,500 of plaintiff's claim within 30 days of his demand and proof of loss.
We now turn to whether the district court was in error in denying plaintiff's demand for penalties and attorney fees for its failure to pay those amounts above and beyond the $7,500. Plaintiff, by answer, seeks an award of statutory penalties and attorney fees for those benefits which the district court found to be covered notwithstanding the limitation of liability for preexisting coverage, a disposition which we affirmed earlier in this opinion. Defendant argues that this matter is res nova and that, therefore, it could not have been arbitrary and capricious in refusing to pay. Additionally, defendant argues that it was *1317 entitled to rely on an opinion by the office of the commissioner of insurance.
Provisions of LSA-R.S. 22:657 are penal in nature and must be strictly construed. These penalties should not be applied unless the refusal to pay is clearly arbitrary and capricious. Colville v. Equitable Life Assurance Society of U.S., 514 So. 2d 678 (La.App. 2d Cir.1987). The fact that an issue raised by an insurer is one of first impression is not alone determinative on the issue of sanctions for denying coverage; even if the policy provision has never been litigated before, the risk of erroneous interpretation is that of the insurer, not the insured. Marks v. Trinity Universal Insurance Co., 531 So. 2d 516 (La.App. 2d Cir.1988). On the other hand, the fact that a beneficiary may ultimately be determined to be entitled to policy benefits does not in and of itself justify the invocation of penalties. Colville v. Equitable Life Assurance Society of U.S., supra.
Notwithstanding that we have already affirmed that the limitation of coverage for preexisting conditions contained in defendant's policy must be modified by the provisions of LSA-R.S. 22:215.6, we find that the district court was correct in refusing to award penalties and attorney fees to plaintiff for defendant's failure to pay. While one may argue that defendant took a chance on misinterpreting its policy and the applicable statute, we find that the lack of jurisprudence, taken together with an opinion by the office of the commissioner of insurance, provided a reasonable basis upon which defendant was entitled to rely until such time as the matter was clearly settled, either in this case or another. Even though we hold that LSA-R.S. 22:215.6 implicates defendant's policy provision, defendant was neither arbitrary nor capricious in placing confidence in an erroneous application of the law to the facts by a governmental office charged with the application and enforcement of state laws regarding insurance. The district court was correct in denying plaintiff's request for penalties and attorney fees for those benefits above the $7,500 limitation.
Finally, plaintiff argues that it is entitled to an increase in attorney fees from those awarded by the district court for the work done on appeal. The district court awarded plaintiff attorney fees for the work done at the trial level. Based upon our review of the work contained in this instant record, the legal issues presented, and the appearance of counsel at oral argument, we believe that plaintiff is entitled to have this amount increased by $1,000 to compensate him for the professional services necessary to protect his interests.
The district court judgment is accordingly amended to increase plaintiff's award of attorney fees from $2,500 to $3,500. In all other respects, the judgment is affirmed, with all costs to be paid by defendant.
AMENDED AND AFFIRMED AS AMENDED.
APPLICATION FOR REHEARING
Before MARVIN, SEXTON, NORRIS, LINDSAY, and STEWART, JJ.
Rehearing denied.
NOTES
[1] Group policies are defined by LSA-R.S. 22:215. In our perusal of this statute, we have been unable to locate the specific niche in that statute into which a multiple employer trust fits. However, the validity of this vehicle for issuing the instant group policy has not been made an issue in this litigation.
[2] This section requires that a correct copy of an application for life or health or accident insurance be attached to the policy or contract when issued or the application may not be admitted into evidence in any action relative to the policy or contract.
[3] Plaintiff points out that the only evidence in support of this argument came from Lester Dunlap, who was neither offered nor accepted as an expert in matters of insurance, but simply testified as a fact witness. Otherwise, plaintiff argues, this support for defendant's policy argument is purely speculative. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2405695/ | 913 S.W.2d 468 (1994)
George Toby CASAREZ, Appellant,
v.
The STATE of Texas, Appellee.
No. 1114-93.
Court of Criminal Appeals of Texas, En Banc.
December 14, 1994.
Opinion Granting Rehearing December 13, 1995.
*469 William S. Harris, Fort Worth, for appellant.
Tim Curry, Dist. Atty., and David M. Curl, Asst. Dist. Atty., Fort Worth, Robert Huttash, State's Atty., Austin, for the State.
Before the court en banc.
*470 OPINION ON APPELLANT'S PETITION FOR DISCRETIONARY REVIEW
BAIRD, Judge.
Appellant was convicted of aggravated sexual assault and sentenced to twelve years confinement. Tex.Penal Code Ann. §§ 22.011 and 22.021. The Court of Appeals affirmed. Casarez v. State, 857 S.W.2d 779 (Tex.App.Fort Worth 1993). We granted appellant's petition for discretionary review to determine whether the Equal Protection Clause of the Fourteenth Amendment prohibits the use of a peremptory challenge on the basis of religion.[1] U.S. Const., amend. XIV. We will reverse.
I.
THE INSTANT CASE
The State peremptorily challenged two black veniremembers. Appellant objected, contending the peremptory challenges were racially discriminatory and prohibited by Tex.Code Crim.Proc.Ann. art. 35.261 and Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986). The prosecutor contended the veniremembers were not struck on the basis of race, but on the basis of their Pentecostal religion.[2] Appellant again objected, this time contending the use of a peremptory challenge on the basis of religion violates the Equal Protection Clause of the Fourteenth Amendment. The trial judge overruled the objection.
On appeal, appellant argued Batson's application of the Equal Protection Clause should be expanded to include religion. The majority opinion of the Court of Appeals read appellant's point of error as being limited to whether religion was of itself an impermissible reason for exercising peremptory strikes. Casarez, 857 S.W.2d at 783. The majority reasoned the Supreme Court's limited application of the Equal Protection Clause to race-based peremptory challenges indicated an intent to confine Batson to race and overruled the point of error. Casarez, 857 S.W.2d at 783-784.[3]
II.
EQUAL PROTECTION AND JURY SELECTION
The Supreme Court first applied the Equal Protection Clause to the jury selection process in Strauder v. West Virginia, 100 U.S. 303, 25 L. Ed. 664 (1879). Strauder, a black man, was convicted by an all-white jury under a West Virginia statute which prohibited blacks from serving on grand or petit juries. Id., 100 U.S. at 304, 25 L. Ed. 664. Strauder contended the statute violated the Equal Protection Clause of the Fourteenth Amendment. Id. The Supreme Court agreed and held the statute unconstitutional:
... The very fact that colored people are singled out and expressly denied by a statute all right to participate in the administration of the law, as jurors, because of their color, though they are citizens, and may be in other respects fully qualified, is practically a brand upon them, affixed by *471 the law, an assertion of their inferiority, and a stimulant to that race prejudice which is an impediment to securing to individuals of the race that equal justice which the law aims to secure to all others... [T]he statute of West Virginia, discriminating in the selection of jurors ... amounts to a denial of equal protection of the laws to a colored man when he is put upon trial for an alleged offense against the State.
Id., 100 U.S. at 308, 310, 25 L. Ed. 664. Importantly, Strauder restricted the application of the Equal Protection Clause to racially discriminatory practices affecting the composition of the venire. Id., 100 U.S. at 312.
A.
Almost a century later, the Supreme Court expanded the application of the Equal Protection Clause to peremptory challenges. Swain v. Alabama, 380 U.S. 202, 85 S. Ct. 824, 13 L. Ed. 2d 759 (1965). The Court held the Equal Protection Clause prohibits the racially discriminatory use of peremptory challenges but required criminal defendants to show the "systematic use" of such peremptory challenges over a period of time. Id., 380 U.S. at 227, 85 S. Ct. at 839. Under the "systematic use" burden a defendant was required to compile evidence from multiple trials demonstrating a racially discriminatory pattern. Id., 380 U.S. at 225-27, 85 S. Ct. at 838-839.
B.
Twenty years later the Supreme Court discarded the "systematic use" requirement in the landmark case of Batson v. Kentucky, 476 U.S. 79, 95, 106 S. Ct. 1712, 1722, 90 L. Ed. 2d 69 (1986). In Batson, the State used its peremptory challenges to exclude every black from the jury. Id., 476 U.S. at 82-83, 106 S. Ct. at 1715. Recognizing a defendant was rarely entitled to relief under the crippling burden of Swain, the Court held the Equal Protection Clause prohibited the use of racially discriminatory peremptory challenges in an individual trial. Id., 476 U.S. at 92-95, 106 S. Ct. at 1721-22. Thus, criminal defendants were allowed to enforce the Equal Protection Clause's prohibition of racial discrimination whenever the State exercised peremptory challenges in a racially discriminatory manner.
Accordingly ... the State's privilege to strike individual jurors through peremptory challenges, is subject to the commands of the Equal Protection Clause. Although a prosecutor ordinarily is entitled to exercise permitted peremptory challenges for any reason at all, as long as that reason is related to his view concerning the outcome of the case to be tried, the Equal Protection Clause forbids the prosecutor to challenge potential jurors solely on account of their race or on the assumption that black jurors as a group will be unable impartially to consider the State's case against a black defendant.[4]
Id., 476 U.S. at 89, 106 S. Ct. at 1719 (footnotes and citations omitted).
C.
Since Batson, the Supreme Court has expanded the scope and application of the Equal Protection Clause to the use of peremptory challenges. In Powers v. Ohio, 499 U.S. 400, 401-03, 111 S. Ct. 1364, 1366, 113 L. Ed. 2d 411 (1991), the Court considered whether Batson required the excluded veniremembers to be of the same race as the defendant. Because the Equal Protection Clause prohibits racially discriminatory classifications, the defendant's race was irrelevant.
The Fourteenth Amendment's mandate that race discrimination be eliminated from all official acts and proceedings of the State is most compelling in the judicial system ... The statutory prohibition on discrimination in the selection of jurors ... makes race neutrality in jury selection a visible, and inevitable, measure of the judicial system's own commitment to the commands of the Constitution....
... Racial identity between the defendant and the excused person might in some cases be the explanation for the prosecution's adoption of the forbidden stereotype... But to say that the race of the defendant *472 may be relevant to discerning bias in some cases does not mean it will be a factor in others, for race prejudice stems from various causes and may manifest itself in different forms.
Id., 499 U.S. at 415-16, 111 S. Ct. at 1373-74.
In Edmonson v. Leesville Concrete, Co., the Supreme Court extended Batson's application of the Equal Protection Clause to civil trials. Edmonson v. Leesville Concrete, Co., 500 U.S. 614, 629-33, 111 S. Ct. 2077, 2088-2089, 114 L. Ed. 2d 660 (1991). However, in order for the Equal Protection Clause to apply, civil litigants had to be classified as state actors. Id., 500 U.S. at 618-20, 111 S. Ct. at 2082. The Court determined civil litigants were state actors because the litigants "make extensive use of state procedures with the `overt, significant assistance of state officials.'" Id., 500 U.S. at 622, 111 S. Ct. at 2083-84.
Further, the Court held civil litigants have third-party standing to challenge the peremptory challenges of another party because the potential juror is unable to defend his or her participatory right and the integrity of the verdict is cast into doubt. Focusing on the harm caused by racial discrimination the Court stated:
Race discrimination within the courtroom raises serious questions as to the fairness of the proceedings conducted there. Racial bias mars the integrity of the judicial system and prevents the idea of democratic government from becoming a reality ... If our society is to continue to progress as a multiracial democracy, it must recognize that the automatic invocation of race stereotypes retards that progress and causes continued hurt and injury.
Id., 500 U.S. at 628-31, 111 S. Ct. at 2087-2088.
In Georgia v. McCollum, 505 U.S. 42, 112 S. Ct. 2348, 120 L. Ed. 2d 33 (1992), the Supreme Court considered whether the Equal Protection Clause applied to the peremptory challenges of criminal defendants. The Court held criminal defendants, like civil litigants, constructively effect state action during voir dire because they wield the power to choose the jury, "the institution of government on which our judicial system depends."
Id., 505 U.S. at 54, 112 S. Ct. at 2356. The Court then turned to the question of whether a criminal defendant's Sixth Amendment right to a fair trial and the criminal defendant's use of peremptory challenges defeated the State's third-party standing to raise a Batson issue. McCollum, 505 U.S. at 54-59, 112 S. Ct. at 2357-2359. In holding criminal defendants may not use peremptory challenges in a racially discriminatory manner, the Court focused on the "harm done to the dignity of persons and the integrity of the courts:"
We do not believe that this decision will undermine the contribution of the peremptory challenge to the administration of justice. Nonetheless, if race stereotypes are the price for acceptance of a jury panel as fair, we reaffirm today that such a price is too high to meet the standard of the Constitution... The goal of the Sixth Amendment is jury impartiality with respect to both contestants.
Id., 505 U.S. at 58, 112 S. Ct. at 2358 (citations and internal quotations omitted).
III.
AN ANALYTICAL FRAMEWORK
The Supreme Court's application of the Equal Protection Clause to peremptory challenges did not end with race. The Court next considered whether the Equal Protection Clause prohibited the use of peremptory challenges to exclude veniremembers on the basis of gender. J.E.B. v. Alabama ex rel. T.B., ___ U.S. ___, 114 S. Ct. 1419, 128 L. Ed. 2d 89 (1994). In J.E.B. the Court developed an analytical framework to apply the Equal Protection Clause to the discriminatory use of peremptory challenges. To understand this analytical framework, we must first consider the traditional Equal Protection review of discriminatory classifications.
A.
The underlying tenet of the Equal Protection Clause is that the Government must treat citizens as individuals, not simply as components of a racial, religious, sexual, or *473 national class.[5] Accordingly, the Equal Protection Clause generally prohibits the government from using suspect classifications as a basis for discriminating between individuals.[6] A violation of the Equal Protection Clause may occur when the government discriminates against the members of a class of individuals who have historically suffered discrimination, i.e., a "suspect" class, or when the government impairs the members of a class from exercising a fundamental right.[7]
To determine the constitutionality of discrimination between classes of individuals, the Supreme Court has historically employed two standards of review: (1) strict scrutiny review; and, (2) rational relationship review. Wygant v. Jackson Board of Education, 476 U.S. 267, 279-80, 106 S. Ct. 1842, 1849-50, 90 L. Ed. 2d 260 (1986). To satisfy strict scrutiny review, the discriminatory classification must promote a compelling government interest and be narrowly tailored to achieve that interest. Metro Broadcasting, 497 U.S. at 602, 110 S. Ct. at 3029 (O'Connor, J., dissenting); Richmond v. J.A. Croson Co., 488 U.S. 469, 493-97, 109 S. Ct. 706, 721-23, 102 L. Ed. 2d 854 (1989). Stated another way, to survive strict scrutiny, the government must prove the classification is based upon an essential government objective which is achieved by the least intrusive means. Id. Strict scrutiny review has been employed with discriminatory classifications based upon race, national origin and alienage, or when a discriminatory classification burdens or impairs the ability of a class to exercise a fundamental right.
On the other hand, under a rational relationship review the Court presumes the discriminatory classification is valid. Schweiker v. Wilson, 450 U.S. 221, 234, 101 S. Ct. 1074, 1082-1083, 67 L. Ed. 2d 186 (1981). A discriminatory classification will be upheld so long as it bears a rational relationship to any legitimate governmental interest. Pennell v. City of San Jose, 485 U.S. 1, 14, 108 S. Ct. 849, 859, 99 L. Ed. 2d 1 (1988). Historically, the Supreme Court has employed a rational relationship review with general economic or social welfare legislation. Id. Currently, the Supreme Court employs a rational relationship review whenever the discriminatory classification does not involve a fundamental right, suspect class or alienage, gender or legitimacy. Ronald D. Rotunda & John E. Nowak, Treatise on Constitutional Law: Substance and Procedure § 18.3 (2d ed. 1992).
During the last twenty-five years the Supreme Court has developed a third standard of review, known as intermediate scrutiny. In order to prevail under an intermediate scrutiny review, the government must demonstrate the discriminatory classification is substantially related to an important governmental interest. See, Hogan, 458 U.S. at *474 724, 102 S. Ct. at 3336-37; and, Personnel Administrator of Mass. v. Feeney, 442 U.S. 256, 273, 99 S. Ct. 2282, 2293, 60 L. Ed. 2d 870 (1979). An intermediate scrutiny review is employed to review classifications based upon gender or illegitimacy.
Therefore, all discriminatory classifications must, at the very least, be rationally related to a legitimate governmental interest. Id. Moreover, discriminatory classifications which infringe on the exercise of a fundamental right, or which affect a suspect class, must satisfy the more stringent intermediate scrutiny or strict scrutiny review. Discriminatory classifications which are subject to strict scrutiny review or intermediate scrutiny review are said to be subject to a "heightened equal protection scrutiny." J.E.B., ___ U.S. at ___, 114 S.Ct. at 1424; and, Ronald D. Rotunda & John E. Nowak, Treatise on Constitutional Law: Substance and Procedure § 18.3, at 14-28 (2d ed. 1992).
B.
In J.E.B., the Supreme Court held the Equal Protection Clause prohibited the use of peremptory challenges to exclude veniremembers on the basis of gender. Six justices held the same harm caused by racial discrimination in the jury selection process occurs with equal force to gender discrimination:
Equal opportunity to participate in the fair administration of justice is fundamental to our democratic system. It not only furthers the goals of the jury system. It reaffirms the promise of equality under the lawthat all citizens, regardless of race, ethnicity, or gender, have the chance to take part directly in our democracy ... When persons are excluded from participating in our democratic processes solely because of race or gender, this promise of equality dims, and the integrity of our judicial system is jeopardized.
Id., ___ U.S. at ___, 114 S.Ct. at 1430 (footnotes and citations omitted).[8] Consequently, the Equal Protection Clause guarantees each person who is "granted the opportunity to serve on a jury ... the right not to be excluded summarily because of discriminatory and stereotypical presumptions that reflect and reinforce patterns of historical discrimination." Id., ___ U.S. at ___, 114 S.Ct. at 1428.
For the first time the Supreme Court unequivocally attached Batson's application of the Equal Protection Clause to those discriminatory classifications subject to "heightened equal protection scrutiny."[9]Id., ___ U.S. at ___, 114 S.Ct. at 1425. Because discriminatory classifications based upon gender are subject to heightened equal protection scrutiny, Mississippi University for Women v. Hogan, 458 U.S. 718, 724-26, 102 S. Ct. 3331, 3336-37, 73 L. Ed. 2d 1090 (1982) (applying intermediate scrutiny review to gender-based discriminations), the Court considered:
... whether discrimination on the basis of gender in jury selection substantially furthers the State's legitimate interest in achieving a fair and impartial trial ... [Or more precisely] whether peremptory challenges based on gender stereotypes provide substantial aid to a litigant's effort to secure a fair and impartial jury.
*475 J.E.B., ___ U.S. at ___-___, 114 S.Ct. at 1425-1426 (footnotes omitted). Because gender alone is not an accurate predictor of juror attitudes, the Court held peremptory challenges based upon gender failed to pass the heightened equal protection scrutiny analysis. The Court concluded, "[w]e shall not accept as a defense to gender-based peremptory challenges the very stereotype the law condemns." Id., ___ U.S. at ___, 114 S.Ct. at 1426 (internal quotations omitted).
As with the Batson line of cases, the J.E.B. Court continued to focus on the harm caused by the discriminatory use of peremptory challenges.
Discrimination in jury selection ... causes harm to the litigants, the community, and the individual jurors who are wrongfully excluded from participation in the judicial process. The litigants are harmed by the risk that the prejudice which motivated the discriminatory selection of the jury will infect the entire proceedings... The community is harmed by the State's participation in the perpetuation of invidious group stereotypes and the inevitable loss of confidence in our judicial system that state-sanctioned discrimination in the courtroom engenders.
J.E.B., ___ U.S. at ___, 114 S.Ct. at 1427 (citations omitted).
Under the analytical framework of J.E.B., the Equal Protection Clause prohibits the discriminatory use of peremptory challenges based on a classification which qualifies for, but fails to pass, "heightened equal protection scrutiny." J.E.B., ___ U.S. at ___, 114 S.Ct. at 1425.[10]
IV.
RELIGIOUS DISCRIMINATION
Today, we are asked to determine whether the Equal Protection Clause of the Fourteenth Amendment prohibits the use of peremptory challenges on the basis of religion.[11] To resolve this issue, we must first determine whether discriminatory classifications based *476 upon religion are subject to heightened equal protection scrutiny.
A.
Our democratic government arose from a period of severe religious discrimination. England suppressed all religious affiliations other than those with the Anglican Church. Michael W. McConnell, The Origins and Historical Understanding of Free Exercise of Religion, 103 Harv.L.Rev. 1410, 1421 (1990). Other religious groups were forbidden to practice their beliefs, imprisoned for practicing their beliefs, and barred from holding public office. Id.; and, The Test Act of 1672, 25 Car. 2, ch. 2 (restricting public and military office to Anglican church members). Therefore, many religious groups sought religious tolerance in the American colonies. The Origins and Historical Understanding of Free Exercise of Religion, supra, at 1422. However, religious discrimination flourished on this continent as well. The Puritans statutorily banished Baptists from the New England territories, and jailed or expelled other religious dissenters. Id. The Virginia Anglican Church horsewhipped, jailed and prevented other religious groups from preaching. Id., at 1423. Further, New York and New Jersey attempted to enforce Anglican intolerance, failing only because of their diverse religious constituencies. Id., at 1424.
The Carolinas, Delaware, Maryland, Pennsylvania, and Rhode Island responded to religious discrimination by adopting a policy of religious toleration which guaranteed the "freedom of conscience." Id., at 1424-1425; and, R.I. Charter of 1663, reprinted in 2 Federal and State Constitutions, Colonial Charters, and Other Organic Laws of the United States 1595-96 (B. Poore 2d ed. 1878). These religious toleration policies are viewed as the predecessors to today's constitutional provisions regarding religion. The Origins and Historical Understanding of Free Exercise of Religion, supra, at 1424-1425. The framers of the United States Constitution incorporated substantial religious protections into art. VI and the First Amendment of the United States Constitution to prevent religious discrimination.[12]Id., at 1515-16; U.S. Const. art. VI; U.S. Const., amend. I. Art. VI and the First Amendment have prohibited discriminatory classifications based upon an individual's religion since 1791, some seventy-five years prior to the adoption of the Fourteenth Amendment and its Equal Protection Clause. Compare, U.S. Const., amend. I with, U.S. Const., amend. XIV (ratified 1868).
Almost seventy years ago we recognized the Equal Protection Clause prohibited discriminatory classifications based upon religion. Juarez v. State, 102 Tex. Crim. 297, 277 S.W. 1091 (Tex.Cr.App.1925). Juarez moved to quash his indictment because Catholics were prevented from serving as grand jurors because of their religious belief. The trial judge overruled Juarez's motion and we reversed.
In bringing about a violation of the provisions of the Fourteenth Amendment, the *477 state cannot do indirectly through its officers or agents that which it could not do directly by legislative act. If the Legislature of the state should pass a law saying that hereafter no man holding to the Baptist religious faith, or the Methodist religious faith, should ever be permitted to serve on a grand jury in this state, and a party adhering to the religious faith so designated should claim that by such legislative act his rights under the Fourteenth Amendment had been violated, the validity of such a law could never be sustained.
Juarez, 277 S.W. at 1094.
B.
In Sherbert v. Verner, 374 U.S. 398, 83 S. Ct. 1790, 10 L. Ed. 2d 965 (1963), the Court considered the constitutionality of a South Carolina statute which allowed the State Unemployment Commission to deny benefits to Seven-Day-Adventists because of their religious prohibition of Saturday work. Id., 374 U.S. at 399-402, 83 S. Ct. at 1791-93. The Court held the freedom to hold or practice religious beliefs is a fundamental right subject to strict scrutiny review. Id., 374 U.S. at 403, 83 S. Ct. at 1793-94. The Court held the statute unconstitutional because it burdened a group's free exercise of religion and was not justified by a "compelling government interest." Id., 374 U.S. at 403-09, 83 S. Ct. at 1793-1796.
In Larson v. Valente, 456 U.S. 228, 102 S. Ct. 1673, 72 L. Ed. 2d 33 (1982), the Supreme Court considered a Minnesota statute which required all religious groups who did not receive fifty per cent of their donations from members or affiliated organizations to file an extensive annual report. Id., 456 U.S. at 231, 102 S. Ct. at 1676. Valente argued the statute violated the Equal Protection Clause. Using a strict scrutiny review, the Supreme Court held Minnesota "failed to demonstrate that the fifty per cent rule ... is `closely fitted' to further a `compelling governmental interest.'" Id., 456 U.S. at 251, 102 S. Ct. at 1687.
Strict scrutiny review remains the uncontested standard for evaluating government infringements on religious freedom. In Church of the Lukumi Babalu Aye v. City of Hialeah, 508 U.S. 520, 113 S. Ct. 2217, 124 L. Ed. 2d 472 (1993), the Supreme Court considered the constitutionality of five municipal ordinances which prohibited animal cruelty, ritualistic sacrifice of animals, and the slaughter of animals outside of areas zoned for slaughterhouses. Id., 508 U.S. at ___, 113 S.Ct. at 2223-2224. The municipal ordinances were passed shortly after Lukumi Babalu Aye, Inc., a Santeria Church, leased property within the city and announced plans to establish a house of worship. Id., 508 U.S. at ___, 113 S.Ct. at 2223. An integral part of the Santeria religion is the sacrifice of animals at "birth, marriage, and death rites, for the cure of the sick, for the initiation of new members and priests, and during an annual celebration." Id., 508 U.S. at ___, 113 S.Ct. at 2222. The Santeria Church sought declaratory relief, contending the municipal ordinances violated the Free Exercise Clause in the First Amendment. Id., 508 U.S. at ___, 113 S.Ct. at 2224. The Supreme Court held:
A law burdening religious practice that is not neutral or not of general application must undergo the most rigorous of scrutiny. To satisfy the commands of the First Amendment, a law restrictive of religious practice must advance interests of the highest order and must be narrowly tailored in pursuit of those interests. The compelling interest standard that we apply... really means what it says. A law that targets religious conduct for distinctive treatment or advances legitimate governmental interests only against conduct with a religious motivation will survive strict scrutiny only in rare cases. It follows from what we have already said that these ordinances cannot withstand this scrutiny.
Id., 508 U.S. at ___, 113 S.Ct. at 2233 (citations and quotations omitted).[13]
*478 The right to the free exercise of religion is unquestionably a fundamental right and any impairment of that right is subject to strict scrutiny review.[14] Consequently, we hold the *479 Equal Protection Clause of the Fourteenth Amendment prohibits the use of a peremptory challenge on the basis of religion absent a compelling governmental interest.[15]
IV.
COMPELLING GOVERNMENTAL INTEREST
A.
Having found that discriminatory classifications based upon religion require heightened equal protection review, we must now decide whether the State has demonstrated a compelling governmental interest in the discriminatory use of a peremptory challenge on the basis of religion. The only interest asserted by the State in the instant case is "[t]he historical importance of peremptory strikes." State's Brief pg. 23. The State contends, and we agree, that peremptory challenges further our need for a "qualified and impartial jury," and enable the parties to ascertain and act upon the possibility of bias. States Brief pg. 26. And we agree that peremptory challenges facilitate the impaneling of an impartial and unbiased jury. State's Brief, pg. 27. However, as the Supreme Court noted in J.E.B.,
... In making this assessment, we do not weigh the value of peremptory challenges as an institution against our asserted commitment to eradicate invidious discrimination from the courtroom. Instead, we consider whether peremptory challenges based on [religious] stereotypes provide [essential] aid to a litigant's efforts to secure a fair and impartial jury.[16]
*480 J.E.B., ___ U.S. at ___-___, 114 S.Ct. at 1425-26 (footnotes omitted).
The State offers no other reason, much less a compelling reason, to justify the discriminatory classification of veniremembers on the basis of religion. As with race and gender, religious affiliation is not an accurate predictor of jurors' attitudes. As the Supreme Court stated:
... In our heterogeneous society policy as well as constitutional considerations militate against the divisive assumptionas a per se rulethat justice in a court of law may turn upon the pigmentation of the skin, the accident of birth, or the choice of religion.
McCollum, 505 U.S. at 59, 112 S. Ct. at 2359 (emphasis added, quoting Ristaino v. Ross, 424 U.S. 589, 596, n. 8, 96 S. Ct. 1017, 1021, n. 8, 47 L. Ed. 2d 258 (1976)). Consequently, we hold religion simply may not serve as a proxy for constitutionally prohibited bias. See, J.E.B., ___ U.S. at ___, 114 S.Ct. at 1430.
B.
The Equal Protection Clause's prohibition of peremptory challenges based upon religion does not herald the end of peremptory challenges. As the McCollum Court eloquently stated:
We do not believe that this decision will undermine the contribution of the peremptory challenge to the administration of justice. Nonetheless, "if ... stereotypes are the price for acceptance of the jury panel as fair" we reaffirm today that such a "price is too high to meet the standard of the Constitution." ... It is an affront to justice to argue that a fair trial includes the right to discriminate....
McCollum, 505 U.S. at 57, 112 S. Ct. at 2358 (quoting Edmonson, 500 U.S. at 629-31, 111 S. Ct. at 2088).
Parties may still challenge veniremembers whom they feel are more prone to bias than other members of the jury panel. As the Supreme Court stated in J.E.B., a properly conducted voir dire "can inform litigants about potential jurors, making reliance upon stereotypical and pejorative notions about a particular [religious group] unnecessary and unwise." Id., ___ U.S. at ___, 114 S.Ct. at 1429. However, the exclusion of such veniremembers must be based upon bias held by the individual veniremember, not a perceived bias which arises solely as a result of the veniremember's race, gender or religion. See, n. 15, supra.
VI.
PRESERVATION OF CLAIM
The Supreme Court has developed a procedure to present claims of violations of the Equal Protection Clause when peremptory challenges are exercised on the basis of race or gender. We believe this framework should be applied when peremptory challenges are allegedly used to discriminate on the basis of religion. To prove a violation of the Equal Protection Clause, a litigant must make a prima facie showing of discriminatory classifications based upon religion. Batson, 476 U.S. at 96-97, 106 S. Ct. at 1723. Once a prima facie case is made, the burden shifts to the opposing party to provide religion-neutral reasons for the peremptory challenge. Id. Such a justification need not rise to the level of a challenge for cause; rather it merely must be based on a juror characteristic other than religion, and the proffered explanation may not be pretextual. Hernandez v. New York, 500 U.S. 352, 111 S. Ct. 1859, 114 L. Ed. 2d 395 (1991).
VII.
CONCLUSION
As with any constitutionally prohibited stereotype, the use of religion as a basis for exercising a peremptory challenge harms both the excluded veniremember and the judicial system. If we were to allow religionbased peremptory challenges, the Equal Protection Clause's fundamental guarantee that the government will treat Americans as individuals rather than stereotypical components of a religious class would be meaningless. A juror sits not as a representative of a racial, religious, or sexual group but as an individual *481 citizen. J.E.B., ___ U.S. at ___, 114 S.Ct. at 1434 (Kennedy, J., concurring). The individual citizen's opportunity to participate in the fair administration of justice is fundamental to our democratic system and reaffirms the promise of equality under the law. All persons, when granted the opportunity to serve on a jury, have the right not to be excluded summarily because of discriminatory and stereotypical presumptions that reflect and reinforce patterns of historical discrimination. J.E.B., ___ U.S. at ___, 114 S.Ct. at 1428. When persons are excluded from participation in our democratic processes because of race, religion or gender the promise of equality dims, and the integrity of our judicial system is jeopardized. J.E.B., ___ U.S. at ___, 114 S.Ct. at 1430.
The judgment of the Court of Appeals is reversed and this case is remanded to that Court for further proceedings consistent with this opinion.[17]
CLINTON, J., joins the opinion of the Court, observing that this decision as well as others by the Supreme Court serve to render obsolete Tex.Code Crim.Proc.Ann. art. 35.261, so the Legislature would be well advised to revise the same.
MALONEY, J., concurs in the result.
McCORMICK, Presiding Judge, dissenting.
At the risk of being accused of attempting to retard "efforts to progress as a multicultural society," I dissent. The majority opinion represents yet another step backwards in the important business of insuring fair trials in criminal cases for what is perceived to be the "greater good" of making sure people do not exercise peremptory challenges based on improper thoughts.
So we do not completely lose our focus here, I briefly set out the facts of the case. The evidence shows the twenty-one-year-old appellant and his friend sexually assaulted a fourteen-year-old girl, who testified she never had had sexual intercourse prior to this incident. During the assault, appellant threatened the victim more than once, he punched her in the nose and appellant's friend cut off her shirt with a knife. Appellant and his friend did unspeakably horrible things to the child-victim.
Contrary to the majority's assertion, the voir dire record in this case actually reflects the prosecutor struck one of the veniremembers because she had "a brother currently in the Texas penitentiary, she was a postal clerk and she expressed discomfort with the law as it regards sexual assault of a child." Casarez v. State, 857 S.W.2d 779, 782 (Tex.App.Fort Worth 1993). The prosecutor struck the other veniremember because his "brother had been arrested, he incorrectly completed his juror questionnaire, and the questioning during voir dire left the prosecutor with the impression that he was somewhat slow." Id. The prosecutor struck both veniremembers also because they were Pentecostals. Id. The prosecutor explained that based on his experience, Pentecostals often had difficulty assessing punishment. Id. On this record, the peremptory challenges were proper, and this Court does not need to decide whether Batson should be extended to "religious-based" peremptory challenges.[1] Cf. Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986); Hill v. State, 827 S.W.2d 860, 866-68 (Tex.Cr. App.) (plurality op.), cert. denied, 506 U.S. 905, 113 S. Ct. 297-98, 121 L. Ed. 2d 221 (1992) (race properly may be a factor coexisting with a nonracial reason for a peremptory *482 strike); Casarez, 857 S.W.2d at 788-89 (Hopkins, J., concurring).
I also dissent to the majority's apparent holding that religious-based peremptory challenges are subject to strict scrutiny review under the Equal Protection Clause of the Fourteenth Amendment. The applicable rule is that "unless a classification warrants some form of heightened review because it jeopardizes [the] exercise of a fundamental right or categorizes on the basis of an inherently suspect characteristic, the Equal Protection Clause requires only that the classification rationally further a legitimate state interest." Nordlinger v. Hahn, 505 U.S. 1, 10, 112 S. Ct. 2326, 2332-33, 120 L. Ed. 2d 1 (1992).[2]
The majority seems to find that religiousbased peremptory challenges violate the First Amendment triggering a strict scrutiny review. The majority mostly relies on United States Supreme Court First Amendment cases dealing with statutes that burdened a group's free exercise of its religion. However, in this case, the majority does not, and cannot, explain how religious-based peremptory challenges, directly or incidentally, burden the free exercise of religion. See Johnson v. Robison, 415 U.S. 361, 375, 94 S. Ct. 1160, 1169, 39 L. Ed. 2d 389 (1974). At most, appellant can show only that some members of some religious groups may be excluded from sitting on juries in some, but not all, cases. And, the stricken veniremembers in this case offered no evidence the exercise of their religion was in any way affected by the strikes.[3]
The majority also cites Larson v. Valente, 456 U.S. 228, 102 S. Ct. 1673, 72 L. Ed. 2d 33 (1982). Larson held a Minnesota statute that granted a denominational preference implicated the Establishment Clause of the First Amendment because the statute preferred "one religion over another." Larson, 456 U.S. at 245-56, 102 S. Ct. at 1684-89. Religious-based peremptory challenges do not constitute governmental action preferring one religion over another; therefore, Larson offers no support for the majority's holding. But see J.E.B. v. Alabama, ___ U.S. ___, ___, 114 S. Ct. 1419, 1438, 128 L. Ed. 2d 89 (1994) (Scalia, J., dissenting).
The majority also relies on Juarez v. State, 277 S.W. 1091 (1925). Juarez stands only for the proposition that a state may not systemically exclude all members of religious groups from ever serving as grand jurors. Juarez, 277 S.W. at 1094. Juarez is factually distinguishable from this case. In addition, Juarez contains no standard for reviewing religious classifications, and the purposes for the religious classifications in Juarez would not withstand even a "rational relationship" standard of review. See Bankers Life and Cas. Co. v. Crenshaw, 486 U.S. 71, 82-84, 108 S. Ct. 1645, 1653, 100 L. Ed. 2d 62 (1988) (singling out a cognizable group in an arbitrary and irrational fashion violates the Equal Protection Clause even under the most deferential standard of review).
Religious-based peremptory challenges do not violate the Establishment or the Free Exercise Clauses of the First Amendment, and it has never been held that any religious group is a "suspect class deserving special judicial protection" for Fourteenth Amendment purposes. See Massachusetts Bd. of Ret. v. Murgia, 427 U.S. 307, 313, 96 S. Ct. 2562, 2566-67, 49 L. Ed. 2d 520 (1976) (a "suspect class" is one "saddled with such disabilities, or subjected to such a history of purposeful unequal treatment, or relegated to such a position of political powerlessness as to command extraordinary protection from the majoritarian political process"); Johnson, 415 U.S. 361, 375, 94 S. Ct. 1160, 1169. Therefore, I would hold religious-based peremptory *483 challenges are not subject to strict scrutiny review.[4]
Also, because the history of religious discrimination in this Country does not occupy the same plane as the history of race and sex discrimination, I would hold that religiousbased peremptory challenges should be reviewed under a less exacting standard than either strict or intermediate scrutiny, and that a party's valuable right in obtaining a fair and impartial jury, and a jury the party believes is fair and impartial, justifies the use of peremptory challenges based on religious stereotypes.[5] See State v. Davis, 504 N.W.2d 767 (Minn.1993), cert. denied, ___ U.S. ___, 114 S. Ct. 2120, 128 L. Ed. 2d 679 (May 23, 1994) (Batson not extended to religious-based peremptory challenges); cf. J.E.B., ___ U.S. at ___, 114 S.Ct. at 1429; but see J.E.B., ___ U.S. at ___, 114 S.Ct. at 1439 (Scalia, J., dissenting) (Batson applies to any peremptory challenge based on a classification that is accorded "heightened scrutiny" under the Equal Protection Clause "which presumably would include religious belief'). Therefore, religious-based peremptory challenges should be exempted from the "special rule of relevance" of Batson and the subsequent cases it spawned extending this rule to other situations. See Davis, 504 N.W.2d at 771.[6]
*484 I also urge that the social experiment started in Batson be aborted, and that both parties in a criminal case be allowed the traditional free use of their peremptory challenges. See J.E.B., ___ U.S. at ___-___, 114 S.Ct. at 1431-33 (O'Connor, J., concurring), and at 1437 (Scalia, J., dissenting); see generally Weatherspoon, 514 N.W.2d at 270-301. This is necessary to help insure fair and impartial juries for both sides in criminal cases, which is still supposed to be one of the paramount goals of a criminal trial.[7] See J.E.B., ___ U.S. at ___-___, 114 S.Ct. at 1431-33 (O'Connor, J., concurring); Weatherspoon, 514 N.W.2d at 270-301. Fair criminal trials are too important to the administration of justice in this State for the kind of nonsense Batson and its progeny promote. See Weatherspoon, 514 N.W.2d at 270-301, 274.
Batson and its progeny should be read in light of this Country's history of racial discrimination, and the precedents upon which Batson relies. In the light of this history and these precedents, Batson and its progeny are fundamentally flawed because they ignore the real purpose of the Equal Protection Clause, and the valid purposes for which peremptory challenges presently are exercised. Batson and its progeny pervert this Country's quest for racial equality and an end to legal segregation in the really important affairs of public life into a misguided and counter-productive exercise of which private thoughts the Constitution will tolerate, and which private thoughts it will not tolerate. See J.E.B., ___ U.S. at ___, 114 S.Ct. at 1438 (Scalia, J., dissenting).
The central purpose of the Fourteenth Amendment's Equal Protection Clause "is the prevention of official conduct discriminating on the basis of race." Washington v. Davis, 426 U.S. 229, 239, 96 S. Ct. 2040, 2047, 48 L. Ed. 2d 597 (1976).[8] The Equal Protection Clause is intended to prevent disparate treatment by all the resources of a state of cognizable racial groups which is "motivated by racial considerations" or a "purpose or intent to segregate."[9]Davis, 426 U.S. at 240, 96 S. Ct. at 2048. An "invidious" racially discriminatory purpose or an intent to segregate must exist to implicate the Equal Protection *485 Clause.[10] See Davis, 426 U.S. at 238-44, 96 S. Ct. at 2047-49. "Discriminatory purpose" implies "more than intent as volition or intent as awareness of consequences;" it implies that the sovereign "selected or reaffirmed a particular course of action in part because of, not merely in spite of, its adverse effects upon an identifiable group."[11]Personnel Administrator of Massachusetts v. Feeney, 442 U.S. 256, 278-80, 99 S. Ct. 2282, 2296, 60 L. Ed. 2d 870 (1979) (internal quotation marks omitted).
Batson seemed to reaffirm this understanding of the Equal Protection Clause because Batson only attempted to lessen a defendant's burden of proof in establishing a prima facie case of invidious racial discrimination in the prosecution's use of its peremptory challenges than what existed under prior law. See Batson, 476 U.S. at 83-101, 106 S. Ct. at 1716-25. In Batson, the defendant was black, the prosecution peremptorily struck every black veniremember, and a "jury composed only of white persons was selected."[12]Batson, 476 U.S. at 83, 106 S. Ct. at 1715. Now, under Batson, at least as this Court has interpreted it, a defendant can make a prima facie case of invidious racial discrimination in the prosecution's use of its peremptory challenges even where members of the defendant's race actually serve on the jury. See, e.g., Keeton v. State, 749 S.W.2d 861, 862-63 (Tex.Cr.App.1988); but cf. Akins v. Texas, 325 U.S. 398, 405, 65 S. Ct. 1276, 1280, 89 L. Ed. 1692 (1945).
Batson and its progeny, in effect, now say it violates Equal Protection for a party to exercise peremptory challenges based solely on racial and sexual stereotypes, which abandons the traditional Equal Protection inquiry into whether peremptory challenges are motivated by invidious discriminatory purposes. See J.E.B., ___ U.S. at ___, 114 S.Ct. at 1426-30. But, Batson was an extension of Strauder v. West Virginia, 100 U.S. 303, 25 L. Ed. 664 (1880), which invalidated a West Virginia statute that excluded all black people from the initial impanelment of the venire pool. See also Swain v. Alabama, 380 U.S. 202, 85 S. Ct. 824, 13 L. Ed. 2d 759 (1965). And, Swain, which Batson later overruled, addressed a practice where prosecutors peremptorily struck every black person in every case so that no black person ever sat on a petit jury.[13] See Swain, 380 U.S. at 222-29, 85 S. Ct. at 837-40; see also Weatherspoon, 514 N.W.2d at 273, 284. Even J.E.B. relies *486 on cases where women were totally excluded from the initial impanelment of the jury venire, voting and other forms of "civic life." J.E.B., ___ U.S. at ___-___, 114 S.Ct. at 1422-26. These precedents dealt with state action motivated by invidious discriminatory purposes that generally affected "cognizable groups."[14]
These jury selection practices do not occur now. States do not systemically exclude blacks and women from ever sitting on juries, and parties do not exercise peremptory challenges for invidious discriminatory purposes; they exercise them to win their case. See, e.g., J.E.B., ___ U.S. at ___, 114 S.Ct. at 1437 (Scalia, J., dissenting) (the pattern of peremptory challenges displayed not a systemic sex-based animus but each side's desire to get a jury favorably disposed to its case); Swain, 380 U.S. at 222-23, 85 S. Ct. at 837 (acceptable considerations in exercising peremptory challenges are those related to the particular case, the particular defendant involved, and the particular crime charged); Weatherspoon, 514 N.W.2d at 286-301. When a party exercises a peremptory on a veniremember based on a group stereotype, he does so usually because he feels the veniremember will be biased in favor of the other side, a valid purpose, and not because it is his "purpose or intent to segregate" or to keep all members of that veniremember's racial or sexual group from ever sitting on a jury, an invidious discriminatory purpose.[15] See, e.g., Swain, 380 U.S. at 218-22, 85 S. Ct. at 835-36 (one purpose of the peremptory challenge is to eliminate extremes of impartiality on both sides).[16] Peremptory challenges so motivated surely do "not violate the sovereign's duty to govern impartially." See F.C.C. v. Beach Communications, Inc., 508 U.S. 307, 323, 113 S. Ct. 2096, 2106, 124 L. Ed. 2d 211 (1993) (Stevens, J., concurring).
Even the stereotypes upon which peremptory strikes are based are different from the "officially disapproved" stereotypes set out in many of the cases upon which Batson and J.E.B. rely. The primary evil identified in these cases was classifications, which were usually statutory, that served "to ratify and perpetuate invidious, archaic, and overbroad stereotypes about the relative abilities of men and women" and whites and blacks. See J.E.B., ___ U.S. at ___, 114 S.Ct. at 1422. But now, peremptory challenges based on race and sex-based stereotypes usually have something to do with the particular case which causes the lawyer to believe the veniremember will not be a fair and impartial juror. These challenges are not based on any stereotypes about the relative abilities of men and women and blacks and whites, and this practice does not "reinforce the same stereotypes about [blacks' and womens'] competence *487 or predispositions that have been used to prevent them from voting, participating on juries, pursuing their chosen professions, or otherwise contributing to civic life." See J.E.B., ___ U.S. at ___ fn. 14, 114 S. Ct. at 1428 fn. 14; Batson, 476 U.S. at 85-86, 106 S. Ct. at 1717 (it violates Equal Protection to exclude members from the jury venire on account of race based on the false assumption that members of that race as a group are not qualified to serve as jurors); Weatherspoon, 514 N.W.2d at 270-301.
Peremptory challenges, as they are used now, should not be held to be based on constitutionally impermissible purposes or constitutionally impermissible thoughts.[17] Cases like Batson and J.E.B. ill-advisedly apply precedents involving the systemic exclusion of blacks and women from ever sitting on juries to situations where these practices do not occur. Compare Batson, 476 U.S. at 86-88, 106 S. Ct. at 1718, with, Batson, 476 U.S. at 120-24, 106 S. Ct. at 1736-37 (Burger, C.J., dissenting). Most Equal Protection precedents deal with statutory classifications that generally affected all members of an identifiable group. No one would argue it violates Equal Protection for a statute to treat members of all groups more or less the same, although not with exact mathematical precision. This is how peremptory challenges operate since members of all groups in all cases are subject to a peremptory challenge based on a stereotype about that group. See J.E.B., ___ U.S. at ___, 114 S.Ct. at 1437 (since all groups are subject to the peremptory challenge, it is hard to see how any group is denied equal protection). And, although members of a particular group may not serve on a jury in a particular case, they do serve on juries in other cases. This is all the Constitution should require.[18]
The use of peremptory challenges are not motivated by race or sex discrimination as such, and they cannot "ultimately be traced to a racially discriminatory purpose" of the type the Equal Protection Clause was really meant to prohibit. See Batson, 476 U.S. at 92-94, 106 S. Ct. at 1721 (the `invidious quality' of governmental action claimed to be racially discriminatory `must ultimately be traced to a racially discriminatory purpose'). Batson and its progeny cross the line from preventing the systemic exclusion of "cognizable groups" from ever sitting on a petit jury to making sure people "think right." See Weatherspoon, 514 N.W.2d at 276, 278.
Also, it cannot be overemphasized that the time-tested, traditional free use of the peremptory challenge is a valuable right to both sides in a criminal trial:
"The principal value of the peremptory is that it helps produce fair and impartial juries. (Citations Omitted) Peremptory challenges, by enabling each side to exclude those jurors it believes will be most *488 partial toward the other side, are a means of eliminat[ing] extremes of partiality on both sides, thereby assuring the selection of a qualified and unbiased jury. (Citation Omitted) The peremptory's importance is confirmed by its persistence: it was well established at the time of Blackstone and continues to endure in all the States." J.E.B., ___ U.S. at ___, 114 S.Ct. at 1431 (O'Connor, J., concurring).
The peremptory by its nature is "an arbitrary and capricious right; and it must be exercised with full freedom, or it fails of its full purpose (citations omitted)." J.E.B., ___ U.S. at ___, 114 S.Ct. at 1438 (Scalia, J., dissenting) (emphasis supplied); see also J.E.B., ___ U.S. at ___, 114 S.Ct. at 1431 (O'Connor, J., concurring) (essential nature of the peremptory challenge is that it is one exercised without a reason stated, without inquiry and without being subject to the court's control); Batson, 476 U.S. at 122-24, 106 S. Ct. at 1737 (Burger, C.J., dissenting).
With an understanding of the value of the peremptory challenge and the valid purposes for which it is used, the free use of peremptory challenges should withstand even strict scrutiny equal protection analysis. See Weatherspoon, 514 N.W.2d at 281 (free use of peremptory challenges should take precedence over social experiments in jury selection). But, it does not, and we must ask for what important reason, besides making sure peremptory challenges are not based on improper thoughts, the Supreme Court continues to limit the traditional free use of peremptory challenges. Does the free use of peremptory challenges deprive a defendant of a fair trial? Does the practice of totally excluding blacks and women or other "cognizable groups" from the initial impanelment of the venire continue? Are parties using their peremptories to strike blacks and women or other members of "cognizable groups" in every case so that they will never sit on a petit jury?
The answer to all of these questions, of course, is, "no." See, e.g., Holland v. Illinois, 493 U.S. 474, 480-488, 110 S. Ct. 803, 807-11, 107 L. Ed. 2d 905 (1990) (peremptory challenges based on racial stereotypes do not produce an unfair jury, and in some circumstances it may increase fairness); see also Powers, 499 U.S. at 425-27, 429-31, 111 S. Ct. at 1379, 1381 (Scalia, J., dissenting) (Batson error entitles the guilty to relief even though the error has not harmed them); Batiste v. State, 888 S.W.2d 9 (Tex.Cr.App.1994) (Mot. for reh'g filed October 31, 1994). And, many blacks and women in this Country serve on juries, vote and otherwise participate in civic life; they did so when Batson was decided, and they will continue to do so with or without Batson.
The expressed justifications advanced for continuing to limit a party's valuable right to freely use his peremptory challenges are that a veniremember who is peremptorily struck based on a group stereotype might get his feelings hurt and the community as a whole might lose its respect for the criminal justice system; these are the reasons the important business of a criminal trial has become a sideshow to "mini-Batson" hearings. See J.E.B., ___ U.S. at ___, 114 S.Ct. at 1439; Weatherspoon, 514 N.W.2d at 289. However, "hurt feelings" should not outweigh a party's important right to freely exercise his peremptory challenges. And, it borders on the absurd to extend precedents dealing with invidious, systemic discrimination against blacks and women in the important affairs of public life to protect people from "hurt feelings."
Batson and its progeny also will produce juries that the parties do not believe are truly impartial which can only diminish confidence in the criminal justice system. See Weatherspoon, 514 N.W.2d at 286. The real justification for Batson and its progeny is that peremptory challenges, including those not exercised for invidious discriminatory purposes, should not be based on "improper" thoughts even if this time-tested practice helps produce fair trials, and even if there is some measure of truth to these "improper" thoughts.[19] See J.E.B., ___ U.S. at ___ f.n. 11, 114 S. Ct. at 1427 f.n. 11.
Finally, as a practical matter, Batson and its progeny should be discarded because the truth of human experience makes it impossible *489 to follow them. See Weatherspoon, 514 N.W.2d at 297 (Batson hurts a defendant, humiliates the two attorneys by making them play "let's pretend," and frustrates the trial court by making it judge the pretend and not the truth). Lawyers use laundry lists of "whatever-neutral" explanations to plug into the second-step of the Batson "three-step danse macabre," and these laundry lists are even taught at CLE seminars. See Weatherspoon, 514 N.W.2d at 287, 297. When the judicial resources in resolving Batson claims at the trial and appellate levels are considered, the dubious benefits we reap under Batson and its progeny are just "not worth the candle."
Batson and its progeny should be discarded. Meanwhile, litigators who don't think right had better watch out because the thought police might come for you and your clients next, and law-abiding citizens should understand their safety may be at risk for the folly of Batson. See Powers, 499 U.S. at 429-31, 111 S. Ct. at 1381-82 (Scalia, J., dissenting). With respect to the facts of this case, the victim may relive her experience on retrial secure in the knowledge that some "greater good" is being accomplished.
CAMPBELL, J., joins paragraph 3 of this dissent.
WHITE, Judge, dissenting.
I realize that Justice Hopkins' concurring opinion is published below; however, I want to quote it verbatim as it is "right on the mark" in this case:
"In Hill v. State, 827 S.W.2d 860 (Tex. Crim.App.1992), the majority opinion[1] contained the following: `[R]ace may be a factor coexisting with nonracial reason for a strike, however, race may not be the reason for the strike.' Id. at 866 (emphasis added). `[A]ppellant must show that the prosecutor's other explanations for his challenge were merely a pretext for discrimination.' Id. at 869.
"Texas has not adopted the so-called `bright-line' rule suggested in Judge Baird's concurring opinion in Hill. Id. at 875 (Baird, J., concurring).
Applying the rationale set forth by the majority in Hill, should the Batson prohibition against racial discrimination in the exercise of peremptory challenges later be extended to include prohibition against religious discrimination, as suggested by Chief Justice Hill in the dissenting opinion, I would follow Hill, supra, and hold that religious beliefs or affiliation as reasons for strikes may co-exist with nonreligious and nonracial reasons in the exercise of strikes. In the present case, the State, in my view, enunciated sufficient nonracial and nonreligious reasons for the exercise of the State's strikes of the two black, Pentecostal venirepersons, including the fact that one's brother was currently incarcerated and the venireperson expressed discomfort with the law applicable to the offenses charged, i.e., aggravated sexual assault and sexual assault of a child. The appellant did not show that these explanations were merely a pretext for discrimination.
"It should be noted that one of the venirepersons struck appeared as number thirty-three on the list, and that the twelve jurors were obtained from the first thirtytwo venirepersons. Although the prosecutor gave similar nonracial and nonreligious reasons for striking number thirty-three, none were required because striking number thirty-three did not have an impact on the composition of the jury since the jurors were obtained from the first thirty-two members of the venire panel, nor did it deprive venireperson number thirty-three the privilege of service on the jury. See Gambel v. State, 835 S.W.2d 788, 791 (Tex. App.Houston [14th Dist.] 1992, no pet.); Rodriguez v. State, 832 S.W.2d 727, 729 (Tex.App.Houston [1st Dist.] 1992, no pet); Henderson v. State, 816 S.W.2d 845, 848 (Tex.App.Fort Worth 1991, no pet.)."
Casarez v. State, 857 S.W.2d, at 788-789.
The majority opinion never reveals all of the facts regarding the other reasons the prosecutor gave for striking the prospective jurors and does not address the fact that one *490 prospective juror was never reached. In a letter brief to this Court responding to appellant's petition for review, the State urged this Court to reject appellant's arguments because he failed to "question the analysis of the concurring opinion below", noting that several of the justifications offered by the State for its strikes were "unchallenged and clearly proper." After this Court granted appellant's petition, the State argued in its reply brief that appellant failed to show that the two strikes were made solely on an allegedly impermissible basis, citing Hill v. State, 827 S.W.2d 860.
Similarly, the State also argued before this Court in Hill v. State that even if one of the factors relied upon to establish identity is shared race, it also offered reasons for its strike which were non-racial and established identity. Hill, at 866. The plurality opinion in Hill addressed this argument, holding that "race may be a factor co-existing with a nonracial reason for the strike", id. In contrast, Judge Baird has chosen to ignore the State's argument in the instant case, as he chose to ignore the State's argument in his concurring opinion in Hill v. State. The plurality opinion is all "SMOKE AND MIRRORS."
I respectfully dissent.
MEYERS, Judge, dissenting.
According to syndicated columnist James Kilpatrick, defense attorney Clarence Darrow's jury selection methods were profoundly influenced by racial, sexual, and religious stereotypes. Darrow preferred Irishmen on his juries because he thought them to be "emotional, kindly and sympathetic." He also "wanted Unitarians, Universalists, Jews and agnostics [, but] ... distrusted women."[1]
While it might once have been considered routine to pick jurors as Darrow did, based mainly on criteria such as these, the practice is now constitutionally risky. Indeed, two of the three criteria mentioned here have already been condemned by the United States Supreme Court as offensive to the Equal Protection Clause of the Fourteenth Amendment. The question we decide today is whether the third also violates fundamental principles of fairness and equality.
After giving the matter due consideration, I am not persuaded that the United States Constitution forbids peremptory removal of prospective jurors on account of their religion, as it does on account of their race or sex. A majority of this Court, however, is induced to a contrary opinion by its reading of J.E.B. v. Alabama ex rel. T.B., 511 U.S. ___, 114 S. Ct. 1419, 128 L. Ed. 2d 89 (1994), the United States Supreme Court's most recent struggle with the constitutional status of peremptory challenges. See also Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986). In an already obtuse area, the Court's reasoning in J.E.B. is even more difficult than usual to pry loose of its rhetorical matrix.
Does the Equal Protection Clause prohibit merely "state-sponsored group stereotypes rooted in, and reflective of, historical prejudice?" 511 U.S. at ___, 114 S.Ct. at 1421. Or does it forbid any irrational "proxy for juror competence and impartiality?" Id. Is a discriminatory classification unconstitutional only when it "serves to ratify and perpetuate invidious, archaic, and overbroad stereotypes?" Id. at ___, 114 S.Ct. at 1422. Or is any classification illegal that irrationally presumes certain persons "unqualified ... to decide important questions upon which reasonable persons could disagree?" Id. at ___, 114 S.Ct. at 1428.
I do not know the answers to these questions, and extracting them from J.E.B. is so confusing and uncertain a process that I am willing to claim very little confidence in my own conclusions. The majority herein focusses on the history of religious discrimination in America, just as J.E.B. focussed on the history of sexual discrimination, concluding that, because religious classification in the law is subject to strict, or at least heightened, scrutiny under the United States Constitution, a peremptory challenge exercised on the basis of religious affiliation *491 is constitutionally indistinguishable from a peremptory challenge exercised on the basis of race or sex. See Larson v. Valente, 456 U.S. 228, 244-246, 102 S. Ct. 1673, 1683-85, 72 L. Ed. 2d 33 (1982); Davis v. Minnesota, ___ U.S. ___, 114 S. Ct. 2120, 128 L. Ed. 2d 679 (1994) (Thomas, J., dissenting). This process of reasoning is similar to that employed by the Supreme Court in J.E.B., and perhaps it is even correct. But my own interpretation of J.E.B. suggests that the Supreme Court contemplates a difference between religious discrimination and racial or sexual discrimination which permits us to regard them differently for purposes of the jury selection process. The overriding distinction that I have settled on is that religion, unlike race and sex, is typified by an official creed.
With few exceptions, the only significant matter that members of a religious faith genuinely have in common is their belief in certain principles, doctrines, or rules. To the extent that religious believers have historically been the objects of discrimination, it is because of their beliefs and not on account of anything else. Yet discrimination on the basis of personal belief has always been considered appropriate in the jury selection context because a veniremember's beliefs reveal especially important information about his suitability for jury service. Certain religious beliefs tell us what his sympathies and prejudices are.
Persons of the same race or sex, on the other hand, are not distinguished by their beliefs, attitudes, or convictions. Because all varieties of political, moral, and religious tenets are commonly shared by people of many different races and by those of both sexes, race and sex clearly do not reveal anything especially relevant about a prospective juror's beliefs. In short, discrimination against race and sex in American history was never based upon the proposition, rational or otherwise, that women and racial minorities subscribe to a disagreeable or undesirable belief system.
To hold, therefore, that a veniremember may not be excluded on account of his religious preference is tantamount to a holding that he may not be struck on account of his beliefs. If pursued to its logical conclusion, such a holding would undercut the essential features of our jury selection system altogether because our form of government protects not only religious belief, but all manner of political, moral, social, and scientific conviction as well. The treatment of religious creed as an inappropriate basis for peremptory exclusion cannot rationally be distinguished from a similar treatment of persons on account of their Libertarian politics, their advocacy of communal living, or their membership in the Flat Earth Society.
I am aware, of course, that J.E.B. limits application of the Batson rule to an exclusion of persons on account of a classification traditionally used for irrational discrimination in our culture. Plainly, libertarians, hippies, and flat-earthers have not been the subject of such historic discrimination, and I would not trivialize the profound social disabilities under which women and racial minorities were made to suffer in this country by comparing their history to that of an odd subculture. But, try as I may, I cannot reconcile the extension of Batson to religious belief without also extending it to constitutionally protected beliefs of other kinds. And, in turn, I cannot make myself accept that a veniremember's belief, religious or otherwise, is an inappropriate subject for inquiry during jury selection or an impermissible basis for the exercise of peremptory strikes. In my view, if it is permissible to discriminate against prospective jurors on account of their beliefs, then it is necessarily permissible to discriminate against them on account of their religion, for discrimination on the basis of religion is discrimination on the basis of belief.
The Supreme Court emphasized that its holding in J.E.B. "does not imply the elimination of all peremptory challenges." 511 U.S. at ___, 114 S.Ct. at 1420. One consequence of this holding is that litigants may continue to discriminate on the basis of classifications not subject to strict or heightened equal protection scrutiny. It does not follow, however, that discrimination on the basis of every classification subject to such scrutiny is necessarily forbidden. For a peremptory challenge to be objectionable under the Equal Protection Clause, according to J.E.B., it *492 must not only be based upon a classification subject to strict or heightened scrutiny, but it must also ratify or perpetuate "invidious, archaic, and overbroad stereotypes." 511 U.S. at ___, 114 S.Ct. at 1422
Attributing to women or African Americans as a group any specific moral, political, or social belief is overly broad because membership in the group does not depend upon subscription to the belief. It is invidious because individual members who do not share the belief are made to suffer the attribution anyway. But in the case of religion, the attribution is not overly broad, and therefore not invidious, when the belief is an article of faith. Because all members of the group share the same faith by definition, it is not unjust to attribute beliefs characteristic of the faith to all members of the group.
Whatever may be said against the system of picking trial juries by striking individuals from a panel of eligible citizens, the practice is deeply entrenched in the American legal process, prescribed by Texas statute law, and constitutionally unobjectionable to the United States Supreme Court. Insofar as the practice was abused and has now largely been remedied by Batson and J.E.B., the State of Texas may not permit the peremptory exclusion of jurors on the basis of irrational prejudices which violate the Equal Protection Clause. But I do not read Supreme Court jurisprudence yet to condemn exclusion on the basis of belief.
For the reasons given above, I would affirm the judgment of the Fort Worth Court of Appeals.
Before the court en banc.
OPINION ON STATE'S MOTION FOR REHEARING OF APPELLANT'S PETITION FOR DISCRETIONARY REVIEW
[December 13, 1995]
MEYERS, Judge.
Famed defense attorney Clarence Darrow's jury selection methods were keenly influenced by racial, sexual, and religious stereotypes. He preferred Irishmen because he thought them to be "emotional, kindly and sympathetic." Clarence Darrow, Attorney for the Defense, Litigation, Winter 1981, at 41, 43 (1981), reprinted from Esquire Magazine (May 1936). He also liked "Unitarians, Universalists, Congregationalists, Jews and other agnostics." Id. at 43. But he distrusted women, having "formed a fixed opinion that they were absolutely dependable" and, therefore, unlikely to be sympathetic to the defense. Id. at 44.
While it might once have been considered acceptable to pick jurors as Darrow did, based mainly on criteria such as these, the practice is now constitutionally risky. Indeed, two of the three criteria mentioned here have already been condemned by the United States Supreme Court. Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986); J.E.B. v. Alabama ex rel. T.B., 511 U.S. ___, 114 S. Ct. 1419, 128 L. Ed. 2d 89 (1994). The question we decide today is whether the third also violates fundamental principles of fairness and equality.
Appellant in the instant cause was convicted of aggravated sexual assault and his punishment assessed at confinement in the penitentiary for twelve years. During voir dire, the prosecutor used two of his peremptory challenges to remove black veniremembers from the jury panel. Appellant objected, claiming that the challenges were racially motivated in violation of Batson. But the prosecutor replied that his motives were religious, not racial, and that he had opted to remove both veniremembers, not because they were black, but because they were members of the Pentecostal Church. Appellant then objected that peremptory exclusion from jury service on the basis of religion, like exclusion on the basis of race, is forbidden by the Equal Protection Clause of the United States Constitution. U.S. Const. amend. XIV. His objection was overruled by the trial judge without elaboration.
On direct appeal, appellant cited removal of the Pentecostals as a basis for reversing his conviction. He argued that the equal protection rationale of Batson, forbidding racially motivated peremptory challenges, is equally applicable to challenges motivated by religious prejudice. The Court of Appeals disagreed, however, concluding that the Supreme Court intended its holding in *493 Batson to apply only in the case of peremptory challenges based on race. Casarez v. State, 857 S.W.2d 779, 783-84 (Tex.App. Fort Worth 1993). We granted appellant's petition for discretionary review because it presents an important question, likely to recur, upon which the judges of the intermediate appellate court in this case disagreed. Tex.R.App.Proc. 200(c)(2), (4). On original submission, we sustained appellant's ground for review and remanded the cause to the Court of Appeals for further proceedings consistent with our opinion. But, on consideration of the State's motion for rehearing, we have decided that our original opinion misapprehended the constitutional significance of peremptory challenges based on criteria implicating First Amendment liberties. Accordingly, we now affirm the judgment of the Court of Appeals.
The Fourteenth Amendment to the United States Constitution provides that no State shall "deny to any person within its jurisdiction the equal protection of the laws." Yet the very process of governing requires discrimination. Laws, regulations, and practices of government, in order to achieve desirable social goals, must often classify people so that the official treatment each person receives is made to depend upon the class into which he falls. For example, able-bodied citizens may be required to serve in the armed forces, while the infirm are not. Implementation of the Equal Protection Clause therefore varies in each instance with the basis of the official classification.
In general, the government has broad discretion in the performance of its functions, and it may usually structure its laws in any way bearing some rational relationship to its legitimate purposes, even though an advantage or disadvantage may thereby inure to members of a certain class. Pennell v. City of San Jose, 485 U.S. 1, 14-15, 108 S. Ct. 849, 858-59, 99 L. Ed. 2d 1 (1981). But when the government classifies individuals on a basis historically used to enforce illegal or irrational group preferences or in such a way as to inhibit the exercise of basic constitutional rights, its discretion is more limited and its classifications require a more particularized and convincing justification. Thus, for example, an official classification based on race is strictly scrutinized and considered to be incompatible with equal protection principles unless there is a compelling reason for it. Wygant v. Jackson Board of Education, 476 U.S. 267, 106 S. Ct. 1842, 90 L. Ed. 2d 260 (1986). Similarly, discriminatory practices based on sex, while not held to so strict a standard, are nevertheless viewed with more than the usual level of suspicion and are prohibited unless substantially related to the accomplishment of an important government purpose. Mississippi University for Women v. Hogan, 458 U.S. 718, 724, 102 S. Ct. 3331, 3336, 73 L. Ed. 2d 1090 (1982).
The system according to which jurors are selected for service in the courts by allowing litigants to exercise peremptory challenges against individual veniremembers is a government practice subject to these equal protection rules. Edmonson v. Leesville Concrete Co., 500 U.S. 614, 618-28, 111 S. Ct. 2077, 2081-87, 114 L. Ed. 2d 660, 672-78 (1991). No party may exclude a prospective juror from service if the basis for exclusion is offensive to the United States Constitution. Georgia v. McCollum, 505 U.S. 42, 112 S. Ct. 2348, 120 L. Ed. 2d 33 (1992). Because peremptory challenges are an established and valuable part of the adversary system, however, preserving the right to this method of jury selection is a legitimate interest of the government. Batson, 476 U.S. at 98-99, 106 S. Ct. at 1723-24. Accordingly, most peremptory challenges are not constitutionally exceptionable. But the government's interest in a system of peremptory challenges is generally not great enough to support exclusion of persons from jury service on the basis of a classification which is subject to strict or heightened scrutiny under the Equal Protection Clause. It is for this reason that peremptory challenges based on race or sex violate the United States Constitution. J.E.B., 511 U.S. ___, 114 S. Ct. 1419, 128 L. Ed. 2d 89; Batson, 476 U.S. 79, 106 S. Ct. 1712; Swain v. Alabama, 380 U.S. 202, 85 S. Ct. 824, 13 L. Ed. 2d 759 (1965).
Whether a classification based on religious affiliation also meets the conditions for more *494 exacting examination under the Constitution, and if so whether it can survive such an examination, are the questions presented in the instant cause. The United States Supreme Court has not yet addressed this issue, although some members of the Court have expressed their individual views of the matter. Davis v. Minnesota, ___ U.S. ___, 114 S. Ct. 2120, 128 L. Ed. 2d 679 (1994) (Thomas, J., joined by Scalia, J., dissenting to denial of certiorari).
In breaking the barrier between classifications that merit strict equal protection scrutiny and those that receive what we have termed "heightened" or "intermediate" scrutiny, J.E.B. would seem to have extended Batson's equal protection analysis to all strikes based on the latter category of classificationsa category which presumably would include classifications based on religion. Cf. Larson v. Valente, 456 U.S. 228, 244-246, 72 LEd2d 33, 102 SCt 1673 [1683-1684] (1982); Batson, 476 US, at 124, 90 LEd2d 69, 106 SCt 1712 [at 1737] (Burger, C.J., dissenting). It is at least not obvious, given the reasoning in J.E.B., why peremptory strikes based on religious affiliation would survive equal protection analysis.
As Justice Thomas thus suggests, there is a plausible basis in constitutional jurisprudence for believing that official discrimination on the basis of religion should be treated the same as discrimination on the basis of sex for purposes of the Equal Protection Clause. But, unlike Justices Thomas and Scalia, we are not persuaded that the United States Constitution therefore necessarily forbids peremptory removal of prospective jurors on account of their religious affiliation. Although the basis for treating religion differently than race or sex under these circumstances may not be immediately apparent, we think it becomes clear on further reflection.
Laws which discriminate between individuals on the basis of their religious affiliation have not been the subject of much litigation under the Equal Protection Clause. This is undoubtedly because the United States Constitution protects persons from religious prejudice mainly by providing that the government "shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof[.]" U.S. Const. amend. I. See, e.g., Sherbert v. Verner, 374 U.S. 398, 83 S. Ct. 1790, 10 L. Ed. 2d 965 (1963). Long before the civil rights of racial minorities and women were recognized, and before ratification of the Fourteenth Amendment, a categorical prohibition against the disenfranchisement of any person on the basis of his religious belief was made by the First Amendment.
But the Equal Protection Clause is also a powerful disincentive to religious classification by the government, since discrimination on the basis of religious belief or affiliation not only interferes with the free exercise of religion by favoring one religion over another, but it also necessarily treats some individuals differently than others on account of their religious belief or practice. When this is so, the rights protected by the First and Fourteenth Amendments are virtually indistinguishable, and the constitutional analysis applicable to the government's religious classification is the same, whether raised as an equal protection claim or as a freedom of religion complaint. See Larson v. Valente, 456 U.S. 228, 102 S. Ct. 1673, 72 L. Ed. 2d 33 (1982).
Supreme Court precedent makes it clear that religious classifications are constitutionally impermissible unless there is an unusually persuasive, perhaps even a compelling, justification for them. Id. at 246-47, 102 S. Ct. at 1684-85. In the present context, of course, that justification begins with the now well-known and generally accepted proposition that peremptory challenges promote selection of a jury that will be fair and impartial to both parties. This objective is, of course, fundamental to the jury system as presently conceived. So long as our method of litigation is adversarial, it is essential not only that the triers of fact be neutral and objective, but that the parties perceive them to be so. Implementing the unarticulated individual preferences of the parties achieves this purpose in a way no other method can, because it permits them to evaluate the desirability of prospective jurors according to their own subjective criteria.
*495 But it is not ultimately the value of peremptory challenges "as an institution" that must be balanced against the evil of invidious discrimination. Rather, it is the extent to which peremptory challenges based on a particular classification actually make a significant contribution to securing a fair and impartial jury. J.E.B., 511 U.S. at ___-___, 114 S.Ct. at 1425-26. The use of peremptory challenges to exclude persons of a certain race or sex does not make such a contribution because the implication that such persons cannot be fair or will not be impartial implicitly attributes to them beliefs or attitudes on account of their race or sex which they may not actually hold. "Striking individual jurors on the assumption that they hold particular views simply because of their [race or] gender ... [therefore] denigrates the dignity of the excluded juror" without significantly improving the chances of fairness and impartiality on the jury. Id. at ___, 114 S.Ct. at 1428.
But excluding prospective jurors on the basis of their religious affiliation does promote fairness and impartiality on the jury. And it does so without denigrating the dignity of any individual veniremembers. With few exceptions, the only significant thing that members of a religious faith have in common is their belief in certain principles, doctrines, or rules. To the extent that they have historically been the objects of discrimination, it is on account of these beliefs and not on account of anything else. Yet discrimination on the basis of personal belief has always been considered appropriate in the jury selection context because a veniremember's beliefs reveal an especially important bit of information about his suitability for jury service. They tell us what some of his sympathies and prejudices are.
Persons of the same race or sex, on the other hand, are not distinguished by their beliefs, attitudes, or convictions. Because all kinds of political, moral, and religious tenets are commonly shared by people of many different races and by those of both sexes, race and sex clearly do not reveal much of anything about a prospective juror's beliefs. In short, discrimination against race and sex in American history was never based upon the proposition, rational or otherwise, that women and racial minorities subscribe to a disagreeable or undesirable belief system.
To hold, therefore, that a veniremember may not be excluded on account of his religious preference is tantamount to a holding that he may not be struck on account of his beliefs. If pursued with even modest rigor, such a holding would undercut the essential features of our jury selection system altogether because our form of government protects not only religious belief, but all manner of political, moral, social, and scientific conviction as well. See United States v. Villarreal, 963 F.2d 725 (5th Cir.1992), cert. denied 506 U.S. 927, 113 S. Ct. 353, 121 L. Ed. 2d 267 (peremptory exclusion of prospective jurors on account of political belief does not offend equal protection principles). The treatment of religious creed as an inappropriate basis for peremptory exclusion cannot rationally be distinguished from a similar treatment of persons on account of their Libertarian politics, their advocacy of communal living, or their membership in the Flat Earth Society.
We are aware, of course, that J.E.B. limits application of the Batson rule to an exclusion of persons on account of a classification traditionally used for irrational discrimination in our culture. Plainly, libertarians, hippies, and those who believe the earth is flat have not been the subject of such historic discrimination, and it would be insensitive to trivialize the profound social disabilities under which women and racial minorities were once made to suffer in this country by comparing their history to that of an odd subculture. But, try as we may, we cannot reconcile the extension of Batson to religious belief without also extending it to constitutionally protected beliefs of other kinds. And, in turn, we cannot make ourselves accept that a veniremember's belief, religious or otherwise, is an inappropriate subject for inquiry during jury selection or an impermissible basis for the exercise of peremptory strikes. If it is permissible to discriminate against prospective jurors on account of their beliefs, then it is necessarily permissible to discriminate against them on account of their religion, for *496 discrimination on the basis of religion is discrimination on the basis of belief.
The Supreme Court emphasized that its holding in J.E.B. "does not imply the elimination of all peremptory challenges." 511 U.S. at ___, 114 S.Ct. at 1429. One consequence of this holding is that litigants may continue to discriminate on the basis of classifications not subject to strict or heightened equal protection scrutiny. It does not follow, however, that discrimination on the basis of every classification subject to such scrutiny is necessarily forbidden. For a peremptory challenge to be objectionable under the Equal Protection Clause, according to J.E.B., it must not only be based upon a classification subject to strict or heightened scrutiny, but it must also fail to survive such scrutiny by ratifying or perpetuating "invidious, archaic, and overbroad stereotypes." 511 U.S. at ___, 114 S.Ct. at 1422.
Attributing to women or African Americans as a group any specific moral, political, or social belief is overly broad because membership in the group does not depend upon subscription to the belief. It is invidious because individual members who do not share the belief are made to suffer the attribution anyway. But in the case of religion, the attribution is not overly broad, and therefore not invidious, when the belief is an article of faith. Because all members of the group share the same faith by definition, it is not unjust to attribute beliefs characteristic of the faith to all of them.
Whatever may be said against the system of picking trial juries by striking individuals from a panel of eligible citizens, the practice is deeply entrenched in the American legal process, prescribed by Texas statute law, and constitutionally unobjectionable. Insofar as the practice has been compromised by Batson and J.E.B., the State of Texas may not permit the peremptory exclusion of jurors on the basis of irrational prejudices which violate the Equal Protection Clause. But we do not read Supreme Court jurisprudence yet to condemn exclusion on the basis of belief. We therefore hold that the interests served by the system of peremptory challenges in Texas are sufficiently great to justify State implementation of choices made by litigants to exclude persons from service on juries in individual cases on the basis of their religious affiliation.
For the reasons given above, the State's motion for rehearing is granted and the judgment of the Fort Worth Court of Appeals is affirmed.
McCORMICK, P.J., adhering to the views expressed in my dissenting opinion on original submission, I join the opinion of majority on rehearing.
CLINTON, OVERSTREET and MALONEY, JJ., dissent.
MANSFIELD, Judge, concurring.
I agree with the Court's conclusion that the Equal Protection Clause of the Fourteenth Amendment does not prohibit the State from peremptorily challenging a venireperson on the basis of religious belief. Accord State v. Davis, 504 N.W.2d 767 (Minn. 1993), cert. denied, ___ U.S. ___, 114 S. Ct. 2120, 128 L. Ed. 2d 679 (1994). I write separately to explain why I believe that conclusion is well-founded.
The Relevant Facts
Appellant, George Toby Casarez, was charged and found guilty by a jury of aggravated sexual assault. During the voir dire portion of appellant's trial, appellant objected to the prosecutor's peremptory challenges of two black venirepersons. Appellant contended that the challenges were racially motivated and thus prohibited by the Equal Protection Clause. See Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986). The prosecutor responded that he struck the venirepersons not because they were black but because, among other things, they were Pentecostals:
It's been my experience from a number of jury panels, in more than 70 felony jury trials and 27 misdemeanor jury trials, that people from that religion often have a problem in passing judgment on other persons, and that they often believe that that is a matter for God and not for man. And that they have trouble not so much, Your Honor, although some do, with the guilt *497 phase of the trial, but especially the punishment phase of the trial, and they are want towant probation rather than to be responsible, in their eyes, for sending someone to the penitentiary, thereby judging them.
Appellant, unimpressed by the prosecutor's race-neutral explanation, argued that the Equal Protection Clause also prohibited peremptory challenges on the basis of religious belief. The trial court allowed the peremptory challenges to stand, however.
On appeal, appellant reiterated his argument that the Equal Protection Clause forbade peremptory challenges on the basis of religion, but the Second Court of Appeals, sitting en banc, disagreed. Casarez v. State, 857 S.W.2d 779 (Tex.App.Fort Worth 1993). We granted appellant's petition for discretionary review to determine whether the court of appeals misinterpreted the requirements of the Equal Protection Clause.
Batson and J.E.B.
In Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, the United States Supreme Court held that "the Equal Protection Clause forbids the prosecutor to challenge potential jurors solely on account of their race or on the assumption that black jurors as a group will be unable impartially to consider the State's case against a black defendant." The Court recognized the value of peremptory challenges in assuring the selection of a fair and impartial jury, id. at 90-92, 106 S. Ct. at 1720, but the Court also recognized that the "central concern of the ... Fourteenth Amendment was to put an end to governmental discrimination on account of race," id. at 85, 106 S. Ct. at 1716. The Court then concluded that that "central concern" required that a potential juror not be denied an important opportunity to participate in civic life simply because of his race. Id. at 87-88, 106 S. Ct. at 1718.
In J.E.B. v. Alabama ex rel. T.B., 511 U.S. ___, ___, 114 S. Ct. 1419, 1430, 128 L. Ed. 2d 89 (1994), the Court went further and held that, consistent with the equal protection guarantee, litigants may not strike potential jurors solely "on the basis of gender, or on the assumption that an individual will be biased in a particular case for no reason other than the fact that the person happens to be a woman or happens to be a man." The Court again recognized the value of peremptory challenges, id. at ___, 114 S.Ct. at 1429, but reasoned that "[w]hen state actors exercise peremptory challenges in reliance on gender stereotypes, they ratify and reinforce prejudicial views of the relative abilities of men and women," id. at ___, 114 S.Ct. at 1427. The Court conceded that all peremptory challenges are based on stereotypes of some kind, but it argued that "where peremptory challenges are made on the basis of group characteristics other than race or gender (like occupation, for example), they do not reinforce the same stereotypes about the group's competence or predispositions that have been used to prevent them from voting, participating on juries, pursuing their chosen professions, or otherwise contributing to civic life." Id. at ___, fn. 14, 114 S. Ct. at 1428, fn. 14 (emphasis added). Essentially the same point was made by a commentator three years before J.E.B. was handed down:
If the Court plans to keep peremptory challenges but satisfy the requirements of the equal protection clause, the only limitation to peremptory challenges, other than the prohibition against racial-based exclusion, should be the prohibition against gender-based exclusion. Prohibition of gender-based peremptory challenges is not only a logical extension of the Batson prohibition, but is also the logical place to end the restructuring of the peremptory challenge. Some commentators have argued that a distinction cannot be made between gender and other classifications. As [Chief] Justice Burger noted in his dissent in Batson, the conventional equal protection principles would have to include prohibition of peremptory challenges based not only on race and sex, but also on "religious or political affiliation, mental capacity, number of children, living arrangements, and employment in a particular industry." However, while courts have held that the equal protection clause specifically requires that no person in a similar situation be treated disparately, the [Supreme] Court only applies heightened *498 scrutiny to members of suspect classes. The people belonging to the classifications mentioned by the Chief Justice are not accorded heightened scrutiny. The Court has never afforded the kind of protection it has given to classifications based on race or gender to the classifications mentioned by Justice Burger. The reason that higher protection has been withheld from the people belonging to the classifications that Justice Burger mentioned is because, according to the Supreme Court, those people have not experienced the kind of discrimination historically suffered by people belonging to a certain race or gender.
Comment, Reconstruction of the Peremptory Challenge System: A Look at Gender-Based Peremptory Challenges, 22 Pac.L.J. 1305, 1329 (1991).
In summary, it is clear from the text of the Batson and J.E.B. opinions that they are grounded on the need to address our Nation's historical and uniquely painful and destructive patterns of race and sex discrimination. The constitutional guarantee of equal protection simply requires special protection in those contexts, even with respect to the use of "peremptory" challenges. The Batson and J.E.B. opinions do not suggest that the Equal Protection Clause prohibits peremptory challenges based on group characteristics that, like religion, have not been the focus of such pervasive and hurtful discrimination. In fact, the J.E.B. opinion suggests quite the opposite.
The First Amendment
The First Amendment guarantees the freedom of religion, speech, press, assembly, petition, and association. See generally R. Rotunda, et al., Treatise on Constitutional Law: Substance and Procedure § 18.40 (2nd ed. 1992). If the Equal Protection Clause forbids peremptory challenges based on religious belief, then there is no principled reason why it would not also forbid peremptory challenges based on the exercise of all the other First Amendment freedoms. Thus, if litigants may not strike a venireperson because of his religious beliefs, then they also may not strike a venireperson because, for example, he is a member of a white supremacists' organization or because he advocates repeal of all laws criminalizing sex with minors. Such an extension of Batson would spell the utter destruction of the peremptory challenge, as the Court of Appeals for the Fifth Circuit recently recognized in United States v. Villarreal, 963 F.2d 725, 728-729 (5th Cir.), cert. denied, 506 U.S. 927, 113 S. Ct. 353, 121 L. Ed. 2d 267 (1992). Nothing in the Batson or J.E.B. opinions suggests or implies that the Equal Protection Clause requires such a result.
Necessary to Achieve A Compelling State Interest
The Supreme Court has developed standards for determining the validity of state action that is challenged as violative of the Equal Protection Clause. The general rule is that state action is presumed to be valid and will be sustained if the classification drawn by the state action is rationally related to a legitimate state interest. City of Cleburne, Tex. v. Cleburne Living Center, 473 U.S. 432, 439-40, 105 S. Ct. 3249, 3254, 87 L. Ed. 2d 313 (1985). If the classification is based on gender, then it will be presumed to be invalid and will be sustained only if it is substantially related to an important state interest. Id. at 441-42, 105 S. Ct. at 3255. Finally, if the classification is based on race, alienage, or national origin, or if the classification impinges on the exercise of a fundamental right, then it will again be presumed to be invalid and will be sustained only if it necessary to the attainment of a compelling state interest. Id. at 439-40, 105 S. Ct. at 3254.
Freedom of religion is a fundamental right. Dinkins v. State, 894 S.W.2d 330, 341, fn. 9 (Tex.Crim.App.1995); Clark v. State, 665 S.W.2d 476, 480, fn. 3 (Tex.Crim.App.1984). And, a fair and impartial jury is plainly a compelling state interest. See J.E.B., 511 U.S. at ___, fn. 8, 114 S. Ct. at 1426, fn. 8. Therefore, assuming arguendo that peremptory challenges based on venirepersons' religious beliefs impinge on those venirepersons' freedom of religion, the question becomes whether such peremptory challenges are nonetheless necessary to the attainment of a fair and impartial jury. If the answer is *499 "yes," then the challenge is valid under the Equal Protection Clause. I believe the answer is "yes."
A juror's religious training and beliefs may seriously affect his views, either consciously or unconsciously, on many issues that might arise in a criminal case: abortion, extramarital sexual relations, homosexuality, divorce, prostitution, alcohol consumption, illicit drug use, gambling, capital punishment, even political affiliation. Furthermore, a juror's religious training and beliefs may seriously affect his willingness or even his ability to sit in judgment or assess punishment. For these reasons, it is essential for litigants to question venirepersons about their conscious religious beliefs as well as the church teachings to which they might have been exposed over their lifetimes. It is equally essential, in order for a fair and impartial jury to be attained, for the litigants to be able to use peremptory challenges based on the information they acquire through this questioning.
The right of a criminal defendant, whose life or liberty may be at stake, to be judged by a fair and impartial jury far outweighs the peripheral burden placed on the free exercise of religion by an individual struck based on his religious beliefs. It would be absurd to suggest, for example, that an African American defendant should be barred from using a peremptory challenge to strike a venireperson who adheres to a religion that advocates white supremacy. The State, as representative of the people, has an equally strong interest in assuring that criminal juries are fair and impartial, and it must be free to use peremptory challenges to strike venirepersons whose religious beliefs reasonably call into question their ability to be fair and impartial.
With these observations, I join the opinion of the Court.
BAIRD, Judge, dissenting.
On original submission we held the Equal Protection Clause of the Fourteenth Amendment prohibits the use of peremptory challenges on the basis of religion. We granted rehearing to determine the limited issue of whether we misapplied First Amendment jurisprudence in reaching that holding. The majority, purportedly seeking to resolve that issue, states that our opinion on original submission misapprehended the constitutional significance of peremptory challenges based on criteria implicating First Amendment liberties.[1]Ante at 493. The majority ultimately holds the governmental interests served by peremptory challenges are sufficiently compelling to permit discrimination on the basis of religion. Ante at 496. To achieve this result the majority opinion rests on three fundamentally flawed theories: first, that the beliefs of a religion are held by all members of that religion, ante at 496; second, that there is a compelling governmental interest that permits discrimination on the basis of religion, ante at 496; and, third, that the proper focus to resolve the ground for rehearing is the veniremember's religious belief(s) rather than the veniremember's right to serve on a jury. We will discuss each theory seriatim.
I.
The majority uses religion, religious affiliation, religious group, religious creed, religious faith and religious preference interchangeably. I will use the term religion because that is the term used in the First Amendment. The majority states: "Because all members of the [religious] group share the same faith by definition, it is not unjust to attribute beliefs characteristic of the faith to all of them." Ante at 496. Consequently, "it is necessarily permissible to discriminate against veniremembers on account of their religion, for discrimination on the basis of religion is discrimination on the basis of belief." *500 Ibid. This premise is fundamentally flawed for at least three reasons.
A.
First, there is precedent from this Court holding to the contrary. In Urbano v. State, 837 S.W.2d 114, 117 (Tex.Cr.App.1992), we held it is irrational to conclude simply from membership that one is aware of all of the rules of an organization.
Additionally, there is decisional authority from other jurisdictions. In Coleman v. United States, 379 A.2d 951 (D.C.Ct.App. 1977), the defendants were charged with robbing of the priests and patrons of a Catholic rectory. At trial, the defendants moved to exclude all Catholics from the jury. This motion was premised on the assumption that Catholics would be unable to impartially judge the truth or falsity of the testimony of Catholic clerics. The trial judge overruled the motion and the Court of Appeals affirmed, holding:
... No evidence was presented to the trial court to support this bald assertion. Appellants single out Catholics in this regard when it could be argued with equal force that because of the prevalence of religious belief in this country, many members of our society generally of whatever faith may be predisposed to believe that clerics can be trusted to always tell the truth. In other words, what appellants contend with regard to Catholics specifically could be contended as well with regard to anyone who acknowledges a belief in some religious faith when confronted with a cleric as a witness.
Id., 379 A.2d at 953. The Court continued, "mere potentiality for bias based upon religious affiliation cannot justify the elimination of a prospective juror." Ibid.
In United States v. Greer, 968 F.2d 433, 435 (5th Cir.1992), the defendants belonged to the Confederate Hammerskins, a white supremacy group, and were charged with conspiring to deprive Black, Hispanic and Jewish citizens of their rights secured by the United States Constitution.[2] The defendants moved to exclude all Blacks, Hispanics, and Jews from the venire, arguing such veniremembers, as a class, could not be fair or impartial. The trial judge denied the motion, and the Court of Appeals affirmed. The Court was unwilling to hold that all members of a religious class should be excluded in cases where members of that class are the victims. Instead, the Court required a showing of individual bias. Id. 968 F.2d at 435. And though the defendants contended the Jewish veniremembers could only harbor bias, the Court of Appeals held the pertinent question was whether the individual veniremembers harbored any bias.
Finally, in Rose v. Sheedy, 134 S.W.2d 18, 19 (Mo.1939), the Missouri Supreme Court held religious affiliations constitute neither a qualification nor a disqualification for jury service. Consequently, inquiry into a veniremember's religious beliefs is proper on voir dire only where religious issues are expressly presented in the case, where a religious organization is a party to the litigation, or where the inquiry is a necessary predicate to the exercise of peremptory challenges. Coleman, 379 A.2d at 954. But for the peremptory challenge to be permissible, it must follow individual inquiry of the veniremember. Only in this way can the peremptory challenge be knowingly and intelligently made and serve to prevent the discriminatory exclusion of veniremembers based on unconstitutional stereotypes. The United States Supreme Court has emphasized the importance of asking specific questions designed to unearth the views of prospective jurors. Morgan v. Illinois, 504 U.S. 719, 729-31, 112 S. Ct. 2222, 2230, 119 L. Ed. 2d 492 (1992). Probing inquiry into the individual veniremember's views or beliefs is necessary. As stated in Greer, the determination of whether the individual veniremember holds a particular belief is a prime function of voir dire examination. Id., 968 F.2d at 435, n. 3.[3]
*501 B.
Second, as an empirical matter, we know that every member of a given religion has not adopted the views of their religious leaders. We pointed this out on original submission, ante at 479, n. 15, but it bears repeating and elaboration here. The Catholic Church officially condemns the use of artificial contraceptives, Maddox, The Pope and Contraception, 29 (1991), but 84% of the members of the Catholic Church believe Catholics should be allowed to use artificial contraceptives. Gallup, The Gallup Poll: Public Opinion 1993 145 (Wilmington, Del.: Scholarly Resources, 1994). Consequently, if a party peremptorily challenged a Catholic veniremember because the party attributed to the veniremember the Catholic Church's condemnation of the use of artificial contraceptives, the party would be wrong 84% of the time.
C.
Finally, it is illogical to attribute every belief held by a religion to its members. We have too many religions to list. Some religions hold complex views and positions, while others hold very simple beliefs, namely those established solely to achieve an IRS tax exemption. Typically, religions which hold complex views and positions reduce them to writing. For example, the United Methodist Church publishes The Book of Resolutions.[4] The book is a collection of all current and official policies, and other resolutions adopted by the General Conference of The United Methodist Church. These policies and resolutions are subject to change and many are changed every four years. The Book of Resolutions was first published in 1968, and currently contains official policy statements on approximately two hundred subjects including: reduction of water usage by United Methodists, care-giving teams for persons with AIDS, organ and tissue donation, sexual violence and pornography, access of Hispanics to higher education, African-American family life, available and affordable housing, communications access for persons who have hearing and sight impairments, Native-American ministries, confronting the drug crisis, domestic violence and sexual abuse, equal rights of women, eradication of racism, health for all by the year 2000, school busing, suicide, bilingual education, gambling, rights of workers, gun control, grand jury abuse, unemployment, police firearms policies, concern for El Salvador, the U.S. military presence in Bolivia and recognition of Cuba. These categories represent just a sampling of policies adopted by one religion.
It is absurd to assume, as the majority does, that all Methodists are even aware of the Methodist Church's positions on housing, busing or gun control. And the majority fails to explain how the Methodist Church's formal position on pornography is necessarily reflective of its members beliefs on the same issue. Is it reasonable to assume that every Methodist has a view on El Salvador, Bolivia or Cuba? If so, is it reasonable to assume that those Methodists who have such views necessarily hold the same views as other Methodists with respect to gambling and suicide? But this is precisely the majority's holding: "Because all members of the [religious] group share the same faith by definition, it is not unjust to attribute beliefs characteristic of the faith to all of them." Ante at 496.[5] The holding begs reality.
*502 D.
A fundamental tenet of the Equal Protection Clause is that the government must treat citizens as individuals, not simply as components of a racial, religious, sexual, or national class.[6] This fundamental teaching is especially important in the context of our jury system because a juror sits not as a representative of a group but as an individual citizen. J.E.B. v. Alabama ex rel. T.B., 511 U.S. ___, ___, 114 S. Ct. 1419, 1434, 128 L. Ed. 2d 89 (1994) (Kennedy, J., concurring). The majority ignores this tenet and permits discrimination on the mistaken notion that all members of a religion necessarily hold the same beliefs. This is contrary to settled precedent, empirical data and common sense. Nevertheless, this stereotyping is the foundation upon which the majority opinion rests.
II.
On original submission, relying on the authority and reasoning in J.E.B. and McCollum, we held there was no compelling governmental interest that permits discrimination on the basis of religion. Ante at 480. Today's majority finds such a compelling governmental interest, ante at 496, but cites no authority for its holding. As can be seen below, the majority's holding can not withstand dispassionate analysis.
A.
The Supreme Court has developed three levels of review to determine whether the governmental interest is sufficient to permit a discriminatory practice to pass constitutional muster. In descending order, those levels are strict scrutiny review, intermediate scrutiny review, and rational relationship review.[7] In the context of strict scrutiny review, discrimination will not pass constitutional muster absent a compelling governmental interest. Racial discrimination must pass strict scrutiny review. In this context, the Supreme Court has held that the need to prohibit racial discrimination is greater than the governmental interest of permitting race-based peremptory challenges. Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986); Georgia v. McCollum, 505 U.S. 42, 112 S. Ct. 2348, 120 L. Ed. 2d 33 (1992); Edmonson v. Leesville Concrete Co., 500 U.S. 614, 629-631, 111 S. Ct. 2077, 2088, 114 L. Ed. 2d 660 (1991); and, Hernandez v. New York, 500 U.S. 352, 111 S. Ct. 1859, 114 L. Ed. 2d 395 (1991). Discrimination on the basis of religion is also subject to the strict scrutiny standard of review.[8] Consequently, *503 it follows that if the government failed to establish a compelling reason for discrimination on the basis of race, the government will, likewise, be unable to establish a compelling reason for discrimination on the basis of religion.
In the context of intermediate scrutiny review, the discrimination will not pass constitutional muster unless the discrimination is substantially related to an important government objective. Gender discrimination is subject to this standard of review. J.E.B., 511 U.S. ___, ___, 114 S. Ct. 1419, 1429. In this context, the Supreme Court held genderbased peremptory challenges were not substantially related to any important governmental objective. Id., 511 U.S. at ___ n. 6, 114 S. Ct. at 1425 n. 6. Consequently, if the government failed to establish a constitutionally permissible reason to discriminate under this lower level of scrutiny, it follows that the government cannot prevail under the strict scrutiny standard of review accorded religious discrimination. To put this in a slightly different context, if a party cannot prove its case by a preponderance of the evidence, it necessarily follows that the party cannot prove its case beyond a reasonable doubt. Ex parte Tarver, 725 S.W.2d 195 (Tex.Cr. App.1986).
Since Batson, whenever the Supreme Court has been asked whether the government's interest in a fair trial permitted the discriminatory use of peremptory challenges, the answer has been no. The argument has been rejected at every turn, perhaps most succinctly and forcefully in McCollum, 505 U.S. at 57-58, 112 S. Ct. at 2358, where the Court stated: "It is an affront to justice to argue that a fair trial includes the right to discriminate against a group of citizens...."[9]
B.
The majority's true fear is that our holding on original submission will ultimately lead to the end of peremptory challenges. But their fear is unfounded. As the Supreme Court stated in J.E.B.: "Our conclusion that litigants may not strike potential jurors solely on the basis of gender does not imply the elimination of all peremptory challenges." Id., 511 U.S. at ___, 114 S.Ct. at 1429.
What should be clear from Batson, J.E.B. and our opinion on original submission is that peremptory challenges are still viable under the Equal Protection Clause. The Equal Protection Clause forbids only the exclusion of veniremembers on the basis of stereotypes associated with race, gender, or religion.[10] As the Supreme Court stated in Edmonson v. Leesville Concrete Co., 500 U.S. at 630, 111 S. Ct. at 2088, if the sanctioning of discrimination and stereotypes are the price for acceptance of a jury panel as fair, the price is too high to meet the standard of the Constitution. When we weigh the constitutional guarantee of freedom from discrimination *504 against the governmental interest in the peremptory challenge, the scales of justice must lean in favor of the Constitution. Simply stated, the constitutional protection against discrimination is more important than the statutory right to exercise peremptory challenges in a discriminatory manner.[11]
III.
We now turn to the third fundamental flaw of the majority opinion, the change of focus which results in the misapplication of the analytical framework of J.E.B.
A.
The majority agrees that J.E.B. provides the analytical framework to resolve the instant issue. The majority states:
We are aware ... that J.E.B. limits application of the Batson rule to an exclusion of persons on account of a classification traditionally used for irrational discrimination in our culture.
Ante, 913 S.W.2d at 495. Compare, Ante, 913 S.W.2d at 474-75 (opinion on original submission). Given our agreement on the analytical framework adopted by the Supreme Court in J.E.B., the reader might ask how today's majority could reach a different result on rehearing. The reason is quite simple, the majority does not follow J.E.B. The majority states:
It does not follow, however, that discrimination on the basis of every classification subject to such scrutiny is necessarily forbidden.
Ante, 913 S.W.2d at 496 (emphasis added).
This is done purposefully to change the focus of the analysis to whether the peremptory strike interferes with the veniremembers' right to free exercise of religion.[12] The free exercise of religion is relevant only to the determination of whether the discriminatory use of peremptory challenges is subject to heightened Equal Protection scrutiny.[13]
The majority's sleight of hand, done to avoid applying J.E.B.'s analytical framework, is intellectually dishonest. In Davis v. Minnesota Justice Thomas stated:
Once the scope of the logic in J.E.B. is honestly acknowledged, it cannot be glibly asserted that the decision has no implications for peremptory strikes based on classifications other than sex, or that it does not imply further restrictions on the exercise of the peremptory strike outside the context of race and sex.
Id., ___ U.S. ___, ___, 114 S. Ct. 2120, 2122, 128 L. Ed. 2d 679 (1994) (Thomas, J., dissenting to the denial of certiorari) (emphasis added).
*505 B.
Our proper focus should be whether the Pentecostal veniremembers held a right to not be discriminated against in the selection of appellant's jury. Veniremembers have the right to not be discriminated against in the use of peremptory challenges. Powers v. Ohio, 499 U.S. 400, 409, 111 S. Ct. 1364, 1370, 113 L. Ed. 2d 411 (1991). See also, J.E.B., 511 U.S. at ___, 114 S.Ct. at 1434 ("All persons... have the right not to be excluded [from jury service] summarily because of discriminatory and stereotypical presumptions that reflect and reinforce patterns of historical discrimination.").
Veniremembers as well as litigants enjoy equal protection rights to jury selection procedures free from discrimination. Hernandez v. New York, 500 U.S. 352, 355, 111 S. Ct. 1859, 1864, 114 L. Ed. 2d 395 (1991); Edmonson v. Leesville Concrete Co., 500 U.S. 614, 111 S. Ct. 2077, 114 L. Ed. 2d 660 (1991); and, McCollum, 505 U.S. 42, 112 S. Ct. 2348 (1992). The opportunity for ordinary citizens to participate in the administration of justice has long been recognized as one of the principal justifications for the jury system.
... It affords ordinary citizens a valuable opportunity to participate in a process of government an experience fostering ... a respect for the law. For most citizens the honor and privilege of jury duty is their most significant opportunity to participate in the democratic process.
Powers, 499 U.S. at 407, 111 S. Ct. at 1369 (quoting Duncan v. Louisiana, 391 U.S. 145, 187, 88 S. Ct. 1444, 1469, 20 L. Ed. 2d 491 (1968) (Harlan, J., dissenting)). And the Supreme Court has recognized the right to participate in jury service to be a basic right incident to citizenship in our country which is second only to the right to vote. Powers, 499 U.S. at 407, 111 S. Ct. at 1369; and, Carter v. Jury Commission of Greene County, 396 U.S. 320, 90 S. Ct. 518, 24 L. Ed. 2d 549 (1970) ("Whether jury service be deemed a right, a privilege, or a duty, the State may no more extend it to some of its citizens and deny it to others on racial grounds than it may invidiously discriminate in the offering and withholding of the elective franchise.").[14] Jury service is an exercise of responsible citizenship by the community, and is often the only opportunity some citizens have to contribute to the community. Powers, 499 U.S. at 407, 111 S. Ct. at 1369.[15]
Discriminatory jury selection harms the excluded veniremember because it denies the veniremember's right to participate in jury service.[16] Indeed, the Supreme Court held the entire community is harmed by the discriminatory exclusion of citizens from jury service. Powers, 499 U.S. at 407-408, 111 S. Ct. at 1368-1369. Discriminatory jury selection practices undermine "public confidence in the fairness of our system of justice." Batson, 476 U.S. at 87-88, 106 S. Ct. at 1718; and, Curry v. Bowman, 885 S.W.2d 421 (Tx.Cr.App.1993). In McCollum, the Supreme Court stated:
... [I]f the court allows a juror to be excluded because of a group bias, it is a willing participant in a scheme that could only undermine the very foundation of our system of justiceour citizens' confidence in it.
Id., 505 U.S. at 49-50, 112 S. Ct. at 2354. Thus, discriminatory jury selection practices cast a shadow over the criminal justice system, harming not only the litigants but the entire judicial process.
*506 Because, each citizen holds an equal right to participate in jury service it follows that the Pentecostal veniremembers in the instant case held the right to not be discriminated against in the selection of appellant's jury.
IV.
This said, it becomes clear that our opinion on original submission correctly addressed the issue before the Court. We traced the application of the Equal Protection Clause to the jury selection process from Strauder v. West Virginia, 100 U.S. 303, 25 L. Ed. 664 (1879), through the Supreme Court's latest pronouncements in J.E.B. Ante, 913 S.W.2d at 492-95. We reviewed J.E.B., and its analytical framework which prohibits the use of peremptory challenges to exclude veniremembers on the basis of classifications subject to heightened Equal Protection scrutiny. Id., 913 S.W.2d at 472-75. We traced religious discrimination from our country's inception through the Supreme Court's latest statements in Church of the Lukumi Babalu Aye v. City of Hialeah, 508 U.S. 520, 113 S. Ct. 2217, 124 L. Ed. 2d 472 (1993), and determined that discrimination based upon religion is subject to heightened Equal Protection review. Ante, 913 S.W.2d at 475-79. And finally we determined there was not a compelling governmental interest in excluding veniremembers on the basis of religion. Id., 913 S.W.2d at 479-80. The opinion on original submission was grounded on established Supreme Court authority.[17] I believe that analysis is the type of analysis contemplated by the Supreme Court under the analytical framework of J.E.B.[18]
V.
Let there be no mistake, today a majority of this Court sanctions, even encourages, the discrimination of our citizens on the basis of their religion. This type of discrimination will harm the litigants, the excluded veniremembers and our judicial system. By allowing peremptory challenges based on religion, we violate the Equal Protection Clause's fundamental guarantee that our government will treat its citizens as individuals rather than stereotypical components of a religious class. We forget that a juror serves not as a representative *507 of some racial, sexual or religious group but as an individual citizen participating in an important function of our government. We ignore that the individual citizen's opportunity to participate in the fair administration of justice is fundamental to our democratic system and reaffirms the promise of equality under the law. When citizens are excluded from participation in our democratic processes because of such invidious discrimination, the promise of equality dims and the integrity of our judicial system is jeopardized.
A dispassionate review reveals the analysis on original submission was correct. Accordingly, the State's motion for rehearing should be overruled. Because it is not, I dissent.
NOTES
[1] Appellant's ground for review states:
The Court of Appeals erred in ruling that the peremptory exclusion of potential jurors on the basis of their religion did not violate the principles of the Equal Protection Clause of the XIV Amendment to the United States Constitution in such a manner that required relief under the doctrine announced by the United States Supreme Court in Batson v. Kentucky.
[2] The State offered other nonracial and nonreligious reasons for striking the veniremembers. Casarez, 857 S.W.2d at 782.
[3] The majority opinion was limited to whether peremptory challenges on the basis on religion are permissible. Understandably, the majority did not address the State's alternative argument that the peremptory challenges were permissible for the nonreligious reasons offered by the State. See, n. 2, supra. The majority's holding that the Equal Protection Clause did not prohibit the use of peremptory challenges on the basis of religion rendered the State's alternative argument moot. Because the majority opinion is limited, and because that limited holding is the sole basis of the appellant's ground for review, see, n. 1, supra, the State's alternative argument is not before us.
We pause to note the alternative argument was addressed in a separate concurring opinion which also noted one of the veniremembers was the thirty-third member of the venire. According to the concurrence, no explanation was required because the thirty-third veniremember was not deprived of the privilege of jury service because the jury was obtained from the first thirty-two veniremembers. Casarez, 857 S.W.2d at 788-89 (Hopkins and Lattimore, JJ., concurring).
[4] All emphasis is supplied unless otherwise indicated.
[5] See, Wygant v. Jackson Board of Education, 476 U.S. 267, 279-80, 106 S. Ct. 1842, 1849-50, 90 L. Ed. 2d 260 (1986) (applying equal protection scrutiny to racial classification); Anderson v. Celebrezze, 460 U.S. 780, 794, n. 16, 103 S. Ct. 1564, 1572, n. 16, 75 L. Ed. 2d 547 (1983) (discussing application of heightened equal protection scrutiny to groups-affiliations based on the exercise of First Amendment rights); Mississippi University for Women v. Hogan, 458 U.S. 718, 724-26, 102 S. Ct. 3331, 3336-37, 73 L. Ed. 2d 1090 (1982) (testing gender-based classifications under equal protection scrutiny); Plyler v. Doe, 457 U.S. 202, 216-17, 217, n. 15, 102 S. Ct. 2382, 2394-95, 2395, n. 15, 72 L. Ed. 2d 786 (1982) (plurality decision) (deriving constitutionally suspect classifications from both historically oppressed classifications and group-affiliations which relate to First Amendment Rights such as religious exercise); and, United States v. Carolene Products, 304 U.S. 144, 152, n. 4, 58 S. Ct. 778, 783-784, n. 4, 82 L. Ed. 1234 (1938) (defining equal protection as applicable to "discrete and insular minorities" which relate to certain fundamental rights). See also, J.E.B. v. Alabama ex rel. T.B., ___ U.S. ___, ___, 114 S. Ct. 1419, 1434, 128 L. Ed. 2d 89 (1994) (Kennedy, J., concurring); Metro Broadcasting, Inc. v. FCC, 497 U.S. 547, 602, 110 S. Ct. 2997, 3028, 111 L. Ed. 2d 445 (1990) (O'Connor, J., dissenting and joined by Rhenquist, Scalia, and Kennedy) (listing religious classifications as groups subject to equal protection's prohibition on stereotyping); and, Arizona Governing Committee v. Norris, 463 U.S. 1073, 1083, 103 S. Ct. 3492, 3498, 77 L. Ed. 2d 1236 (1983) (including religious groups with other heightened scrutiny classifications under Title VII).
[6] See, n. 3, supra; and, Ronald D. Rotunda & John E. Nowak, Treatise on Constitutional Law: Substance and Procedure § 18.2, at 7 (2d ed. 1992).
[7] See, n. 3, supra; and, Ronald D. Rotunda & John E. Nowak, Treatise on Constitutional Law: Substance and Procedure § 18.3 (2d ed. 1992).
[8] Justice Blackmun wrote the four-justice plurality opinion extending Batson protection to gender-based peremptory challenges. J.E.B., ___ U.S. at ___-___, 114 S.Ct. at 1429-30 (plurality opinion). Justice O'Connor concurred in the judgment and fully adopted the majority's rationale as it applied to criminal defendants. Id. ___ U.S. at ___, 114 S.Ct. at 1430-33. (O'Connor, J., concurring). Justice Kennedy concurred only in the result, but adopted a rationale very similar to the majority. Id. ___ U.S. at ___-___, 114 S.Ct. at 1433-34 (Kennedy, J., concurring).
[9] Justice O'Connor adopted the plurality's rationale:
I agree with the Court that the Equal Protection Clause prohibits the government from excluding a person from jury service on account of their gender. The State's proffered justification for its gender-based peremptory challenges are far from the `exceedingly persuasive' showing required to sustain a genderbased classification.
J.E.B., ___ U.S. at ___, 114 S.Ct. at 1430-1431 (O'Connor, J., concurring) (citations omitted). Despite her agreement with the heightened scrutiny rationale, Justice O'Connor wrote separately to reiterate her opinion that Batson protection should be limited to the State's use of peremptory challenges in criminal trials. Id. See, n. 8, supra.
[10] Judges McCormick and Meyers, while conceding that our application of J.E.B.'s analytical framework is correct, dissenting op., pg. 483 (McCormick, P.J., dissenting); dissenting op. pg. 494 (Meyers, J., dissenting), are "not persuaded that the United States Constitution forbids peremptory removal of prospective jurors on account of their religion." Dissenting op. pg. 490 (Meyers, J., dissenting). Neither Judge McCormick nor Judge Meyers dispute that J.E.B. attached Batson's constitutional protection to classifications which warrant heightened equal protection scrutiny. See, J.E.B., ___ U.S. at ___, 114 S.Ct. at 1425. Further, Judges McCormick and Meyers do not, and indeed cannot, contend that religious classifications are not subject to heightened equal protection scrutiny. Instead, each Judge ignores J.E.B. and expresses his personal view of Batson. Judge McCormick urges "that the social experiment started in Batson be aborted ..." Dissenting op., pg. 484. Judge Meyers believes Batson should be limited to race and gender. However, even if we accepted the view of either Judge, it is clear the Supreme Court does not. The Supreme Court is the final arbiter of the Equal Protection Clause of the Fourteenth Amendment of the United States Constitution. As judges on this honorable Court, we are bound to apply the United States Constitution as interpreted by the Supreme Court; we do not have the luxury or the liberty to ignore binding precedent.
[11] The Minnesota Supreme Court rejected an attempt to extend the Equal Protection Clause to peremptory challenges based on religion. State v. Davis, 504 N.W.2d 767, 771-72 (Minn.1993). Notably, Davis was decided prior to J.E.B. when the Supreme Court had seemingly limited Batson to race. Id. However, J.E.B. undermined the Minnesota Court's rationale.
Despite the Minnesota Court's faulty belief that Batson was limited to race, the United States Supreme Court denied certiorari. Davis v. Minnesota, ___ U.S. ___, ___, 114 S. Ct. 2120, 2120-22, 128 L. Ed. 2d 679 (1994). Although the denial of a writ of certiorari imports no expression of opinion upon the merits of the case, and opinions accompanying the denial of certiorari do not have the same effect as decisions on the merits, Teague v. Lane, 489 U.S. 288, 296, 109 S. Ct. 1060, 1067-1068, 103 L. Ed. 2d 334 (1989), it should be noted that Justices Scalia and Thomas dissented to the denial of certiorari, arguing: (1) the Minnesota Court's holding should be vacated because it was based on the traditional restriction of Batson to racial discrimination; and, (2) J.E.B.'s reliance on "heightened equal protection scrutiny" opened the door to a broader application of equal protection than race and gender discrimination. Davis, ___ U.S. at ___, 114 S.Ct. at 2121-2122.
Several other jurisdictions have extended Batson protection to ethnicity and religion. See, State v. Alen, 616 So. 2d 452 (Fla.1993); People v. Snow, 44 Cal. 3d 216, 242 Cal. Rptr. 477, 746 P.2d 452 (1987); and, State v. Gilmore, 103 N.J. 508, 511 A.2d 1150, 1159 n. 3. (1986).
[12] Article VI forbids the use of "religious tests" to exclude citizens from "public trusts." U.S. Const. art. VI, cl. 3. The discriminatory classification of individuals based upon their religious belief is such a religious test. The peremptory challenge, however, allows religion to be used as a "test" for juror competence. Swain, 380 U.S. at 220, 85 S. Ct. at 836 (positing that religion is a routine basis for removing veniremembers on arbitrary grounds). See, State v. Gilmore, 103 N.J. 508, 511 A.2d 1150, 1167-1168 (1986) (Peremptory challenges exercised against Blacks based on the assumption that they were predominantly Baptists was a clear indication of group bias, both racial and religious.)
Further, the Supreme Court has classified jury duty as a public trust of the highest order.
... [The jury is] an entity that is a quintessential governmental body, having no attributes of a private actor. The jury exercises the power of the court and of the government that confers the court's jurisdiction ... [T]he jury system performs the critical governmental functions of guarding the rights of litigants and insuring the continued acceptance of the laws by all of the people.
Edmonson, 500 U.S. at 624, 111 S. Ct. at 2085 (citations and internal quotations omitted). Indeed, it is difficult to imagine a more sacred public trust than the proper adjudication of a criminal case.
The First Amendment provides that Congress shall make no law prohibiting the free exercise of religion. U.S. Const., amend. I. The First Amendment is applicable to the states through the Fourteenth Amendment. Cantwell v. Connecticut, 310 U.S. 296, 303, 60 S. Ct. 900, 903, 84 L. Ed. 1213 (1940).
[13] See also, Hernandez v. Commissioner, 490 U.S. 680, 699, 109 S. Ct. 2136, 2148, 104 L. Ed. 2d 766 (1989); Hobbie v. Unemployment Appeals Comm'n of Fla., 480 U.S. 136, 141, 107 S. Ct. 1046, 1049, 94 L. Ed. 2d 190 (1987); Thomas v. Review Bd. of Ind. Employment Security Div., 450 U.S. 707, 718, 101 S. Ct. 1425, 1432, 67 L. Ed. 2d 624 (1981); McDaniel v. Paty, 435 U.S. 618, 626-29, 98 S. Ct. 1322, 1327-29, 55 L. Ed. 2d 593 (1978); Wisconsin v. Yoder, 406 U.S. 205, 215, 92 S. Ct. 1526, 1533, 32 L. Ed. 2d 15 (1972); and, Gillette v. United States, 401 U.S. 437, 462, 91 S. Ct. 828, 842, 28 L. Ed. 2d 168 (1971).
Further, the Religious Freedom Restoration Act of 1993, P.L. 103-141, 107 Stat. 1488-89 (RFRA) defined religious exercise as a fundamental right and applied strict scrutiny review to infringements on this right. Accordingly, RFRA expressly guaranteed a strict scrutiny review to any infringement of the right to religious freedom:
The framers of the Constitution, recognizing free exercise of religion as an unalienable right, secured its protection in the First Amendment to the Constitution ... [Therefore,] [g]overnment shall not substantially burden a person's exercise of religion even if the burden results from a rule of general applicability... [unless] it demonstrates that application of the burden to the person (1) is in furtherance of a compelling government interest; and (2) is the least restrictive means of furthering that compelling government interest.
Id. Thus, Congress has codified the Supreme Court's historical treatment of the right to religious freedom.
Finally, the Supreme Court applies strict scrutiny review to any violation of a fundamental right. See, Planned Parenthood of Southeastern Penn. v. Casey, 505 U.S. 833, 863-902, 112 S. Ct. 2791, 2813-33, 120 L. Ed. 2d 674 (1992) (applying strict equal protection scrutiny to a woman's fundamental liberty interest to terminate pregnancy); R.A.V. v. City of St. Paul, Minnesota, 505 U.S. 377, 384-85 n. 4, 112 S. Ct. 2538, 2543-44 n. 4, 120 L. Ed. 2d 305 (noting the need in constitutional jurisprudence to "fuse" the First Amendment with the Equal Protection Clause); Burson v. Freeman, 504 U.S. 191, 197 n. 3, 112 S. Ct. 1846, 1850-1851, n. 3, 119 L. Ed. 2d 5 (1992) (plurality opinion) (observing interchangeability of the Equal Protection Clause and First Amendment rationales in applying strict scrutiny review); Austin v. Michigan State Chamber of Comm., 494 U.S. 652, 666-67, 110 S. Ct. 1391, 1401, 108 L. Ed. 2d 652 (1990) (holding that strict scrutiny review necessary to analyze an abridgement of the First Amendment right to political expression); Lyng v. International Union, UAW, 485 U.S. 360, 365, 108 S. Ct. 1184, 1189, 99 L. Ed. 2d 380 (1988) (recognizing that heightened equal protection scrutiny would attach to any infringement of the First Amendment Right to Association); Carey v. Brown, 447 U.S. 455, 459-463, 100 S. Ct. 2286, 2289-91, 65 L. Ed. 2d 263 (1980) (strict scrutiny review applies to First Amendment "free speech" violations); Massachusetts Board of Retirement v. Murgia, 427 U.S. 307, 312, 96 S. Ct. 2562, 2566, 49 L. Ed. 2d 520 (1975) (strict scrutiny review applies to violations of a fundamental right); San Antonio School District v. Rodriguez, 411 U.S. 1, 16, 93 S. Ct. 1278, 1287, 36 L. Ed. 2d 16 (1973) (strict scrutiny review applies to violations of a fundamental right); Bullock v. Carter, 405 U.S. 134, 142-45, 92 S. Ct. 849, 855-56, 31 L. Ed. 2d 92 (1972) (strict scrutiny review applies to abridgment of fundamental right to vote); Shapiro v. Thompson, 394 U.S. 618, 629-31, 89 S. Ct. 1322, 1329, 22 L. Ed. 2d 600 (1969) (strict scrutiny review applies to abridgement of fundamental right to travel); Williams v. Rhodes, 393 U.S. 23, 31-32, 89 S. Ct. 5, 10-11, 21 L. Ed. 2d 24 (1968) (strict scrutiny review applies to violations of First Amendment); and, Ronald D. Rotunda & John E. Nowak, Treatise on Constitutional Law: Substance and Procedure § 18.3, at 15-19 (2d ed. 1992).
[14] At times the rights guaranteed by the First Amendment become fused with those guaranteed by the Fourteenth Amendment. R.A.V. v. City of St. Paul, Minnesota, 505 U.S. 377, 385, 112 S. Ct. 2538, 2544, 120 L. Ed. 2d 305 (1992) ("This Court itself has occasionally fused the First Amendment into the Equal Protection Clause ... but at least with the acknowledgment ... that the First Amendment underlies its analysis."). The most often cited example of the fusion of First Amendment rights into the Fourteenth Amendment is Police Dept. of City of Chicago v. Mosley, 408 U.S. 92, 92 S. Ct. 2286, 33 L. Ed. 2d 212 (1972). Mosely sought a declaratory judgment that Chicago's picketing ordinance was unconstitutional. The ordinance prohibited picketing within 150 feet of a school except peaceful picketing of any school involved in a labor dispute. The Supreme Court held the ordinance violated the Equal Protection Clause and the First Amendment, stating:
... the equal protection claim in this case is closely intertwined with First Amendment interests; the Chicago ordinance affects picketing, which is expressive conduct; moreover, it does so by classifications formulated in terms of the subject of picketing.
Id., 408 U.S. at 95, 92 S. Ct. at 2290. See also, Niemotko v. Maryland, 340 U.S. 268, 272, 71 S. Ct. 325, 327-328, 95 L. Ed. 267 (1951) ("... [T]he right to equal protection of the laws, in the exercise of those freedoms of speech and religion protected by the First and Fourteenth Amendments, has a firmer foundation than the whims or personal opinions of a local governing body."). Additionally, in Lyng v. International Union, UAW, 485 U.S. 360, 108 S. Ct. 1184, 99 L. Ed. 2d 380 (1988), the Court stated:
... Although the challenge in that case was brought solely on equal protection grounds, and not under the First Amendment, the Court was obliged to decide whether the statutory classification should be reviewed under a stricter standard than mere rational-basis review because it ... burden[s] a fundamental right.
Id., 485 U.S. at 366, 108 S. Ct. at 1189.
[15] Judge Meyers states, "... the only significant matter that members of a religious faith genuinely have in common is their belief in certain principles, doctrines, or rules." Dissenting Op., pg. 491. This statement assumes that all members of a religious group subscribe to and accept the formal teachings of their religion. Consequently, Judge Meyers argues that stereotypes of religious groups are accurate and may be relied upon to determine the attitudes and beliefs of the individuals who belong to those groups. Therefore, Judge Meyers believes peremptory challenges based on religious stereotypes should be permissible. Dissenting Op., pp. 491-92. This argument is faulty for several reasons. First, it perpetuates the use of stereotypes. The Equal Protection Clause clearly prohibits the use of peremptory challenges on the basis of a stereotype attributed to a class subject to heightened equal protection scrutiny. J.E.B., ___ U.S. at ___, 114 S.Ct. at 1425. Such stereotyping retards our efforts to progress as a multicultural society. Edmonson, 500 U.S. at 629-31, 111 S. Ct. at 2088. Secondly, Judge Meyers ignores the axiom that jurors sit as individuals, not as representatives of a particular group. J.E.B., ___ U.S. at ___, 114 S.Ct. at 1434 (Kennedy, J., concurring). Thirdly, Judge Meyers' argument is fallacious. One cannot assume that every member of a certain religion believes the resolutions and views of their religious leaders. For example, although the Catholic Church condemns the use of artificial contraceptives, see, Bromley, Catholics and Birth Control 3-4 (1965); and, Maddox, The Pope and Contraception, 29 (1991), 84% of the members of the Catholic Church believe catholics should be allowed to use artificial contraceptives. Gallup, The Gallup Poll: Public Opinion 1993 145 (Wilmington, Del.: Scholarly Resources, 1994). In another context, we concluded that it would be irrational to conclude simply from membership that one is aware of all of the rules of an organization. Urbano v. State, 837 S.W.2d 114, 117 (Tex.Cr.App.1992).
Finally, Judge Meyers ignores the rationale and reasoning of Batson and J.E.B. Peremptory challenges of members of a class subject to heightened equal protection scrutiny on the basis of their personal beliefs are not constitutionally prohibited so long as those beliefs are related to the particular case being tried. Batson, 476 U.S. at 98, 106 S. Ct. at 1724. However, peremptory challenges exercised on the basis of a stereotype attributed to a class subject to heightened equal protection scrutiny are prohibited. We believe this is the true teaching of the Supreme Court; if the veniremember holds personal beliefs or attitudes that are unacceptable, that veniremember may be peremptorily challenged. However, the Equal Protection Clause prohibits peremptorily challenging a member of a class subject to heightened equal protection scrutiny based on stereotypical assumptions attributed to that class. Rather than make unfounded assumptions, the litigants should question the venire as to their beliefs. Such a properly conducted voir dire will inform litigants about potential jurors, making reliance upon stereotypical and pejorative notions about a particular religion both unnecessary and unwise. J.E.B., ___ U.S. at ___, 114 S.Ct. at 1429. In the instant case, had the individual veniremembers been questioned about their beliefs and expressed a belief unacceptable to the State, when viewed in relation to the instant case, they could have peremptorily challenged. Under those circumstances the veniremembers would have been excused on the basis of their personal beliefs and not on a stereotypical assumption based on their religion.
[16] J.E.B., ___ U.S. at ___, 114 S.Ct. at 1425. Although in J.E.B., the Supreme Court conducted an intermediate scrutiny review, a strict scrutiny review is appropriate in the instant case.
[17] To varying degrees, Judges McCormick, Campbell and White believe the instant case is controlled by Hill v. State, 827 S.W.2d 860 (Tex. Cr.App.1992). However, that issue is not before us. For the reasons stated in n. 3, supra, this opinion is limited to the Court of Appeals' holding that the Equal Protection Clause does not prohibit the use of peremptory challenges on the basis of religion. Upon remand, the Court of Appeals is free to consider to what extent, if any, our plurality opinion in Hill applies.
[1] But, we expend more than 50 pages discussing whether these facts violate the Equal Protection Clause of the Fourteenth Amendment, and, more specifically, whether the peremptory challenges were based on a constitutionally improper stereotype about the veniremembers' Pentecostal faith!
[2] Most U.S. Supreme Court Equal Protection cases discussed in the various opinions here dealt with statutory classifications that generally affected cognizable groups. It is difficult to apply these cases to peremptory challenges exercised in a single trial. See, e.g., Batson, 476 U.S. at 122-24, 106 S. Ct. at 1737 (Burger, C.J., dissenting) (traditional equal protection analysis is simply inapplicable to peremptory challenges exercised in any particular case).
[3] Appellant assumed the burden to prove the peremptory challenges burdened the exercise of the veniremembers' religion, and he has not met this burden.
[4] The majority also errs to apply a more exacting standard of review to religious-based peremptory challenges (strict scrutiny) than the standard applied to sex-based peremptory challenges (intermediate scrutiny) in J.E.B. v. Alabama. ___ U.S. ___, ___, 114 S. Ct. 1419, 1425, 128 L. Ed. 2d 89 (1994). According to J.E.B., the history of discrimination in this Country against women is a close second to the history of discrimination against black people justifying the heightened scrutiny standard of review to sex-based peremptory challenges. See id. With respect to jury selection practices, the Supreme Court has not yet decided which group is number three in this hierarchy of racial and sexual preferences. See State v. Weatherspoon, 514 N.W.2d 266, 281 (Minn.App.1994) (Randall, J., specially concurring).
[5] However, under Crenshaw and Juarez, it is difficult to conceptualize how peremptory challenges based on any group stereotype would not violate Equal Protection even under a rational basis standard of review since members of that group are being singled out "in an arbitrary and irrational fashion." See Batson, 476 U.S. at 122-24, 106 S. Ct. at 1737 (Burger, C.J., dissenting) (traditional equal protection analysis has no application to the peremptory challenge because it is an arbitrary and capricious right); but see J.E.B., ___ U.S. at ___, 114 S.Ct. at 1429 (peremptory challenges based on sexual stereotypes fail heightened scrutiny equal protection analysis because they do not substantially further an important government interest, but parties may still exercise peremptory challenges based on stereotypes about members of groups subject to a "rational basis" review). It appears, at least with respect to jury selection practices, that some groups are more equal than other groups. See id.
[6] In Footnote ten, the plurality asserts this dissenting opinion cannot contend that religious classifications are not subject to heightened scrutiny. THIS OPINION, HOWEVER, COCLUDES RELIGIOUS-BASED PEREMPTORY CHALLENGES SHOULD BE REVIEWED UNDER A LESS EXACTING STANDARD THAN HEIGHTENED SCRUTINY. This standard apparently is the line drawn in the sand for making lawyers explain the reasons for their peremptory strikes; therefore, it is unnecessary to decide exactly which standard of scrutiny applies to religious-based peremptory challenges. This opinion also concludes this Court need not address the issue the plurality opinion addresses because it is unnecessary to the disposition of this case; this Court should dismiss the petition for discretionary review as improvidently granted. Cf. Briggs v. State, 740 S.W.2d 803, 806-807 (Tex.Cr.App.1987) (constitutionality of a statute should not be determined unless such a determination is absolutely necessary to decide the case in which the issue is raised).
The plurality opinion also asserts this opinion concedes its application of J.E.B.'s "analytical framework" is "correct." This opinion makes no such concession because, like Judge Meyers, I am not sure I really understand J.E.B.'s "analytical framework." What I do know about J.E.B. is that it addressed a practice where a party used all its peremptory strikes on men, and the Supreme Court relied on the history of discrimination in this country against women to condemn that practice and to announce sex-based peremptory challenges violate the Fourteenth Amendment. Were I to apply J.E.B.'s "analytical framework," I would conclude the Constitution should reflect my own personal views. More importantly, J.E.B., under the guise of Equal Protection, supports the dubious proposition that parties may not use their peremptory challenges to single out in an arbitrary and irrational fashion members of some groups, but parties may do so with respect to members of groups subject to a "rational basis" review. J.E.B., ___ U.S. at ___, 114 S.Ct. at 1429. I must ask whether this also means the Fourteenth Amendment no longer prohibits states from passing laws that single out members of these latter groups in an arbitrary and irrational fashion? See, e.g., Plessy v. Ferguson; Strauder v. West Virginia, infra.
Also, the plurality erroneously asserts this dissenting opinion ignores binding precedent. It does not because there is no binding precedent, and the plurality has not cited any. The plurality still has not demonstrated how religious-based peremptory challenges violate the First Amendment, and the cases cited in Footnote fourteen of the plurality opinion in support of its "fusion analysis" do not support its holding because even though the Supreme Court "has occasionally fused the First Amendment into the Equal Protection Clause"; it has done so because "the First Amendment underlies its analysis." R.A.V. v. City of St. Paul, Minn., 505 U.S. 377, 385, 112 S. Ct. 2538, 2544, 120 L. Ed. 2d 305 (1992) (the only reason the government's interest is not a legitimate one is that it violates the First Amendment) (Emphasis Supplied). Central to the plurality's analysis is that religious-based peremptory challenges implicate the First Amendment, but the plurality still has not explained how.
Finally, this dissenting opinion suggests, respectfully and in the interest of promoting this State's legitimate interests in providing fair and impartial juries to both sides in criminal cases and protecting its citizens from the obviously guilty, that Batson should be reexamined. That is why this opinion sets out the facts of the case. The law, and to a certain extent the powers granted to governments under the Constitution, are intended to protect citizens from the obviously guilty, like this appellant. Batson, however, entitles obviously guilty and fairly tried defendants to relief even though they have not been harmed. We have traveled from the honorable purpose of preventing the systemic exclusion from juries of members of various groups for invidious discriminatory purposes to the dishonorable purpose of allowing an obviously guilty and fairly tried defendant to assert the rights of members of various groups who were not peremptorily stricken for invidious discriminatory purposes. Extending Batson to other situations is beginning to impose a burden on this state's judicial resources, especially when one understands that Batson generally has nothing to do with whether a defendant has received a fair trial. This dissenting opinion suggests the Constitution should not be used to promote a social agenda that really has nothing to do with the Constitution. To do so trivializes this Country's history of the struggle to end invidious racial discrimination.
[7] The majority also recognizes the free use of peremptory challenges "facilitate the impaneling of an impartial and unbiased jury." However, this does not qualify as a compelling governmental interest!
[8] Cf. Lanford v. Fourteenth Court of Appeals, 847 S.W.2d 581, 585 (Tex.Cr.App.1993) (primary goal in the interpretation of a constitutional provision is to ascertain and give effect to the apparent intent of the voters who adopted it).
[9] Historically, this meant state-sponsored, systemic discrimination against black people. See Juarez, 277 S.W. at 1094.
[10] See also City of Mobile, Alabama, v. Bolden, 446 U.S. 55, 62, 100 S. Ct. 1490, 1497, 64 L. Ed. 2d 47 (1980); Village of Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252, 266-67, 97 S. Ct. 555, 564-65, 50 L. Ed. 2d 450 (1977).
[11] These considerations generally apply to individuals as well as cognizable groups "though group disabilities are sometimes the mechanism by which the State violates the individual right in question." J.E.B., ___ U.S. at ___, 114 S.Ct. at 1434 (Kennedy, J., concurring).
[12] See also Powers v. Ohio, 499 U.S. 400, 429-31, 111 S. Ct. 1364, 1381, 113 L. Ed. 2d 411 (1991) (Scalia, J., dissenting) (it is intolerably offensive to imprison a person on the basis of a conviction rendered by a jury from which members of the defendant's race were carefully excluded).
[13] The Swain court addressed the problem as follows:
"We have decided that it is permissible to insulate from inquiry the removal of Negroes from a particular jury on the assumption that the prosecutor is acting on acceptable considerations related to the case he is trying, the particular defendant involved and the particular crime charged. But when the prosecutor in a county, in case after case, whatever the circumstances, whatever the crime and whoever the defendant or the victim may be, is responsible for the removal of Negroes who have been selected as qualified jurors by the jury commissioners and who have survived challenges for cause, with the result that no Negroes ever serve on petit juries, the Fourteenth Amendment claim takes on added significance. (Citation Omitted) In these circumstances, giving even the widest leeway to the operation of irrational but trial-related suspicions and antagonisms, it would appear that the purpose of the peremptory challenge are being perverted. If the State has not seen fit to leave a single Negro on any jury in a criminal case, the presumption protecting the prosecutor may well be overcome. Such proof might support a reasonable inference that Negroes are excluded from juries for reasons wholly unrelated to the outcome of the particular case on trial and that the peremptory system is being used to deny the Negro the same right and opportunity to participate in the administration of justice enjoyed by the white population. These ends the peremptory challenge is not designed to facilitate or justify." Swain, 380 U.S. at 223-24, 85 S. Ct. at 837-38. (Emphasis Supplied).
[14] The lone dissenting opinion in the historically relevant Plessy v. Ferguson case illustrates the conditions which the Equal Protection Clause was intended to remedy. Plessy v. Ferguson, 163 U.S. 537, 554-57, 16 S. Ct. 1138, 1145, 41 L. Ed. 256 (1896) (Harlan, J., dissenting):
"It was said in argument that the statute of Louisiana does not discriminate against either race, but prescribes a rule applicable alike to white and colored citizens. But this argument does not meet the difficulty. Every one knows that the statute in question had its origin in the purpose, not so much to exclude white persons from railroad cars occupied by blacks, as to exclude colored people from coaches occupied by or assigned to white persons. Railroad corporations of Louisiana did not make discrimination among whites in the matter of accommodation for travelers. The thing to accomplish was, under the guise of giving equal accommodation for whites and blacks, to compel the latter to keep to themselves while traveling in railroad passenger coaches. No one would be so wanting in candor as to assert the contrary." (Emphasis Supplied).
[15] See Weatherspoon, 514 N.W.2d at 296:
"I suggest strongly that neither prosecutor nor defense attorney are interested in discrimination or bias against any person, for its own sake. As stated throughout this opinion, questions of race, color, creed, religion, [sex], ethnic origin, occupational status, age, economic status, other life experiences, are factors that filter through a competent trial attorney's mind as they attempt to judge who would be a better juror for their client. That is the only way peremptory strikes are used, and the only way they will be used in the future, regardless of [Batson and its progeny's] rhetoric." (Emphasis in Original)
[16] See also Feeney, 442 U.S. at 278-80, 99 S. Ct. at 2296 (discriminatory purpose implies more than intent as volition or intent as awareness of consequences; it implies that the sovereign selected or reaffirmed a particular course of action at least in part because of, not merely in spite of, its adverse effects upon an identifiable group ) (internal quotation marks omitted).
[17] And, Batson and its progeny do to a degree attempt to regulate the most private thoughts of trial lawyers, even if there is some truth to these thoughts. See J.E.B., ___ U.S. at ___ fn. 11, 114 S. Ct. at 1427 fn. 11 (a peremptory challenge based even on a "true" gender-based stereotype violates Equal Protection), and at ___, 114 S.Ct. at 1436 (Scalia, J., dissenting) (even if sex was a good predictor in certain cases, the Court would find its use in peremptories unconstitutional); Weatherspoon, 514 N.W.2d at 276, 278 (Batson and its progeny require trial courts to be "thought police" and gives them the power to punish those who "don't think right" by, for example, placing on a jury a juror upon whom the defendant has exercised a peremptory challenge).
[18] The Fourteenth Amendment is intended to protect all the civil rights pertaining to freedom and citizenship. Plessy, 163 U.S. at 554-57, 16 S. Ct. at 1145 (Harlan, J., dissenting). Personal freedom "consists in the power of locomotion, of changing situation, or removing one's person to whatsoever place one's own inclination may direct, without imprisonment or restraint, unless by due course of law." Id., 163 U.S. at 557-59, 16 S. Ct. at 1146. It is difficult to understand how the use of peremptory challenges violate any citizen's "personal freedom" as we have historically come to understand what the term means. And, it is especially hard to understand how peremptory challenges can withstand scrutiny based on stereotypes about some groups and not withstand scrutiny when based on stereotypes about other groups. See Footnote 5, supra; J.E.B., ___ U.S. at ___, 114 S.Ct. at 1429. If these peremptory challenges violate the personal freedom of the members of the latter groups, then they also violate the personal freedom of the members of the less favored groups. See Footnote 5, supra; Crenshaw, 486 U.S. at 82-84, 108 S. Ct. at 1653 (singling out members of a cognizable group in an arbitrary and capricious manner violates the Equal Protection Clause even under the most deferential standard of review).
[19] Therefore, the Constitution requires litigators to deny the "truth" in some circumstances!
[1] With all due respect to Justice Hopkins, the opinion written by Judge Maloney in Hill v. State was a plurality opinion. Hill v. State, 827 S.W.2d, at 860.
[1] James Kilpatrick, Prejudice is crucial in selection of jurors, Austin American-Statesman, May 19, 1994, at A-13.
[1] I am not quite sure what the majority means by "the constitutional significance of peremptory challenges." The issue presented in this case involves the classification of a Constitutional right, namely freedom of religion, against a statutory right, namely the exercise of peremptory challenges. There is nothing in the Constitution of the United States which requires the peremptory challenge. Stilson v. United States, 250 U.S. 583, 586, 40 S. Ct. 28, 30, 63 L. Ed. 1154 (1919). Therefore, notwithstanding the majority's statement to the contrary, the peremptory challenge has no "constitutional significance."
[2] Some of the charges resulted from the vandalizing of Jewish temples.
[3] The cases discussed in this section are ignored by the majority just at the majority ignores the fact that the Pentecostal veniremembers were not peremptorily challenged for their religious beliefs. Rather, the veniremembers were excluded because of the prosecutor's stereotypical view that Pentecostals have difficulty sitting in judgment of others and have a propensity to impose probationary sentences. There is no showing that these are beliefs of the Pentecostal religion nor were the veniremembers individually questioned to determine if they held those beliefs as a result of their membership in the Pentecostal religion. Rather than make unfounded assumptions, litigants should question the venire as to their beliefs. Such a properly conducted voir dire will inform litigants about potential jurors, making reliance upon stereotypical and pejorative notions about a particular religion both unnecessary and unwise. See, J.E.B., 511 U.S. at ___, 114 S.Ct. at 1429.
Additionally, I believe the majority's reliance on United States v. Villarreal, 963 F.2d 725 (5th Cir.1992), for the proposition that peremptorily challenging veniremembers on account of their political beliefs does not offend equal protection principles is misplaced. Ante at 495. Villarreal is of limited precedential value because it was delivered before the rationale of Batson had been extended beyond race.
[4] UNITED METHODIST CHURCH, THE BOOK OF RESOLUTION OF THE UNITED METHODIST CHURCH (United Methodist Pub. House 1992).
[5] The majority's notion of unanimity of belief by all members of a religion is contrary to our fundamental right to the free exercise of religion. As the Supreme Court has held:
... If all expression of religion or opinion, however, were subject to the discretion of authority, our unfettered dynamic thoughts or moral impulses might be made only colorless and sterile ideas. To give them life an force, the Constitution protects their use. No difference of view as to the importance of the freedoms of press or religion exist. They are fundamental personal rights and liberties.
Jones v. City of Opelika. Bowden et al., 316 U.S. 584, 594, 62 S. Ct. 1231, 1237, 86 L. Ed. 1691 (1942). By permitting peremptory challenges based on religion, the majority "in effect makes abandonment of one's own religion or conformity to religious beliefs of others, the price of" jury service. Employment Division, Dept. Human Resources v. Smith, 494 U.S. 872, 897, 110 S. Ct. 1595, 1610, 108 L. Ed. 2d 876 (1990) (O'Connor J., Concurring).
[6] See, Wygant v. Jackson Board of Education, 476 U.S. 267, 106 S. Ct. 1842, 90 L. Ed. 2d 260 (1986); Anderson v. Celebrezze, 460 U.S. 780, 794, 103 S. Ct. 1564, 1572, 75 L. Ed. 2d 547 (1983); Mississippi University for Women v. Hogan, 458 U.S. 718, 102 S. Ct. 3331, 73 L. Ed. 2d 1090 (1982); Plyler v. Doe, 457 U.S. 202, 102 S. Ct. 2382, 72 L. Ed. 2d 786 (1982); and, United States v. Carolene Products, 304 U.S. 144, 151-154, 58 S. Ct. 778, 783-784, 82 L. Ed. 1234 (1938). See also, J.E.B. v. Alabama ex rel. T.B., 511 U.S. ___, ___, 114 S. Ct. 1419, 1434, 128 L. Ed. 2d 89 (1994) (Kennedy, J., concurring); and, Arizona Governing Committee v. Norris, 463 U.S. 1073, 103 S. Ct. 3492, 77 L. Ed. 2d 1236 (1983).
[7] Classifications subject to strict scrutiny review or intermediate scrutiny review are said to be subject to "heightened Equal Protection scrutiny." Ante, 913 S.W.2d at 474 (on original submission).
[8] In its latest opinion addressing the right to free exercise of religion, the Supreme Court reiterated that classifications affecting the fundamental right to religious freedom must satisfy strict scrutiny. Church of the Lukumi Babalu Aye v. City of Hialeah, 508 U.S. 520, 113 S. Ct. 2217, 124 L. Ed. 2d 472 (1993):
... To satisfy the commands of the First Amendment, a law restrictive of religious practice must advance interests of the highest order and must be narrowly tailored in pursuit of those interests. The compelling interest standard that we apply ... really means what it says. A law that targets religious conduct for distinctive treatment or advances legitimate governmental interests only against conduct with a religious motivation will survive strict scrutiny only in rare cases.
Id., 508 U.S. at ___, 113 S.Ct. at 2233 (citations and quotations omitted).
[9] In Ristaino v. Ross, 424 U.S. 589, 596, n. 8, 96 S. Ct. 1017, 1021, n. 8, 47 L. Ed. 2d 258 (1976), the Supreme Court stated:
... In our heterogeneous society policy as well as constitutional considerations militate against the divisive assumptionas a per se rulethat justice in a court of law may turn upon the pigmentation of skin, the accident of birth, or the choice of religion.
[Emphasis added.]
[10] Peremptory challenges of members of a class subject to heightened equal protection scrutiny on the basis of their personal beliefs are not unconstitutional so long as those beliefs are related to the particular case being tried. The only unconstitutional peremptory challenges are those exercised on the basis of a stereotype attributed to a class subject to heightened equal protection scrutiny. If the veniremember holds personal beliefs that are unacceptable, that veniremember may be peremptorily challenged. However, the Equal Protection Clause prohibits peremptorily challenging a member of a class subject to heightened equal protection scrutiny based on stereotypical assumptions attributed to that class. In the instant case, had the individual veniremembers been questioned about their beliefs and expressed a belief unacceptable to the State, when viewed in relation to the instant case, they could have been peremptorily challenged. Under those circumstances the veniremembers would have been excused on the basis of their personal beliefs and not on a stereotypical assumption based on their religion.
[11] Our fundamental right to the free exercise of religion must be "zealously protected ... even at the expense of ... admittedly high social interests." Wisconsin v. Yoder, 406 U.S. 205, 215, 92 S. Ct. 1526, 1533, 32 L. Ed. 2d 15 (1972).
[12] This misdirected focus is an obvious rabbit trail because the unconstitutional exclusion of a veniremember does not affect the veniremember's religious affiliation. The Pentecostal veniremembers were still Pentacostals after their unconstitutional exclusion just as the veniremembers unconstitutionally excluded in Batson were still African-Americans and the male veniremembers unconstitutionally excluded in J.E.B. were still males. Consequently, as seen in part III B, infra, the focus must be on whether their class was entitled to heightened Equal Protection scrutiny.
The unconstitutional peremptory challenge need not directly affect the veniremember's religion. In Sherbert v. Verner, 374 U.S. 398, 404, 83 S. Ct. 1790, 1794, 10 L. Ed. 2d 965 (1963), the Court said if the purpose is to "discriminate ... between religions, that law is constitutionally invalid even though the burden may be characterized as being only indirect." Ibid. (Quoting Braunfeld v. Brown, 366 U.S. 599, 607, 81 S. Ct. 1144, 1148, 6 L. Ed. 2d 563 (1960).) Indirect harm is sufficient because the opportunity to serve on a jury is a civil right afforded to all citizens as an incident of their citizenship, and allowing a party to strike a potential juror solely because of religion without showing a more specific bias on behalf of the veniremember imposes a burden on the juror's free exercise of religion. State v. Levinson, 71 Haw. 492, 795 P.2d 845, 849 (1990).
[13] That is, if the veniremember's right to the free exercise of religion is fundamental, Cantwell v. Connecticut, 310 U.S. 296, 303, 60 S. Ct. 900, 903, 84 L. Ed. 1213 (1940), then the infringement of that right is subject to heightened Equal Protection scrutiny. Cleburne v. Cleburne Living Center, 473 U.S. 432, 440, 105 S. Ct. 3249, 3254, 87 L. Ed. 2d 313 (1985).
[14] Jury service is perhaps the most powerful function an ordinary citizen will perform. Here the juror's vote is equal to the sovereign. It is here the juror may validate or invalidate the governmental exercise of power.
[15] A study by William R. Pabst Jr. found 90% of those who served as jurors were favorably impressed with jury duty and felt more favorable toward it than before their service. The Myth of the Unwilling Juror, 60 Judicature 164, 165 (1976).
[16] In Lockhart v. McCree, 476 U.S. 162, 175, 106 S. Ct. 1758, 1766, 90 L. Ed. 2d 137 (1986), the Supreme Court stated:
[T]he exclusion from jury service of large groups of individuals not on their inability to serve as jurors, but on the basis of some immutable characteristic such as race, gender, or ethnic background, undeniably gave rise to an "appearance of unfairness." Finally, such exclusion improperly deprived members of these often historically disadvantaged groups of their right as citizens to serve on juries in criminal cases.
[17] Our holding on original submission that religious discrimination has no place in the jury selection process was not novel. State v. Levinson, 71 Haw. 492, 795 P.2d 845, 849 (1990) (Improper to exercise peremptory challenge on religious affiliation.); Joseph v. State, 636 So. 2d 777 (Fla. 3d DCA 1994) (Improper to peremptorily challenge a veniremember on the basis of Jewish faith.); North Carolina v. Eason, 336 N.C. 730, 445 S.E.2d 917, 921 (1994) (Improper to use peremptorily challenge solely because veniremember was a Jehovah's Witness. Discrimination so strongly taints the judicial system that any proceeding in which it appears is fatally flawed.); Commonwealth v. Soares, 377 Mass. 461, 387 N.E.2d 499, 516 (1979) ("... generic group affiliations which may not permissibly form the basis for jury exclusion: sex, race, color, creed [religion] or national origin."); People v. Wheeler, 22 Cal. 3d 258, 148 Cal. Rptr. 890, 902, 583 P.2d 748, 761 (1978) ("... peremptory challenges may not be used to exclude from a jury, solely because of a presumed `group bias,' all or most members of identifiable group of citizens distinguished on racial, religious, ethnic or similar grounds."); Walker v. State, 611 So. 2d 1133, 1141 (Ala.Cr.App.1992) (State may not use religious affiliation as a race neutral explanation for Batson objection to the exclusion of blacks.); Riley v. State, 496 A.2d 997, 1006 (Del.1985) (Peremptory challenges based on religious affiliation are generally impermissible.); People v. Snow, 44 Cal. 3d 216, 242 Cal. Rptr. 477, 746 P.2d 452 (1987) (Peremptory challenges may not be used to exclude from a jury citizens distinguished on racial, religious, ethnic, or similar grounds.); People v. Fudge, 7 Cal. 4th 1075, 31 Cal. Rptr. 2d 321, 332, 875 P.2d 36, 47 (1994) (may not exclude veniremembers solely on religious grounds); and, State v. Gilmore, 103 N.J. 508, 511 A.2d 1150, 1158 (1986) ("... defendant is entitled to trial by impartial jury without discrimination on basis of religious principles...."). See also, Brandborg v. Lucas, 891 F. Supp. 352, 358 (U.S.Dist.Ct.E.D.Texas 1995) (Questions concerning religion are improper at voir dire.); State v. Willis, 33 Ohio Misc. 159, 293 N.E.2d 895, 896 (1972) ("[N]o person shall be denied the right to serve on a jury because of status of race, religion, sex, or age so long as they are competent."); and, United States v. Daily, 139 F.2d 7 (7th Cir.1943) (The parties may not inquire into religious affiliation during voir dire.).
[18] I am astounded at the lack of authority advanced by the majority to support its ultimate holding. The reader will observe the majority opinion provides authority only when it is in agreement with our holding on original submission. However, when the majority departs from our original holding, the reader is left baffled as to its legal authority to do so. I cannot help but believe that such an analysis was never contemplated by the Supreme Court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1198913/ | 960 P.2d 941 (1998)
90 Wash.App. 808
STATE of Washington, Respondent,
v.
John O. DUNCAN, Appellant.
No. 14680-4-III.
Court of Appeals of Washington, Division 3.
April 14, 1998.
*942 Deforest N. Fuller, Fuller & Associates, Wenatchee, for Appellant.
James A. Hershey, Deputy Prosecutor, Wenatchee, for Respondent.
SCHULTHEIS, Chief Judge.
A juvenile court judge may impose an exceptional sentence if a standard range sentence would constitute a manifest injustice. After his conviction for first degree murder, first degree burglary, attempted residential burglary and two counts of theft of a firearm, 12-year-old John Oliver Duncan received a manifest injustice sentence keeping him in juvenile detention until age 21. He contends the sentence is not supported by the record and is excessive. We remand for resentencing.
On August 19, 1994, Mr. Duncan and another 12-year-old, Manuel Sanchez, attempted *943 to enter a neighbor's home at 1:00 a.m.[1] In the process, they broke a basement window, cut a telephone line and unscrewed motion sensor lights. They were discovered before they entered the house, but they escaped.
The next day, they entered a friend's home and took three pistols. They then went down to the Columbia River and began shooting at the water. After a man near the river yelled at the boys to stop, they began shooting at him. Eventually, the man hit Mr. Sanchez in the face with a thrown rock. The boys reacted by shooting the man until he fell into the water. They then ran up the embankment for more ammunition. Mr. Duncan reloaded, went back down to the man's body and shot him several more times, in the head and chest. In all, the man was shot at least 18 times. Police arrived as Mr. Duncan threw the guns under a bush and headed back up the embankment.
Mr. Duncan was charged by amended information with first degree murder, two counts of first degree burglary, residential burglary and four counts of theft of a firearm. The juvenile court retained jurisdiction after a declination hearing. Mr. Duncan's statement to police was admitted after a CrR 3.5 hearing. Ultimately, he was convicted of first degree murder while armed with a deadly weapon,[2] first degree burglary while armed with a deadly weapon,[3] attempted residential burglary,[4] and two counts of theft of a firearm.[5]
At sentencing, the trial court considered materials presented during the decline hearing and trial as well as the predisposition report prepared by the juvenile rehabilitation board. Although the board suggested Mr. Duncan's crimes met most of the aggravating factors found in RCW 13.40.150(3)(i),[6] the trial court found that the factors, in themselves, did not support a manifest injustice sentence. The court did find, however, that these factors supported a finding that Mr. Duncan was at serious risk of reoffending and that a manifest injustice sentence was necessary to protect the public. It also held that a sentence keeping him in juvenile detention until age 21 would provide the best opportunity for rehabilitation.
The board's recommended sentence length535 weeksincluded the weeks remaining until Mr. Duncan's 21st birthday plus possible earned good time. Although the trial court asserted it could not consider good time in the disposition it adopted the board's recommendation of 535 weeks as "the time necessary to address John Duncan's disabilities and, more particularly, ... to protect the community from John Duncan."
The sole issue on appeal is the court's imposition of the manifest injustice sentence. Mr. Duncan contends the record does not support the court's reasons for departing from the standard range and asserts the length of the sentence is clearly excessive because it takes into consideration earned good time. We stayed disposition of this matter pending the Supreme Court decision in State v. Sledge, 133 Wash.2d 828, 947 P.2d 1199 (1997).
*944 A juvenile court may impose a sentence outside the standard range if it determines that a sentence within the standard range would "effectuate a manifest injustice." RCW 13.40.160(1); State v. P.B.T., 67 Wash.App. 292, 300, 834 P.2d 1051 (1992), review denied, 120 Wash.2d 1021, 844 P.2d 1017 (1993). The Juvenile Justice Act of 1977 defines as manifest injustice "a disposition that would either impose an excessive penalty on the juvenile or would impose a serious, and clear danger to society in light of the purposes of this chapter." RCW 13.40.020(16). These purposes include protection of the citizenry and provision of necessary treatment, supervision and custody for juvenile offenders. RCW 13.40.010(2)(a), (f).
The trial court's finding of manifest injustice must be supported by clear and convincing evidence, and the resulting sentence must not be clearly excessive. RCW 13.40.160(1), .230(2). In reviewing a trial court's finding of manifest injustice, the appellate court engages in a three-part test: (1) Are the reasons given by the trial court supported by substantial evidence; (2) do those reasons support the determination of a manifest injustice disposition beyond a reasonable doubt; and (3) is the disposition either clearly too excessive or too lenient? RCW 13.40.230(2); State v. Rhodes, 92 Wash.2d 755, 760, 600 P.2d 1264 (1979); P.B.T., 67 Wash.App. at 301, 834 P.2d 1051. The trial court's reasons for imposing a manifest injustice sentence must be clear in the record and must convincingly support the conclusion. State v. Bevins, 85 Wash.App. 280, 283, 932 P.2d 190, review denied, 133 Wash.2d 1005, 943 P.2d 663 (1997); State v. E.J.H., 65 Wash.App. 771, 830 P.2d 375 (1992). Whether a court's reasons justify a departure from the standard range is a question of law. State v. Scott, 72 Wash.App. 207, 213, 866 P.2d 1258 (1993), aff'd. sub nom. State v. Ritchie, 126 Wash.2d 388, 894 P.2d 1308 (1995).
Here, the trial court's findings that a sentence outside the standard range was necessary to protect the public and rehabilitate Mr. Duncan are recognized factors supporting a manifest injustice disposition. Bevins, 85 Wash.App. at 284, 932 P.2d 190; State v. N.E., 70 Wash.App. 602, 606-07, 854 P.2d 672 (1993). Mr. Duncan contends the expert testimony, specifically the recommendation of Eileen McCarty, does not support this finding.
Ms. McCarty, a clinical psychologist testifying for the defense, diagnosed a possibility that Mr. Duncan suffered attention deficit disorder and hyperactivity. She based her recommendations on personal observation during interviews, materials from the police department, an intelligence test and unspecified "personality tests." She described Mr. Duncan as an immature, unsophisticated youth of average intellectual ability who had limited contact with juvenile rehabilitation programs. She stated his prior offenses did not include assault. Based on these observations, she recommended juvenile rehabilitation for a standard range sentence of minimally four years.
Although the trial court considered Ms. McCarty's reports, it placed more confidence in the psychiatric evaluations of Jack Reiter, M.D.[7] Dr. Reiter based his assessment of Mr. Duncan on Ms. McCarty's psychological evaluation as well as on additional psychological tests and interviews. Besides a diagnosis of attention deficit hyperactivity disorder, he also diagnosed the more serious problems of conduct disorder and oppositional defiant disorder.[8] Dr. Reiter described Mr. Duncan as a non-empathetic and self-centered child with aggressive, sadistic and antisocial personality traits. In his opinion, such a child is easily provoked and inclined to brood and harbor grudges. Although *945 Dr. Reiter noted that an attention deficit disorder is usually easily treated with stimulant medication, he believed treatment was hampered here by the conduct and oppositional defiant disorders. At any rate, he believed appropriate treatment could help inhibit Mr. Duncan's impulsive violence in the future.
Both Dr. Reiter's report and the predisposition report prepared by Kathleen Peryea Gut noted that, contrary to Ms. McCarty's conclusion, Mr. Duncan has a long history of assaultive and destructive behavior. He began to fight at school in second grade and was expelled twice for fighting. By fifth grade, he had "terrorized his peers to the degree that they kept him after school with an aide, so the [c]hildren could get home safely." His offense history reveals such reports as intimidation with a weapon, malicious mischief, assault and theft. Most of these reports did not lead to filed charges, but in some cases he was offered and refused diversion, in one case he successfully completed a diversion agreement, and in another he was punished for failing to meet diversion terms.
The trial court considered these materials, and the report that Mr. Duncan recently had yelled death threats to a child in an adjoining cell, and found that his assaultive behavior had escalated over the past two years. Although the court found that the statutory aggravating factors of RCW 13.40.150(3)(i) were mostly subsumed in the charge of first degree murder, it held that the seriousness of the multiple injuries, inflicted on an unarmed man by a juvenile whose recent criminal history shows a failure to respect dispositional orders, could be considered in determining the future risk to the community. The court concluded that the pattern of escalating violence and property destruction and the level of violence exhibited in the current offenses indicated Mr. Duncan was a serious risk to reoffend. This conclusion is amply supported by the record and supports beyond reasonable doubt the imposition of a manifest injustice sentence to protect public safety.
Once a trial court has legitimately decided to depart from the standard range, it has broad discretion to determine the length of a manifest injustice disposition. State v. Tauala, 54 Wash.App. 81, 86, 771 P.2d 1188, review denied, 113 Wash.2d 1007, 779 P.2d 727 (1989). The court must have a tenable basis for its determination. State v. S.S., 67 Wash.App. 800, 819, 840 P.2d 891 (1992). Here, the trial court found that if Mr. Duncan was not detained until age 21, he would beyond reasonable doubt continue to terrorize the community. The length of this detention would ensure that the maximum effort would "be expended on his behalf so that he [may] have any chance of being a productive, responsible and crime-free adult, while at the same time protecting the community." Both Ms. McCarty and Dr. Reiter recommended treatment in a controlled environment, and Dr. Reiter suggested that even with appropriate treatment Mr. Duncan's prognosis was only "guarded to possibly good." Nothing in the record indicates that the court considered a specific treatment program of a specific duration in setting the length of his disposition.
The juvenile court may set a maximum term of confinement beyond the offender's 21st birthday. Juveniles must, however, be released at age 21 regardless of their sentence. RCW 13.40.300; State v. Bourgeois, 72 Wash.App. 650, 658, 866 P.2d 43 (1994). The problem here is that the juvenile rehabilitation board added a number of weeks to its recommended sentence solely based on its speculation of possible earned early release time. The assumption that a juvenile offender will earn a discretionary early release invites too much speculation and is a manifest abuse of discretion. State v. Sledge, 133 Wash.2d 828, 844-45, 947 P.2d 1199 (1997). While the trial court asserted it could not consider early release time, the fact remains that it relied on a recommendation based on such consideration. Absent facts documenting a need to confine Mr. Duncan for a set duration to attend a specific treatment program, the assumption that he might be released before his 21st birthday is too speculative to support the length of his sentence. Id. at 845, 947 P.2d 1199.
To summarize, we affirm the trial court's imposition of an exceptional sentence. Because *946 the length of the sentence appears to be based in part on speculation of earned early release, we remand for reconsideration of the sentence duration.
Remanded for resentencing.
KURTZ, J., and THOMPSON, J. Pro Tem., concur.
NOTES
[1] Mr. Duncan does not assign error to the trial court's findings and they are verities on appeal. State v. Allert, 117 Wash.2d 156, 168, 815 P.2d 752 (1991).
[2] RCW 9A.32.030(1)(a); RCW 13.40.193, 196.
[3] RCW 9A.52.020; RCW 13.40.193, 196.
[4] RCW 9A.52.025.
[5] RCW 9A.56.300.
[6] The board suggested that Mr. Duncan's offenses satisfied these RCW 13.40.150(3)(i) aggravating factors:
"(i) In the commission of the offense, or in flight therefrom, the respondent inflicted or attempted to inflict serious bodily injury to another;
"(ii) The offense was committed in an especially heinous, cruel, or depraved manner;
"(iii) The victim or victims were particularly vulnerable;
"(iv) The respondent has a recent criminal history or has failed to comply with conditions of a recent dispositional order or diversion agreement;
"....
"(vi) The respondent was the leader of a criminal enterprise involving several persons; and
"(vii) There are other complaints which have resulted in diversion or a finding or plea of guilty but which are not included as criminal history."
[7] The trial court has discretion to choose among recommendations from different credible expert witnesses. State v. J.S., 70 Wash.App. 659, 665, 855 P.2d 280 (1993).
[8] The American Psychiatric Ass'n, Diagnostic and Statistical Manual of Mental Disorders (4th ed. 1994) (DSM-IV) describes conduct disorder as "[a] repetitive and persistent pattern of behavior in which the basic rights of others or major age-appropriate societal norms or rules are violated...." DSM-IV at 90. Oppositional defiant disorder is described as "[a] pattern of negativistic, hostile, and defiant behavior...." DSM-IV at 93. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1644727/ | 888 F. Supp. 332 (1994)
Richard PENNEY, et al.
v.
TOWN OF MIDDLETON, et al.
Civ. No. 92-555-B.
United States District Court, D. New Hampshire.
November 21, 1994.
*333 *334 *335 *336 Sheldon M. Katz, Hanover, NH, for plaintiffs.
Cynthia A. Satter, Timothy Bates, Laconia, NH, for defendants.
ORDER
BARBADORO, District Judge.
Richard and Laura Penney and their children, Robert, Jason and Suzanne, seek compensatory and punitive damages from the Town of Middleton, its local school district, various local officials, and a non-profit corporation. The Penneys contend that they suffered from unlawful discrimination because they moved to Middleton from Massachusetts, and unlawful retaliation because of things Richard and Laura did and said. Richard Penney also claims that he was the victim of unlawful discrimination because of a visual disability. The Penneys base their claims on the constitutional rights to free speech, travel and equal protection; § 504 of the Rehabilitation Act of 1973, 29 U.S.C.A. § 794; an agreement reached between the town and the United States Department of Housing and Urban Development; and various state law rights. Defendants have moved to dismiss parts of the complaint for failure to state a claim. They also invoke the affirmative defenses of immunity, bankruptcy discharge, accord and satisfaction, collateral estoppel, and res judicata. Before I address the merits of this motion, I outline the case's convoluted procedural history, the standard of review I use in deciding the motion, and the complaint's allegations.
I. BACKGROUND
A. Procedural History
The Penneys filed their first federal court complaint in this matter on October 30, 1992. They named forty-five defendants including the town of Middleton, and various officers and agents of the town, and of neighboring towns. The complaint contained twenty-three federal claims and ten pendent state law claims alleging a legion of civil rights violations and common law torts. Within a few months, the Penneys amended their complaint, making only minor changes.
In February 1993, the defendants moved for a more definite statement and several defendants moved to dismiss the claims against them. Following a status conference in April 1993, the parties submitted a proposed case management order, and the resulting order set guidelines for the progress of the case and provided for the appointment of "lead defendants' counsel" to act as spokesperson for the defendants. After the next status conference, I ordered the Penneys to prepare a second amended complaint identifying the defendants that were allegedly liable for each cause of action and the facts on which each cause of action was based. I also directed the parties to confer about the plaintiffs' claims and the defendants' expected defenses in order to clarify and narrow the genuine factual and legal issues.
The Penneys' second amended complaint, filed in June 1993, reduced the number of defendants to thirty-three, and reorganized their claims into thirty-six counts. At the end of August, lead defendants' counsel moved to dismiss the complaint on procedural grounds. On November 29, 1993, I held hearing on the defendants' motion to dismiss. At that time, I expressed my discouragement with the quality of the second amended complaint. Following the hearing, I issued an order limiting motions and instructing the Penneys to file a third amended complaint that would set out their claims with greater precision. The Penneys filed the present amended complaint on May 11, 1994, and the defendants filed a timely motion to dismiss.
B. Standard of Review
When considering a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), a district court must take all well-pleaded facts in the complaint as true and draw reasonable inferences in favor of the plaintiff. Coyne v. City of Somerville, 972 F.2d 440, 442-43 (1st Cir.1992). Well-pleaded facts, however, do not include the plaintiffs' "unsupported conclusions or interpretations of law." Washington Legal Found. v. Massachusetts Bar Found., 993 F.2d 962, 971 (1st Cir.1993). Thus, a district court need not accept subjective characterizations, bald assertions, or conclusory descriptions. See Correa-Martinez *337 v. Arrillaga-Belendez, 903 F.2d 49, 52-53 (1st Cir.1990). Although the "the line between `facts' and `conclusions' is often blurred," it must be drawn, because
[i]t is only when such conclusions are logically compelled, or at least supported, by the stated facts, that is, when the suggested inference rises to what experience indicates is an acceptable level of probability that "conclusions" become "facts" for pleading purposes.
Dartmouth Review v. Dartmouth College, 889 F.2d 13, 16 (1st Cir.1989).
Under the general pleading requirements of Fed.R.Civ.P. 8(a)(2), the Penneys need only aver "a short and plain statement of the claim showing that the pleader is entitled to relief." Allegations of civil rights violations pursuant to 42 U.S.C.A. § 1983 need not meet a heightened pleading standard. Leatherman v. Tarrant County Narcotics Unit, ___ U.S. ___, ___, 113 S. Ct. 1160, 1163, 122 L. Ed. 2d 517 (1993) (holding that Fed.R.Civ.P. 8(a)(2) applies to allegations against municipalities in § 1983 actions and prevents a heightened pleading standard).[1] Even the minimal requirements of notice pleading, however, require the Penneys to plead sufficient facts in each count so that "each general allegation [is] supported by a specific factual basis." Fleming v. Lind-Waldock & Co., 922 F.2d 20, 23 (1st Cir.1990). With this standard of review in mind, I assume the truth of the complaint's allegations and summarize them in the light most favorable to the Penneys.
C. Factual Background
Richard Penney has a less than total visual impairment that causes him to be classified under state law as "legally blind." As a result, he is entitled to a partial real estate tax exemption. See N.H.Rev.Stat.Ann. § 72:37 (Supp.1993).
The Penney family moved to Middleton, New Hampshire, from Massachusetts in 1981. Since then, Richard and Laura Penney have filed a series of petitions, administrative complaints, and legal actions: invoking their right to a real estate tax exemption; challenging the town's administration of a federally funded community development block grant program; alleging discrimination and retaliation because of a handicap; and contesting an improper meeting of the Middleton School District.
In 1984, Richard Penney complained to acting chief of police Roy Snyder that his son, Robert, was assaulted with a BB gun and threatened with a rifle by boys in town. Roy Snyder failed to properly investigate the incidents and did not commence a prosecution of the boys involved. Between 1986 and 1992, Snyder, acting in his official capacity as Middleton School District bus driver and coordinator: participated in the school district's decisions suspending Robert and Jason Penney; subjected Suzanne and Robert Penney to verbal abuse; and showed reckless disregard and deliberate indifference to the children's safety. Star Snyder, as a member of the school board for the Middleton School District, either disregarded or tacitly authorized Roy Snyder's actions.
Jeremy Johnson, in his capacity as police chief, twice revoked Richard Penney's concealed weapon permit. In 1990, Johnson frequently drove back and forth past the Penneys' house intending to harass and intimidate them.
In May 1991, the Middleton Concerned Citizen Group, Inc. ("MCCG"), with Calvin Roach and Roy Snyder as officers, sued the town and two selectmen, and later sought to amend the complaint to add Richard Penney as a defendant. Richard Penney intervened in the suit to protect his interests. In October 1991, Roy Snyder made public statements that Richard Penney conspired with a town selectman to receive town funds illegally. The suit was dismissed in January 1992. At various times, the Middleton School District has refused to comply with Richard *338 Penney's requests under New Hampshire's right-to-know law.
III. DISCUSSION
Apparently believing that quantity is more important than quality, defendants support their motion with nearly 20 separate arguments. I analyze their motion by first examining the sufficiency of the Penneys' claims. I then address defendants' immunity defenses and their contention that a prior bankruptcy filing bars claims against Chief Johnson. Finally, I discuss defendants' attempted reliance on the affirmative defenses of accord and satisfaction, collateral estoppel and res judicata.
A. First Amendment Claims
The Penney children contend in Count I that the Middleton School District and both Roy and Star Snyder are liable pursuant to 42 U.S.C.A. § 1983 and the First Amendment because the defendants retaliated against the children for things their parents did and said. The children make a similar claim against Chief Johnson in Count VIII. However, a § 1983 claim cannot be predicated on a violation of another person's protected rights. Dohaish v. Tooley, 670 F.2d 934, 936-37 (10th Cir.), cert. denied, 459 U.S. 826, 103 S. Ct. 60, 74 L. Ed. 2d 63 (1982); Casanas v. De Leon, 633 F. Supp. 22, 23-24 (D.P.R.1986); but see Dangler v. Yorktown Cent. Schools, 771 F. Supp. 625, 630-31 (S.D.N.Y.1991). Since the children do not contend that their own First Amendment rights were chilled by the conduct described in Count I, their First Amendment claims must be dismissed.
Richard and Laura Penney allege in Count VIII that Chief Johnson violated their First Amendment rights by repeatedly driving slowly in front of their home in retaliation for things the Penneys did and said. However, the Penneys have not alleged that their right to speak out was in fact chilled by Johnson's conduct and no such claim could credibly be made based upon the facts alleged in the complaint. Accordingly, this claim must also be dismissed. Sullivan v. Carrick, 888 F.2d 1, 4 (1st Cir.1989) ("[w]here a chilling effect is speculative, indirect or too remote, finding an abridgment of First Amendment rights is unfounded").
B. Right to Travel and Equal Protection
The Penney children base their right to travel and equal protection claims in Count I on the contention that they were mistreated by the school bus driver and chief of police. Richard Penney contends in Count VII that Chief Johnson violated his rights to travel and equal protection by twice revoking Penney's pistol permit. The Penney family all allege in Count VIII that Chief Johnson violated their rights to travel and to equal protection by driving slowly past their house to intimidate and harass them.
Regardless of its source, the essence of the Penneys' right to travel claims is their contention that they were treated differently from other residents because they had moved to Middleton from Massachusetts. See, e.g., Attorney Gen. of New York v. Soto-Lopez, 476 U.S. 898, 901-05, 106 S. Ct. 2317, 2319-22, 90 L. Ed. 2d 899 (1986) (noting relationship between right to free migration claim and equal protection claim based upon right to travel); Bray v. Alexandria Women's Health Clinic, ___ U.S. ___, ___, 113 S. Ct. 753, 763, 122 L. Ed. 2d 34 (1993) (quoting Zobel v. Williams, 457 U.S. 55, 60 n. 6, 102 S. Ct. 2309, 2312-13 n. 6, 72 L. Ed. 2d 672 (1982)) (explaining the right to interstate travel protects against being discriminated against by "`the erection of actual barriers to interstate movement' and `being treated differently from intrastate travelers'"). Any such claim must allege that the defendants purposely discriminated against the plaintiffs because they had traveled from one state to another. See Lipsett v. University of Puerto Rico, 864 F.2d 881, 896 (1st Cir.1988) (unlawful discrimination claim must allege facts showing discriminatory intent or purpose).
The Penneys have not alleged that defendants purposely discriminated against them because they came from another state. Instead, they merely assert that defendants violated their rights to travel and equal protection. This type of conclusory pleading is *339 insufficient even under Fed.R.Civ.P. 8's liberal pleading standard.
C. Rehabilitation Act Claims
Richard Penney alleges in Count VII that Chief Johnson violated § 504, by unjustly revoking his pistol permit solely because of his disability. All of the Penneys allege in Count IV that the defendants violated plaintiffs' rights under 24 C.F.R. § 8.56(k), a Department of Housing and Urban Development ("HUD") regulation prohibiting retaliation against persons who participate in a HUD investigation of a § 504 claim. The Penneys base their claims both on an implied right of action pursuant to § 504 and a right to damages for violations of § 504 pursuant to § 1983.
Defendants apparently concede that a properly pleaded complaint can state an implied cause of action pursuant to § 504 for both a violation of the statute itself and its implementing regulations.[2] Instead, they argue that: (1) the children's implied right of action claim in Count IV cannot survive because the regulation they rely on protects only people who participate in some way in a HUD investigation; (2) neither Count IV nor Count VII states a claim for relief under § 1983; (3) neither the town nor the school district can be held liable for a § 1983 violation on a respondeat superior theory (4) Star Snyder cannot be held liable on a respondeat superior theory; and (5) the Middleton Concerned Citizen Group, Inc. cannot be liable for a § 504 violation because it did not engage in "state action." I address each argument in turn.
1. The Children's § 504 Claim
The regulation the Penneys rely on in Count IV provides in pertinent part:
No recipient or other person shall intimidate, threaten, coerce, or discriminate against any person for the purpose of interfering with any right or privilege secured by this part, or because he or she has made a complaint, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this part.
24 C.F.R. § 8.56(k) (1994). Defendants contend that the children cannot base a claim on this regulation because they do not allege that they complained, testified, assisted, or participated in a HUD investigation conducted pursuant to § 504. I reject this contention because the complaint plainly alleges that the defendants violated the regulation by "intimidating and discriminating against the Penney children for their parents' making complaints to HUD, and for the Penneys' assistance and participation in investigation of their complaints." (Emphasis added).
2. § 504 Claims and § 1983
The United States Supreme Court has determined that a federal statute may be privately enforced in a § 1983 claim unless either "the statute did not create enforceable rights, privileges, or immunities within the meaning of § 1983" or "Congress has foreclosed such enforcement of the statute in the enactment itself." Suter v. Artist M, 503 U.S. 347, 355-56, 112 S. Ct. 1360, 1366, 118 L. Ed. 2d 1 (1992) quoting Wright v. Roanoke Redevelopment and Housing Authority, 479 U.S. 418, 423, 107 S. Ct. 766, 770, 93 L. Ed. 2d 781 (1987). A statute will not be deemed to have foreclosed a § 1983 enforcement action "unless the state actor demonstrates by express provision or other specific evidence from the statute itself that Congress intended to preclude such private enforcement." Wright at 424, 107 S.Ct. at 770. Finally, the court has held that a state actor can establish that Congress intended to foreclose a § 1983 enforcement action by demonstrating that *340 the statute's own enforcement mechanism is comprehensive. Middlesex Cty. Sewerage Auth. v. National Sea Clammers Ass'n, 453 U.S. 1, 21, 101 S. Ct. 2615, 2627, 69 L. Ed. 2d 435 (1981).
Defendants contend that § 504's own implied private right of action qualifies as a comprehensive remedial scheme that precludes the Penneys from also basing their § 504 claims on § 1983. All but two courts that have considered whether a plaintiff may bring a § 504 claim pursuant to § 1983 have come to a different conclusion. See Pushkin v. Regents of Univ. of Colo., 658 F.2d 1372, 1382 (10th Cir.1981); Pendleton v. Jefferson Local Sch. Dist., 1992 WL 57421, at *7, 1992 U.S.App. LEXIS 6294 *21 (6th Cir.1992); Madsen v. Boise State Univ., 976 F.2d 1219, 1225-26 (9th Cir.1992) (Norris, J., dissenting); Independent Housing Servs. v. Fillmore Ctr. Assoc., 840 F. Supp. 1328, 1345 (N.D.Cal.1993); Harris v. Board of Educ., 798 F. Supp. 1331, 1334 (S.D.Ohio 1992); Rothschild v. Grottenthaler, 716 F. Supp. 796, 801 (S.D.N.Y.1989); Cordero-Martinez v. Aponte-Roque, 685 F. Supp. 314, 316 (D.P.R. 1988); Conlon v. City of Long Beach, 676 F. Supp. 1289, 1298 (E.D.N.Y.1987); Meyerson v. Arizona, 526 F. Supp. 129 (D.Ariz. 1981), aff'd on other grounds, 709 F.2d 1235 (9th Cir.1983), vacated and remanded, 465 U.S. 1095, 104 S. Ct. 1584, 80 L. Ed. 2d 118 (1984); Medley v. Ginsberg, 492 F. Supp. 1294 (S.D.W.Va.1980); but see Ruth Anne M. v. Alvin Indep. School Dist., 532 F. Supp. 460, 476 (S.D.Texas 1982); Tyus v. Ohio Dep't of Youth Services, 606 F. Supp. 239 (S.D.Ohio 1985). The Supreme Court's decision in Franklin v. Gwinnett County Pub. Schools, 503 U.S. 60, 112 S. Ct. 1028, 117 L. Ed. 2d 208 (1992) does not cause me to question the wisdom of these decisions.
3. The town and the school district municipal liability
The Penneys allege in Count IV that the school district and the town are liable for Roy Snyder's violations of § 504. Richard Penney alleges in Count VII that the town is liable for Chief Johnson's § 504 violations. To the extent that these claims are based on an implied private right of action under § 504, plaintiffs are entitled to maintain claims against the school district and the town on a respondeat superior theory. Bonner v. Lewis, 857 F.2d 559, 566 (9th Cir. 1988); Glanz v. Vernick, 756 F. Supp. 632, 636 (D.Mass.1991); Patton v. Dumpson, 498 F. Supp. 933, 942 (S.D.N.Y.1980).
To the extent that the parties base their claims on § 1983, however, the claims are subject to the same pleading requirements as any other § 1983 claim. Neither the town nor the school district may be liable for a § 1983 violation on a respondeat superior theory. Monell v. Department of Soc. Servs., 436 U.S. 658, 694, 98 S. Ct. 2018, 2037-38, 56 L. Ed. 2d 611 (1978). Instead, a § 1983 claim against a municipality or a municipal subdivision, such as the school district, must allege that: (1) a municipal policymaker intentionally adopted a policy, implemented a training protocol or allowed a custom to develop; (2) the challenged policy, training protocol or custom caused a violation of federally protected rights; and (3) the policymaker acted with at least deliberate indifference to the strong likelihood that a violation of federally protected rights will result from the implementation of the policy, training, protocol or custom. Canton v. Harris, 489 U.S. 378, 385, 109 S. Ct. 1197, 1202-03, 103 L. Ed. 2d 412 (1989); Manarite v. City of Springfield, 957 F.2d 953, 958 (1st Cir. 1992), cert. denied, ___ U.S. ___, 113 S. Ct. 113, 121 L. Ed. 2d 70 (1992). Whether a municipal employee's adoption of a policy or acquiescence in a custom will be attributable to the municipality depends upon whether state law authorizes the employee to "speak with final policymaking authority for the local governmental actor concerning the action alleged to have caused the particular constitutional or statutory violation at issue." Jett v. Dallas Independent School Dist., 491 U.S. 701, 738, 109 S. Ct. 2702, 2724, 105 L. Ed. 2d 598 (1989); see also Gonzalez v. Ysleta Indep. Sch. Dist., 996 F.2d 745, 759 (5th Cir. 1993). Unless such a policymaker either implements the challenged policy or allows an established custom to be implemented, the municipality will not be liable for a § 1983 violation. Jett, 491 U.S. at 738, 109 S.Ct. at 2724. Since the Penneys have not alleged *341 that any of defendants' § 504 violations were the result of an official policy, training protocol or custom, their § 1983 claims against the school district and the town in Counts IV and VII cannot succeed.
Richard Penney's claim against the town in Count VII survives, however, because the complaint alleges that the town's police chief violated Penney's § 504 rights by revoking his pistol permit. The chief plainly acts as a municipal policymaker when he decides on the criteria to be considered in granting or denying a request for a gun permit. See N.H.Rev.Stat.Ann. 159:6, 6-b (Supp.1993).
4. Star Snyder Supervisory Liability
The Penneys' allegations in Count IV against Star Snyder also fail to state a § 1983 claim. A plaintiff suing a supervisor under § 1983 must allege that (1) a subordinate violated her constitutional rights; (2) the supervisor's acts or omissions caused the subordinate's unconstitutional conduct; and (3) the supervisor was deliberately indifferent to the constitutional rights of others in acting or failing to act. Febus-Rodriguez v. Betancourt-Lebron, 14 F.3d 87, 92 (1st Cir.1994); Manarite, 957 F.2d at 955-56. The First Circuit has determined that deliberate indifference requires "actual knowledge [or willful blindness] of impending harm, easily preventable." Manarite, 957 F.2d at 956 (quoting DesRosiers v. Moran, 949 F.2d 15, 19 (1st Cir.1991)). Although the Penney children alleged in Count I that Star Snyder "showed reckless disregard and deliberate indifference to Roy Snyder's deprivations" of their First Amendment rights, right to travel and right to equal protection, the Penneys failed to include similar allegations as to their rights under § 504 in Count IV. Consequently, the Penneys' § 1983 claims against Star Snyder in Count IV are dismissed.
5. The Middleton Concerned Citizens Group, Inc.
The Middleton Concerned Citizens Group, Inc. ("MCCG") is a New Hampshire nonprofit corporation. Roy Snyder and Calvin Roach are officers of the corporation. Richard Penney alleges in Count IV that MCCG violated § 504 and 24 C.F.R. 8.56(k) by causing a lawsuit to be filed against him for complaints he made to HUD. He makes this claim both directly under § 504 and under § 1983.
In order to maintain a § 1983 claim, a claimant must allege state action by the defendant. Rodriques v. Furtado, 950 F.2d 805, 813 (1st Cir.1991); Rodriguez-Garcia v. Davila, 904 F.2d 90, 95 (1st Cir.1990). In cases where a private party is charged with a § 1983 violation, the claimant must allege that either (1) the financial or regulatory relationship between the state and the private actor is sufficiently strong that the private entity's actions are deemed to be the actions of the state; (2) the private actor allegedly exercised an exclusively public function; or (3) a symbiotic relationship existed between the state and the private actor. Rodriguez-Garcia, 904 F.2d at 96-97. Although this inquiry is necessarily fact specific, a § 1983 claim cannot survive if it does not allege facts that would satisfy the state action requirement.
Here, Penney does not claim the MCCG engaged in state action. Accordingly, his § 1983 claim against MCCG is dismissed. However, the state action requirement does not apply to an implied right of action under § 504. Thus, I reject defendants' challenge to this claim.
D. Voluntary Compliance Agreement
Richard Penney alleges in Count V that Snyder and the town are liable under § 1983 because they violated a "Voluntary Compliance Agreement" entered between HUD and the town that allegedly prohibited the town from retaliating against the Penneys. A claim under § 1983 must be based upon a claimed violation of "rights, privileges or immunities secured by the constitution and laws" of the United States. 42 U.S.C.A. § 1983. A claim that certain defendants violated the terms of an agreement between HUD and the town does not fulfill this requirement. Accordingly, Count V is dismissed.
*342 E. State Constitutional Claim
The Penney children claim a right to damages in Count I based on a violation of the New Hampshire Constitution's equal protection clause, N.H. Const., Pt. 1, Art. 14. The law in this circuit is that a plaintiff who chooses the federal forum cannot expect a federal court to break new ground in recognizing rights under state law that have not yet been identified by the state's own courts. DCPB, Inc. v. City of Lebanon, 957 F.2d 913, 916 (1st Cir.1992). Since the New Hampshire Supreme Court has so far declined to recognize an implied right to damages for violations of the Pt. 1, Article 14 of the state's constitution, Rock-house Mountain Property Owners Ass'n v. Town of Conway, 127 N.H. 593, 597-602, 503 A.2d 1385 (1986), I grant defendants' motion to dismiss this claim.
F. Defamation Claim
Richard Penney asserts a defamation claim in Count IX that he did not include in any of the prior complaints. I did not give him permission to file this new claim and, because he has already amended the complaint several times, he must first move to amend the complaint before I will determine whether to allow his new claim. Fed. R.Civ.P. 15. Accordingly, Count IX is dismissed without prejudice. Plaintiff may seek to add this count to the amended complaint by filing a motion to amend within 10 days.
G. Punitive Damages
The parties agree that punitive damages are not available against the town or the school district for the Penneys' § 1983 claims. See Smith v. Wade, 461 U.S. 30, 55-56, 103 S. Ct. 1625, 1639-40, 75 L. Ed. 2d 632 (1983); City of Newport v. Fact Concerts, 453 U.S. 247, 271, 101 S. Ct. 2748, 2762, 69 L. Ed. 2d 616 (1981). The defendants also contend, however, that punitive damages are not available in § 504 actions. The Supreme Court's recent decision in Franklin v. Gwinnett County Public Schools, held that a broad spectrum of damages are available in Title IX cases, which are closely analogous to § 504 cases. Franklin, 503 U.S. at 70-77, 112 S.Ct. at 1035-38. Although the Court did not specifically address punitive damages, it relied on a well-established general presumption for determining the availability of remedies:
The general rule, therefore is that absent clear direction to the contrary by Congress, the federal courts have the power to award any appropriate relief in a cognizable cause of action brought pursuant to a federal statute.
Franklin, 503 U.S. at 70-71, 112 S.Ct. at 1035. The First Circuit has recently interpreted the presumption of a full remedy, described in Franklin to allow for exemplary damages for violations of the implied right of action prohibiting retaliatory discharges under the Occupational Safety and Health Act of 1970. Reich v. Cambridgeport Air Systems, Inc., 26 F.3d 1187, 1194 (1st Cir.1994). Other courts that have concluded that punitive damages are unavailable in § 504 actions have not considered the Franklin decision. See, e.g., United States v. Forest Dale, Inc., 818 F. Supp. 954, 970 (N.D.Tex.1993); Glanz v. Vernick, 750 F. Supp. 39, 45 (D.Mass.1990); Gelman v. Department of Educ., 544 F. Supp. 651, 654 (D.Colo.1982). Given the unsettled state of the law concerning an appropriate remedy in § 504 actions, I decline to dismiss the Penneys' § 504 claims for punitive damages. If necessary, I will resolve the issue prior to trial.
H. Claims Against Johnson Effect of a Bankruptcy Filing
Johnson moves to dismiss the Penneys' claims against him on the grounds that these claims were discharged by his 1993 bankruptcy. See 11 U.S.C. § 542(a). If the Penneys' claims against Johnson have been discharged, he has nothing to fear from this lawsuit. The plaintiffs will not be able to recover from him personally and if his insurers refuse to defend the action in his name, he could default without fear of the consequences. However, a bankruptcy discharge does not prevent the Penneys from naming Johnson in this lawsuit in an effort to recover from Johnson's insurers. In re Edgeworth, 993 F.2d 51, 54 (5th Cir.1993); In re Shondel, 950 F.2d 1301, 1307 (7th Cir.1991); In re Jet Florida Systems, Inc., 883 F.2d 970, 976 *343 (11th Cir.1989). Accordingly, defendant's motion to dismiss on this basis is denied.
I. Federal Claims Against Roy Snyder: Absolute Immunity
To the extent that the Penney children's § 1983 claims in Count IV against Roy Snyder depend on his alleged failure to prosecute certain crimes committed against Robert Penney, Snyder is absolutely immune from liability under federal law for any decision he made not to prosecute someone. Harrington v. Almy, 977 F.2d 37, 40 (1st Cir.1992). Accordingly, this allegation cannot be used to support Count IV.
Snyder also claims that he is absolutely immune from liability for the children's § 1983 claims based on the school bus suspensions because he was acting as a prosecutor or a judge when he allegedly committed these acts. The Supreme Court has adopted a functional approach to the analysis of immunity claims. Butz v. Economou, 438 U.S. 478, 512-14, 98 S. Ct. 2894, 2913-15, 57 L. Ed. 2d 895 (1977). Thus, a person in Snyder's position may be entitled to absolute immunity for acts taken in his capacity as a school bus driver if he was acting at the time in a role functionally comparable to that of a prosecutor or a judge. See id.; see also Bettencourt v. Board of Registration in Medicine, 904 F.2d 772, 782-83 (1st Cir.1990). I cannot conclude from the complaint whether Snyder undertook the acts the Penneys describe in a prosecutorial or judicial capacity. Accordingly, I deny defendants' motion to dismiss on this basis without prejudice to their right to present the issue again in a properly supported motion for summary judgment.
J. Federal Claims against Chief Johnson: Qualified Immunity
Richard Penney alleges in Count IV that Chief Johnson revoked his gun permit in retaliation for complaints Penney made to HUD. Johnson contends that his alleged conduct is protected by the doctrine of qualified immunity. The essence of his argument is that clearly established law did not prohibit him from engaging in the conduct described in the complaint and his motives for undertaking the conduct cannot be considered in determining whether he is entitled to qualified immunity. Johnson's argument fails because it has been expressly rejected by the First Circuit Court of Appeals on more than one occasion. This issue was most recently raised in Broderick v. Roache, 996 F.2d 1294, 1298 (1st Cir.1993). There, plaintiff claimed that the defendant had retaliated against him because he had exercised his First Amendment rights. The defendant claimed that he was entitled to qualified immunity even if he intended to retaliate against the plaintiff because his acts were lawful. In rejecting this argument, the court stated: "The short answer to [the defendant's] contention is that, in a recent decision not cited by any of the parties, we rejected this very argument. See Feliciano-Angulo v. Rivera-Cruz, 858 F.2d 40, 45-47 (1st Cir. 1988)." Broderick, 996 F.2d at 1298.
If, as Penney alleges, Chief Johnson purposely retaliated against him because he had complained to HUD, Johnson may not claim qualified immunity for his acts simply because the acts might have been lawful if his motives had been pure. The motion to dismiss on this basis is denied.
K. Defendants' Remaining Arguments
Defendants invoke the affirmative defenses of accord and satisfaction, collateral estoppel, and res judicata in support of their motion to dismiss. I decline to address the merits of these arguments because they would require me to look well beyond the pleadings. See Fed.R.Civ.P. 12(b)(6); Maruho Co., Ltd. v. Miles, Inc., 13 F.3d 6, 8 (1st Cir.1993). Thus, defendants' motion to dismiss on this basis is denied without prejudice to their right to renew their arguments in a properly supported motion for summary judgment.
III. CONCLUSION
I enter the following order with respect to defendants' motion to dismiss (document # 143):
1. Count I is dismissed.
2. Plaintiffs' claims in Count IV against the town, the school district, Star Snyder, *344 and MCCG pursuant to 42 U.S.C.A. § 1983 are dismissed.
3. Count V is dismissed.
4. Richard Penney's right to travel and equal protection claims in Count VII are dismissed.
5. Count VIII is dismissed.
6. Count IX is dismissed without prejudice.
In all other respects, defendants' motion to dismiss is denied.
SO ORDERED.
NOTES
[1] The breadth of the holding in Leatherman and its effect on the existing case law requiring pleading particularity in § 1983 actions is currently unsettled in this circuit as well as others. See, e.g., Schultea v. Wood, 27 F.3d 1112, 1115 n. 2 (5th Cir.1994); Feliciano v. DuBois, 846 F. Supp. 1033, 1042 (D.Mass.1994); Hall v. Dworkin, 829 F. Supp. 1403, 1409 (N.D.N.Y. 1993).
[2] The First Circuit has recognized an implied right of action for violations of § 504 itself. See Cook v. Rhode Island, 10 F.3d 17 (1st Cir.1993). Moreover, other courts have recognized that an implied right of action also exists in certain instances to enforce a statute's implementing regulations. See, e.g., Smith v. Dearborn Fin. Servs., Inc., 982 F.2d 976, 979 (6th Cir.1993) (private right of action exists to enforce regulation if the right to enforce the regulation is implied by the authorizing statute); Hoyt v. St. Mary's Rehabilitation Center, 711 F.2d 864, 867 (8th Cir.1983) (retaliation claim in violation of Department of Health and Human Services regulations is actionable under § 504); Dopico v. Goldschmidt, 687 F.2d 644, 650-51 n. 5 (2d Cir.1982) (recognizing right of action for implementing regulations based on implied right of action under § 504). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1746256/ | 225 Miss. 411 (1955)
83 So. 2d 622
PIGFORD BROS. CONSTRUCTION CO., et al.
v.
EVANS, et al.
No. 39766.
Supreme Court of Mississippi.
November 28, 1955.
Vardaman S. Dunn, Jackson, for appellants.
*414 John B. Gee, Vicksburg; W. Arlington Jones, Hattiesburg, for appellees.
*416 ETHRIDGE, J.
These workmen's compensation claims arise out of the death of an employee incurred during the 1953 Vicksburg tornado. The attorney-referee, the commission, and the circuit court held that the injury arose out of the employment. That also is our conclusion. Appellants are the employer of E.C. Evans, the deceased employee, and its compensation insurance carrier. Appellees are the alleged widow and three dependents claiming as the children and stepchild of Evans. Appellee Bessie Lee Hackett has cross-appealed from the denial by the circuit court of compensation to her as a "stepchild".
E.C. Evans was the employee of Pigford Brothers Construction Company, which was constructing at Vicksburg a concrete flood wall adjacent to the Yazoo Channel. Evans worked on a large machine called a dragline. His job as oiler was to oil the dragline for use on the project and to render assistance to the operator of the machine. On December 5, 1953, the construction crew of 10 to 18 men was pouring the first six feet of a concrete flood wall. The forms were in place, and the dragline was being used to unload the cement. A misting rain had begun, and Evans, as the dragline oiler, had the duty to place and keep a tarpaulin over the brake drums of this machine, in order to keep them dry and to prevent slipping. The brake drums were located on the dragline approximately six feet above the ground level. The dragline was situated between the flood-wall under construction and the edge of the water on the east side of the Yazoo Channel. About four to five feet east of the new wall then under construction was the old "seawall", a concrete structure approximately 12 feet in height. About 20 yards east of the old "seawall" was the property of Anderson-Tully Company, a sawmill plant. A short distance *417 below the Yazoo Channel flows the Mississippi River. The channel is about 50 yards in width. Between the dragline and the Yazoo Channel and on southwesterly along the path of an approaching storm there were not any structures or other objects except willow trees growing upon an island between the river and the channel.
The dragline was situated upon a level embankment about 12 to 14 feet in width, and 25 feet above the level of the water. So the dragline, 6 feet in height, was being operated on top of this 25 foot high embankment.
A short time before the storm struck that vicinity, a rainfall had passed over the city, and between that time and that of the storm there was an intermittent rainfall. Evans' duties required him to climb upon the dragline to place and keep the tarpaulin over the brake drums. Immediately before he was killed he had climbed upon the dragline and put the tarpaulin back over the brake drums. This was one of his usual and customary duties, and he was then in and about his employer's business and performing those duties. At about 5:32 p.m., December 5, 1953, a tornado struck the Vicksburg area. It picked up a boat rudder from some point away from the premises on which Evans was employed, and cast it against his body on top of the dragline with such force as to sever his head and cause his immediate death.
The estimated wind velocity was about 200 miles per hour. Vicksburg had never been considered a storm area, and this wind was of unusual proportions for that vicinity. The width of the tornado ranged from 50 yards to about three-fourths of a mile. The tornado began its damage in this area about three miles southwest of the dragline's location, and travelled in a northeasterly direction from the State of Louisiana across the Mississippi River, a small wooded island in the river, and the Yazoo Channel, and struck the east bank of the channel upon which was situated this dragline. It, apparently, was the first object other than the woods and water which *418 was struck by the tornado in this area. For five minutes the tornado passed through a large business and residential area in the City of Vicksburg. It killed 37 and injured 385 people. It destroyed many buildings.
(Hn 1) First. Clearly Evans' death occurred while he was in the course of his employment, performing the necessary and usual duties of his job. We think also that his injury arose out of his employment. All of the courts agree that injury due to windstorm, as well as to lightning, earthquake, freezing, sunstroke and exposure to contagious diseases, arises out of the employment if the employment increases the risk of this kind of harm. 1 Larson, Workmen's Compensation Law (1952) Sec. 8.20. (Hn 2) In other words, if an employee, by reason of his duties, is exposed to a special or peculiar danger from the elements, which increases the risk of injury and is within the sphere of the employment, such injury arises out of the employment. 58 Am. Jur., Workmen's Compensation, Sec. 260; 6 Schneider, Workmen's Compensation Text (1948) Sec. 1552, pp. 78-89; Malone, Louisiana Workmen's Compensation Law and Practice (1951) Sec. 193; Horovitz, Workmen's Compensation Law, (1944) pp. 99-107; Annotations in 13 A.L.R. 974, 25 A.L.R. 146, 40 A.L.R. 400, 46 A.L.R. 1218, 83 A.L.R. 234.
At the time Evans was killed he was performing the necessary duties of his job. The dragline was upon an embankment 25 feet above the water. This machine was 6 feet high. It had been raining, and in order to keep the brake drums dry and prevent slipping, Evans' job required him to place himself in this exposed and elevated position, with his head more than 31 feet above the water level. When the tornado came, the wind picked up a boat's rudder apparently lying somewhere in the vicinity of the river's waterfront. The rudder killed him while he was in this unusually exposed position. Clearly Evans' employment increased the risk of this kind of *419 harm to him. Accordingly, under the universal rule his job was a contributing factor to his injury and death. They were connected in fact with his employment. Hence death arose out of his employment. (Hn 3) The test is connection in fact with the employment, not whether it is foreseeable in advance, or apparently only in retrospect.
Since this accident manifestly comes within the universally recognized increased risk test, we do not need to consider at this time the other criteria which have been used by the courts in deciding compensation cases involving "acts of God" and exposure to the elements, such as the actual risk doctrine, the positional risk test, and the contact-with-the-premises-exception, which are discussed so lucidly in Mr. Larson's textbook, supra, Sections 6 through 8.
Appellants claim that the position of the employee was no different from that of the general public and was common to the neighborhood, so no causal relationship exists. However, Evans' job placed him in a position of increased risk. Moreover, whether the risk is common to others in the vicinity is of little if any value in determining whether in fact the injury is connected with the employment.
No purpose would be solved by an extensive discussion of the many workmen's compensation cases dealing with employee injuries from windstorms. Some of them applying principles which are pertinent to this case are: American Shipbuilding Company v. Michalski, 30 Ohio App. 80, 164 N.E. 123 (1928); Reid v. Automatic Electric Washer Company, 179 N.W. 323 (Iowa 1920); Industrial Commission of Ohio v. Hampton, 123 Ohio St. 500, 176 N.E. 74 (1931); Maryland Casualty Co. v. Lilly, 62 Ga. App. 806, 10 S.E.2d 110 (1940); Arrington v. Goldsmith, 23 N.J. Super. 103, 92 A.2d 630 (1952); Indrisano's Case, 307 Mass. 526, 30 N.E.2d 538 (1940); Central Ill. Service Co. v. Industrial Commission, 291 *420 Ill. 256, 126 N.E. 144, 13 A.L.R. 967 (1920); Merrill v. Penasco Lbr. Co., 27 N. Mex. 632, 204 P. 72 (1922); Scott School Board v. Carter, 156 Va. 812, 159 S.E. 115, 83 A.L.R. 229 (1931); Globe Indemnity Company v. Mackendree, 39 Ga. App. 58, 146 S.E. 46 (1928), affirmed in 169 Ga. 510, 150 S.E. 849 (1929); cf. Caswell's Case, 305 Mass. 500, 26 N.E.2d 328 (1940). For general discussions of so-called neutral risks arising from windstorms and other "acts of God" see Larson, Workmen's Compensation in Mississippi, The First Five Years, 25 Miss. L.J. 109, 119-122 (1954); 3 N.A.C.C.A. Law Journal 43-52; 4 N.A.C.C.A. Law Journal 91-99; 12 N.A.C.C.A. Law Journal 75.
Second. Is appellee Willie Alice Evans entitled on this record to compensation benefits as the widow of E.C. Evans? The attorney-referee and commission denied them, but the circuit court reversed in that respect and made an award to Willie Alice. We think the circuit court was correct. On December 29, 1930, Evans married Lula Mae Whitten in a ceremonial marriage. They lived together in Lambert, Quitman County, Mississippi, for six years, until 1936, at which time they were separated. After their separation Lula Mae moved to Panola County, and in 1938 she started living with I.T. Armstead. She was living with him at the time of the trial. They had six children, and in 1951 she and Armstead obtained a marriage license and had a ceremonial marriage.
After the separation in 1936, E.C. Evans moved to Hattiesburg, in Forrest County, Mississippi, where he lived with his mother until he moved to Vicksburg in 1953. On February 21, 1953, Evans entered into a ceremonial marriage with appellee, Willie Alice Hackett, the claimant. Willie Alice had not been married before.
Following this marriage Evans and Willie Alice lived together in Vicksburg as husband and wife until his death on December 5, 1953, about nine months. They occupied a home in Vicksburg, and on October 29, 1953, *421 a child was born to them, appellee Alice Ruth Evans. She, an illegitimate child of Willie Alice's, and an acknowledged illegitimate child of Evans' lived with Willie Alice and E.C. during this period and before his death. All of them were dependent upon E.C. Evans, and he supported them.
(Hn 4) In Anderson-Tully Co. v. Wilson, 221 Miss. 656, 74 So. 2d 735 (1954), this Court in a workmen's compensation case followed a long line of decisions on related issues and held that a strong presumption of validity operates in favor of a second marriage, and that the party attacking the validity of such marriage has the burden of proving its invalidity, even though it involves the proving of a negative. Even where a valid prior marriage is shown, it may be presumed in favor of the second marriage that the first marriage has been dissolved, either by divorce or death of the former spouse, "so as to cast the burden of adducing evidence to the contrary on the party attacking the second marriage, even though he is thereby required to prove a negative".
(Hn 5) In this case the only evidence offered by appellants to rebut this strong presumption of validity of a second marriage was the testimony of Evans' first wife, Lula Mae. She said she had not divorced Evans, and he had not divorced her. She claimed no compensation. This evidence was not sufficient to rebut the presumption of validity of Evans' marriage to Willie Alice. As stated in numerous cases and in Amis, Divorce and Separation in Mississippi (1935) Sec. 54, such an admission does not adequately prove whether a divorce has been granted to the other party, Evans. (Hn 6) The practical course of proof in such a case would be to show where each party to the prior marriage had resided up to the time of the second marriage, and then to procure from the clerk of the proper court in each such county a certificate of search showing that no divorce or annulment had been granted by the court of which he is clerk. See Pigford *422 v. Ladner, 147 Miss. 822, 112 So. 785 (1927). This required that appellants offer such documentary proof from Quitman, Panola and Forrest Counties. Code of 1942, Secs. 2738, 1852. Appellants failed to meet this burden of proof in this case. This rule places a difficult burden of proof upon those contesting a second marriage, but it is based upon a sound public policy and is well established. 2 Larson, Workmen's Compensation Law, Sec. 62.21. Parker v. American Lumber Co., 190 Va. 181, 56 S.E.2d 214 (1949) is a recent workmen's compensation case involving almost this identical situation, where the only evidence offered by the contestants was the testimony of the first wife of the deceased employee. That case cites several other decisions holding to the same effect. One of them, Pettinger v. Pettinger, 28 Colo. 308, 64 P. 195 (1901), was cited with approval in the first reported opinion in Pigford v. Ladner, 138 Miss. 461, 469, 103 So. 218 (1925). So on this record appellee Willie Alice Evans is the lawful widow of the employee, is entitled to compensation benefits, and the circuit court is affirmed in that respect.
Third. Bessie Lee Hackett, appellee and cross-appellant, is the illegitimate child of Willie Alice Evans, and was born on May 18, 1947. Under the conclusions stated above, her mother is the lawful widow of the deceased employee. The question is whether Bessie Lee can be considered a stepchild of E.C. Evans within the meaning of the statute. After her mother and Evans married, she lived in the houshold with them, he supported her, and she was dependent upon him. The attorney-referee allowed Bessie Lee compensation as a dependent stepchild. The commission and the circuit court held against her.
Code Section 6998-02 (12) provides: "`Child' shall include a posthumous child, a child legally adopted prior to the injury of the employee, a child in relation to whom the deceased employee stood in the place of a parent *423 for at least one year prior to the time of injury, and a stepchild or acknowledged illegitimate child dependent upon the deceased, ..." The general definition of stepchild is the child by a former marriage of either the husband or the wife. 82 C.J.S. 1066-67. However, there is a difference of opinion among the courts interpreting workmen's compensation acts as to whether an illegitimate child becomes a stepchild of the husband of his or her mother. New York, Minnesota, and West Virginia hold that he does. Larsen v. Harris Structural Steel Company, 243 N.Y. Supp. 654, 230 A.D. 280 (1930); Lunceford v. Fegels Construction Company, 185 Minn. 31, 239 N.W. 673 (1931); Simpson v. State Compensation Commissioner, 114 W. Va. 814, 174 S.E. 329 (1934). Three states deny the existence of a stepchild relationship, although they all base their decisions upon the peculiar limiting terms of the state's statute. In re Marshall, 117 Indiana App. 203, 70 N.E.2d 772 (1947); Dangrefield v. Indemnity Insurance Company, 19 So. 2d 598 (La. 1944), affirmed in 209 La. 195, 24 So. 2d 375 (1945); Sharp v. Borough of Vineland, 117 N.J.L. 598, 190 A. 44 (1937). See 40 Words and Phrases 143-144; 71 C.J., Workmen's Compensation, Sec. 293, p. 542; 58 Am. Jur., Workmen's Compensation, Sec. 179.
It should be noted that the terminology in the New York statute, under which compensation is awarded, is almost identical with that of the Mississippi statute. See Lunceford v. Fegels Construction Company, 239 N.W. at p. 674.
(Hn 7) We think that the reasoning in the Larsen, Simpson and Lunceford cases answering this issue in the affirmative is sound and more consistent with the terms of the Mississippi statute and the legislative intent. The child lived in the Evans' home with her mother and Evans as a member of the family, and was supported by him and wholly dependent upon him. The relationship to him arose by the marriage of her mother, who owed *424 Bessie Lee the same obligation of support and care as if she had been born in wedlock. Illinois C.R.R. Co. v. Sanders, 104 Miss. 257, 61 So. 309 (1913); 7 Am. Jur., Bastards, Sec. 71. If either the mother or child had died the survivor would have inherited unbequeathed property. Code of 1942, Sec. 474. And when Evans married the mother, and the child was recognized by him as his wife's child and was supported by him, and wholly dependent upon him, we think that she was his stepchild within the meaning of Code Section 6998-02 (12). Cf. Pathfinder Coach Div. of Superior Coach Corp. v. Cottrell, 216 Miss. 358, 60 So. 2d 383 (1953).
For these reasons the circuit court was in error in denying compensation benefits to appellee and cross-appellant Bessie Lee Hackett, and is reversed in that respect and judgment rendered for this cross-appellant.
(Hn 8) Fourth. Appellees Willie Alice Evans, Alice Ruth Evans, and Bessie Lee Hackett have filed a motion for allowance of attorney's fee in the amount of forty percent of the amount recovered for Willie Alice Evans, and of thirty-three and one-third percent of the recovery for Alice Ruth Evans and Bessie Lee Hackett. We have previously held that in compensation cases an attorney's fee will not be allowed in excess of one-third for all services rendered, including those before the attorney-referee, commission, circuit court and this Court. W.G. Avery Body Co. v. Hall, 80 So. 2d 53 (Miss. 1955). For that reason this motion is sustained in part and overruled in part, and an attorney's fee is allowed for these three appellees in the amount of thirty-three and one-third percent of the amount recovered for each of them, as full compensation for all services rendered.
Dorothy Jane Evans has filed a motion for allowance of attorney's fee in the amount of one-third of the sum recovered for this child. That motion is sustained, as full compensation for all services rendered to her.
*425 The judgment of the circuit court is affirmed insofar as it awarded compensation to Willie Alice Evans, Alice Ruth Evans and Dorothy Jane Evans; its judgment is reversed insofar as it denied benefits to Bessie Lee Hackett, and judgment is rendered here awarding benefits under the compensation act to Bessie Lee Hackett.
Affirmed in part, reversed in part, judgment rendered, and cause remanded.
All Justices concur, except Roberds, J., who took no part. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1762438/ | 387 So. 2d 761 (1980)
Victoria SMITH
v.
R.A. WEIR, Jr., et al.
No. 52133.
Supreme Court of Mississippi.
September 10, 1980.
*762 James E. Lambert, William C. Smith, Jr., Taylor, Covington, Smith & Matrick, Jackson, for appellant.
O.B. Triplett, Jr. (Deceased) by Tom S. Lee and O.B. Triplett, III, Forest, for appellees.
Before ROBERTSON, P.J., and WALKER and SUGG, JJ.
WALKER, Justice, for the Court:
This is a suit to partition certain real property situated in Newton County, Mississippi. The complainant Victoria Smith, alleged that her second husband, Grover Smith, owned an undivided one-seventh interest in this property and that this interest passed to her as his wife and only heir when he died intestate in 1968.
The defendants answered, denying that Victoria Smith was entitled to any interest in the lands, and asserting they were the exclusive owners thereof. Their defense rested on a claim that Victoria Smith's marriage to Grover Smith was void ab initio, her first marriage constituting an absolute impediment to her second marriage.
At the hearing before the chancellor the parties made several stipulations to eliminate the need for proof. They stipulated that at one time the 135 acres involved in this suit were owned by Joe Smith; that Joe Smith died intestate leaving a wife and seven children, one of whom was Grover Smith; that Joe Smith's wife died intestate survived by six of her children and one grandson who took the place of the seventh child, so that the property was divided seven ways. Victoria Smith also stipulated that she had never filed for a divorce from her first husband and she had no knowledge of any divorce suit filed against her by her first husband.
The parties agreed that the sole issue before the lower court was whether or not Grover Smith was legally married to Victoria Smith when he died intestate. The chancellor ruled that he was not, and from that ruling Victoria Smith appeals.
The proof developed at the hearing showed that Victoria Smith, using the name Miss Quick Erneston, married one Sim Futch on June 3, 1918, in Scott County, Mississippi. She had two sons by Sim Futch before he left her sometime in 1919. She has never heard from him since then. One of her sons, Ned Futch, who lives in Detroit, Michigan, testified that he is 60 years old and has never met his father or anyone else by the name of Sim Futch.
Fifteen years after Sim Futch left her, Victoria married Grover Smith in Newton County, Mississippi. They resided in Newton County until Grover's death on October 19, 1968. Victoria then moved to Detroit, Michigan, where she has resided ever since.
The defendants' case rested on the testimony of one witness, Mrs. Mittis Bufkin, a sister of Grover Smith. She testified that she had a conversation with a man who stated he was Sim Futch in 1969, just after Hurricane Camille struck the Gulf Coast, and that this man told her Victoria Ernest *763 was his wife. His specific words, as recollected by the witness, were, "That's my wife."[1]
In light of this testimony, which the chancellor termed unequivocal and positive, and also considering the admission by Victoria Smith that she had never obtained a divorce from Sim Futch and had no knowledge that he had obtained a divorce from her, the chancellor held that the defendants had rebutted the presumption that the second marriage was valid. He, therefore, dismissed the bill of complaint. This was error.
Where there is proof of a marriage ceremony, the law will presume the capacity of the parties, consent of the parties, and all essentials to the validity of the marriage. The presumption was early recognized by this Court in Hull v. Rawls, 27 Miss. 471 (1854), and has been consistently applied ever since.
The rule of law was perhaps best stated in Anderson-Tully Co. v. Wilson, 221 Miss. 656, 74 So. 2d 735 (1954) as follows:
It is well-established that when a person has entered into several successive marriages, a presumption arises in favor of the validity of the second or last marriage. And this presumption of validity is applicable to a subsequent common-law marriage, as well as to a subsequent ceremonial marriage. Anno., 14 A.L.R. 2d 7, 19; 55 C.J.S. Marriage § 43, pp. 887-892, 896. A subsequent marriage in fact raises the presumption that a former marriage has been terminated by divorce or by the death of a prior spouse. These presumptions are based upon public policy. The burden of adducing evidence to the contrary rests on the party who attacks it. 55 C.J.S. [Marriage, § 43,] pp. 890-891. Of course this presumption can be rebutted by evidence excluding the possibility of a divorce or death of a prior spouse, 14 A.L.R. 2d 45, but that burden of proof is a difficult one: "It has been declared that, an existing marriage being shown, the presumption of its validity is so strong that proof of a former subsisting marriage, in order to be sufficient to overcome this presumption, must be so cogent and conclusive as to fairly preclude any other result." (221 Miss. at 662, 74 So.2d at 737).
In Pigford Bros. Construction Co. v. Evans, 225 Miss. 411, 83 So. 2d 622 (1955), a deceased employee's second wife was entitled to compensation benefits as the lawful widow of the employee. The only evidence offered to rebut the presumption was the testimony of the employee's first wife that she had not divorced him and he had not divorced her. We held this evidence was not sufficient to rebut the presumption of validity of the second marriage because it did not prove that the deceased had not obtained a divorce from his first wife. The Court stated:
The practical course of proof in such a case would be to show where each party to the prior marriage had resided up to the time of the second marriage, and then to procure from the clerk of the proper court in each such county a certificate of search showing that no divorce or annulment had been granted by the court of which he is clerk. (225 Miss. at 421, 83 So.2d at 625).
*764 In Ramphrey v. Ramphrey, 243 Miss. 184, 137 So. 2d 906 (1962), a husband attempted to set aside the divorce decree granted to his wife. He alleged that at the time of their marriage his wife was still married to a former husband, and as proof he submitted a divorce decree obtained by his wife from her first husband after her marriage to her second husband. This was not enough. It was incumbent on the petitioner to show that the first husband had not obtained a divorce prior to the subsequent marriage.
The case of Erwin v. Hodge, 317 So. 2d 55 (Miss. 1975) most strongly illustrates the proof necessary to overcome the presumption. In that case Henry Erwin married Alice Newberry in 1941 in Lincoln County. He obtained a divorce in 1945, but remarried her in 1947. Later that same year he married Helen Scott in Lincoln County. In 1958 Helen Scott obtained a divorce from Erwin in Adams County. They also remarried in 1958, but divorced in 1959. In 1961 Erwin married Linnie Smith. He died intestate in 1971, in Jefferson County, while living with Linnie Smith Erwin. The proof showed that Henry Erwin was a lifelong resident of Jefferson County. Alice Newberry, his first wife, moved to Hinds County, then to Warren County, following her separation from Erwin. In an attempt to rebut the presumption of the validity of Erwin's subsequent marriages, certificates were introduced from the chancery clerk of Adams, Hinds, Jefferson, Lincoln and Pike Counties, certifying that no record of divorce or an annulment had been granted to Henry Erwin or Alice Newberry Erwin between August 7, 1947, the date of their remarriage, and the date of Erwin's death. This proof failed, in part because there was no showing whether there had been a divorce in Warren County.
The proof offered in this case to rebut the presumption that Victoria Smith's marriage to Grover Smith was valid does not preclude the possibility that Sim Futch had obtained a divorce from Victoria or had died prior to Victoria's second marriage. Mittis Bufkin's testimony that she once met a man who claimed to be Sim Futch and who claimed to be married to Victoria Ernest was only hearsay. Even though there was no objection to this testimony it was entitled to little, if any, weight. Further, the stipulation that Victoria Smith had never divorced Sim Futch and that she had no knowledge of any divorce obtained by Sim Futch does not preclude the possibility that Sim Futch had in fact obtained a divorce from her. The burden of producing evidence to rebut the presumption of validity attaching to Victoria and Grover Smith's ceremonial marriage rested on the parties attacking it, and that burden could only be met by producing proof so cogent and conclusive as to fairly preclude any other result. The proof in this case clearly falls short of that required.
Since it is evident that the chancellor erred, the cause should be reversed and remanded for proceedings on the bill of complaint for partition.
REVERSED AND REMANDED.
PATTERSON, C.J., SMITH and ROBERTSON, P. JJ., and SUGG, BROOM, and COFER, JJ., concur.
LEE and BOWLING, JJ., took no part.
NOTES
[1] Mrs. Bufkin testified that she and some friends drove to the Gulf Coast to view the damage done by Hurricane Camille. While travelling toward Biloxi off Highway 49, going into Back Bay, they stopped at a filling-station to have a flat fixed. An old black man identified himself as Sim Futch. He had seen the Scott County license plate and started a conversation with Mrs. Bufkin about different people in Scott County. He asked if she knew any Futches. She replied, "Yes." He asked if she knew any Ernests, and she said she knew some. He asked her about Victoria Ernest (Victoria Smith's maiden name). He said that was his wife. Mrs. Bufkin told him that the Victoria she knew was married to another man. He again told her Victoria was his wife and that he would look her up someday. Mrs. Bufkin just laughed.
On cross-examination Mrs. Bufkin did not know the name of the filling-station, what highway it was on, or what county it was in. She described the man who claimed to be Sim Futch as gray-haired, brown-skinned, and of medium height. She had not seen him before or since, and there is no evidence that anyone else has seen him, either. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1581043/ | 919 F. Supp. 232 (1995)
Myrtle Lee WESLEY, Plaintiff,
v.
UNION NATIONAL LIFE, Defendant.
Civil Action No. 3:94-cv-641(L)(N).
United States District Court, S.D. Mississippi, Jackson Division.
October 3, 1995.
*233 J. Andrew Phelps, Hattiesburg, MS, for Plaintiff.
William C. Brabec, Arthur F. Jernigan, Jr., Phelps Dunbar, Jackson, MS, for Defendant.
MEMORANDUM OPINION AND ORDER
TOM S. LEE, District Judge.
This cause is before the court on the motion of defendant Union National Life (Union National) for summary judgment or, in the alternative, for partial summary judgment. Plaintiff Myrtle Lee Wesley opposes the motion, and the court, having considered the memoranda of the parties, concludes that defendant's motion for summary judgment should be granted.
The undisputed facts of the case are as follows. On May 11, 1992, Thomas F. Wesley took out a whole life insurance policy in which he named his mother, plaintiff Myrtle Lee Wesley, as beneficiary. The policy provided $10,000 death benefits with an additional $10,000 benefits for accidental or unnatural death. Thomas F. Wesley signed the application form. The answers to three questions on the form indicated that he had not been hospitalized in the past five years, that he had not used cocaine or heroin within the past three years and that he had not consulted a physician within the past three years. It is undisputed that all three of these answers were false, and it is also undisputed that Union National would not have provided the same insurance policy at the same premium if the answers on the application had been truthful.
Thomas F. Wesley was shot and killed on June 21, 1992. The coroner's report showed that cocaine was in Mr. Wesley's blood at the time of his death. Upon learning of the circumstances surrounding his death, Union National began to investigate whether Mr. Wesley's answers on the application were truthful. The investigation revealed that within one year prior to his application for insurance, Wesley had been confined to a chemical dependency unit at a hospital in California due to cocaine addiction. As a result, Union National rescinded the policy and returned the premium payments to the beneficiary, Myrtle Lee Wesley. Mrs. Wesley then filed suit for specific performance, bad faith, breach of contract, negligence and conversion. She seeks both actual and punitive damages.
Defendant moves for summary judgment based on its assertion that but for the false statements on Mr. Wesley's application, it would not have issued a life insurance policy to him. In the alternative, defendant argues that partial summary judgment should be granted as to plaintiff's bad faith claims since defendant had a reasonable basis for denying payment of the insurance benefits. Plaintiff has answered the motion for summary judgment by asserting that Union Life would have issued another type of life insurance policy if Thomas Wesley had answered the questions truthfully. She also contends that Union Life engaged in post-claims underwriting in violation of Mississippi law.
Under Mississippi law, an insured party may be barred from recovering the *234 proceeds of an insurance policy if he makes false statements on the application.
In Mississippi, a material misrepresentation in an application for an insurance policy allows the insurer to void or rescind the policy. Home Life Ins. Co. v. Madere, 101 F.2d 292 (5th Cir.1939); Deposit Guaranty Nat'l Bank v. Minnesota Mutual Life Ins. Co., 369 F. Supp. 8 (S.D.Miss.1973); Coffey v. Standard Life Ins. Co., 238 Miss. 695, 120 So. 2d 143, 148-49 (1960). The right to void or rescind occurs only where the answers given in the application are both false and material to the acceptance of the risk or the hazard to be assumed. Miss. Code Ann. § 83-9-11(3) (1972). "If the misstatement is material, it can make no difference as to whether or not it was made in good faith." Fidelity Mutual Life Ins. Co. v. Miazza, 93 Miss. 18, 46 So. 817, 819 (1908). A misrepresentation is material if knowledge of the true facts would have influenced a prudent insurer in determining whether to accept the risk. 45 C.J.S. 595(3), pp. 406-07. Finally, an insurance company "has the right to rely on the information supplied in the application in determining whether or not to accept the risk." Mattox v. Western Fidelity Ins. Co., 694 F. Supp. 210, 216 (N.D.Miss.1988) (referring to Apperson v. United States Fidelity and Guaranty Co., 318 F.2d 438, 441 (5th Cir.1963)).
Massachusetts Mutual Life Ins. Co. v. Nicholson, 775 F. Supp. 954, 959 (N.D.Miss. 1991) (footnote omitted).
Mrs. Wesley first argues that the false answers on her son's insurance application were not material to the risks assumed. She submits that his false answers did not affect defendant's evaluation of the risk or hazard assumed. However, the undisputed evidence reveals that Union National would not have issued this policy if plaintiff's insured had answered the questions on the application accurately. Under Mississippi law, this gives the defendant the right to rescind the policy. Plaintiff's contention that the insured would have been eligible for another type of insurance, even if true, is irrelevant. When an applicant makes material misrepresentations, the law grants an insurance company the right to rescind the policy in whole. It follows that defendant does not have to provide the coverage that would or might have been available if the applicant had answered questions truthfully. The overt misrepresentations of the insured, not the acts of the defendant, denied him the benefits of life insurance altogether.
Plaintiff also argues that the false answers on the insurance policy were not material because her son's death was unrelated to his use of cocaine.[1] However, there is no requirement under Mississippi law that the actual cause of death be related to risks concealed by an insurance applicant in order for the concealed facts to be material. Golden Rule Ins. Co. v. Hopkins, 788 F. Supp. 295, 303 (S.D.Miss.1991) (each misrepresentation by insured regarding physical conditions unrelated to cause of death constituted "an independent basis for rescission").
The plaintiff does not dispute that her son used cocaine up until at least one year before he took out the life insurance policy with defendant. Defendant presented evidence showing that the insured could not have obtained the same type of insurance policy at the same premium if he had accurately disclosed his prior drug use. This evidence establishes that a prudent insurer would have considered the risk of death posed by an applicant who had used cocaine to be greater than the risk posed by an applicant who had not used cocaine. It is well-documented that cocaine users have a higher risk of death not only from the adverse physical effects of cocaine, but also from violence at the hands of others.[2]
The evidence clearly and convincingly shows that defendant would have acted differently *235 if the truth had been disclosed. Therefore, summary judgment is proper since defendant has shown by clear and convincing evidence that the false statements contained in the insurance application materially affected the acceptance of risk or hazard assumed by defendant.
Plaintiff also argues that defendant is liable because the company allegedly engaged in post claim underwriting in violation of Mississippi law. The Mississippi Supreme Court has defined post claim underwriting as an insurer's waiting until after the insured makes a claim to determine whether the claimant is eligible for insurance according to the risks he presents. Lewis v. Equity Nat'l Life Ins. Co., 637 So. 2d 183, 188-89 (Miss. 1994). The court has criticized this practice, reasoning that "[a]n insurer has an obligation to its insureds to do its underwriting at the time a policy application is made, not after a claim is filed." Id. at 188-89. However, defendant did not engage in post-claims underwriting as defined in Lewis. The questions on the insurance application were one method for screening out applicants who presented unacceptable risks. Defendant made an underwriting decision not to insure applicants who answered "yes" to any of these questions. In answering three of these questions falsely, the insured bypassed defendant's underwriting process. The remedy provided by Mississippi law is for defendant to have the option to rescind the insurance policy as a whole. Defendant has properly exercised this legal right.
Under Mississippi law, an insurer "has the right to rely on the information supplied in the application in determining whether or not to accept the risk." Mattox v. Western Fidelity Ins. Co., 694 F. Supp. 210, 216 (N.D.Miss.1988) (referring to Apperson v. United States Fidelity and Guaranty Co., 318 F.2d 438, 441 (5th Cir.1963)). Plaintiff would have this court impose liability on the defendant for accepting the insured's answers on his application as true and for denying coverage when the circumstances surrounding his death and the facts that were revealed by a subsequent investigation showed that he misrepresented facts that would have made him ineligible for the coverage.[3] The court refuses to contravene established Mississippi law as plaintiff suggests.
The court need not address plaintiff's remaining claims since as a matter of law defendant properly rescinded the insurance contract because of the material misrepresentations made by the plaintiff's insured on the application for insurance. The court grants summary judgment to defendant as to all of plaintiff's claims.
SO ORDERED.
NOTES
[1] Plaintiff appears to be arguing that Wesley's death was the result of a gunshot wound and not from adverse physical effects resulting from cocaine use. Plaintiff fails to mention certain circumstances surrounding the shooting that suggest that cocaine was a factor that contributed to the death of Thomas Wesley. For example, tests conducted soon after his death revealed cocaine in his blood.
[2] One study found that on average thirty-one percent of the victims of homicide had traces of cocaine in their blood. The researchers offered an explanation for the increased risks of homicide associated with cocaine use:
Homicide victims may have provoked violence through irritability, paranoid thinking, or verbal or physical aggression, which are known to be pharmacologic effects of cocaine. In addition, homicide may have been part of the business of dealing cocaine. Violence is often used for the control of sales territory, in retaliation against dealers who may be using cocaine themselves, or in other violent crimes.
"Homicide in New York City: Cocaine Use and Firearms," The Journal of the American Medical Association, July 6, 1994; Vol. 272; No. 1; Pg. 43.
[3] Plaintiff appears to confuse post claim underwriting with post claim investigation of eligibility. To deny defendant the right to engage in post claim investigation would mean that insurers would have to investigate every answer by every applicant before insuring them and to pay claims regardless of the misrepresentations contained in the application. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2115274/ | 812 F. Supp. 2d 768 (2011)
Susan HEWITT, Plaintiff
v.
WYETH, INC., et al., Defendant.
Civil Action No. 5:03CV333TSL-MTP.
United States District Court, S.D. Mississippi, Western Division.
July 7, 2011.
*769 Richard A. Freese, Sweet & Freese, PLLC, Birmingham, AL, Rick D. Patt, Patt Law Firm, PLLC, Jackson, MS, for Plaintiff.
Heather M. Aby, Biggs, Ingram, Solop & Carlson, PLLC, Anita K. Modak-Truran, Charles F. Morrow, Christy D. Jones, Butler, Snow, O'Mara, Stevens & Cannada, Mark D. Jicka, Rebecca L. Wiggs, Robert B. Ireland, III, Watkins & Eager, Dudley Collier Graham, Jr., Wise, Carter, Child & Caraway, Jackson, MS, Michael B. Hewes, Butler, Snow, O'Mara, Stevens & Cannada, PLLC, Gulfport, MS, for Defendants.
MEMORANDUM OPINION AND ORDER
TOM S. LEE, District Judge.
This cause is before the court on the motion of defendants Wyeth, LLC and Wyeth Pharmaceuticals Inc. (Wyeth) for summary judgment on statute of limitations grounds. Plaintiff Susan Hewitt has responded to the motion and the court, having considered the memoranda of authorities, together with attachments, submitted by the parties, concludes that Wyeth's motion is well taken and should be granted.
Plaintiff Susan Hewitt was diagnosed with breast cancer on October 3, 1998, for which she underwent surgery in November 1998. The surgery was successful in removing the cancer, and she has remained cancer-free since that time. On December 21, 2002, Hewitt filed the present action against Wyeth on various products liability theories,[1] all based on the allegation that plaintiff's cancer was caused by her consumption of the hormone therapy medications Prempro and Premarin, which were manufactured, marketed and distributed by Wyeth.[2] By the present motion, Wyeth seeks dismissal of plaintiff's complaint, contending her claims are barred by Mississippi's "catch-all" three-year statute of limitations, see Miss. Code Ann. § 15-1-49(1) ("All actions for which no other period of limitation is prescribed shall be commenced within three (3) years next after the cause of such action accrued, and not after."). Wyeth notes that § 15-1-49(2) establishes a latent injury discovery rule, as follows:
In actions for which no other period of limitation is prescribed and which involve latent injury or disease, the cause of action does not accrue until the plaintiff has discovered, or by reasonable diligence should have discovered, the injury.
Wyeth contends this rule is applicable to plaintiff's claims since breast cancer is a "latent injury or disease"; and it submits that under this rule, as interpreted and applied by the Mississippi Supreme Court, Hewitt's claims accrued, and the limitations period began to run, at the time of her cancer diagnosis in October 1998, and that her lawsuit, filed more than four years later in December 2002, is untimely and therefore due to be dismissed. Wyeth is clearly correct.
In response to Wyeth's motion, plaintiff agrees that her claims are subject to the three-year limitations period of § 15-1-49(1) and to the latent discovery rule of § 15-1-49(2), which by its terms indicates that her claim accrued at the time she *770 discovered her "injury." Yet she seems to suggest that since breast cancer can result from many different causes other than hormone replacement drugs, and since at the time of her diagnosis, the scientific community had not yet established (or at least had not published findings indicating) a causal link between hormone replacement drugs and breast cancer, then her claim did not accrue until July 2002, when the World Health Institutes published the results of a study ostensibly establishing this causal link. Plaintiff's position in this regard is contrary to Mississippi law.
Recently, in Angle v. Koppers, Inc., the Mississippi Supreme Court held that in accordance with the plain language of § 15-1-49(2), a cause of action for recovery on account of latent disease or injury "accrues upon discovery of the injury, not discovery of the injury and its cause." 42 So. 3d 1, 3 (Miss.2010). The plaintiff in Angle alleged various injuries, including breast cancer, as a result of exposure over a period of years to toxic chemicals released from railroad tank cars and trucks and from a wood-treatment facility near her residences. The court found the statute of limitations began to run on the plaintiff's claim at the latest in 2001, the date she was last diagnosed with an injury or disease (which, as here, was breast cancer); and thus, her complaint, filed five years later, was untimely. The court wrote, "No provision of Section 15-1-49 provides that a plaintiff must have knowledge of the cause of the injury before the cause of action accrues, initiating the running of the statute of limitations." Id. at 7.
Notably in Angle, the court referenced its earlier opinion in Schiro v. American Tobacco Co., 611 So. 2d 962, 965 (Miss. 1992), as confusing the accrual issue by its comment, in dicta, that in 1981, the plaintiff "did not actually know that she had cancer, an injury connected with smoking. Thus, even if she had brought suit at this point, the claim would have been premature." Angle, 42 So. 3d at 6 (quoting Schiro, 611 So. 2d at 965). The Angle court clarified that in Schiro, "the proper inquiry under the statute should have been the plaintiff's discovery of the injury or disease, i.e., a diagnosis of cancer, not the discovery of a causative relationship between smoking and the cancer." Angle, 42 So. 3d at 6. Likewise in this case, the proper inquiry is the date of Hewitt's discovery that she had breast cancer, i.e., her injury or disease, not the date on which she purportedly discovered a causative relationship between hormone replacement drugs and the cancer. See also Lincoln Electric Co. v. McLemore, 54 So. 3d 833 (Miss.2010) ("As clarified in Angle, Section 15-1-49 does not require a plaintiff to know the cause of the injury before accrual of the cause of action[,]" and thus "[u]nder Angle, knowledge of the cause of an injury is irrelevant to the analysis [under § 15-1-49(2)"); Barnes ex rel. Barnes v. Koppers, Inc., 534 F.3d 357, 361 (5th Cir.2008) (pre-Angle toxic tort case finding that cause of action accrued upon breast cancer diagnosis, not upon discovery of alleged cause of such cancer, since "under § 15-1-49, a cause of action accrues when the plaintiff has knowledge of the injury, not knowledge of the injury and its cause.").[3]
*771 Based on the foregoing, it is apparent that summary judgment is in order, and therefore, it is ordered that Wyeth's motion is granted.
A separate judgment will be entered in accordance with Rule 58 of the Federal Rules of Civil Procedure.
NOTES
[1] Plaintiff's complaint includes claims against Wyeth for negligence and gross negligence, strict liability, breach of express and implied warranties, misrepresentation and conspiracy.
[2] In addition to her claims against Wyeth, Hewitt asserted medical malpractice claims against her former gynecologists who had prescribed the Prempro/Premarin to plaintiff during the five years preceding her cancer diagnosis as hormone therapy to treat her severe perimenopausal symptoms. These defendants were dismissed by agreed order on February 4, 2011.
[3] Plaintiff's reliance on Donald v. Amoco Production Co., 735 So. 2d 161 (Miss.1999), to avoid dismissal is misplaced. As described in Angle, the injury in Donald, contamination of the plaintiff's property with oil waste, was "`inherently undiscoverable,' and the cause of action had accrued upon discovery of the injury." Angle, 42 So.3d at 7. As Wyeth notes, there was a question in Donald about whether the plaintiff knew he had been injured, since he was unaware of the radioactive nature of certain oil waste deposits buried on his property. See Donald, 735 So.2d at 168 (Miss.1999) (noting that discovery rule of § 15-1-49 is applicable "where the plaintiff will be precluded from discovering the harm or injury because of the secretive or inherently undiscoverable nature of the wrongdoing in question ... [o]r, the discovery exception may be applied when it is unrealistic to expect a layman to perceive the injury at the time of the wrongful act") (emphasis added). Here, unlike Donald, there is no question about when Hewitt learned of her injury. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1923033/ | 127 B.R. 346 (1991)
In re PAPERCRAFT CORPORATION, Debtor-In-Possession.
SECOND PENNSYLVANIA REAL ESTATE CORPORATION, Movant,
v.
PAPERCRAFT CORPORATION, Respondent.
Bankruptcy No. 91-00903 JKF, Motion No. 91-2790-M.
United States Bankruptcy Court, W.D. Pennsylvania.
June 14, 1991.
*347 George M. Cheever, Kirkpatrick & Lockhart, Pittsburgh, Pa., for debtor.
Philip E. Beard, Stonecipher, Cunningham, Beard & Schmitt, Pittsburgh, Pa., for Unsecured Creditors' Committee.
Robert G. Sable, Stephen J. Laidhold, Sable, Markoroff, Sherman & Gusky, P.C., Pittsburgh, Pa., for Second Pennsylvania Real Estate Corp.
MEMORANDUM OPINION ON MOTION FOR RECONSIDERATION
JUDITH K. FITZGERALD, Bankruptcy Judge.
Before the court are motions for reconsideration filed on behalf of Debtor and on behalf of the Official Committee of Unsecured Creditors concerning the order of this court dated April 30, 1991, 126 B.R. 926 which required the Debtor to make post-petition lease payments but permitted certain reductions in the April rent based on prepaid items. At the hearing on the motion for reconsideration held on May 21, 1991, Movants[1] contended that at the hearing which led to the April 30 order they were surprised by Second Pennsylvania's (Lessor's) claim, based on the parties' use of an annual reconciliation at calendar year end, that an offset should not be permitted for prepaid taxes on a fiscal year proration. The parties conducted their business on the calendar year basis even though the taxing body at issue bills on a fiscal year.
The court provided an opportunity for the Debtor and the committee to cite in the record where surprise was claimed. Despite the requests of both parties for a week following the hearing of May 21 in which to do so, neither party submitted any information to the court.[2] Moreover, a fair reading of the record would substantiate that even if Debtor so claimed, the claim would not be meritorious. If any entity was surprised by a change in a relationship and practice among the parties, it would be Lessor. The first and only time that anyone requested a change in the calendar *348 year adjustments was when Debtor decided to reject the lease, the motion for which also is pending. Debtor then claimed a credit for prepaid taxes based on a fiscal, rather than calendar, year proration. The testimony establishes that, prepetition, the parties credited prepaid taxes against rent by taking one-twelfth of the previous calendar year tax payments and attributing that twelfth to the monthly rent. Prior to the inception of this bankruptcy case, the parties never used a fiscal year calculation. Therefore, the Debtor's request to offset all of its prepaid tax liability against one month's rent is not supported by the evidence and the motion for reconsideration on this basis must be denied.
The next issue raised also concerned the tax proration. The court requested Debtor and the committee to provide cases which indicated that there was some support for the proposition that because a taxing body bills on a fiscal year basis, the offset, if any, must be determined on the fiscal year of the taxing body rather than on the parties' established method of conducting business. No such cases were submitted. The testimony clearly established a custom and practice between these parties of annualizing credits and debits on a calendar year basis.[3] Despite the clear provisions of the lease concerning who was to pay taxes and when, the parties' actual practice differed from their written contract. They agreed that the lease provisions were never followed. There is no evidence to support Debtor's claim that taxes should be prorated on a fiscal year basis for purposes of the requested setoff. For the reasons expressed by this court in its opinion of April 30, 1991, and by Judge Bentz in In re Wheeling Pittsburgh Steel Corp., 109 B.R. 689 (Bankr.W.D.Pa.1990), the motion for reconsideration on this ground must be denied.
Debtor next contended that its lease obligation is to provide utility services for various other tenants in the building, to pay for those utilities and then to be given a credit by Lessor for those payments made on behalf of third-party tenants. A reexamination of the lease reveals this argument to be spurious. There is no such obligation attributed to Debtor in the lease. The lease specifically requires Lessor to make electricity, water, sewer service and steam heat available. See ¶ 12(a) of the Lease. Debtor's responsibility is to pay for those utilities plus gas, power, telephone, etc., which it consumes. The lease specifically provides that Lessee (Debtor) has no obligation to pay for utilities for third-party tenants. See ¶ 12(f). Nonetheless, the testimony supports Debtor's contention that it paid for utility services for third-party tenants and was reimbursed for those services by Lessor.
The only issue addressed by the court in the April 30 Memorandum Opinion and Order was whether payments made, or to be made, by Debtor for utilities could be deducted from the April rent. The court determined that it would be appropriate to permit Debtor a credit for the utility services for which it had actually paid. For unpaid services, which are all prepetition unsecured claims, the Debtor may have an entitlement to an offset at some point in the future. The parties have on-going, competing claims. The Debtor may or may not pay all unsecured creditors 100 cents on the dollar. For this reason, it would be inequitable to allow Debtor an offset at 100 cents on the dollar for monies it has not expended against a rent obligation which it clearly owes at a time when it has not made the payment it seeks to offset. The court was concerned that the sole payment obligation for utilities for third-party tenants may not rest with the Debtor. Debtor contended that it is solely liable to the utility companies by contract with those companies but no evidence was introduced on this point. Debtor agreed that the utility companies may seek payment from Lessor, which, if it pays, would seek subrogation *349 from Debtor.[4] However, no utility company is before the court seeking payment. Instead, the Debtor is attempting to reduce its monthly rent obligation to its landlord by the amount of a utility payment for which Debtor may be liable but which Debtor has not made. To the extent that Debtor pays unsecured creditors through its plan of reorganization, Debtor will satisfy its obligation to the utility companies. At that point if the Debtor has expended funds on behalf of third-party tenants, Debtor can seek reimbursement under and to the extent provided by the lease.
Debtor contended that the testimony of Frank Kane would substantiate its position concerning both surprise and the unpaid utilities. The court listened to the tape of Mr. Kane's testimony[5] again and finds no change in its earlier assessment of his testimony. For these reasons, the motion for reconsideration based on the claim for an additional credit for unpaid utilities will be denied.
The committee also contends that the setoff of the unpaid utilities should be permitted. The argument is that in other situations, a creditor who has an outstanding obligation to the Debtor is permitted an offset against unpaid obligations owing to it by the Debtor. Thus, the creditor's entire claim against the Debtor is reduced but no money changes hands. This situation is not analogous. Debtor's obligation in this case is not to make utility payments to Lessor. In fact, according to the lease, Debtor has no obligation to make the utility payments on behalf of third-party tenants at all. To the extent that the Debtor has an obligation to make the utility payments, that obligation runs to the utility which provided the service, not to Lessor. The parties, as a matter of convenience, adopted the practice of having Debtor make utility payments, billing Lessor for the amounts chargeable to third-party tenants, and then receiving reimbursement from Lessor. Debtor has no right to credits from Lessor for amounts which remain unpaid. Debtor is entitled to reimbursement only after it pays the bill and invoices Lessor for the proportionate share.
Even the analogy to triangular setoffs is not appropriate in this situation. If Debtor were permitted to reduce its rent claim 100 cents on the dollar but then to pay the utility company less than in full, it would have received a windfall. Because there will be time to adjudicate the issues in an orderly fashion in claims litigation, the most reasonable solution is to allow the Debtor to deduct from its rent obligation those utility payments which it actually has made on behalf of third parties and to deal later with the issue of reimbursement for the as yet unpaid portion.
The next issue is whether or not the credit allowed against the rent is in the nature of setoff or recoupment.[6] As indicated in the opinion of April 30, 1991, the court did not draw a fine distinction because the parties had not done so at the initial hearings. Although the elemental differences in the doctrines are evident when a creditor attempts to establish a setoff or recoupment, they are blurred when a debtor invokes § 558, particularly in circumstances such as presented in this case. We note at the outset that § 553 of the Bankruptcy Code prescribes setoff but applies only to creditors. Recoupment is not mentioned in the Code but is utilized in bankruptcy by decision. Lee v. Schweiker, 739 F.2d 870, 875 (3d Cir.1984). Debtor's *350 claim to setoff or recoupment, therefore, must be based on the implicit incorporation of the doctrines into § 558, or by way of preservation of the Debtor's defenses by contract, or by some common law entitlement. Thus, we examine only this defensive action by Debtor, invoking § 558, to determine whether the postpetition rent may be reduced by amounts owed to Debtor, prepetition, by Lessor.
Section 558 preserves to the Debtor its prepetition defenses to causes of action. In that context, either setoff or recoupment would be available as a defense and, if established, would result in a netting out of what each party owes the other.
To establish setoff, the movant must show that there are mutual prepetition debts and that the result of the offsets will not improve the position of the creditor. The essential element of recoupment is that the debts must arise out of the same transaction. Setoff is a narrower, more restrictively applied doctrine than is recoupment. See University Medical Center v. Sullivan, 122 B.R. 919 (E.D.Pa.1990); In re California Canners & Growers, 62 B.R. 18 (9th Cir. BAP 1986); In re Vaughter, 109 B.R. 229 (Bankr.W.D.Tex.1989). The issues which typically arise with respect to setoff include how to determine what constitutes a prepetition obligation, how to define what is a mutual debt, and how to determine whether an improvement in position would result. With respect to recoupment, the issues tend to be focused on what constitutes the "same transaction."
Concerning setoff as applied in this case, the parties have substantiated the mutuality[7] of the debts and the court finds that neither Debtor's nor Lessor's position would be improved by virtue of the limitations to rent reduction authorized by the court in these opinions and orders. The problem is that Debtor seeks to offset its prepetition prepayment of taxes against its postpetition rental obligation. Were this a creditor seeking a setoff, that time differential would be fatal to applying setoff principles. However, because § 558 preserves to the Debtor the defenses it would have had prepetition, the court must examine the transaction as though the bankruptcy had not been filed.[8] Doing so eliminates the prepetition/postpetition distinction and, in essence, obliterates the requirement that the mutual debts must both be prepetition obligations in a § 558 context. Removing that distinction further obscures the difference between "setoff" and "recoupment." What remains clear in this case, though, is that without the time line barrier, Debtor has the defense of setoff available.
The recoupment doctrine has a different constraint, i.e., the necessity that the debts arise out of the same transaction. In this case, the parties agree that the obligations at issue derive from the same transaction,[9] i.e., the sale and leaseback of Papercraft Park. Cf., In re Vaughter, 109 B.R. 229 (Bankr.W.D.Tex.1989) (obligations *351 arising from a lease are part of a recurring transaction which are governed contractually by the terms of the lease). We must then examine whether there is a contractual or other basis for recoupment.
The lease, which is an executory contract, does not require Debtor to pay taxes and utilities for third parties and to receive a credit against rent in exchange. However, the business practice of the parties was to have Debtor do so and to "net out" their claims via an annual reconciliation. There is, therefore, a course of dealing which purportedly recognizes recoupment.[10]
In the context of this case, whether one chooses to apply the label "setoff" or "recoupment" seems of little import. Because the court has required the Debtor to make the prerejection, postpetition rent payments in accord with the provisions of the lease, the court finds that recoupment is appropriate in this case despite Debtor's effort to reject the lease. The court has balanced the equities and exercises its discretion to limit the reduction to the April rent as indicated. In this case the netting out of the claims as provided by this court's opinion and order of April 30 and of today is permissible under either doctrine: setoff or recoupment. See footnote 9, supra.
Finally, after the court issued its opinion of April 30, Debtor filed an affidavit indicating that Frank Kane's testimony had been incorrect in its computation of the portions of the utilities which had been paid. Because the affidavit substantiates that there was less money paid to the utilities than Kane's testimony indicated, Lessor agreed to a recomputation of the setoff amounts based upon the information in the affidavit. Therefore, the motion for reconsideration concerning the amount of the offset will be granted. At page 12 of the Memorandum Opinion of April 30, 1991, the court found that Debtor had paid $37,871.61 with respect to utilities. The affidavit, however, substantiated that Debtor had paid only $26,229.50. Thus, the credit to Debtor against the April rent must be decreased by $11,642.11. The Order of April 30, 1991, will be amended to require Debtor to pay to lessor the rents which were due on April 1 to the extent that they exceed $56,716.40.
An appropriate Order will be entered.
NOTES
[1] This motion was filed by Debtor and the Creditors Committee at the same motion number as the original pleading. The references to movants, therefore, refer to them with respect to this motion for reconsideration only.
[2] Debtor claimed at argument on this motion that it was surprised because Lessor did not provide its witness, a Mr. Karlton, for deposition prior to hearing. Lessor responds that Mr. Karlton was present in court and available although not called to testify. Had Debtor requested time at the evidentiary hearing to talk with him and/or to depose him about this matter the court would have granted that request. No request was made during that hearing.
[3] The lease itself is silent as to whether the parties would allot payments on a calendar or fiscal year. However, ¶ 5.1(d) of the lease provides for monthly prorations and reimbursements of the 1988 prepaid taxes.
[4] Of course, any subrogation claim would be limited to the charges attributable to Debtor's use of the facility, which is significantly less than the total utility payments which Debtor makes. Lessor reimburses Debtor for the portions attributable to third-party usage.
[5] The court also instructed Debtor's counsel to provide a transcript of that portion relative to surprise. Counsel did not do so. The court discovered none in its review of Kane's testimony.
[6] Recoupment is "the setting up of a demand arising from the same transaction as the plaintiff's claim or cause of action, strictly for the abatement or reduction of such claim." 4 COLLIER ON BANKRUPTCY ¶ 553.03 (15th ed. 1991). The doctrine has been utilized in bankruptcy to allow prepetition claims to be reduced by postpetition obligations arising from the same transaction. See, e.g., Waldschmidt v. CBS, Inc., 14 B.R. 309, 314 (M.D.Tenn.1981).
[7] Mutuality requires contemporaneous transactions between parties acting in the same capacity. Stamp v. Insurance Company of North America, 908 F.2d 1375 (7th Cir.1990). In this case the sale and leaseback were contemporaneous transactions by parties who had the same right and capacity, i.e., Debtor = Sellor and Lessee; Second Pennsylvania = Purchaser and Lessor. See In re Drexel Burnham Lambert Group, Inc., 113 B.R. 830 (Bankr.S.D.N.Y.1990). See also In the Matter of Bevill, Bresler & Schulman Asset Management Corp., 896 F.2d 54 (3d Cir.1990).
[8] As stated in 4 COLLIER ON BANKRUPTCY ¶ 558.02 (15th ed. 1991), in order to defeat improper claims against the estate, the Trustee "must be able to assert all the defenses that the Debtor could have asserted had bankruptcy not intervened."
[9] We note that setoff is used in situations in which the parties engaged in different transactions but see nothing to prohibit its use in this case. For this purpose, the sale could be seen as one transaction and the lease another. Part of the setoff involves unpaid interest due by Lessor to Debtor on the note and mortgage issued at the sale closing. That obligation is not part of the lease. However, the sale was subject to Debtor's agreement to lease back part of the building. In these circumstances, the parties intended to engage in a course of dealing through their contemporaneous transactions. To separate out the parts of the transaction is contrived. To say that all obligations arose from one contractual instrument is equally as contrived. This sequence of events is not uncommon in today's economic climate and leads to the conclusion that this whole transaction is the sum of its parts. The effort to characterize the events as separate or as one pinpoints even further the confusion in labeling the "netting out" in this case as "setoff" or as "recoupment." The parties routinely conducted their business relationship in this fashion prepetition and it makes little sense to require a different practice while that relationship continues in Chapter 11. One author suggests that the origins of setoff may have their roots in the context of one transaction. See Sepinuck, The Problems With Setoff: A Proposed Legislative Solution, 30 WILLIAM & MARY L.REV. 51, 52-53 (1988). If this is so, the necessity to find two separate transactions for setoff may be unnecessary on the facts of this case.
[10] Authority exists in the case law for the proposition that the Debtor may not recoup unless he assumes an executory contract. See In re Memorial Hospital, 82 B.R. 478 (W.D.Wis.1988), appeal dismissed, 862 F.2d 1299 (7th Cir.1988). But see, University Medical Center v. Sullivan, 122 B.R. 919 (E.D.Pa.1990) (recoupment permitted before executory contract was either assumed or rejected). This Debtor seeks to reject the lease and to terminate its landlord-tenant relationship with Lessor. Debtor has substantiated its entitlement to the defense of recoupment through custom and usage. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2168694/ | 27 Cal.App.3d 38 (1972)
103 Cal. Rptr. 483
SHIRLEY GREENE, Plaintiff and Appellant,
v.
FRANCHISE TAX BOARD, Defendant and Respondent.
Docket No. 11107.
Court of Appeals of California, Fourth District, Division One.
August 3, 1972.
*40 COUNSEL
Richard Gross, Alphonse L. Pazos, Allen M. Gruber and Andrew J. Freeman for Plaintiff and Appellant.
Evelle J. Younger, Attorney General, Philip C. Griffin and Neal J. Gobar, Deputy Attorneys General, for Defendant and Respondent.
OPINION
AULT, J.
Plaintiff taxpayer appeals from a judgment denying her claim of exemption filed under Code of Civil Procedure sections 690.6, 690.50 and 690.51. By the claim she sought the release of $72.44 in wages withheld by her employer and transmitted to the defendant Franchise Tax Board (Board) pursuant to its order issued under Revenue and Taxation Code section 18807 (now renumbered § 18817). All facts necessary to a determination of the claim were settled by a written stipulation.
CONTENTIONS ON APPEAL
On appeal, plaintiff contends: (1) A taxpayer is entitled to the exemptions provided in Code of Civil Procedure section 690 et seq. where the state proceeds to collect delinquent income tax payments under Revenue and Taxation Code section 18807. (2) If construed to disallow such exemptions, section 18807 is void as violative of the Due Process and Equal Protection Clauses of the Fourteenth Amendment.
FACTS
Plaintiff Shirley Greene and her husband, John H. Greene, filed joint California income tax returns reporting, under penalty of perjury, a $39 tax due on account of their 1968 incomes ($9,653.27), and a $42 tax due on account of their 1969 income ($9,757). Both returns were filed without payment.
The Greenes lived together with their four minor children. Both were employed, Mr. Greene as a federal civil service worker at the North Island Naval Air Station, and Mrs. Greene as a maid at the Royal Inn in San Diego. Mr. Greene paid the rent from his income, and Mrs. Greene paid the other household expenses for the family from her wages. The stipulation reflects Mr. Greene earned over $7,600 in 1968 and Mrs. Greene earned $14.20 per day plus tips.
*41 The Franchise Tax Board tried to collect the $81 in delinquent taxes from the Greenes. Mr. Greene's salary could not be reached because he was a federal employee. In late 1969, Mrs. Greene went to the Board office in San Diego and agreed to pay $13 each payday on the back taxes. Only one payment was made.
On March 8, 1971, pursuant to Revenue and Taxation Code section 18807,[1] the Board sent Mrs. Greene's employer an order to withhold and transmit her unpaid income tax in the amount of $72.44. When Mrs. Greene's attorney contacted the Board office he was advised of the Board's policy to withdraw the order to withhold and to permit installment payments if it was established full payment would create extreme hardship for the taxpayer. He was told Mrs. Greene's case would be given consideration if she would come to the office and fill out a financial statement. She did not do so and, instead, filed a claim of exemption in the superior court. On March 24, 1971, Mrs. Greene's employer transmitted the $72.44 withheld from her wages to the Board. This was applied to the Greene's tax liability and satisfied the delinquency in full.
DISCUSSION
(1a) Code of Civil Procedure section 690 provides that certain property, described and enumerated in sections 690.1 through 690.29, is exempt from execution or attachment when a claim for exemption is filed as provided in section 690.50. The exemption for earnings for personal services is found in section 690.6. The only section which makes the state of California subject to these exemptions is Code of Civil Procedure section 690.51 which, at the time in question, provided in pertinent part:
"In cases in which a warrant ... is issued by the State of California, or a department or agency thereof, pursuant to ... Section 6776, 7881, 9001, 10111, 18906, 26191, 30341 or 32365 of the Revenue and Taxation Code, for the collection of tax liability owed to the state, a department or agency thereof, the tax debtor shall be entitled to the exemptions provided in Sections 690.1 to 690.29, inclusive, and all the provisions of Section 690.50 shall be applicable to the assertion and determination thereof."
*42 In the Revenue and Taxation Code, the Legislature has uniformly provided state taxing agencies with two separate and distinct procedures for the collection of unpaid, delinquent taxes: (1) The taxing agency may issue a warrant to a sheriff, constable, or marshal which has the same effect as a writ of execution. (2) The agency may issue a notice or order to withhold to any person, who has in his possession or control any credit or other property of value, belonging to the tax debtor, directing such person to withhold and transmit the credit or property to the taxing agency.
Code of Civil Procedure section 690.51, by its terms, refers only to the warrant sections in the Revenue and Taxation Code and not to the sections giving state tax collecting agencies the authority to use the order to withhold. Its effect is to give the tax debtor the benefit of the exemption statutes when the State pursues collection by way of warrant, but not when an order to withhold is used to collect the tax.
Despite the plain language of the Code of Civil Procedure section 690.51, Mrs. Greene asserts the exemptions still apply. Citing cases which hold the exemption statutes are deeply rooted in public policy and liberally construed (Holmes v. Marshall, 145 Cal. 777, 778-779 [79 P. 534]; Perfection Paint Products v. Johnson, 164 Cal. App.2d 739, 741 [330 P.2d 829]), she contends a tax debtor would be entitled to the benefit of the exemption statutes even if there were no express statute so providing. She views section 690.51 of the Code of Civil Procedure as merely procedural, arguing the omission of the withhold order sections from the statutes enumerated in the section has no substantive effect. She buttresses her position by reference to cases which hold the exemption statutes applicable to ordinary debts owed the state (hospital bills), in the absence of an express statute so providing. (Estate of Ferarazza, 219 Cal. 668, 672 [28 P.2d 670]; Guardianship of Bayly, 95 Cal. App.2d 174, 175 [212 P.2d 587].)
(2) The liberal principles governing the construction of exemption statutes are not applicable to unpaid taxes (Estate of Ferarazza, supra, 219 Cal. 668, 672). The power to levy and collect taxes is a vital, essential attribute of government without which it could not function (Watchtower B. & T. Soc. v. County of L.A., 30 Cal.2d 426, 429 [182 P.2d 178]). In exercising the power, the State acts in its sovereign, governmental capacity and is in no sense engaging in business (Douglas Aircraft Co. v. County of L.A., 137 Cal. App.2d 803, 806 [291 P.2d 85]). Laws which tend to limit sovereignty are strictly construed in favor of the State. (3) "A statute will not be construed to impair or limit the sovereign power of the state to act in its governmental capacity and perform its governmental *43 functions in behalf of the public in general, unless such intent clearly appears." (Italics added.) (People v. Centr-O-Mart, 34 Cal.2d 702, 703-704 [214 P.2d 378].)
(1b) A statute which permits a delinquent taxpayer to exercise a claim of exemption, when the state acts to collect unpaid taxes, tends to limit and impair the power of the state to collect taxes, and must be strictly construed. Since Code of Civil Procedure section 690.51 makes the preceding exemptions applicable to warrant procedures, specifying the sections of the Revenue and Taxation Code providing for such procedures, and makes no reference to the equal number of statutes allowing the same taxes to be collected by the withholding procedure, the rules of statutory construction referred to above require the conclusion the omission was intentional.[2]
(4) Mrs. Greene contends Revenue and Taxation Code section 18807, establishing the withholding procedure for delinquent personal income taxes, violates both procedural and substantive due process, because it authorizes the Board to collect the taxes without notice and without a hearing to establish that the amount claimed is due. She likens the seizure of her wages to satisfy her delinquent 1968 and 1969 income taxes to the prejudgment wage garnishment held to violate due process in Sniadach v. Family Finance Corp., 395 U.S. 337 [23 L.Ed.2d 349, 89 S.Ct. 1820]. (See also McCallop v. Carberry, 1 Cal.3d 903 [83 Cal. Rptr. 666, 464 P.2d 122]; Cline v. Credit Bureau of Santa Clara Valley, 1 Cal.3d 908 [83 Cal. Rptr. 669, 464 P.2d 125]; Blair v. Pitchess, 5 Cal.3d 258 [96 Cal. Rptr. 42, 486 P.2d 1242]; Randone v. Appellate Department, 5 Cal.3d 536 [96 Cal. Rptr. 709, 488 P.2d 13].) Here, as distinguished from Sniadach, McCallop, Cline, Blair and Randone, we are dealing with an acknowledged tax debt, declared to be due by the taxpayer herself under penalty of perjury, not a private business obligation. In a very real sense, this tax was self-assessed. The requirements of due process are met when the debtor's tax liability is shown on the face of his own tax return, as well as when it has been established by an administrative or judicial proceeding *44 at which he had notice and an opportunity to be heard. (See 1971 Recommendation of the California Law Revision Commission, supra, p. 721.) No hearing was required to establish the validity or the amount of the state's claim.
The order to withhold procedure provided for in Revenue and Taxation Code section 18807 has recently been upheld against the charge it violated the Due Process and Equal Protection Clauses of the Fourteenth Amendment, by the United States Court of Appeals for the Ninth Circuit. In a case very similar to this one, the court stated:
"We do not think Sniadach v. Family Finance Corp., 1969, 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349, upon which appellant relies, requires a different result. That case dealt with pre-judgment wage garnishment, levied without any notice to the debtor. The procedure here is more like post-judgment execution. Appellant had assessed his own liability and has never claimed that he does not owe the tax. Moreover, he was twice notified of his delinquency and never responded to either notice." (Randall v. Franchise Tax Board of State of California, 453 F.2d 381, 382.)
Like the taxpayer in Randall, Mrs. Greene has never claimed she did not owe the tax. She was notified of the delinquency and given the opportunity to pay the tax in small installments. The procedures used by the Board to collect the unpaid tax did not violate due process.
In the stipulated statement of facts, the Board acknowledges it uses the order to withhold procedure set out in Revenue and Taxation Code section 18807, rather than the warrant procedure, to collect relatively small amounts of delinquent income tax. Since claims of exemption may be asserted against warrants, Mrs. Greene contends a holding they cannot be used under section 18807 would have the effect of creating "an invidious discrimination against the poor," in violation of the Equal Protection Clause.
The argument is directed to the Board's policy of using the withholding notice to collect small tax debts, not against the statute itself, which does not require its use in that manner. Moerover, it is based upon an incomplete and unfair statement of the Board's policy. The stipulation of facts also states the Board uses the withhold procedure to collect small tax debts to avoid the additional expense to the taxpayer which would be incurred if warrants were issued and levied by the sheriff. The stipulation further states: "It is the practice and procedure of the Franchise Tax Board that whenever the taxpayer appears ... and establishes that collection *45 of the full amount owed or the full amount subject to the order to withhold would create extreme hardship, the Board will withdraw its order to withhold and allow the payments to be made in installments." This policy was specifically called to the attention of Mrs. Greene's attorney. Far from being invidious toward the poor, the stipulated facts show Board policy reflects a conscious contrary effort.
The judgment is affirmed.
Brown (Gerald), P.J., and Coughlin, J.,[*] concurred.
A petition for a rehearing was denied August 18, 1972.
NOTES
[1] The section read in relevant part: "The Franchise Tax Board may by notice, served personally or by registered mail, require any person ..., having in their [his] possession, or under their [his] control, any credits or other personal property or other things of value, belonging to a taxpayer ..., to withhold, from such credits ..., the amount of any tax, interest or penalties due from the taxpayer ... and to transmit the amount withheld to the Franchise Tax Board...."
[2] The California Law Revision Commission has likewise concluded the Legislature has effectively distinguished between the warrant and order to withhold procedures with respect to exemptions. In its 1971 Recommendation to the Governor and Legislature relating to Attachment, Garnishment, and Exemptions from Execution, the Commission points out that in contrast to the warrant procedure no exemptions are applicable to the funds or property required to be withheld under the notice to withhold statute (p. 721). While we agree with the Commission's recommendation for modification and change of both procedures in relation to the exemption statutes, such changes should be effected through legislative rather than court action.
[*] Retired Associate Justice of the Court of Appeal sitting under assignment by the Chairman of the Judicial Council. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1427954/ | 755 F.Supp. 1389 (1991)
STATE BANK & TRUST COMPANY OF GOLDEN MEADOW
v.
BOAT "D.J. GRIFFIN", Its Engines, Tackle, Apparel, etc. BOAT "JOEY G", Its Engines, Tackle, Apparel, etc. in Rem.
Derris Griffin Boat Operators, Inc. in Personam.
Civ. A. No. 84-3383.
United States District Court, E.D. Louisiana.
January 8, 1991.
*1390 *1391 *1392 *1393 Robert E. Barkley, Jr., Barkley & White, Patricia D. Tunmer, Sessions & Fishman, New Orleans, La., John D. Ziober, Shockey & Ziober, Baton Rouge, La., for plaintiff.
Lloyd N. Shields, Susan Tart, Simon, Peragine, Smith & Redfearn, New Orleans, La., for defendant and plaintiff-in-counterclaim, Derris Griffin Boat Operators, Inc.
MEMORANDUM OPINION
MENTZ, District Judge.
This matter was tried before the Court for six days beginning on September 13, 1990. After considering the record and the evidence adduced at trial, the Court finds as follows.
To the extent that any of the following findings of fact constitute conclusions of law, they are adopted as such; to the extent that any of the conclusions of law constitute findings of fact, they are so adopted.
Introduction
This suit was filed by State Bank & Trust Company of Golden Meadow ("State Bank"), as an in rem action to foreclose on preferred maritime mortgages on two vessels, the "D.J. GRIFFIN" and the "JOEY G", owned and operated by Derris Griffin Boat Operators, Inc. ("Boat Operators"), and as an in personam action against Boat Operators on the basis of an endorsement of a promissory note for $1,310,000 dated December 23, 1982. The vessels were subsequently seized by the United States Marshal and sold at auction on October 19, 1984, for a total of $205,000. Said sums were then deposited into the registry of the Court pending further orders of the Court.
In response, Boat Operators denied liability on the promissory note and denied that the vessel mortgages were validly pledged to secure it. Additionally, in 1985 Elta Griffin, derivatively for the benefit of and on behalf of Boat Operators, sued State Bank in counterclaim for wrongful seizure of its vessels.[1] The primary issue before the Court is whether Derris Griffin, as president of Boat Operators, had authority to endorse the $1,310,000 hand note made by two separate Derris Griffin corporations on behalf of Boat Operators and pledge Boat Operators' assets for an indebtedness of those two unrelated corporations. In connection with this issue, the Court must also decide whether State Bank knew or should have known that Derris Griffin was acting outside his authority when he endorsed the hand note and pledged the assets of Boat Operators to secure the indebtedness of the two unrelated corporations. A further issue to be decided by the Court *1394 is specifically what kind of mortgages were created with respect to the two Boat Operators vessels. A final issue to be resolved is whether State Bank acted in bad faith, with malice, or gross negligence in seizing the two Boat Operators vessels.
Findings of Fact
1. At all pertinent times, plaintiff, State Bank, was a Louisiana banking corporation, having its principal place of business in Lafourche Parish, Louisiana.
2. At all pertinent times, defendant, Boat Operators was a Louisiana corporation having its principal place of business in Lafourche Parish, Louisiana.
3. The M/V D.J. GRIFFIN, at all material times owned and operated by Boat Operators, is an offshore supply vessel measuring approximately 104 feet in length and bearing the official number 578168.
4. The M/V JOEY G, at all material times owned and operated by Boat Operators, is an offshore utility vessel measuring approximately 72 feet in length and bearing the official number 291880.
5. Boat Operators was formed as a Louisiana corporation on May 27, 1968. During the time of the events in question, on the books of the corporation, eight of the ten outstanding shares of the corporation were in the name of Derris Griffin and the remaining two shares were in the name of Elta Griffin. Elta Griffin subsequently acquired all outstanding shares and is presently the sole shareholder of the corporation.
6. On March 2, 1982, Elta Griffin and Derris Griffin were legally separated, thereby dissolving the community of acquets and gains existing between them. A judgment of divorce was rendered on March 29, 1984. There has been no partition of the community property.
7. At the time of the incorporation and at all times material herein, Derris J. Griffin and Elta C. Griffin were on the board of directors of Boat Operators.
8. The articles of incorporation of Boat Operators empowered the corporation, in carrying out its stated object and purposes, "to borrow money, and to issue from time to time, to any extent necessary and convenient in the opinion of the Board of Directors of this corporation, negotiable notes, coupons, registered or other bonds, or obligations of this corporation, and to secure the payment of the principal and interest on the same by mortgage or pledge of all or any part of the property, rights, franchises and privileges of the corporation then owned or which may thereafter be acquired by the corporation...."
9. By resolution dated November 3, 1969 ("1969 Resolution"), the board of directors of Boat Operators authorized Derris Griffin or Elta Griffin, in the name of and for the account of Boat Operators, to borrow any sum or sums of money from State Bank and to pledge and/or mortgage any property of Boat Operators "to secure the payment of any indebtedness, liability or obligation of [Boat Operators] to said Bank ..." (emphasis added). On November 3, 1969, Derris J. Griffin was President, Elta C. Griffin was Vice-President, and Janice G. Rebstock was Secretary-Treasurer of Boat Operators. State Bank had a copy of the 1969 Resolution in its files at all material times.
10. On January 31, 1977, a first preferred marine mortgage in the amount of $450,000 on the M/V D.J. GRIFFIN was executed by Derris Griffin, as president of Boat Operators, in favor of State Bank to secure an indebtedness evidenced by a promissory note dated January 31, 1977, in the sum of $450,000, bearing interest at the rate of 8% per annum ("ship mortgage no. 1").
11. Boat Operators executed a promissory note payable to the order of "ITSELF" dated January 31, 1977, in the sum of $450,000, bearing interest at the rate of 10% per annum, which was paraphed that same date ne varietur for identification with ship mortgage no. 1 ("mortgage note no. 1").
12. On June 30, 1977, a first preferred mortgage on the M/V JOEY G was executed by Derris Griffin, as president of Boat Operators, in favor of State Bank to secure an indebtedness evidenced by a promissory note dated January 31, 1977, in *1395 the principal sum of $150,000, bearing interest at the rate of 8% per annum ("ship mortgage no. 2").
13. Boat Operators executed a promissory note payable to the order of "ITSELF" dated June 30, 1977, in the sum of $150,000, bearing interest at the rate of 10% per annum, which was paraphed that same date ne varietur for identification with ship mortgage no. 2 ("mortgage note no. 2").
14. On February 14, 1977, Boat Operators borrowed the sum of $582,000 from State Bank, which loan was secured by, among other collateral, a pledge of the $450,000 mortgage note no. 1, dated January 31, 1977. The purpose of this loan was to secure the funds necessary to pay for the construction of the M/V D.J. GRIFFIN.
15. Subsequently, the $150,000 mortgage note no. 2, dated June 30, 1977, was pledged to further secure the $582,000 loan.
16. The loan made on February 14, 1977, by State Bank to Boat Operators was paid in full on May 17, 1982.
17. The mortgages were both made by Boat Operators in favor of a particular creditor, State Bank. Both mortgages were for a specific debt. In addition, neither mortgage states that the notes which the mortgages secure were intended to be used to raise funds, nor was either made in favor of any future holder(s). Further, the mortgages do not contain language that the ne varietur note, paraphed for identification with it, was to be negotiated and might be placed as security for future obligations; nor do the mortgages contain language that the collateral notes could be issued and reissued without being extinguished.
18. The first preferred mortgages state as follows:
PROVIDED, HOWEVER, that if Owner, his heirs, executors, administrators or its assigns shall perform and observe all and singular the terms, covenants and agreements herein, then this Mortgage shall cease, otherwise to remain in full force and effect.
19. The first preferred mortgage on the M/V JOEY G states that it secures an indebtedness "evidenced by a promissory Note dated January 31, 1977, in the principal sum of One Hundred Fifty Thousand and No/100 ($150,000.00) Dollars." There is no promissory note for $150,000 dated January 31, 1977. Rather, the $150,000 promissory note is dated the same date as the first preferred mortgage on the M/V JOEY G, June 30, 1977.
20. There was no separate written pledge agreement underlying either of these mortgage transactions.
21. The intent of the Griffins when the original pledge of the preferred mortgages took place was that the mortgages were not to secure future advances; rather, the mortgages were for a particular and specific debt, and that the funds evidenced by this debt were to be used to pay for the construction of the M/V D.J. GRIFFIN.
22. Derris Griffin Boat Rentals, Inc. ("Boat Rentals") was at all material times a corporate entity separate and distinct from that of Boat Operators, and whose stock was at all material times owned by Derris Griffin.
23. From December 16, 1981 to May 24, 1982, a series of nine unsecured loans were made by State Bank to Boat Rentals, resulting in an unpaid balance, on May 24, 1982, of $1,310,000. All proceeds from these loans were disbursed to, and for the benefit of, Boat Rentals. There is no evidence to suggest that any part of the proceeds of these loans was received by or benefitted Boat Operators in any way.
24. On April 13 and 19, 1982, Elta Griffin received reminders of past due payments of $9,500 and $90,000, respectively, from State Bank. State Bank had loaned these funds to Derris Griffin, purporting to act on behalf of Boat Operators, but without the knowledge of Elta Griffin. Said funds were never deposited into the corporate account of Boat Operators, nor did Boat Operators receive benefit from those funds.
25. After Elta Griffin discussed these past due notices, Note No. 35521 in the amount of $9,500 and Note No. 35234 in *1396 the amount of $90,000, with Curtis Adams, a State Bank officer now deceased, both were marked "paid" on April 30, 1982. Boat Operators paid nothing to extinguish these debts. They were extinguished only by the request of Elta Griffin.
26. On several occasions prior to December 23, 1982, Elta Griffin informed James Alario, then President of State Bank, and Curtis Adams, then Senior or Executive Vice President of State Bank that there was a limitation upon the authority of Derris Griffin to borrow money or mortgage the property of Boat Operators. At no time was Elta Griffin told that State Bank was unaware of any such limitation upon the authority of Derris Griffin with regard to Boat Operators.
27. On December 23, 1982, Derris Griffin, as president of Boat Rentals (and as president of Big 3 Marine, Inc., a corporation also owned by Derris Griffin), executed a promissory note in the amount of $1,310,000 in favor of State Bank. The funds from the $1,310,000 loan were disbursed to pay the previous debts, as described in paragraph 23 above, of Boat Rentals and did not benefit Boat Operators in any way. As security for this debt of Boat Rentals, Derris Griffin purported to pledge both the $150,000.00 and the $450,000.00 mortgage notes described in paragraphs 11 and 13 above, which notes were further secured by first preferred marine mortgages on the M/V JOEY G and the M/V D.J. GRIFFIN, respectively. The above described mortgage notes were, at the time, unpledged and the vessels securing them were not otherwise encumbered.
28. State Bank had in its files a number of promissory notes which had been previously signed by Derris Griffin in blank.
29. Derris Griffin did not remember signing the December 23, 1982 Note at the same time as the accompanying allonge, which purported to pledge the mortgages described in paragraph 27 above. Mr. Griffin did not know the difference between a collateral and an ordinary mortgage. No one at State Bank ever explained this difference to him, nor did anyone at State Bank explain to Derris Griffin the terms of the December 23, 1982 Note.[2]
30. The sole basis for State Bank's acceptance of the pledge of the mortgage notes described in paragraphs 11 and 13 above for the debt of Boat Rentals and Big 3 Marine was the 1969 Resolution of Boat Operators. State Bank, through its officers and directors, had actual knowledge of said 1969 Resolution. State Bank had no reason to believe that Derris Griffin had actual or apparent authority in excess of that provided for by the specific language of the 1969 Resolution.
31. On August 17, 1984, the United States Marshal seized the M/V D.J. GRIFFIN at the United Diesel Dock, in Houma, Louisiana, and the M/V JOEY G at a dock in Bayou Lafourche near Mathews, Louisiana. Said seizures were based on the nonpayment of the promissory note in the amount of $1,310,000 made by Boat Rentals and Big 3 Marine, payable to the order of State Bank.
32. Edward T. Diaz was a member of the board of directors of State Bank. In addition, Diaz also acted as attorney for State Bank. In that capacity he signed and filed the original foreclosure pleadings to seize the M/V D.J. GRIFFIN and the M/V JOEY G.
33. On January 18, 1977, an initial Time Charter for the M/V D.J. GRIFFIN was entered into by and between Odeco Oil and Gas Company ("Odeco") and Boat Operators. The Time Charter was executed pursuant to a Master Service Contract by and between Odeco and Boat Operators, whereby Boat Operators, as contractor, supplied the M/V D.J. GRIFFIN as a manned time-chartered vessel to Odeco. The M/V D.J. GRIFFIN worked continuously from the time it was put into service until August 17, 1984, the date of its seizure by the United States Marshal. As of July 1, 1983, Odeco was paying $850 per day, 7 days per week for the vessel. At the time of its seizure, the M/V D.J. GRIFFIN was still on time charter to Odeco, but was undergoing engine repairs at United Diesel Dock in *1397 Houma, Louisiana. The board of State Bank was aware at this time that the M/V D.J. GRIFFIN was working under contract with Odeco.
34. On October 15, 1984, the M/V D.J. GRIFFIN and the M/V JOEY G were sold at public auction conducted by the United States Marshal. Said vessels were sold for $200,000 and $5,000 respectively and the funds were deposited into the registry of the Court.
Conclusions of Law
1. This Court has jurisdiction over the claim and the counterclaim pursuant to 28 U.S.C. § 1333(1) and Rule 9(h) of the Federal Rules of Civil Procedure. Jurisdiction over the counterclaim also arises under ancillary jurisdiction as the counterclaim is compulsory. Venue is proper in this district.
2. The Bangor Punta doctrine is an equitable doctrine which denies stockholders the right to seek damages from former directors for corporate mismanagement when the claimants' stock was acquired by them with the knowledge of the prior misconduct. Rivercity v. American Can Company, 600 F.Supp. 908, 917 (E.D. La.1984), aff'd, 753 F.2d 1300 (5th Cir. 1985); see Bangor Punta Operations, Inc. v. Bangor & Aroostook Railroad Company, 417 U.S. 703, 94 S.Ct. 2578, 41 L.Ed.2d 418 (1974).
3. Since the counterclaim is not an action against Derris Griffin as a former director of Boat Operators, the Bangor Punta doctrine is not applicable.
4. Each spouse owns an undivided one-half interest in all community property. La.Civ.Code Ann. art. 2336. Community property includes property acquired during the existence of the legal regime through the effort, skill, or industry of either spouse. La.Civ.Code Ann. art. 2338. Boat Operators, as well as several other Griffin companies were formed and incorporated during the existence of the marriage of Derris and Elta Griffin; therefore, the assets of all these companies were community property and, as such, both Derris and Elta Griffin each owned an undivided one-half interest in the assets of those companies until the date of the filing of their separation from bed and board on March 2, 1982. La.Civ.Code Ann. art. 2356.
5. Any ownership interest for purposes of community property, however, is distinct and separate from the ability to control a corporation. Because Elta Griffin was at all material times a stockholder and director of Boat Operators, and pursuant to the 1969 Resolution, control of that corporation in its dealings with State Bank, i.e., borrowing money or encumbering assets, was governed by the 1969 Resolution, not by the law of community property.
6. Because of their nature and function, security devices should be strictly construed. Durham v. First Guaranty Bank of Hammond, 331 So.2d 563, 565 (La.App. 1st Cir.), writ denied, 334 So.2d 431 (La.1976); see Thrift Funds Canal, Inc. v. Foy, 242 So.2d 253, 256 (La.App. 4th Cir.1970), aff'd, 261 La. 573, 260 So.2d 628 (1972).
7. A mortgage is an accessory right which is granted to the creditor over the property of another as security for the debt. La.Civ.Code Ann. arts. 3278, 3284; see First Guaranty Bank v. Alford, 366 So.2d 1299, 1302 (La.1978).
8. Mortgages are of three types: conventional, legal and judicial. Id. (citing La.Civ.Code Ann. art. 3286). Within the area of conventional mortgages, three different forms are recognized by the Louisiana statutes and jurisprudence: (1) an ordinary mortgage; (2) a mortgage to secure future advances; and (3) a collateral mortgage. Id. (citations omitted).
9. An ordinary mortgage is a mortgage given to secure a particular, specific, existing debt. Thrift Funds, 260 So.2d at 630. A mortgage for future advances is a mortgage given to secure a debt not yet in existence. Id; see La.Civ. Code Ann. arts. 3292, 3293.
10. "Unlike the other two forms of conventional mortgages, a collateral mortgage is not a `pure' mortgage; rather, it is the result of judicial recognition that one can pledge a note secured by a mortgage and *1398 use this pledge to secure yet another debt." First Guaranty, 366 So.2d at 1302.
11. "A collateral mortgage indirectly secures a debt via a pledge. A collateral mortgage consists of at least three documents, and takes several steps to complete. First, there is a promissory note, usually called a collateral mortgage note or a `ne varietur' note. The collateral mortgage note is secured by a mortgage, the so-called collateral mortgage. The mortgage provides the creditor with security in the enforcement of the collateral mortgage note." Id.
12. The collateral mortgage note differs from the mortgage to secure future advances in that money is not directly advanced on the note that is paraphed for identification with the act of mortgage. Instead, in a collateral mortgage situation, the collateral mortgage note and the mortgage which secures it are pledged to secure a debt. Id.
13. A collateral mortgage is a mortgage not intended to directly secure an existing debt, but to secure a mortgage note pledged as collateral security to raise funds, usually in the form of hand notes. This mortgage is usually drawn in favor of future holders, who are represented in the act by a nominal mortgagee. For convenience in pledging, the companion collateral mortgage promissory note ("mortgage note"), the payment of which the mortgage secures, is usually payable to bearer on demand. The mortgage note will also contain language allowing the maker to issue and reissue the note without the note being extinguished. Thrift Funds, 260 So.2d at 630; Nathan & Marshall, The Collateral Mortgage, 33 La.L.Rev. 497, 504-06 (1973).
14. The accepted method to connect the hand note to the security of the collateral mortgage is to designate on the face of the hand note that it is secured by the pledge of the mortgage note. Durham, 331 So.2d at 565. The pledge of a collateral mortgage note to secure an indebtedness is a contract. La.Civ.Code Ann. art. 3133. The pledge secures only that debt or debts contemplated in the contract between the pledgor and the pledgee. Durham, 331 So.2d at 565.
15. The ordinary mortgage is drafted to secure a specific debt to a specific named creditor, and the mortgage is identified with that debt, so that when the debt is paid, the mortgage expires. La.Civ. Code Ann. art. 3285. The rule is well settled in Louisiana jurisprudence that "when the mortgage is for a specific debt, payment extinguishes debt and mortgage, and the subsequent issue of the note will not revive the mortgage." Mente & Co. v. Levy, 160 La. 496, 107 So. 318, 320 (1926).
16. In the absence of a written act of pledge to the contrary, State Bank must prove by parole evidence whether the parties originally contemplated the mortgage notes would be pledged as security for future advances or for a particular debt. Nathan & Dunbar, The Collateral Mortgage: Logic and Experience, 49 La.L.Rev. 39, 50-51 n. 48 (1988).
17. The evidence showed that Boat Operators performed all the terms of the mortgage by paying the note. The original loan in the amount of $582,000 made on February 14, 1977, for which the ship mortgages and mortgage notes were created, was paid in full on May 17, 1982. Accordingly, the first preferred ship mortgages on the M/V JOEY G and the M/V D.J. GRIFFIN ceased to exist as of May 17, 1982.
18. There are five requirements that a lender must meet in order to secure future advances by collateral mortgage:
(1) The initial pledge must be properly confected;
(2) Each subsequent loan must be specifically secured by a pledge of the original collateral mortgage notes;
(3) The parties must mutually agreed at the time of the original pledge that the pledge will also secure obligations thereafter arising;
(4) The pledge collateral must have continuously remained in the hands of the pledgee; and
(5) The parties at all times must have acted in good faith.
New Orleans Silversmiths, Inc. v. Toups, 261 So.2d 252, 254 (La.App. 4th Cir.), writ *1399 denied, 262 La. 309, 263 So.2d 47 (1972) (citing La.Civ.Code Ann. art. 3158).
19. State Bank and Derris Griffin did not act in good faith at all times, as evidenced by the blank signed promissory notes in the files of State Bank.
20. Mere retention of the thing pledged, i.e. the collateral mortgage note, does not determine the continued existence of the pledge. First Guaranty Bank, 366 So.2d at 1304 n. 4. Therefore, the fact that State Bank remained in possession of the mortgage notes in question does not indicate that the parties intended those mortgages to secure future advances.
21. One must look to the act of pledge in order to determine whether the parties contemplated using a mortgage to secure future advances; however, there was no separate written act of pledge in this case. See Texas Bank of Beaumont v. Bozorg, 457 So.2d 667, 674-75 (La.1984). Since there was no pledge agreement and no other evidence to indicate otherwise, the Court finds that the mortgages in question were not intended to secure future advances.
22. The first preferred ship mortgages and mortgage notes are ordinary mortgages. They were created to secure one specific debt, that being the original $582,000 loan made by Boat Operators in February of 1977. That loan was paid in full in May of 1982. Neither the mortgages nor the mortgage notes contain the proper language indicating that they were to be used to raise funds and could be issued and reissued. The intent of the parties was for these mortgages and mortgage notes to secure a specific debt. Once the debt was paid, the mortgages were extinguished; therefore, the notes pledged by Derris Griffin and reused by State Bank to secure the $1,310,000 hand note were not themselves secured by valid mortgages. Therefore, State Bank did not have a valid security interest in the M/V D.J. GRIFFIN and the M/V JOEY G.
23. A party seeking to enforce an alleged contract against a corporation is required to establish that the officer or agent with whom he contracted was in fact authorized to bind the corporation. North American Sales Alliance, Inc. v. Carrtone Laboratories, Inc., 214 So.2d 167, 172 (La. App. 4th Cir.), writ denied, 253 La. 57, 216 So.2d 306 (1968); Graves v. Pelican Downs, Inc., 292 So.2d 297, 299 (La.App. 1st Cir.1974).
24. Under Louisiana law, any action taken in the name of a corporation that is unauthorized by the corporation cannot bind the corporation. Marsh Investment Corp. v. Langford, 490 F.Supp. 1320, 1324 (E.D.La.1980), aff'd, 652 F.2d 583 (5th Cir. Unit A Aug. 1981), cert. denied sub nom., Pontchatrain State Bank v. Marsh Investment Corp., 454 U.S. 1163, 102 S.Ct. 1037, 71 L.Ed.2d 319 (1982).
25. The authority to act on behalf of a corporation can only be conferred by the charter or the bylaws of the corporation or by resolution of the board of directors. La.Rev.Stat.Ann. § 12:81(C)(8) (West 1969 & Supp.1990); McKendall v. Williams, 467 So.2d 1301, 1303 (La.App. 4th Cir.), writ denied, 469 So.2d 986 (La. 1985).
26. In order to hold Boat Operators liable on the mortgage notes secured by the marine mortgages on the M/V D.J. GRIFFIN and the M/V JOEY G, Derris Griffin must have had either actual or apparent authority of Boat Operators to pledge the mortgage notes for the debts of Boat Rentals. Lilliedahl & Mitchel, Inc. v. Avoyelles Trust & Savings Bank, 352 So.2d 781, 787 (La.App. 3rd Cir.1977).
27. "Actual express authority of corporate officers stems from statute, articles of incorporation, bylaws, or resolutions of board of directors." Dunham v. Anderson-Dunham, Inc., 466 So.2d 1317, 1320-21 (La.App. 1st Cir.), writ denied, 472 So.2d 29 (La.1985).
28. When a corporate resolution authorizes a corporate officer to act as agent with respect to encumbering assets, borrowing money or disbursing money for the benefit of that corporation, that authority does not extend to permit the officer to act for his own benefit. See Lilliedahl, 352 So.2d at 787. General language in a corporate resolution following a recitation *1400 of specific powers shall be construed and confined within the limitation of the specific powers named. Williams v. United St. John's Grand Lodge, 140 So.2d 206, 210 (La.App. 4th Cir.1962). If the power to donate is not specifically enumerated, donations of corporate funds by corporate officers are improper. This is true in part because there is no legal right to exercise such a power, and in part because the corporation does not receive any benefit therefrom. See id. Therefore, the Court finds that the 1969 Resolution did not give Derris Griffin actual authority to pledge the mortgage notes to secure the debts of Boat Rentals and Big 3 Marine because that resolution only authorized Derris Griffin to act on behalf of and for the benefit of Boat Operators.
29. Apparent authority is a doctrine created by the courts to protect innocent third persons dealing in good faith with corporate officials where the corporation has taken such action or inaction as to justify a belief that the official has acted with authority. Id. The doctrine of apparent authority has two requirements: (1) the principal must make some form of manifestation to an innocent third party; and (2) the third party must rely reasonably on the purported authority of the agent as a result of the principal's manifestations. Id.
30. The reasonableness of the third party's reliance is determined from all the facts and circumstances of the case. Analab, Inc. v. Bank of the South, 271 So.2d 73, 76 (La.App. 4th Cir.1972). However, a third party seeking to benefit from the doctrine of apparent authority may not blindly rely on the assertions of an agent. He has a duty to inquire into the nature and extent of the agent's power. Boulos v. Morrison, 503 So.2d 1, 3 (La.1987).
31. The Court finds that State Bank did not meet its burden of proof. Derris Griffin was not clothed with the apparent authority to pledge the mortgage notes to secure the debts of Boat Rentals and Big 3 Marine. In particular, the Court finds that because of the relationship which existed between Derris Griffin and State Bank, and because of State Bank's reliance upon the 1969 Resolution, and because of the presence of the signed blank promissory notes in the files of State Bank, State Bank was not an innocent third party nor did it reasonably rely on Derris Griffin's assumption of authority to pledge the property of Boat Operators to secure the debts of Boat Rentals and Big 3 Marine.
32. Ratification is the adoption by one person of an act done on its behalf by another without authority. It amounts to a substitute for prior authority. First National Bank of Shreveport v. Crawford, 455 So.2d 1209, 1215 (La.App. 2nd Cir.), writ denied, 459 So.2d 538 (La.1984).
33. A ratification occurs when personnel with the authority to bind the corporation acquire knowledge of the unauthorized act and thereafter fail to repudiate it within a reasonable period of time. 3 A's Towing Co. v. P & A Well Service, Inc., 642 F.2d 756, 758-59 (5th Cir.Unit A April 1981). The burden of proving ratification is on the party asserting it. Tyson v. Robinson, 329 So.2d 781, 783 (La.App. 2nd Cir.1976); McCurnin v. Kohlmeyer & Co., 477 F.2d 113, 115 (5th Cir.1973).
34. The Court finds that Boat Operators did not ratify Derris Griffin's act of pledging the mortgage notes to secure the debts of Boat Rentals and Big 3 Marine. In particular, the Court finds that after personnel with authority to bind Boat Operators acquired knowledge of Derris Griffin's unauthorized act, said personnel: (1) informed State Bank that Derris Griffin had acted beyond his authority; (2) did not make any payments on the $1,310,000 note secured by the pledge of the mortgage notes; and (3) contacted legal counsel to pursue the protection of the corporation's rights.
35. Equitable estoppel is defined as the effect of the voluntary conduct of a party which should preclude him from asserting rights against another because the other party has justifiably relied upon such conduct and changed his position so that he will suffer injury if the former is allowed to repudiate the conduct. The general rule is that estoppel is not favored. One must affirmatively show that he was *1401 misled and acted to his prejudice in order to prevail in a defense of equitable estoppel. Wilkinson v. Wilkinson, 323 So.2d 120, 126 (La.1975); Lilly v. Angelo, 523 So.2d 899, 903-04 (La.App. 4th Cir.), writ denied, 526 So.2d 1120 (La.1988). Because of the 1969 Resolution and Elta Griffin's oral notifications to State Bank that Derris Griffin was exceeding his corporate authority, State Bank was not misled by the conduct of Boat Operators and may not rely on the defense of equitable estoppel.
36. Because the mortgage notes were not properly pledged, State Bank did not hold a valid security interest in the M/V D.J. GRIFFIN and the M/V JOEY G.
37. In admiralty, the gravamen of the right to recover damages for wrongful seizure or detention of vessels is the bad faith, malice, or gross negligence of the offending party. Frontera Fruit Co., Inc. v. Dowling, 91 F.2d 293, 297 (5th Cir.1937).
38. The Court finds that State Bank wrongfully seized the M/V D.J. GRIFFIN and the M/V JOEY G. State Bank acted in bad faith and was grossly negligent in allowing Derris Griffin to encumber the assets of Boat Operators for the benefit of other corporations. State Bank and its board of directors knew that Derris Griffin did not have the authority to endorse the December 23, 1982 hand note and mortgage and/or pledge Boat Operators' vessels to secure the debts of Boat Rentals and Big 3 Marine. First, the 1969 Resolution clearly limited Derris Griffin's authority to encumber the assets of Boat Operators only for the benefit of Boat Operators, not for other corporations. Second, Elta Griffin orally notified State Bank on more than one occasion that Derris Griffin was acting beyond the scope of his corporate authority. In addition, the presence of the signed blank promissory notes in the files of State Bank further indicate State Bank's bad faith. Furthermore, after Elta Griffin complained to State Bank about past due notices on the $9,500 and $90,000 notes discussed above, those notes were canceled within days, a further recognition by State Bank that State Bank knew Derris Griffin was exceeding his corporate authority.
Damages
1. The Court finds that the seizure and sale of the M/V JOEY G caused Boat Operators to suffer losses in the amount of $200,000.00, measured as the fair market value of the vessel at the time it was seized.
2. The Court finds that the seizure and sale of the M/V D.J. GRIFFIN caused Boat Operators to suffer losses in the amount of $960,000.00. This loss is due to lost profits pursuant to the time charter and master service contract by and between Odeco and Boat Operators. The Court believes there was competent testimony to estimate with reasonable certainty lost profits to Boat Operators as a result of the wrongful seizure of the M/V D.J. GRIFFIN at $80,000.00 per year for twelve years, the remaining useful life of the vessel at the time it was seized.
3. State Bank has been found to have acted with bad faith and gross negligence; therefore, Boat Operators is entitled to an award of reasonable attorney's fees. Vaughan v. Atkinson, 369 U.S. 527, 530, 82 S.Ct. 997, 999, 8 L.Ed.2d 88 (1962); Frontera Fruit Co. v. Dowling, 91 F.2d 293, 297 (5th Cir.1937); Cardinal Shipping Corp. v. M/V SEISHO MARU, 744 F.2d 461, 474 (5th Cir.1984).
4. As a general rule, prejudgment interest should be awarded in admiralty cases, absent "peculiar circumstances." Noritake Co., Inc. v. M/V HELLENIC CHAMPION, 627 F.2d 724, 728-29 (5th Cir.1980). There are no peculiar circumstances in this case; therefore, Boat Operators is entitled to prejudgment interest, said interest to run from the date the vessels were seized. See Ryan Walsh Stevedoring Co. v. James Marine Services, Inc., 792 F.2d 489, 492-93 (5th Cir.1986).
Accordingly,
IT IS ORDERED that judgment be entered in favor of the plaintiff-in-counterclaim, Elta Griffin derivatively for the benefit of and on behalf of Derris Griffin Boat Operators, Inc., and against the defendant-in-counterclaim, State Bank & Trust Company of Golden Meadow in the sum of *1402 $1,160,000.00 less the net proceeds held in the registry of the Court, plus costs and interest at the legal rate to run from August 17, 1984 until paid, plus reasonable attorney's fees.
IT IS FURTHER ORDERED that the matter of attorney's fees is hereby REFERRED to the magistrate for an evidentiary hearing, if necessary, to determine the reasonableness of said fees, with the magistrate to prepare a report and recommendation on that issue for the Court.
NOTES
[1] Mrs. Griffin also brought other counterclaims; however, this Court subsequently dismissed those counterclaims for lack of jurisdiction. See State Bank & Trust v. Boat "D.J. GRIFFIN", 731 F.Supp. 770 (E.D.La.1990).
[2] An explanation of the terms of the note would have seemed appropriate since, as was apparent to the Court during Mr. Griffin's testimony, Derris Griffin could not read. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2311987/ | 13 F.Supp.2d 1331 (1998)
UNITED STATES of America, Plaintiff,
v.
Luckner GUILLAUME, Defendant.
No. 97-6007-CR.
United States District Court, S.D. Florida.
August 3, 1998.
*1332 John Kasternakes, Assist, U.S. Atty, West Palm Beach, FL, for Plaintiff.
Michael G. Smith, Fort Lauderdale, FL, for Defendant.
ORDER DENYING MOTION TO SUPPRESS AND EXCLUDE
MORENO, District Judge.
THIS CAUSE came before the Court upon Defendant's Motion to Exclude the testimony of witnesses for allegedly violating the federal bribery statute, 18 U.S.C. § 201(c)(2), which prohibits offering something of value in exchange for testimony. The Court finds that Congress, in enacting that statute, clearly intended to exclude plea agreements between a defendant and a prosecutor. Therefore, the motion to exclude the accomplice testimony is denied.
ANALYSIS
Congress and the courts have long accepted the reality in criminal procedure that, where government needs will be served, immunity from prosecution may be granted to an individual in exchange for testimony regarding the crime under investigation. See Enforceability of agreement by law enforcement 32 A.L.R.4th 990 (1984). This practice permits the government to obtain testimony in order to effectuate criminal detections, investigations, and prosecutions, in circumstances where the absence of such testimony would lead to the release of criminals to the detriment of society. See 32 A.L.R.4th 990 (1984). Therefore, plea agreements are essential to the administration of justice and are to be encouraged by the courts. See Santobello v. New York, 404 U.S. 257, 260, 92 S.Ct. 495, 30 L.Ed.2d 427 (1971).
This exchange of reduced sentences or immunity for testimony presents the danger that a witness, influenced by his hope of obtaining a grant of immunity or a reduced sentence, will promise to testify to anything desired by the prosecution. See 32 A.L.R.4th 990 (1984). But because deal striking is so necessary to obtaining prosecutions and enforcing the law, safeguards have been established to protect against such abuses. See United States v. Dailey, 759 F.2d 192, 196 (1st Cir.1985); United States v. Insana, 423 F.2d 1165, 1169 (2d Cir.1970). Courts have uniformly held that a witness may testify so long as: (1) the government's bargain with him is fully divulged so that the jury can evaluate his credibility; (2) defense counsel is permitted to cross-examine the accomplice about the agreement; and (3) the jury is specifically instructed to weigh the accomplice's testimony with caution. See United States v. Cervantes-Pacheco, 826 F.2d 310, 315 (5th Cir.1987); Dailey, 759 F.2d at 196. These rules strike a balance between the competing interests of effective law enforcement and the need for reliable testimony in court, and manifest the tenet that "the government cannot be expected to depend exclusively upon the virtuous in enforcing the law." United States v. Richardson, 764 F.2d 1514, 1521 (11th Cir.1985).
Nevertheless, the Tenth Circuit Court of Appeals recently held that the federal bribery statute is applicable to the government. See United States v. Singleton, 144 F.3d 1343, 1998 WL 350507 (10th Cir. July 1, 1998), vacated & reh'g en banc granted, United States v. Singleton, 144 F.3d 1343 (10th Cir.1998). The federal bribery statute provides:
Whoever ... directly or indirectly, gives, offers, or promises anything of value to any person, for or because of the testimony under oath or affirmation to be given by such person as a witness upon a trial, hearing, or other proceeding, before any court ... authorized by the laws of the United States to hear evidence or take testimony ... shall be fined under this *1333 title or imprisoned for not more than two years or both.
18 U.S.C. § 201(c)(2) (West 1998).
Courts have long recognized the rule that statutes do not apply to the government or affect governmental rights unless the text expressly includes the government. See Nardone v. United States, 302 U.S. 379, 383, 58 S.Ct. 275, 82 L.Ed. 314 (1937). This rule applies where a statute would deprive the government of "a recognized or established prerogative title or interest" or where applying the statute to the government would create an absurdity. Id. The Singleton panel found that the rule did not apply to 18 U.S.C. § 201(c)(2), instead opining that the government is included in the statutory class "whoever." See Singleton, 144 F.3d 1343, 1346-48. This Court disagrees.[1] The application of § 201(c)(2) to the government deprives it of a "recognized and established prerogative interest or title," works an obvious absurdity, and threatens to hamper the effectiveness of the government in the investigation and prosecution of crime. Therefore, this Court holds that Congress presumptively excluded the government from the application of § 201(c)(2).
"Recognized or Established Prerogative Interest or Title"
The recommendation of leniency in exchange for testimony is a recognized and established activity of federal prosecutors in the investigation and prosecution of criminal activity. "No practice is more ingrained in our criminal justice system than the practice of the government calling a witness who is an accessory to the crime for which the defendant is charged and having that witness testify under a plea bargain that promises him a reduced sentence." Cervantes-Pacheco, 826 F.2d at 315. This traditional prosecutorial granting of leniency has, throughout history, been sanctioned by Congress and the courts. See 18 U.S.C. § 3553(e); 18 U.S.C. §§ 6001-6005; 28 U.S.C. § 994(n); USSG § 5K1.1; Fed.R.Crim.P. 35(b). See, e.g., United States v. Ford, 99 U.S. 594, 604, 9 Otto 594, 25 L.Ed. 399 (1878) (holding that a public prosecutor is permitted to induce a witness to fully and fairly testify the guilt of his associates in exchange for the prosecutor's recommendation for executive clemency). The case law is replete with instances of this well-known practice. See, e.g., United States v. Medina, 90 F.3d 459, 464 n. 8 (11th Cir.1996); United States v. Garcia Abrego, 141 F.3d 142, 151 (5th Cir.1998); United States v. Garcia, 66 F.3d 851, 857 n. 6 (7th Cir.1995); United States v. Benny, 786 F.2d 1410, 1418 (9th Cir.1986). In short, the practice is a recognized and established "prerogative interest or title," and the government is therefore presumptively excluded from the application of § 201(c)(2).
Obvious Absurdity
Applying § 201(c)(2) to federal prosecutors would also work an obvious absurdity in the application of federal statutes. Since its inception, § 201(c)(2) has never been applied to federal prosecutors. The federal sentencing statutes, and the United States sentencing guidelines promulgated as a result of Congressional action, were enacted subsequent to § 201(c)(2), and are in direct conflict with the Singleton panel's analysis. It is obvious that Congress intended either to immunize the government from § 201(c)(2), or to supersede the bribery statute as it applies to federal prosecutors. The federal criminal sentencing statute, 18 U.S.C. § 3553(e), provides: "Upon motion of the Government, the court shall have the authority to impose a sentence below a level established by statute as minimum sentence so as to reflect a defendant's substantial assistance in the investigation or prosecution of another person who has committed an offense." Section 994(n) of Title 28 instructs the United States Sentencing Commission to ensure that guidelines reflect "the general appropriateness of imposing a lower sentence than would otherwise be imposed, including a sentence that is lower than that established by statute as a minimum sentence, to take into account a defendant's substantial assistance in the *1334 investigation or prosecution of another person who has committed an offense." Similarly, Fed.R.Crim.P. 35(b) provides: "The court, on motion of the Government made within one year after the imposition of the sentence, may reduce a sentence to reflect a defendant's subsequent, substantial assistance in the investigation or prosecution of another person who has committed an offense...." Thus, Congress has sanctioned leniency by federal prosecutors to induce a defendant's "substantial assistance" in another defendant's investigation or prosecution.
These statutes, which authorize the rewarding of substantial assistance after it is rendered, would be in conflict with § 201(c)(2) under the Singleton panel's analysis. The Singleton panel's attempt to reconcile the statutes by declaring that substantial assistance does not include testimony, see 144 F.3d 1343, 1355, is not convincing. This Court, like most throughout the nation, has for the last eight years reduced sentences, upon the motion of the government filed in response to a defendant's testimony. Thus, the application of § 201(c)(2) to the government would not merely result in the exclusion of the testimony of accomplice witnesses, but would also necessitate the bizarre conclusion that federal prosecutors routinely violate the law by promising to move to reduce the sentences of defendants in exchange for their testimony.
Many district judges, including this one, have expressed frustration at minimum mandatory sentences and resulting reductions available to those who are higher in the criminal venture hierarchy and not available to those with little information and thus little testimony to provide. Nevertheless, Congress has maintained its position to reward cooperation and testimony with a reduction in the sentence. Even the Congressional response to some public objection to the harsh penalties facing first offenders has included a requirement of cooperation.[2]
The federal sentencing statutes explicitly provide for grants of immunity and reduced sentences in exchange for testimony from a witness. USSG § 5K1.1 provides that the government may move for a downward departure from the guidelines if it determines that the defendant has "provided substantial assistance in the investigation or prosecution of another person who has committed an offense.... The appropriate reduction shall be determined by the court for reasons stated that may include ... the truthfulness, completeness, and reliability of any information or testimony provided by the defendant." (emphasis added). Thus, this provision expressly allows for the government to reward a defendant for testifying, and the Singleton panel's attempt to distinguish "substantial assistance" from testimony therefore fails to reconcile its terms with their radical interpretation of § 201(c)(2).
Applying § 201(c)(2) to federal prosecutors also works an absurdity in view of the federal immunity statute, 18 U.S.C.A. §§ 6001-6005. The Singleton panel noted that §§ 6001-6005 "authorize federal prosecutors to grant immunity for testimony while § 201(c)(2) criminalizes offering anything of value for testimony," 144 F.3d 1343, 1348, yet the panel failed to harmonize these statutes. A promise by a federal prosecutor to grant immunity is a thing of value, since a witness subjectively attaches value to it. See Singleton, 144 F.3d 1343, 1350. In short, this statute provides further evidence that Congress intended to exclude the government from the application of § 201(c)(2) when granting leniency in exchange for testimony, in order to effectuate an investigation or prosecution.
CONCLUSION
The statutory class "whoever" in the federal bribery statute, § 201(c)(2), was not intended to encompass a federal prosecutor actually engaged in the investigation or prosecution of a crime. The law has always recognized a manifest difference between a private individual offering another individual money in return for testimony in court and a federal prosecutor promising a witness a recommendation to a court for a downward departure in exchange for testimony. The fact that § 201(c)(2) has never been applied to *1335 federal prosecutors and that safeguards have been established to curtail abuses of this well-established practice make clear that Congress and the courts have sanctioned this practice as a necessary investigatory and prosecutorial activity, one that, in fact, predates the founding of our nation, See, e.g., Rex v. Rudd, 1 Cowp. 331 (1775) (holding that a prosecutor may give hope to an accomplice that if he discloses the whole truth, he may, by a recommendation of mercy, save himself from punishment and secure a pardon). The holding of the Singleton panel would dangerously disable the government's investigatory and prosecutorial powers. Surely if Congress had intended to eliminate a procedure so well-established, it would have done so in clear, unambiguous terms. Accordingly, it is
ADJUDGED that Defendant's motion to exclude is DENIED.
NOTES
[1] Apparently the Tenth Circuit as a whole also has reservations about the panel's extraordinary opinion, as the opinion was vacated pending an en banc rehearing. Moreover, two U.S. District Courts have published opinions rejecting the Singleton panel's conclusion. See U.S. v. Arana, ___ F.Supp.2d ___, 1998 WL 420673 (E.D.Mich. July 24, 1998); U.S. v. Duncan, 1998 WL 419503 (E.D.La. July 15, 1998).
[2] 18 U.S.C. § 3553(f)(5) and U.S.S.G. § 5C1.2(5) require a defendant to disclose all the information he possesses about his involvement in the crime, including the identities and participation of others, before he is eligible for the safety valve provisions allowing for a sentence below the minimum mandatory. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1618506/ | 685 S.W.2d 352 (1984)
BAPTIST MEMORIAL HOSPITAL SYSTEM, Appellant,
v.
Sam C. BASHARA, Appellee.
No. 04-82-00354-CV.
Court of Appeals of Texas, San Antonio.
May 16, 1984.
Rehearing Denied May 31, 1984.
Writ of Error Granted October 3, 1984.
*353 Herbert W. Hill, San Antonio, for appellant.
Sam C. Bashara, Pro se.
Before ESQUIVEL, REEVES and TIJERINA, JJ.
OPINION
ESQUIVEL, Justice.
This is an appeal from a judgment awarding attorney's fees.
Briefly, the background facts are as follows. Jody Maxwell Tombs (Tombs) was involved in a collision with appellee, Kelly F. Axtell (Axtell). Axtell sued Tombs for injuries received in the collision. Appellee Sam C. Bashara (Bashara), an attorney, represented Axtell under a contingency contract of employment in Axtell's personal injury suit against Tombs. While this suit was pending and before settlement was reached, all parties knew that appellant Baptist Memorial Hospital System (Baptist) filed a hospital lien for charges incurred by Axtell at Baptist for treatment of his injuries received in the collision. Through Bashara's efforts, Axtell settled with Tombs' automobile liability insurance carrier, Texas Farmers Insurance Company (Farmers). Farmers issued two drafts in payment of the total amount of the settlement. One draft was for $34,789.55 payable to Axtell and Bashara; the other draft was for $15,210.45 payable to Axtell, Bashara and Baptist. A dispute arose as to the distribution of the proceeds of the latter draft because Bashara was claiming a share thereof as his attorney's fees, which claim Baptist refused to recognize. A lawsuit, subject of this appeal, was filed to resolve this dispute.
Baptist sued Farmers to recover its hospital lien and for its attorney's fees. Axtell and Bashara intervened, seeking a reduction of Baptist's lien from $15,210.45 to $2,500.00 and for judgment against Baptist for the remaining $12,610.45 and for judgment for one-third (1/3) of the gross recovery by Baptist as Bashara's attorney's fees. Farmers answered both petitions and also filed a bill of interpleader, deposited the $15,210.45 draft in the registry of the court, requested that the court determine the rightful owner of the proceeds, and asked for its attorney's fees. In a bench trial the court entered judgment in favor of Bashara against Baptist for $3,854.62 as his attorney's fees on the theory of quantum meruit and ordered that this sum be retired from the $15,210.45 proceeds interpled by Farmers; the court further ordered that the interpled draft be endorsed by all payees thereon and thereafter be deposited for collection by the clerk of the court and that upon collection the clerk pay out the following amounts: $2,885.00 to Axtell and his wife; $750.00 to W. Burl Brock as his attorney's fees for filing the interpleader; $3,854.62 to Bashara as his attorney's fees for recovering the hospital charges; and $7,720.83 to Baptist. Baptist filed a motion for new trial which was overruled by the court. Baptist gave notice of appeal and in compliance with TEX.R.CIV.P. 353, gave *354 notice of appeal limiting its appeal to only that portion of the judgment rendered against it for Bashara's attorney's fees. The trial court filed findings of fact and conclusions of law.
We will address the points of error, reply points and cross-points of the parties under the following categories.
ESTOPPEL BY JUDGMENT
It is undisputed that Baptist accepted $7,720.23 from the clerk of the court as its share of the distribution ordered by the judgment. Bashara contends in his reply point that when Baptist cashed the $7,720.83 check distributed to it by the clerk of the court, this was an acceptance by Baptist of the judgment which amounted to a waiver of the right of review. The general rule relied upon by Bashara is laid down in Matlow v. Cox, 25 Tex. 578 (1860) and Carle v. Carle, 149 Tex. 469, 234 S.W.2d 1002 (1950) as follows:
A litigant cannot treat a judgment as both right and wrong, and if he has voluntarily accepted the benefits of a judgment, he cannot afterward prosecute an appeal therefrom.... The rule is based on the principle of estoppel.
Carle, 149 Tex. at 472, 234 S.W.2d at 1004.
Baptist contends that it accepted a benefit under the judgment which could not be adversely affected by its appeal and therefore did not waive its right of appeal. We agree with Baptist.
Generally, if a litigant voluntarily accepts benefits of a judgment he is estopped from later prosecuting an appeal therefrom. Matlow, 25 Tex. at 580-81. However, this rule is subject to that exception that where a reversal of a judgment cannot possibly affect a litigant's right to the benefit secured under the judgment an appeal may be taken. Caranas v. Jones, 437 S.W.2d 905 (Tex.Civ.App. Dallas 1969, writ ref'd n.r.e.). In the instant case, the only portion of the judgment before us is the question of Bashara's attorney's fees. Applying the aforementioned rules, we conclude a reversal in no way can affect Baptist's right to the $7,720.23 accepted by it. To the contrary, the only result of a reversal would be that Baptist would have a right to a sum of money in addition to the $7,720.23 already received by it.
JURISDICTION
In his reply point number one Bashara contends that the trial court erred in awarding Baptist $12,325.45 because there is no evidence to support such an award. Baptist contends that this Court lacks jurisdiction to consider this point and in support of its contention argues that its appeal was limited only to Bashara's attorney's fees; that Bashara did not give notice of appeal, nor did he file any appeal bond to any part of the judgment. We agree with Baptist's contention and hold that we do not have jurisdiction to consider this portion of the judgment.
It is undisputed that Baptist complied with the provisions of Rule 353 when it filed its notice of limited appeal. The record is void of any claim by Bashara, either at trial or before this Court, that the award of attorney's fees is not a severable portion of the judgment. The purpose of Rule 353 notice requirements is to insure that appellee will have notice of appellant's intention to limit the scope of his appeal so that appellant may perfect his appeal on any severable portion of the judgment with which he is dissatisfied. Johnson v. Downing & Wooten Construction Co., 480 S.W.2d 254, 256 (Tex.Civ.App. Houston [14th Dist.] 1972, no writ). If, as in this appeal, an appellant has appealed from a portion of a severable judgment appellee will not be heard to complain of any matters falling wholly within the portion of the judgment not brought up for review by appellant. Dallas Electric Supply Co. v. Branum Co., 143 Tex. 366, 371, 185 S.W.2d 427, 430 (1945); Barnsdall Oil Co. v. Hubbard, 130 Tex. 476, 483, 109 S.W.2d 960, 964 (1937). Bashara not having perfected an appeal on that portion of the judgment with which he was dissatisfied, i.e., the $12,325.45 award to Baptist, cannot now be heard to complain about it on appeal. Cf. *355 Great Eastern Life Insurance Co. v. Jones, 526 S.W.2d 268 (Tex.Civ.App. Beaumont 1975, writ ref'd n.r.e.).
REQUESTED FINDINGS OF FACT AND CONCLUSIONS OF LAW
In its points of error five, six and eight through twelve, Baptist contends that the trial court erred in failing to make two requested conclusions of law and five requested findings of fact. We conclude that Baptist's requested additional findings of fact and conclusions of law are adequately covered by the court's findings and conclusions, they are contrary to such findings, and they were not material and necessary. A trial court may properly refuse requested additional findings of fact an conclusions of law where they are either already adequately covered by the court's findings and conclusions, or were contrary to such findings, or were not material and necessary. Caranas v. Jones, 437 S.W.2d 905, 910 (Tex.Civ.App. Dallas 1969, writ ref'd n.r.e.). Accordingly, the trial court did not err in refusing same.
ATTORNEY'S FEES
Baptist contends that the trial court erred in deducting Bashara's attorney's fees from the portion of the judgment awarded to it for its hospital lien charges against Farmers. Baptist argues in support of its contention that there is a conflict of interest between Axtell and Baptist precluding Axtell's attorney, i.e., Bashara, from charging both Axtell and Baptist for the services rendered. Bashara admits in his brief that:
[A]fter the monies were collected and the unliquidated claim reduced to liquidated form, the hospital and Mr. Axtell became antagonistic to each other. However, at no time after the interests of the parties became antagonistic did Bashara purport to represent the Baptist Memorial Hospital System or claim a fee therefrom. His entire claim is premised upon the proposition that he caused to be reduced to money the therefore unliquidated lien of the hospital. Accordingly, there was no conflict between the parties....
Bashara argues that the circumstances pending in this appeal are markedly similar to the situation sanctioned by statute under the Workers' Compensation Statute, TEX. REV.CIV.STAT.ANN. art. 8307, § 6a, (Vernon Supp.1984), wherein the trial court is authorized to charge an insurer's portion of a damage award against a third-party with attorney's fees. We cannot agree with Bashara's contention that the central issue presented by this appeal is whether, under the theory of quantum meruit, an attorney is entitled to an award for attorney's fees against a hospital that has previously filed a hospital lien, when through the attorney's efforts a settlement, which includes the hospital's charges, is reached between his client and the automobile insurer and carrier of the other driver. Bashara's pleadings and his failure to challenge the finding of fact by the court that "in determining a reasonable fee for the necessary legal services rendered by Sam C. Bashara for the benefit of the Baptist Memorial Hospital System, only the amount actually recovered, to-wit: $12,325.45, should be considered..." (emphasis ours), leads us to the conclusion that Bashara's suit for his attorney's fees was not based on the gross originally "recovered" for Baptist. After seeking to reduce the amount of Baptist's hospital lien from $15,210.45 to $2,500.00, Axtell and Bashara's plea in intervention continues as follows:
IV.
A reasonable fee for the necessary legal services rendered in connection with the collection of any monies for the Plaintiff would be one-third (1/3) of the amount collected. The Intervenor, SAM C. BASHARA, prays judgment of one-third (1/3) of the gross amount of such recovery to be awarded to him from any proceeds recovered for the HOSPITAL.
WHEREFORE, PREMISES CONSIDERED, Intervenors pray that upon final hearing, the lien be reduced in accordance with the allegations contained hereinabove; that from the proceeds paid *356 to the hospital, Intervenor, SAM C. BASHARA, be awarded one-third (1/3) of the gross recovery; that Intervenor, KELLY F. AXTELL, be awarded $12,710.45 representing the difference between the lien amount and that to which the Plaintiff is actually entitled; for their costs of court, and such other and further relief to which they may show themselves justly entitled.
We hold that there is a conflict between the interests of Axtell and Baptist which precludes Bashara from charging both Axtell and Baptist for services rendered. A lawyer is precluded from accepting or continuing employment when asked to represent two or more clients who may have differing interests whether such interests be conflicting, inconsistent, diverse, or otherwise discordant. Lott v. Ayres, 611 S.W.2d 473, 476 (Tex.Civ.App. Dallas 1981, writ ref'd n.r.e.); SUPREME COURT OF TEXAS, RULES GOVERNING THE STATE BAR OF TEXAS art. XII, § 8 (Code of Professional Responsibility) DR 5-105 (1973); STATE BAR OF TEXAS, ETHICAL CONSIDERATIONS ON CODE OF PROFESSIONAL RESPONSIBILITY EC 5-14 (1973). The court erred as a matter of law in charging the amount received by Baptist with Bashara's attorney's fees.
Accordingly, the judgment of the trial court is reversed and judgment is rendered that Bashara's claim for attorney's fees be denied.
REEVES, J., concurs in result. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1908589/ | 64 N.J. 74 (1973)
312 A.2d 147
MATERIALS RESEARCH CORPORATION, PLAINTIFF-APPELLANT,
v.
METRON, INC., A CORPORATION OF THE STATE OF NEW JERSEY AND CHRISTOPHER F. MALO, JR., DEFENDANTS-RESPONDENTS.
The Supreme Court of New Jersey.
Argued September 12, 1973.
Decided December 4, 1973.
*75 Mr. Norman Biener argued the cause for appellant.
Mr. Sheppard A. Guryan argued the cause for respondents (Messrs. Lasser, Lasser, Sarokin and Hochman, attorneys).
*76 The opinion of the Court was delivered by CLIFFORD, J.
The narrow issue posed by this appeal is whether the application of the foreign corporation qualification provision of New Jersey's statutes to plaintiff's activities unconstitutionally burdens interstate commerce. If so, the court below was in error in dismissing the complaint "on the ground that plaintiff has not obtained a certificate of authority to transact business in this State." That dismissal was on defendants' motion supported by affidavit, in response to which plaintiff filed an affidavit, and it was on this sketchy material that the trial court reached its decision. The Appellate Division, in an unreported opinion, affirmed the dismissal, agreeing with the trial court's finding that the corporate plaintiff was transacting business of an intrastate character in New Jersey "in a degree sufficient to invoke the injunction of N.J.S.A. 14A:13-11 denying such corporation access to our courts." We granted plaintiff's petition for certification, 63 N.J. 329 (1973). Our review of the meager record leads us to an opposite conclusion from that reached below.
Plaintiff, Materials Research Corporation (hereinafter MRC), is a corporation of the State of New York, with its principal office in Orangeburg, New York. It brings this business tort action against Metron, Inc., a New Jersey corporation, and Christopher F. Malo, Jr., an officer, director and founder of Metron and formerly an officer of MRC. Malo resides in New Jersey. It is alleged that defendants have maliciously interfered with the contractual and advantageous relations of plaintiff with its key personnel, inducing them to breach their employment contracts with the plaintiff by resigning and entering the employ of defendant Metron. It is further alleged that "plaintiff has suffered * * * loss of business and profits, diminished sales, low morale among the remaining key personnel, loss of standing and status in its field with its customers and will be put to great expense to recruit and train replacement personnel." The complaint seeks an injunction, an accounting, compensatory *77 and punitive damages, and a declaration that certain employment contracts are void.
While the answer does not set up any separate defense with respect to the plaintiff's capacity to maintain any action in this State, the dismissal motion previously referred to was timely brought, with affidavits being filed on behalf of all parties. After oral argument the trial court concluded, as indicated above, that plaintiff is transacting business in this State and that to maintain the suit it should first obtain the appropriate certificate within sixty days.[1] Plaintiff not having availed itself of the opportunity so afforded, an Order of Dismissal was filed after the sixtieth day.
Plaintiff manufactures and sells scientific equipment, instruments, and ceramics, and it processes metals. It has offices throughout the world. Its products are sold directly to customers throughout this country, including New Jersey. It does not maintain any New Jersey office. The record contains an annual report and financial statement for fiscal 1970, indicating that sales for the year preceding the commencement of the instant action amounted to approximately $5,700,000. According to defendants MRC's New Jersey orders approximated $250,000., or about 4.4% of the total sales.
We have only an incomplete picture of MRC's marketing system, from which it appears that there are eight "sales districts" manned by "sales engineers" who solicit orders on MRC's behalf. They do not "write" or accept orders, but orders obtained by them are subject to approval of the regional sales manager or a corporation officer of the plaintiff at its New York office.
While plaintiff's affidavits in response to the moving papers indicate that it has about thirty New Jersey customers and *78 about thirty to thirty-five "prospective" customers[2] in this State, defendant Metron asserts that in 1970 MRC sold its products to about one hundred New Jersey customers. The trial judge did not make any finding of fact on this point, presumably being of the view that this unresolved discrepancy did not affect his conclusion.
The title of sales engineer appears to be a somewhat pretentious one. We take it that the function of persons holding this title is simply to explain the plaintiff corporation's product lines to customers and potential customers. While Metron says that MRC's New Jersey sales engineer received orders and sells products, apparently the trial court did not take this as an allegation of activity beyond solicitation, in view of his finding that MRC orders originating in New Jersey were subject to acceptance by the home office.
The New Jersey sales engineer lives in New Jersey and his sales region includes this State. He is paid on a salary and commission basis and visits the home office once a week to complete his paper work. MRC denies that the sales engineer uses his residence as an office on the corporation's behalf and says it does not reimburse him for the use of his home. Orders are telephoned to the New York office and most of them are received on customer order forms. Invoicing and receipt of payment takes place in New York. Goods are shipped f.o.b Orangeburg, New York. MRC maintains a listing in the white pages of the Bergen County telephone directory, with the address listed as Orangeburg, New York; the telephone is a tie line to the New York office maintained, says MRC, as a device for the convenience of its customers so that they can avoid toll charges.
N.J.S.A. 14A:13-11(1) provides in part that "No foreign corporation transacting business in this State without a certificate of authority shall maintain any action or proceeding in any court of this State, until such corporation shall have *79 obtained a certificate of authority." The penalty is forfeiture to the State of "not less than $200.00 nor more than $1,000.00 for each calendar year, not more than 5 years prior thereto, in which it shall have transacted business in this State without a certificate of authority." N.J.S.A. 14A:13-11(3).
Plaintiff's position is that this statutory scheme for the licensure of foreign corporations cannot be constitutionally applied to it in the factual complex before us because its activities are in interstate commerce and it is not transacting business in this State. Among the recognized constitutional limitations on the states' ability to regulate foreign corporations through qualification statutes are those arising from the Commerce Clause of the United States Constitution, art. 1, § 8, c. 3. Thus, the law has long been settled that a state may not impose a qualification statute which unduly burdens interstate commerce, Dahnke-Walker Milling Co. v. Bondurant, 257 U.S. 282, 42 S.Ct. 106, 66 L.Ed. 239 (1921); see, e.g., International Text-Book Co. v. Pigg, 217 U.S. 91, 30 S.Ct. 481, 54 L.Ed. 678 (1910); Sioux Remedy Co. v. Cope, 235 U.S. 197, 35 S.Ct. 57, 59 L.Ed. 193 (1914).
Defendants, while not quarreling with this statement of the basic legal principle involved, dispute its application to this case, arguing that a review of the authorities "demands the conclusion that plaintiff is transacting business in this State and must comply with N.J.S.A. 14A:13-11." They readily concede, however, that "doing business" is a term not susceptible of precise definition automatically resolving every case, and that each case must be dealt with on its own circumstances to determine if the foreign corporation has engaged in local activity or only in interstate commerce.[3]
*80 Both sides rely on Eli Lilly & Co. v. Sav-On Drugs, Inc. 57 N.J. Super. 291 (Ch. Div. 1959), aff'd 31 N.J. 591 (1960), aff'd 366 U.S. 276, 81 S.Ct. 1316, 6 L.Ed.2d 288 (1961). There the plaintiff, an Indiana corporation engaged in the manufacture and sale of pharmaceutical products, had its main office and plant in Indiana. It sold its goods to wholesalers nationwide, including New Jersey. Lilly brought suit in New Jersey to enjoin defendant, Sav-On, from selling Lilly's products in New Jersey at prices lower than those fixed in minimum retail price contracts into which Lilly had entered with a number of New Jersey drug retailers. Sav-On had not signed such a contract, but the Fair Trade Act bound it to agreements signed by others. Sav-On moved to dismiss the complaint under the then applicable statute which denied a foreign corporation transacting business in this State the right to bring any action in New Jersey upon any contract made here unless and until it qualified to do business here. The argument was that Lilly had transacted business here even though it was not qualified to do so and had thereby incurred the statutory disability. The trial court granted the motion to dismiss, and this Court affirmed, relying entirely on the opinion below.
The United States Supreme Court affirmed the judgment for defendant, holding that Lilly was indeed engaged in intrastate as well as interstate aspects of the New Jersey drug business. The opinion focused on the function of Lilly's "detailmen" as the basis for imputing intrastate activities to Lilly, emphasizing the following: maintenance of an office in Newark with its name on the door and on the tenant registry in the lobby of the building; rental by an employee of that space, which was paid for by Lilly; telephone listings in the regular and classified sections of the directory, giving the Newark address; presence of a secretary in the Newark office, paid directly by Lilly on a salary basis; a work force of eighteen "detailmen" paid by Lilly on a salary basis with no commissions, their function being to visit retail pharmacies, *81 physicians and hospitals in order to acquaint them with Lilly's products. The "detailmen" did not sell to New Jersey retailers but urged them to buy from Lilly's New Jersey customers, who were wholesalers.
By comparison we note that MRC has no New Jersey office. Its telephone listing is in the regular section only of the New Jersey directory, giving a New York address, and the number ties into a New York line. MRC's sales engineer is compensated on a salary and commission basis and deals only with MRC customers.
The parties also cite United States Time Corp. v. Grand Union, 64 N.J. Super. 39 (Ch. Div. 1960), wherein a corporation of the State of Connecticut sued to enforce price agreements under the Fair Trade Act. Defendant contended that plaintiff was a foreign corporation not authorized to do business in New Jersey and thus was barred from maintaining the action by virtue of R.S. 14:15-4. Plaintiff was engaged in the manufacture and distribution of watches which were sold throughout New Jersey and elsewhere in the United States. It employed two salesmen, neither of whom resided in New Jersey; one called on twenty-eight accounts and the other had two customers. The salesmen worked under the direct supervision of the sales office in New York City, and the orders taken by them were subject to acceptance at plaintiff's home office in Connecticut. Twenty-seven of the accounts referred to were wholesale distributors. The New Jersey sales accounted for about 2% of the total volume of business conducted by plaintiff in the United States. No taxes were due or paid to the State of New Jersey. Plaintiff had no office or telephone listings in the State; it neither held nor leased real property, and it did not occupy any premises in New Jersey. Confronted with this record the Chancery Division distinguished Lilly, supra, and concluded there was "no evidence that plaintiff is or has been transacting business in the State of New Jersey."
*82 In an effort to distinguish this case from the one at hand the trial court relied on the fact that U.S. Time's salesmen did not live in New Jersey, the corporation had no telephone number, and "there wasn't the substantial amount of business done in New Jeresy that was done and is being done by this plaintiff." These distinctions hardly seem significant, except possibly for the amount of business conducted in New Jersey, and even the magnitude of that difference in this case is not impressive, being 2% of the total volume in United States Time, and 4.4% in the instant case (we note that in Lilly it was 2.7% of the total domestic sales). We view the circumstances of MRC's sales engineer living within New Jersey rather than elsewhere and his employer's maintaining a telephone number in this State with a tie line to the New York office as being conditions under which he conducted his business rather than determinatives of the essential nature of that business.[4]
On the sparse record before us we conclude that this case is akin to the line of so-called "drummer" decisions. The leading case is Robbins v. Shelby County Taxing Dist., 120 U.S. 489, 7 S.Ct. 592, 30 L.Ed. 694 (1887), wherein plaintiff, a citizen of Ohio, failed to take out a license in Tennessee. He was engaged in the business of "drumming," i.e. soliciting trade by the use of samples for the firm for which he worked. The Court held that the bare solicitation of orders did not constitute the transacting of business for qualification purposes. See Corson v. Maryland, 120 U.S. 502, 7 S.Ct. 655, 30 L.Ed. 699 (1887); Asher v. Texas, *83 128 U.S. 129, 9 S.Ct. 1, 32 L.Ed. 368 (1888); Stoutenburgh v. Hennick, 129 U.S. 141, 9 S.Ct. 256, 32 L.Ed. 637 (1889); Stockard v. Morgan, 185 U.S. 27, 22 S.Ct. 576, 46 L.Ed. 785 (1902); Rearick v. Pennsylvania, 203 U.S. 507, 27 S.Ct. 159, 51 L.Ed. 295 (1906); Dozier v. Alabama, 218 U.S. 124, 30 S.Ct. 649, 54 L.Ed. 965 (1910); Stewart v. Michigan, 232 U.S. 665, 34 S.Ct. 476, 58 L.Ed. 786 (1914); Davis v. Virginia, 236 U.S. 697, 35 S.Ct. 479, 59 L.Ed. 795 (1915); Real Silk Hosiery Mills v. Portland, 268 U.S. 325, 45 S.Ct. 525, 69 L.Ed. 982 (1925); Best & Co. v. Maxwell, 311 U.S. 454, 61 S.Ct. 334, 85 L.Ed. 275 (1940); Nippert v. City of Richmond, 327 U.S. 416, 66 S.Ct. 586, 90 L.Ed. 760 (1945).
To be sure, solicitation with some additional elements may take a case across the threshold of intrastate commerce. Without attempting to catalogue all those "additional elements," we suggest weight might be given to such factors as a salesman's having binding authority or approving contracts himself rather than forwarding them to a sales office or home office for approval,[5] and the foregoing discussion of the distinguishing features of Lilly illustrates the kind of evidentiary material which has led this Court to find intrastate activity, not present here.
Defendant seeks to support the decision below on the authority of Bozzuto's Inc. v. Frank Kantrowitz & Sons, Inc., 117 N.J. Super. 146 (App. Div. 1971). The case is inapposite, for there the court did not undertake to apply any label of "interstate" or "intrastate" commerce to corporate *84 activities. The sole issue presented was "whether a foreign corporation, not qualified to do business in New Jersey pursuant to statutory mandate, may seek affirmative relief in an action at law in conjunction with its defense against the claim of another," 117 N.J. Super. at 147.
Defendants also rely on a line of cases dealing with the exercise of jurisdiction over foreign corporations. These are likewise inapplicable, inasmuch as the qualification requirement demands greater connection with the state than the requirements for a finding of jurisdiction for service of process purposes. See generally Note, "Foreign Corporations: The Interrelationship Between Jurisdiction and Qualification," 33 Ind L.J. 358, 369 (1958).
There being, on the limited record before us, an insufficient showing of intrastate commerce to bar plaintiff from maintaining the present action, the judgment is reversed and the case remanded for further proceedings not inconsistent with this opinion.
For reversal and remandment Justices JACOBS, HALL, SULLIVAN, PASHMAN and CLIFFORD 5.
For affirmance None.
NOTES
[1] Compliance with a qualification requirement during the course of trial has been held sufficient for a plaintiff unqualified at the action's inception to avoid being precluded from maintaining suit. Menley & James Laboratories, Ltd. v. Vornado, Inc., 90 N.J. Super. 404 (Ch. Div. 1966).
[2] A "prospective" or "potential" customer is described in the record as one who has received a price quotation within the past two years.
[3] For a general discussion see 36 Am. Jur.2d, Foreign Corporations § 316 et seq., and 17 Fletcher, Cyclopedia of Corporations § 8464 (1960).
[4] In Federal Schools Inc. v. Sidden, 14 N.J. Misc. 892 (Sup. Ct. 1936) suit was brought for the agreed price of the course of instruction furnished to a New Jersey resident by a Minnesota correspondence school, which had the following contacts with New Jersey: a "resident instructor," a "resident scholar" in New Jersey, and a New Jersey office. Held, plaintiff was engaged in interstate commerce and suit could be maintained. See also International Textbook Co. v. Pigg, supra.
[5] In State v. Mauer, 75 N.J. Super. 90 (Cty. Ct. 1962), an employee of a California corporation engaged in the sale of photograph albums solicited orders in New Jersey to be accepted and filled from out of the State; he also exhibited a sample album but made no sale of it. The court held that the employee was engaged in interstate commerce, on the authority of Nippert v. Richmond, supra; Moyant v. Paramus, 30 N.J. 528 (1959); State v. Kromer, 34 N.J. Super. 465 (Cty. Ct. 1955). See also Clifton v. Weber, 84 N.J. Super. 333 (App. Div. 1964), aff'd 44 N.J. 266 (1965). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2266020/ | 452 Pa. Superior Ct. 299 (1996)
681 A.2d 1348
COMMONWEALTH of Pennsylvania
v.
Dean L. MYERS, Sr., Appellant.
COMMONWEALTH of Pennsylvania, Appellant
v.
Deborah Ann MYERS.
Superior Court of Pennsylvania.
Argued June 11, 1996.
Filed July 22, 1996.
*301 Darrell C. Dethlefs, Camp Hill, for Dean L. Myers, Sr.
Michael D. Rentschler, Camp Hill, for Deborah A. Myers.
Mary B. Seiverling, Deputy Attorney General, Harrisburg, for the Com.
Before TAMILIA, JOHNSON and MONTEMURO,[*] JJ.
TAMILIA, Judge.
These consolidated appeals arise from the drug trafficking convictions of Dean and Deborah Myers, husband and wife. Following a joint jury trial, Dean Myers was convicted of four counts of possession with intent to deliver a controlled substance[1] and one count of criminal conspiracy,[2] and Deborah Myers was convicted of one count of possession with intent to *302 deliver a controlled substance and one count of criminal conspiracy. The convictions arose from the same set of facts, which are set forth by the trial court as follows.
The evidence at trial indicated that, on March 16, 1994, agents from the Tri-County Drug Task Force and agents from the Pennsylvania Office of the Attorney General were in the process of investigating a marijuana trafficking operation. In the course of their investigation, the officers received notice that the [Myerses, subjects] of the drug investigation, [were] proceeding toward 702 State Street in the borough of Lemoyne. The police proceeded to 702 State Street and observed the [Myerses] as they arrived in a a Budget Rent-A-Van.
After the [Myerses'] van stopped, the police approached, identified themselves, and explained that they were investigating the [Myerses'] involvement in the transportation of marijuana from California to central Pennsylvania. In addition, the police administered Miranda warnings. After receiving these warnings, Dean and Deborah Myers both indicated that the van contained marijuana. [Dean Myers] also informed the police that he had been conducting his own investigation and was trying to identify major marijuana traffickers who were supplying marijuana to his son. [Dean Myers] further stated that he wished to relay additional information, but requested that he leave his residence at 702 State Street because he feared being overheard by other occupants of the home.
Pursuant to this request, the police transported [Dean Myers] to the Lemoyne police department, and Deborah Myers followed in the Budget Rent-A-Van. At the police station, the investigating officers conducted a joint interview of Dean and Deborah Myers. During this interview, Dean Myers indicated that, on the night in question, he had transported approximately thirty-three pounds of marijuana from California to central Pennsylvania. Myers also indicated that he had transferred approximately twenty pounds of the total thirty-three pounds to a nearby storage facility. In addition to these admissions, [Dean Myers] indicated *303 that, prior to his apprehension for this incident, he had travelled to California and had returned to central Pennsylvania with various quantities of marijuana, ranging in weight from 20.5 to 33.25 pounds. Finally, during the course of this interview, [Dean Myers] consented to a police search of the Budget Rent-A-Van.
As a result of the receipt of this information, Officer Diller, an agent from the Office of the Attorney General, obtained a search warrant to recover the marijuana allegedly located at the storage facility. Upon execution of the warrant, officers discovered a large, black storage container smelling strongly of marijuana, but otherwise empty. The officers were not successful in recovering any quantity of the drug.
While Agent Diller was executing the warrant for the storage facility, Officer Troutner, another agent from the Office of the Attorney General, conducted a search of the Budget Rent-A-Van. The search of the van revealed what appeared to be several wrapped Christmas gifts. In the course of the search, Mrs. Myers, who was present throughout the search, identified a large, gift-wrapped box and indicated that the box contained marijuana. When the investigating officers opened the package, they discovered vegetable material surrounded with contact paper. Under the contact paper were layers of black pepper and baking soda. Preliminary field testing on the vegetable substance revealed the package contained marijuana.
In addition to the testing performed at the scene of the Budget Rent-A-Van search, the vegetable material was subjected to testing at the Pennsylvania State Police Lab in Harrisburg [which confirmed that the vegetable substance was marijuana].
(Slip Ops. [in both cases], Hoffer, J., 10/2/95, pp. 1-4; citations and footnote omitted.)
At this point, the facts of the cases diverge and we return to the trial court's recitation as relevant to Dean and Deborah Myers, separately:
*304 In light of the previously mentioned scientific evidence and self-inculpatory statements, [Dean Myers] was charged with four counts of possession with the intent to deliver a Schedule I controlled substance. Count A-I arose from the March 16 incident and involved the marijuana found in the Budget Rent-A-Van and the marijuana placed in the storage shed. Counts A-II, A-III, and A-IV arose from [Dean Myers's] inculpatory statements, elicited during the interview at the Lemoyne Police Department, indicating that, on at least three previous occasions, he had travelled to California and had returned to central Pennsylvania with various quantities of marijuana. Finally, [Dean Myers] was charged with one count of criminal conspiracy.
On March 27, 1995, a jury trial commenced in this matter, and the Commonwealth filed a notice of mandatory sentence with regard to Counts A-I through A-IV. On March 28, 1995, the jury found [Dean Myers] guilty on all counts, and on April 24, 1995, [he] appeared for sentencing. With regard to Count A-I, this Court found that, on March 16, 1995, [Dean Myers] transported a quantity in excess of ten pounds of marijuana into Pennsylvania. Having found that the quantity of contraband in question exceeded ten pounds, this Court, in accordance with the mandatory sentencing procedures set forth in 18 Pa.C.S.A. § 7508(a)(1)(ii), sentenced [Dean Myers] to imprisonment in the State Correctional Institution for a period of not less than three years nor more than five years. With regard to Counts A-II through A-IV, this Court again imposed the mandatory minimum, and again sentenced [Dean Myers] to a period of incarceration of not less than three years nor more than five years. The sentencing order indicates that these sentences were to run concurrently.
(Slip Op. at 4-6; citations omitted.)
As to Deborah Myers, the trial court stated as follows:
Deborah Myers was charged with one count of possession with the intent to deliver a controlled substance and one count of criminal conspiracy. On March 27, 1995, a jury trial commenced in this matter, and the Commonwealth filed a notice of mandatory sentence with regard to the *305 possession with intent to deliver charge. On March 28, 1995, the jury found [Deborah Myers] guilty on both counts, and on June 20, 1995, [she] appeared for sentencing.
With regard to the possession count, this Court sentenced [Deborah Myers] to undergo imprisonment in a State Correctional Institution for a period of not less than one year nor more than five years. This sentence constitutes the mandatory minimum with regard to the possession of two to ten pounds of marijuana.
(Slip Op. at 5; citations omitted.) Thus, although a similar factual predicate underlies the convictions in both cases, Dean Myers was sentenced to the mandatory minimum for possession of more than ten pounds of marijuana, while Deborah Myers was sentenced to the mandatory minimum for possession of two to ten pounds of marijuana.
On appeal, Dean Myers claims the record does not support the trial court's conclusion that he possessed in excess of ten pounds of marijuana. As to Deborah Myers, the Commonwealth appeals on the basis that the sentence was illegal because the record clearly demonstrated that Deborah Myers possessed at least ten pounds of marijuana and there was no evidence to support the sentencing court's finding that she possessed only two to ten pounds.
Since both appeals allege error in sentencing, we note initially that the Myerses were sentenced pursuant to the mandatory minimum sentence provisions of 18 Pa.C.S. § 7508, which provides in pertinent part:
§ 7508. Drug trafficking sentencing and penalties
(a) General rule. Notwithstanding any other provisions of this or any other act to the contrary, the following provisions shall apply:
(1) A person who is convicted of violating section 13(a)(14), (30) or (37) of the April 14, 1972 (P.L. 233, No. 64), known as The Controlled Substance, Drug, Device and Cosmetic Act, where the controlled substance is marijuana shall, upon conviction, be sentenced to a mandatory minimum term of imprisonment and a fine as set forth in this subsection:
*306 (i) when the amount of marijuana involved is at least two pounds, but less than ten pounds, or at least ten live plants but less than 21 live plants; one year in prison and a fine of $5,000 or such larger amount as is sufficient to exhaust the assets utilized in and the proceeds from the illegal activity; however, if at the time of sentencing the defendant has been convicted of another drug trafficking offense: two years in prison and a fine of $10,000 or such larger amount as is sufficient to exhaust the assets utilized in and the proceeds from the illegal activity;
(ii) when the amount of marijuana involved is at least ten pounds, but less than 50 pounds, or at least 21 live plants but less than 51 live plants; three years in prison and a fine of $15,000 or such larger amount as is sufficient to exhaust the assets utilized in and the proceeds from the illegal activity; however, if at the time of sentencing the defendant has been convicted of another drug trafficking offense: four years in prison and a fine of $30,000 or such larger amount as is sufficient to exhaust the assets utilized in and the proceeds from the illegal activity[.]
Id.
As to the stage of judicial proceedings at which the applicability of these provisions is determined, section 7508(b) states:
(b) Proof of sentencing. Provisions of this section shall not be an element of the crime. Notice of the applicability of this section to the defendant shall not be required prior to conviction, but reasonable notice of the Commonwealth's intention to proceed under this section shall be provided after conviction and before sentencing. The applicability of this section shall be determined at sentencing. The court shall consider evidence presented at trial, shall afford the Commonwealth and the defendant an opportunity to present necessary additional evidence and shall determine, by a preponderance of the evidence, if this section is applicable.
Id.
In imposing sentence, the court's determination must not be disturbed absent a manifest abuse of discretion. *307 Commonwealth v. Edrington, 490 Pa. 251, 416 A.2d 455 (1980). An abuse of discretion is not merely an error of judgment, but if in reaching a conclusion the law is overridden or misapplied, or the judgment exercised is manifestly unreasonable, or the result of partiality, bias or ill will, as shown by the evidence of record, discretion is abused. Commonwealth v. Jackson, 336 Pa.Super. 609, 486 A.2d 431 (1984).
Turning first to Dean Myers's appeal, he claims that as to Count I (arising from the drugs recovered from the Rent-A-Van), the affidavit of probable cause indicated that the package seized contained only 4.5 pounds of marijuana, whereas the subsequent testing at the State Police laboratory revealed 10.04 pounds of marijuana. Thus, according to Myers, this conflict left the trial court without sufficient evidence to sentence Myers to the mandatory minimum for possession of more than ten pounds of marijuana under section 7508(a)(1)(ii). We reject this claim.
Our review of the record indicates that the Commonwealth established, well beyond the preponderance of evidence contemplated by section 7508(b), that Dean Myers possessed in excess of ten pounds of marijuana. At trial, the Commonwealth presented the testimony of Beverly Beshore-Strohm, a forensic scientist at the Pennsylvania State Police Lab in Harrisburg who has conducted more than ten thousand drug analyses, including the one at issue (N.T., 3/27/95, p. 34). She confirmed that the substance recovered from the Rent-A-Van driven by Myers was in fact marijuana (N.T. at 26, 28). Further, she testified that she utilized a Metler top-loading balance in order to determine that the marijuana weighed ten pounds and two-third ounces (N.T. at 23-25). As to the accuracy of the scale, Beshore-Strohm testified that it was "brand new basically" (N.T. at 35), and had been calibrated prior to every use with an internal calibrating device and on a yearly basis by the manufacturer. Id. Finally, she testified that even giving Myers the benefit of the scale's one-gram variation, the marijuana nonetheless weighed approximately ten pounds and eighteen grams (N.T. at 25.)
*308 In his brief, Myers does not directly challenge this clear and convincing scientific testimony as to the amount of marijuana he possessed. Rather, he suggests that the amount of drugs somehow increased by the time they "were turned over to the Pennsylvania State Police Laboratory, [which] indicated that the drugs seized weighed ... right over the ten pound limit which would subject the defendant to a mandatory sentence." (Appellant's brief, p. 6.) Appellant does not advance this suggestion any further, other than to note "it is reasonable to infer that the physical weight of evidence especially that of drugs seized would be a `condition' that must be unimpaired when surrendered to the court." (Appellant's brief at 8.) We reject this thinly-veiled and completely unsupported allegation of police tampering.
The 4.5 pounds of marijuana indicated on the affidavit of probable cause was based solely on what Myers had told police he thought was the weight of the package (N.T. at 117). In fact, as is often the case, the officer who obtained the warrant had not even seen the package at the time he sought the warrant. Id. Myers's erroneous guess may not now serve to undermine competent, scientific evidence that the marijuana weighed in excess of ten pounds, much less support an allegation of police or prosecutorial misconduct.[3] Particularly in conjunction with Myers's admission that the package seized was part of 33.25 pounds of marijuana he imported from California, the scientific evidence presented was clearly sufficient to support sentencing under section 7508(a)(1)(ii). Dean Myers's first claim fails.
Next, Myers claims the evidence as to the weight of the marijuana was insufficient to support the concurrent mandatory sentences imposed on Counts II-IV, which were based upon his admission that on three prior occasions he transported *309 marijuana from California.[4] The sum of his argument on this point, appearing in the Conclusion section of his brief, reads as follows:
For Counts II, III, and IV, no marijuana was ever seen, seized, weighed, or otherwise tested by the Commonwealth. The only evidence of this alleged marijuana at issue in these three counts was elicited through the testimony of witnesses at trial, and through Defendant's testimony of what he was told existed. Defendant had no independent knowledge of the weight of this alleged marijuana.
(Appellant's brief at 10.) This claim also fails.
Initially, we reject Myers's claim that drugs must be "seen, seized, weighed or otherwise tested" before their weight can be established under section 7508.[5] Here, Myers not only admitted to the precise amount of marijuana underlying Counts II-IV, but the conspiracy to import that marijuana was clearly established by independent evidence at trial, including storage receipts and shipping records in the name of Myers's supplier in California and the fictitious business name used by Myers. The dates on these receipts and records also correspond to the dates on which Myers admittedly transported the drugs from California. Keeping in mind the lower preponderance of the evidence standard utilized under the mandatory sentencing guidelines, we find the court did not abuse its discretion in imposing sentences under Counts II-IV consistent with the amount of marijuana admittedly transported by Myers, where that transportation was established by independent evidence at trial. Thus, the argument is without merit.
*310 Turning to the issues concerning Deborah Myers, we note the Commonwealth's claim that the sentencing court erred in failing to impose sentence upon Mrs. Myers consistent with possession in excess of ten pounds of marijuana. Applying the abuse of discretion and preponderance of the evidence standards set forth above, we agree with the Commonwealth. The evidence of record simply does not support the sentencing court's finding that Mrs. Myers possessed less than ten pounds of marijuana. Initially, it must be remembered that the possession charge against Mrs. Myers "was limited to the contraband discovered in the Budget Rent-A-Van" (Slip Op. at 6), namely, the single gift-wrapped package containing marijuana which was subsequently determined to weight 10.04 pounds. In her trial testimony, Mrs. Myers not only denied involvement in her husband's drug operation (N.T. at 187), but also repeatedly and emphatically denied any knowledge of the contents of the package (N.T. at 181-182, 190-206). To the contrary, Officers Henry Troutner, Ronald Diller and James Heck all testified that Mrs. Myers directed them to the package and admitted it contained marijuana long before it was even opened (N.T. at 54, 87, 215).[6]
This conflicting testimony was ultimately resolved by the jury against Mrs. Myers. Had the jury believed her testimony that she knew nothing of either the drug operation or the presence of marijuana, it could not have convicted her of possession or conspiracy. Thus, the question of whether or not Mrs. Myers was an unwitting bystander to crimes committed by her husband or a full participant was fairly and finally adjudicated against her by the finder of fact at trial. In short, Mrs. Myers either did or did not possess the gift-wrapped package and since the jury found as a matter of fact that she did, the court at sentencing may not disregard this adjudicated fact in order to fashion a more lenient sentence than that required by the evidence presented. 18 Pa.C.S. § 7508(b). ("The [sentencing] court shall consider evidence presented at *311 trial, shall afford the Commonwealth and the defendant an opportunity to present necessary additional evidence and shall determine, by a preponderance of the evidence if this section is applicable.")
As noted above, Ms. Beshore-Strohm testified in detail at trial as to the methods used in determining that the marijuana contained in the package that Mrs. Myers was convicted of possessing weighed 10.04 pounds. Ms. Beshore-Strohm stated that the scale in question was infrequently used and "brand new basically." (N.T. at 35.) She further testified that the scale was calibrated prior to every use by means of an internal calibrating device and also calibrated yearly by the manufacturer. Id. Finally, she stated that even giving Mrs. Myers the benefit of the scale's one-gram variation, the drugs still weighed no less than 18 grams over 10 pounds (N.T. at 25). Standing against this clear and convincing testimony was the fact, elicited on cross-examination by Mrs. Myers's counsel, that Ms. Beshore-Strohm did not also place a known weight on the scale to again verify its accuracy (N.T. at 38). Nothing else as to the accuracy of the scale was introduced by the defense.
At sentencing, the extent of defense counsel's argument as to the accuracy of the scale was as follows:
There was testimony concerning the weight scale that was used. I do not believe that it was calibrated.
(N.T., 6/20/95, p. 4.) The prosecutor responded by recalling Ms. Beshore-Strohm's testimony and noted that the scale's variation did not reduce the amount of marijuana to under ten pounds (N.T. at 5). Nonetheless, the sentencing court held as follows:
The district attorney is asking for a mandatory sentence because the weight of the marijuana just edges the scale over ten pounds. I'm going to give you the benefit of the doubt on that, and whatever happens, happens.
(N.T. at 11.) The court then sentenced Mrs. Myers consistent with possession of two to ten pounds of marijuana under section 7508(a)(1)(i).
*312 Clearly, the mandatory sentencing guidelines, by imposing a preponderance of the evidence standard, preclude a sentencing court from granting a defendant "the benefit of the doubt" in the absence of any evidence justifying that doubt. Mrs. Myers's counsel offered no evidence that the scale used by Ms. Beshore-Strohm was defective, other than to suggest an additional method of verifying the accuracy of the scale. The sentencing court's finding that this suggestion, standing against the clear, convincing and thorough testimony of Ms. Beshore-Strohm, constituted a preponderance of the evidence, operated to override and misapply the evidentiary standard of the mandatory sentencing guidelines. We are simply unable to agree that defense counsel's unpersuasive suggestion that Ms. Beshore-Strohm failed to utilize a redundant method of calibration outweighed the ample testimony supporting the Commonwealth's case. Thus, the sentencing court abused its discretion in failing to impose sentence consistent with the preponderance of the evidence presented at trial and sentencing.
Finally, it must be reemphasized that Mrs. Myers was convicted of possessing a single, gift-wrapped package of marijuana which was subsequently determined to weigh in excess of ten pounds. Since the package as seized was not capable of apportionment, Mrs. Myers either possessed the entire package or she did not and, in light of the jury's verdict, the sentencing court erred in redetermining that she possessed only two to ten pounds, and not the entire 10.04 pounds of the package. Our conclusion is supported by relevant case law.
For instance, in Commonwealth v. Jones, 413 Pa.Super. 482, 605 A.2d 825 (1992), appellee was convicted of possession with intent to deliver following the recovery of 26.401 grams of cocaine from her home. Based on the fact that she possessed in excess of 10 grams, appellee was originally sentenced to the mandatory three to six year sentence under section 7508(a)(3)(ii). Thereafter, reconsideration was granted and the court found that appellee constructively possessed only the 2.722 grams found in her bedroom, rather than the total 26.401 *313 grams found in her house. Thereafter, appellee was resentenced under the more lenient mandate of section 7508(a)(3)(i). The Commonwealth appealed and we vacated and remanded, holding as follows:
At sentencing, when applying 18 Pa.C.S.A. § 7508(a)(3)(ii), the court was required only to determine whether the Commonwealth established by a preponderance of the evidence that cocaine which appellee possessed weighed at least ten grams and less than one hundred grams. Certainly, the Commonwealth sustained their burden of proof through expert testimony as to the exact weight of the cocaine in question.... `[O]nce a party is found guilty, the adjudicated elements of the offense must be fully considered and cannot be disregarded when fashioning a sentence.... The sentencing court is not allowed to rewrite the script....' Instantly, although adjudicating appellee guilty of possessing cocaine with intent to deliver, the lower court decided to `rewrite the script' by finding that appellee did not possess all of the cocaine found in her residence. This type of reexamination of the facts at the time of sentencing in order to permit the court to impose a more lenient sentence ignores its legislative mandate and will not be condoned.
Id. at 486-487, 605 A.2d at 827-828 (citation omitted).
Similarly, in Commonwealth v. Mayes, 436 Pa.Super. 1, 647 A.2d 212 (1994), 2.34 grams of crack cocaine, packaged in 68 vials, was seized from appellee and he was convicted of possession with intent to deliver. At sentencing, defense counsel asked the court to consider some portion of the 2.34 grams as a personal-consumption amount, so as to avoid the mandatory sentence required for possession of two or more grams under section 7508(a)(3)(i). The trial court agreed, and held:
I find as a fact that ... you were a user as well as [a seller of cocaine].
I further find as a matter of fact neither beyond a reasonable doubt nor beyond a preponderance that the amount *314 which was possessed with the intent to deliver was necessarily in excess of two grams.
Id. at 4, 647 A.2d at 214. The court then sentenced appellee to a more lenient sentence than that required by section 7508(a)(3)(i). Id.
In reversing and remanding for resentencing consistent with the mandatory sentencing guidelines, we stated:
In the instant case the uncontroverted evidence introduced at trial and at sentencing revealed that appellee possessed 2.34 grams of crack cocaine.... The trial court convicted appellee of possession of crack cocaine, and, possession with intent to deliver crack cocaine. `Once a party is found guilty, the adjudicated elements of the offense must be fully considered and cannot be disregarded when fashioning a sentence. The sentencing court is not allowed to rewrite the script.' At sentencing, the trial court cannot reassess facts determined prior to a finding of guilt of possession with intent to deliver a controlled substance.
.....
The trial court has no choice but to apply § 7508; it cannot proceed to reevaluate the facts (i.e., that appellee possessed sixty-eight vials of crack cocaine with a combined weight of 2.34 grams of crack cocaine) it determined at trial when it found appellee guilty of possession with intent to deliver. Since the trial court failed to apply § 7508 we must vacate appellee's sentence and remand this case for resentencing in accordance with that mandated by 18 Pa.C.S. § 7508(a)(3)(i).
Id. at 6-10, 647 A.2d at 215-217 (citations and footnote omitted). See also Commonwealth v. Rosario, 400 Pa.Super. 505, 583 A.2d 1229 (1990), vacated on other grounds, 535 Pa. 282, 635 A.2d 109 (1992) ("We hold that once a party is found guilty, the adjudicated elements of the offense must be fully considered and cannot be disregarded when fashioning a sentence.").
Instantly, Mrs. Myers was convicted of possessing a single package of marijuana which was determined at trial by compelling evidence to weigh 10.04 pounds. In imposing a more *315 lenient sentence, the court disregarded this adjudicated fact and improperly "rewrote the script" to include possession of only two to ten pounds of marijuana. Since the court did not impose the mandatory minimum sentence required for Mrs. Myers's crime, we vacate the judgment of sentence and remand for resentencing in accordance with 18 Pa.C.S. § 7508(a)(1)(ii). Mayes, Jones, Rosario, supra; see also Commonwealth v. Logan, 404 Pa.Super. 100, 590 A.2d 300 (1991) (lower court has no discretion to impose less than the mandatory minimum sentence, and if it does, appellate court will vacate and remand for resentencing); 18 Pa.C.S. § 7508(d).[7]
Based on the foregoing, we affirm Dean Myers's concurrent three to five-year judgments of sentence. However, as to the Commonwealth's appeal, we vacate Deborah Myers's one to five-year sentence and remand for resentencing consistent with section 7508(a)(1)(ii) and this Opinion.
Jurisdiction relinquished.
NOTES
[*] Retired Justice assigned to the Superior Court.
[1] 35 P.S. § 780-113(a)(30).
[2] 18 Pa.C.S. § 903.
[3] While Myers does not offer any evidence in support of his allegation, we note that the chain of custody was clearly established at trial via the testimony of Agent Henry Troutner, who seized the marijuana (N.T. at 55), Agent Ronald Diller, who delivered the marijuana for testing (N.T. at 114), and Miss Beshore-Strohm, who analyzed the marijuana (N.T. at 18). This testimony indicates that the marijuana was at all times properly secured and accounted for.
[4] Myers does not challenge the introduction of his admission at trial. The admission indicated that on three previous occasions, between the winters of 1993 and 1994, Myers had transported into Pennsylvania 30 pounds, 20.5 pounds and 26.5 pounds of marijuana, respectively (N.T. at 93-95).
[5] Although we have found no case applying the principle to the weight of illegal drugs, it is clear that the identity of drugs may be established by circumstantial evidence, without chemical analysis. See e.g. Commonwealth v. Stasiak, 305 Pa.Super. 257, 451 A.2d 520 (1982); Commonwealth v. Leskovic, 227 Pa.Super. 565, 307 A.2d 357 (1973); Commonwealth v. Aikens, 179 Pa.Super. 501, 118 A.2d 205 (1955).
[6] The diametric opposition of this conflicting testimony was further emphasized when, on cross-examination, Mrs. Myers repeatedly accused the officers of "lying." (N.T. at 190, 193, 195, 196, 205.)
[7] 18 Pa.C.S. § 7508(d) provides:
(d) Appellate review. If a sentencing court refuses to apply this section where applicable, the Commonwealth shall have the right to appellate review of the action of the sentencing court. The appellate court shall vacate the sentence and remand the case to the sentencing court for imposition of a sentence in accordance with this section if it finds that the sentence was imposed in violation of this section. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2266022/ | 5 Cal.Rptr.3d 598 (2003)
112 Cal.App.4th 1137
Hossain SAHLOLBEI, Plaintiff and Appellant,
v.
PROVIDENCE HEALTHCARE, INC. et al., Defendants and Respondents.
No. E032525.
Court of Appeal, Fourth District, Division Two.
October 24, 2003.
Review Denied February 18, 2004.
*600 Law Offices of Henry R. Fenton, Henry R. Fenton, Los Angeles, Dennis E. Lee, and Harry J. Nelson for Plaintiff and Appellant.
Fulbright & Jaworski, Mark A. Kadzielski, and Abbie P. Maliniak, Los Angeles, for Defendants and Respondents.
*599 OPINION
RICHLI, J.
Plaintiff Hossain Sahlolbei, M.D., appeals from the denial of his motion for a preliminary injunction in this action arising from the termination of his privileges as a member of the staff of Palo Verde *601 Hospital (PVH). We conclude PVH was required to provide plaintiff with a hearing prior to, not after, terminating his staff membership, and that plaintiff was entitled to an injunction reinstating his membership pending such a hearing. Accordingly, we reverse the trial court's order.
I
FACTUAL AND PROCEDURAL BACKGROUND
A. Factual Background
1. Appointment of plaintiff to PVH staff
Plaintiff is a physician specializing in surgery. PVH is a licensed acute care hospital in Blythe, California, and is the only general acute care hospital in that community. The PVH Board of Directors (the Board), the governing body of PVH, appointed plaintiff to the medical staff in the spring of 1998, for a two-year term. He was reappointed in January 2000 and again on January 17, 2002. Beginning January 1, 2002, plaintiff took the positions of vice-chair of the PVH medical staff and cochief of surgery.
2. Rescission of plaintiffs reappointment
After plaintiff was reappointed, in January and February 2002, David Conejo, chief executive officer of PVH and a member of the Board, requested that the hospital medical staff[1] investigate alleged improper behavior by plaintiff. The behavior consisted of alleged derogatory comments about Conejo and PVH's chief nursing officer and disruptive conduct in dealings with coworkers.
On February 11, 2002, the Board informed plaintiff that its approval of his reappointment application the previous month was in error. According to the Board, a January 2002 accreditation survey had pointed out deficiencies in the reappointment process, which had to be corrected. Due to these deficiencies, the Board had rescinded its January action and would review all appointments in February 2002.
3. Ad hoc committee investigation
On March 27, 2002, the Board asked the medical executive committee to report on allegations that plaintiff had altered, and had been untruthful in, his reappointment application for January 2002 and had engaged in disruptive behavior. On April 16, 2002, the committee reported it had found no improprieties on plaintiffs part and recommended approval of his application.
The Board took the position that the committee had not adequately investigated the allegations of disruptive behavior and appointed an ad hoc committee, composed of board members, to investigate those allegations. The ad hoc committee interviewed 17 individuals during early May 2002, including plaintiff. The committee's report summarized numerous allegations of disruptive conduct by plaintiff in his dealings with PVH personnel, including staff physicians and nurses, from 1999 to 2002. Some coworkers reportedly quit because of plaintiff or refused to work with him. The committee also reported that *602 most of the nonphysicians interviewed stated plaintiffs behavior could potentially endanger the lives of patients.
After completing its investigation, the ad hoc committee on May 22, 2002, recommended the Board deny plaintiffs application for reappointment. The same day, Conejo wrote to plaintiff stating that the Board had recommended denial of his application and that, due to the conflict between the recommendations of the Board and the medical executive committee, the matter would be submitted to a joint conference committee. Conejo also stated that plaintiffs staff privileges would continue in effect until June 12, 2002, when the Board made its final decision.
4. Consultant report
While the ad hoc committee investigation was proceeding, the Board requested that The Greeley Company, a consulting company based in Massachusetts, review certain of plaintiffs surgical cases to evaluate the quality of patient care. The company's report, dated May 21, 2002, summarized 11 cases. It noted six cases with no problems; two with minor problems not affecting patient outcome; two in which disease or symptoms were caused, exacerbated, or allowed to progress; and one in which longevity and/or functional quality of life was shortened or adversely affected.
5. Denial of reappointment
On June 6, 2002, the joint conference committee decided to forward plaintiffs reappointment application to the full Board. On June 12, 2002, the Board voted not to reappoint plaintiff. The following day, Conejo wrote to plaintiff stating that the Board had denied his application for reappointment, and his privileges would expire that date. Conejo stated the decision was based on (1) repeated disruptive behavior; (2) lack of truthfulness on the reappointment application; and (3) substantial concerns regarding quality of care to patients. Conejo also notified plaintiff he had the right to a hearing before an ad hoc committee to review the decision.
B. Procedural Background
Plaintiff filed this action on June 10, 2002, and filed a first amended complaint (complaint) eight days later, seeking reinstatement of his privileges and damages. The complaint named as defendants PVH and related companies, the Board and individual board members, and a former PVH chief executive officer (collectively, defendants). The complaint alleged 12 causes of action arising from the termination of plaintiffs staff privileges, based on tort, contract, and statutory violations. Plaintiff prayed for declaratory and injunctive relief, a writ of mandamus under Code of Civil Procedure section 1085 or in the alternative a writ of administrative mandamus under Code of Civil Procedure section 1094.5, and monetary damages.
Concurrently with the amended complaint, plaintiff filed a motion for a preliminary injunction or, in the alternative, for a peremptory writ of mandate under Code of Civil Procedure section 1085 or 1094.5. Plaintiff sought to require defendants to (1) set aside the review of his reappointment and the pending termination of his privileges; (2) reinstate him to the medical staff; and/or (3) take no further action to prevent his exercise of his staff privileges unless carried out pursuant to the procedural requirements of the PVH bylaws.
After a hearing, the court denied plaintiffs motion on the grounds that (1) plaintiff had not exhausted the administrative remedies provided for in the PVH bylaws; (2) it did not appear there was a reasonable likelihood plaintiff would prevail on the merits of his case; and (3) the denial of plaintiffs application was a completed action *603 that the court would not overturn, because plaintiff had ample time before the action was taken to seek to prevent the Board from taking the action. Plaintiff appealed from the order denying a preliminary injunction.
II
DISCUSSION
A. Standard of Review
In determining whether to issue a preliminary injunction, the trial court considers: (1) the likelihood that the moving party will prevail on the merits and (2) the interim harm to the respective parties if an injunction is granted or denied. The moving party must prevail on both factors to obtain an injunction. Thus, where the trial court denies an injunction, its ruling should be affirmed if it correctly found the moving party failed to satisfy either of the factors. (Abrams v. St. John's Hospital & Health Center (1994) 25 Cal.App.4th 628, 635-636, 30 Cal.Rptr.2d 603.)
Where the evidence before the trial court was in conflict, its factual determinations, whether express or implied, are reviewed for substantial evidence. We interpret the facts in the light most favorable to the prevailing party. (Shoemaker v. County of Los Angeles (1995) 37 Cal. App.4th 618, 625, 43 Cal.Rptr.2d 774.)
Generally, the standard of review for denial of a preliminary injunction is whether the trial court committed an abuse of discretion. However, a party's likelihood of prevailing on the merits sometimes can be determined as a matter of law. (Pacific Landmark Hotel, Ltd. v. Marriott Hotels, Inc. (1993) 19 Cal. App.4th 615, 624, 23 Cal.Rptr.2d 555; Hunter v. City of Whittier (1989) 209 Cal. App.3d 588, 595-596, 257 Cal.Rptr. 559.) In that case, de novo review as to that factor is proper. (Thomsen v. City of Escondido (1996) 49 Cal.App.4th 884, 890, 56 Cal.Rptr .2d 902.)
With these principles in mind, we consider the grounds on which the trial court denied a preliminary injunction.
B. Exhaustion of Administrative Remedies
The first ground for the trial court's denial of a preliminary injunction was that plaintiff had failed to exhaust his administrative remedies.
1. The exhaustion doctrine
"[A] doctor who is challenging the propriety of a hospital's denial or withdrawal of staff privileges must pursue the internal remedies afforded by that hospital to a final decision on the merits before resorting to the courts for relief.... `The exhaustion doctrine "is not a matter of judicial discretion, but is a fundamental rule of procedure" [citation] under which "relief must be sought from the administrative body and this remedy exhausted before the courts will act" [citation].' [Citation.]" (Unnamed Physician v. Board of Trustees (2001) 93 Cal.App.4th 607, 619-620, 113 Cal.Rptr.2d 309 (Unnamed Physician).)
2. Internal remedies under the PVH bylaws
The PVH bylaws provided that action adverse to a physician, including denial of reappointment, would entitle the physician to a hearing upon request. At the conclusion of the hearing, the hearing panel would make a recommendation to the Board, which would then make a decision. If the decision was adverse to the physician, he or she had the right to request appellate review by the Board. After appellate review, the Board would make a final decision.
*604 Plaintiff does not dispute these internal remedies were available to him. However, he contends that due process and statutory provisions required that the remedies, and specifically a hearing, be provided him before his privileges could be terminated. He asserts that the failure to provide a pretermination hearing rendered the internal remedies inadequate and made it unnecessary for him to exhaust them.
3. Due process requirements for termination of staff privileges
Once appointed to a hospital medical staff, a physician "may not be denied reappointment to the medical staff absent a hearing and other procedural prerequisites consistent with minimal due process protections." (Anton v. San Antonio Community Hosp. (1977) 19 Cal.3d 802, 824, 140 Cal.Rptr. 442, 567 P.2d 1162.) "[T]he full rights of staff membership vest upon appointment, subject to divestment upon periodic review only after a showing of adequate cause for such divestment in a proceeding consistent with minimal due process requirements." (Id. at pp. 824-825, 140 Cal.Rptr. 442, 567 P.2d 1162.) Due process in this context requires, at least, that a physician be afforded, among other rights, "a hearing before the deciding board"; "a written statement of the charges against him"; and "the right to call his own witnesses." (Id. at pp. 815-816, fn. 12, 140 Cal.Rptr. 442, 567 P.2d 1162.)
4. Requirements for termination under Business and Professions Code section 809.1 et seq.
In 1989, the Legislature essentially codified the requirements previously recognized in case law governing a physician's right to a hearing regarding the termination of his or her staff privileges. In Business and Professions Code[2] section 809 et seq., the Legislature set forth a comprehensive procedure governing adverse action by a hospital against a staff physician. (See generally Unnamed Physician, supra, 93 Cal.App.4th 607, 616-618, 113 Cal.Rptr.2d 309.) This procedure is mandatory for acute care hospitals and must be incorporated into their bylaws. (Id. at p. 622, 113 Cal.Rptr.2d 309; see § 809, subd. (a)(8).)
Most relevant here is section 809.1 et seq., which deals with the right of a physician to a hearing after adverse action has been proposed against him or her. Section 809.1 provides that a physician who is the subject of a "final proposed action" of a peer review body is entitled to written notice of the action. (§ 809.1, subd. (a).) The notice must inform the physician of his or her right to request a hearing on the action. (§ 809.1, subd. (b)(3).) A "peer review body" means a body composed of members of the hospital medical staff. (§ 805, subd. (a)(1)(A).) "Final proposed action" means "the final decision or recommendation of the peer review body after informal investigatory activity or prehearing meetings, if any." (§ 809.1, subd. (a).)
Section 809.3 provides that in a hearing concerning a "final proposed action" the parties shall have certain procedural rights, including the right to call, examine, and cross-examine witnesses and to present and rebut evidence. (§ 809.3, subd. (a)(1)-(5).) Section 809.4 provides that at the conclusion of the hearing the parties have the right to a written decision and to be informed of the procedure for appealing the decision, if one exists. (§ 809.4, subd. (a)(1), (2).)
*605 Although section 809.1 et seq. speaks of "a final proposed action of a peer review body" (e.g., § 809.1, subd. (a)), section 809.05, subdivision (c) provides that, if a peer review body fails to take action in response to a direction from the hospital's governing body, the governing body itself can take action against a physician. That provision further states that any such action "shall fully comply with the procedures and rules applicable to peer review proceedings established by Sections 809.1 to 809.6, inclusive." (§ 809.05, subd. (c).) Thus, the procedural rights in section 809.1 et seq. apply whether the adverse action is initiated by a peer review body or by a governing body such as the PVH Board in this case.
5. Compliance with section 809.1 et seq. in this case
There appears to be no dispute that plaintiff was not afforded a hearing under section 809.1 et seq. prior to the Board's decision to deny his reappointment application, which effectively terminated his staff privileges. Defendants argue, however, that PVH was not required to provide plaintiff with a pretermination hearing. Instead, the posttermination hearing that was made available to him was sufficient.
Defendants acknowledge that section 809.1 et seq. continually refers to a hearing on a "final proposed action" (italics added). However, they argue the word "proposed" in this context simply means that the action is subject to being overturned if the physician requests a hearing and prevails at the hearing and on any ensuing appellate review. Under defendants' interpretation, therefore, a "final proposed action" under section 809.1 et seq. takes immediate effect and continues in effect unless and until it is overturned. Thus, the Board was justified in excluding plaintiff from PVH effective June 13, 2002, based on its denial of his application the previous day, without a prior hearing.
We cannot accept defendants' position, for the following reasons. First, "[w]ords used in a statute or constitutional provision should be given the meaning they bear in ordinary use. [Citations.]" (Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735, 248 Cal.Rptr. 115, 755 P.2d 299.) The ordinary use of the word "proposed" is to refer to an action that has not taken effect yet. In Public Resources Protection Assn. v. Department of Forestry & Fire Protection (1994) 7 Cal.4th 111, 27 Cal. Rptr.2d 11, 865 P.2d 728, the Supreme Court considered whether certain timber operations were "proposed timber operations" within the meaning of rule 919.9 of the Forest Practice Rules (Cal.Code Regs., tit. 14, § 919.9) when the rule went into effect. The court concluded that "because timber operations had not in fact substantially begun by March 25, 1991, they were `proposed timber operations' within the meaning of rule 919.9...." (Public Resources Protection Assn., at pp. 121-122, 27 Cal.Rptr.2d 11, 865 P.2d 728.)
Similarly, the court in Concerned Citizens of Calaveras County v. Board of Supervisors (1985) 166 Cal.App.3d 90, 212 Cal.Rptr. 273 considered the proper interpretation of the requirement of Government Code section 65302, subdivision (a) that a county's general plan designate the "proposed" location of waste disposal facilities. The court stated: "The obvious meaning of the term `proposed,' is that the general plan indicate the county's intended uses for the land rather than actual uses which may or may not be at odds with the county's planning policy and goals." (Concerned Citizens, at p. 104, 212 Cal.Rptr. 273.)
In keeping with the ordinary meaning of the word "proposed," it appears the Supreme Court interprets the provisions of section 809.1 et seq., which provide for a *606 hearing on a "final proposed action," to require that a hearing occur before the action takes effect. In Arnett v. Dal Cielo (1996) 14 Cal.4th 4, 56 Cal.Rptr.2d 706, 923 P.2d 1, the court said: "A peer review committee may informally investigate a complaint or an incident involving a staff physician. If the committee proposes to recommend that the privileges of the physician be restricted or revoked because of the manner in which he or she exercised those privileges, the physician is entitled to written notice of the charges and may request a formal hearing. (Bus. & Prof. Code, § 809.1.)" (Id. at p. 10, 56 Cal. Rptr.2d 706, 923 P.2d 1, italics added.)
Although the discussion in Arnett v. Dal Cielo was dicta, the court's apparent interpretation of section 809.1 et seq. as affording a physician the right to a hearing before proposed action is implemented is consistent with the language of those sections. Section 809.1, subdivision (b)(1), for example, provides that notice of a final proposed action shall include a statement that the action "if adopted," shall be "taken" and reported pursuant to section 805. (Italics added.) The notice must also include a statement that the physician has the right to request a hearing. (§ 809.1, subd. (b)(3).) Thus, the statute appears to contemplate that a hearing be provided before a proposed action is "adopted" or "taken."
Similarly, section 809.3, subdivision (b)(1) provides that at a hearing concerning a final proposed action, "[t]he peer review body shall have the initial duty to present evidence which supports the charge or recommended action." (Italics added.) Again, the implication is that the hearing will take place at the point at which the action is "recommended," before it has been implemented.
Finally, as discussed in more detail in part II.E, post, section 809.5 authorizes the immediate suspension or restriction of a physician's clinical privileges to avoid "imminent danger to the health of any individual." (§ 809.5, subds.(a), (b).) The physician must be "subsequently provided with the notice and hearing rights set forth in Sections 809.1 to 809.4, inclusive ...."(§ 809.5, subd. (a).) If the Legislature had intended that an ordinary "final proposed action" under sections 809.1 to 809.4 take effect immediately, there would have been no need to provide separately for a procedure for immediate suspension in section 809.5.[3] We must, of course, interpret section 809.1 et seq. so as to harmonize the various provisions therein if possible and to avoid rendering any of those provisions surplusage. (People v. Loeun (1997) 17 Cal.4th 1, 9, 69 Cal. Rptr.2d 776, 947 P.2d 1313.)
The only possible indication we have found in section 809.1 et seq. that the Legislature might have considered a post-termination hearing to be appropriate appears in section 809.1, subdivision (c)(1). That provision states that, if a physician requests a hearing on a final proposed action, he or she must be given a written notice setting forth "[t]he reasons for the final proposed action taken or recommended. ..." (§ 809.1, subd. (c)(1), italics added.) The reference to an action "taken" could mean that it is permissible to implement an action before a hearing takes place.
However, in view of the remaining provisions of section 809.1 et seq., discussed *607 ante, which as we have seen appear to contemplate a pretermination hearing, we believe the more likely explanation of the use of the word "taken" in section 809.1, subdivision (c)(1) is that in some cases the hearing may concern a summary suspension imposed pursuant to section 809.5. As seen, that section authorizes an immediate suspension as long as a physician "is subsequently provided with the notice and hearing rights set forth in Sections 809.1 to 809.4 ...." (§ 809.5, subd. (a), italics added.) Thus, in that specific category of posttermination hearing is permissible. We do not read section 809.1, subdivision (c)(1) to mean that a posttermination hearing is permissible in the more usual case where there is no immediate suspension. Since as noted ante the Board did not purport to proceed under section 809.5, its failure to provide a pretermination hearing cannot be justified based on the reference to action "taken" in section 809.1, subdivision (c)(1).
For these reasons, we construe section 809.1 et seq. to require that a physician be afforded the right to a hearing before action proposed to be taken against him or her is implemented. Contrary to defendants' view, an action that has already been taken is not a "proposed" action merely because it may be overturned in a subsequent hearing, any more than a judgment rendered by a trial court is a "proposed" judgment merely because it may be reversed on appeal. PVH's immediate termination of plaintiffs staff privileges on June 13, 2002, without a hearing, therefore failed to comply with section 809.1 et seq.
6. Medical disciplinary cause or reason
Defendants argue that even assuming section 809.1 et seq. entitles a physician to a pretermination hearing, the present case does not fall within the purview of those sections because their application is limited to instances in which action is taken solely for a "medical disciplinary cause or reason." The procedure set forth in section 809.1 et seq. only applies to final proposed actions "for which a report is required to be filed under Section 805 ...." (§ 809.1, subd. (a).) Section 805 requires that a report be filed with the state agency having jurisdiction over a practitioner whose staff privileges are terminated "for a medical disciplinary cause or reason." (§ 805, subd. (b)(2).) "Medical disciplinary cause or reason" means conduct "reasonably likely to be detrimental to patient safety or to the delivery of patient care." (§ 805, subd. (a)(6).)
Defendants assert that plaintiffs disruptive behavior alone justified termination of his staff privileges. Therefore, he was not terminated for a medical disciplinary cause or reason.
The Board clearly thought it was terminating plaintiff for a medical disciplinary cause or reason and that the procedure set forth in section 809.1 et seq. therefore applied. In its letter of termination, the Board advised plaintiff he had the right to a hearing on the termination pursuant to "the California Business and Professions Code," i.e., section 809.1 et seq.
It is equally clear that, notwithstanding their current argument, defendants have taken the position that plaintiffs alleged disruptive behavior not only antagonized coworkers but also was likely to be detrimental to patient care. In fact, in the very section of their brief in which they argue the disruptive behavior was not a "medical disciplinary cause or reason," defendants simultaneously assert that the behavior "directly affected patient care," likely "would have continued to affect patient care," and had to be eliminated "in order to guarantee the quality of care that patients *608 received" so that the Board could discharge its responsibility of "ensuring the quality of care received by patients ...."
As stated, conduct that is "reasonably likely to be detrimental to patient safety or to the delivery of patient care" qualifies as a medical disciplinary cause or reason. (§ 805, subd. (a)(6).) Having adopted the position that plaintiff's disruptive behavior affected patient care, defendants cannot now credibly argue that the behavior provided a basis for termination that was not a medical disciplinary cause or reason and therefore was not subject to section 809.1 et seq.
7. Effect of noncompliance with section 809.1 et seq. on exhaustion requirement
Having determined that PVH should have afforded plaintiff a hearing before terminating his staff privileges, we consider whether its failure to do so excused plaintiff from pursuing PVH's internal remedies before seeking an injunction. In Holderby v. Internat. Union etc. Engrs. (1955) 45 Gal.2d 843, 291 P.2d 463 (Holderby), the executive board of a union expelled the plaintiff from the union without following the provisions of the union's constitution, which required that formal charges and a hearing be provided. (Id. at p. 845-846, 291 P.2d 463.) The constitution also provided that a member could appeal to the general executive board from any action by a local union. (Id. at p. 845, 291 P.2d 463.) However, the plaintiff did not pursue an appeal before filing a lawsuit to obtain reinstatement and damages for unlawful exclusion.
The Supreme Court concluded the action was barred by the plaintiffs failure to pursue the internal appeal. It stated: "It is only when the organization violates its rules for appellate review or upon a showing that it would be futile to invoke them that the further pursuit of internal relief is excused. The violation of its own rules which inflicts the initial wrong furnishes no right for direct resort to the courts." (Holderby, supra, 45 Cal.2d at p. 847, 291 P.2d 463.)
Significantly, in Holderby only internal rules were violated. The court did not have to consider whether exhaustion should be required in a case where the organization failed to afford the member a right guaranteed by law. Two years after Holderby, in Mooney v. Bartenders Union Local No. 284 (1957) 48 Cal.2d 841, 313 P.2d 857 (Mooney), the court considered that question. A union member requested permission to examine the union's financial records, which was refused. The constitution of the union required that a member exhaust internal remedies before resorting to court. The plaintiff failed fully to exhaust those remedies. (Id. at p. 843, 313 P.2d 857.)
The court held the action, seeking a writ of mandate to permit inspection of the records, was not barred by the lack of exhaustion. It acknowledged that under Holderby "[provisions in union constitutions requiring the exhaustion of internal remedies are generally recognized by the courts as binding on the members. [Citations.]" (Mooney, supra, 48 Cal.2d at p. 843, 313 P.2d 857.) It noted, however, that a corporate shareholder had a statutory right to inspect corporate records and that the courts would generally afford the same right to a member of a union: "It would seem clear that a member of an unincorporated labor union is entitled to inspect its financial records." (Ibid.)
The Mooney court also emphasized the fact that requiring the member to exhaust internal remedies before permitting the inspection "would unduly hamper the member's right and possibly defeat the *609 purpose of the investigation." In contrast, an inspection would not unduly interfere with the union's internal affairs, since it related only to a preliminary matter and not to the merits of the underlying dispute. (Mooney, supra, 48 Cal.2d at p. 844, 313 P.2d 857.)
Although Justice Carter, concurring in Mooney, expressed the view that Mooney "in effect overrules the Holderby case" (Mooney, supra, 48 Cal.2d at p. 845, 313 P.2d 857 (cone. opn. of Carter, J.)), it is not necessary for us to consider that possibility. Even if exhaustion is required under Holderby notwithstanding violations of internal rules, under Mooney exhaustion is not required where pursuing the internal remedy would in effect deprive the member of a right guaranteed by law independently of the internal rules. That is the situation here. Section 809.1 et seq. affords plaintiff the right to a pretermination hearing. Pursuing the internal remedy offered, a posttermination hearing, would effectively deprive plaintiff of that statutory right.
Moreover, as in Mooney, affording plaintiff the relief he seeks in this proceeding would not unduly interfere with PVH's internal affairs. As in Mooney, the redress plaintiff seeks at this point, a preliminary injunction, relates to a preliminary matter, his right to a pretermination hearing. He does not seek to have the court decide, at this stage, the underlying issue to be addressed at that hearing, whether PVH had cause to terminate his privileges. Excusing the exhaustion requirement in this context does not undermine the reason for the requirement, as stated by the Supreme Court, i.e., that "`as a matter of policy ... the association itself should in the first instance pass on the merits of an individual's application rather than shift this burden to the courts.'" (Rojo v. Kliger (1990) 52 Cal.3d 65, 86, 276 Cal.Rptr. 130, 801 P.2d 373.)
Defendants note that in Bollengier v. Doctors Medical Center (1990) 222 Cal. App.3d 1115, 272 Cal.Rptr. 273 (Bollengier) the court held a physician had to exhaust internal remedies even though he did not receive the right to a formal hearing until after his staff privileges were revoked. (Id. at p. 1121, 272 Cal.Rptr. 273.) But Bollengier was not decided under section 809.1 et seq. and therefore did not consider whether violation of the pretermination hearing requirement of those sections would excuse the exhaustion requirement. Moreover, the physician in Bollengier did not challenge the failure to provide a pretermination hearing. Instead, he objected to alleged procedural defects in the charges against him. (Bollengier, at pp. 1121-1122, 272 Cal.Rptr. 273.) He wanted the court to address these defects before he proceeded to an administrative hearing on the charges.
The Bollengier court viewed the physician's allegations of procedural defects as a contention that the hospital's bylaws were not followed. (Bollengier, supra, 222 Cal.App.3d at p. 1123, 272 Cal.Rptr. 273.) It noted that the bylaws provided for review of the type of procedural defect the physician was asserting. (Id. at p. 1126, 272 Cal.Rptr. 273.) Therefore, the case came within the holding in Holderby that an organization's violation of its internal rules does not excuse the exhaustion requirement. (Bollengier, at p. 1128, 272 Cal.Rptr. 273.) The court did not need to, and did not, address whether providing a hearing only after revocation of privileges would amount to a violation of an independent legal right, which would excuse the exhaustion requirement.
The court in Unnamed Physician, supra, 93 Cal.App.4th 607, 113 Cal.Rptr.2d 309, in fact, distinguished Bollengier on *610 just that basis. The hospital in Unnamed Physician proposed to restrict the privileges of a staff physician. The physician contended the procedures for challenging the proposed action, as set forth in the hospital's bylaws and as implemented in his case, did not comply with the requirements of sections 809 through 809.8 in certain respects. (Unnamed Physician at pp. 617-618, 113 Cal.Rptr.2d 309.) Although the court ultimately disagreed with that contention, it rejected the proposition that the physician had to exhaust the internal procedures before challenging their adequacy in court: "An essential part of appellant's challenges is that the bylaws, which govern the administrative procedure, do not comport with the statutory minimums. The argument has two components related to seeking extraordinary relief. First, the argument includes an assertion that respondents have a duty to provide a procedural mechanism for peer review which offers the statutory procedural safeguards. Second, that absent compliance with the statutory procedural safeguards, the administrative procedure established by the bylaws does not comport with due process. Under either or both of these, the failure to exhaust administrative remedies, in and of itself, will not bar relief." (Id. at pp. 620-621, 113 Cal. Rptr.2d 309.)
Plaintiff's claim in this case, that PVH's failure to afford him a pretermination hearing did not comply with section 809.1 et seq., is analogous to the claim of the physician in Unnamed Physician that the hospital's procedure did not comply with the statutory requirements. Under Unnamed Physician, that claim was not subject to the exhaustion requirement.
Defendants also cite Lujan v. G & G Fire Sprinklers, Inc. (2001) 532 U.S. 189, 121 S.Ct. 1446, 149 L.Ed.2d 391. There, the United States Supreme Court held that a public agency's withholding of funds owed to a public works contractor due to a suspected wage law violation was not a violation of due process even though there was no prior hearing, as long as postdeprivation relief in the form of a court action was available. However, the court in Lujan based its holding on the fact that the contractor's claim to the money was not a "present entitlement," which could only be taken away after a hearing. The court contrasted cases in which a present entitlement was involved, such as where the claimant was denied the right "to pursue a gainful occupation." (Id. at p. 196, 121 S.Ct. 1446.)
Here, of course, the right "to pursue a gainful occupation" is exactly what is at stake. As stated, the California Supreme Court has determined that the right to retain staff privileges is a "vested" right that merits protection over and above that afforded to other property interests, such as the interest of an initial applicant in obtaining a staff appointment. (Anton v. San Antonio Community Hosp., supra, 19 Cal.3d 802, 824-825, 140 Cal.Rptr. 442, 567 P.2d 1162.) Therefore, the holding in Lujan that a property interest that does not rise to the level of a "present entitlement" does not merit a predeprivation hearing does nothing to assist defendants.
Moreover, Lujan was decided solely on federal due process grounds. It did not involve a statutory scheme such as section 809.1 et seq., which, as we have seen, contemplates a hearing prior to termination of privileges.
For these reasons, we conclude plaintiff was entitled to seek an injunction to secure his statutory right to a pretermination hearing under section 809.1 et seq. without first pursuing PVH's internal remedy, a posttermination hearing. Accordingly, the court's denial of a preliminary injunction *611 cannot be sustained based on the exhaustion requirement.
C. Likelihood of Prevailing on Merits
The second basis on which the court denied an injunction was that it did not appear there was a reasonable likelihood plaintiff would "prevail on the merits of his case...." In evaluating that ruling, we must first determine what prevailing on the merits means in this context. Plaintiff's complaint alleged in part that defendants had failed to provide him with a pretermination hearing as required by section 809.1 and the common law right of fair procedure. He also alleged, however, that defendants' purported reasons for terminating his privileges were without substantive merit. The question thus arises whether, to show a likelihood of prevailing on the merits, plaintiff had to establish a probability that defendants lacked cause to terminate him, or only that they should have provided him with a pretermination hearing.
In Shoemaker v. County of Los Angeles, supra, 37 Cal.App.4th 618, 43 Cal.Rptr.2d 774, a physician challenged his removal from posts at a medical center and university. He obtained a preliminary injunction rescinding the removal and restraining the defendants from removing him unless they provided him with due process and complied with civil service rules. (Id. at p. 625, 43 Cal.Rptr.2d 774.) On appeal, the court in addressing the factor of likelihood of success on the merits said: "Shoemaker sought the preliminary injunction based on a violation of the procedural rights alleged in the first amended complaint.... More specifically, Shoemaker argued that he should be reinstated until such time, if any, as defendants accord him the predisciplinary procedural safeguards allegedly mandated by civil service rules and the due process clause. We therefore have no occasion to evaluate Shoemaker's likelihood of success on his substantive claims." (Id. at p. 626, 43 Cal.Rptr.2d 774.)
Here, similarly, plaintiff sought a preliminary injunction based on the violation of his procedural right to a pretermination hearing. Accordingly, as in Shoemaker the relevant question is whether plaintiff was likely to prevail on his claim that his procedural rights were violated, not whether he would be able to show defendants lacked cause to terminate his privileges.
We have concluded in part II.B., ante, that plaintiff should have been afforded a pretermination hearing. Thus, he adequately established a likelihood of prevailing on the relief he sought at the injunction stage, i.e., the reinstatement of his privileges pending a hearing. The court erred in denying an injunction based on a lack of probability of success on the merits.
D. Injunction Against Completed Act
The remaining ground on which the court denied an injunction was that the denial of plaintiff's reappointment application on June 12, 2002, was a completed act that the court would not overturn where plaintiff could have sought relief prior to that date. Defendants contend the ruling was proper based on the principle that an injunction will not issue to restrain a completed act. They cite Scripps Health v. Marin (1999) 72 Cal.App.4th 324, 85 Cal. Rptr.2d 86, in which the court held an injunction was not warranted to restrain the defendant from contacting the plaintiffs employees where the defendant had committed only one act of violence and there was no showing of any threat of future acts. (Id. at p. 336, 85 Cal.Rptr.2d 86.)
The Scripps court in turn cited Gold v. Los Angeles Democratic League (1975) 49 Cal.App.3d 365, 122 Cal.Rptr. 732, limited *612 on other grounds in Youst v. Longo (1987) 43 Cal.3d 64, 74, 233 Cal.Rptr. 294, 729 P.2d 728. In Gold, the court held there was no basis for injunctive relief to restrain the defendants from mailing misleading election pamphlets where the election had occurred a year earlier and there was no allegation the defendants threatened to repeat the mailings. (Gold, at pp. 372-373, 122 Cal.Rptr. 732.)
In contrast, injunctive relief has been upheld where the defendant's completed act causes ongoing harm or is part of a continuing course of conduct. In Warsaw v. Chicago Metallic' Ceilings, Inc. (1984) 35 Cal.3d 564,199 Cal.Rptr. 773, 676 P.2d 584, for example, the Supreme Court held it was proper to order the defendant to remove part of a completed structure that interfered with the plaintiffs' easement. The court stated: "Defendant argues that a mandatory injunction may not issue to enjoin a completed act. However, there is extensive authority standing for the proposition that a court of equity may, in a proper case, issue a mandatory injunction for protection and preservation of an easement including, where appropriate, an order for removal of an obstruction already erected." (Id. at p. 572, 199 Cal. Rptr. 773, 676 P.2d 584.)
In Volpicelli v. Jared Sydney Torrance Memorial Hosp. (1980) 109 Cal.App.3d 242, 167 Cal.Rptr. 610 (Volpicelli), the court upheld an injunction ordering that the plaintiff physician be given notice and a hearing on the termination of his staff membership and that he be reinstated pending the hearing. (Id. at p. 246, 167 Cal.Rptr. 610.) The court rejected the defendants' argument that the termination was a "completed act" that could not be undone by injunctive relief granted more than two years after the termination. (Id. at p. 250, 167 Cal.Rptr. 610.) It noted that, after the termination, the hospital had refused the plaintiffs requests for reappointment. (Id. at p. 251, 167 Cal. Rptr. 610.) This conduct brought the case "within the recognized exception to the rule that injunctive relief is not available to give redress to completed actsthe exception making injunctive relief available where the wrongful acts are repeated." (Ibid.)
The significant distinction between Scripps and Gold on the one hand, and Warsaw and Volpicelli on the other, is that in Scripps and Gold the harm the injunction was sought to prevent had already occurred. It could not be undone, and, since there was no indication the conduct causing the harm would recur, there was nothing left to prevent. In Warsaw and Volpicelli however, the harm was a continuing interference with the plaintiffs rights, which could be prevented by granting an injunction.
The present case falls within the second category. The harm plaintiff sought to preventhis exclusion from the staff without a prior hearingcontinued as long as his staff privileges remained terminated. The continuation of the harm could be prevented by reinstating his privileges and ordering a hearing as a prerequisite to any subsequent termination. The court therefore was not justified in denying injunctive relief based on the "completed act" principle.
E. Relative Harm
The trial court did not expressly state whether it relied-upon the relative harm factor in deciding to deny an injunction. However, the Supreme Court has stated that "[w]hen a trial court denies an application for a preliminary injunction, it implicitly determines that the plaintiffs have failed to satisfy either or both of the `interim harm' and `likelihood of prevailing on the merits' factors." (Cohen v. Board *613 of Supervisors (1985) 40 Cal.3d 277, 286, 219 Cal.Rptr. 467, 707 P.2d 840.) Thus, where denial of an injunction could have been based on a finding that the interim harm to the plaintiff did not outweigh the harm to the defendant, the denial must be affirmed if such an implied finding did not constitute an abuse of discretion. (Id. at p. 289, 219 Cal.Rptr. 467, 707 P.2d 840.)
Defendants argue granting an injunction would cause irreparable harm to PVH and the community, because plaintiff is a disruptive physician who has serious quality of care issues concerning his treatment of patients. They cite the report of the ad hoc committee concerning plaintiff's disruptive behavior and the Greeley report, which noted possible problems with some of his surgical cases.
There was conflicting evidence regarding plaintiff's competence and whether his behavior interfered with patient care. As noted, when asked to report on plaintiffs alleged disruptive behavior, the medical executive committee stated it had found no improprieties on plaintiff's part. In contrast, the ad hoc committee reported that nonphysician care providers had stated plaintiffs behavior could potentially endanger the lives of patients.
The Greeley report identified possible problems with some of plaintiff's cases but stopped short of recommending any action against him. The report stated: "In the event Physician # 140 [plaintiff] is able to provide additional factual information which would clarify certain issues, this information should certainly be considered prior to taking any final action concerning the findings and conclusions of this report."
The record does not reflect whether the Board obtained such additional factual information before deciding to terminate plaintiff. The day after the termination, Dr. Judalena, the PVH chief of staff, complained in a letter to Conejo that the report of problems with plaintiff's surgical cases had not been "discussed with [plaintiff] nor was it brought up to any of the medical staff committees to hear his explanations." Dr. Lucero, the chairman of the PVH peer review subcommittee, stated the subcommittee had been reviewing records for two months and had not found "any cause which would support the concern that the Board is voicing regarding the quality of care [plaintiff] provides." Dr. Judalena similarly stated that as of June 19, 2002, there had been "no proof of any gross malpractice prompting denial of [plaintiffs] re-appointment."
If the question before us were whether there was substantial evidence to justify PVH's concerns about plaintiff's competence and ability to work with others, we would find that there was. The fact that reasonable minds may differ on a given point does not preclude a finding that substantial evidence supports one position or the other. (Sutton v. Golden Gate Bridge, Highway & Transportation Dist. (1998) 68 Cal.App.4th 1149, 1158, 81 Cal.Rptr.2d 155.) (We emphasize, however, that because no hearing occurred plaintiff did not have an opportunity to present evidence to rebut that presented by defendants. We express no opinion how the issue of plaintiff's job performance ultimately should be decided.)
For purposes of granting or denying an injunction, however, the question was not whether there were legitimate concerns about plaintiff's performance, but whether those concerns were sufficient to outweigh the harm to plaintiff in terminating his staff privileges. "When the doctrine of relative hardship or balancing conveniences is invoked as a defense to injunctive relief, proof of irreparable injury to defendant is a necessary element of *614 the defense. [Citation.]" (Volpicelli, supra, 109 Cal.App.3d 242, 252, 167 Cal. Rptr. 610, fn. omitted.) In weighing the relative harms, a court should consider "such things as the inadequacy of other remedies...." (Abrams v. St. John's Hospital & Health Center (1994) 25 Cal. App.4th 628, 636, 30 Cal.Rptr.2d 603.)
Here, PVH had an effective remedy if plaintiff in fact posed a serious risk to patients as defendants contend. As noted ante, section 809.5, subdivision (a) authorizes a peer review body to immediately suspend a physician to prevent "imminent danger to the health of any individual...." Subdivision (b) of that section provides that when no person authorized by the peer review body is available, the governing body may suspend privileges for up to two working days while it seeks ratification from the peer review body. The PVH bylaws similarly provided that when a practitioner's conduct required immediate action to protect the life of a patient or prevent injury to a person in the hospital, the staff, the chief executive officer, or the Board could summarily suspend the practitioner.
An analogous situation was presented in Hackethal v. Loma Linda Community Hosp. Corp. (1979) 91 Cal.App.3d 59, 153 Cal.Rptr. 783. In that case, this court held the plaintiff was entitled to a writ of mandate compelling the hospital to reinstate his staff privileges pending a proper hearing. The hospital argued that reinstatement pending a hearing would hamper its ability to protect the public interest. This court rejected the argument, noting that the hospital bylaws provided a mechanism for summary suspension of clinical privileges when necessary in the interest of patient care. (Id. at p. 67, 153 Cal.Rptr. 783.)
Here, similarly, PVH had an adequate remedy in section 809.5 and the bylaws to address any serious quality of care issues. Reinstatement of plaintiff subject to PVH's right to seek summary suspension would not have caused irreparable harm to PVH or the community.
In contrast, the hardship to plaintiff if an injunction were denied was significant. PVH's denial of plaintiff's reappointment, without a hearing, left plaintiff effectively unable to practice his profession, notwithstanding the lack of any finding that he posed any immediate danger to patients. As a surgeon, plaintiff needed a hospital venue in which to conduct his practice. The California Supreme Court has stated: "`It is common knowledge that a physician or surgeon who is not permitted to practice his profession in a hospital is as a practical matter denied the right to fully practice his profession...."' (Ezekial v. Winkley (1977) 20 Cal.3d 267, 273-274, 142 Cal.Rptr. 418, 572 P.2d 32.)
Under these circumstances, the court would have been in error had it denied an injunction based on the balance of harm factor. That factor therefore cannot furnish an alternative basis for upholding the court's ruling.
III
CONCLUSION
The limited question before the court in considering whether to grant an injunction was whether plaintiff was entitled to a hearing before his staff privileges were revoked. We have concluded plaintiff was entitled to a pretermination hearing under section 809.1 et seq. The internal remedy available to him, a posttermination hearing, was not an adequate substitute. The remaining bases on which the court denied an injunction were similarly lacking in merit. Accordingly, an injunction should have been granted.
*615 IV
DISPOSITION
The order denying plaintiffs motion for a preliminary injunction is reversed. The trial court is directed to issue a preliminary injunction reinstating plaintiffs staff privileges pending a pretermination hearing, subject to PVH's right to seek a temporary suspension of privileges pending the hearing should it elect to do so. Appellant shall recover costs on appeal.
We concur: McKINSTER, Acting P.J., and WARD, J.
NOTES
[1] "Hospitals are required by law to have a medical staff association which oversees physicians who are given staff privileges to admit patients and practice medicine in the hospital. A hospital's medical staff is a separate legal entity, an unincorporated association, which is required to be self-governing and independently responsible from the hospital for its own duties and for policing its member physicians. [Citations.]" (Hongsathavij v. Queen of Angels etc. Medical Center (1998) 62 Cal. App.4th 1123, 1130, fn. 2, 73 Cal.Rptr.2d 695.)
[2] Further statutory references are to the Business and Professions Code unless otherwise noted.
[3] We note in passing that there is no indication the Board purported to use the summary suspension procedure set forth in section 809.5 when it terminated plaintiff's staff privileges on June 13, 2002, without a hearing, and defendants do not argue that plaintiff's conduct satisfied the requirements for immediate suspension. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2326017/ | 25 F.Supp.2d 518 (1998)
UNITED STATES of America
v.
David Paul HAMMER.
No. 4:CR-96-239.
United States District Court, M.D. Pennsylvania.
October 9, 1998.
*519 Frederick E. Martin, Office of U.S. Attorney, Williamsport, PA, for United States of America.
Ronald C. Travis, Rieders, Travis, Mussina, Humphrey and Harris, Williamsport, PA, Stephen Chadwick Smith, Lock Haven, PA, David A. Ruhnke, Ruhnke & Barrett, Montclaire, NJ, for David Paul Hammer.
OPINION
MUIR, District Judge.
I. Introduction.
On September 18, 1996, a Grand Jury sitting in Williamsport, Pennsylvania, returned an indictment charging Defendant David Paul Hammer with first degree murder. On April 9, 1997, the government filed a notice of its intent to seek the death penalty in this case. Mr. Hammer was charged with killing his cellmate, Andrew Marti, while housed in Cell 103 of the Special Housing Unit at the Allenwood United States Penitentiary, White Deer, Pennsylvania. The cause of death was strangulation with a cord braided from a bedsheet.
This case was placed on the May, 1998, trial list. Jury selection commenced on May 5, 1998, with a pool of 250 potential jurors and lasted fourteen (14) days. During that period an additional 205 potential jurors were needed. A jury of 12 jurors and 6 alternates was impaneled on June 2, 1998, and on the next day the government commenced its case. On June 11, 1998, the government rested and the defense commenced its case. The defense presented an insanity defense. Robert M. Sadoff, M.D., the defense forensic psychiatrist testified that Mr. Hammer suffered from multiple personality disorder or as it is now designated dissociative identity disorder. Dr. Sadoff further testified that Mr. Hammer has four alter personalities: (1) Jocko, a violent personality, (2) Tammy, a female personality, (3) Wilbur, a child personality and (4) Jasper, a chimpanzee. In sum, Dr. Sadoff testified that Jocko committed the killing of Mr. Marti and that Mr. Hammer was not legally responsible for the killing. On June 17, 1998, the defense rested and the government commenced its rebuttal *520 case by calling James K. Wolfson, M.D., a forensic psychiatrist employed at the Medical Center for Federal Prisoners, Springfield, Missouri. Dr. Wolfson's testimony was the opposite of Dr. Sadoff, i.e., Mr. Hammer did not suffer from dissociative identity disorder and that he was responsible for his actions.
On June 22, 1998, before the cross-examination of Dr. Wolfson was completed, the court was notified that Mr. Hammer desired to plead guilty. Before entering into a guilty plea colloquy with Mr. Hammer, the court required Mr. Hammer to be evaluated to determine whether he was competent to plead guilty. That evaluation was conducted by Dr. Wolfson and John R. Mitchell, Psy.D., a psychologist at the Allenwood United States Penitentiary, White Deer, Pennsylvania. The court than heard testimony from both Drs. Wolfson and Mitchell which established that Mr. Hammer was competent to enter a guilty plea.
On June 22, 1998, Mr. Hammer entered a plea of guilty to the intentional premeditated murder of Mr. Marti in violation of 18, United States Code, Section 1111. As a result of the guilty plea, the penalty phase of the trial commenced on June 30, 1998. On July 23, 1998, the jury retired to deliberate on its verdict and on the next day recommended that Mr. Hammer be sentenced to death.
The evidence presented during the trial viewed in a light most favorable to the government[1] establishes that Mr. Hammer bound each limb of Mr. Marti by using the ruse that he would only slightly injure Mr. Marti and obtain a transfer for Mr. Marti to another prison. Mr. Hammer after rendering Mr. Marti helpless put Mr. Marti in a sleeper hold. Testimony from a pathologist established that Mr. Marti struggled in the restraints. Once Mr. Marti was rendered unconscious by the sleeper hold, Mr. Hammer strangled him with a homemade cord. In recommending a sentence of death the jury, as required by statute, found that the government established beyond a reasonable doubt that Mr. Hammer intentionally killed Mr. Marti.[2] The jury also found beyond a reasonable doubt the following two statutory aggravating factors: (1) Mr. Hammer previously had been convicted of two or more State or Federal offenses punishable by a term of imprisonment for more than one year and (2) Mr. Hammer committed the murder of Mr. Marti after substantial planning and premeditation. These two statutory aggravating factors are supported by the record.[3]*521 Mr. Hammer was convicted in 1978 and 1984 in Oklahoma state court of felonies involving the use of weapons. The 1984 conviction involved a shooting with intent to kill. As for substantial planning and premeditation, the testimony of inmate witnesses as well as the evidence of the preparation of the homemade cord establish beyond a reasonable doubt that statutory aggravating factor. The jury also found the following two non-statutory aggravating factors: (1) Mr. Hammer represents a continuing danger to the lives and safety of others in the future because he is likely to commit criminal acts of violence, and (2) Mr. Hammer caused harm to the family of Mr. Marti as a result of the impact of the killing upon the family. These two non-statutory aggravating factors are supported by the record. Documents written by Mr. Hammer as well as his tape recorded statement to a news reporter establish beyond a reasonable doubt that he represents a continuing danger to the lives and safety of others in the future. Also, in one document Mr. Hammer stated that if given the chance he would kill again. As for the harm to the family of Mr. Marti, based on the testimony of family members there is no doubt that such harm was inflicted.
The jury after finding two statutory and two non-statutory aggravating factors then considered whether any mitigating factors existed. One juror found that Mr. Hammer committed the offense under severe mental or emotional disturbance, suffers from cognitive deficits, is remorseful for having caused the death of Mr. Marti and has demonstrated acceptance of responsibility for his offense. Twelve jurors found that Mr. Hammer is the product of a violent, abusive and chaotic childhood, that as a young person he attempted to seek help for mental difficulties, that he will be sentenced to life in prison without the possibility of release if a sentence of death is not imposed, and friends and family members of Mr. Hammer will be adversely affected if he is sentenced to death. Six jurors found that as a child Mr. Hammer was a victim of sexual abuse. Three jurors found that the United States Bureau of Prisons and the Oklahoma Department of Corrections are capable of fashioning conditions of confinement such that Mr. Hammer is unlikely to commit criminal acts of violence in the future. Finally, five jurors found that Mr. Hammer even though incarcerated for most of his life has managed to do some good things.
The jurors then balanced the aggravating factors against the mitigating factors and concluded that because the aggravating factors sufficiently outweighed the mitigating factors a sentence of death was justified.[4] The recommendation of the jury is supported by the evidence presented during the trial.
On Friday, July 31, 1998, Mr. Hammer filed a document entitled "Defendant's Pro Se Motion for the Discharge of Court Appointed Counsel; and Request For Immediate Sentencing." In that document Mr. Hammer states that he "has no desire to file any post trial motions or to pursue any appeals of the jury's verdict or the sentence to be imposed." On August 3, 1998, a hearing was held on Mr. Hammer's motion at which time Mr. Hammer addressed this court and repeated his requests that counsel be discharged and sentence be imposed immediately. The government responded by requesting a competency examination. On August 4, 1998, an order was issued directing that Mr. Hammer undergo a competency evaluation at *522 the Medical Center for Federal Prisoners, Springfield, Missouri.
On August 5, 1998, counsel for Mr. Hammer filed a motion to withdraw as counsel, or in the alternative for the appointment of additional counsel. By order of August 10, 1998, we denied the motion to withdraw but appointed Stephen C. Smith, Esquire, as additional counsel. By order of September 1, 1998, we continued the date for imposition of sentence originally set for September 17, 1998, until after the competency evaluation of Mr. Hammer was completed and a hearing had been held to determine Mr. Hammer's competency to discharge his counsel and waive his appeal rights.
Mr. Hammer's motion to discharge counsel and waive his appeal rights has been fully briefed and a hearing was held thereon on October 1, 1998. At that hearing James K. Wolfson, M.D., and John R. Mitchell, Psy.D., reappeared and testified regarding Mr. Hammer's mental state and competency to discharge counsel and waive his appeal rights. At the conclusion of the testimony of Drs. Mitchell and Wolfson, we entered into an extensive colloquy with Mr. Hammer. Therefore, the motion is ripe for decision. We will also address in this opinion our basis for denying certain penalty phase jury instructions proposed by Mr. Hammer and his motion for a mistrial which was requested after the court interrupted on two occasions the closing argument of defense attorney Ruhnke. The following are the court's findings of fact, discussion and conclusions of law relating to the hearing held on October 1, 1998.
II. Findings of Fact.
1. During his various appearances before this Court over the past two years, Mr. Hammer did not act in any fashion which suggested that he was incompetent.
2. None of the defense experts, including Drs. Sadoff and Gelbort who testified at trial, suggested that Mr. Hammer was incompetent at any time. (Undisputed, hereinafter "U")[5]
3. None of the three forensic evaluations conducted in Mr. Hammer's cases beginning in 1978 and continuing through 1997 suggested that Mr. Hammer was incompetent in various criminal prosecutions which he faced including the instant one. (U)
4. None of the psychiatrists or psychologists who also testified at trial, Drs. Mitchell, Karten, and Wolfson, suggested that Mr. Hammer was during the time frames when they saw him, 1995 through 1997, incompetent. (U)
5. Mr. Hammer since July 24, 1998, when the jury returned its recommendation, repeatedly has praised attorneys Ruhnke and Travis for their assistance on his behalf.
6. Following July 24, 1998, Mr. Hammer, in writing, requested the termination of defense counsel's services as an initial step to being promptly executed as was recommended by the jury. (U)
7. In all of his written submissions or briefs to this Court since July 24, 1998, Mr. Hammer appears to be competent.
8. On July 31, 1998, Mr. Hammer filed a pro se motion seeking to discharge court-appointed counsel Travis and Ruhnke. (U)
9. Mr Hammer's pro se motion also asked the Court to strike the post-trial motions filed by attorneys Travis and Ruhnke. (U)
10. Mr. Hammer's pro se motion also asks the Court to set a date for immediate formal sentencing. (U)
11. A hearing on Mr. Hammer's pro se motion was held on August 3, 1998.(U)
12. At the hearing on August 3, 1998, the government requested that the Court order a psychiatric or psychological evaluation of Mr. Hammer pursuant to 18 U.S.C. §§ 4241(a) and 4247(b) and (c). (U)
13. Mr. Hammer has been incarcerated, with the exception of the several times where he was in escape status, for over twenty years. (U)
*523 14. Mr. Hammer, even if the jury had not made its recommendation of July 24, 1998, still faces 1210 years of imprisonment as a result of his criminal convictions in Oklahoma State Court. (U)
15. In one of his written requests to discharge counsel, Mr. Hammer refers to the Roman Philosopher Seneca as well as the German philosopher Neitsche in observing that his desire to accept imposition of the death sentence is a rational one under the circumstances in his particular case.
16. On August 3, 1998, Dr. John Mitchell spoke at length with Mr. Hammer at the Allenwood Penitentiary regarding Mr. Hammer's mental state and competence.
17. Dr. James Wolfson, who became familiar with Mr. Hammer during an evaluation at the Medical Center for Federal Prisoners in November and December 1997, interviewed Mr. Hammer in August and September, 1998, regarding Mr. Hammer's mental state and especially his competence to waive counsel. (U)
18. Dr. Wolfson is a highly qualified psychiatrist and is a Diplomate of the American Board of Psychiatry and Neurology with Added Qualification in Forensic Psychiatry.
19. Dr. Mitchell is a highly qualified psychologist.
20. Both Drs. Mitchell and Wolfson on these different occasions and locations reached consensus on a number of matters. (U)
21. Drs. Mitchell and Wolfson agreed that Mr. Hammer was alert and oriented to person, place and time. (U)
22. Drs. Mitchell and Wolfson agreed that Mr. Hammer's thinking was logical and coherent and there was no evidence of a thought disorder. (U)
23. Drs. Mitchell and Wolfson agreed that Mr. Hammer's attention and concentration were good and there was no evidence of memory impairment. (U)
24. Drs. Mitchell and Wolfson agreed that Mr. Hammer's affect was broad in range and he displayed a reflectiveness and confidence emotionally.
25. Drs. Mitchell and Wolfson agreed that Mr. Hammer denied hallucinations and there were no signs of delusional thinking by him.
26. Drs. Mitchell and Wolfson agreed that neither they nor staff either at Allenwood or Springfield facilities observed Mr. Hammer to be experiencing hallucinations or delusions.
27. Drs. Mitchell and Wolfson agreed that Mr. Hammer denied being influenced by any other person to make his current decision. (U)
28. Drs. Mitchell and Wolfson observed that Mr. Hammer explained he does not have a death wish and his decision to proceed without counsel is not a suicidal act because if he wanted to die, he could have just hung himself in his cell.
29. Drs. Mitchell and Wolfson agreed that Mr. Hammer is willing to accept the consequences of killing Mr. Marti.
30. Drs. Mitchell and Wolfson agreed that Mr. Hammer wishes to be sentenced and executed immediately so as to end the suffering of incarceration and "move on to something better."
31. Drs. Mitchell and Wolfson agreed that Mr. Hammer "believes there's something better than this."
32. Drs. Mitchell and Wolfson agreed that Mr. Hammer acknowledged to them that he has made impulsive decisions in the past, but that his current decision is well thought out, carefully considered, and reaches a reasonable conclusion under the circumstances of his situation.
33. Drs. Mitchell and Wolfson agreed that Mr. Hammer expressed understanding that filing his motion could lead to his speedier death.
34. Drs. Mitchell and Wolfson agreed that Mr. Hammer conveyed his feelings and thoughts about his decision with clarity, commitment, and conviction.
35. Drs. Mitchell and Wolfson agreed that Mr. Hammer did not display signs of any mental illness which was interfering with his ability to make his decision logically and coherently.
*524 36. Drs. Mitchell and Wolfson agreed that Mr. Hammer was found to be free of any mental illness which would interfere with his ability to think rationally and with sound mind about his decision to file his motion to discharge counsel and proceed pro se.
37. Drs. Mitchell and Wolfson agreed that Mr. Hammer clearly understood the nature of the motion he filed, the potential consequences of his motion, and was able to assist in the processes involved with his motion. (U)
38. Although Dr. Mitchell previously testified that Mr. Hammer in his opinion is suffering from a major depressive disorder, recurrent, that he nonetheless finds Mr. Hammer to be fully competent in deciding to discharge his counsel. (U)
39. On or about August 10, 1998, Stephen C. Smith, Esquire, was appointed as additional counsel for Mr. Hammer. (U)
40. That subsequent to said appointment, Mr. Hammer has presented himself in his verbal communications, his written motions, and various correspondence, that he desires to discharge attorneys Travis and Ruhnke. (U)
41. Mr. Hammer has asserted that the decision to discharge counsel is his, and his alone. (U)
42. Mr. Hammer's evaluations by Dr. Wolfson and Dr. Mitchell indicate that Mr. Hammer desires to discharge attorneys Travis and Ruhnke. (U)
43. Mr. Hammer desires to have Stephen C. Smith, Esquire and David A. Ruhnke, Esquire, represent him throughout the duration of all of these proceedings, as co-counsel with Mr. Hammer or as stand-by counsel. (U)
44. Mr. Hammer's present desire to forego an appeal and ask for immediate imposition and the carrying out of the sentence of death is a competent and well-reasoned decision made by him.
45. During the guilty plea proceedings, attorneys Travis and Ruhnke stated that Mr. Hammer's decision to plead guilty was a competent decision. (U)
46. In a prior proceeding, attorneys Travis and Ruhnke filed a petition seeking to withdraw as counsel to Mr. Hammer, citing a conflict of interest. (U)
47. Attorneys Travis and Ruhnke sought a postponement of the briefing schedule relating to the post-trial motions pending the completion of the court-ordered psychiatric evaluation. (U)
48. The request for postponement of the briefing schedule on the post-trial motions was denied by the Court. (U)
49. On the 15th day of September, 1998, the Court entered an Order denying the post-trial motions filed by attorneys Travis and Ruhnke. (U)
50. During the trial of Mr. Hammer, numerous government witnesses testified that Mr. Hammer was a manipulative person. (U)
51. During the underlying trial, numerous government witnesses testified to lies and fabrications of Mr. Hammer. (U)
52. During the underlying trial, the government developed through witnesses the fact that Mr. Hammer had engaged in numerous scams both in and out of custody. (U)
53. During the underlying trial, Dr. Robert Sadoff testified that Mr. Hammer suffered from dissociative identity disorder. (U)
54. Mr. Hammer has asserted to the Court and asserted to Dr. Wolfson that his decision to discharge counsel is his personal decision and has not been affected by any of the alter personalities including Jocko. (U)
55. During the court's colloquy with Mr. Hammer on October 1, 1998, Mr. Hammer was highly articulate and coherent.
56. During that colloquy, Mr. Hammer expressed his position and arguments at least as well, if not better, than some attorneys who appear before this court.
57. During that colloquy Mr. Hammer did not evidence any signs of mental incompetence and expressed a strong desire to discharge counsel and proceed pro se.
*525 58. Mr. Hammer also expressed a strong desire to forego an appeal and have the sentence of death carried out expeditiously.
59. Mr. Hammer's explanation as to his desire to discharge counsel and waive his appeal rights is set forth at length in Dr. Wolfson's report. That report states in pertinent part as follows:
While some of the interview time spent with Mr. Hammer during this evaluation was spent discussing issues of his medical history, and he also brought me up to date on some aspects of his case and discussed some case law that he felt was important, the bulk of the time was spent discussing Mr. Hammer's bases for making the various decisions he had made about how he wants his case to proceed from this point. As had been the case in previous discussions, he expressed himself in a sophisticated and insightful fashion. While I am skeptical of my ability to articulate his viewpoint any better than he does, I will summarize some of what he told me.
Mr. Hammer took pains to point out that he was not dissatisfied with his lawyers,
I really and truly believe that I had outstanding legal representation. Everybody worked to try to save my life. I didn't always agree with them, but I wasn't so pig-headed that I didn't listen to them.
He added that both Mr. Travis and Mr. Ruhnke had pointed out to him that there were some legitimate issues to be raised on appeal, and Mr. Hammer agreed, based on his own assessment, that such issues were present, "My decision is made with full knowledge that there might be some relief if I chose to pursue [post-verdict motions or subsequent appeal]." However, he pointed out that the ultimate outcome, should such appeals be successful, would likely simply be another trial, and that, in terms of sentencing, the best that he could hope for would be a sentence of life without parole, "years and years of incarceration," which he would already be serving in any event, based on his three consecutive 400-year Oklahoma sentences. In light of the fact that this was the best gain that could be produced, Mr. Hammer related that he found nothing appealing about the prospect of going through a new trial, "For me, this entire process has been one of the most painful experiences of my entire life," particularly in light of the fact that he personally could find little to fault in the trial he had had already, "No trial is ever perfect. I had a fair trialI had an extremely fair trial." He continued,
If the case is prolonged, it prolongs the pain and suffering for the defendant and for the victim's family. To accept the verdict of the jury it allows me to maintain my dignity and prepare for my own death, on my own terms. The harder one fights to live, the more difficult it becomes to accept death when it comes.
Our discussion revisited points Mr. Hammer had made previously about the difference between living a meaningful existence and "merely existing." He again pointed out that he does not fear death, but that if it would be "a new beginning, it's worth looking forward to, and if not, it's still not a loss." He also mentioned that he had not been able to forgive himself for killing Andrew Marti until he made a public acknowledgment of his responsibility, which took a big load off my mind." He also added that there would be "something comforting about knowing the time, place, and method of my death," and he found it ironic that "no one raised this kind of Cain when the jury sentenced me to 1200 years" [in his previous Oklahoma case].
Mr. Hammer also told me, "It's the law that the sentence get carried out. I owe a debt to Andrew Marti and his family." When he said this, I responded to him that it seemed to me that he was articulating a fundamental respect for the law, which certainly was inconsistent with his attitude when younger, at least as expressed by his actions then. To this, he conceded that his viewpoint about the law had indeed changed, "It's just my nature to break the law. As I mature, I try to rein that in and think before I act." He also related that previous offenses had not been on the scale as the offense conduct in this case, "There's a big difference between writing *526 bogus checks and first degree murder I accepted the responsibility for the killing of Andrew Marti, knowing full well that the repercussions might include paying with my own life." He related that he had taken plenty of time and reflection before deciding this, and that "I have peace with myself, over my decision."
Though Mr. Hammer related that he agreed with the position expressed in one of the law review articles he provided, which analogizes the acquiescence of a condemned prisoner to a terminally ill individual who has come to terms with his own death, and he acknowledged that having some control over his fate was important to him, he also emphasized that that was not the sole reason he adopted his position, "This is not about control ... [though] its a factor to have some control over circumstances." He related that another important factor was that, "given that society is going to have a death penalty, I don't believe the death penalty is a deterrent, but if it is ever going to be a deterrent, it has to be carried out in a prompt manner." He continued on that it would be inconsistent for there to be a death penalty imposed and then not subsequently carry it out, "Why in the fuck prolong it?" In further remarks, Mr. Hammer explained that he would find such conduct hypocritical; he appeared to wish to distance himself from such hypocrisy.
Government Exhibit No. 2, Forensic Report prepared by Dr. Wolfson, pp. 13-14.
60. Mr. Hammer's explanation outlined in Dr. Wolfson's report was reiterated in part by Mr. Hammer during the colloquy.
61. Mr. Hammer during the colloquy also expressed a substantial understanding of the legal issues that could be presented to the Court of Appeals for the Third Circuit if he took an appeal.
62. Mr. Hammer during the colloquy summarized the potential appealable issues as he understood them.
63. Attorneys Travis and Ruhnke supplemented Mr. Hammer's rendition of the appealable issues.
64. The issues outlined by Mr. Hammer without any notes during the colloquy included those raised in the three new trial motions filed by attorneys Travis and Ruhnke that (1) one or more representatives of the United States Marshal's Service provided confidential information to the FBI case agent regarding the identity and location of defense witnesses, (2) the government presented testimony in violation of 18 U.S.C. § 201(c)(2), and (3) there was an inadequate factual basis for his guilty plea.[6]
65. The issues discussed during the colloquy also included challenges to the court's charge to the jury. Specifically, Mr. Hammer noted during the colloquy that he had requested that the jury be instructed that if the jury was unable to reach a unanimous verdict the court would automatically impose a life sentence and that the court denied that request. Attorney Ruhnke also noted during the colloquy that the court denied a request that the jury be instructed that in order to recommend a sentence of death the jury was obliged to find beyond a reasonable doubt that the aggravating circumstances outweighed the mitigating circumstances.
66. Mr. Hammer during the colloquy also noted that there was a potential appealable issue relating to our allowance of testimony from David Walter relating to Mr. Hammer's future dangerousness.[7]
67. During the colloquy Attorney Ruhnke also supplemented the issues by stating that *527 there was a potential appealable issue relating to the court's interruption of his closing argument on two occasions.
68. During the colloquy Mr. Hammer was also made aware of potential appealable issues relating to the disposition of pretrial motions[8] and the selection of the jury.[9]
69. Mr. Hammer has previously represented himself in both state and federal court.
70. Mr. Hammer has assisted other inmates with federal appeals.
71. Mr. Hammer has the ability to read and understand the Federal Rules of Appellate Procedure.
72. Mr. Hammer does not suffer from a mental disease or defect which prevents him from understanding the nature and consequences of the proceedings against him or participating in his own defense.
73. Mr. Hammer has the ability to understand the nature and consequences of the proceedings against him and to participate in his own defense.
74. Mr. Hammer's decision to discharge counsel and proceed pro se and his revocable decision to decline to file an appeal within the statutory period are made knowingly, intelligently and voluntarily.
III. Discussion.
Mr. Hammer has the right to self-representation so long as he is competent and his decision to waive counsel and proceed pro se is made knowingly, intelligently and voluntarily. Godinez v. Moran, 509 U.S. 389, 396-402, 113 S.Ct. 2680, 125 L.Ed.2d 321 (1993); Faretta v. California, 422 U.S. 806, 819-21, 95 S.Ct. 2525, 45 L.Ed.2d 562 (1975). The Supreme Court noted in Godinez that "[t]he focus of the competency inquiry is the defendant's mental capacity; the question is whether he has the ability to understand the proceedings." 509 U.S. at 401 n. 12, 113 S.Ct. 2680. A defendant is competent to waive counsel if he has the capacity to understand the nature and object of the proceedings against him. We are satisfied based on the testimony of Drs. Wolfson and Mitchell, our colloquy with Mr. Hammer on October 1, 1998, and our observations of him during the trial and that colloquy that Mr. Hammer is competent to discharge counsel, proceed pro se and decline to file an appeal within the statutory period.
A finding that Mr. Hammer is competent is not, however, the end of the inquiry. Mr. Hammer's decision to waive counsel, proceed pro se, and whether or not to appeal must be made knowingly, intelligently and voluntarily. The "knowingly and intelligently" aspect of the waiver of counsel only requires that the defendant "be made aware of the dangers and disadvantages of self-representation, so that the record will establish that `he knows what he is doing and his choice is made with eyes open.'" Faretta, 422 U.S. at 835, 95 S.Ct. 2525 (1975) (citation omitted). "Knowingly and intelligently" should not be confused with "wise." As one court has noted
The Constitution is a seamless web of rights and liberties not conferred but guaranteed against the intrusive, offensive, and sometimes paternalistic presence of Big Government. When a criminal defendant elects to stand at the Bar in his own defense, and he does so knowingly, voluntarily, and unequivocally, the court is bound by the Constitution to honor that *528 election, however suicidal it may appear to be.
Johnstone v. Kelly, 633 F.Supp. 1245, 1248 (S.D.N.Y.1986)(Brieant, J.), rev'd on other grounds, 808 F.2d 214 (2d Cir.1986),[10] cert. denied, 482 U.S. 928, 107 S.Ct. 3212, 96 L.Ed.2d 699 (1987). In order for a defendant's waiver of counsel to be voluntary, it must be uncoerced. Godinez, 509 U.S. at 401 n. 12, 113 S.Ct. 2680. A defendant should unequivocally request self-representation, rather than claim such a course of conduct has been thrust upon him involuntarily by whatever circumstances. See United States v. Goldberg, 67 F.3d 1092, 1099-1100 (3d Cir.1995).
Mr. Hammer has requested that counsel be discharged and he be permitted to proceed pro se and decide on his own whether to appeal. His request is unequivocal and made knowingly, intelligently and voluntarily. We will, therefore, discharge attorneys Travis, Ruhnke and Smith as counsel of record for Mr. Hammer. However, attorneys Smith and Ruhnke will be appointed standby counsel.[11]
IV. Conclusions of Law.
1. The court finds by clear and convincing evidence that Mr. Hammer is competent to discharge attorneys Travis and Ruhnke as his legal representatives, proceed pro se and decide on his own whether to appeal.
2. The court finds by clear and convincing evidence that Mr. Hammer's request to discharge counsel, proceed pro se and decide on his own whether to appeal is made knowingly, intelligently and voluntarily and not as the result of coercion or duress.
V. Jury Instructions.
We will now address certain issues raised during the trial. At the conclusion of the evidence in the penalty phase of the trial, counsel for Mr. Hammer requested that the jury be instructed on the consequences of a non-unanimous verdict. Specifically, counsel requested that the jury be instructed that if they were unable to reach a unanimous verdict we would automatically impose a sentence of life in prison. Counsel also requested that the jury be instructed that in order for the jury to recommend a sentence of death the jury had to find beyond a reasonable doubt that the aggravating factors outweighed the mitigating factors. We denied both requests.
With regard to Mr. Hammer's proposed jury instruction relating to the failure of the jury to reach a unanimous verdict, we will first note that 18 U.S.C. § 3593(e) provides in relevant part that "[b]ased upon this consideration [i.e., weighing of the aggravating and mitigating factors or consideration of the aggravating factors standing alone if there are no mitigating factors found to exist], the jury by a unanimous vote ... shall recommend whether the defendant shall be sentenced to death, to life imprisonment without possibility of release or some other lesser sentence." (Emphasis added.) The prior death penalty statute, 18 U.S.C. § 848(k) was not phrased in such an unequivocal fashion. The former statute provides in relevant part "based upon this consideration, the jury by a unanimous vote ... shall recommend that a sentence of death be imposed rather than a sentence of life imprisonment without the possibility of release or some other lesser sentence." (Emphasis added.)
Our denial of Mr. Hammer's proposed jury instruction relating to lack of unanimity was based primarily on the opinion of the Court of Appeals for the Fifth Circuit in United States v. Jones, 132 F.3d 232 (5th Cir.1998). Louis Jones was convicted in the United States District Court for the Northern District of Texas of kidnapping with death resulting and was sentenced to death. At the *529 end of the penalty phase, Jones requested that the district court instruct the jury that failure to reach a unanimous verdict recommending a sentence of death would result in an automatic life sentence without the possibility of release. Specifically, Jones proposed the following two jury instructions apparently in the alternative:
(1) In the event, after due deliberation and reflection, the jury is unable to agree on a unanimous decision as to the sentence to be imposed, you should so advise me and I will impose a sentence of life imprisonment without possibility of release.
(2) If, after fair and impartial consideration of all the evidence in this case, any one of you is not persuaded that justice demands Mr. Jones's execution, then the jury must return a decision against capital punishment and must fix Mr. Jones's punishment at life in prison without the possibility of release.
Jones, 132 F.3d at 242 n. 8. The district court denied both requests. The Court of Appeal for Fifth Circuit affirmed the death sentence.
With regard to the refusal of the district court to give Jones's proposed jury instructions, the Court of Appeals for the Fifth Circuit stated:
The actual jury instruction given by the district court repeated the sentencing options available under the [Federal Death Penalty Act]. The instructions traced 18 U.S.C. § 3593(e) by informing the jury that it could recommend death, life without the possibility of release, or some lesser sentence. The defendant, however, contends that the jury should have been instructed that a failure to reach a unanimous verdict recommending the death penalty would result in the court automatically imposing a sentence of life without the possibility of release. The defendant's proposed instructions were not substantively correct because the proposed instructions informed the jury that the failure to return a unanimous verdict would result in an automatic sentence of life without the possibility of release. Such is not the case under § 3593, which requires unanimity for every sentence rendered by the jury regardless whether the verdict is death, life without the possibility of release, or, if possible under the substantive criminal statute, any other lesser sentence. Life without the possibility of release was not the default penalty in the event of non-unanimity. On the contrary, the failure to reach a unanimous decision regarding sentencing would result in a hung jury with no verdict rendered.
132 F.3d at 242-43.
We find further support for our rejection of Mr. Hammer's proposed instruction in the case of United States v. Chandler, 996 F.2d 1073 (11th Cir.1993). The Court of Appeals for the 11th Circuit in Chandler interpreted 21 U.S.C. § 848(e), the 1988 death penalty statute enacted by Congress to deal with murders occurring in the setting of a large-scale drug operation to require a district court to impose a life sentence in the event of a non-unanimous jury. However, the Court of Appeals held that "the district court is not required to instruct the jury on the consequences of the jury's inability to reach a unanimous verdict." 996 F.2d at 1089. The Court of Appeals further observed that "[o]ur holding is further supported by the general interest the criminal justice system has in unanimous verdicts. Asking the jury to return a unanimous verdict forces jurors to examine their views on the case and engage in discussions and deliberations as they attempt to resolve their differences." Id.
Our rejection of Mr. Hammer's jury instruction relating to the consequence of the jury failing to reach a unanimous verdict is further supported by the case of Green v. French, 143 F.3d 865 (4th Cir.1998). In that case a habeas corpus petitioner asserted that the lack of an instruction to the jury on the consequences of a deadlock could produce coercion. The Court of Appeals for the Fourth Circuit rejected that argument and held that "a court may reasonably refuse to instruct a capital sentencing jury as to the consequences of deadlock in order to promote jury deliberation." Id. at 890.
Although our research has revealed that some state courts Delaware, New Jersey *530 and Louisiana[12]require an instruction similar to that requested by Mr. Hammer, other state courtsNorth Carolina, Florida and Alabama[13]do not require such an instruction. However, state law is not controlling. This is federal death penalty case. We are still of the opinion that the plain wording of the statute and the Jones, Chandler and Green cases strongly support our denial of Hammer's proposed jury instruction relating to the consequences of the jury failing to reach a unanimous verdict.
We will now explain why we denied Mr. Hammer's request that the jury be instructed that in order for the jury to recommend a sentence of death the jury had to find beyond a reasonable doubt that the aggravating factors outweighed the mitigating factors. The United States Supreme Court in Zant v. Stephens, 462 U.S. 862, 875, 103 S.Ct. 2733, 77 L.Ed.2d 235 (1983) noted that in Gregg v. Georgia, 428 U.S. 153, 96 S.Ct. 2909, 49 L.Ed.2d 859 (1976) the Court approved a "capital sentencing statute even though it clearly did not channel the jury's discretion by enunciating specific standards to guide the jury's consideration of aggravating and mitigating circumstances." In footnote 13 of the Zant opinion the Court stated that "specific standards for balancing aggravating against mitigating circumstances are not constitutionally required." In Franklin v. Lynaugh, 487 U.S. 164, 179, 108 S.Ct. 2320, 101 L.Ed.2d 155 (1988) the Court again noted that "we have never held that a specific method of balancing mitigating and aggravating factors in a capital sentencing proceeding is constitutionally required." As recently as 1994, the Court held that a "capital sentencer need not be instructed how to weigh any particular fact in the capital sentencing decision." Tuilaepa v. California, 512 U.S. 967, 979, 114 S.Ct. 2630, 129 L.Ed.2d 750 (1994).
Several Courts of Appeals have considered whether the reasonable doubt standard should be engrained on the weighing process of a capital sentencing scheme. The Court of Appeals for the Ninth Circuit rejected a contention that "the state must prove beyond a reasonable doubt that the death penalty is appropriate." Harris v. Pulley, 692 F.2d 1189, 1194 (9th Cir.1982). The Court of Appeals further stated in Harris:
The United States Supreme Court has never stated that a beyond-a-reasonable-doubt standard is required when determining whether a death penalty should be imposed.... Moreover, we are not aware of any instance where a state must carry such a burden of proof when attempting to convince a sentencing authority of the appropriate criminal sentence. If the Supreme Court had intended for the burden in death-penalty cases to vary from the standard burden in all other criminal sentencing, it would have said so in one of the many modern cases dealing with the death penalty.
692 F.2d at 1195. The Harris decision was overturned by the Supreme Court on other grounds. Pulley v. Harris, 465 U.S. 37, 43, 104 S.Ct. 871, 79 L.Ed.2d 29 (1984). In reversing Harris the Supreme Court noted, without disapproving of, the Court of Appeals' holding that the reasonable doubt standard is not constitutionally required to be engrained on the weighing or balancing process of a capital sentencing scheme. 465 U.S. at 41 n. 4, 104 S.Ct. 871, 79 L.Ed.2d 29.; see also Gerlaugh v. Lewis, 898 F.Supp. 1388, 1421 (D.Ariz.1995)(state is not constitutionally required to prove, or sentencing court to find, that aggravating factors outweigh mitigating factors by proof beyond a reasonable doubt), aff'd. 129 F.3d 1027 (9th Cir.1997); Bonin v. Vasquez, 807 F.Supp. 589, 620-21 (C.D.Cal.1992)(Constitution does not require jury in penalty phase of capital case to find that aggravating factors outweigh mitigating factors beyond a reasonable doubt), aff'd. 59 F.3d 815 (9th Cir.1995).
The Court of Appeals for the 11th Circuit has also rejected the claim that the reasonable *531 doubt standard should be engrained on the weighing process. Ford v. Strickland, 696 F.2d 804 (11th Cir.1983). That Court stated that the petitioner's argument "confuses proof of facts and the weighing of facts in sentencing." 696 F.2d at 818. The Court further explained:
While the existence of an aggravating or mitigating circumstance is a fact susceptible to proof under a reasonable doubt or preponderance standard, the relative weight is not. The process of weighing circumstances is a matter for judge and jury, and unlike facts, is not susceptible to proof by either party. Petitioner's contrary suggestion is based on a misunderstanding of the weighing process, the statute and the guiding and channeling function identified in Proffitt v. Florida, 428 U.S. at 258, 96 S.Ct. at 2969. Indeed, it appears no case has applied In re Winship in the manner Ford urges. The North Carolina and Utah cases cited by him which imposed a reasonable doubt standard in this situation turned on construction of state statutes rather than the due process rationale of In re Winship.
Id. The Court of Appeals for the 11th Circuit again addressed the issue in United States v. Chandler, supra. The Court of Appeal stated:
That the jury need only be instructed that the aggravating factors sufficiently outweigh the mitigating factors is entirely appropriate. A capital sentencing scheme is constitutional even if it does not require that a specific burden of proof govern the jury's weighing process.
996 F.2d at 1091. As previously noted Chandler involved the 1988 death penalty statute enacted by Congress to deal with murders occurring in the setting of a large-scale drug operation.
The Court of Appeals for the 10th Circuit has also addressed the issue. Andrews v. Shulsen, 802 F.2d 1256 (10th Cir.1986). In Andrews the Court held that "sentencing authorities may determine a defendant's fate without regard for burdens of proof or other measures of certainty." Id. at 1264. In a well-known case tried in the 10th Circuit, United States v. McVeigh, 96-CR-68-M (D.Colo.), the defendant, Timothy James McVeigh, requested a jury instruction similar to that requested by Mr, Hammer. McVeigh requested that the jury be instructed that "[o]nly if you are unanimously persuaded beyond a reasonable doubt that the aggravating factors so outweigh the mitigating factors that justice cannot be done by any sentence less than death can you return a decision in favor of capital punishment." Brief of the United States Regarding Weighing Process and Mitigating Factors filed in the McVeigh case, 1997 WL 312093 (D.Colo. Doc.). Judge Richard P. Match did not so instruct the jury. Official Trial Transcript, Closing Arguments and Jury Instructions in the McVeigh case, 1997 WL 312609 (D.Colo. Trans.).
Finally, the language of the death penalty statute, 18 U.S.C. § 3593(e), itself gives no indication that a reasonable doubt standard is required. The language of the statute instructs that the capital sentencer need only find that the aggravating factors "sufficiently outweigh" all the mitigating factors. Congress clearly identified the standard to be used in the weighing process, and by so doing excluded other standards, specifically the reasonable doubt standard. This conclusion is further supported by Congress specifically setting forth the reasonable doubt standard in other parts of the statute, e.g., a jury cannot find that an aggravating factor exists unless the jury is convinced beyond a reasonable doubt that the aggravating factor is present. When Congress intended the reasonable doubt standard to be applicable it so specified. See 18 U.S.C. §§ 3591(a)(2) and 3593(c).
VI. Court's Interruption of Defense Counsel's Closing Argument
The government and the defense were each allotted by the court a total of 4½ hours for closing argument. The government's closing was split 3½ hours for initial argument and 1 hour for rebuttal. On July 21, 1998, at 10:00 a.m. the court charged the jury regarding the legal principles which apply to the case. At the conclusion of the charge the government commenced its initial closing argument which was completed at approximately 4:20 p.m. At that time attorney *532 Ruhnke requested that he have five minutes with the jury "so Mr. Martin is not the only one to have spoken to them today ...." The court permitted attorney Ruhnke to commence his closing argument. What transpired after Mr. Ruhnke commenced his closing argument is as follows:
MR. RUHNKE: I will only take five minutes of your time today, but I wanted to talk to you before you leave for the night, because you've just heard a representative of your government, my government, spend the better part of a day advocating for the death of a human being. I mean that is what this is about, and that is what you have heard today.
You've heard a representative of your government take the boundaries of responsible advocacy, that is argument
THE COURT REPORTER: I'm sorry, could you speak up.
THE COURT: Yeah, I couldn't hear the last phrase either.
MR. RUHNKE: To take the boundaries of responsible advocacy and stretch them to their absolute limit in order to try to convince you to sentence another human being to death.
THE COURT: May I see counsel?
(Whereupon, the following occurred at sidebar between the Court and counsel.)
THE COURT: I think that is grossly improper argument. I have never heard anything like it before.
MR. RUHNKE: I didn't say exceeded the limits, Your Honor, I said stretched the limits to the outer boundaries
THE COURT: I said I think it's extremely bad and we're going to give you four more minutes but I don't want to hear any more like that.
MR. RUHNKE: I think it's fair comment.
THE COURT: I am directing you to go forward. If you don't, we're going to send this jury home.
(Whereupon, the discussion held at sidebar between the Court and counsel concluded.)
MR RUHNKE: When a jury hears the kinds of arguments that it's heard today, it's possible to begin to hate another human being, it's possible to begin to hate Mr. Hammer.
THE COURT: May I see counsel?
(Whereupon, the following occurred at sidebar between the Court and counsel.)
THE COURT: Now, we are not going to permit this kind of argument in this Court. I never heard anything like it. I am going to send this jury home and I don't want any more of it tomorrow. And if I hear more of it tomorrow I'm going to cut you off.
Do you understand that?
MR. RUHNKE: Your Honor, I understand you very well.
THE COURT: All right, that's the end of it. Take your seat.
(Whereupon, the discussion held at sidebar between the Court and counsel was concluded.)
After the conference at sidebar was concluded, the jury was given certain instructions, including an instruction not to discuss the case, and excused for the day. Attorney Ruhnke then requested that the court grant a mistrial because of the interruption of his closing. The request was denied.
The court's comments in the instant case were conveyed to attorney Ruhnke out of the hearing of the jury. The court interrupted attorney Ruhnke to limit him to remarks that could fairly be considered supported by the evidence. At no point during the government's closing was it suggested by government counsel that the jurors should be governed by hate or that they should hate Mr. Hammer. On July 21, 1998, when we interrupted attorney Ruhnke's closing argument we were of the opinion that he was attempting to prejudice the jury by a claim of an overreaching prosecution. The closing by government counsel was entirely proper and in no way even approached taking the boundaries of responsible advocacy and stretching them to their absolute limit. Attorney Ruhnke was contending that the government went beyond the boundaries of proper argument. The boundaries of proper argument are set and cannot be stretched. An attorney either remains within the boundaries of proper argument or goes outside of *533 them. The statements of attorney Ruhnke were not proper comment on the evidence presented during the trial. Furthermore, they were in the view of the undersigned an inappropriate attack on opposing counsel.
On July 22, 1998, attorney Ruhnke commenced his closing argument at 10:00 a.m. Attorney Travis concluded the closing argument for the defense at approximately 10:20 a.m. on July 23, 1998, at which time the government presented rebuttal argument.
On July 23, 1998, it was brought to the court's attention that the jury may have overheard what was said at sidebar on that day. The secrecy of sidebar conferences in this court is always preserved by a noisemaker activated by the court reporter. The court inquired of the jury if they had overheard anything that was discussed at sidebar that day, on July 22 or on July 21, 1998.[14] None of the jurors answered in the affirmative.
Statements made during closing argument must be supported by the record and a trial judge has broad discretion to control the scope and content of closing argument. United States v. Pool, 660 F.2d 547, 561 (5th Cir.1981). If comments are made by counsel during closing argument that are not supported by the record, the trial judge is permitted to interrupt counsel. Id.; see also United States v. Jimenez-Diaz, 659 F.2d 562, 569 (5th Cir.1981)("When counsel voiced his personal opinion about agent's conduct, the court simply cautioned him, quite appropriately, to confine his argument to conclusions he wished the jury to draw from the evidence."). Only in rare circumstances will the court's interruptions of a defense counsel's closing argument call for a new trial. See United States v. Moreno-Pulido, 695 F.2d 1141, 1146 (9th Cir.1983); see also United States v. Busic, 592 F.2d 13, 28-29 (2d 1978)(even where the court interrupted the closing argument of defense counsel 44 times a new trial was not granted).
The Court of Appeals for the Ninth Circuit has held that a new trial is only warranted when the record reveals actual bias on the part of the trial judge or an appearance of advocacy or partiality is projected to the jury. United States v. Mostella, 802 F.2d 358, 361 (9th Cir.1986). Likewise, the Court of Appeals for the Seventh Circuit stated "that to warrant reversal because of a trial judge's comments during defense counsel's closing argument, `it must appear that the conduct [of the trial judge] measured by the facts of the case presented together with the result of the trial, was clearly prejudicial to the rights of the party.'" United States v. Briggs, 700 F.2d 408, 414 (7th Cir.1983)(quoting United States v. Eldred, 588 F.2d 746, 750 (9th Cir.1978)). The Court of Appeals for the Seventh Circuit further observed that a judge has the right and often the obligation to interrupt closing argument in order to insure a fair trial. Briggs, 700 F.2d at 414. That is exactly what was done here.
In the Briggs case defense counsel made a statement "that it was a `crime' that [his client the codefendant to Briggs] should be charged with the offenses in the indictment." Id at 415. The Court of Appeals observed that that statement "if not actually going beyond the range of proper argument, it certainly borders on the same." Id. The Court of Appeals than held that "[i]n the trial of a lawsuit where defense counsel makes improper suggestions to the jury and his statements go beyond the range of what a judge determines is proper ... it is well within the discretion of the trial judge to advise and caution defense counsel during the argument, as to the appropriateness of his remarks." Id. at 415. The Court of Appeals further held that "even if it had been error for the trial judge to interrupt ... counsel during closing argument ... before *534 conduct of the trial judge rises to the level of reversible error, the defendant must demonstrate that the judge's conduct was prejudicial and substantially interfered with the defendant's rights." Id.
As noted, our remarks to attorney Ruhnke were made out of the hearing of the jury. Furthermore, defense counsel were given 4 ½ hours for closing argument. The court did not interrupt that 4½ hours other than for needed recesses for the jury. Moreover, at the conclusion of closing argument and before the jury was sent out to deliberate, the court instructed the jury as follows:
Before you retire to the jury room to deliberate, I want to reemphasize a few final cautionary instructions in this extremely serious case. You are to perform your duty as jurors without bias or prejudice as to either party. The law does not permit jurors to be governed by fear, favor, emotion, prejudice, or public opinion. Mr. Hammer, the government and the public expect that you will carefully and impartially consider all the evidence in the case, follow the law as stated by the court and reach a true and just decision.
Anything that I may have said or done during the trial should not be taken as an indication that I have an opinion regarding how you should answer or complete the Special Findings form. That is your sole and exclusive responsibility. I in fact have no such opinion. I have carefully refrained from forming any such opinion. You are to follow scrupulously the court's instructions which were read to you. You will each have a copy of the instructions in typewritten form during your deliberations.
In order that your findings are complete and consistent with each other, it is extremely important with respect to any question on the Special Findings form that you carefully follow the instructions relating to that question.
Consequently, we are satisfied that the court's two interruptions of attorney Ruhnke's closing argument on July 21, 1998, were completely proper and totally irrelevant to the outcome of the case. The denial of the motion for a mistrial based on the court's interruption of Mr. Ruhnke's closing was justified. The motion was completely devoid of merit.
APPENDIX A
IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
UNITED STATES OF AMERICA
v.
DAVID PAUL HAMMER
No. 4:CR-96-239
(Judge Muir)
ORDER
September 15, 1998.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
On July 24, 1998, a jury recommended that David Paul Hammer be sentenced to death. On August 3, 1998, Hammer filed three motions for a new trial. The motions are fully briefed and ripe for disposition.
Fed.R.Crim.P. 33 states in pertinent part: "The court on motion of a defendant may grant a new trial to that defendant if required in the interest of justice." A defendant bears the burden of persuading the trial court that the interest of justice requires the grant of a new trial. United States v. Geders, 625 F.2d 31, 33 (5th Cir.1980). The decision to grant or deny a motion for a new trial lies within the discretion of the trial court. United States v. Anderson, 76 F.3d 685 (6th Cir.1996).
In the first motion Hammer claims that one or more representatives of the United States Marshal's Service provided confidential information to the FBI case agent regarding the identity and location of defense witnesses. Defense counsel filed ex parte and under seal applications for writs of habeas corpus ad testificandum. Defense counsel also provided the court with proposed writs of habeas corpus ad testificandum (Docs. 376 through 385). The court signed those proposed writs and the Clerk's Office delivered them to the United States Marshal's Service. *535 Those writs did not state that the writs were filed under seal or instruct the United States Deputy Marshals to keep the contents of the writs confidential. The Clerk's Office only delivered copies of the writs to the United States Marshal's Service and did not provide the United States Marshal's Service with copies of the applications for the writs. Consequently, there is no basis for a claim that any Deputy United States Marshals violated a requirement that the contents of the writs be kept confidential. Moreover, assuming that the Deputy United States Marshals had notice of their obligation to keep the contents of the writs confidential, the remedy is not the grant of new trial because there has been no showing of prejudice resulting from any alleged disclosure. Cf. United States v. Starusko, 729 F.2d 256, 264 (3d Cir.1984). A new trial is not required in the interest of justice based on Hammer's claim that one or more representatives of the United States Marshal's Service provided confidential information to the FBI case agent regarding the identity and location of defense witnesses.
In the second motion for a new trial Hammer claims that the prosecution presented testimony in violation of 18 U.S.C. § 201(c)(2). That provision provides that
(c) Whoever
* * * * * *
(2) directly or indirectly, gives, offers or promises anything of value to any person, for or because of the testimony under oath or affirmation given or to be given or to be given by such person as a witness upon a trial, hearing, or other proceeding, before any court, any committee of either House or both Houses of Congress, or any agency, commission, or officer authorized by the laws of the United States to hear evidence or take testimony, or for or because of such person's absence therefrom;
* * * * * *
shall be fined under this title or imprisoned for not more than two years, or both.
During the guilt phase of the trial, the government called as witnesses two federal inmates, Steven Classen and Leonard Yager. Hammer contends that the government by making certain promises to inmates Classen and Yager in exchange for their testimony provided unlawful gratuities to them in violation of § 201(c)(2). The prosecution does not dispute the essential factual basis surrounding Hammer's claim. Both inmates testified with the understanding that their cooperation could result in transfers to safer and lower security prisons as well as reduction in their sentences, if found to be appropriate by the United States Attorney's Office which prosecuted them and their sentencing judges.
Hammer relies on a recent opinion issued by the Court of Appeals for the Tenth Circuit. See United States v. Singleton, 144 F.3d 1343 (10th Cir.1998). However, that opinion was vacated and rehearing en banc was ordered by the Court of Appeals. Furthermore, the opinion has been criticized and disapproved of by several district courts. See, e.g., United States v. Arana, 18 F.Supp.2d 715, 1998 WL 420673 (E.D.Mich. 1998).
The Singleton panel's conclusion that prosecutors commit a federal criminal offense when they engage in the common practice of offering lenity for a witness' truthful testimony was an extreme and radical departure from history, practice, and established law. Not only did the panel make a criminal out of nearly every federal prosecutor and accomplices out of district judges it suppresses highly relevant evidence and cripples enforcement of federal criminal law. Congress did not intend that result. In 1962 when revising § 201 into its current form, Congress made bribing a witness a separate offense, but gave no indication it intended to include under the new gratuity statute prosecutors who engage in the then common practice of offering leniency to cooperating witnesses. Instead, the legislative history of this revision states it "would make no significant changes of substance." S.Rep. No. 2213, 87th Cong., 2d Sess. (1962), reprinted in 1962 U.S.C.C.A.N. 3852, 3853.
In the matter of United States v. Birchfield, et al., 4:CR-97-0195, Judge McClure of this court on August 11, 1998, denied a similar motion, relying on the reasoning of Judge Rosen of the United States District Court for the Eastern District of Michigan in his opinion *536 in United States v. Arana. Judge Rosen sets forth a thorough analysis and concludes that the three judge panel of the Court of Appeals for the Tenth Circuit in Singleton made an erroneous decision. We concur with the reasoning and analysis of Judge Rosen. See also United States v. Reid, 19 F.Supp.2d 534, 537, 1998 WL 481459 (E.D.Va.1998)(Spencer, J)("This court holds that a reading of Section 201(c)(2) that includes government attorneys would work `obvious absurdity' and, ... `the general words of a statute do not include the government or affect its rights unless the construction be clear and indisputable upon the text of the act.'"); United States v. Guillaume, 13 F.Supp.2d 1331, 1333, 1998 WL 462199 (S.D.Fla.1998)(Moreno, J.)("The recommendation of leniency in exchange for testimony is a recognized and established activity of federal prosecutors in the investigation and prosecution of criminal activity."); United States v. Barbaro, 1998 WL 556152 (S.D.N.Y., Sept.1, 1998)(Keenan, J.)("The concept of affording cooperating accomplices leniency dates back to the common law of England and has been recognized and approved by the United States Congress, the United States Courts and the United States Sentencing Commission."); United States v. Eisenhardt, 10 F.Supp.2d 521, 1998 WL 436356 (D.Md.,1998)(Smalkin, J.)("The Court, first, notes that the panel opinion in Singleton has been vacated. Thus, it is no longer of any authoritative weight at all. Furthermore, it never was, in my judgment, persuasive authority. Before it was vacated, the undersigned read that opinion, and ... concluded that it was amazingly unsound, not to mention nonsensical, ... The chances of either or both the Fourth Circuit and the Supreme Court reaching the same conclusion as the Singleton panel are, in this Court's judgment, about the same as discovering that the entire roster of the Baltimore Orioles consists of cleverly disguised leprechauns."). The motion for a new trial based on the Singleton opinion is devoid of merit and will be denied.
In the third motion for a new trial, Hammer claims that there was an inadequate factual basis for his guilty plea. This claim is devoid of any merit whatsoever. On June 22, 1998, we engaged in an extensive and thorough colloquy with Hammer. Hammer admitted twice that he had committed the act as charged in the remaining count of the indictment. He agreed substantially with the prosecution's view of the evidence. In addition, when asked whether he acknowledged his guilt "of the crime charged in the remaining count of th[e] indictment," Hammer responded, "Yes, sir, I do." There were two different sources of information available to the court at the time of the entry of Hammer's guilty plea. This information included the approximately three weeks of testimony which began on June 2, 1998. Indeed, the prosecutor alluded to that fact by stated that "since the Court has heard the evidence over the past several weeks, I'll give a thumbnail rendition of that evidence." We also heard Hammer admit that he was guilty of the offense after being advised of all of the elements of the offense. Thus, whether one relies upon the evidence presented to the court prior to June 22, 1998 and during the guilty plea colloquy, or reviews exclusively Hammer's statements on June 22, 1998, the result is the same. That is, there exists a factual basis for the guilty plea. Finally, at the conclusion of the guilty plea colloquy we stated as follows:
I find the defendant is acting voluntarily and not as a result of force or threats or promises. Secondly, that he fully understands his rights, fully understands the consequences of his plea of guilty, voluntarily waives his right to a trial on the guilt phase, and is in fact guilty.
We further found that the plea was "knowledgeable, voluntary and has a basis [in] fact which contains all the elements of the crime charged ...." Hammer's third new trial motion will be denied.
NOW, THEREFORE, IT IS ORDERED THAT:
1. Hammer's motion for a new trial based on a claim that one or more representatives of the United States Marshal's Service provided confidential information to the FBI case agent regarding the identity and location of defense witnesses (Doc. 579) is denied.
*537 2. Hammer's motion for a new trial based on the claim that testimony was presented in violation of 18 U.S.C. § 201(c)(2) (Doc. 582) is denied.
3. Hammer's motion for a new trial based on the claim that there was an inadequate factual basis for Hammer's guilty plea (Doc. 580) is denied.
APPENDIX B
AMENDED ORDER
July 23, 1998.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
On June 29, 1998, Hammer filed a document entitled "Request by Counsel to Confer with the Court and Government Counsel Prior to Commencement of Penalty Phase." In that document Hammer, inter alia, claims that our order of September 30, 1997, precluded the testimony of David Walter. On June 30, 1998, we orally denied Hammer's request to exclude the testimony of Mr. Walter. Although our order of September 30, 1997, struck from the notice what was referred to as "additional, uncharged" or "other serious acts of violence" it did not strike from the notice or preclude the government from using evidence of Hammer's alleged lack of remorse or boastful statements to the extent that the evidence is indicative of future dangerousness. The order of September 30, 1997, at page 6 specifically stated "[w]e will ... deny Hammer's motion to strike the portions of the notice referring to his lack of remorse and boastful statements." The portion of the notice referring to Hammer's statement that "if he had known his victim lived, he would have reloaded his weapon and fired it six more times" was not stricken from the notice. That was a boastful statement indicative of future dangerousness. The purpose of this order is to reduce to writing our oral order denying Hammer's request to exclude the testimony of Mr. Walter.
Defense counsel on July 1, 1998, stated that we had authorized an amendment to the government's notice by our order from the bench of June 30, 1998. Such is not the case. The oral order contained no authorization for the government to amend its notice. No amendment was required.
NOW, THEREFORE, IT IS HEREBY ORDERED THAT:
Hammer's motion to exclude the testimony of Mr. Walter is denied.
APPENDIX C
ORDER
September 18, 1997.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
On September 18, 1996, a Grand Jury sitting in Williamsport, Pennsylvania returned an indictment charging Defendant David Paul Hammer with first degree murder. On April 9, 1997, the government filed a notice of its intent to seek the death penalty in this case. This case is on the January, 1998, trial list. On August 1, 1997, Hammer filed twelve pretrial motions. Those motions are fully briefed and are ripe for disposition.
This order addresses Motion No. 1 filed on August 1, 1997, in which Hammer requests that we declare the Federal Death Penalty Act of 1994 unconstitutional. Hammer argues that the death penalty is cruel and unusual punishment and inherently racist, results in executing the innocent, vests prosecutors with undue discretion, and will be repudiated by the public in the future. The United States Supreme Court has considered and rejected all of these arguments. See, e.g., McCleskey v. Kemp, 481 U.S. 279, 296-97, 300-01, 306-07, 307 n. 28, 107 S.Ct. 1756, 95 L.Ed.2d 262 (1987); Gregg v. Georgia, 428 U.S. 153, 177-78, 96 S.Ct. 2909, 49 L.Ed.2d 859 (1976)(opinion of Stewart, Powell, and Stevens,JJ.)(citing two centuries of precedent recognizing that capital punishment is not invalid per se).
Hammer's citation to the farewell dissenting opinion of Justice Blackmun in Callins v. Collins, 510 U.S. 1141, 114 S.Ct. 1127, 1128, 127 L.Ed.2d 435 (1994) and the dissenting opinion of Judge Lewis, joined by Judges Mansmann and McKee, in Flamer v. Delaware, 68 F.3d 736, 764-76 (3d Cir.1995) provides *538 no basis for this court to find that the federal death penalty is unconstitutional. Relying on controlling Supreme Court precedent, including McCleskey v. Kemp and Gregg v. Georgia, we will reject the challenge.
ACCORDINGLY, IT IS HEREBY ORDERED THAT:
Hammer's Motion to Declare the Federal Death Penalty Act of 1994 Unconstitutional (Motion No. 1 filed August 1, 1997, Doc. 148) is denied.
ORDER # 1 of
September 19, 1997.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
On September 18, 1996, a Grand Jury sitting in Williamsport, Pennsylvania returned an indictment charging Defendant David Paul Hammer with first degree murder. On April 9, 1997, the government filed a notice of its intent to seek the death penalty in this case. This case is on the January, 1998, trial list. On August 1, 1997, Hammer filed twelve pretrial motions. Those motions are fully briefed and are ripe for disposition.
This order addresses Motion No. 2 filed on August 1, 1997, in which Hammer requests that we dismiss the government's notice of its intent to seek the death penalty on the ground that the "intent" factors do not constitutionally narrow the class of offenders exposed to the death penalty.
The Supreme Court considered and rejected virtually the same argument in Lowenfield v. Phelps, 484 U.S. 231, 233-34, 241-46, 108 S.Ct. 546, 98 L.Ed.2d 568 (1988), where the only aggravating factor found by the jury on sentencing was identical to the intent element of the capital offense of which the defendant was convicted. The Supreme Court concluded that the crime, as defined by the legislature, genuinely narrowed the class of defendants eligible for the death penalty at the guilt phase, and thus, the court held that duplication of the intent elements at the penalty phase did not violate the Constitution. Id. In this case 18 U.S.C. § 3592, the provision setting forth the aggravating and mitigating factors to be considered by the jury at the penalty phase, genuinely narrows the class of defendants eligible for the death penalty. We will, therefore, deny Hammer's Motion No. 2 filed on August 1, 1997.
There are two other issues presented by Hammer's Motion No. 2. Although neither issue affects the validity of the government's notice of intent to seek the death penalty, the issues will be addressed. First, Hammer argues that the government must prior to trial elect between the intent elements set forth in 18 U.S.C. § 3591(a)(2). 18 U.S.C. § 3591(a)(2) provides:
(a) A defendant who has been found guilty of
* * * * * *
(2) any other offense for which a sentence of death is provided, if the defendant, as determined beyond a reasonable doubt at the [penalty phase] hearing under section 3593
(A) intentionally killed the victim;
(B) intentionally inflicted serious bodily injury that resulted in the death of the victim;
(C) intentionally participated in an act, contemplating that the life of a person would be taken or intending that lethal force would be used in connection with a person, other than one of the participants in the offense, and the victim dies as a direct result of the act; or
(D) intentionally and specifically engaged in an act of violence, knowing that the act created a grave risk of death to a person, other than one of the participants in the offense, such that participation in the act constituted a reckless disregard for human life and the victim died as a direct result of the act,
shall be sentenced to death if, after consideration of the factors set forth in section 3592 in the course of a hearing held pursuant to section 3593, it is determined that imposition of a sentence of death is justified, ....
*539 Hammer offers no authority for his proposition that the government is obliged to elect between the intent elements set forth in § 3591(a)(2) and we find nothing in the statute that would require the government so to elect. Furthermore, it is not obvious to us, as it apparently is to Hammer, that the government will have so to elect at the time of trial. Cf. United States v. Flores, 63 F.3d 1342, 1367 (5th Cir.1995)(jury was asked to decide whether the government established at least one of the four intent factors). We are not precluding Hammer from raising the issue during the course of trial. However, Hammer should present clear authority requiring the government to elect one of the intent factors set forth in § 3591(a)(2).
The second issue raised by Hammer's Motion No. 2 which does not affect the validity of the government's notice of intent to seek the death penalty relates to what aggravating and mitigating factors can be weighed by the jury during the penalty phase. It appears that there is a dispute as to whether the "intent" factors set forth in § 3591(a)(2) can be considered by the jury during the penalty phase as aggravating factors that should be weighed against any mitigating factors. This is a matter that need not be decided prior to trial. However, the court is dubious whether the "intent" factors set forth in § 3591(a)(2) can be considered aggravating factors. The aggravating and mitigating factors are set forth in 18 U.S.C. § 3592 and the procedures spelled out in § 3593 relating to the penalty phase hearing refer to the balancing or weighing of the aggravating and mitigating factors set forth in § 3592. Cf. United States v. Nguyen, 928 F.Supp. 1525, 1532-33 (D.Kan.1996)(a case where the defendant was charged with the death-eligible offense of murder by use of a firearm during the course of a robbery, the government noted that the use of a firearm was not a statutory aggravating factor and that the jury during the death penalty phase of the trial must find the presence of at least one of the statutory aggravating factors set forth in 18 U.S.C. § 3592(c)).
ACCORDINGLY, IT IS HEREBY ORDERED THAT:
Hammer's Motion to Dismiss the Death-Notice (Motion No. 2 filed August 1, 1997, Doc. 134) is denied.
ORDER # 2 of
September 19, 1997.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
On September 18, 1996, a Grand Jury sitting in Williamsport, Pennsylvania returned an indictment charging Defendant David Paul Hammer with first degree murder. On April 9, 1997, the government filed a notice of its intent to seek the death penalty in this case. This case is on the January, 1998, trial list. On August 1, 1997, Hammer filed twelve pretrial motions. Those motions are fully briefed and are ripe for disposition.
This order addresses Motion No. 3 filed on August 1, 1997, in which Hammer requests that one of the aggravating factors, i.e., a December 4, 1978, Caddo County, Oklahoma, conviction for robbery with a dangerous weapon, set forth in Section B, ¶ 1, of the government's notice to seek the death penalty should be stricken from the notice. Section B, ¶ 1 of the government's notice sets forth aggravating factors under 18 U.S.C. § 3592(c)(2). Section 3592(c)(2) provides that a prior conviction of "a Federal or State offense punishable by a term of imprisonment of more than 1 year, involving the use or attempted or threatened use of a firearm (as defined in section 921) against another person" is an aggravating factor that the jury can consider during the death penalty phase of the trial.
In Section B, ¶ 1, of the government's notice of intent to seek the death penalty, the government lists three convictions. Hammer claims that the 1978 Caddo County conviction for robbery involved the use of a knife and not a firearm. The government states that Hammer's "claim has technical merit" and agrees that reference to the 1978 Caddo County conviction should be stricken as a statutory aggravating factor from Section B, ¶ 1, of the government's notice of intent to seek the death penalty.
ACCORDINGLY, IT IS HEREBY ORDERED THAT:
*540 Hammer's motion to strike the Caddo County robbery conviction from Section B, ¶ 1, of the government's notice of intent to seek the death penalty (Motion No. 3 filed August 1, 1997, Doc. 136) is granted.
ORDER # 3 of
September 19, 1997.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
On September 18, 1996, a Grand Jury sitting in Williamsport, Pennsylvania returned an indictment charging Defendant David Paul Hammer with first degree murder. On April 9, 1997, the government filed a notice of its intent to seek the death penalty in this case. This case is on the January, 1998, trial list. On August 1, 1997, Hammer filed twelve pretrial motions. Those motions are fully briefed and are ripe for disposition.
This order addresses Motion No. 4 filed on August 1, 1997, in which Hammer requests that the aggravating factor of two state court convictions involving the infliction of, or attempted infliction of, serious bodily injury or death set forth in Section B, ¶ 2, of the government's notice to seek the death penalty be stricken from the notice.
Section B, ¶ 2, of the government's notice sets forth an aggravating factor under 18 U.S.C. § 3592(c)(4). Section 3592(c)(4) provides that two or more prior convictions of "Federal or State offenses, punishable by a term of imprisonment of more than 1 year, committed on different occasions, involving the infliction of, or attempted infliction of, serious bodily injury or death upon another person" is an aggravating factor that the jury can consider during the death penalty phase of the trial.
In Section B, ¶ 2, of the government's notice of intent to seek the death penalty, the government lists the following two state court convictions: (1) a 1982 conviction in Cleveland County, Oklahoma, for robbery by fear, and (2) a 1984 conviction in Oklahoma County, Oklahoma, for robbery with a firearm and shooting with intent to kill. Hammer claims that the 1982 Cleveland County conviction for robbery did not involve the infliction of, or attempted infliction of, serious bodily injury or death upon another person.
The government does not dispute the rendition of the facts surrounding the 1982 Cleveland County conviction set forth in Hammer's brief in support of the motion. That rendition reveals that Hammer on or about October 25, 1981, while on escape status from an Oklahoma correctional institution, entered the home of Lonnie and Effie Huddleston, husband and wife, in Norman, Oklahoma. While Hammer was in the Huddleston's home, he threatened each of them with a poker from the couple's fireplace. However, there is nothing in the court records to suggest that Hammer inflicted or attempted to inflict serious bodily injury or death upon the Huddlestons.
ACCORDINGLY, IT IS HEREBY ORDERED THAT:
Hammer's motion to strike the statutory aggravating factor set forth in Section B, ¶ 2, of the government's notice of intent to seek the death penalty (Motion No. 4 filed August 1, 1997, Doc. 138) is granted.
ORDER # 4 of
September 19, 1997.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
On September 18, 1996, a Grand Jury sitting in Williamsport, Pennsylvania returned an indictment charging Defendant David Paul Hammer with first degree murder. On April 9, 1997, the government filed a notice of its intent to seek the death penalty in this case. This case is on the January, 1998, trial list. On August 1, 1997, Hammer filed twelve pretrial motions. Those motions are fully briefed and are ripe for disposition.
This order addresses Motion No. 5 filed on August 1, 1997, in which Hammer requests that the statutory aggravating factor that the murder was committed "in an especially heinous, cruel or depraved manner" set forth at § B, ¶ 3, of the government's notice to seek the death penalty should be stricken from the notice. Section B, ¶ 3, of the government's notice sets forth an aggravating factor pursuant 18 U.S.C. § 3592(c)(6). Section 3592(c)(6) provides that committing an "offense *541 in an especially heinous, cruel, or depraved manner in that it involved torture or serious physical abuse to the victim" is an aggravating factor that the jury can consider during the death penalty phase of the trial.
Hammer claims that this aggravating factor is unconstitutionally vague and overbroad. This argument has been rejected by the Supreme Court in Walton v. Arizona, 497 U.S. 639, 654-55, 110 S.Ct. 3047, 111 L.Ed.2d 511 (1990). In that case the aggravating factor was the commission of the murder in an "especially heinous, cruel or depraved" manner. The Supreme Court expressed approval of jury instructions that elaborate on those terms. Id. at 653, 110 S.Ct. 3047; see also Proffitt v. Florida, 428 U.S. 242, 255-56, 96 S.Ct. 2960, 49 L.Ed.2d 913 (1976) ("especially heinous, atrocious, or cruel" language is not unconstitutionally vague when limited to a "conscienceless or pitiless crime which is unnecessarily torturous to the victim").
A more recent decision of the Supreme Court explains that a statutory aggravating factor is not unconstitutionally vague if it meets either of two different tests: (1) the statutory language itself is sufficiently clear and specific to provide guidance, or (2) the narrowing construction by courts has adequately defined otherwise vague statutory terms. Arave v. Creech, 507 U.S. 463, 469-73, 113 S.Ct. 1534, 1540-41, 123 L.Ed.2d 188 (1993). The Court went on to hold that it was not necessary to decide whether the statutory phrase "utter disregard for human life" was too vague because the state court had adopted a limiting construction of the phrase which met constitutional requirements. Id. at 471-73, 113 S.Ct. at 1541. In the present case, the statutory language of section 3592(c)(6) already includes the limiting language, i.e., "some kind of torture or physical abuse," approved by the Supreme Court in Walton v. Arizona. See also United States v. Nguyen, 928 F.Supp. 1525, 1534-35 (D.Kan.1996)(Belot, J.)(statutory aggravating factor under federal death penalty statute that defendant committed offense in especially heinous, cruel or depraved manner, involving torture or serious physical abuse to the victim was not unconstitutionally vague); United States v. Bradley, 880 F.Supp. 271, 289 (M.D.Pa.1994)(Rambo, J.)(same). Therefore, it is not necessary for the court to limit the language any further in order to meet the requirements of the Constitution.
Hammer also claims that the aggravating factor, i.e., he committed the offense in an especially, heinous, cruel or depraved manner, involving torture or serious physical abuse to the victim, is unconstitutional as applied to him. The government has indicated that the evidence will show that Hammer, rather than confront the victim directly to kill him, succeeded in convincing the victim to have each limb bound "by using the ruse that he would thereby merely injure him and obtain a transfer for them to another prison." Furthermore, during the course of rendering the victim unconscious with a "sleeper hold", the victim pleaded for his life and told Hammer that his behavior caused him to have flashbacks to when he previously had been shot in the head. Also, when the victim began to whimper, Hammer increased his activities. The autopsy report apparently reveals that the victim struggled in the restraints which is consistent with Hammer's statement to agents of the Federal Bureau of Investigation about the victim's response to Hammer's actions. During the course of rendering the victim unconscious, Hammer's "shoulder popped out" of its socket as the result of the pressure he was applying to the victim's neck. As a result of the dislocated shoulder, Hammer stopped strangling the victim for a period of time to "get the shoulder back into its socket." Once he adjusted his shoulder, Hammer continued to apply a "sleeper hold" to the victim. After the victim was render unconscious with the "sleeper hold," the victim was strangled with a cloth cord or homemade garrote. Based on the foregoing proffered facts, we find no merit to Hammer's argument that the aggravating factor as applied to him is unconstitutional.
ACCORDINGLY, IT IS HEREBY ORDERED THAT:
Hammer's motion to strike the aggravating factor that the murder was committed in an especially heinous, cruel or depraved manner set forth at § B, ¶ 3, of the government's *542 notice of intent to seek the death penalty (Motion No. 5 filed August 1, 1997, Doc. 140) is denied.
ORDER
September 25, 1997.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
On September 18, 1996, a Grand Jury sitting in Williamsport, Pennsylvania returned an indictment charging Defendant David Paul Hammer with first degree murder. On April 9, 1997, the government filed a notice of its intent to seek the death penalty in this case. This case is on the January, 1998, trial list. On August 1, 1997, Hammer filed twelve pretrial motions. Those motions are fully briefed and are ripe for disposition.
This order addresses Motion No. 6 filed on August 1, 1997, in which Hammer requests that the non-statutory aggravating factors set forth in the government's notice of intent to seek the death penalty be stricken from the notice. The government sets forth in the notice three categories of non-statutory aggravating factors: (1) participation in additional, uncharged murders, attempted murders, or serious acts of violence, (2) future dangerousness of Hammer, and (3) victim impact evidence.
The Federal Death Penalty Act of 1994 is a weighing statute, i.e., a jury in deciding whether to impose the death penalty is to weigh the aggravating circumstances and mitigating circumstances and only impose the death penalty if the aggravating circumstances outweigh the mitigating circumstances. Relying on Zant v. Stephens, 462 U.S. 862, 103 S.Ct. 2733, 77 L.Ed.2d 235 (1983), Hammer argues that a weighing statute may not constitutionally resort to nonstatutory aggravating factors without also providing for mandatory comparative proportionality review and, therefore, the Federal Death Penalty Act is not constitutional.
We find no merit in Hammer's argument. Comparative proportionality review in death penalty cases involves an appellate determination of whether or not a sentence of death in one case is arbitrary or capricious by comparing it to the sentences imposed in similar cases. See Pulley v. Harris, 465 U.S. 37, 43, 104 S.Ct. 871, 79 L.Ed.2d 29 (1984). The Constitution does not require proportionality review of death sentences. Id. In Pulley v. Harris the Supreme Court stated:
[W]e did not hold [in Zant] that without comparative proportionality review the statute would be unconstitutional. To the contrary, we relied on the jury's finding of aggravating circumstances, not [an appellate court's] finding of proportionality, as rationalizing the sentence. Thus, the emphasis was on the constitutionally necessary narrowing function of statutory aggravating circumstances. Proportionality review was considered to be an additional safeguard against arbitrarily imposed death sentences, but we certainly did not hold that comparative review was constitutionally required.
465 U.S. at 50, 104 S.Ct. 871 (citations omitted).
Hammer does argue that Pulley v. Harris is limited to cases in which the sentence is based only upon statutory aggravating factors. This argument has been rejected by several district courts and we will, likewise, reject the argument. See, e.g., United States v. Nguyen, 928 F.Supp. 1525, 1537 (D.Kan.1996)(Belot, J.); United States v. Bradley, 880 F.Supp. 271 (M.D.Pa.1994)(Rambo, J.).
ACCORDINGLY, IT IS HEREBY ORDERED THAT:
Hammer's motion to strike the non-statutory aggravating factors from the government's notice of intent to seek the death penalty (Motion No. 6 filed August 1, 1997, Doc. 142) is denied.
ORDER # 1 of
September 26, 1997.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
On September 18, 1996, a Grand Jury sitting in Williamsport, Pennsylvania returned an indictment charging Defendant David Paul Hammer with first degree murder. On April 9, 1997, the government filed a notice of its intent to seek the death penalty in this *543 case. This case is on the January, 1998, trial list. On August 1, 1997, Hammer filed twelve pretrial motions. Those motions are fully briefed and are ripe for disposition. This order relates solely to motion # 7 filed August 1, 1997.
Because the government is seeking the death penalty the trial scheduled for January will be a bifurcated proceeding. If the jury finds Hammer guilty of the charge of murder, the jury then must determine whether he should receive the death penalty. This determination requires that the jury pass through several stages. Initially, the jury must determine whether Hammer had the requisite "intent" in committing the offense. 18 U.S.C. § 3591(a)(2). If the jury determines beyond a reasonable doubt that Hammer had at least one of the required "intent" factors set forth in § 3591(a)(c), the jury proceeds to the second stage. However, if they do not find the requisite intent, the deliberation are over and the death penalty cannot be imposed.
If the jury reaches the second stage of the death penalty phase, the jury must consider any statutory aggravating factors. 18 U.S.C. § 3592(c). For the death penalty to be imposed, the jury must find that the government has proven beyond a reasonable doubt at least one statutory aggravating factor. If they so find, they proceed to the next stage. If they do not find at least one statutory aggravating factor, they cannot impose the death penalty.
The third stage involves the jury weighing the statutory and non-statutory aggravating factors[1] for which notice has been provided against any mitigating factors and deciding whether the aggravating factors outweigh all the mitigating factors found to exist. "Based upon this consideration, the jury by a unanimous vote" shall either recommend death or life imprisonment. 18 U.S.C. § 3593(e).
In Motion No. 7 filed on August 1, 1997, Hammer requests that the non-statutory aggravating factors set forth in the government's notice of intent to seek the death penalty be stricken on the ground that Congress may not delegate to the executive the authority to determine aggravating factors.
Several courts have considered and rejected this non-delegation argument. United States v. McCullah, 76 F.3d 1087, 1106-07 (10th Cir.1996); United States v. Bradley, 880 F.Supp. 271, 283-84 (M.D.Pa.1994)(Rambo, J.); United States v. Pitera, 795 F.Supp. 546, 562 (E.D.N.Y.1992)(Raggi, J.). We are persuaded by those cases. Congress did not impermissibly delegate legislative authority when it enacted the Federal Death Penalty Act. The function of the prosecutor in identifying non-statutory aggravating factors under that Act is "an exercise in advocacy derived from the executive's discretion to prosecute, not the legislature's power to fix punishment." United States v. Pitera, 795 F.Supp. at 563. Thus, "[i]n identifying nonstatutory aggravating factors pursuant to [the statute], the prosecution plays virtually the same role in a capital sentencing proceeding as it does in a non-capital one." Id. at 562.
In conclusion, we note that "the statutory aggravating factors themselves provide a ready framework for determining Congressional intent and for evaluating the relevance and admissibility of the proposed nonstatutory aggravating factors." United States v. Davis, 912 F.Supp. 938, 944 (E.D.La.1996).
*544 ACCORDINGLY, IT IS HEREBY ORDERED THAT:
Hammer's motion to strike the non-statutory aggravating factors from the government's notice of intent to seek the death penalty on the ground that Congress may not delegate to the executive the authority to determine aggravating factors (Motion No. 7 filed August 1, 1997, Doc. 144) is denied.
ORDER # 2 of
September 26, 1997.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
On September 18, 1996, a Grand Jury sitting in Williamsport, Pennsylvania returned an indictment charging Defendant David Paul Hammer with first degree murder. On April 9, 1997, the government filed a notice of its intent to seek the death penalty in this case. This case is on the January, 1998, trial list.
On August 1, 1997, Hammer filed twelve pretrial motions. Those motions are fully briefed and are ripe for disposition. This order addresses Motion No. 8 filed on August 1, 1997, in which Hammer requests that the non-statutory aggravating factors set forth in the government's notice of intent to seek the death penalty unrelated to "victim impact" be stricken from that notice.
Several courts have permitted the use of non-statutory aggravating factors other than "victim impact" evidence. United States v. McCullah, 76 F.3d 1087, 1106-12 (10th Cir. 1996); United States v. Davis, 912 F.Supp. 938, 944-45 (E.D.La.1996); United States v. Bradley, 880 F.Supp. 271, 283-84 (M.D.Pa.1994)(Rambo, J.). We are persuaded by those cases. Hammer's motion will be denied.
ACCORDINGLY, IT IS HEREBY ORDERED THAT:
Hammer's motion to strike the non-statutory aggravating factor from the government's notice of intent to seek the death penalty other than relating to "victim impact" (Motion No. 8 filed August 1, 1997, Doc. 150) is denied.
ORDER
September 30, 1997.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
On September 18, 1996, a Grand Jury sitting in Williamsport, Pennsylvania returned an indictment charging Defendant David Paul Hammer with first degree murder. On April 9, 1997, the government filed a notice of its intent to seek the death penalty in this case. This case is on the January, 1998, trial list. On August 1, 1997, Hammer filed twelve pretrial motions. Those motions are fully briefed and are ripe for disposition.
This order addresses Motion No. 9 filed on August 1, 1997, in which Hammer requests that certain non-statutory aggravating factors and proffered evidence in support of those factors set forth in the government's notice of intent to seek the death penalty be stricken from the notice. The government sets forth in the notice three categories of non-statutory aggravating factors: (1) participation in additional, uncharged murders, attempted murders, or serious acts of violence (see § C, ¶ 1), (2) future dangerousness of Hammer (see § C, ¶ 2), and (3) victim impact evidence (see § C, ¶ 3).
The Federal Death Penalty Act of 1994 is a weighing statute, i.e., a jury in deciding whether to impose the death penalty is to weigh the aggravating circumstances and mitigating circumstances and only impose the death penalty if the aggravating circumstances outweigh the mitigating circumstances. Under a weighing statute aggravating factors may not be alleged in duplicative fashion. See United States v. McCullah, 76 F.3d 1087, 1111-12 (10th Cir.1996). However, multiple reference to one situation or circumstance is not impermissible as long as there is at least one non-duplicative element or aggravating circumstance brought out that genuinely narrows the class of defendants eligible for the death penalty. Lowenfield v. Phelps, 484 U.S. 231, 244-46, 108 S.Ct. 546, 98 L.Ed.2d 568 (1988).
With regard to the first non-statutory aggravating factor set forth in the government's notice, participation in additional, uncharged murders, attempted murders, or *545 other serious acts of violence, Hammer objects to the repetitive use of a 1984 conviction for shooting with intent to kill. On September 9, 1984, Hammer was convicted by a jury in Oklahoma City, Oklahoma, of shooting with intent to kill a man named Thomas Upton. Hammer shot Mr. Upton in the head, three times. Mr. Upton survived the shooting and testified against Hammer at his trial.
The Thomas Upton shooting is utilized by the government to support two statutory and two non-statutory aggravating factors. First, the Upton shooting is alleged to support the statutory aggravating factor set forth in § B, ¶ 1 of the notice. In § B, ¶ 1 of the notice, the government set forth three previous convictions where allegedly a firearm was used.[1] Second, the Upton shooting is utilized to support the statutory aggravating factor set forth in § B, ¶ 2 of the notice. In that paragraph, the government set forth two convictions that allegedly involved the infliction or attempted infliction of serious bodily injury upon another person. The aggravating factor set forth in ¶ 2 was stricken by order # 3 of September 19, 1997, because the statute, 18 U.S.C. § 3593(c)(3), requires two convictions involving the infliction or attempted infliction of serious bodily injury and one of the convictions set forth by the government did not involve that type of conduct. Third, the Upton shooting is alleged to support the non-statutory aggravating factor set forth in § C, ¶ 1, of the notice. Section C, ¶ 1 of the notice, relates to Hammer's purported "[p]articipation in additional, uncharged murders, attempted murder, or other serious acts of violence." To support this non-statutory aggravating factor the government relies in part, in sub-¶ a, on the Upton shooting.
The government correctly notes that not every offense involving the use or attempted or threatened use of a firearm results in injury to an individual. We agree that injury to an individual during a firearm offense could be a separate non-statutory aggravating factor. However, the government refers in § C, ¶ 1, to "additional, uncharged" or "other serious acts of violence." The Uptown shooting was previously designated in the notice as supporting the statutory aggravating factor that Hammer had previously been convicted of an offense involving the use or attempted or threatened use of a firearm. Therefore, it cannot be an "additional, uncharged" or "other serious act of violence."[2]
Hammer also objects to use of the uncharged homicide of a Mr. Kenner set forth in § C, ¶ 1, sub-¶ b of the notice. That subparagraph states:
Additionally, Hammer, although incarcerated at the time in the Oklahoma Department of Corrections, urged a person in the community to rob and, if necessary, kill Kenneth B. Kenner, a person with whom he had telephone communication and correspondence, in Louisville, Tennessee. In fact, Kenner was killed on November 23, 1986. Hammer confessed to his involvement in the offense during an interview on December 18, 1986, by Oklahoma and Tennessee law enforcement officials. No federal or state charges were brought against him notwithstanding his admission.
The government's use of the uncharged homicide is complicated by its recently filed motion to amend the notice of intent to seek the death penalty. In that motion the government states that "[i]t appears that Hammer may have wrongfully admitted his involvement in Kenner's death by implicating two individuals who did not commit the offense." The government goes on to state that "[n]otwithstanding the fact that Hammer may not have actually precipitated the murder, it is submitted that [Hammer's] videotaped admission is probative of his future *546 dangerousness ...." The motion to amend the notice is not ripe for disposition and we will address that motion in due course. However, at this time we will strike ¶ 1, sub-¶¶ a and b, of § C of the government's notice of intent to seek the death penalty.
Hammer also requests that certain portions of the notice of intent to seek the death penalty relating to his future dangerousness be stricken. Specifically, Hammer requests that the provisions regarding his "lack of remorse" and "threatening words and warped bravado" be stricken.
Future dangerousness to the lives and safety of other persons has been found to be a legitimate aggravating factor that a jury can consider during the penalty phase. Jurek v. Texas, 428 U.S. 262, 272, 96 S.Ct. 2950, 49 L.Ed.2d 929 (1976); United States v. Davis, 912 F.Supp. 938, 945 (E.D.La.1996).
Hammer relies on the case of United States v. Davis for the proposition that reference to his "lack of remorse" should be stricken. In Davis, the government listed "lack of remorse" as a separate aggravating factor. The district court in Davis did not permit the government to use "lack of remorse" as a separate aggravating factor. However, the court did not foreclose the use of "lack of remorse" as probative of "future dangerousness." The government in Davis proposed to present evidence of the defendant's "alleged jubilation in learning that [the victim] had been killed." Id. at 946. The district court held that "[w]hile the government may not assert "lack of remorse" as an independent nonstatutory aggravating factor, it may argue DAVIS' alleged exultation as information of DAVIS' future dangerousness, ...." Id. We will, therefore, deny Hammer's motion to strike the portions of the notice referring to his lack of remorse and boastful statements.
ACCORDINGLY, IT IS HEREBY ORDERED THAT:
1. Hammer's motion to strike specific non-statutory aggravating factors from the government's notice of intent to seek the death penalty (Motion No. 9 filed August 1, 1997, Doc. 152) is granted in part and denied in part.
2. Paragraph 1, Subparagraphs a and b, of Section C of the government's notice of intent to seek the death penalty are stricken from the notice.
3. In all other respects Hammer's motion is denied.
ORDER # 1 of
October 7, 1997.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
On September 18, 1996, a Grand Jury sitting in Williamsport, Pennsylvania returned an indictment charging Defendant David Paul Hammer with first degree murder. On April 9, 1997, the government filed a notice of its intent to seek the death penalty in this case. This case is on the January, 1998, trial list. On August 1, 1997, Hammer filed twelve pretrial motions. Those motions are fully briefed and are ripe for disposition.
This order addresses Motion No. 10 filed on August 1, 1997, in which Hammer requests that the aggravating factors set forth in the government's notice of intent to seek the death penalty be dismissed on the ground that his capital prosecution is arbitrary and capricious. In essence the motion is a motion to strike the government's notice of intent to seek the death penalty and will be referred to as such. Hammer argues that "[t]here have been numerous murders by inmates of inmates, at Bureau of Prisons institutions since ... the effective date of the [Federal Death Penalty Act]" and "[o]nly a small handful of these have been handled as death-penalty cases." Without any other basis for support, the defendant concludes that "Mr. Hammer has been singled out for exposure to the death penalty in an arbitrary manner" and that "[s]uch arbitrariness violates the Eighth and Fifth Amendment."
The decision to prosecute, including the decision to seek the death penalty, rests with the prosecutor. See Wayte v. United States, 470 U.S. 598, 607, 105 S.Ct. 1524, 84 L.Ed.2d 547 (1985); United States v. Nguyen, 928 F.Supp. 1525, 1544-45 (D.Kan.1996)(Belot, J.); United States v. Bradley, 880 F.Supp. 271, 279-81, 291 (M.D.Pa.1994)(Rambo, J.); *547 United States v. Pretlow, 779 F.Supp. 758, 777 (D.N.J.1991)(Raggi, J.). The mere fact that the government has only sought the death penalty in a de minimis number of murder cases involving federal inmates is not sufficient to demonstrate that the prosecution of Hammer is arbitrary and capricious. Id. More is required. Hammer must show that the government is seeking the death penalty for an impermissible reason, such as race, religion, or in retaliation for exercising his right to trial by jury. Id.
Moreover, a hearing on such a motion is "necessitated only when the motion alleges sufficient facts to take the question past the frivolous state and raises a reasonable doubt as to the prosecutor's purpose." United States v. Eklund, 733 F.2d 1287, 1290 (8th Cir.1984), cert. denied, 471 U.S. 1003, 105 S.Ct. 1864, 85 L.Ed.2d 158 (1985) (citations omitted). Hammer has failed to proffer any evidence from which it can be concluded that the government is seeking the death penalty for an impermissible reason.
ACCORDINGLY, IT IS HEREBY ORDERED THAT:
Hammer's motion to strike the government's notice of intent to seek the death penalty (Motion No. 10 filed August 1, 1997, Doc. 154) is denied.
ORDER #2 of
October 7, 1997.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
On September 18, 1996, a Grand Jury sitting in Williamsport, Pennsylvania returned an indictment charging Defendant David Paul Hammer with first degree murder. On April 9, 1997, the government filed a notice of its intent to seek the death penalty in this case. This case is on the January, 1998, trial list. On August 1, 1997, Hammer filed twelve pretrial motions. Those motions are fully briefed and are ripe for disposition.
This order addresses Motion No. 11 filed August 1, 1997, in which Hammer requests that the aggravating factors set forth in the government's notice of intent to seek the death penalty be dismissed on the ground that the relaxed evidentiary standard available to the government at the penalty hearing does not allow for a reliable jury determination. In essence the motion is a motion to strike the government's notice of intent to seek the death penalty and will be referred to as such.
Hammer contends that 18 U.S.C. § 3593(c) is unconstitutional because it impermissibly allows presentation of unreliable evidence at the penalty phase hearing. That provision provides in relevant part as follows:
At the sentencing hearing, information may be presented as to any matter relevant to the sentence, including any mitigating or aggravating factor permitted or required to be considered under section 3592. Information presented may include the trial transcript and exhibits if the hearing is held before a jury or judge not present during the trial, or at the trial judge's discretion. The defendant may present any information relevant to a mitigating factor. The government may present any information relevant to an aggravating factor for which notice has been provided .... Information is admissible regardless of its admissibility under the rules governing the admission of evidence at criminal trials except that information may be excluded if its probative value is outweighed by the danger of creating unfair prejudice, confusing the issues, or misleading the jury.
We are satisfied that the standard set forth in the foregoing provision is not so unreliable as to be unconstitutional. Several court have rejected the same argument made with respect to 21 U.S.C. § 848(j), a substantially similar provision. One court stated that "in many circumstances reference to the Federal Rules of Evidence will be useful in deciding whether information proffered at a capital sentencing hearing is sufficiently reliable to be more probative than prejudicial. The Rules will not, however, be determinative.... The heightened standard applicable to capital sentencing proceeding may ... demand further indicia of reliability before a court can say that the probative value of [certain evidence] outweighs its prejudicial *548 potential." United States v. Pitera, 795 F.Supp. 546, 565 (E.D.N.Y.1992)(Raggi, J.). The court in Pitera in rejecting defendant's challenge to the statute's evidentiary standard concluded that the Constitution required "heightened reliability" of evidence presented during the death penalty phase of the trial and that "such a standard can adequately be factored into a consideration of whether proffered evidence is more probative than prejudicial." Id. at 566; see also United States v. Bradley, 880 F.Supp. 271, 291 (M.D.Pa.1994)(Rambo, J.)(evidentiary standard applicable to penalty phase of proceeding under continuing criminal enterprise statute's death penalty provision requiring exclusion of evidence relating to aggravating and mitigating factors only if its probative value was substantially outweighed by danger of unfair prejudice did not unconstitutionally curtail reliability of sentencing proceeding).
ACCORDINGLY, IT IS HEREBY ORDERED THAT:
Hammer's motion to strike the government's notice of intent to seek the death penalty on the ground that the relaxed evidentiary standard available to the government at the penalty phase does not allow for a reliable jury determination (Motion No. 11 filed August 1, 1997, Doc. 146) is denied.
ORDER #1 of
October 9, 1997.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
On September 18, 1996, a Grand Jury sitting in Williamsport, Pennsylvania returned an indictment charging Defendant David Paul Hammer with first degree murder. On April 9, 1997, the government filed a notice of its intent to seek the death penalty in this case. This case is on the January, 1998, trial list. On August 1, 1997, Hammer filed twelve pretrial motions. Those motions are fully briefed and are ripe for disposition. This order addresses Motion No. 12 filed August 1, 1997, in which Hammer requests that the indictment be dismissed because of alleged misconduct by the prosecutor before the grand jury.
The indictment in this case originally consisted of two counts. Count I charged Hammer pursuant to 18 U.S.C. § 1111 with murder within the special maritime and territorial jurisdiction of the United States. Count II charged Hammer pursuant to 18 U.S.C. § 1118 with murder by a federal inmate serving a sentence of life imprisonment. On April 25, 1997, Count II of the indictment was dismissed on motion of the government. Hammer alleges that the prosecutor committed misconduct by misleading the grand jury into believing that Hammer was serving a life sentence and that because of this erroneous and prejudicial presentation, the indictment should be dismissed.
We have reviewed relevant portions of the transcript of the Grand Jury proceeding in this case. The Grand Jury twice heard information about sentences which Hammer was serving. At both instances the prosecution did not refer to the types of offenses for which Hammer was convicted of in Oklahoma. To support the now dismissed Count II of the Indictment the Grand Jury was advised that the aggregate sentences which Hammer received from his various convictions in Oklahoma totalled 1232 years. Although under Oklahoma state law Hammer was only serving at the time of the murder a five year term of incarceration, he was obliged to serve substantial consecutive terms of imprisonment in excess of 1200 years.
Hammer cites the Supreme Court's decision in Costello v. United States, 350 U.S. 359, 76 S.Ct. 406, 100 L.Ed. 397 (1956) and the Court of Appeals for the Third Circuit's decision in United States v. Serubo, 604 F.2d 807 (3d Cir.1979) in support of his claim that the indictment should be dismissed. However, neither case calls for the dismissal of the indictment in this case[1] and Hammer fails to cite the more recent precedents of Bank of *549 Nova Scotia v. United States, 487 U.S. 250, 108 S.Ct. 2369, 101 L.Ed.2d 228 (1988) and United States v. Soberon, 929 F.2d 935 (3d Cir.1991).
In Soberon the Court of Appeals for this circuit set forth the standard of review:
Bank of Nova Scotia v. United States ...established the standard for dismissing an indictment based on error in a grand jury proceeding. The Supreme Court held in Bank of Nova Scotia that a district court is bound by the doctrine of "harmless error" and may not dismiss an indictment on the basis of prosecutorial misconduct before the grand jury without making a factual finding that the defendant was prejudiced by that misconduct. To find prejudice, the district court must establish that "`the violation substantially influenced the grand jury's decision to indict,' or ... there is `grave doubt' that the decision to indict was free from the substantial influence of such violation."
929 F.2d at 939-40 (citations omitted). Hammer was found in his cell with the victim, Andrew Marti, at 3:00 a.m., on April 13, 1996. The victim was tied spread-eagled, face down and strangled with a cloth cord. Thus, even if incorrect information was presented to the grand jury regarding Hammer's sentences imposed in Oklahoma, we conclude that the error had no impact whatsoever on the grand jury's decision to return a true bill as to Count I of the indictment.
Although technically he was serving a five year sentence at the time of the murder, his consecutive 1232 year sentence imposed in 1984 did not disappear. It is clear from the transcripts of the grand jury proceedings that the prosecutor limited the information regarding the nature of Hammer's prior convictions even in the face of curious members of the grand jury. Given the discovery and circumstances surrounding Andrew Marti's death at 3:00 a.m. in a two-man cell in the Special Housing Unit at USP-Allenwood, Hammer clearly was not prejudiced by referring to his 1232 year sentence. Furthermore, we are not convinced that a 1232 year sentence is less than a life sentence.
ACCORDINGLY, IT IS HEREBY ORDERED THAT:
Hammer's motion to dismiss the indictment (Doc. 156) is denied.
APPENDIX D
ORDER
May 8, 1998.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
Hammer challenged juror Robert D. Herr for cause because of Mr. Herr's opinion regarding the death penalty. The court understood Hammer's challenge to be based on his concern that Mr. Herr would start from the position that the death penalty should be imposed and require the defense to move him away from that position. The court finds based on Mr. Hartman's answers to the voir dire questions and his demeanor that his opinions or beliefs regarding the death penalty would not prevent or substantially impair the performance of his duties in accordance with the court's instructions and his oath, and he can set aside any opinion he might hold regarding the death penalty and decide the case based on the evidence presented and the law as given by the court. See Wainwright v. Witt, 469 U.S. 412, 423-426, 105 S.Ct. 844, 83 L.Ed.2d 841 (1985). We will overrule Hammer's challenge for cause.
NOW, THEREFORE, IT IS HEREBY ORDERED THAT:
Hammer's challenge for cause to Mr. Herr is overruled.
ORDER
May 27, 1998.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
Defendant Hammer challenged juror Leslie F. Riggs for cause because of his views on the death penalty. We are satisfied that Mr. Riggs will in accordance with the court's instructions give appropriate consideration during the penalty phase to any mitigating factors presented by Mr. Hammer, including evidence that Mr. Hammer was sexually abused during his childhood and that he suffers *550 from various mental health problems. Mr. Riggs indicated that a finding of future dangerousness would "sway him in the direction" of the death penalty. However, we are satisfied that Mr. Riggs will not automatically impose a sentence a death if the government proves beyond a reasonable doubt that Mr. Hammer will pose a future danger to prison guards, other inmates or society but will weigh all the evidence presented including evidence of any mitigating factors. We were impressed by Mr. Rigg's sincerity when he stated he would consider all the evidence and that human life is sacred. We are convinced that Mr. Riggs will consider all the evidence and evaluate the evidence in accordance with the court's instructions.
The court finds based on the answers of Mr. Riggs to the voir dire questions and his demeanor that (1) he is not impermissibly biased in favor of the death penalty, (2) his opinions or beliefs would not prevent or substantially impair the performance of his duties in accordance with the instructions given him and in accordance with his oath, and (3) he can set aside any opinion he might hold regarding the death penalty and decide the case based on the evidence presented and the law as given by the court. See Wainwright v. Witt, 469 U.S. 412, 423-426, 105 S.Ct. 844, 83 L.Ed.2d 841 (1985).
Mr. Rigss's answers to questions 47, 48, 49, 53, 54, 56, 58, 68, 73 and 81 of the Juror Questionnaire support this court's conclusion that he is qualified to serve as a juror in this case. We are satisfied that Mr. Riggs's answers on the questionnaire and his oral answers in court are truthful. Moreover, we are satisfied that Mr. Riggs would be able faithfully and impartially to apply the law as given to him by us. This order reduces to writing our oral order from the bench overruling Hammer's challenge for cause.
NOW, THEREFORE, IT IS HEREBY ORDERED THAT:
Hammer's challenge for cause to juror Riggs is overruled.
ORDER
May 22, 1998.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
Defendant Hammer challenged juror Margaret Ann Meabon for cause on the basis that she was exposed to a newspaper article that indicated the length of sentence Hammer is serving. Mrs. Meabon overheard a discussion relating to the newspaper article. However, she does not recall the exact number of years that was mentioned in the article, other than it was possibly a 100 years or a long time. Mrs. Meabon was asked if she could disregard what she heard and she indicated she could put what she heard out of her mind. She further stated that this was a separate case and she could keep an open mind.
The type of information that Mrs. Meabon overheard, i.e., a long sentence and "a 100 years," is the type that can be disregarded. We are satisfied based on Mrs. Meabon's answers and her demeanor that she will disregard what she heard and that she will be able faithfully and impartially to apply the law as given to her by us and base her decision solely on the evidence presented during the trial. The court will note for the record that Mrs. Meabon appeared very sincere when answering the questions of the court and counsel. This order reduces to writing our oral order from the bench overruling Hammer's challenge for cause.
NOW, THEREFORE, IT IS HEREBY ORDERED THAT:
Hammer's challenge for cause to juror Meabon is overruled.
ORDER
May 12, 1998.
THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:
The government challenged juror Manga Alagiriswami for cause. Juror Alagiriswami answered questions 43, 44 and 45 of the Juror Questionnaire in a potentially disqualifying manner. Her answer to question 45 reveals that the fact that this case involves a murder charge would affect her ability to *551 serve as a juror. Her answer to question 46 indicates that the viewing of photographs of the body of the victim would affect her ability to serve as a juror. Her answer to question 47 reveals that she would have difficulty following the court's instructions on the law. In answering question 73 she stated:
G. I feel that my view against capital punishment will make it difficult for me to perform my duty as a juror to reach a verdict based on the facts and the law in the case.
H. I am strongly opposed to the death penalty. I will have a difficult time being fair.
Furthermore, although question 73 gave her the opportunity to state that she believed she could "follow the law providing for the imposition of the death penalty," she failed to do so. More importantly, in response to a question from government counsel in court she stated that she has opposed the death penalty for thirty years and is not sure she could follow the court's instructions on the law.
Juror Alagiriswami did not give a clear answer to this court's question as to whether she would refuse to vote for a death sentence under any circumstances. In essence she answered the question by stating she was opposed to the death penalty. Although defense counsel asked a question as to whether she could consider the death penalty and she responded that she would consider the options, she did not indicate that her beliefs and opinions regarding the death penalty would not prevent her from voting for the death penalty if the facts and circumstances justified its imposition.
The court finds based on the answers of the juror to the voir dire questions and the demeanor of the juror when answering questions in court that (1) the juror is impermissibly biased against the death penalty, (2) the juror's opinions or beliefs would prevent or substantially impair the juror's performance of the juror's duties in accordance with the instructions to the juror and the oath of the juror, and (3) the juror cannot set aside any opinion the juror might hold regarding the death penalty and decide the case on the evidence and the law as given by the court. See Wainwright v. Witt, 469 U.S. 412, 423-426, 105 S.Ct. 844, 83 L.Ed.2d 841 (1985). This court has the definite impression that juror Alagiriswami would be unable faithfully and impartially to apply the law. Id. This order reduces to writing our oral order from the bench sustaining the government's challenge for cause.
NOW, THEREFORE, IT IS HEREBY ORDERED THAT:
1. The government's challenge for cause is sustained.
2. Juror Alagiriswami is excused for cause.
/s/ Muir
MUIR, U.S. District Judge
NOTES
[1] In reviewing the record to determine whether the decision of the jury is justified, the evidence must be viewed in a light most favorable to the government. See United States v. Villard, 885 F.2d 117, 120 (3d Cir.1989). If this case is appealed by Mr. Hammer to the Court of Appeals for the Third Circuit, the Court of Appeals is required by statute to review, inter alia, the evidence submitted during the trial and determine "whether the evidence supports the special finding of the existence of an aggravating factor ...." 18 U.S.C. § 3595(b) and (c). Because Mr. Hammer has stated that he desires to forego an appeal and be executed expeditiously, it seems appropriate for us to review the record to determine whether the jury's recommendation is supported by the evidence.
[2] Even if a defendant pleads guilty to first degree murder or is found guilty of first degree murder, which requires a finding beyond a reasonable doubt of premeditation and malice aforethought, during the penalty phase of the trial the government pursuant to 18 U.S.C. § 3591(a)(2) is required to convince the jury beyond a reasonable doubt that the defendant either
(1) intentionally killed the victim;
(2) intentionally inflicted serious bodily injury that resulted in the death of the victim;
(3) intentionally participated in an act, contemplating that the life of a person would be taken or intending that lethal force would be used in connection with a person, other than one of the participants in the offense, and the victim died as a direct result of the act; or
(4) intentionally and specifically engaged in an act of violence, knowing that the act created a grave risk of death to a person, other than one of the participants in the offense, such that participation in the act constituted a reckless disregard for human life and the victim died as a direct result of the act.
This statutory requirement appears to provide a defendant with "a second bite at the apple."
[3] The government in its notice of intent to seek the death penalty also set forth as statutory aggravating factors the following:
(1) Mr. Hammer committed the offense in an especially heinous, cruel, or depraved manner in that it involved torture or serious physical abuse to the victim; and
(2) Mr. Marti was particularly vulnerable because of infirmity.
We concluded the evidence relating to those two statutory aggravating factors was insufficient and did not permit the jury to consider them.
[4] Part Six of the Special Findings Form Regarding the Punishment to be Imposed Upon David Paul Hammer for the Killing of Andrew Marti required each juror to sign an Understanding which stated as follows:
We understand that we are to consider whether the aggravating factor or factors unanimously found by us to exist sufficiently outweigh any mitigating factor or factors found to exist to justify a sentence of death, or in the absence of mitigating factors, whether the aggravating factor or factors are themselves sufficient to justify a sentence of death. We also understand that a finding with respect to a mitigating factor may be made by any one or more of the members of the jury, and any member of the jury who finds the existence of a mitigating factor may consider such factor established for purposes of his or her weighing of the aggravating factor or factors and mitigating factor or factors regardless of the number of jurors who concur that a particular mitigating factor has been established. We also understand that a jury is never required to impose a death sentence and that a sentence of death cannot be imposed except by unanimous vote.
[5] This finding of fact was designated by all counsel as undisputed. However, the Court is of the opinion that counsel may have incorrectly designated the finding undisputed. Dr. Sadoff's testimony that Mr. Hammer was controlled by Jocko at the time of the murder would suggest that he was incompetent at least at the time of the murder.
[6] By order of September 15, 1998, we denied the three new trial motions. (Doc. 618) That order sets forth the basis for denying the motions. The order is attached to this opinion as Appendix A.
[7] Mr. Walter was a reporter who interviewed Mr. Hammer regarding his attempted murder of Thomas Upton. Mr. Hammer shot Mr. Upton, who was prone on the ground, three times at close range in the head execution style. Mr. Upton survived the shooting because the ammunition contained bird shot only. Mr. Hammer told Mr. Walter during the interview that "if he had known his victim lived, he would have reloaded his weapon and fired it six more times." Our amended order of July 23, 1998, sets forth the basis for allowing Mr. Walter to testify. (Doc. 550) That order is attached to this opinion as Appendix B.
[8] On August 1, 1997, Mr. Hammer filed twelve pretrial motions. Those motions were disposed of by orders issued on September 18, 19, 25, 26, and 30, and October 7 and 9, 1997. (Docs. 190 through 195, 201 through 203, 206, 210, 211 and 215) Those order are attached to this opinion as Appendix C.
[9] During jury selection the court overruled Mr. Hammer's challenges for cause to 21 potential jurors and sustained one challenge for cause made by the government. We issued an order with regard to each potential juror where we overruled a challenge for cause and in the one instance where we sustained the government's challenge. Only three of the potential jurors Mr. Hammer challenged for cause ended up on the final jury that deliberated on his fate: Robert D. Herr, Leslie F. Riggs, and Margaret Ann Meabon. The orders overruling the challenges for cause to those jurors and the order sustaining the government's challenge for cause to, Manga Alagiriswami, the one juror where Mr. Hammer objected to excusal for cause, are attached to this opinion as Appendix D.
[10] Judge Brieant found that a state trial court denied Johnstone his right to waive counsel and proceed pro se. However, Judge Brieant found the error harmless. The Court of Appeals held that harmless error analysis was inapplicable to violations of the right to self-representation and reversed.
[11] The United States Supreme Court has stated that a court may "appoint `standby counsel' to aid the accused if and when the accused requests help, and to be available to represent the accused in the event that termination of the defendant's self-representation is necessary." Faretta v. California, 422 U.S. 806, 834 n. 46, 95 S.Ct. 2525, 45 L.Ed.2d 562 (1975)
[12] See Whalen v. State, 492 A.2d 552, 562 (Del. 1985); State v. Ramseur, 106 N.J. 123, 524 A.2d 188, 283-84 (1987); State v. Williams, 392 So.2d 619, 633-34 (La.1980).
[13] Barfield v. Harris, 540 F.Supp. 451, 472 (E.D.N.C.1982); Aldridge v. State, 351 So.2d 942, 944 (Fla. 1977)(per curiam); Coulter v. State, 438 So.2d 336, 346 (Ala.Crim.App.1982)(collecting cases).
[14] The transcript states as follows:
THE COURT: There has been some question as to whether the jury is able to hear what we say at the sidebar conference today or, let's say two days ago. Did you hear anything?
JURY PANEL: No.
THE COURT: Well, I'll put it another way. Did any juror hear anything said at the sidebar conference today, yesterday, or the day before; if so, please put up your hand and we'll inquire.
All right. I don't see any hands raised.
Is that acceptable to the defense?
MR. RUHNKE: Yes, Your Honor.
THE COURT: All right. You may go ahead, sir.
[1] In our order # 1 of September 19, 1997, addressing Hammer's motion # 2 filed August 1, 1997, we stated:
It appears that there is a dispute as to whether the "intent" factors set forth in § 3591(a)(2) can be considered by the jury during the penalty phase as aggravating factors that should be weighed against any mitigating factors. This is a matter that need not be decided prior to trial. However, the court is dubious whether the "intent" factors set forth in § 3591(a)(2) can be considered aggravating factors.
We have found from further research that the "intent" factors set forth in 18 U.S.C. § 3591(a)(2) are not referred to in the statute as "aggravating factors" and, therefore, conclude that the "intent" factors cannot be considered by the jury during the weighing process. Cf. United States v. McCullah, 76 F.3d 1087, 1109 (10th Cir.1996)(in considering a murder charge under the continuing criminal enterprise statute, 21 U.S.C. § 848, the court found it dispositive that the "intent" factors of that statute were specifically referred to in the statute as aggravating factors).
[1] By order of # 2 of September 19, 1997, one of those convictions was stricken from the notice because it involved the use of a knife instead of a firearm.
[2] A conviction involving the use or attempted or threatened use of a firearm is a statutory aggravating factor under 18 U.S.C. § 3592(c)(2). Two convictions for the use or attempted or threatened use of a firearm are set forth in § B, ¶ 1, of the government's notice of intent to seek the death penalty. We do not see that the government is precluded from presenting the circumstances surrounding those offenses during the penalty phase.
[1] The prosecutor in the Serubo case engaged in egregious and reprehensible conduct, including an attempt to link the defendants with organized crime without laying any evidentiary foundation. 604 F.2d at 815. As for the Costello case, it stands for the proposition that a criminal defendant has a right to an unbiased grand jury. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/8326584/ | Tucker, Richard T., J.
The plaintiff, Worcester Envelope Company, has brought this action for breach of contract and quantum meruit against the defendant, Universal Printing, Inc., alleging that Universal failed to pay for $31,385.80 worth of envelopes that it received from Worcester Envelope. This matter is now before the court on Universal’s motion to dismiss based on lack of personal jurisdiction and forum non conveniens.1
FACTS
Universal is a company based in Quebec, Canada that obtains and distributes printed materials for its customers. It does not maintain offices in the United States, and its transactions with Worcester Envelope have been Universal’s only contact with Massachusetts. All of these transactions were negotiated via fax. Although Worcester Envelope states that Universal’s president visited Massachusetts twice, Worcester Envelope does not allege that these visits included negotiations.
One of Universal’s customers was a company called PROCITE, also located in Quebec. PROCITE was a valuable customer for Universal, ordering approximately $700,000 worth of advertising envelopes every year. Universal had contracted with an unrelated third-party company to print these envelopes; that *647company contacted Worcester Envelope to do the manufacturing. In an attempt to cut out the third-party middleman, Worcester Envelope contacted Universal directly to solicit their business, promising better service at a cheaper price.
Universal accepted this solicitation and placed several orders with Worcester Envelope over the next year. Each time the printed envelopes were ready to be delivered, Universal hired a third-party shipping company based in Quebec (E&W Transport) to pick up the envelopes from Worcester Envelope’s factory in Auburn, Massachusetts and transport them to PROCITE in Quebec.
According to Universal, the envelopes delivered in August and September 2010 were defective. More than half the envelopes in the August order were incorrectly glued on the right side, causing them to jam in PROCITE’s machines. Many were also manufactured to the wrong size, an eighth-inch longer than is required by Canada Post. The September order was printed in the wrong colors, and an important advertising message was unreadable. When these latter problems were noted in the first shipment of September, Worcester Envelope claimed to have corrected the problem. However, the rest of September’s order was delivered with the same defects.
These defects followed a complaint by PROCITE about the quality and print color of envelopes that had been delivered the preceding January. At that time, PROCITE had deducted $18,000 from its invoice with Universal, and Universal had absorbed that cost. As a result of the August and September defects, PROCITE terminated its contract with Universal.
The August and September 2010 purchase orders totaled $31,385.80. Universal has allegedly refused to pay this amount, and Worcester Envelope has therefore brought this action for breach of contract and quantum meruit.
Personal Jurisdiction
This Court may exercise personal jurisdiction over a nonresident defendant transacting business in the Commonwealth, pursuant to the longarm statute, G.L.c. 223A, §3, if that defendant has taken some act “by which [it] purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Droukas v. Divers Training Academy, Inc., 375 Mass. 149, 152-53 (1978).
On this record, there are insufficient facts to find personal jurisdiction over Universal. Universal does not maintain any offices in the United States, and has never transacted business with a Massachusetts company apart from the relationship at issue here. And these parties’ business relationship arose when Worcester Envelope solicited Universal from Massachusetts, not vice versa. Neither party has identified the original third-party middleman—the company from whom Worcester Envelope learned about Universal—or where that company is located. There is also little information on the record about F&W Transport, the company hired by Universal to deliver the envelopes from Massachusetts to PROCITE in Canada. Both parties agree that F&W is based in Canada, but nothing else is stated, including the delivery logistics. Not even the currency that was used between Worcester Envelope and Universal is specified.
Worcester Envelope alleges that Universal’s president, Judy Goldfinger, twice visited its factory in Auburn, Massachusetts and met with the business-development manager to review Universal’s orders. However, Universal’s motion included an affidavit from Ms. Goldfinger stating that none of the negotiations or orders were made in Massachusetts. Worcester Envelope does not dispute this statement. The record does not include the dates of Ms. Goldfinger’s visits, itineraries, or details of what was discussed. If anything substantive did occur, it is not reflected in this record.
“Confronted with a motion under Mass.R.Civ.P. 12(b)(2), a plaintiff has the burden of establishing the facts upon which the question of personal jurisdiction over a defendant is to be determined.” Droukas, 375 Mass. at 151 (citation omitted). Worcester Envelope has not sustained its burden on the record before this Court. Accordingly, Universal’s motion must be allowed.
Forum Non Conveniens
Universal has also moved for dismissal on the ground of forum non conveniens. See G.L.c. 223A, §5. The court may dismiss a case when it “finds that in the interest of substantial justice the action should be heard in another forum...” Id. The decision to refuse to hear a case based on forum non conveniens is left to the trial judge’s discretion, Kearsarge Metallurgical Corp. v. Peerless Ins. Co., 383 Mass. 162, 168 (1981), but the Supreme Judicial Court has identified certain factors for the judge to consider—access to sources of proof, availability of compulsory process for attendance of unwilling witnesses; the cost of obtaining attendance of willing witnesses; and the enforceability of a judgment if one is obtained. Joly v. Albert Larocque Lumber Ltd., 397 Mass. 43, 44 (1986) (affirming dismissal on forum non conveniens where Canadian forum would be more convenient), citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947).
On the facts before this Court, PROCITE’s appearance seems to be necessary to this case. It was PRO-CITE, not Universal, that actually received and inspected the envelopes and discovered their alleged defects. PROCITE withheld $18,000 from Universal in January 2010 because of printing defects attributed to Worcester Envelope. PROCITE ultimately cancelled its contract with Universal because of printing defects attributed to Worcester Envelope. Yet Universal can*648not compel PROCITE to appear to substantiate any of these facts in a lawsuit in Massachusetts.
Moreover, if Worcester Envelope were successful in obtaining a judgment against Universal, enforcing that judgment would require Worcester Envelope to resort to a Canadian court. As noted above, Universal has no offices or assets in the United States. A Massachusetts court could issue a judgment against Universal, but could not effect it.
Additional factors either favor litigation in Canada (e.g., F&W Transport is also based in Quebec) or else balance (e.g., one party or the other will need to travel to a foreign jurisdiction). Ultimately, this Court finds that there is an alternate forum available to the parties in the Canadian courts,2 and in the interest of substantial justice, that those Canadian courts are the more appropriate forum for Worcester Envelope’s claim.
ORDER
For the foregoing reasons, the defendant’s motion to dismiss is ALLOWED.
Universal also moved for dismissal pursuant to Mass.R.Civ.P. 12(b)(5) for improper service of process, arguing that Article 2 of the Hague Convention requires that a complaint served upon a defendant in Quebec must be translated into French. Worcester Envelope admits that it did not serve Universal with a French translation, but argues that Article 2 does not require a translation where the recipient understands English. Because the jurisdictional analyses render this issue moot, it will not be addressed herein.
Universal represented in both its memorandum on this motion and at oral argument (although not via affidavit) that Canadian courts provide adequate recourse for Worcester Envelope’s claim. Worcester Envelope did not deny this. | 01-03-2023 | 10-17-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/2515613/ | 202 P.3d 290 (2009)
226 Or. App. 85
STATE
v.
RICHARDSON.
Court of Appeals of Oregon.
February 18, 2009.
Affirmed without opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2987724/ | Affirmed and Memorandum Opinion filed February 12, 2013.
In The
Fourteenth Court of Appeals
NO. 14-11-00982-CR
JACOBY DARNELL HALL, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 263rd District Court
Harris County, Texas
Trial Court Cause No. 1318666
MEMORANDUM OPINION
A jury convicted appellant Jacoby Darnell Hall of capital murder, and the
trial court assessed automatic punishment of life imprisonment without parole. See
Tex. Code Crim. Proc. Ann. art. 37.071 § 1 (Vernon Supp. 2011). We affirm.
BACKGROUND
The appellant has not challenged the sufficiency of the evidence supporting
his conviction; therefore, we recite only those facts necessary to the disposition of
this appeal.
In August 2008, Varn Butler (a/k/a “Hop”) was paid approximately $1,800
for 1,500 Xanax pills. He took the money but never produced the pills. The
appellant was a part of a group that spent several days searching for Butler in an
attempt to retrieve the $1,800. The group tracked down people who knew Butler
and looked for him at several of his known hangouts.
On August 16, 2008, the appellant and his cousin, Reginald Price, broke into
Marcus Smith’s house by kicking in the door. The appellant was carrying a
revolver, and Price was carrying a semiautomatic pistol. The appellant forced
Smith to call the complainant, William Jones (a/k/a/ “Boo”), to invite him to
Smith’s house to smoke marijuana. The appellant and Price believed the
complainant had information on where to find Butler. When the complainant
arrived, the appellant and Price forced him to sit next to Smith while he was
interrogated at gunpoint about Butler’s whereabouts. Charles Patterson, a
neighborhood handyman, knocked on the front door around this time; the appellant
and Price forced him to stand in a corner of the room while Smith and the
complainant were being questioned.
When Price was distracted, the complainant jumped up and tried to wrestle
his gun away. After a short fight, the appellant and Price both shot the
complainant. The appellant and Price took cell phones and identification from the
2
complainant, Smith, and Patterson before fleeing. The complainant died on the
way to the hospital of multiple gunshot wounds.
The appellant was indicted for the intentional killing of Jones while in the
course of committing several different violations of the Texas Penal Code:
burglary or attempted burglary of a building owned by Smith;1
kidnapping or attempted kidnapping of Jones;2
kidnapping or attempted kidnapping of Smith; 3
kidnapping or attempted kidnapping of Patterson; 4
robbery or attempted robbery of Jones;5
robbery or attempted robbery of Smith; 6 and
robbery or attempted robbery of Patterson7
A jury found the appellant guilty of capital murder, and the trial court assessed the
mandatory sentence of life imprisonment without parole.
The appellant raises six issues on appeal: (1) The amended indictment failed
to provide adequate notice and protect the appellant from double jeopardy; (2) the
jury charge violated the appellant’s constitutional and statutory rights to a
unanimous verdict; (3) the jury charge included theories of the crime unsupported
1
See Tex. Penal Code Ann. § 30.02 (Vernon 2011).
2
See Tex. Penal Code Ann. § 20.03 (Vernon 2011).
3
See id.
4
See id.
5
See Tex. Penal Code Ann. § 29.02 (Vernon 2011).
6
See id.
7
See id.
3
by the evidence; (4) automatic punishment of life imprisonment without parole
constitutes “cruel and unusual punishment” that violates the Eighth Amendment of
the U.S. Constitution; (5) automatic punishment of life imprisonment without
parole constitutes “cruel or unusual punishment” that violates Article I, section 13
of the Texas Constitution; and (6) automatic punishment of life imprisonment
without parole is a violation of the separation of powers set out in Article 2, section
1 of the Texas Constitution.
ANALYSIS
I. Waiver
The Texas Rules of Appellate Procedure require a party to preserve error for
appellate review by demonstrating the error on the record. Tex. R. App. P. 33.1(a);
Clark v. State, 305 S.W.3d 351, 354 (Tex. App.—Houston [14th Dist.] 2010),
aff’d, 365 S.W.3d 333 (Tex. Crim. App. 2012). The party must make the
complaint in a timely manner and state the grounds for the ruling that the
complaining party seeks from the trial court with sufficient specificity to make the
trial court aware of the complaint, unless the specific grounds were apparent from
the context. Tex. R. App. P. 33.1(a)(1)(A). In raising the complaint on appeal, the
party must ensure the point of error is the same as the complaint or objection made
during trial. Clark, 305 S.W.3d at 354. Even constitutional errors can be waived if
a party fails to properly object to the errors at trial. Id. at 355. A challenge to the
constitutionality of a statute may not be raised for the first time on appeal.
Karenev v. State, 281 S.W.3d 428, 434 (Tex. Crim. App. 2009) (facial challenges);
Curry v. State, 910 S.W.2d 490, 496 (Tex. Crim. App. 1995) (as-applied
challenges). Therefore, if a party’s objection at trial does not correspond with its
issue on appeal, the party has waived that issue. Clark, 305 S.W.3d at 354.
4
Here, the appellant argues that the issues raised on appeal were preserved in
the trial court by his motion to quash the indictment and his objection to the jury
charge.
In relevant part, the appellant’s motion to quash provides:
The [appellant’s] right to have his guilt determined by a unanimous
verdict and have a fundamentally fair trial as provided by the due
process clause of the U.S. Constitution is violated by the Texas rule
allowing a general verdict without requiring jurors to agree on the
manner the alleged crime was committed.
* * *
Under the present indictment there are no less than 15 ways the
[appellant] might be found guilty of Capital Murder. It is possible for
the jury to return a general verdict of guilt without any two jurors
agreeing to the manner in which he could be found guilty.
The defense counsel made a similar argument when he objected to the jury charge:
I do have one objection, Judge. I would ask that the State be required
to elect a specific paragraph in the indictment of one of the
enumerated three felonies, whether it’s burglary of a building,
kidnapping[,] or robbery, so that the — my client gets a fair trial and
there is no due process violation of his right to unanimous verdict
from the Jury.
I think the way the Jury charge is, is confusing, it’s misleading and the
State — not necessary for them to have three enumerated felonies in
this case, Your Honor.
The appellant offers no other vehicle for preservation beyond his motion to quash
and his charge objection. Neither makes any mention of inadequate notice or
double jeopardy, the jury charge’s inclusion of theories unsupported by the
evidence, cruel and unusual punishment under the United States Constitution, cruel
5
or unusual punishment under the Texas Constitution, or a violation of the
separation of powers.8 Therefore, the appellant has waived these arguments.
We overrule the appellant’s first, third, fourth, fifth, and sixth issue.
II. Unanimity
In his second issue, the appellant argues that, “The jury charge should have
required the jury to be unanimous as to a theory of Capital Murder, with multiple
verdict forms, if necessary.” According to the appellant, the trial court violated his
constitutional and statutory rights to a unanimous verdict by overruling his request
that the State elect which underlying felony it would rely on to establish capital
murder. Price raised the same argument in his separate appeal, which was rejected.
See Price v. State, No. 14-11-00122-CR, 2012 WL 3292960, at *7 (Tex. App.—
Houston [14th Dist.] Aug. 14, 2012, pet. ref’d) (mem. op., not designated for
publication). We see no basis for reaching a different conclusion here.
It is not a violation of the defendant’s right to a unanimous jury for the trial
court to submit disjunctively all alternative theories of capital murder contained
within section 19.03, whether they are found in the same or different subsections,
so long as the same victim is alleged for the predicate murder. Gamboa v. State,
296 S.W.3d 574, 584 (Tex. Crim. App. 2009). Nothing prohibits a single capital
murder from containing alternative underlying offenses that are the same statutory
offense but with different victims or different underlying methods of commission,
so long as the same victim is alleged with respect to the predicate murder. Davis v.
8
This court has rejected the contention that life imprisonment without parole for an adult
defendant violates the Cruel and Unusual Punishment Clause of the Eighth Amendment to the
United States Constitution, the Cruel or Unusual Punishment Clause of the Texas Constitution,
and the Separation of Powers Section of the Texas Constitution. See Wilkerson v. State, 347
S.W.3d 720, 723, 725 (Tex. App.—Houston [14th Dist.] 2011, pet. ref’d); Battle v. State, 348
S.W.3d 29, 32 (Tex. App.—Houston [14th Dist.] 2011, no pet.).
6
State, 313 S.W.3d 317, 342 (Tex. Crim. App. 2010). Accordingly, the trial court
did not violate the appellant’s right to a unanimous verdict by failing to order the
State to elect a single underlying felony upon which to base its capital murder case.
We overrule the appellant’s second issue.
CONCLUSION
Having overruled all of the appellant’s issues on appeal, we affirm the
judgment of the trial court.
/s/ William J. Boyce
Justice
Panel consists of Chief Justice Hedges and Justices Boyce and Donovan.
Do Not Publish — Tex. R. App. P. 47.2(b).
7 | 01-03-2023 | 09-23-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2451600/ | 674 S.W.2d 795 (1984)
Paul E. MAXWELL and Cheryl Dale, Appellants,
v.
Jim LAKE d/b/a Jim Lake Company #2, Appellee.
No. 05-83-00091-CV.
Court of Appeals of Texas, Dallas.
May 18, 1984.
*797 Ronald E. Holub, Dallas, for appellants.
Ward Williford, Terence M. Murphy, Dallas, for appellee.
Before AKIN, SPARLING and SHUMPERT, JJ.
SHUMPERT, Justice.
This appeal is from a take-nothing judgment rendered by the court against plaintiffs/appellants Maxwell and Dale in an action for breach of an option contract. The crucial questions on this appeal are: (1) May an optionee exercise an option by giving notice within the option period and tendering performance within a reasonable time thereafter when the contract is silent with respect to the method of exercising the option? We answer this question in the affirmative. (2) Was extrinsic evidence admissible here to show the parties' intent, either because there was an ambiguity in the contract, or because the contract was silent with respect to the method of exercising the option? We conclude that it was not, because the contract was unambiguous, and because there was no evidence of the circumstances surrounding the formation of the contract. Consequently, the option was properly exercised when Maxwell and Dale gave notice to appellee Lake and tendered performance shortly thereafter, thus binding Lake to perform under the contract. Accordingly, we reverse the trial court's judgment and remand with instructions to order specific performance.
Factual Setting
The record reflects that the parties first actively considered a conveyance of the property in question in March, 1980. Contracts of sale dated March 12, 1980, and March 18, 1980, were drafted, and earnest money of $5,000 was deposited on each occasion, but Maxwell and Dale were unable to obtain financing either time and the deals collapsed. Maxwell and Dale subsequently leased the property from Lake for a three year term commencing June 15, 1980. Under paragraph 35 of the lease agreement, Lake gave Maxwell and Dale a one year option to purchase the property under the following terms:
35. SPECIAL CONDITIONS:
c) Tenant is hereby given one (1) year from June 15, 1980 an option to purchase this property on the following conditions:
1. Sales price is $212,600.00 of which $12,600.00 is to be in art as outlined in Exhibit B attached.
3. Balance of sales price to be paid in cash to Landlord at closing.
4. If a loan does not become available during the one year option period then Tenant will have one additional year in order to obtain financing.
5. If a loan is made available to Tenant at any time during this one (1) year option or the one (1) year extension and Tenant elects not to accept said loan, then this option is null and void and of no further force and effect.
F. If Tenant elects to exercise either of the above mentioned options then the closing will be in basic accord with a sales contract signed by Jim Lake Co. #2 (Seller) and Paul E. Maxwell and Cheryl Dale (Purchasers) dated March 18, 1980 and shown as Exhibit C attached.
In a letter to Maxwell and Dale dated May 11, 1981, Lake extended the option to purchase for an additional year, until June 15, 1982. On June 15, 1982, Maxwell and Dale hand delivered a letter to Lake purporting to exercise the option. Two days later, they delivered a cashier's check for $5000 to Safeco Title and a letter to Lake in which they advised him that they were "ready, willing and able to pay the balance of the purchase price in full" and offered to do so. On that same day, June 17, 1982, Lake refused to close the sale contending that the option was not properly exercised because the sale had to be closed before June 15, 1982.
*798 Maxwell and Dale filed suit seeking specific performance of the contract, and alternatively, damages for sums expended for improvements on the property in reliance upon the option. The case was tried to the court, and in addition to the lease agreement and contracts of sale, both sides offered testimony as to the parties' intent at various times during the dealings between the parties. The trial court rendered a take-nothing judgment against Maxwell and Dale and later made findings of fact and conclusions of law. Maxwell and Dale contest the trial court's judgment and findings of fact and conclusions of law in eighteen points of error.
Method of Exercising the Option When the Contract is Silent
Initially, we note that the option clause in the lease agreement is silent as to the manner in which the option is to be exercised. That clause does state that if the option is exercised, then the closing of the deal will be "in basic accord" with the contract dated March 18, 1980, allegedly attached to the lease agreement. The contract dated March 12, 1980, however, was attached by mutual mistake. This discrepancy is of no import in this context, however, as both the March 12 and the March 18 contracts were silent regarding how the option is to be exercised.
Maxwell and Dale contend that written notice to Lake on the final day of the option period followed by a tender of the purchase money two days later was sufficient as a matter of law to exercise the option. Lake, on the other hand, argues that the parties intended that either the full purchase price, or alternatively, the $5,000 earnest money that Maxwell and Dale tendered under the two previous contracts of sale, had to be tendered by June 15, 1982, the final day of the option period to exercise the option. We agree with Maxwell and Dale. Accordingly, we hold that where a contract is silent regarding the method of exercising the option, giving timely notice to the optionor and tendering performance within a reasonable time thereafter is sufficient to exercise the option. Our holding is in keeping with the rule of construction that unless an option to purchase contains provisions to the contrary, the optionee is only required to notify the optionor prior to the expiration of the option period, and then tender performance within a reasonable time thereafter to exercise the option. San Antonio Joint Stock Land Bank v. Malcher, 164 S.W.2d 197 (Tex.Civ.App. San Antonio 1942, writ ref'd w.o.m.); Odum v. Sims, 609 S.W.2d 881 (Tex.Civ. App. San Antonio 1980, no writ); Farrell v. Evans, 517 S.W.2d 585, 589 (Tex.Civ. App. Houston [1st Dist.] 1974, no writ). See also Austin Presbyterian Theological Seminary v. Moorman, 391 S.W.2d 717 (Tex.1965), cert. den., 382 U.S. 957, 86 S. Ct. 434, 15 L. Ed. 2d 361 (1965).
Our holding is also in keeping with traditional concepts of contract law. When an option is given in exchange for legal consideration, the power of the option holder is generally called a power of acceptance. The giving of an option creates a power in the optionee to be exercised by giving notice of consent to perform. Upon the giving of such notice of acceptance of the option within the time limit, the legal result is a binding promise because a consideration was paid for it. 1A A. Corbin, Corbin on Contracts § 264 (1963).
The purpose of a purchase option is to give the optionee the right to purchase, at his election, within an agreed period, at a named price, which presumably was considered satisfactory by the optionor in case the option should be exercised at any time during the option term. Sinclair Refining Co. v. Allbritton, 14 Tex. 468, 218 S.W.2d 185 (1949). Once the option is exercised, a binding, enforceable contract of sale has been created. Sinclair, 218 S.W.2d at 188; Farrell, 517 S.W.2d at 589. Our holding is in keeping with these traditional concepts of the mechanics of option contracts. The option is first exercised creating a binding promise to perform, and the sale is later completed.
Furthermore, our holding is in accord with the practicalities of real estate transactions. Generally, upon the exercise of an option in a real estate purchase situation, the seller accumulates the paperwork necessary *799 to furnish the buyer with marketable title. See Lambert v. Taylor Telephone Co-Operative, 276 S.W.2d 929 (Tex. Civ.App. Eastland 1955, no writ). If marketable title is not furnished, the deal will normally not be closed.
Lake contends that the optionee must close the sale before the date the option expires to exercise the option. Under that theory, if the option holder must tender the purchase price within the option period, then in fairness, the seller must be ready to perform, which means he must be able to give the buyer proof of marketable title and have the closing documents prepared on every final day of every option period in case the option holder should elect to exercise the option.
We cannot accept Lake's argument because, as a practical matter, it is not the way business is transacted. An option in this setting is an offer to an option holder to enter into a contract of sale. Corbin at § 264. Many options expire unexercised for a multitude of reasons. Presumably, the consideration given for the option has made it worth the seller's while to give the purchaser that opportunity. The ecnonomic calculus is not presently designed, however, for the seller to be compensated for the machinations he must go through to be prepared to close a deal each time an option period is to expire.
In short, option contracts as they presently exist are for the benefit of both the purchaser and the seller. The price of an option would increase, and the attractiveness of option contracts would decrease, however, if a seller had to be ready to close at the end of each option period. We recognize that if the parties wish to contract for the closing to occur on the final day of the option period, they are free to do so, but we are unwilling to read that provision into a contract which is silent regarding the manner of the exercise of the option.
A similar result under similar reasoning was reached in San Antonio Joint Stock Land Bank v. Malcher, 164 S.W.2d 197 (Tex.Civ.App. San Antonio 1942, writ ref'd w.o.m.). In Malcher, the option clause stated:
The Lessor hereby gives Lessee (August Malcher) the right to purchase the above described tract of land for a consideration of $3,009.70, plus 6% interest from June 7, 1940, to date of purchase. This option, if not exercised, expires September 30, 1941, is not transferrable, and is subject to right of sale by Lessor prior to September 30, 1941.
The court posed the question of whether Malcher was required to pay or to tender the purchase money to the bank on or before the date the option was to expire, or whether having notified the bank of his intention to exercise the option, he would have a reasonable time after that date to pay the money and complete the deal. The court stated:
We conclude that he would have such reasonable time. (after the option date to pay the money) It will be borne in mind that the contract does not require that the option be accepted in writing not later than September 30, 1941, neither does it require in express terms that the money be paid or tendered not later than that date; nor does it require that the money be tendered in cash. It simply provides that the "option, if not exercised, expires September 30, 1941." ... Where an option does not contain provisions to the contrary all that is required is that he notify the optionor, prior to the date of expiration, of his decision to exercise the option and he thereafter has a reasonable time to complete the deal. Malcher, 164 S.W.2d at 199-200.
The court then held that Malcher had tendered money to the bank within a reasonable time after September 30, and that Malcher was therefore entitled to specific performance of the option contract. The Malcher holding was subsequently followed in Odum v. Sims, 609 S.W.2d 881 (Tex.Civ.App. San Antonio 1980, no writ), and Farrell v. Evans, 517 S.W.2d 585, 589 (Tex.Civ.App. Houston [1st Dist.] 1974, no writ).
Lake has argued, alternatively, that to exercise the option, the parties intended that Maxwell and Dale deposit $5,000 earnest money by June 15, 1982. The trial *800 court agreed. We are again unwilling, however, to read a provision into an option clause, this time stating that earnest money must be deposited to exercise the option, when, as Lake conceded at trial, the language of the contract does not so provide. Because we have construed the contract, as a matter of law, to permit a reasonable time after notification of the exercise of the option for tendering performance, the trial court's fact finding regarding the parties' intent is immaterial.
In support of his contentions, Lake cites Greenbaum v. Cortez, 644 S.W.2d 510 (Tex.App. Corpus Christi 1982, writ dismissed), and Killough v. Lee, 2 Tex.Civ. App. 260, 21 S.W. 970 (1893, no writ). We decline to follow Greenbaum because it is distinguishable and Killough because it was incorrectly decided.
In Greenbaum, the option clause stated: Seller gives buyer option to purchase said property for $16,500 at the end of 5 years with 2/3 of rent money going toward down payment. Greenbaum, 644 S.W.2d at 511.
Citing Estate of Griffin v. Sumner, 604 S.W.2d 221 (Tex.Civ.App. San Antonio 1980, writ ref'd n.r.e.), the Greenbaum court stated that "[w]here a contract provides for a fixed sum but has no provision concerning time or method of payment, the general rule is that the consideration is to be paid in cash upon the exercise of the option." Greenbaum, 644 S.W.2d at 511.
This case is distinguishable from Greenbaum and Estate of Griffin on its facts. Unlike the contracts in those two cases, the contract here provides for time and method of payment of the purchase money. It provides for the closing. The Greenbaum and Estate of Griffin holdings, therefore, are inapplicable. Further, we doubt the soundness of Greenbaum because it mentions neither Killough nor Malcher, nor other cases containing the two potential outcomes for the situation in which the contract is silent regarding how to exercise an option. We note further, that the language in the option clause of Greenbaum is very similar to that in Odum v. Sims, 609 S.W.2d 881, (Tex.Civ.App. San Antonio 1980, no writ), one of the Malcher progeny, in which a result opposite to Greenbaum was reached.
Lake also cites Killough v. Lee, 2 Tex. Civ.App. 260, 21 S.W. 970 (1893, no writ), in support of his contentions. In Killough, the option clause stated:
Received from Dr. D.S. Killough fifty dollars, for an option to buy within six days.... The price agreed upon is twelve thousand dollars cash, upon payment of which the said Chas. H. Lee will make deed for his five-sixths interest and make application to court for the sale of interest of his minor son.
The Killough court then stated two principles. The first was that if an option is given which is to be accepted by payment within a given time, then the time of payment is essential and payment is a condition precedent to the vesting of any right in the vendee. The second principle was that if the offer or option requires assent and acceptance within a given time, such assent must be made within the time prescribed, and the contract thereby becomes concluded and mutual. The court then held that the contract required not simply that appellant should assent to the terms proposed within the six days and pay the price at some subsequent time, but that he should buy within that time, paying the price in cash. Killough, 21 S.W. at 971.
We note that Malcher cites Killough for two propositions but does not distinguish its opposite outcome based on very similar language in the respective option clauses. Killough acknowledged the reasoning later used in Malcher but held that the clause in Killough contemplated payment of the purchase money by the option date.
In Moore v. Kirgan, 250 S.W.2d 759, 766 (Tex.Civ.App. El Paso 1952, no writ), the court cited and discussed Malcher and Killough in successive paragraphs but did not distinguish the two. The Moore court merely decided that the language in the option contract before it was very similar to that in Malcher, and that Malcher, therefore, was controlling. The Moore court stated that the Texas Supreme Court *801 had approved the Malcher case in Burford v. Pounders, 145 Tex. 460, 199 S.W.2d 141 (1947), but that approval was for a holding unrelated to the issue at hand. Further, the Moore court reversed its decision on rehearing, deciding that the option had never been exercised.
We fail to perceive a real difference between the option clause language in Malcher and that in Killough. The Killough court, however, concluded that payment was required to exercise the option. Killough, 21 S.W.2d at 971. Because we cannot distinguish Killough from Malcher and its progeny based on the language of the respective option clauses, we conclude that Killough was incorrectly decided. The Killough court should have held that giving notice and tendering performance shortly thereafter was sufficient to exercise the option because the contract was silent regarding how the option was to be exercised, and not that payment was required to exercise the option under the terms of the contract. We decline, therefore, to follow Killough.
Ambiguity
Lake next argues that the lease was ambiguous, and that extrinsic evidence, therefore, was admissible to explain the ambiguity. The question of whether a contract is ambiguous is one of law for the court. R & P Enterprises v. LaGuarta, Gavrel and Kirk, 596 S.W.2d 517 (Tex. 1980); City of Pinehurst v. Spooner Addition Water Company, 432 S.W.2d 515 (Tex.1980). If a written instrument is so worded that a court may properly give it a certain or definite legal meaning or interpretation, it is not ambiguous, and extrinsic evidence is not admissible. LaGuarta, 596 S.W.2d at 519. Conversely, a contract is ambiguous if the application of pertinent rules of interpretation to the face of the instrument leaves it genuinely uncertain as to which one of two or more meanings is proper. Universal C.I.T. Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154 (1951). In that situation, extraneous evidence is admissible to determine the true meaning of the instrument. LaGuarta, 596 S.W.2d at 519. Mere disagreement over the interpretation of an instrument does not make it ambiguous. Sun Oil Co. (Delaware) v. Madeley, 626 S.W.2d 726 (Tex.1982).
Lake initially asserts that the lease agreement is ambiguous because it incorporates by reference the March 18, 1980, contract of sale, but the March 12, 1980, contract was attached instead to the lease agreement. He contends, therefore, that reference must be made to a document outside of the Lease Agreement for its terms, and that the document is therefore ambiguous on its face. The provision to which Lake refers states as follows:
If tenant elects to exercise either of the above mentioned options then the closing will be in basic accord with a sales contract signed by Jim Lake Co. #2 (Seller) and Paul E. Maxwell and Cheryl Dale (Purchasers) dated March 18, 1980 and shown as exhibit C attached. (emphasis added)
We disagree with Lake's contention. First, both parties have agreed that the March 12, 1980, contract of sale was attached by mutual mistake. The mistaken attachment of a document does not create an ambiguity. Universal C.I.T. Credit Corp., 243 S.W.2d at 154. Further, the lease agreement does not, as Lake contends, provide that the option to purchase will be in accord with the terms of the prior contract of sale. The clause in the lease agreement states that if the option is exercised, then the closing will be in accord with a prior sales contract. The use of the word "then" sets forth a condition precedent which must occur before the clause describing the closing ever comes into play. City of Pinehurst, 432 S.W.2d at 519. The language regarding the March 18, 1980, contract had nothing to do with the exercise of the option. We hold, therefore, that no ambiguity exists in the mistaken attachment of the wrong contract of sale.
Lake next contends that the term "option to purchase" is ambiguous in the following provision:
Tenant is hereby given one (1) year from June 15, 1980 an option to purchase this property on the following conditions:
*802 We disagree with Lake's contention. The term "option to purchase" is unambiguous. It is undisputed that Maxwell and Dale had an option to buy the property. Lake argues that the parties understood that phrase to mean that the sale had to be closed prior to the expiration of the option. We have found no rule of construction which gives that meaning to the words "option to purchase." Although it is true that Greenbaum and Killough held that that meaning could be inferred from those or similar words, we have already concluded that Greenbaum is distinguishable because there was no provision there providing for the time and method of payment of the purchase money, and that Killough was incorrectly decided. Because we hold that "option to purchase" can only mean an option to buy, and that the phrase implies nothing concerning the method of exercising the option, we hold that the phrase is unambiguous.
Lake also argues that the contract is ambiguous because it does not state how the option is to be exercised. We disagree. The failure of a written instrument to express an intention of the parties will not admit proof of such intention on the theory that the writing is ambiguous. The rule permitting extrinsic evidence to explain an ambiguous writing has application only when the intention is expressed but in uncertain language susceptible of more than one interpretation. If the written contract is silent, the question is not one of interpreting the language of the writing but rather one of determining the legal effect of the writing. Banner v. Taylor, 118 S.W.2d 826 (Tex.Civ.App. Eastland 1938, writ ref'd); Summit Insurance Co. of New York v. Central National Bank of Houston, 624 S.W.2d 222, 226 (Tex.Civ.App. Houston [1st Dist.] 1981, no writ); Don Drum Real Estate Co. v. Hudson, 465 S.W.2d 409 (Tex.Civ.App. Dallas 1971, no writ).
Surrounding Circumstances
Lake next argues that the trial court properly considered surrounding circumstances in determining the parties' intentions, and that based on evidence of the surrounding circumstances showing the parties' intent, the trial court correctly held that the option was not properly exercised. We disagree. If an unambiguous writing has been entered into between the parties, and there is a question when an attempt is made to apply the language to the subject matter of the contract, proof of circumstances at the time of the formation of the contract is admissible to enable the court to apply the language used therein to the facts as they then existed. The fact that the parties may have intended to make a different contract from that embodied in the writing, or afterwards thought that they had actually made a different one, becomes immaterial, in the absence of a plea of fraud, accident, or mistake. Murphy v. Dilworth, 137 Tex. 32, 151 S.W.2d 1004, 1005 (1941) (per Alexander, C. J.).
All evidence here of the surrounding circumstances and of the parties' intent is evidence of the parties' words and actions in the days immediately before the option was to expire. Lake has presented no evidence of the surrounding circumstances or of the parties' intentions at the time the lease agreement containing the option contract was signed or at the time that the letter extending the option for another year was written. Under Murphy, because there is no evidence of the parties' intentions at either of the above-mentioned times, and neither fraud, accident, nor mistake has been pleaded, evidence of surrounding circumstances is inadmissible and we may look only to the four corners of the document itself. As we have already held, the document is unambiguous, and provides as a matter of law, that the option could be exercised by giving notice within the option period and tendering performance within a reasonable time thereafter.
Lake cites three cases for the proposition that surrounding circumstances should be considered. Scott v. Walden, 140 Tex. 31, 165 S.W.2d 449 (Tex.Comm'n App.1942, opinion adopted), followed Murphy and only permitted evidence showing circumstances at the time the contract was made. Clajon Gas Co. v. Tipton, 523 S.W.2d 438 *803 (Tex.Civ.App. El Paso 1975, no writ), allowed the introduction of extrinsic evidence on three grounds. That court found ambiguity in the contract, relied on Scott which followed Murphy, and relied on the rule stated in Henry v. Powers, 447 S.W.2d 738 (Tex.Civ.App. Houston [1st Dist.] 1969, no writ), the third case cited by appellant, which applied the rule of looking at circumstances as they existed at the time the parties entered into the contract. These cases do not support Lake's position.
If a contract is silent regarding how to exercise an option, the option may be exercised by notifying the optionor by the final date in the option clause and tendering performance within a reasonable time thereafter. We hold that here, as in Malcher, Maxwell and Dale gave proper notice and tendered performance to Lake within a reasonable time, thereby properly exercising the option. Accordingly, we reverse the trial court's judgment and remand with instructions to the trial judge to order specific performance of the contract and to determine a reasonable attorney's fee to be awarded to Maxwell and Dale. Costs are taxed to Lake.
Reversed and remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1564913/ | 691 S.W.2d 717 (1985)
W.H. McCRORY & CO., INC., Appellant,
v.
CONTRACTORS EQUIPMENT AND SUPPLY COMPANY, Appellee.
No. 13944.
Court of Appeals of Texas, Austin.
March 6, 1985.
Rehearing Denied April 3, 1985.
*718 Arch M. Skelton, Besing, Murphy & Armstrong, Dallas, for appellant.
Gary W. Javore, Gregory B. Grigsby, Johnson & Christopher, San Antonio, for appellee.
Before SHANNON, C.J., and EARL W. SMITH and GAMMAGE, JJ.
ON MOTION FOR REHEARING
SHANNON, Chief Justice.
Our opinion of December 12, 1984, is withdrawn and the following opinion is handed down in lieu thereof.
Appellant W.H. McCrory & Co., Inc., seeks to set aside a take-nothing judgment rendered by the district court of Travis County upon appellee Contractors Equipment and Supply Company's (CESCO) motion for judgment non obstante veredicto. This Court will affirm the judgment.
McCrory pleaded an oral contract to lease a used forklift from CESCO. McCrory had negotiated the oral contract with CESCO's president, Bob Mott. By the terms of the alleged oral contract, McCrory claimed an option to purchase the forklift for $40,000 and to receive credit for ninety percent of its previous rental payments toward that purchase price. Thereafter, the president of CESCO died.
When McCrory queried the new owners of CESCO concerning the exercise of the alleged option, CESCO finally denied the existence of the option, and claimed instead that the lease agreement between CESCO and McCrory was embodied in a written instrument which had been delivered to McCrory along with the forklift. The written instrument did not confer upon McCrory an option to purchase the forklift. *719 McCrory thereafter stopped making rental payments.
CESCO later offered to sell the forklift to McCrory for $54,000 and to credit sixty percent of McCrory's previous rental payments towards that price. McCrory rejected this offer and later purported to exercise its alleged option to purchase the forklift under the claimed oral contract by sending a letter and a check to CESCO.
CESCO sued McCrory for past-due rentals of $15,009.14 under the claimed written lease agreement and for attorney's fees. In its answer, McCrory filed a counterclaim pleading the oral contract containing the option to purchase the forklift. McCrory sought, among other things, specific performance of the oral contract by CESCO's delivery of a bill of sale showing McCrory as the owner of the forklift free and clear of any indebtedness. CESCO's defense to the counterclaim was the Statute of Frauds. Tex.Bus. & Com.Code Ann. § 2.201 (1968).
In response to special issues, the jury (1) refused to find that a written contract was made between CESCO and McCrory for rental of the forklift; (2) found that the oral contract between CESCO and McCrory contained an option to purchase the forklift; (3) found that McCrory exercised its option to purchase within the time specified or within a reasonable time, if no time had been specified; and (4) found that no money was due and owing from McCrory to CESCO; and (5) found that the reasonable rental value of the forklift was $1,900 in addition to tax.
The judgment, by its terms, overruled CESCO's motion for judgment non obstante veredicto in part and granted it in part. The district court concluded in the judgment that there was some evidence warranting the jury's refusal to find that a written contract existed between the parties and some evidence warranting the jury's finding that the oral contract between the parties contained an option to purchase the forklift. On the other hand, the district court concluded the option contract violated the Statute of Frauds and was, therefore, unenforceable. The court concluded further that there was no applicable exception to the Statute of Frauds. The district court determined further that McCrory failed to prove the terms of the option contract and that had McCrory proved up the terms of the oral contract, CESCO would be entitled to an offset for the reasonable rental value of the forklift, as found by the jury. The judgment provided, accordingly, that CESCO take nothing by its suit and, as well, that McCrory take nothing by its counterclaim.
In rendering the judgment, the district court necessarily must have concluded, among other things, that the evidence established as a matter of law that the oral contract was in violation of the Statute of Frauds and that, McCrory as the party seeking to avoid the effect of application of that defense, had the burden to request the submission of special issues the answers to which would establish an exception to the statute.
Only McCrory perfected an appeal from the judgment; however, CESCO complains by cross-points of that part of the judgment denying its recovery.
McCrory contends on appeal that the district court erred in concluding that enforcement of the option to purchase under the oral contract would violate the Statute of Frauds. McCrory argues further that CESCO waived the Statute of Frauds defense by not requesting special issues inquiring whether exceptions to the Statute of Frauds were applicable.
The Statute of Frauds of the Texas Business and Commerce Code provides as follows:
§ 2.201.
(a) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or *720 broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.
(b) Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of Subsection (a) against such party unless written notice of objection to its contents is given within ten days after it is received.
(c) A contract which does not satisfy the requirements of Subsection (a) but which is valid in other respects is enforceable
(1) if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement; or
(2) if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or
(3) with respect to goods for which payment has been made and accepted or which have been received and accepted (Section 2.606).
Under § 2.201 a contract for the sale of goods for the price of $500.00 or more is not enforceable unless there is some writing sufficient to indicate a sale between the parties, signed by the party against whom enforcement is sought.
The district court correctly concluded that the parties' transaction came within the terms of § 2.201(a). The whole thrust of McCrory's evidence was that its president and CESCO's president entered into an oral agreement for the lease of a used forklift. The oral agreement contained an option permitting McCrory to purchase the equipment for $40,000 and allowing McCrory a credit of ninety percent of the lease payment against the purchase price. In the face of such proof, McCrory cannot now be heard to claim that there was no proof of an oral contract for the sale of goods for the price of $500.00 or more.[1]
Assuming evidence in support of one or more exceptions to the Statute of Frauds (§ 2.201(a)), it is manifest that neither party requested special issues submitting one or more such exceptions. The pivotal inquiry is whether McCrory or CESCO had the burden of requesting the submission of special issues concerning the applicability of one or more exceptions to the Statute of Frauds (§ 2.201). Each party claims that the other had the burden to request the special issues and, by its failure to do so, waived a determination of the applicability of the exceptions to the Statute of Frauds. Tex.R.Civ.P.Ann. 279 (1977).
This Court concludes that McCrory had the burden of requesting the submission of special issues concerning the applicability of one or more exceptions to the Statute of Frauds. All of McCrory's proof was that the parties entered into an oral agreement "for the sale of goods for the price of $500.00 or more" pursuant to § 2.201.
Section 2.201(a) plainly barred McCrory from enforcing that contract unless one of the exceptions to § 2.201(a) was applicable.
"The ascertainment of which of the parties relies upon a particular issue may be made by considering which one is interested in, and will be benefited by, a determination *721 of the issue." Hodges, Special Issue Submission in Texas 179-80 (1959). Only McCrory would benefit by submission of special issues on the applicability of exceptions to the Statute of Frauds. Absent a fact finding that such an exception applied, McCrory could not recover under the terms of the oral contract.
Our conclusion is supported by Wise v. Anderson, 163 Tex. 608, 359 S.W.2d 876, 881 (1962), an opinion involving analogous facts. In Wise the defendant set up the defense of the statute of limitations. The Supreme Court held that it was the burden of the plaintiff, and not the defendant, to request submission of a special issue inquiring whether the defendant was absent from the state for a sufficient time to toll the statute of limitations, and that the plaintiff waived the issue by failing to so request.
Because the parties' contract was unenforceable by virtue of the Statute of Frauds and because there was no determination of the applicability of any exception to the statute, the district court did not err in rendering judgment that McCrory take nothing by its counterclaim.
By five cross-points of error, CESCO seeks review of that part of the judgment denying it recovery for past-due rentals under the claimed lease agreement and for attorney's fees. After the jury returned its verdict, CESCO filed its motion for judgment non obstante veredicto. As previously written, the judgment, by its terms, overruled the motion for judgment non obstante veredicto in part and granted it in part. CESCO made no complaint to the trial court as to that part of the judgment overruling in part its motion for judgment non obstante veredicto.
The trial court should be afforded an opportunity to correct any errors that it might have made in the judgment. Accordingly, to complain of the judgment on appeal, an appellee is required to bring those errors to the court's attention in some manner whether by filing exceptions to the judgment, notice of appeal, or motion for new trial. West Texas Utilities Co. v. Irvin, 161 Tex. 5, 336 S.W.2d 609 (1960); Dahl v. Akins, 645 S.W.2d 506, 515 (Tex. App.1982, no writ); State Bar of Texas Appellate Procedure in Texas § 15.16 (2d ed. 1979).
On motion for rehearing, CESCO suggests that its motion for judgment non obstante veredicto was sufficient to put the district court on notice of its dissatisfaction with the judgment. We do not agree. The rationale underlying the rule is that the trial court ought to be afforded an opportunity to correct any errors that it might have made in the judgment. Because the district court granted CESCO's motion for judgment non obstante veredicto in part and denied it in part, and because CESCO filed no complaint of the judgment after its rendition, it may well have appeared to the district court that CESCO was entirely satisfied with the court's judgment. A motion filed before rendition of judgment does not apprise the trial court of the party's dissatisfaction with the judgment thereafter rendered, most particularly when the motion was granted in part.[2]
As explained, the cross-points are probably not here for review. We, nevertheless, have examined them and their supporting arguments and are of the view that all are without merit. Accordingly, the cross-points are overruled.
The judgment is affirmed.
NOTES
[1] McCrory does not contend that the Statute of Frauds is inapplicable on the ground that the oral contract is for the lease of goods and provides the lessee an option to purchase, as opposed to a simple sale of the goods. We, therefore, do not address this contention, and assume for purposes of this opinion that the Statute of Frauds is applicable.
[2] CESCO's position, as a party dissatisfied with the judgment, is different from the appellees in Motsenbocker v. Wyatt, 369 S.W.2d 319 (Tex. 1963) and Brownstone Park Ltd. v. Southern Union Gas Co., 537 S.W.2d 270 (Tex.Civ.App. 1976, writ ref'd n.r.e.). In those cases, the appellees were satisfied with the judgments rendered and by their cross-points reserved claimed error only in the event of reversal of the trial courts' judgments by the appellate courts. Tex.R.Civ.P. 324(c). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1621973/ | 942 S.W.2d 156 (1997)
AMERICAN EMPLOYERS' INSURANCE COMPANY, Commercial Union Insurance Company, the Employers' Fire Insurance Company, the Northern Assurance Company of America, and Cu Lloyds of Texas, Appellant
v.
Lanny AIKEN, LaVera Aiken and Lanny Aiken Insurance Agency, Inc., Appellee.
No. 2-96-295-CV.
Court of Appeals of Texas, Fort Worth.
March 13, 1997.
Rehearing Overruled April 24, 1997.
*157 David R. Hudgins, Tom J. Stollenwerck, Dallas, for appellant.
David Martin, Waco, for appellee.
Before DAY, LIVINGSTON and HOLMAN, JJ.
OPINION
HOLMAN, Judge.
This interlocutory appeal is authorized by TEX.CIV.PRAC. & REM.CODE ANN. § 171.017(Vernon Supp.1997).[1] A group of insurance companies collectively called "Commercial Union" appeal the trial court's denial of their motion to compel arbitration *158 and stay the lawsuit of an insurance agency and the agency shareholders, who claim the insurers wrongfully terminated its agency agreement. See id. § 171.002. The appeal challenges the trial court's findings that the agency's claims are not within the scope of the agency agreement's arbitration provision and that the provision is unconscionable and unenforceable. See id. § 171.001. Because the evidence establishes that the agency's claims are within the scope of the arbitration provision and because that provision is valid, enforceable, and not unconscionable, we reverse.
Background
Lanny Aiken and his wife, Lavera Aiken, are shareholders of Lanny Aiken Insurance Agency, Inc., in Granbury, Texas. Since 1958, when Mr. Aiken entered the insurance business, he has represented more than 20 insurance companies and has signed more than 30 agency agreements. The first agreement for the Aiken agency to represent Commercial Union in selling only commercial insurance lines became effective July 1, 1982 and did not contain an arbitration clause. At that time, the Aiken agency was located in Fort Worth. The second agreement between the agency in Fort Worth and Commercial Union was signed only two months later on September 1, 1982 and did include an arbitration clause. The next agreement Mr. Aiken signed was in 1985 for his Fort Worth agency to represent Commercial Union for commercial lines. In 1986, after moving his agency to Granbury, Mr. Aiken signed another agreement for the agency to represent the insurer for personal lines. The 1985 and 1986 agreements did not contain an arbitration clause.
The Arbitration Clause
The arbitration clause in the September 1, 1982 agency agreement states:
(18) Arbitration. If any dispute or disagreement shall arise in connection with any interpretation of this agreement, its performance or non-performance, or the figures and calculations used, the parties shall make every effort to meet and settle their dispute in good faith informally. If the parties cannot agree on a written settlement to the dispute within fourteen (14) days after it arises, or within a longer period agreed upon by the parties, then the matter in controversy shall be settled by arbitration, in accordance with the rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction.
The parties may agree to submit the dispute to one arbitrator; otherwise there shall be three, one named in writing by each party within ten days after notice of arbitration is served by either party upon the other, and a third arbitrator selected by these two arbitrators within fifteen days thereafter. If the arbitrators are unable to agree upon a third arbitrator, then the third arbitrator shall be chosen impartially by the American Arbitration Association. The determination of the arbitrator(s). shall be final and binding on all parties, provided such determination is made in writing and signed by a majority of the arbitrator(s). Where arbitration results in an award, such award shall include interest in the amount of six percent (6%) per annum running from the date when the amount that is the subject of the award first became due. The costs of arbitration shall be borne equally by the parties. [Emphasis added].
On November 3, 1989, Commercial Union sent Mr. Aiken a letter about a proposed new agency agreement, including a synopsis of the proposed new terms, pointing out the fact that those terms would include an arbitration agreement. Mr. Aiken testified that he read the synopsis and saw the information about an arbitration clause. Eventually, he received the new agency agreement by mail and signed it on January 1, 1990. Although the agreement covered the Aiken agency's sales of both personal and commercial lines of insurance for Commercial Union, Mr. Aiken testified that he had read the synopsis of the contract but did not read the actual agreement before he signed it.
Approximately seven months later, on July 16, 1990, the agreement was amended again, *159 and the arbitration clause remained intact. The other changes made in the July amendment are not in controversy. The text of the July 16 arbitration clause is identical to the arbitration clauses of both the September 1, 1982 and January 1, 1990 agreements between the Aiken agency and Commercial Union. The appeal focuses on the July 16, 1990 agency agreement because it is the one that was in effect when this dispute arose.
Scope of the Arbitration Clause
The first point of error asserts that the trial court erred by finding that the complaints made by the Aiken agency in this lawsuit are not within the scope of the agency agreement's arbitration clause. Whether the agreement imposes a duty to arbitrate this particular dispute is a matter of contract interpretation and a question of law for the court. Kline v. O'Quinn, 874 S.W.2d 776, 782 (Tex.App.Houston [14th Dist.] 1994, writ denied), cert. denied, ___ U.S. ___, 115 S. Ct. 2579, 132 L. Ed. 2d 829 (1995). Any doubts regarding the scope of an arbitration agreement should be resolved in favor of arbitration. Cantella & Co., Inc. v. Goodwin, 924 S.W.2d 943, 944 (Tex.1996) (orig. proceeding); Merrill Lynch, Pierce, Fenner & Smith v. Eddings, 838 S.W.2d 874, 880 (Tex. App.Waco 1992, writ denied).
Standard of Review
The Texas General Arbitration Act includes this statement:
A written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract.
TEX.CIV.PRAC. & REM.CODE ANN. § 171.002 (Vernon Supp.1997). A trial court that is asked to evaluate the scope of a contract's arbitration clause may summarily decide whether to compel arbitration, based on affidavits, pleadings, discovery, and stipulations. Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 269 (Tex.1992).
On appeal, we are asked to review whether the trial court's rulings as to scope and unconscionability were an abuse of discretion. Commercial Union asserts that the rulings were an abuse, and the Aikens say there was no abuse. We must decide whether the trial court's rulings were arbitrary and unreasonable, that is, made without reference to any guiding rules or principles. Worford v. Stamper, 801 S.W.2d 108, 109 (Tex.1990); Southwest Health Plan, Inc. v. Sparkman, 921 S.W.2d 355, 357 (Tex.App. Fort Worth 1996, no writ).
Termination of the Agency Agreement
In June 1992, Commercial Union evaluated the losses it had experienced on claims filed by the holders of its insurance policies written through the Aiken agency and elected to terminate the Aiken agency's authority to write personal lines insurance under the July 16, 1990 agency agreement. The July 16, 1990 agreement includes this language:
20. Termination.
....
(C) This agreement may be terminated by [Commercial Union] at any time upon written notice to agent stating when, not less than ninety (90) days after mailing of such notice, such cancellation shall become effective.
....
(E) All termination procedures are subject to any statutory or regulatory requirements.
Mr. and Mrs. Aiken and their agency contend in this lawsuit that the method by which Commercial Union terminated the agency agreement violated a statutory requirement that before a fire and casualty insurer may terminate an agency agreement that has been in effect for a period of two years in Texas, the insurer must give the agency at least six-months' advance notice in writing. See TEX.INS.CODE ANN. art. 21.11-1 (Vernon 1981 & Supp.1997). While the Aikens are maintaining that Commercial Union did not comply with the statutory notice requirement, the insurer is contending that it did. The Aikens also assert that because the termination of the agency agreement caused the *160 insurers' cancellation of policies held by the agency's policyholders, the agency termination violated a statutory prohibition against canceling a homeowner's policy unless the insured had filed three or more claims under the policy within a three year period. See id. art. 21.49-2B § 7(c), (d) (Vernon Supp.1997). Determining which party enjoys the correct position on the agency's claims that there were statutory violations by Commercial Union is simply an evidentiary matter not ripe for our review in this appeal. However, the impasse between the parties about whether the insurers did or did not satisfy the contractual obligation to comply with statutory requirements raises the question of whether that impasse is a "dispute or disagreement" that the parties' own contract requires them to arbitrate because the dispute arose in connection the insurer's alleged nonperformance of the agency agreement. It is.
The Agency's Tort Theories
The Aikens' third amended original petition also asserts tort claims. They allege that because the termination of the agency agreement resulted in cancellation of the outstanding insurance policies that were written while the agency agreement was in force, the policy cancellations amounted to defamation of the Aikens and their agency, interference with business relations between the agency and its policyholders, negligence, gross negligence, negligent misrepresentation, and intentional infliction of emotional distress. However, a party may not avoid the responsibility to arbitrate a contract dispute by attempting to cast complaints in tort rather than contract. Merrill Lynch, 838 S.W.2d at 880.
Here, the contract included the agreement to arbitrate any dispute arising in connection with nonperformance of the contract. And a dispute arising out of a contractual relationship may give rise to both breach of contract and tort claims at the same time because the breach of a duty owed under the contract may involve tortious conduct. Montgomery Ward & Co. v. Scharrenbeck, 146 Tex. 153, 204 S.W.2d 508, 510 (Tex.1947). But, if a defendant's negligent conduct would give rise to liability only because it breaches the parties' agreement, then the claim sounds only in contract. Southwestern Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494 (Tex.1991); Valero Energy Corp. v. Wagner & Brown II, 777 S.W.2d 564, 566 (Tex.App.El Paso 1989, writ denied). The Aikens' claims asserting tort liability are so interwoven with their contract claims that they do not stand alone, for the agency contract is the only basis for a legal relationship between the parties. In fact, in their brief the Aikens concede that their claims are within the scope of the arbitration clause.
Because we find that all of the claims asserted by the Aikens in this lawsuit are within the scope of the arbitration agreement, we hold that the trial court abused its discretion in finding to the contrary. The first point of error is sustained.
Unconscionability
The second point of error asserts that the arbitration clause is not unconscionable and that the trial court erred in relying on unconscionability as the basis for denying the motion to compel arbitration and to stay the lawsuit. When a contract is between private persons who bargain from positions of substantially equal strength, the agreement is ordinarily enforced. Interstate Fire Ins., Co. v. First Tape, Inc., 817 S.W.2d 142, 145 (Tex.App.Houston [1st Dist.] 1991, writ denied). When deciding whether a contractual provision such as the arbitration clause is unconscionable, a court must consider the entire atmosphere in which the agreement was made. DeLanney, 809 S.W.2d at 498 (Gonzales, J., concurring). The court must look at the bargaining process the parties went through and must evaluate the fairness of a contractual provision in controversy by determining whether there are legitimate commercial reasons that justify its inclusion as part of the agreement. Id. at 499. Although unconscionability is a question of law, the trial court is entitled to hear evidence on the issue. Wade v. Austin, 524 S.W.2d 79, 85 (Tex.Civ.App.Texarkana 1975, no writ).
The Aikens insist that the arbitration clause in their agency agreement is unconscionable because they had no bargaining power whatsoever in negotiating that agreement *161 and were forced to accept the arbitration clause, waiving their right of access to the courts, in order to preserve the economic viability of the agency and the interests of its policyholders. The Aikens contend that when they made their agency agreement with Commercial Union, there were no available alternatives for keeping their agency financially sound and also protecting the agency's 750 policyholders against being left without insurance coverage.
The Aikens offer that rationale for the argument that they suffered from a coercive atmosphere in the bargaining process between themselves and Commercial Union. The Aikens protest that during the bargaining process, the attitude of the Commercial Union personnel about the contract was simply "take it or leave it."
The Aikens cite Wade, 524 S.W.2d at 86, as authority for the premise that their present description of the bargaining atmosphere in which they negotiated the agency agreement compelled the trial court, and should now compel us, to determine that the contract's arbitration clause is oppressive, unreasonable, and unconscionable. A similar argument relying on unequal bargaining power of the contracting parties was rejected by the court in Wade when the real estate listing agreement before that court was found to not be unconscionable. Id. The Wade opinion also cautions that:
"[A] party who knowingly enters a lawful but improvident contract is not entitled to protection by the courts. `In the absence of any mistake, fraud, or oppression, the courts, as such, are not interested in the wisdom or impolicy of contracts and agreements voluntarily entered into between parties compos mentis and sui juris. Such parties to contracts have the right to insert any stipulations that may be agreed to, provided they are neither unconscionable nor otherwise illegal or contrary to public policy. It has accordingly been said that, almost without limitation, what the parties agree upon is valid, the parties are bound by the agreement they have made, and the fact that a bargain is a hard one does not entitle a party to be relieved therefrom if he assumed it fairly and voluntarily...."
Id. at 86.
The courts of Texas view arbitration agreements with favor and have done so since at least 1845. Jack B. Anglin Co., Inc., 842 S.W.2d at 268. There is nothing unconscionable per se about an arbitration contract, and the party claiming unconscionability has the burden to prove it. Emerald Texas, Inc. v. Peel, 920 S.W.2d 398, 402 (Tex.App.Houston [1st Dist.] 1996, no writ). Here, the trial court appropriately heard evidence that is in the appellate record. After carefully reviewing the record, we are persuaded that the trial court erred by ruling that the arbitration clause is unconscionable and unenforceable as a matter of law.
The arbitration clause in the contract is plain and unambiguous. Its wording is identical to arbitration clauses that Mr. Aiken agreed to in the September 1, 1982 agency agreement and the January 1, 1990 agency agreement. He testified that he knew in advance that the July 16, 1990 agency agreement would include an arbitration clause, that he had read a synopsis of the agreement, that he thought he understood it, and that he signed the agreement. Mr. Aiken's admission from the witness stand that he had read and understood the synopsis conflicts with his contention that someone with Commercial Union fraudulently told him that the new agency agreement would not include an arbitration clause, thereby inducing him to sign the agreement without reading it. Contracting parties are obligated to protect themselves by reading what they sign. G-W-L, Inc. v. Robichaux, 643 S.W.2d 392, 393 (Tex.1982), overruled on other grounds, Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349, 355 (Tex.1987) (regarding waiver of implied warranty in consumer goods cases). A person who signs a contract, is presumed as a matter of law to know its terms. D. Wilson Constr. Co. v. McAllen Indep. Sch. Dist., 848 S.W.2d 226, 230 (Tex. App.Corpus Christi 1992, writ dism'd w.o.j.).
This is not a disparate bargaining power case in which the insurer had vastly superior expertise and knowledge of agency agreements when compared with Mr. Aiken's knowledge. The evidence is clear that Mr. Aiken had 38 years of experience in the *162 insurance business and had been a party to more than 30 agency agreements during that time. He was a member of at least five professional insurance agent organizations or societies. He professed to be an expert consultant for other insurance agents in Texas on the subject of their agency agreements and actually served other agents in that expert capacity.
In a contractual bargaining process analogous to that in which the Aiken agency agreement was negotiated, a "take it or leave it" contract was held not unconscionable as a matter of law because the complaining party, a physician, could have contracted his services to another hospital. See Dillee v. Sisters of Charity, 912 S.W.2d 307, 310-11 (Tex. App.Houston [14th Dist.] 1995, no writ). Although Mr. Aiken initially testified and contends on appeal that his agency had no alternative but to sign the Commercial Union agency agreement because he could not have moved his 750 policyholders to any other insurance company, other evidence refuted that contention. In March or April 1990, before he signed the July 16, 1990 agency agreement, Mr. Aiken rejected offers to sign agency agreements and do business through Kemper Insurance Company, Cigna Insurance Company, Transamerica Insurance Company, Continental Insurance Company, and Republic Insurance Company. We conclude from the evidence that the Aiken agency did have other alternatives for continuing to serve its policyholders.
As a matter of law, the arbitration clause in the Aiken agency agreement is fair to the contracting parties. There is no evidence that the clause contains unique or unusual provisions, and we recognize that the stated public policy of Texas is to encourage the peaceable resolution of disputes, even the early settlement of pending litigation, through voluntary settlement procedures, including arbitration. See TEX.CIV.PRAC. & REM.CODE ANN. §§ 154.002, 154.003, 154.027 (Vernon Supp.1997); Jack B. Anglin Co. Inc., 842 S.W.2d at 268. Because the arbitration clause is not unconscionable and because it appears to be a valid, enforceable, and irrevocable agreement between the parties, the second point of error is sustained. The third point of error asserts that because no other grounds exist to support the trial court's order, the court erred in denying the motion to compel arbitration and stay the lawsuit. Based on our review of the record, we agree and sustain the third point of error.
Conclusion
We have sustained all points of error, and because the errors complained of on appeal denied Commercial Union's rights to an extent reasonably calculated to cause, and probably did cause, rendition by the trial court of an improper order from which this appeal was taken, the order of the trial court is reversed. See TEX.R.APP.P. 81(b)(1). We render judgment compelling arbitration and staying the cause pending arbitration. See TEX.R.APP.P. 81(c).
NOTES
[1] Formerly TEX.REV.CIV.STAT.ANN. art. 238-2, redesignated as TEX.CIV.PRAC. & REM.CODE ANN. § 171.017, Acts 1995, 74th Leg., ch. 588, § 1, eff. Sept. 1, 1995. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1876784/ | 829 F. Supp. 707 (1993)
ASSOCIATED BUSINESS TELEPHONE SYSTEMS CORPORATION, Plaintiff,
v.
Leo J. DANIHELS, Defendant.
Civ. A. No. 92-3943.
United States District Court, D. New Jersey.
August 20, 1993.
*708 Stuart A. Wilkins, Berlin, NJ, for plaintiff.
Guy Michael, Brown & Michael, P.C., Atlantic City, NJ, for defendant.
OPINION
GERRY, Chief Judge.
This is a diversity action between plaintiff, Associated Business Telephone Systems Corporation ("ABTS"), whose principal place of business is in New Jersey, and defendant, Leo J. Danihels, who is domiciled in Nevada. The parties are presently before the court upon motion of defendant to dismiss the complaint for lack of subject matter jurisdiction and for lack of personal jurisdiction. In the alternative, defendant seeks transfer of this action to Nevada pursuant to the doctrine of forum non conveniens.
BACKGROUND
ABTS is a telephone systems service corporation incorporated and having its principal place of business in New Jersey. In *709 1990, ABTS entered into a telephone servicing contract ("the Contract") with the Ramada Las Vegas Inn ("the Inn") situated in Las Vegas, Nevada, and the Inn's owner, Jesse Wright. The contract was for a term of twelve years and required, among other things, that ABTS install a telephone system at the Inn, that the Inn collect and remit to ABTS the monthly charges arising from guest usage of the system, that those funds be held in trust for ABTS, and that the Inn insure the system. The contract also contained a liquidated damages provision and stated that New Jersey law would govern its interpretation and enforcement.
The Inn experienced financial difficulties and defendant, a secured creditor of Wright and the Inn, was appointed Interim Receiver of the Inn on January 14, 1992. In addition to the usual powers granted to receivers, defendant was specifically vested with the power to manage the Inn, to collect rents and profits, to pay expenses, and to maintain and preserve the Inn pending foreclosure proceedings. Shortly thereafter, ABTS notified defendant that the Inn was approximately $14,000 in arrears for payments due under the Contract and that the telephone system was therefore scheduled for disconnection unless defendant remitted the outstanding debt.
Defendant sent ABTS $4,042.57, and ABTS agreed not to have the system shut down. Plaintiff alleges that defendant promised that he would be bound by and make all payments due under the Contract during the period of receivership. Plaintiff also maintains that defendant stated that he could not as receiver assume the Contract, but, if defendant was successful in taking over the property as second mortgage holder after foreclosure, he would assume the contract at that time. Defendant purchased insurance and began making the monthly payments.
ABTS further alleges that sometime later during the receivership, ABTS again sought to terminate the Contract because the original arrearage was still outstanding, because defendant had yet to assume the Contract, and because the foreclosure was taking much longer than defendant had initially predicted. ABTS maintains defendant responded by assuring ABTS that he was definitely going to take over the Inn following foreclosure. Based upon such representations, ABTS states that it continued to perform under the Contract and upgraded the system at a cost of $15,000 to $20,000.
Defendant subsequently failed to pay the invoices for the months of June and August 1992, which amounted to $8,638.66. These latter invoices were not paid because of a dispute between the parties over whether the defendant's original $4,042.57 payment was a good faith deposit to keep the phones operable or should have been credited to the monthly invoices as they came due. On August 4, 1992, the Inn was sold at a trustee sale and acquired by someone other than defendant. After the sale, defendant sent ABTS two payments totalling $4,596.09, representing the difference between the monies defendant believed should have been credited to his account and the remaining balance of the June/August invoices.
ABTS instituted this action alleging breach of contract, conversion of the unremitted funds, and fraud. Defendant moves to dismiss contending that ABTS cannot meet the requisite jurisdictional amount in controversy and for lack of personal jurisdiction.
DISCUSSION
I. Amount in Controversy
This court has jurisdiction over diversity actions only if they involve more than $50,000 in controversy. 28 U.S.C. § 1332. Although the complaint alleges more than $50,000 in damages, defendant argues that in fact the amount in controversy is much less.
The amount claimed in the complaint is controlling unless, upon the face of the pleadings or proofs submitted, it "appears to a legal certainty that the claim is really for less." St. Paul Mercury Indem. Co. v. Red Cab. Co., 303 U.S. 283, 288-89, 58 S. Ct. 586, 589-90, 82 L. Ed. 845 (1938); Smithers v. Smith, 204 U.S. 632, 642, 27 S. Ct. 297, 299, 51 L. Ed. 656 (1907). The existence of a perfect defense that might reduce the recovery below the requisite amount does not defeat jurisdiction. Id. *710 Once challenged, however, it is the plaintiffs burden to show that it does not appear to a legal certainty that the claim does not satisfy the jurisdictional amount. Gibbs v. Buck, 307 U.S. 66, 59 S. Ct. 725, 83 L. Ed. 1111 (1939); Nelson v. Keefer, 451 F.2d 289 (3d Cir.1971).
To demonstrate that the amount it alleged in the complaint is made in good faith and not legally certain to be for less, ABTS relies on the liquidated damages clause in the Contract, which calls for damages in excess of $500,000; the amount it would be entitled to on its conversion claim, which could include punitive damages under Nevada Revised Statute § 42.005 (1991); and reliance damages of fifteen to twenty thousand dollars on its fraud claim, under which ABTS also seeks punitive damages.
Defendant argues that he was not bound by the Contract because he agreed only to make payments in accordance with the pre-existing contract, not to be bound by any other terms. Alternatively, he contends that if he was bound by the entire Contract, he did not breach the Contract because he remitted all that was owed to plaintiff. Either way, he maintains that he cannot be liable under the Contract's liquidated damages clause. Defendant also contends that he cannot be liable for punitive damages because all of his actions were done in good faith.
Defendant's arguments are premature. That defendant may have a valid defense to the contract claim does not demonstrate that the claim was made in bad faith. Moreover, though it is not clear that a $500,000 liquidated damages provision will be enforceable on a contract involving approximately $4,000 a month over an eight month period, the liquidated damages clause is sufficient to satisfy the plaintiffs burden on this motion. We cannot say that it is legally certain that the clause is unenforceable. Finally, the fact that punitive damages may be available on the remaining claims similarly precludes us from finding it legally certain that plaintiffs damages will not exceed $50,000. Like defendant's former arguments, his contention that he did not have the requisite mental state to justify punitive damages is premature. These issues are more properly determined on motion for summary judgment or at trial. We hold, therefore, that ABTS has met its burden to invoke this court's subject matter jurisdiction.
II. Personal Jurisdiction
Defendant also challenges this court's exercise of personal jurisdiction. A court acquires personal jurisdiction over an out-of-state defendant where that defendant is properly served, and exercise of jurisdiction does not otherwise offend the constitution. Federal Rule of Civil Procedure 4(e) requires us to examine the New Jersey Long Arm statute to assess the scope of service over an out-of-state defendant. That statute, N.J.Rule 4:4-4(c)(1), grants jurisdiction to the same extent as allowed by the United States Constitution. Avdel Corp. v. Mecure, 58 N.J. 264, 277 A.2d 207, 209 (1971). The only constitutional limit placed upon a federal court's exercise of personal jurisdiction is the Due Process Clause, which requires that a defendant have sufficient minimum contacts with the forum state such that maintenance of the suit there does not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945).
The contacts between a defendant and the forum must demonstrate that the defendant "has [purposefully] availed itself of the benefits and protection of that state," and that a defendant "should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 297, 100 S. Ct. 559, 563, 567, 62 L. Ed. 2d 490 (1980); see also Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1239, 2 L. Ed. 2d 1283 (1958) (defendant must "purposefully avail" itself of privilege of acting within the forum). Accordingly, a "defendant will not be haled into a jurisdiction solely as a result of `random,' `fortuitous,' or `attenuated' contacts, or [based upon] the `unilateral activity of another person.'" Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S. Ct. 2174, 2183, 85 L. Ed. 2d 528 (1985) (citations omitted). Those who deliberately "`reach out'" and "`create continuing relationships and obligations with citizens of another state,'" *711 however, will be subject to that state's regulations and sanctions for consequences arising from those relationships. Id. at 473, 105 S.Ct. at 2182 (quoting Travelers Health Ass'n v. Virginia, 339 U.S. 643, 647, 70 S. Ct. 927, 929, 94 L. Ed. 1154 (1950)). Nevertheless, "fair play and substantial justice" may preclude jurisdiction even where the defendant has "purposefully engaged in forum activities." Id. at 477-78, 105 S.Ct. at 2184-85. The court must engage in a fact specific inquiry wherein there will be no clear cut answers. Id. at 486, 105 S.Ct. at 2189. This is an area of law in which the "`greys are dominant and even among them the shades are innumerable.'" Id. at 486 n. 29, 105 S.Ct. at 2190 n. 29 (quoting Kulko v. California Superior Court, 436 U.S. 84, 92, 98 S. Ct. 1690, 1697, 56 L. Ed. 2d 132 (1978)). Once challenged, it is plaintiff's burden to demonstrate the existence of sufficient contacts to establish personal jurisdiction. Carteret Savings Bank, FA v. Shushan, 954 F.2d 141, 146 (3d Cir.1992); Compagnie Des Bauxites De Guinee v. L'Union Atlantique S.A. D'Assurances, 723 F.2d 357, 362 (3d Cir.1983).
Plaintiff does not dispute defendant's assertion that he has never set foot in New Jersey and has had no prior dealings with New Jersey residents. Plaintiff contends, however, that defendant's agreement to be bound by the Contract terms during his receivership is sufficient by itself to invoke either general or specific in personam jurisdiction over defendant.[1] General in personam jurisdiction arises out of a defendant's continuous and systematic conduct in the forum that is unrelated to the subject matter of the lawsuit. Specific in personam jurisdiction, however, arises when the particular cause of action at issue arose out of the defendant's contacts with the forum. See Provident Nat'l Bank v. California Federal Savings & Loan Ass'n, 819 F.2d 434, 437 (3d Cir.1987).
We find defendant has insufficient contacts with New Jersey to justify the exercise of general in personam jurisdiction. Plaintiff has alleged no ongoing contacts outside of the alleged contract. Defendant has never been to New Jersey, has no personal connection to New Jersey, and has had no business dealings with New Jersey residents other than the alleged contract with ABTS. His entry into this single, short-term contract does not establish the necessary "continuous and systematic" contacts with the forum. Therefore, we now turn to whether ABTS has demonstrated sufficient contacts to invoke specific jurisdiction.
The Supreme Court has stated that it is the business relationship evidenced by a contract, rather than the contract itself, that will serve as the basis for in personam jurisdiction. Burger King, 471 U.S. at 478-79, 105 S.Ct. at 2185-86. Accordingly, a contract between a forum resident and an out-of-state party will not automatically establish sufficient contacts with the forum to justify in personam jurisdiction. Id. at 478, 105 S.Ct. at 2185. When examining an assertion of jurisdiction based upon a contract, the court must examine the character of any prior negotiations, the terms of the contract, the parties' actual dealings with each other, and the contemplated future consequences. Id. at 479, 105 S.Ct. at 2186. The contract in Burger King for example, which the Supreme Court found sufficient to invoke personal jurisdiction, was negotiated over a five-month period; was intended to run for twenty years; involved continuing and widespread contacts with the forum; provided that the forum's law would govern; and required some travel to and training in the forum. Id. at 466, 478-86, 105 S.Ct. at 2185-89. Keeping *712 in mind the quintessential determination whether defendant purposefully availed himself of forum benefits so that exercise of jurisdiction will not offend notions of fair play we now examine the instant contract under the Burger King guidelines.
First, we find that there were minimal prior negotiations between the parties. Defendant did not seek to establish this contract on his own initiative nor were there any negotiations involving the contract terms. Instead, defendant, while under the court-imposed duty upon him as receiver to keep the Inn operational, was contacted by ABTS and threatened with the dismantling of the phone system unless payments due under the previously existing contract were made. ABTS does not allege that any bargaining occurred over potential terms. This situation is akin to a party's entrance into a contract of adhesion, and the parties' conduct cannot be viewed as negotiations as that term is commonly understood. The defendant's failure to initiate the contact with ABTS or take affirmative action to establish connections with New Jersey and the complete lack of discussion regarding the specifics of the contract terms seriously undermines any characterization of defendant's conduct as purposeful availment of New Jersey benefits or "reaching out" to a New Jersey resident. Cf. Allied Leather Corp. v. Altama Delta Corp., 785 F. Supp. 494, 500 (M.D.Pa.1992) (initiation of contact and bargained for terms important in analyzing prior negotiations to determine propriety of in personam jurisdiction).
Second, the contract was intended to be of relatively short duration. ABTS acknowledges that it was surprised and concerned that the receivership was lasting eight months. This demonstrates that, at the time of the alleged contracting, the parties expected the agreement to end somewhat sooner. Thus, although the contract required ABTS to service the equipment when necessary, required ABTS to monitor phone usage, and provided that ABTS was to receive payment from defendant and remit payments due to the local and long distance telephone companies servicing the hotel, the continuing nature of the obligations and foreseeable consequences were necessarily limited. While defendant cannot be characterized as a one time purchaser of goods, which would clearly preclude personal jurisdiction, see Borg-Warner Acceptance Corp. v. Lovett & Tharpe, Inc., 786 F.2d 1055, 1059 (11th Cir. 1986), neither can he be characterized as entering into the type of long-term agreement addressed in Burger King. See also Travelers Health Ass'n v. Virginia, 339 U.S. 643, 648, 70 S. Ct. 927, 929, 94 L. Ed. 1154 (1950) (suggesting that "isolated," "short-lived" transactions insufficient to give rise to personal jurisdiction).
Third, while we note the contract provision requiring the application of New Jersey law, this factor alone is insufficient to render the contract a sufficient basis for our exercise of in personam jurisdiction. Burger King, 471 U.S. at 482, 105 S.Ct. at 2187. The Burger King Court viewed the choice of law provision, when coupled with the twenty-year contract term, merely as reinforcement of the defendants' intentional affiliation with the forum. Here, as discussed above, we have no such long-term contract. Additionally, the lack of negotiations regarding this term further erodes its value as evidence of defendant's deliberate availment of rights and protections under New Jersey law.
ABTS relies upon Associated Business Telephone Sys. Corp. v. Greater Capital Hotel Corp., Civ. No. 87-2697 (D.N.J. Aug. 26, 1987) and General Elec. Capital Corp. v. Integra, Civ. No. 90-3700 (D.N.J. Mar. 11, 1992) wherein similar contracts were held sufficient to establish in personam jurisdiction over defendants having no other contacts with New Jersey. We find, however, that these cases are distinguishable because they involved long-term contracts. Moreover, the former case dealt with a contract that the defendant entered into in an open market, and the latter involved a contract that had been assumed by the defendant. In the instant case, ABTS does not allege that defendant assumed the entire contract and stepped into the shoes of the previous owner. Instead, its breach of contract action is based upon its allegation that defendant agreed only to be bound by the Contract terms during the period of receivership, which both *713 parties state they expected to last only a short time. In essence, ABTS is arguing that a separate contract was entered into that incorporated all the terms of the former Contract excepting the contract length. The defendant entered a contract of limited duration and did so under a legal obligation as receiver to maintain operation of the Inn.
Thus, not only are the mutual obligations and rights involved here of a much less significant nature than those created by the contracts addressed in the cases cited by ABTS, the requisite "purposeful availment" is missing. There is no allegation that the Contract was assumed, which might impute the purposeful conduct of defendant's predecessor to defendant. As discussed earlier, ABTS alleges only that defendant entered into a new short-term contract based upon the old Contract's terms. Although ABTS correctly noted at oral argument that the receiver could have rejected the contract if it was not in the best interests of the Inn, defendant's failure to make such a rejection cannot be viewed as deliberate reaching out to the New Jersey plaintiff. We do not believe that exercise of personal jurisdiction based solely upon an out-of-state receiver's agreement to honor an existing contract for a short duration would comport with "fair play and substantial justice" as required by International Shoe. Thus, on the peculiar facts presented here, we hold that we cannot exercise in personam jurisdiction over the defendant.[2]
In light of our disposition of the jurisdictional issue, we need not address defendant's motion to transfer this action to Nevada based upon forum non conveniens. Considering defendant's willingness to adjudicate this action in Nevada, however, rather than dismiss, we will transfer the action to the District of Nevada pursuant to 28 U.S.C. § 1404(a).[3] That district clearly has personal jurisdiction over the defendant as he is domiciled in Nevada.
CONCLUSION
ABTS has established subject matter jurisdiction over this action. This court does not, however, have in personam jurisdiction over defendant. Rather than dismiss the action, the action will be transferred to the District of Nevada. The accompanying order has been entered.
ORDER
This matter having come before the court upon motion of defendant Leo J. Danihels to dismiss plaintiff Associated Business Telephone Systems Corporation's complaint for lack of subject matter and personal jurisdiction, and the court having considered the submissions, and for good cause shown;
It is, this 20th day of August 1993, hereby ORDERED that defendant's motion is DENIED as to lack of subject matter jurisdiction. It is further ORDERED that defendant's motion as to lack of personal jurisdiction is GRANTED IN PART AND DENIED IN PART. This court, having no personal jurisdiction over defendant, hereby transfers the above captioned action to the District Court of Nevada pursuant to 28 U.S.C. § 1404(a).
NOTES
[1] ABTS relies on a disputed contract as the basis for jurisdiction. We note that plaintiff has adequately alleged that defendant entered into a contract with plaintiff that was to last for the time he was receiver of the Inn and whose terms were derived from the existing contract between ABTS and the Inn and its former owner. Although the existence of this contract is disputed, where a jurisdictional issue cannot be decided without ruling on the merits, the case must proceed to trial. Wade v. Rogala, 270 F.2d 280, 285 (3d Cir.1959) (citations omitted); see also Carteret Savings Bank, F.A. v. Shushan, 954 F.2d 141, 148 (3d Cir.1992) (premature on motion to dismiss for lack of jurisdiction to decide that tort claim was pled fallaciously to support personal jurisdiction; issues of fact left for trial; Rule 11 sanctions adequate to deter fallacious pleading). Thus, though ABTS must prove the existence of the contract at trial, for purposes of this motion we must assume that a contract existed.
[2] The court notes that plaintiff raised the possibility for the first time at oral argument that personal jurisdiction could be based upon defendant's alleged promise to assume the Contract after purchasing the hotel. That promise is the basis of plaintiff's claim for fraud and was not pled as part of plaintiff's breach of contract claim. Compare Verified Complaint ¶¶ 23-25 with ¶¶ 30-34. This argument was not briefed nor was it developed at oral argument beyond that basic assertion. Moreover, it was raised in the context of bolstering plaintiff's position that the Contract was voluntarily entered into rather than as a separate basis for jurisdiction. It is therefore unclear whether plaintiff intended to assert jurisdiction based upon the fraud claim or not. Under these circumstances, defendant has not had an opportunity to address this argument and it would be inappropriate for this court to base jurisdiction on such grounds.
[3] This court has the power to transfer pursuant to section 1404(a) sua sponte. See Washington Pub. Utilities Group, et al. v. United States Dist. Court of Washington, 843 F.2d 319 (9th Cir. 1987); I-T-E Circuit Breaker Co. v. Becker, 343 F.2d 361 (8th Cir.1965). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1846372/ | 134 B.R. 194 (1991)
In re REPH ACQUISITION COMPANY and Republic Health Corporation, Debtors.
REPUBLIC HEALTH CORPORATION, Movant-appellant-cross-appellee,
v.
CORAL GABLES, LTD., Nonmovant-appellee-cross-appellant.
REPUBLIC HEALTH CORPORATION and Coral Gables Hospital, Inc., Plaintiffs-appellees,
v.
CORAL GABLES, LTD., Defendant-appellant.
Civ. A. Nos. CA3-90-2407-D, CA3-90-2408-D, Bankruptcy Nos. 389-38126-SAF-11, 389-38127-SAF-11, Adv. No. 390-3210.
United States District Court, N.D. Texas, Dallas Division.
December 17, 1991.
*195 Mark E. MacDonald (argued), Stephen C. Morton, and Daren W. Perkins of Johnson & Gibbs, P.C., Dallas, Tex., for Republic Health Corp. and Coral Gables Hosp., Inc.
Dean M. Gandy, Marvin R. Mohney, and J. Christopher Luna (argued) of Akin, Gump, Strauss, Hauer & Feld, Brian S. Book, Thomas H. Grace, and Michelle E. Shriro of Arter & Hadden, Dallas, Tex., for Coral Gables, Ltd.
FITZWATER, District Judge:
These are appeals and a cross-appeal from orders of the bankruptcy court denying a motion under 11 U.S.C. § 365(d)(4) to assume an unexpired nonresidential lease and granting a permanent injunction precluding the lessor from continuing a state court eviction action filed post-petition and from seeking to terminate the lease as to a nonbankrupt co-lessee based upon the bankrupt's rejection of the lease and bankruptcy filing. Finding no reversible error in the bankruptcy court's denial of the motion to assume, the court AFFIRMS the order. Concluding the bankruptcy court did not err in enjoining the eviction action but erred in permanently enjoining future litigation, the court AFFIRMS in part and REVERSES in part the injunction order.
I
On December 15, 1989 chapter 11 debtors Republic Health Corporation ("RHC") and REPH Acquisition Company ("REPH") filed for bankruptcy protection. On December 20, 1989 they submitted a *196 prepackaged[1] chapter 11 joint plan of reorganization (the "Joint Plan").[2] The Joint Plan was eventually approved and a confirmation order entered on April 17, 1990, to become effective April 30, 1990. One provision of the Joint Plan provided that RHC assumed all unexpired leases, unless nonassumable under applicable bankruptcy law, or expressly rejected by REPH or RHC on or before the effective date of the Joint Plan.
Of several appeals taken from these bankruptcies, only these two remain. Both pertain to a dispute over a Coral Gables, Florida hospital lease ("the Hospital Lease"). In 1982 RHC agreed to purchase certain assets from Hospital Corporation of America ("HCA"). Pursuant to the agreement, HCA contracted to transfer hospital facilities located throughout the United States to subsidiaries to be formed by RHC. One asset was the property interest in question: a lease to a hospital located in Coral Gables, Florida. At the time, the leasehold estate was owned by an HCA subsidiary. RHC became an assignee of the subsidiary's rights under the Hospital Lease at the time of the 1982 acquisition. A wholly-owned subsidiary of RHC, Coral Gables Hospital, Inc. ("Coral Gables Hospital"), was formed to hold title to the Hospital Lease. Coral Gables, Ltd. ("CGL"), a New Jersey limited partnership, was the landlord and lessor under the lease.
On December 30, 1982 several parties, including RHC, Coral Gables Hospital, and CGL, signed a document[3] in connection with the transaction. RHC and Coral Gables Hospital viewed it as an estoppel letter executed as a matter of customary practice in connection with the sale of long-term ground leases. The bankruptcy court below relied upon provisions in the document that stated CGL was the lessor and RHC and Coral Gables Hospital were the lessees, to hold RHC and Coral Gables Hospital had agreed they were co-lessees under the Hospital Lease. See May 30, 1990 Tr. at 95-96. The court also found that the signatories to the agreement fully intended this arrangement. See id. at 97. The parties do not challenge these holdings on appeal.
In 1989 Coral Gables Hospital determined it was necessary to make life and safety code improvements to the hospital. The Hospital Lease required CGL's consent and provided such consent could not be unreasonably withheld. The parties negotiated over a period of several months concerning the financial aspects of the improvements. In August 1989 CGL learned of RHC's attempts to restructure its financial obligations. No agreement regarding the improvements had been reached as of December 15, 1989, when REPH and RHC filed for bankruptcy.[4]
On March 29, 1990 CGL filed in Florida county court an eviction action against RHC and Coral Gables Hospital, seeking to remove them from the leased premises.[5] CGL alleged, inter alia, that RHC had filed for bankruptcy protection and had failed to assume the Hospital Lease, and that the lease was deemed rejected pursuant to § 365(d)(4). CGL also averred its *197 eviction action could not have been commenced prepetition and the automatic stay was therefore inapplicable.
Eight days later, on April 6, 1990, RHC and Coral Gables Hospital countered by initiating an adversary proceeding in the court below. Coral Gables Hospital alleged it was the sole lessee under the Hospital Lease and that § 365(d)(4) did not apply because Coral Gables Hospital was not a bankruptcy debtor. Coral Gables Hospital also averred that CGL had waived the time period prescribed by § 365(d)(4) by accepting rent payments after the period had expired. RHC and Coral Gables Hospital asked the bankruptcy court pursuant to § 105 to stay and enjoin prosecution of the county court litigation so that the lease assumption issue could be decided in the bankruptcy court.[6] The parties also sought recovery of damages based on CGL's conduct in connection with the 1986 leveraged buy-out of RHC and challenged, as in an earlier-filed Florida district court suit, see supra n. 4, CGL's failure to consent to improvements to the leasehold.
Also on April 6, 1990 RHC filed with the bankruptcy court a motion to assume interest in unexpired lease. RHC stated it did not believe it was a lessee under the Hospital Lease within the meaning of § 365(d)(4) or that it had any interest in the Hospital Lease or obligations or liability thereunder. It also alleged that "in an abundance of caution, [RHC] hereby elects to assume whatever interest it may subsequently be determined to have in the [Hospital] Lease." Mot. to Assume at 2-3.[7] RHC also conceded the time period under § 365(d)(4) for assuming or rejecting an unexpired lease of real property had expired, Mot. to Assume at 3, but alleged CGL's acceptance of rent after the expiration of the period constituted a waiver of rights. Id.
On May 29 and 30, 1990 the bankruptcy court convened a joint hearing of the RHC/Coral Gables Hospital adversary proceeding and RHC motion to assume unexpired lease. In decisions rendered May 30, 1990 and reduced to writing in orders signed July 25, 1990,[8] the bankruptcy court denied RHC's motion to assume interest in unexpired lease but held that RHC's surrender of possession had no effect on Coral Gables Hospital's right to remain in possession of the leasehold premises and did not cause the termination of the lease as to Coral Gables Hospital, and that contrary state property laws were preempted. In the adversary proceeding, the bankruptcy court permanently enjoined CGL from commencing and continuing any litigation seeking to terminate the Hospital Lease based on the RHC bankruptcy filing or on the fact of RHC's bankruptcy rejection of its interest in the Hospital Lease.
In No. 90-2407 RHC appeals the order denying its motion to assume interest in unexpired lease. CGL cross-appeals the order to the extent it holds RHC's surrender of possession of the leased premises has no effect on the rights of Coral Gables Hospital to remain in possession and does not cause the termination of the lease as to Coral Gables Hospital, and to the extent the order holds contrary state property laws are preempted.
In No. 90-2408 CGL appeals the bankruptcy court's order in the adversary proceeding permanently enjoining it from commencing or continuing litigation against Coral Gables Hospital on the basis of RHC's bankruptcy and deemed rejection of its interest in the Hospital Lease.
II
The court turns first to No. 90-2407, RHC's appeal of the order denying its motion *198 to assume interest in unexpired lease and CGL's cross-appeal.
The record is undisputed that RHC did not file a motion pursuant to § 365(d)(4)[9] to assume the unexpired Hospital Lease. RHC did not consider itself to be a party to the lease and so argued in the bankruptcy court. The court below held to the contrary. It found on the basis of the parties' intentions as reflected in the document executed by CGL, RHC, and Coral Gables Hospital on December 30, 1982 that RHC and Coral Gables Hospital were co-lessees. As noted, RHC does not challenge this finding on appeal. Because RHC did not view itself as a co-lessee, it did not move to assume the Hospital Lease when it timely filed other such motions in its chapter 11 proceeding. On April 6, 1990, after the time period for filing such a motion had expired, RHC filed the motion to assume, doing so "in an abundance of caution." Mot. to Assume at 2; Appellant Br. at 37.[10] The bankruptcy court denied the motion as untimely, finding RHC neither had filed the motion within 60 days of the order for relief, as required by § 365(d)(4), nor had sought and obtained additional time to do so. July 25, 1990 Order at ¶¶ 8-9. The court therefore concluded RHC's interest in the Hospital Lease was deemed rejected. Id. at ¶ 13.
A
On appeal, RHC asks the court to hold that its proposed reorganization plan satisfied the requirements of a § 365(d)(4) motion to assume or constituted the equivalent of a request for an extension of time to file an assumption motion, thereby making RHC's April 6 motion timely filed. RHC relies upon 11 U.S.C. § 1123(b)[11] and Fed.R.Bankr.P. 6006(a)[12] as authority to excuse a formal motion when an unexpired lease is assumed as part of a proposed plan of reorganization. Noting a split of authority regarding whether a formal motion to assume a lease is necessary, RHC urges that § 1123(b) and Rule 6006(a) support the approach RHC took in the present case. RHC then argues that its proposed plan complied with § 365(d)(4) because it was filed within 60 days of the order of relief and contained a proviso whereby the reorganized RHC assumed all unexpired leases (other than those made nonassumable by § 365(c) of the Code) unless RHC expressly rejected them on or before the Joint Plan's effective date. RHC posits that because it did not expressly reject the Hospital Lease as of plan confirmation, it assumed the interest of co-lessee that the bankruptcy court concluded it had.
Assuming, without deciding, that § 1123(b) and Rule 6006(a) can be interpreted to permit the procedure advocated by RHC, the court nevertheless rejects its application here. In the present case, the bankruptcy court found that RHC failed to notify CGL of the contents of the proposed Joint Plan. See July 25, 1990 Order at ¶ 12 ("RHC did not provide timely notice to [CGL] of its intent to assume the [Hospital Lease]"; May 30, 1990 Tr. at 99 (RHC did *199 not prove it circulated the Joint Plan to CGL; CGL should have been served and provided an opportunity to object); id. at 100 (no proof of notice to CGL under either Rule 2002(b) or 9014); id. at 101 (no proof CGL had notice of lease). Rule 6006(a) excuses the procedure that applies in contested matters when a proceeding to assume an unexpired lease is "part of a plan." Fairly interpreted, Rule 6006(a) does not eliminate the notice requirements applicable to a contested matter. Rule 9014, which governs contested matters not otherwise covered by the Bankruptcy Rules, requires that relief be requested on reasonable notice to the party against whom the relief is sought. The court holds that Rule 6006(a) implies a similar obligation upon a debtor[13] who seeks to assume an unexpired nonresidential lease by means of its proposed reorganization plan. This means that although the plan itself constitutes the act of assumption contemplated by § 365(d)(4), the lessor, as the party against whom the relief is sought, must be given reasonable notice of the debtor's intent. Even if Rule 6006(a) cannot be read to incorporate the notice requirement of Rule 9014, § 1125(b) of the Code plainly requires that the contents of a proposed reorganization plan be adequately disclosed.
RHC responds to the lack of notice issue in two ways, neither of which the court finds persuasive. RHC first contends CGL was not entitled to notice because it was not a creditor of RHC within the definition of § 101(a); it argues second that CGL had actual knowledge of RHC's intent to assume whatever interest RHC had in the Hospital Lease.
The court rejects RHC's first position as reflecting a misunderstanding of the interplay among § 365(d)(4), § 1123(b), and Rule 6006(a). RHC essentially asks the court to find a notice hiatus in the Code when an assumption request is contained in a proposed plan rather than separately made. The Code cannot be read this way. If the Code enables a plan proponent to assume an unexpired lease by means of the plan itself, the Code contemplates that any party against whom the relief is sought will receive at least the notice required by Rule 9014, if not by § 1125(b).
The court specifically rejects RHC's reliance upon In re American Healthcare Management, Inc., 900 F.2d 827, 832 (5th Cir.1990), as inapposite to the present facts. On the basis of Rule 9006(b)(1) and circuit precedent, the panel in American Healthcare held that a court, without notice, may enlarge the time within which an act is required or allowed to be done. In the present case the bankruptcy court did not in fact order the period enlarged. It is therefore irrelevant that the court could have granted such relief without notice to CGL.
RHC's reliance upon In re Victoria Station, Inc., 875 F.2d 1380 (9th Cir.1989), is similarly misplaced. That case, too, addressed whether notice of an extension request under § 365(d)(4) was required. See 875 F.2d at 1383 (appellant challenged second and third extensions of time as untimely and attacked second extension as void because granted without notice). Victoria Station expressly distinguished the facts before it from a proceeding that would be accorded finality, in which case it recognized notice and an opportunity to be heard were required. See id. at 1386. The holding of Victoria Station would only be pertinent to today's case if the bankruptcy court had granted RHC an extension of time without giving CGL notice of the request and extension.
The court also declines to accept RHC's second argument, that it properly assumed the Hospital Lease because CGL had actual knowledge both of RHC's chapter 11 proceedings and of its intentions to assume and perform the lease. RHC relies for this contention upon its view of facts below. RHC deems this evidence conclusive of CGL's knowledge of the contents of the proposed reorganization plan. See Appellant *200 Br. at 26-28, 33-34. At no time, however, does it argue, much less demonstrate, to this court that the bankruptcy judge's contrary findings are clearly erroneous. In his oral findings of fact made pursuant to Fed.R.Bankr.P. 9014 and Fed.R.Civ.P. 52(a), the bankruptcy judge specifically found "[t]here is no proof before this Court that [RHC] circulated its plan to [CGL] prior to the filing." May 30, 1990 Tr. at 99; see also id. at 100-01. In his written order, the judge found RHC did not provide CGL timely notice of its intent to assume the Hospital Lease. July 25, 1990 Order at ¶ 12. It is fairly implied by these findings and from record evidence that CGL had no actual knowledge of the Joint Plan provision on which RHC now relies. See Endrex Exploration Co. v. Pampell, 97 B.R. 316, 323 (N.D.Tex.1989) (reviewing court may assume that trial court made implied finding consistent with general holding so long as the implied finding is supported by the evidence). By failing to contend in its brief that these findings are clearly erroneous, RHC has waived this argument. See Yaquinto v. Greer, 81 B.R. 870, 876 n. 4 (N.D.Tex.1988) (appellate court will not consider matter not briefed). Even if the argument is not waived, RHC has not established that the findings are clearly erroneous. It has not canvassed the hearing record with particularity, showing how the bankruptcy court lacked evidence, or impermissibly credited evidence, in support of the finding of no actual notice.
B
RHC also argues that the Hospital Lease "rode through" the RHC bankruptcy, and is binding on the parties, because it was unaffected by the confirmed reorganization plan and was neither assumed nor rejected prior to or in the Joint Plan. RHC posits if there is any doubt whether the Hospital Lease was deemed rejected, the lease "should, at a minimum, `ride through' the proceedings and thereby be binding" on RHC and CGL. Appellant Br. at 29. The court has no doubt that RHC failed to assume the lease within the time prescribed by § 365(d)(4). This argument therefore fails.
C
RHC next contends § 365(d)(4) should be interpreted and applied in accordance with its primary purposes to protect lessors from delay and uncertainty and to respond to harm caused by extended vacancies or partial operation of shopping center leases involving bankrupt tenants. RHC argues CGL has incurred no delay, harm, loss, disadvantage, or detriment and that § 365(d)(4) should not be employed to approve a substantial and unjust forfeiture in circumstances for which the Code provision was not intended. RHC attempts to justify why this result is unwarranted on the present facts, positing the Code should not effect a forfeiture where a prepackaged reorganization plan has moved through the bankruptcy process apace, thereby avoiding the delays that § 365(d)(4) seeks to eliminate; where the debtor has acted promptly and in good faith to assure the lessor of its intent to perform under the lease and to avoid forfeiture; and where the debtor is better off financially after reorganization than when the lease was originally executed.
This argument divides into two issues. The first is whether, as a matter of law, § 365(d)(4) permits the forfeiture of an unexpired nonresidential lease that is not timely assumed. The statute does so in unmistakable terms: if the debtor does not assume the lease, "then such lease is deemed rejected." The bankruptcy court did not err in holding RHC's interest was deemed rejected under § 365(d)(4). See July 25, 1990 Order at ¶ 13. The second is whether the bankruptcy court abused its discretion when it apparently viewed the equities differently than does RHC in its brief. See Appellant Br. at 31-35. This court cannot conclude there was such an abuse when the court below followed the clear terms of the relevant statute.
D
RHC next urges that it should have the opportunity to remedy any technical defects in its notification of intent to assume *201 the Hospital Lease. For this contention it relies upon the well-settled principle that bankruptcy courts are courts of equity and are to be guided by equitable principles. RHC also cites this court to examples of bankruptcy court decisions in which courts have exercised equitable powers in a manner RHC contends should guide the resolution of the present case.
But RHC's broad and fervent appeal to equity is made to the wrong tribunal. It is the bankruptcy judge's province in the present case to weigh and resolve the equities; it is this appellate court's role to decide whether the bankruptcy judge abused his discretion. RHC has not advanced an abuse of discretion contention in support of this argument. The argument is therefore waived. Even had RHC done so, the court discerns no such abuse in the record below.
E
RHC finally argues CGL waived its right to assert that the Hospital Lease is deemed rejected because it accepted rent and undertook other actions with respect to the landlord-tenant relationship. RHC explains why principles of waiver should apply in the context of § 365(d)(4), see Appellant Br. 43-49, and why, in RHC's view, the elements of waiver are present in the instant case, see id. at 49. This argument presents no basis to reverse the bankruptcy court.
In the present case, the question whether CGL waived its right to rely upon RHC's deemed rejection of the Hospital Lease is one of fact. Because RHC had the burden of proof on the waiver issue, it was obligated to present evidence to the bankruptcy court to prove waiver and either obtain findings on waiver or complain of the bankruptcy court's failure to enter such findings. See In re Hunt, 124 B.R. 200, 206-07 (N.D.Tex.1991) (addressing equitable estoppel); cf. Fed.R.Bankr.P. 7008(a) (adopting Fed.R.Civ.P. 8 in adversary proceedings); Fed.R.Civ.P. 8(c) (waiver is affirmative defense). The record below reflects that RHC raised the waiver argument in its motion to assume. See Mot. to Assume at 3. RHC's brief offers an abbreviated recitation of acts that it contends equate to waiver, but the brief contains no citation to the hearing record showing the evidence was presented to the bankruptcy judge. The bankruptcy judge's oral and written findings do not explicitly address waiver. RHC has not demonstrated that it presented waiver evidence to the bankruptcy court and obtained a finding on waiver. RHC does not complain of the bankruptcy judge's failure to make a waiver finding.
As framed, RHC's argument on appeal essentially asks this court to make a de novo determination regarding waiver. This is improper. Even if RHC could demonstrate to this court that it adduced evidence of waiver and obtained a contrary finding, it would be entitled to no greater level of review than under the deferential clearly erroneous standard. See Rule 8013. RHC has not established such error. The court therefore declines to hold that CGL waived its right to treat the Hospital Lease as rejected.
III
CGL cross-appeals the bankruptcy court's order denying RHC's motion to assume. On the basis of several arguments, many of which overlap issues presented in No. 90-2408, CGL contends the bankruptcy court erred when it entered findings and conclusions that are inconsistent with a right CGL posits it has to terminate the Hospital Lease by reason of RHC's failure to assume the lease. In the context of the order denying motion to assume interest in unexpired lease, these holdings are dicta and present no basis to disturb the order.
The motion to assume was filed by RHC. CGL did not file its own motion requesting relief from the court. It intended, as it apparently does now, to obtain a Florida county court remedy by way of an eviction action. That the bankruptcy court, in entering its dispositive holding that RHC did not assume the Hospital Lease, augmented the decision with dicta, does not present a basis to reverse the bankruptcy court. Indeed, in examining what CGL seeks by its appeal in No. 90-2407, it is *202 apparent CGL presents no basis for obtaining relief from this court. CGL prays that the court affirm the denial of the motion to assume but that it reverse the rulings that the Hospital Lease has not terminated and that RHC's bankruptcy and rejection of the Hospital Lease may not be raised by CGL against Coral Gables Hospital. This court will not by way of appeal modify specific bankruptcy court holdings that are unnecessary to its decision.
CGL also alleges as error the bankruptcy court's failure to hold that RHC's rejection and surrender of the leased premises permits CGL to terminate the lease. In the context of RHC's motion to assume, however, this finding is also unnecessary to denial of RHC's motion.
Neither RHC nor CGL has presented a basis to reverse or modify the order denying RHC's motion to assume interest in unexpired lease and the order is affirmed.
IV
The court now turns to the appeal in No. 90-2408. CGL appeals a permanent injunction that precludes it "from commencing or continuing any litigation seeking to terminate its lease with [Coral Gables Hospital], based on the bankruptcy filing of [RHC] or on the fact of the bankruptcy rejection of [RHC's] interest in the [Hospital Lease]." July 25, 1990 Order at 3.
In oral findings and conclusions, supplemented by its written order, the bankruptcy court held Coral Gables Hospital remains a lessee under the Hospital Lease; RHC's bankruptcy filing cannot be grounds to terminate the lease; rejection of the lease does not, as a matter of federal bankruptcy law, cause the termination of the lease as to Coral Gables Hospital; and CGL's Florida county court eviction action would be declared void if still pending in county court or dismissed if removed to and pending in bankruptcy court.
CGL challenges the injunction essentially on three grounds, contending the bankruptcy court lacked jurisdiction and authority to enter the injunction; the injunction was erroneously issued because RHC and Coral Gables Hospital had an adequate remedy at law; and the Florida eviction action should not have been declared void.
A
The court begins by addressing the standard of appellate review. Appellees RHC and Coral Gables Hospital argue the bankruptcy court's "finding of jurisdiction" and "issuance of an injunction" are subject to review for abuse of discretion. Appellees Br. at 2. The court disagrees.
The question whether a court has subject matter jurisdiction is a question of law. See, e.g., Abbott Bldg. Corp., Inc. v. United States, 951 F.2d 198, 200 (9th Cir. 1991). It is therefore reviewed de novo. Id.; see Hunt, 124 B.R. at 208 (district court reviews question of law de novo).
A permanent injunction is reviewed for clearly erroneous fact findings, errors of law, or abuse of discretion. See Roho, Inc. v. Marquis, 902 F.2d 356, 358 (5th Cir.1990) (preliminary injunction standard of review).[14] "Each element of the injunction analysis typically involves questions of fact and of law. The factual components of the decision are subject to a clearly-erroneous standard of review. Legal conclusions, of course, are subject to broad review and will be reversed if incorrect." White v. Carlucci, 862 F.2d 1209, 1211 (5th Cir.1989) (preliminary injunction case) (citations and internal quotation marks omitted). Properly understood, the abuse of discretion standard applies to that vast area of equitable choice that remains to the chancellor who has properly applied the *203 law to fact findings that are not clearly erroneous.
B
CGL first argues the bankruptcy court lacked the jurisdiction and authority to enter the permanent injunction. It contends the court was without jurisdiction because the Hospital Lease, once deemed rejected, was no longer part of the RHC bankruptcy estate.[15]
RHC and Coral Gables Hospital filed a complaint for the purpose, among others, of obtaining an order permanently enjoining CGL from prosecuting the state court eviction action in the event it was not removed to bankruptcy court. CGL moved to dismiss the complaint, challenging the bankruptcy court's jurisdiction over a contractual dispute between two private parties that were not in bankruptcy. CGL preserved the jurisdictional challenge by stating in the pretrial order, inter alia, that its contested issues of fact and law were subject to its motion to dismiss, see PTO at 11, and at the hearing that it did not waive any argument regarding jurisdiction, see May 29, 1990 Tr. Vol. I at 22.
There is little doubt that the adversary proceeding was at least "related to" the RHC bankruptcy case within the meaning of 28 U.S.C. § 1334(b).[16] When a proceeding is related to a case under title 11, the district court has jurisdiction over it. In re Majestic Energy Corp., 835 F.2d 87, 89 (5th Cir.1988). The district court, as this court has done by miscellaneous order, can refer all bankruptcy matters to a bankruptcy judge. The specific nature of the proceeding does not affect the jurisdiction of the district court, but it does impact the power of the bankruptcy court. If a case is "core," the bankruptcy court may enter a final judgment; if it is "non-core," the bankruptcy court may only enter proposed findings and conclusions which, in response to timely objections, the district court must consider de novo. Holloway v. HECI Exploration Co. Employees' Profit Sharing Plan, 76 B.R. 563, 567 (N.D.Tex.1987), aff'd, 862 F.2d 513 (5th Cir.1988). Thus, as the Fifth Circuit wrote in Majestic Energy, the question whether there is jurisdiction over bankruptcy cases and proceedings is determined by § 1334(b), "which is to be read as a broad grant of jurisdiction." 835 F.2d at 90. When jurisdiction is found, the court then looks to 28 U.S.C. § 157 to determine the extent to which the bankruptcy court, rather than the district court, can adjudicate the matter. Id. This turns on whether the matter is core or non-core. Id.
Whether a proceeding is related to a bankruptcy case is determined by examining "whether the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy." In re Wood, 825 F.2d 90, 93 (5th Cir.1987) (quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir.1984)). Therefore, if the outcome of the proceeding could alter the debtor's rights, liabilities, options, or freedom of action, there is "related to" jurisdiction. See Pacor, 743 F.2d at 994. CGL attempts to distinguish between the bankruptcy estate and the reorganized debtor, arguing the eviction suit cannot harm the estate because the plan has been confirmed and the estate has concluded. The court rejects this interpretation of § 1334(b).
In Majestic Energy the Fifth Circuit held an action was related to a bankruptcy case because it could impact "the execution of the Plan and [the debtor's] actions in administering the estate." 835 F.2d at 91. In the present case the record adequately discloses at least a conceivable impact[17] upon RHC if CGL successfully establishes *204 that Coral Gable Hospital's interest in the Hospital Lease has been terminated or that CGL has any greater rights under the lease by virtue of RHC's bankruptcy or failure to assume its interest in the lease. The adversary proceeding therefore satisfied the requirements for "related to" jurisdiction. See In re American Hardwoods, Inc., 885 F.2d 621, 624 (9th Cir.1989) (bankruptcy court had "related to" jurisdiction over debtor's motion for permanent injunction of creditor's state court action against non-debtor guarantors of bankrupt's debt where enforcement of guaranty "could conceivably" affect administration of debtor's plan).
C
The next question presented is whether the adversary proceeding was core or non-core.[18] In this case, the determination is bipartite, dividing into whether the court below had core authority to enter the injunction against continuing the Florida eviction action, and whether the bankruptcy court possessed the power to enjoin future eviction actions initiated by CGL.
As CGL concedes, see Appellant Rep. Br. at 15, the injunction as it related to continuation of the post-petition Florida county court action was a core proceeding. It arose under title 11 because the complaint stated a claim for violation of the automatic stay. The bankruptcy court therefore had authority to decide as a core matter whether to void the post-petition, pre-confirmation eviction action. That decision is subject to review under appellate standards.
For reasons set out below, the court does not reach the question whether the bankruptcy court had core or non-core authority over the portion of the injunction that addressed future litigation. If the bankruptcy court's authority was core, this court reverses the injunction under applicable standards of appellate review; if the court below had only non-core authority, this court on de novo review declines to enter the same injunctive relief.
D
Having decided the bankruptcy court had core authority to determine the validity of the pre-confirmation eviction action, the court now turns to the merits of CGL's arguments on appeal.
CGL contends the bankruptcy court erred when it held the eviction action was commenced in violation of the automatic stay because the stay is inapplicable to a post-petition cause of action and RHC's rejection of the Hospital Leaseon which the eviction action is basedcould only have occurred post-petition. CGL contends if the automatic stay did apply at all post-petition, it expired at the end of the 60-day period prescribed by § 365(d)(4). The court disagrees.
Section 365(a) provides, with exceptions not applicable here, that the rejection of an unassumed, unexpired lease constitutes a breach of the lease immediately before the date of the filing of the petition. The eviction action therefore violated the automatic stay and the bankruptcy court correctly enjoined CGL from continuing that case. This portion of the injunction is affirmed.
E
CGL next asks this court to reverse the portion of the bankruptcy injunction that precludes it from seeking to terminate the Hospital Lease based on RHC's bankruptcy or its rejection of the Hospital Lease. CGL challenges the power of the *205 bankruptcy court, post-confirmation, to permanently enjoin a creditor's claim against a nondebtor where the property in dispute is no longer part of the debtor's estate.[19]
Section 105(a) of the Code empowers the bankruptcy court to issue, inter alia, any order "that is necessary or appropriate to carry out the provisions of this title." On its face, § 105(a) is limited to those exercises of judicial authority that have specific relevance to a Code provision. See In re Ionosphere Clubs, Inc., 124 B.R. 635, 642 (S.D.N.Y.1991) (§ 105(a) power "can be exercised only within the confines of the Bankruptcy Code"). In the context of extra-bankruptcy actions, courts have exercised § 105(a) power on a temporary basis when persuaded the action could substantially and deleteriously impact a pending bankruptcy case. See, e.g., In re Chateaugay Corp., 109 B.R. 613, 621-22 (S.D.N.Y.1990) (upholding bankruptcy court order enjoining prosecution of district court class action against nondebtors where necessary to protect bankruptcy court's jurisdiction and to preserve integrity of reorganization process), appeal dism'd and case remanded for clarification, 924 F.2d 480 (2d Cir.1991) (per curiam). There is an important distinction to be drawn between a bankruptcy court's authority under § 105(a) to enter permanent, as opposed to temporary, injunctive relief in matters involving nondebtors and non-estate property. See, e.g., In re Western Real Estate Fund, Inc., 922 F.2d 592, 599-600 (10th Cir.1990) (per curiam) (distinguishing between temporary and permanent injunctive relief and viewing permanent injunction as presenting "more serious problem"), modified in part on other grounds, Abel v. West, 932 F.2d 898 (9th Cir.1991) (per curiam). But the court need not decide today how much greater is the burden for granting permanent relief. It is sufficient to conclude that a permanent injunction must be supported at least by grounds sufficient to warrant temporary relief and that such grounds are lacking in the present case.
In order for a bankruptcy court to grant temporary relief pursuant to § 105(a) restraining an extra-bankruptcy action involving nondebtors and non-estate property, the court must be satisfied on the basis of competent evidence that the proceedings will sufficiently harm or interfere with the debtor's bankruptcy case. See Western Real Estate, 922 F.2d at 599 (citing 2 Collier on Bankruptcy ¶ 105.02 at 105-7 to 105-9 (15th ed. 1990)). Thus, to warrant even a preliminary injunction, there must be a "substantial burden sufficient to justify a stay." Id. In each instance in which a preliminary injunction over nondebtors and non-estate property is entered, the bankruptcy court must justify that the relief in the words of § 105(a)"is necessary or appropriate to carry out the provisions of [the Bankruptcy Code]." A variety of factors may inform the bankruptcy court's judgment, see Western Real Estate, 922 F.2d at 599 (noting "[t]he Fourth Circuit has evolved a fairly well-developed approach"), but it is essential that there be a basis for concluding "the bankruptcy process will somehow be burdened or impaired as a consequence"[20] of an extra-bankruptcy action against a nondebtor third party.
In the adversary proceeding below, the bankruptcy court based its decision to grant permanent injunctive relief on this narrow ground:
Because [RHC's] bankruptcy filing cannot permit, as a matter of Federal bankruptcy law, the termination of the lease as to the other lessee who's not in bankruptcy, [Coral Gables Hospital], there must be further injunctive relief issued besides the dismissal of the complaint that was filed in violation of the stay. *206 May 30, 1990 Tr. at 103. See July 25, 1990 Order at ¶¶ 5-6 (RHC bankruptcy filing cannot be grounds for terminating Coral Gables Hospital's interest in Hospital Lease or cause termination of the lease). Assuming this conclusion is correct (a proposition CGL vigorously challenges on appeal), it does not explain why the court should have enjoined CGL's claim against nondebtor Coral Gables Hospital regarding property that, by virtue of the court's contemporaneous ruling, was no longer part of RHC's estate. There are no findings that the injunction was necessary or appropriate to carry out a particular Code provision or that other litigation would impose a substantial burden upon, or otherwise substantially impair, the bankruptcy process.[21] Essentially, the bankruptcy court determined the legal effect of its decision regarding RHC's rejection of the Hospital Lease and enjoined future litigation of that issue as well as of the effect of RHC's bankruptcy.
This court thinks it necessary, however, that the extraordinary step of prohibiting future litigation that does not involve a debtor and estate property be based upon clear findings that the injunction is necessary or appropriate to carry out a particular Code provision or that it is required in order to avoid a substantial burden or impairment to the debtor's case or estate administration. Absent such findings, the bankruptcy court lacks authority under § 105(a) to give its rulings collateral estoppel effect by silencing litigation over them in another forum.
Even had the bankruptcy court made the necessary findings in the present case, however, the record would not have supported them. The reason RHC and Coral Gables Hospital sought the injunctive relief in question is succinctly set out by their counsel in his closing argument below: to prevent CGL from taking action to terminate, modify, or forfeit appellees' rights "by reason of what occurred in [the bankruptcy] court during the [RHC] Chapter 11 proceeding." May 30, 1990 Tr. at 88. To facilitate this, RHC and Coral Gables Hospital wanted "to clean off the record" so that in any state court eviction action appellees could "hand a judge in another court" an injunction that will permit the state court judge to "understand what issues [the bankruptcy court] said can be heard and what issues [the bankruptcy court] suggested were already decided on collateral estoppel basis by [the bankruptcy court]." May 29, 1990 Tr. Vol. I at 82 (opening statement). In closing argument, appellees' counsel reiterated the point, stressing "it's very important to us not to send us back to some poor state court judge to listen to these arguments rehashed to him because there was no injunction order entered clearly and definitively saying, thou shalt not argue this anymore." May 30, 1990 Tr. at 66; see id. at 87 (arguing CGL will attempt to invoke federal doctrine "to do nothing other than attempt to confuse a state court with doctrines that it does not regularly deal with"). Counsel also contended it was necessary that the bankruptcy court, on the basis of one or more legal theories advanced by RHC and Coral Gables Hospital, prevent "the prosecution of these federal theories of forfeiture or termination as a means to forfeit or terminate the lease." Id. at 93.
Appellees introduced no evidence during the hearing[22] to justify this relief. They offered only their counsel's arguments. It is, of course, well settled that the arguments of counsel are not evidence. Assuming *207 arguendo that they are, the statements represent counsel's apprehension regarding another court's capacity to understand and apply collateral estoppel principles; they are not proof either that the injunction is necessary or appropriate to carry out a particular Code provision or of a substantial burden or impairment to the debtor's case or estate administration.
The court holds the bankruptcy court erred in the present case by extending its § 105(a) power on a permanent basis to nonbankrupt parties involved in a dispute over non-estate property. Alternatively, the bankruptcy court abused its discretion in doing so. This portion of the injunction must therefore be reversed.[23]
* * *
In No. 90-2407, the bankruptcy court's order denying debtor's motion to assume interest in unexpired lease is AFFIRMED. In No. 90-2408, the portion of the bankruptcy court's order issuing permanent injunction that enjoins CGL from continuing pre-confirmation litigation against Coral Gables Hospital is AFFIRMED and the portion that enjoins CGL from commencing litigation seeking to terminate its lease with Coral Gables Hospital on the basis of RHC's bankruptcy and rejection of the lease is REVERSED.
AFFIRMED in part; REVERSED in part.
NOTES
[1] A "prepackaged" plan is specifically contemplated by the Bankruptcy Code. See In re TS Indus., Inc., 117 B.R. 682, 688 (Bankr.D.Utah 1990); In re Colonial Ford, Inc., 24 B.R. 1014, 1017 (Bankr.D.Utah 1982). A prepackaged plan is "negotiated between a debtor and its creditors prior to a Chapter 11 filing." TS Industries, 117 B.R. at 688-89. Such plans are considered preferable in most instances because they are generally well thought-out and reduce the time and expense of litigation, thereby allowing the debtor to commence its reorganized operations as soon as possible. Id. at 689. See Trost, Business Reorganizations Under Chapter 11 of the New Bankruptcy Code, 34 Bus.Law. 1309, 1324-25 (1979) (discussing prepackaged chapter 11 plans).
[2] The bankruptcies were ordered jointly administered.
[3] The document was signed December 30, 1982 and took effect on December 31, 1982.
[4] On January 2, 1990 Coral Gables Hospital filed a complaint in Florida district court requesting a declaratory judgment and other relief on the ground that CGL was violating the Hospital Lease by unreasonably withholding its consent to the proposed hospital improvements.
[5] Coral Gables, Ltd. v. Coral Gables Hospital, Inc. and Republic Health Corp., Case No. 90-1959-CC-25, in the County Court in and for Dade County, Florida (Civil Division).
[6] According to the record, this action was removed to the Southern District of Florida bankruptcy court.
[7] The record is consistent with this allegation. RHC did not list the Hospital Lease in its schedule of executory contracts and leases, did not include the lease as property of the RHC bankruptcy estate, and did not include CGL on its list of creditors or provide CGL with formal notice of the bankruptcy filing and bankruptcy proceedings. RHC did timely assume several executory contracts and unexpired leases other than the Hospital Lease.
[8] The orders were entered on the docket on July 26, 1990. For clarity, the court refers to them by the date they were signed.
[9] 11 U.S.C. § 365(d)(4):
Notwithstanding paragraphs (1) and (2), in a case under any chapter of this title, if the trustee does not assume or reject an unexpired lease of nonresidential real property under which the debtor is the lessee within 60 days after the date of the order for relief, or within such additional time as the court, for cause, within such 60-day period, fixes, then such lease is deemed rejected, and the trustee shall immediately surrender such nonresidential real property to the lessor.
[10] References to briefing in section II of this opinion are to the briefs filed in No. 90-2407. References to briefing in section IV are to the briefs filed in No. 90-2408. The parties are designated according to their respective capacities in each appeal.
[11] 11 U.S.C. § 1123(b):
Subject to subsection (a) of this section, a plan may
(1) impair or leave unimpaired any class of claims, secured or unsecured, or of interests;
(2) subject to section 365 of this title, provide for the assumption, rejection, or assignment of any executory contract or unexpired lease of the debtor not previously rejected under such section;
[12] Rule 6006(a):
A proceeding to assume, reject, or assign an executory contract, unexpired lease, or time share interest, other than as part of a plan, is governed by Rule 9014.
[13] Section 365(d)(4) refers explicitly to the "trustee." As a debtor in possession, RHC is treated for purposes of this section as a "trustee." See 11 U.S.C. § 1107(a). When the court uses "debtor" in this opinion, it means debtor in possession or trustee, as applicable.
[14] Even in the more deferential context of a preliminary injunction, the appellate court conducts de novo review where the question is one of law and the facts either are established or are of no controlling relevance. See United Offshore Co. v. Southern Deepwater Pipeline Co., 899 F.2d 405, 407 (5th Cir.1990) (citing Thornburgh v. American College of Obstetricians, 476 U.S. 747, 757, 106 S. Ct. 2169, 2177, 90 L. Ed. 2d 779 (1986)); Blue Bell Bio-Medical v. Cin-Bad, Inc., 864 F.2d 1253, 1256 (5th Cir.1989) (denial of preliminary injunction on basis of erroneous legal principles is reviewed de novo).
[15] CGL concedes the bankruptcy court initially had jurisdiction over the lease until the point the lease was deemed rejected by operation of § 365(d)(4). See Appellant Br. at 7.
[16] 28 U.S.C. § 1334(b)
Notwithstanding any Act of Congress that confers exclusive jurisdiction on a court or courts other than the district courts, the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11.
[17] For reasons explained infra at § IV(E), the record does not, however, establish a substantial burden upon RHC.
[18] As appellees point out, see Appellees Br. at 26, CGL did not address this issue in its opening brief. It did so in its reply brief, however, see Appellant Rep. Br. at 14-16, and appellees were permitted to file a surreply brief. Deciding the issue does not under these circumstances run afoul of the rule against addressing matters first raised by way of reply. Cf. Hunt, 124 B.R. at 210 n. 11 (declining to consider arguments presented for first time in reply brief). Even if it did, this court must in any event determine the question on its own since it implicates bankruptcy court authority and Article III considerations and because CGL plainly raised jurisdictional arguments in its opening brief.
[19] CGL also presents several other challenges to the injunction. In view of the disposition of this issue, the court does not reach them.
[20] This language is taken from Western Real Estate, 922 F.2d at 599, and applied for a proposition that is different from, although not inconsistent with, that for which this court now quotes it.
[21] Although this court has determined supra at § IV(B) that the adverse consequences of RHC's bankruptcy on Coral Gables Hospital are sufficient to confer at least "related to" jurisdiction upon the bankruptcy court, the question whether the specific relief awarded by the bankruptcy court is justified by the record is distinguishable. The jurisdictional test measures whether a proceeding "could conceivably have any effect." See Wood, 825 F.2d at 93. A § 105(a) injunction requires proof of a "substantial burden."
[22] To the extent such evidence was presented in another manner, the bankruptcy judge did not expressly purport to rely upon it. His rulings were made in relation to the motion to assume and request for permanent relief. See May 30, 1990 Tr. at 94.
[23] Were there a basis in the record below to make such findings, and the bankruptcy court had simply failed to articulate a proper basis for its decision, this court would vacate and remand for entry of appropriate findings. The court is satisfied, however, that the record does not support such an injunction. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1853199/ | 403 N.W.2d 781 (1987)
James O. GRIMES, Mark Alan Grimes, and Brandt, Inc., a Wisconsin Corporation, Plaintiffs,
v.
AXTELL FORD LINCOLN-MERCURY, a Corporation, Defendant-Movant.
AXTELL FORD LINCOLN-MERCURY, a Corporation, Plaintiff-Movant,
v.
GRALNEK-DUNITZ COMPANY, Defendant.
No. 86-994.
Supreme Court of Iowa.
April 15, 1987.
Thomas J. Walsh Sr. and Thomas J. Walsh Jr. of Walsh, Fullenkamp, Doyle & Rau, Omaha, Neb., and Troyce Wheeler of Anderson & Wheeler, Council Bluffs, for Grimes and Brandt.
John D. Sens and William R. Hughes Jr. of Stuart, Tinley, Peters, Thorn, Smits & Sens, Council Bluffs, for Axtell Ford.
Dean F. Suing of Katskee & Henatsch, Omaha, Neb., and David F. McCann of Dipple & McCann, Council Bluffs, for Gralnek-Dunitz.
Considered by HARRIS, P.J., and SCHULTZ, CARTER, WOLLE, and LAVORATO, JJ.
LAVORATO, Justice.
The United States Court of Appeals for the Eighth Circuit has certified three questions of law to us. See Iowa Code ch. 684A; Iowa R.App.P. 451-61. The issue is whether we will extend the doctrine of strict liability to sellers of used goods.
The plaintiffs were injured as a result of the failure of a used axle shaft installed on their vehicle. The defect in the shaft was not a manufacturing or design defect, nor was it created by either the defendant (installer) or the third-party defendant (salvage yard). Instead, the defect was caused by an unknown person while the axle shaft was in the possession of an unknown previous owner.
The federal court stated the relevant facts as follows:
The left rear axle shaft on James Grimes' 1979 Ford Econoline van failed on June 25, 1981, while Mark Grimes was driving the van on a highway near Smithland, Iowa. This failure caused the left rear wheel to come off and Mark lost control of the vehicle. The van went off the highway and overturned.
*782 James was a passenger in the van at the time of the accident. Both he and Mark are Nebraska residents, and both suffered personal injuries in the accident. They brought this suit against Axtell Ford Lincoln-Mercury (Axtell), a Newton, Iowa, Ford dealership which had installed a used rear axle assembly in Grimes' van shortly after the original axle failed on December 8, 1980. Axtell responded to the suit by filing a third-party complaint against Gralnek-Dunitz Company, a Newton, Iowa, salvage dealer which sold Axtell the used axle assembly on December 9, 1980.
A Wisconsin corporation, Brandt, Inc., joined the suit as a plaintiff. At the time of the accident, Grimes was transporting Brandt's money handling machines in the back of the van. These machines were damaged when the van overturned.
Unrefuted evidence presented at trial disclosed that the axle shaft had failed because it had been exposed to heat which had weakened it and that the exposure to heat had occurred before the axle came into the possession of Gralnek-Dunitz Company. The defect in the shaft was latent and could only be discovered by a skilled metallurgist. Gralnek-Dunitz had not disassembled or inspected the axle prior to selling it to Axtell. Prior to installing the axle in Grimes' van, Axtell's mechanic noticed grease leaking from the assembly and replaced the axle's grease seal. Axtell's mechanic had also replaced the pinion yoke on the axle assembly in order to adapt the assembly to Grimes' van.
The plaintiffs' case against Axtell was submitted to the jury on a strict liability theory. [The jury found for the plaintiffs and awarded them damages.]
Axtell's case against Gralnek-Dunitz for indemnity or contribution was submitted to the jury on express warranty and strict liability theories. The jury found for Gralnek-Dunitz on Axtell's express warranty theory. With respect to the strict liability theory, the jury answered "yes" to the following special interrogatories:
Special Interrogatory No. 6: Based on the evidence you have heard, do you find that the "rear axle assembly" was defective at the time it was sold by Gralnek-Dunitz to Axtell Ford on December 9, 1980?
Special Interrogatory No. 7: Did the axle assembly sold by Gralnek-Dunitz to Axtell reach the Plaintiff Grimes in a condition substantially unchanged from its condition when it was sold by Gralnek-Dunitz?
The jury answered "no," however, to the following special interrogatory:
Special Interrogatory No. 8: Did Axtell Ford have a right to expect that the rear-end assembly sold to it by Gralnek-Dunitz was free of defects when it was delivered to Axtell by Gralnek-Dunitz?
Based upon this last answer the trial court (Hon. Donald E. O'Brien) entered judgment for Gralnek-Dunitz on Axtell's strict liability theory. [Thus, the court found for Gralnek-Dunitz on Axtell's claim for indemnity or contribution.]
Axtell then appealed to [the United States Court of Appeals for the Eighth Circuit], contending that the doctrine of strict liability should not be applied to a seller of used goods. Alternatively, Axtell maintained that if the doctrine is applied to it, then the doctrine should also be applied to Gralnek-Dunitz.
The federal court posed certified questions as follows:
1. Can the doctrine of strict liability in tort be applied to sellers of used goods? If not, question numbers two and three need not be answered.
2. Can an automobile repair garage and Ford dealership which purchased [a used axle having an unknown defect] from a salvage yard and installed it in a Ford van after replacing the axle's grease seal and pinion yoke, be properly held liable under the doctrine of strict liability in tort? If not, question number three need not be answered.
3. Can an automobile salvage yard which did not inspect or alter the used axle which had a latent defect be properly *783 held liable under the doctrine of strict liability in tort where the used axle was defective when it came into the salvage yard's possession, was defective when it was sold to a repair garage, and a jury has determined that the repair garage had no right to expect that the axle be free of defects?
I. We decline to answer question one under the facts presented. We begin with the federal court's question number two, which we answer negatively. Thus, question three requires no answer. In addressing the question, we restrict our answer to the facts provided with the certified questions. Mulcahy v. Eli Lilly & Co., 386 N.W.2d 67, 70 (Iowa 1986). We do not foreclose the possibility of our applying the doctrine of strict liability to sellers of used goods under other circumstances.
We first examine the policy reasons behind the doctrine of strict liability. We adopted strict liability in tort, as set out at Restatement (Second) of Torts section 402A, in Hawkeye-Security Ins. Co. v. Ford Motor Co., 174 N.W.2d 672, 684 (Iowa 1970) (suit against manufacturer of defective brakes).[1] We gave the following reasons for adopting the doctrine:
The purpose of such liability is to insure that the costs of injuries resulting from defective products are borne by the manufacturers that put such products on the market rather than by the injured persons who are powerless to protect themselves.
....
[P]ublic interest in human life and health, the invitations and solicitations to purchase the product and the justice of imposing the loss on the one creating the risk and reaping the profit are present and ... compelling....
....
Existence of the defect means violation of the representation implicit in the presence of the article in the stream of trade that it is suitable for the general purposes for which it is sold and for which such goods are generally appropriate.
174 N.W.2d at 683-84 (citations omitted). Our goal in imposing strict liability is twofold. First, we hope to deter the sale of defective goods by holding those who control the manufacturing process strictly liable. Consequently, we have applied strict liability to retailers as well as to manufacturers. Osborn v. Massey-Ferguson, Inc., 290 N.W.2d 893, 901 (Iowa 1980). But see 1986 Iowa Acts ch. 1211, § 32 (codified at Iowa Code § 613.18 (1987)) (limits scope of strict liability as to nonmanufacturers, including retailers, under certain circumstances). Retailers are in a position to inspect and repair their products or to exert pressure on manufacturers to improve product safety. See Note, Protecting the Buyer of Used Products: Is Strict Liability for Commercial Sellers Desirable?, 33 Stan.L.Rev. 535, 539-42 (1981). Second, we intend to provide compensation to those injured by defective goods. For example, we made the strict liability doctrine available to injured bystanders in addition to consumers and users of defective goods. Haumersen v. Ford Motor Co., 257 N.W.2d 7, 16 (Iowa 1977).
II. Several courts have addressed the general question whether and in what circumstances a dealer in used products should be held strictly liable. See generally Annotation, Strict Liability in Tort: Liability of Seller of Used Product, 53 A.L.R. 3d 337 (1973). Their answers are as varied as the many different fact situations that engender the issue, resulting in a split of authority.
*784 Some courts imposing strict liability on sellers of used products have done so because they conclude Restatement section 402A is not limited by its terms to sellers of new products. See, e.g., Jordan v. Sunnyslope Appliance Propane & Plumbing Supplies Co., 135 Ariz. 309, 660 P.2d 1236, 1237 (Ct.App.1983); Hovenden v. Tenbush, 529 S.W.2d 302, 306 (Tex.Ct.App.1975). Those courts found that the same policy reasons for holding sellers of new goods strictly liable under section 402A apply to dealers in used goods. See Jordan, 660 P.2d at 1242; Turner v. International Harvester Co., 133 N.J.Super. 277, 336 A.2d 62, 71 (Law Div.1975); Hovenden, 529 S.W.2d at 310.
In contrast, those courts that have declined to extend the doctrine of strict liability to sellers of used products have found that the policy reasons for holding sellers of new goods strictly liable are not fully applicable to sellers of used products. See, e.g., Peterson v. Lou Bachrodt Chevrolet Co., 61 Ill. 2d 17, 329 N.E.2d 785, 786-87 (1975); Tillman v. Vance Equip. Co., 286 Or. 747, 596 P.2d 1299, 1304 (1979); Crandell v. Larkin & Jones Appliance Co., 334 N.W.2d 31, 34 (S.D.1983) (adopting Tillman reasoning). Those courts conclude that section 402A does not apply.
In Tillman v. Vance Equip. Co., 286 Or. 747, 596 P.2d 1299, 1304 (1979), the Oregon Supreme Court held that strict liability would not apply to the seller of a used crane having a manufacturer's design defect. The court reviewed its three policy reasons for strict liability: (1) reasonable expectations of consumer or user, (2) impetus to manufacture a better product, and (3) compensation. Id. at 1303. The court decided that the first two policy reasons would not be advanced by imposing strict liability on dealers in used goods. Buyers of used goods who do not bargain for specific assurances of quality have lesser expectations of safety than buyers of new products. See id. at 1303-04. Because the dealer in used goods is normally entirely outside the original chain of distribution, the incentive to reduce risk accomplished by imposing strict liability would be insignificant. Id. at 1304. Regarding compensation, the court stated that
although the provision of an adequate remedy for persons injured by defective products has been the major impetus to the development of strict product liability, it cannot provide the sole justification for imposing liability without fault on a particular class of defendants.
596 P.2d at 1304. The court concluded that the policy reasons do not justify imposing strict liability for defective products on dealers in used goods. Id.
In Peterson v. Lou Bachrodt Chevrolet Co., 61 Ill. 2d 17, 329 N.E.2d 785 (1975), the Illinois Supreme Court faced a fact situation involving defective brakes on a used car. As in this case, the defect was caused by an unknown third party while the automobile was in the possession of an unknown previous owner. Id. at 787. Despite allegations that the defect would have been discovered upon reasonable inspection, id. at 788 (Goldenhersh, J., dissenting), the majority declined to impose strict liability. The court reasoned that
[i]f strict liability is imposed upon the facts alleged here, the used car dealer would in effect become an insurer against defects which had come into existence after the chain of distribution was completed, and while the product was under the control of one or more consumers.
329 N.E.2d at 787. Accord Masker v. Smith, 405 So. 2d 432, 434 (Fla.Dist.Ct.App. 1981). Thus, the Illinois Supreme Court would apply strict liability to dealers in used goods only in the case of design or manufacturing defects or where the dealer itself created the defect. See Peterson, 329 N.E.2d at 787.
More recently the South Dakota Supreme Court addressed the issue in the context of the sale of a defective used clothes dryer described by the seller as a "Quality Reconditioned Unit" which was "Guaranteed." Crandell v. Larkin & Jones Appliance Co., 334 N.W.2d 31, 32 (S.D.1983). The court agreed with the rule stated by the Oregon Supreme Court in Tillman to the extent it applies to the broad commercial *785 used-goods market. Id. at 34. The South Dakota court recognized the exception, however, that dealers who rebuild or recondition goods are subject to strict liability, regardless of fault, because of heightened consumer expectations. Id.
III. The specific issue presented to us by question two is whether the seller of a defective used good can be held strictly liable where the defect is (1) not a manufacturing or design defect, (2) not caused by the dealer, and (3) not discoverable by reasonable and customary inspection. The used good in the fact pattern presented was not a rebuilt, reconditioned, or recapped product. We reject the plaintiffs' theory that Axtell's replacing the grease seal and pinion yoke before installing the assembly constitutes rebuilding or reconditioning the used rear axle. Under these facts, we decline to apply the doctrine of strict liability.
The federal district court allowed the strict liability claim against Axtell because "product representations made in general by car dealerships ... would heighten consumer expectations to a level that would justify an implied representation of safety," and because Axtell "had a continuing business relationship with the manufacturer of the product, Ford Motor Company." We do not agree that car dealerships that sell used parts make a more particular representation of quality than any other dealer in used goods.
[T]he sale of a used product, without more, may not be found to generate the kind of expectations of safety that the courts have held are justifiably created by the introduction of a new product into the stream of commerce.
Tillman, 596 P.2d at 1304.
If a buyer wants some assurance of quality, he typically either bargains for it in the specific transaction or seeks out a dealer who routinely offers it (by, for example, providing a guarantee, limiting his stock of goods to those of a particular quality, advertising that his used goods are specially selected, or in some other fashion).
Id. at 1303. We also do not agree that Axtell, as a dealer in used goods, is in any special position vis-a-vis the original manufacturer, Ford Motor Company. Id. at 1304. This is not a case involving a manufacturing or design defect. Nor did Ford Motor Company supply the used axle to Axtell.
We agree with the Illinois and Oregon courts that our goal to deter the sale of defective goods would not be significantly furthered by applying strict liability to dealers in used goods under the facts given. See Peterson, 329 N.E.2d at 786-87; Tillman, 596 P.2d at 1304. We also concur with the statement in Tillman that the compensation goal cannot be the sole justification for imposing strict liability. Tillman, 596 P.2d at 1304.
IV. We will not extend the doctrine of strict liability to a dealer in used goods for latent defects, not arising from design or manufacture, which were caused while the goods were in the possession of a previous owner. We therefore answer certified question number two in the negative. We decline to answer certified question number one under the facts presented. Certified question number three requires no answer.
CERTIFIED QUESTIONS ANSWERED.
NOTES
[1] Restatement (Second) of Torts § 402A (1965) provides:
(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if
(a) the seller is engaged in the business of selling such a product, and
(b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.
(2) The rule stated in Subsection (1) applies although
(a) the seller has exercised all possible care in the preparation and sale of his product, and
(b) the user or consumer has not bought the product from or entered into any contractual relation with the seller. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1898099/ | 599 F. Supp. 1103 (1984)
Rafael FERNANDEZ-ROQUE, et al., Petitioners,
v.
William French SMITH, et al., Respondents.
Moises GARCIA-MIR, et al., Plaintiffs,
v.
William French SMITH, et al., Defendants.
Orlando CHAO-ESTRADA, Petitioner,
v.
William French SMITH, et al., Respondents.
Civ. A. Nos. C81-1084A, C81-938A and C81-1350A.
United States District Court, N.D. Georgia, Atlanta Division.
October 15, 1984.
*1104 Dale Schwartz, Myron Kramer, Deborah Ebel, Kenneth Hindman, David Webster, Atlanta, Ga., for plaintiffs.
Richard K. Willard, Acting Asst. Atty. Gen., Lauri S. Filppu, Dept. of Justice, Washington, D.C., Larry D. Thompson, U.S. Atty., Barbara V. Tinsley, Asst. U.S. Atty., Atlanta, Ga., for defendants.
ORDER
SHOOB, District Judge.
Plaintiffs in this case are those Cubans who arrived in the United States as part of the 1980 "Freedom Flotilla" and who were, are, or will be incarcerated at the Atlanta Penitentiary. Fernandez-Roque v. Smith, 91 F.R.D. 117, 122-24, as modified, 91 F.R.D. 239, 240 n. 1 (N.D.Ga.1981). Presently before the Court is plaintiffs' "Second Renewed Motion for Habeas Corpus," pursuant to 8 U.S.C. § 1105a(b), seeking judicial review of their final orders of exclusion. Specifically, plaintiffs have petitioned the Court to review the November 30, 1983 decisions of the Board of Immigration Appeals (BIA or Board) that denied plaintiffs' class-wide motions to reopen their asylum claims. Plaintiffs base their claims to asylum on their membership in the Freedom Flotilla.
For the reasons that follow, this Court finds that BIA abused its discretion in denying plaintiffs' motions to reopen. Accordingly, the Court reverses and remands these cases to BIA, with directions to reopen plaintiffs' exclusion cases and to consider on the merits plaintiffs' claims to *1105 asylum based on their membership in the Freedom Flotilla. All final orders of exclusion for class members are set aside pending the outcome of these proceedings on remand.
BACKGROUND
In 1981, by amendment to their original complaint, plaintiffs contended that as a result of having left Cuba in the 1980 Freedom Flotilla, they as a class have a well-founded fear of persecution if returned to Cuba. As relief they sought (1) release from imprisonment as asylees or refugees under Article 31 of the Protocol Relating to the Status of Refugees, and (2) withholding of deportation (or an injunction against deportation to Cuba) under Article 33 of the Protocol and under 8 U.S.C. § 1253(h). On August 19, 1981, this Court entered a temporary restraining order prohibiting their deportation to Cuba.
Defendants then challenged this Court's jurisdiction to entertain these class-wide asylum claims and sought review in the Eleventh Circuit Court of Appeals. In Fernandez-Roque v. Smith, 671 F.2d 426 (11th Cir.1982), the Court of Appeals directed this Court to decide whether it had jurisdiction over plaintiffs' class-wide asylum claims. On April 28, 1982, this Court responded by holding that (1) it had jurisdiction to review on a class-wide basis by way of habeas corpus the final orders of exclusion for those class members who had fully exhausted their administrative remedies; (2) it lacked jurisdiction to review final orders of exclusion for class members who had never appealed to BIA; and (3) it lacked jurisdiction over plaintiffs' claim of entitlement to a remand to the Immigration and Naturalization Service (INS) for a class-wide asylum hearing. Fernandez-Roque v. Smith, 539 F. Supp. 925 (N.D.Ga. 1982).
On June 15, 1982, those class members over whose asylum claims the Court at that time had no jurisdiction filed a motion to reopen their asylum claims before an Immigration Judge (IJ). Matter of Leon-Orosco. On the same day, class members over whose asylum claims the Court had jurisdiction filed a motion to reopen directly with BIA. Matter of Rodriguez-Colas. Although these two motions were filed not as class motions but as individual ones, the parties stipulated that they would be test cases, "binding on all asylum/withholding of deportation issues relating to membership in the Freedom Flotilla as a social group except with respect to statutory and regulatory exceptions to asylum/withholding eligibility." Thus, the effect of these test cases was a class-wide motion to reopen the asylum claims.[1]
In support of their motions to reopen, plaintiffs submitted the following evidence:
(1) Thirteen Mariel Cubans submitted affidavits stating that they previously had never been jailed in Cuba; that they voluntarily returned to Cuba in 1980 because they were homesick; that they were incarcerated, tortured, indicted, and tried as "Mariel scum" who illegally entered Cuba; that on the one year anniversary of Mariel they were set adrift on the ocean without food, water, or navigational equipment; and that they were told they were no longer Cubans and that all who left via Mariel were traitors. The Cuban indictments for the 13 returnees not only accused them of illegal entry but also specifically described *1106 the returnees as "all of bad social antecedents, who abandoned the national territory in the first months of 1980 as scum, by the way of Mariel."
(2) Plaintiffs submitted State Department Country Reports on Human Rights Practices in Cuba for 1980 and 1981, documenting the inhumane treatment received by Mariel Cubans prior to leaving Mariel Harbor and by others who sought to leave but were not allowed to depart. The Reports confirmed that some Mariel Cubans have returned to Cuba, but stated that their treatment after return to Cuba was unknown.
(3) Plaintiffs also submitted correspondence from the State Department confirming that the Cuban government's response to early efforts to repatriate Mariel Cubans was that all Cubans who left via Mariel have made an irrevocable decision to leave Cuba.
(4) Plaintiffs introduced a statement by the U.S. Coordinator for Refugee Affairs, dated April 21, 1980, that all Cubans who sought asylum in the Peruvian embassy have a well-founded fear of persecution if returned to Cuba.
(5) Plaintiffs also offered the November 12, 1981 deposition of Jorge Dominguez, Professor of Government at Harvard University and an expert on Cuba; Professor Dominguez testified that although distinctions were plausible among Mariel Cubans, Cuba refused to make such distinctions and treated the entire Freedom Flotilla group as "escoria" (scum) who were to blame for Cuba's past problems and whose departure enabled Cuba to have a better future. According to Dominguez, this group of Cuban emigres was treated differently than any previous group of emigres. He believed that the affidavits from the 13 Mariel returnees were credible and that these 13 returnees received harsh treatment not only because they violated Cuban immigration laws in returning but also because they were Mariel scum. Most significantly, Dominguez testified that, in his opinion, if plaintiffs were returned to Cuba, they would be punished under the law of "peligrosidad" (state of political dangerousness) and that deprivations under peligrosidad would most likely include deprivation of freedom in the form of house arrest or detention in some other place. In addition to the legal sanctions accompanying this state of dangerousness, plaintiffs would be subject to informal community sanctions for four to five years before they were "cleansed" of the enemy "taint". Finally, Dominguez noted that it was possible, although he could not state with certainty, that returning Mariel Cubans would be regarded and punished as traitors. On cross-examination Dominguez acknowledged that, to his knowledge, Cuba had passed no special laws concerning Mariel Cubans and that, to his knowledge, previous groups of Cuban emigres who have visited Cuba with Cuban consent have not been persecuted.
On August 16, 1982, the IJ denied the Leon-Orosco motion to reopen, concluding that the Flotilla was not a "social group" for asylum purposes. Plaintiffs appealed this denial to the Board. On November 30, 1983, the Board dismissed the appeal in Leon-Orosco and, in a virtually identical decision, denied the motion to reopen in Rodriguez-Colas. The Board assumed arguendo that the Flotilla was a social group, but held that plaintiffs had failed to make out a prima facie case of a "well-founded fear of persecution." See Matter of Leon-Orosco and Rodriguez-Colas (BIA November 30, 1983).
On February 10, 1984, plaintiffs filed a "Renewed Motion for Habeas Corpus to Review and Reverse Decision of Board of Immigration Appeals." On the same date the Commissioner of INS, pursuant to 8 C.F.R. § 3.1(h)(iii), certified to the Attorney General for review two issues related to the decisions of the Board in Leon-Orosco and Rodriguez-Colas. Consequently, this Court delayed its decision on "Plaintiffs' Renewed Motion for Habeas Corpus" pending a response by the Attorney General. On July 27, 1984, the Attorney General *1107 approved BIA's handling of both issues.[2]Matter of Leon-Orosco and Rodriguez-Colas (A.G. July 27, 1984). On July 31, 1984, plaintiffs filed their "Second Renewed Motion for Habeas Corpus," seeking judicial review of the decisions of BIA.[3]
JURISDICTION
An alien against whom a final order of exclusion has been entered may obtain judicial review of that order by habeas corpus proceedings in district court. 8 U.S.C. § 1105a(b). An order of exclusion shall not be reviewed by any court unless the alien has exhausted the administrative remedies available to him as of right. 8 U.S.C. § 1105a(c). At present, all class members have fully exhausted their administrative remedies with respect to their claims to asylum and withholding of deportation based on membership in the Freedom Flotilla. This Court has jurisdiction to review their final orders of exclusion, which include the denial of asylum and withholding of deportation.
STANDARD OF PROOF IN MOTION TO REOPEN
In considering a motion to reopen, the BIA must determine on the basis of the moving papers, affidavits, and other supporting evidence whether petitioners have presented a prima facie case of eligibility for the relief sought.[4]Aguilar v. INS, 638 F.2d 717, 719 (5th Cir. Unit B 1981), citing Urbano de Malaluan v. INS, 577 F.2d 589, 593 (9th Cir.1978). The ultimate relief sought by plaintiffs is asylum and withholding of deportation. Although not directly at issue in this motion to reopen, to prevail on the merits in a reopened hearing plaintiffs would have to demonstrate a well-founded fear of persecution for asylum and a clear probability of persecution for withholding. INS v. Stevic, ___ U.S. ___, 104 S. Ct. 2489, 2497 n. 18, 81 L. Ed. 2d 321 (1984).
The Ninth Circuit recently explained the purpose of a motion to reopen:
The motion to reopen is only a preliminary proceeding, representing the first in a series of hurdles that the alien must clear to obtain relief .... The motion to reopen is not intended to be a substitute for a hearing. Its purpose is merely to allow the Board to screen out those claims that clearly lack merit and thus can be disposed of without a hearing. The function of the Board at the motion-to-reopen stage of the proceedings is not to make a determination of the alien's eligibility for relief.... The function of the Board is merely to determine whether the alien has set forth a prima facie case of eligibility for relief.
Reyes v. INS, 673 F.2d 1087, 1089-90 (9th Cir.1982) (citations omitted). Thus, the Board's role in a motion to reopen is not to render ultimate decisions of fact, but rather to determine whether plaintiffs have made a sufficient showing to warrant reopening their asylum claims and providing them a full hearing.
SCOPE OF JUDICIAL REVIEW
This Court is aware of the narrow scope of judicial review and the deference given to agencies in the review of administrative cases. The Court is also mindful that it must not substitute its own judgment for that of the agency. Decisions of the Board in denying a motion to reopen, *1108 however, are subject to review for abuse of discretion and for errors of law. Te Kuei Liu v. INS, 645 F.2d 279, 283 (5th Cir. Unit A 1981).
Courts have recognized several circumstances in which a BIA decision would constitute an abuse of discretion. Courts in this circuit and elsewhere have declared that INS has abused its discretion when it has denied reopening despite the alien's demonstration of a prima facie case. See, e.g., Vargas-Gonzales v. INS, 647 F.2d at 457, 459; Samimi v. INS, 714 F.2d 992, 995 (9th Cir.1983). It would also be an abuse of discretion for the BIA to distort or disregard important aspects of the alien's claim. Reyes v. INS, 673 F.2d at 1089. It has also been held to be an abuse of discretion for the BIA to prejudge the case on the merits at the reopening stage. Motamedi v. INS, 713 F.2d 575, 576 (10th Cir.1983). Finally, when the BIA applies incorrect legal standards, the BIA's decision is subject to review for errors of law. Te Kuei Liu v. INS, 645 F.2d at 283.
REVIEW OF BIA'S DECISIONS DENYING PLAINTIFFS' MOTION TO REOPEN
This Court has studied the evidence submitted by plaintiffs in support of their motion to reopen and has carefully considered the BIA decision in light of the evidence. The Court has also thoughtfully evaluated the arguments presented by the Service and the Cubans. The Court determines that the BIA has abused its discretion by using an incorrect legal standard in deciding the motion, by disregarding or mischaracterizing evidence tending to establish plaintiffs' claim of a well-founded fear of persecution, and by impermissibly prejudging the case on the merits at the reopening stage.
First, BIA abused its discretion by employing an erroneous and improper legal standard. BIA stated its rationale for denying the motion to reopen as follows:
Neither the lawful nor unlawful return of the Mariel participants is a present reality. The applicants' motion fails to demonstrate prima facie a present realistic likelihood of persecution.
BIA thus considered whether deportation was a "present reality" and, since it was not, determined that plaintiffs had no present reason to fear persecution. However, neither the asylum statute, 8 U.S.C. § 1158, nor the statute defining a "refugee," 8 U.S.C. § 1101(a)(42)(A), makes actual or threatened deportation or return, or the method of return, a criterion to be considered in the decision to grant asylum or refugee status. BIA's interpretation of the relevant statutes is unfounded and erroneous as a matter of law. The correct test for evaluating the type of asylum claim raised by plaintiffs is the one specified by the statute: whether the alien has demonstrated a well-founded fear of persecution. 8 U.S.C. §§ 1158, 1101(a)(42)(A).
Second, BIA abused its discretion because, in deciding that plaintiffs had failed to show prima facie a well-founded fear of persecution, BIA disregarded or mischaracterized evidence tending to establish a well-founded fear of persecution. Several aspects of BIA's decision reflect this flaw. One example is that BIA characterized the thirteen Mariel returnees as "those Cubans who sought to enter Cuba without first obtaining permission and in violation of Cuban travel laws," apparently attributing the persecution of returnees solely, or almost entirely, to their illegal entry into Cuba. The expert testimony of Professor Dominguez, however, contradicts BIA's apparent conclusion: "The mere fact of [the 13 returnees'] departure via Mariel was in itself among the aggravating circumstances for which the returnees were punished." Dominguez Deposition at 69.
Another, more egregious, example of BIA's mischaracterization of the evidence was its interpretation of Professor Dominguez's testimony regarding the likely treatment of plaintiffs if they are returned to Cuba:
[T]he testimony of Professor Dominguez clearly suggests that Mariel participants who are returned pursuant to an agreement would not experience treatment *1109 similar to those nationals who attempted to illegally re-enter Cuba. His testimony further suggests that while Mariel participants so returned would not be comfortable, it would be primarily the result of the economic and social upheaval taking place in Cuba, which affects the entire population, rather than a specifically directed course of persecution.
BIA's characterization of the expert testimony is indefensible. Dominguez testified that even if the Mariel Cubans were returned pursuant to an agreement with Cuba, "at a minimum, the Cuban government would classify all those so returned as being in the `State of Dangerousness.'" Dominguez Deposition at 63 (emphasis added). The incidents of the state of dangerousness "deprivation of freedom, some elements of house arrest, some element of compulsory work"surely are severe enough to constitute "persecution," especially when at least one court has held that deprivation of an economic nature can establish persecution for asylum purposes. Kovac v. INS, 407 F.2d 102, 107 (9th Cir. 1969). Further, Dominguez testified that the returning Mariel Cubans also would suffer informal sanctions lasting four or five years. Dominguez Deposition at 65-66. It puzzles the Court how BIA could have interpreted this testimony as indicating only that the returning Mariel Cubans "would not be comfortable," and that their harsh treatment would not be the result of a "specifically directed course of persecution." Moreover, plaintiffs were not required to show that they would "experience treatment similar to those nationals who attempted to illegally re-enter Cuba" (emphasis added); persecution can take many forms. For all these reasons, BIA abused its discretion in disregarding or mischaracterizing evidence that this Court finds sufficient to establish prima facie a well-founded fear of persecution.
Third, the Board abused its discretion by prejudging the case on the merits, instead of limiting its inquiry to whether plaintiffs had presented a prima facie case. See Motamedi v. INS, 713 F.2d 575 (10th Cir. 1983). As the Court has already noted, a decision on, a motion to reopen should not be a ruling on the ultimate merits of claims to asylum and withholding of deportation. Although BIA need not have assumed that plaintiffs would present more persuasive evidence in a reopened hearing, it incorrectly assumed that plaintiffs would have no further evidence to present.[5]
In sum, the Court holds that BIA abused its discretion by employing an incorrect legal standard, by disregarding or mischaracterizing evidence tending to establish plaintiffs' claims, and by prejudging the case on the merits. The Court finds that plaintiffs made a sufficiently strong showing before the agency to justify a full hearing with a thorough consideration by the agency of their asylum and withholding of deportation claims. Plaintiffs' evidence compares favorably with evidence presented in other cases in which courts have ordered proceedings to be reopened. See, e.g., Motamedi v. INS, 713 F.2d at 576; Samimi v. INS, 714 F.2d at 995. Still, as the Ninth Circuit noted in Samimi, a finding that a prima facie showing has been made entitles plaintiffs only to a hearing and does not preordain the result of that hearing. 714 F.2d at 995.
The Court therefore REVERSES the decisions of BIA in Leon-Orosco and Rodriguez-Colas and REMANDS the cases to BIA with directions to reopen plaintiffs' exclusion cases and to consider on the merits plaintiffs' claims to asylum based on their membership in the Freedom Flotilla. More specifically, the BIA is DIRECTED to hold a hearing and to decide (1) whether *1110 plaintiffs have a well-founded fear of persecution based on membership in the Freedom Flotilla; (2) whether the freedom Flotilla is a particular social group for asylum purposes; and (3) if it is not a social group, whether plaintiffs qualify for asylum on the ground that their fear of persecution is based on political opinion, see 8 U.S.C. § 1101(a)(42)(A). Accordingly, all final orders of exclusion for all class members are set aside pending the outcome of these proceedings on remand.
NOTES
[1] The decisions on the motion to reopen and in the reopened hearing are binding on all class members who have final orders of exclusion entered against them by an IJ and who have not appealed to BIA. Although, the stipulation was also binding on class members who have not received final orders of exclusion from an IJ after an exclusion hearing, that group is not before the Court for judicial review under 8 U.S.C. § 1105a(b) unless and until they receive a final order of exclusion from an IJ.
Similarly, these decisions are binding on all class members who had final orders of exclusion entered against them by an IJ, who have appealed to BIA, and whose final orders of exclusion have been affirmed on appeal. Although the stipulation was also binding on class members who have appealed to BIA and who are waiting for a decision, that group is not before the Court for judicial review under 8 U.S.C. § 1105a(b) unless and until BIA dismisses their appeal or affirms the final orders of exclusion.
[2] INS had complained to the Attorney General that BIA should have approved the stipulations entered into between the parties and that BIA should have ruled on whether the Flotilla was a social group for asylum purposes. The Attorney General found that INS had misread the BIA decision and that BIA did not in fact reject the stipulations, but merely found it unnecessary to discuss their effect. The Attorney General also approved BIA's failure to rule on whether the Flotilla was a social group.
[3] In this motion plaintiffs have not challenged the Attorney General's decision. Thus, the Court limits its review to BIA's decisions denying plaintiffs' motions to reopen their asylum claims.
[4] There are various technical requirements for a motion to reopen, see 8 C.F.R. §§ 3.2, 103.5, 242.22; however, the BIA did not rest its refusal to reopen on any technical failure to comply with these regulations.
[5] Plaintiffs advised the IJ that additional evidence from journalists and others who had recently been in Cuba would be presented in a reopened hearing. Moreover, according to plaintiffs' reply brief and oral argument, in the two years since the motion to reopen was filed additional evidence to support their claim has come to plaintiffs' attention, including the 1984 State Department Country Report; Testimony by Elliott Abrams, Assistant Secretary of State for the Bureau of Human Rights and Humanitarian Affairs; and the 1983 Americas Watch Report. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1554742/ | 429 F.Supp. 288 (1977)
M. by his parents R. and S., Plaintiff,
v.
BOARD OF EDUCATION BALL-CHATHAM COMMUNITY UNIT SCHOOL DISTRICT NO. 5, CHATHAM, ILLINOIS, et al., Defendants.
Civ. No. 77-3035.
United States District Court, S. D. Illinois, S. D.
March 16, 1977.
*289 Ronald L. Maksym, Mary Lee Leahy, Andrew J. Leahy, Springfield, Ill., for plaintiff.
Alfred B. LaBarre, Springfield, Ill., for defendants.
MEMORANDUM ORDER
ACKERMAN, District Judge.
Plaintiff M., a third year student at Glenwood Senior High School, by his parents R and S, brings this action under 42 U.S.C. § 1983 for redress of alleged violations of his constitutional rights under color of state law by the defendants, Board of Education Ball-Chatham Community District No. 5, Chatham, Illinois, each member of the board as board members and individually, William J. Hovey, individually and as Superintendent, and Michael A. Collins, individually and as Assistant Principal, Glenwood Senior High School.
Plaintiff seeks an injunction requiring defendants to continue plaintiff as a student at Chatham Senior High, expungement of the high school records and damages in the amount of $100,000 from the above-named individual defendants. The cause is here on plaintiff's motion for preliminary injunction.
The facts are not in dispute. On February 9, 1977, at approximately 3:20 in the afternoon Assistant Principal Michael A. Collins was approached by a student who said that he had seen plaintiff and a number of other students passing back and forth what the student thought to be drugs during a study hall on the morning of February 9.[1] The student further stated that plaintiff appeared to be in possession of a large amount of money. Transcript of Expulsion Proceedings before Chatham School Board Unit District No. 5, dated March 3, 1977 [hereinafter cited as Transcript] at 24-26. Classes adjourned for the day at 3:30.
The next morning at approximately 10:40 a.m. Mr. Collins and Mr. Bird, the assistant principal at the junior high school, entered the study hall class and required plaintiff and the other students reported to be involved in the previous day's activities, to accompany Mr. Collins and Mr. Bird to a nearby kitchen area. There, each boy was searched individually.
In plaintiff's case, the search was accomplished by first requesting plaintiff to empty his pockets. Plaintiff refused. Mr. Collins after stating to plaintiff that there were several alternatives, specifically, calling plaintiff's parents to either get permission for the search or request that they perform the search, or calling the police, attempted unsuccessfully to call plaintiff's parents. After the unsuccessful calls, plaintiff agreed to empty his pockets. Transcript at 6, 15-16. In plaintiff's possession were found a small pipe containing what appeared to be marijuana residue, a small matchbox containing what appeared to be marijuana, and a red and yellow capsule, stated to be a "Contact pill". Transcript at 6.
The substance in the matchbox was subsequently tested by a member of the Chatham Police Department using a field testing kit known as a Voltox kit and the substance was determined to be marijuana.
Mr. Collins, after discovery of the pipe and matchbox and after several more attempts, contacted plaintiff's parents by telephone, informed them of the situation and asked them to come to the school. Further, *290 in a letter dated February 10, Mr. Collins informed plaintiff's parents that plaintiff pursuant to disciplinary procedures promulgated by the Board of Education[2] was suspended for ten days effective immediately. The letter also advised plaintiff's parents of their right to a hearing on the suspension.
Following the meeting with plaintiff's parents, Mr. Collins prepared a written report of the occurrence. This report along with a request for an expulsion hearing was presented to the defendant board at the next regular board meeting, February 21. Transcript at 13. The expulsion hearing was set for February 24 and notice to plaintiff's parents was given by letter dated February 22, over the signature of William D. Hovey, superintendent of the district. The expulsion hearing was subsequently reset to March 3, at the request of plaintiff's counsel.
At the expulsion hearing on March 3, plaintiff and his parents were present and represented by counsel. Mr. Collins, Mr. Bird, plaintiff, and plaintiff's father testified. Plaintiff's counsel examined all the witnesses, presented questions to the board, and marked documents for identification. The board retired to executive session and after deliberation, ordered plaintiff expelled for the remainder of the school year for violation of the board policy concerning possession of a dangerous substance and related paraphernalia.
Under these circumstances plaintiff contends that his right to due process of law under the Fourteenth Amendment was violated by defendants. Plaintiff contends that the facts present substantive and procedural due process questions. More specifically, plaintiff alleges that his right to substantive due process was violated by an unreasonable search of his person, the fruits of which were introduced against him at the suspension hearing. Additionally, plaintiff contends that his right to due process was violated in at least three instances by the school board procedures or the lack thereof.
I.
In the procedural due process attack on the board action, plaintiff contends that the due process clause was violated in that:
1. the expulsion hearing was conducted without the formulation of any specific procedures to govern expulsion hearings;
2. the disciplinary rules promulgated by the board were overly vague in that they failed to distinguish between conduct which would result in suspension rather than expulsion and;
3. the lack of rules promulgated by the board, to govern search of students by school officials violates fundamental fairness guaranteed by the due process clause.
It is clear that the due process clause is applicable to disciplinary actions taken by public school officials. Goss v. Lopez, 419 U.S. 565, 95 S.Ct. 729, 42 L.Ed.2d 725 (1975). While,
[i]t is not the role of the federal courts to set aside decisions of school administrators which the court may view as lacking a basis in wisdom or compassion . . . [p]ublic high school students do have substantive and procedural rights while at school. Wood v. Strickland, 420 U.S. 308, 326, 95 S.Ct. 922, 1003, 43 L.Ed.2d 214 (1975).
In the Goss case, the Supreme Court held that a suspension of 10 days or less required at least notice and a rudimentary hearing in order to comport with due process. The Court also recognized that "[l]onger suspensions or expulsions for the remainder of the school term, or [longer] may require more formal procedures." Goss, supra, 419 U.S. at 584, 95 S.Ct. at 741.
In this case, plaintiff was expelled for violation of school rules. Clearly, more than notice and a rudimentary hearing is necessary in order to protect plaintiff's rights under the Constitution. However under the facts here presented, I believe the plaintiff received due process of law.
*291 The procedures followed by the school board here, appear to me to be entirely proper. Although there may have been no written guidebook for the board and plaintiff's attorney to consult concerning expulsion hearings, there was an orderly presentation of evidence by the school officials and plaintiff's counsel. There was adequate notice. All parties were present. All had the opportunity to present whatever testimony they desired and to ask whatever questions they thought appropriate, in front of the assembled school board prior to a decision.
Under these circumstances, the lack of formal guidelines does not violate due process. The cases cited by plaintiff are clearly distinguishable. Nitzberg v. Parks, 525 F.2d 378 (4th Cir. 1975) struck down rules promulgated for prior restraint of student publications on grounds of vagueness, and is inapplicable here. The hearing here was not truncated, incomplete, or merely a rubber stamp for a prior ex parte hearing as was the case in Strickland v. Inlow, 519 F.2d 744 (8th Cir. 1975).
Plaintiff's next objection is that the disciplinary rules promulgated by the board are unconstitutionally vague. I find this argument without merit on the facts here presented.
The disciplinary rules themselves, reproduced here as an appendix, clearly provide differing punishments for differing offenses. Plaintiff contends that as to drug-related offenses, the rules are unconstitutionally vague because they do not differentiate between those offenses meriting a suspension and those offenses from which expulsion may flow. It appears to me that this is not improper or undesirable, much less a violation of due process.
"The system of public education that has evolved in the Nation relies necessarily upon the discretion and judgment of the school administrators and school board members . . ." Wood v. Strickland, supra 420 U.S. at 326, 95 S.Ct. at 1003. The rules here, merely vest the school official with discretion to determine which situations he believes sufficiently serious to warrant expulsion, and the power to request such a sanction from the board. Clearly, the school officials must be vested with this type of discretion in order to maintain discipline and good order. See, Goss, supra 419 U.S. at 589-90, 95 S.Ct. 729 (Powell, Jr., dissenting).
Thirdly, plaintiff argues, citing U. S. v. Barbera, 514 F.2d 294 (2 Cir. 1975), that the failure to provide school administrators with guidelines for searches of students is of itself a violation of due process. But the Barbera case does not go this far. While, I may agree that it would be useful to provide such rules for the use of school administrators, the lack of such rules does not violate due process. As in the language quoted above from the Wood case suggests, the discretion of school officials must be relied upon. If the trust given those officials is violated, and if the rights of the student under the Constitution are violated, a ready forum is available in this Court. Due process does not require that school boards promulgate rules interpreting the Fourth Amendment for the use of local school officials.
II.
The second and perhaps more difficult prong of plaintiff's due process argument is that his substantive rights under the due process clause were violated in that the entire hearing was the direct result of a search and seizure prohibited by the Fourth Amendment. The ultimate question here, of course, is whether the products of an illegal search and seizure are required to be excluded from an expulsion hearing before a local school board[3] and whether school boards are going to be required to formulate some sort of suppression hearing to determine what evidence may be presented at such a hearing.
*292 Reserving that question, however, I must first deal with the basic question whether the search was in fact performed in violation of the Fourth Amendment. Whether the full force of the Fourth Amendment and all the decisions interpreting it apply in this situation appears in my mind to be open to serious question.
The student's right to be free from unreasonable search and seizure must be balanced with the necessity for the school officials to be able to maintain order and discipline in their schools and to fulfill their duties under the in loco parentis doctrine to protect the health and welfare of their students. Considering these factors the Court in Moore v. Student Affairs Committee of Troy State Univ., 284 F.Supp. 725 (M.D.Ala. 1968) held that college administrators needed only "reasonable cause to believe" rather than the higher constitutional standard of probable cause, required in criminal cases, to justify a warrantless search of a student's dormitory room. In Doe v. State, 88 N.M. 347, 540 P.2d 827 (1975), a "reasonable suspicion" standard was used to judge the reasonableness of a search by a school official. See also, 49 A.L.R.3d 978 (1973).
Plaintiff would require this Court to hold that a school official must have probable cause to search a student, citing the learned opinion by Judge Flaum in Picha v. Wielgos, 410 F.Supp. 1214 (N.D.Ill.1976). But Judge Flaum properly distinguishes between instances where police are involved, requiring probable cause and those cases where the school officials are acting alone where a lesser standard is applied. See Picha, supra, at 1219.
In this case, where there was no police involvement and where the scope of the intrusion was slight, requiring the plaintiff merely to empty his pockets, I believe the search was reasonable applying a "reasonable cause to believe" standard. The information provided by Mr. Collins' student source that something thought to be drugs and what appeared to be a large amount of money was seen in the possession of plaintiff, provided Mr. Collins reasonable cause to believe that plaintiff had drugs in his possession.
The search was reasonable and did not violate the Fourth Amendment. The Assistant Principal here was doing his job properly. He was performing his duties as all parents would wish. He was acting with restraint, for the health, safety, and welfare of all students.
Under these circumstances, the plaintiff has failed to show the necessary likelihood of success on the merits and, therefore, the motion for preliminary injunction must be denied.
APPENDIX
DISCIPLINARY PROCEDURES
All disciplinary procedures will be handled with immediacy. We believe this to be important to the child as well as to the atmosphere of the school. Any conference noted in these procedures will be held within three days of the infraction whether initiated by the school or parents.
SKIPPING CLASS: 1st Offense - Unexcused absence, 1 hour
detention per 1 missed, notify parents
by phone and letter.
2nd Offense - Unexcused absence, 1 hour
detention per 1 hour missed, parental
conference recommended, warn of suspension
on next offense.
3rd Offense - Suspension 3 days, certified
letter, parental conference recommended,
warn of 10 day suspension.
4th Offense - Suspension 10 days, certified
letter, parental conference required,
warn of expulsion letter to
Board of Education notifying them of
situation.
*293
5th Offense - Suspension till nearest
board meeting (unless board chooses to
set a special hearing date). Hearing
before Board of Education with recommendation
for expulsion.
UNEXCUSED TARDINESS: Two warnings by teacher, referred to
assistant principal in writing after 2nd
offense.
3rd Offense - 3 nights detention, notify
parents by letter.
4th Offense - 3 day suspension, parental
conference recommended, certified letter.
DAMAGE TO SCHOOL
PROPERTY: - payment for damaged property.
VANDALISM: 1st Offense - 3 day suspension, payment
for damaged property, refer to police
for arrest.
2nd Offense - expulsion[*], payment for
damages, refer to police for arrest.
INSUBORDINATION: 1st Offense - 3 days detention, conference
(Defined as failure to between staff member, student,
follow a staff member's parent and assistant principal, if
directions) deemed necessary by assistant principal,
notify parents by phone or letter.
2nd Offense - 3 day suspension, conference
between staff member, student,
parent and assistant principal.
3rd Offense - 10 day suspension, removal
from class for rest of semester with a
failing grade.
GROSS INSUBORDINATION 1st Offense - 3 day suspension, conference
(Defined as between staff member, student,
talking back to a staff parents and assistant principal.
member, after failing 2nd Offense - Removal from class for
to follow a staff rest of semester with failing grade,
member's direction) 3 day suspension.
3rd Offense - Expulsion[*]
USE OF ABUSIVE OR OBSCENE 1st Offense - 3 day suspension
LANGUAGE TO A STAFF MEMBER: 2nd Offense - 3 to 10 days, conference
between staff member, student, parents
and assistant principal.
3rd Offense - Expulsion[*]
BEING IN PARKING LOT OR 1st Offense - 3 nights detention,
CARS DURING THE SCHOOL warning letter to parents that on next
DAY: offense student will lose driving
privileges and be suspended.
2nd Offense - 3 day suspension and loss
of driving privileges for rest of school
term (semester).
3rd Offense - 10 day suspension and
loss of driving privileges for the year.
FIGHTING ON SCHOOL
PROPERTY: 1st Offense - Choice of 3 day suspension
or a legally administered
corporal punishment, certified letter
to parents.
2nd Offense - 10 day suspension.
3rd Offense - Recommended expulsion[*]
*294
VIOLATION OF BUS RULES: While students are on the bus, they
are under the supervision of the bus
driver. It is hoped most bus discipline
problems can be handled by the
bus driver. Any flagrant rule infraction
that are reported by the bus driver
shall be handled as a similar classroom
situation. Riding the school bus is a
privilege. If this privilege is abused
the student will be removed from the
bus. Student bus problems shall be
handled by the building principal in
conjunction with the Assistant Superintendent
in charge of bus transportation.
SMOKING: If you do not smoke, you are greatly
High School: urged not to start. Those students
who feel they must smoke must strictly
follow the smoking policy, which is as
follows:
The student smoking area is the
immediate area across the drive
from the northwest corner of the
corner of the building. It is
the rocked area near the large tree
located next to the curve in the
drive. Students may smoke in this
area before school, after school,
or during their regularly assigned
lunch period.
1st Offense - 3 day suspension.
2nd Offense - 3 day suspension
3rd Offense - 10 day suspension
4th Offense - Expulsion[*]
Junior High: Students in 6th, 7th, and 8th grade may
not at any time while on school property
or while at school have in their possession
cigarettes or smoke cigarettes.
Any student found in violation of this
rule shall be immediately suspended for
3 days. Certified letter to parents.
Parental Conference.
1st Offense - 3 day suspension.
2nd Offense - 3 day suspension.
3rd Offense - 10 day suspension.
4th Offense - Expulsion[*]
DRUGS AND ALCOHOL: Any student who is using drugs or alcohol
outside of school and asks for assistance
will be given the full services of the
school's personnel and will be referred
to outside social agencies if requested.
Otherwise:
-Any student found in possession of,
under the influence of, or in possession
of paraphernalia concerning any dangerous
substance shall be immediately suspended
from school for 10 days. If expulsion
is recommended, the board will set a
hearing date at the next school board
meeting to determine if this student shall
be permanently expelled from school.
*295
-Any student found in possession of, or
under the influence of any alcoholic
beverage shall be suspended for 5 days.
If expulsion is recommended, the board
will set a hearing date at the next school
board meeting to determine if this student
shall be permanently expelled from school.
FALSE FIRE ALARM: 1st Offense - 3 day suspension - notify
authorities.
2nd Offense - 10 day suspension - notify
authorities
NOTES
[1] At a hearing in this Court on motion for preliminary injunction Mr. Collins testified and expanded on his testimony before the school board. He testified that the student had reported that this occurred on a regular basis and that he had seen this student passing drugs on other prior occasions.
[2] See Disciplinary Rules reproduced here as an appendix.
[3] In Caldwell v. Cannady, 340 F.Supp. 835 (N.D.Tex.1972), the court held that evidence obtained by police officers through illegal search and seizure could not be used to expel student under board policy requiring expulsion for drug-related offenses.
[*] Suspension till nearest board meeting (unless board chooses to set a special hearing date). Hearing before Board of Education with recommendation for expulsion.
MAC-WGB/dah
1976 | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2625017/ | 20 P.3d 237 (2001)
173 Or. App. 6
Shawna McCOMB, Appellant,
v.
Lisa M. TAMLYN and State of Oregon, by and through its Department of Transportation, Respondents.
(CCV 97-09-080; CA A105285)
Court of Appeals of Oregon.
Argued and Submitted September 11, 2000.
Decided March 14, 2001.
*238 Helen T. Dziuba, Portland, argued the cause filed the briefs for appellant. With her on the briefs was Law Office of Helen T. Dziuba.
Thomas M. Christ, Portland, argued the cause for respondent Lisa M. Tamlyn. With him on the brief was Mitchell, Lang & Smith.
Michael C. Livingston, Assistant Attorney General, argued the cause for respondent State of Oregon. With him on the brief were Hardy Myers, Attorney General, and Michael D. Reynolds, Solicitor General.
EDMONDS, Presiding Judge, and ARMSTRONG and BREWER, Judges.
EDMONDS, P.J.
Plaintiff was injured when defendant Tamlyn's vehicle hit her while plaintiff was riding her bicycle in a crosswalk. Plaintiff entered the crosswalk with a "Walk" signal, while Tamlyn had a solid green light when she turned into it from a dedicated right turn lane. Plaintiff alleged that Tamlyn was negligent in driving her vehicle and that the state Department of Transportation (the state) was negligent in designing the signals for the intersection. At the close of the evidence, the trial court granted the state's motion for a directed verdict on the ground of discretionary immunity. ORCP 60. The jury then found that plaintiff's negligence was 90 percent of the cause of the accident and that Tamlyn's negligence was 10 percent of the cause. The court entered judgment for both defendants, and plaintiff appeals. We affirm as to Tamlyn and reverse as to the state.
Because the trial court granted the state's motion for a directed verdict, we state the facts most favorably to plaintiff.[1] On November 27, 1996, plaintiff was riding her bicycle south on the sidewalk on the east side of 82nd Street in northern Clackamas County. For several blocks, the sidewalk follows the west side of Clackamas Town Center (the Center), a large shopping mall. When plaintiff arrived at the northern curb of the west entrance road to the Center, she pressed the pedestrian crossing button. At the same time, the signal for the traffic leaving the Center turned red as part of the normal signal cycle. Plaintiff received an immediate "Walk" signal and then rode her bicycle into the crosswalk. At the same time, Tamlyn was driving north on 82nd Street, intending *239 to turn right into the Center at the west entrance. Shortly before arriving at that entrance, she moved into a dedicated right turn lane. She observed a solid green signal, known as a "green ball," for that lane, and she thereafter began making the turn. There was no sign warning cars turning right to look for, or to yield to, pedestrians or others in the crosswalk. At the time, it was dark, and the weather was stormy and wet. There is testimony that plaintiff and Tamlyn did not see each other until Tamlyn hit plaintiff.
When the state designed the intersection in the early 1980s, it established three phases for its traffic signals; on the night of the accident, the signals were operating in accordance with the state's design. The first phase permits traffic on 82nd Street to flow north and south and also permits northbound vehicles to turn right into the Center. The first phase is also the only phase during which pedestrians wishing to use the crosswalk across the entrance road can receive a "Walk" signal; they do so by pushing an appropriate button. At least at the beginning of the first phase, the "Walk" signal appears as soon as the button is pressed. The second phase of the signals stops traffic flowing north on 82nd Street but permits traffic flowing south to proceed. At the same time, those traveling south who wish to enter the Center receive a left turn arrow, and those wishing to leave the Center by turning north on 82nd Street also receive an appropriate signal. In the third phase, the signals stop both north and south traffic on 82nd Street, while those wishing to leave the Center in either direction receive signals permitting them to so. Also in the third phase, those traveling north on 82nd Street in the dedicated right turn lane receive a green ball signal that permits them to turn into the Center. Significantly, the green ball signal remains lit when the signals change from the third phase back to the first phase. In the second and third phases pedestrians wishing to use the crosswalk receive a "Don't Walk" signal. The signals change from phase to phase in the order described, so long as there is traffic wishing to make the various movements. If no traffic wishes to enter or leave the Center, the signals remain in the first phase indefinitely.
Plaintiff based her negligence claim against the state on its design of the signal system at the intersection. In her amended complaint, she alleged that the state was negligent:
"1. In synchronizing a `walk' signal that gives an instantaneous `walk' pedestrian signal without any notice or warning to northbound drivers who wish to turn right onto SE McBride.[2]
"2. In synchronizing a walk signal that sends people into the crosswalk in the path of oncoming vehicles."
At trial, plaintiff's expert testified that the design of the signal phases creates an unexpected conflict between pedestrians and automobiles turning right. He stated that that conflict is contrary to the Manual on Uniform Traffic Control Devices that the state has adopted for use in designing intersections. On the other hand, the premise of the state's immunity argument, which its expert witnesses supported, is that the decision to adopt the Manual was a policy decision for which discretionary immunity exists and that the design of the signals at the intersection complies with the Manual's requirements. We therefore begin by describing the relevant portions of the Manual.
Section 4B-5(1)(a) gives the meaning for a green ball signal:
"Traffic, except pedestrians, facing a CIRCULAR GREEN may proceed straight through or turn right or left except as such movement is modified by lane-use signs, turn prohibition signs, lane markings, or roadway design. But, vehicular traffic, including vehicles turning right or left, shall yield the right-of-way to other vehicles, and to pedestrians lawfully within the intersection or an adjacent crosswalk, at the time such signal indication is exhibited." *240 Section 4B-6(3) limits the use of a green ball signal to situations in which "it is intended to permit traffic to proceed in any direction which is lawful and practical." Unless a pedestrian signal indicates otherwise, "pedestrians facing any green indication, except when the sole green indication is a turn arrow, may proceed across the roadway within any marked or unmarked crosswalk." Section 4B-5(1)(c). Section 4D-2(3), provides that a "walk" signal for pedestrians
"means that a pedestrian facing the signal indication may proceed across the roadway in the direction of the indication. The WALK indication means that there may or may not be possible conflict of pedestrians with turning vehicles."
Finally, section 4B-16 deals with unexpected conflicts between traffic movements:
"No movement that may involve an unexpected crossing of pathways of moving traffic during any green or yellow interval[,] except [when:]
"[1.] [T]he movement involves only slight hazard;
"[2.] Serious traffic delays are materially reduced by permitting the conflicting movement[;] and
"[3.] Drivers and pedestrians subjected to the unexpected conflict are effectively warned thereof.
"When such conditions, unexpected conflict exist, warning may be given by a sign or by use of an appropriate signal indication as set forth in section 4B-7. The foregoing applies to vehicle/pedestrian conflicts as well as to vehicle/vehicle conflicts."
According to plaintiff's expert witness, the intersection created an unexpected conflict as section 4B-16 of the Manual uses the term. He testified that the state could have minimized the conflict in either or both of two ways: first, by providing a "Walk" signal while the traffic light was still red, thus giving pedestrians a chance to start walking before cars came into the intersection, and, second, by posting a sign warning motorists making right turns to yield to pedestrians. He stated that other cities used the first method, and he provided pictures of signs in use at other locations with dedicated turn lanes, both near the Center and in Salem, that illustrate the second method. The expert then gave his opinion that the intersection signals did not meet the requirements of section 4B-16 of the Manual.
In contrast, the state's expert witnesses testified that the signals complied with the Manual. They emphasized that both section 4B-5(1)(a) of the Manual and ORS 811.040[3] require vehicles to yield to pedestrians who are lawfully within a signaled crosswalk. In their opinion, a green ball signal that permits a right turn and a "Walk" signal for pedestrians at the same time does not create a conflict that requires any action under section 4B-16.
In the ordinary case, such a disagreement between experts raises an issue for the jury. According to the state, however, its experts' testimony does not simply support its claim that it was not negligent when it designed the signals for the intersection. Rather, the state argues that it designed the signals in accordance with the policy decisions reflected in the Manual and that it is therefore immune from liability for that design.
The foundation of the state's argument is ORS 30.265(3)(c), which provides that a public body, and the public body's officers, employees, and agents acting within the scope of their employment or duties, are immune from liability for "[a]ny claim based upon the performance of or the failure to exercise or perform a discretionary function or duty, whether or not the discretion is abused." The leading case explaining discretionary immunity under ORS 30.265(3)(c) is Stevenson v. State of Oregon, 290 Or. 3, 619 P.2d 247 (1980). In Stevenson, the driver of a car entered an intersection against a red light, resulting in a collision with a truck that had a green light. There was evidence that, because of the angle of the intersection and inadequate shielding of the signal, the driver may have believed that the green light was intended for him rather than for the truck. One of the persons who was injured in the accident and the estate of the person who *241 was killed recovered damages from the state. On appeal, the state argued that it was entitled to discretionary immunity for its decision on how to shield the signal. The Supreme Court disagreed and affirmed the judgment against the state.
The crux of the court's decision in Stevenson is its distinction between decisions that require the exercise of governmental discretion and those that require a technical but nonpolicy exercise of discretion. For example, a decision to build a highway rather than a railroad in a particular location is a governmental policy decision that cannot give rise to liability under the statute. On the other hand, many decisions in the planning and design of highways require the exercise of some technical discretion but do not necessarily involve governmental policy choices. 290 Or. at 9-11, 619 P.2d 247. In determining the nature of a decision, it is important to determine the administrative level where the decision was taken and the extent of policy choice delegated to that level. Thus, a decision not to install certain safety equipment because budgetary constraints limit the number of locations that can receive such equipment and other locations appear to need it more would be an immune policy decision. On the other hand, a failure to recognize the need for that equipment under established criteria would not be immune. Id. at 14-15, 619 P.2d 247.
The court's ruling in Stevenson illustrates the distinction. There, the state argued that the design and the shielding of traffic lights were appropriate matters for engineering judgment. There were frequent references in the testimony to guidelines established by national standards adopted by the state. Apparently the design complied with those guidelines. However, there was nothing in those standards that prevented appropriate changes to eliminate a hazardous condition, and there was nothing in the record to suggest that the design of the particular shield was made as a governmental policy decision. Consequently, the court held that the trial court did not err in submitting the issue of negligence to the jury.
The state asserts that it is immune in this case because its decision to adopt the Manual was a governmental policy decision of the kind contemplated by Stevenson and because it designed and constructed the signals at the intersection in accordance with the Manual. We rejected a similar argument in Hall v. Dotter, 129 Or.App. 486, 879 P.2d 236 (1994). In that case, we held that, even if the applicable Manual constituted a policy decision, there was a disputed factual issue about whether the Manual actually controlled the placement of the particular signs and, if it did, whether the public employees who installed the traffic lights followed the criteria that the Manual established.
In this case, even if the state's decision to adopt the Manual is the kind of governmental policy decision that is immune under ORS 30.265, we cannot say as a matter of law that the signals at the intersection comply with the Manual so that the design of the intersection is also immune. Some of the portions of the Manual that are in evidence, and on which the parties rely, simply describe the meanings of different signals; they do not require that a traffic engineer use a particular signal in designing a specific intersection. The description of the green ball signal in the Manual itself recognizes the possibility of conflicts with pedestrians when a driver makes a turn in reliance on such a signal. Although a driver has a duty under ORS 811.040 to yield to pedestrians within a crosswalk, and the existence of that duty may well be a relevant consideration in deciding what is required to warn drivers of hazards at a particular intersection, it does not follow from the fact of the statute that that decision is the kind of policy decision that Stevenson describes. Indeed, as the evidence suggests, it is not unusual for engineers to use warning signs despite the statutory requirement that drivers yield to pedestrians in the crosswalk. Section 4B-16 of the Manual specifically recognizes that there may be conflicts in various situations that will call for special signs or other measures. As the Manual states, in a portion that plaintiff's expert quoted on cross-examination, "qualified engineers are needed to exercise engineering judgment inherent in the selection of traffic control devices."
*242 In sum, to the extent that the Manual reflects an immune policy judgment, that policy judgment did not dictate the design of the intersection of 82nd Street and the west entrance road to the Center.[4] Rather, the Manual provided some of the tools for engineers to use in exercising their engineering judgment in making that design. As the court pointed out in Stevenson, the burden is on the state to demonstrate how the decision was made at this particular intersection as part of establishing its immunity. Here, the state has not carried its burden. There is also conflicting expert testimony about whether the design complied with the Manual's requirements, and the Manual itself contemplates additional warning of unexpected conflicts. We conclude for these reasons that the trial court erred in granting the state's motion for a directed verdict on the basis of discretionary immunity under ORS 30.265.
Plaintiff's assignment of error concerning the judgment in favor of Tamlyn involves an evidentiary issue that does not require discussion. Even assuming that the trial court erred, any error was harmless.
Judgment in favor of Oregon Department of Transportation reversed and remanded; otherwise affirmed..
NOTES
[1] Because of the jury's verdict, we would normally state the facts most favorably to Tamlyn in evaluating the appeal as to her. Because plaintiff's only assignment of error concerning Tamlyn does not involve the facts that we describe, we do not need to restate them in order to resolve that portion of the appeal.
[2] Although the entrance road is unnamed, the parties at times refer to it as McBride Street because that is the name of the street that enters the west side of 82nd Street across from the entrance road.
[3] On appeal the state also relies on ORS 811.010. Because that statute relates to crosswalks without any traffic control signals, it does not apply to this case.
[4] The state does not suggest that budgetary considerations affected its decision of how to design the signals. | 01-03-2023 | 11-01-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2279871/ | 547 Pa. 504 (1997)
691 A.2d 929
ANGLO-AMERICAN INSURANCE COMPANY, Zurich Re (UK) Ltd., and Colin William Spreckley, an Underwriter at Lloyd's London, on behalf of himself and those other Lloyd's Underwriters subscribing to Policy No. 595/DOO 114001, Appellants,
v.
Emil J. MOLIN, et al., Appellees.
Supreme Court of Pennsylvania.
Submitted July 10, 1996.
Decided March 26, 1997.
*505 James J. Binns, Philadelphia, Christopher J. Graham, pro hac vice, New York City, and Erika L. Austin, Philadelphia, for Anglo-American Ins. Co. et al.
George Bochetto, Philadelphia, for Frederic S. Richardson.
Jerome Stestack and Zachary Grayson, Philadelphia, for Insurance Commissioner.
Walter Wier, for Theodore D. Nering.
Eugene J. Maginnis and Gerald J. Dugan, Philadelphia, for Joseph Breakly.
Helen Mandel Braverman, Philadelphia, for David Smith.
Louis B. Kupperman, Philadelphia, for Whetstone, Richardson et al.
Joseph M. Fioravanti, Media, for CO-CN Frederic Richardson.
Joseph T. Kelley, Jr., Bethlehem, for Harry Stokes.
David L. Jacobsen, Chicago, IL, for Barry Feldman.
Before FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE, NIGRO and NEWMAN, JJ.
FLAHERTY, Chief Justice.
This is a direct appeal of three orders of the Commonwealth Court. The first order dated February 27, 1996, 673 A.2d 986, *506 is a preliminary injunction which orders the appellants (hereinafter the "1994 Underwriters")[1] to pay certain amounts of money pursuant to insurance coverage which they allegedly agreed to provide to Molin, et al. (Emil J. Molin, Theodore D. Nering, and Frederic S. Richardson, hereinafter "the Richardson defendants"). The second order, dated April 18, 1996, holds the 1994 Underwriters in contempt for failure to pay as they were ordered by the preliminary injunction, and orders payment. The third order, dated May 10, 1996, denies 1994 Underwriters' motion for a stay or supersedeas and directs the 1994 Underwriters to immediately pay two-thirds of the Richardson Defendants' legal expenses, not to exceed $250,000.
The factual background of the case is that in 1993 Lawrence Underwriters and Anglo-American Insurance Company ("the 1993 Underwriters") issued a directors and officers liability insurance policy which covered the Richardson defendants, who were directors and officers of Corporate Life Insurance Company against loss from claims first made during the policy period (1993) for "wrongful" acts. The insurance coverage did not include a duty to defend, but only payment for damages, settlements and costs, which could include legal expenses.
On May 25, 1993, Corporate Life provided 1993 Underwriters notice that there was a possible claim against its officers and directors:
Please accept this letter as official notice by all named insureds under the policy of a possible claim under the above-referenced policy.
On May 7, 1993, the management of Corporate Life Insurance Company ("CLIC") received [a pleading from] the Pennsylvania Department of Insurance. . . . This document, filed under seal with the Commonwealth court of Pennsylvania, alleges certain actions which if proven to be *507 true, could give rise to a claim under the above-referenced policy.
The acts alleged to be "Wrongful Acts" as that term is defined in the Policy include: self-dealing, falsifying assets; and improper investing. If proven, the individual directors and officers involved could be subject to liability in excess of the policy limits.
If you should have any questions regarding this matter please feel free to contact me.
The background of the insurance departments's allegations is that on March 30, 1992, the Pennsylvania Insurance Department issued an ex parte suspension order suspending the business of Corporate Life based on a finding that it was insolvent. Thereafter Corporate Life and the insurance department entered into negotiations and on March 31, 1993 Corporate Life requested a rule to show cause why a purported settlement agreement should not be enforced against the insurance department. On May 7, 1993 the insurance commissioner filed an "Opposition to Enforce Settlement and Response to Corporate Life Insurance Company's Objection and Petition to Strike Plaintiff's Praecipe to Withdraw Petition for Liquidation." The pleading referred to in Corporate Life's letter was the "Opposition Petition" filed by the insurance commissioner.
Among the allegations contained in the Opposition Petition are that Corporate Life failed to produce thousands of key documents; disregarded document requests; failed to grant the department free access to books and records; hid documents; instructed others not to cooperate with the department; and gave false information in an attempt to mislead the department. RR. 140a.
The department stated: "Inasmuch as the Department anticipates filing a Petition to Liquidate Corporate Life Insurance Company within the next month, it would be a waste of judicial resources, the resources of the Commonwealth, and, indeed, of Corporate Life itself to litigate these factual issues in this forum." RR. 141a142a. Nonetheless, the department *508 did offer illustrations in its Opposition Petition of Corporate Life's alleged violations:
22. Corporate Life has falsified its books and records to create a surplus which does not exist and to hide an alarming operating loss. Such acts include the listing on its 1992 Annual Statement as 1992 assets over 489 mortgages created in 1993 and having a stated aggregate value in excess of $21,664,000. . . .
23. Corporate Life has engaged in the above-cited and other extensive fraud involving fraudulent acts in concert with and participated in by Frederick Richardson, Emil Molin, Ted Nering, and the firm of Shiffman Hughes Brown, DP Realty and various others.
24. The Department has uncovered a systematic scheme to strip Corporate Life of any valuable and liquid assets. . . .
25. Additional evidence of self-dealing in violation of Pennsylvania insurance statutes and regulations relate to Richardson's use of Corporate Life funds to purchase, finance and/or refinance personal residential real estate holdings. On July 7, 1992, Corporate Life Insurance Company issued a certified check in the amount of $400,000 for the purchase of Frederic Richardson's personal residence. The $400,000 is the full amount of the purchase price of Frederic Richardson's personal residence. To date, Corporate Life has been unable to produce any documentation relating to any "mortgage" or other loan documents relating to this advance of $400,000. (The Department has been informed that Richardson repaid this loan under pressure in late 1992). . . .
26. On that same day, July 7, 1992, Frederic Richardson caused Corporate Life to issue a $115,000 check for the payment of the mortgage on another residence in which he has a pecuniary interest. The residence is purportedly occupied by his mother-in-law. Corporate Life and Richardson have failed to disclose this transaction as required pursuant to the Pennsylvania Insurance Holding Company Registration Act.
27. In July, 1992, Richardson, Molin and Nering caused Corporate Life to fund their purchase of a mortgage banking *509 operation in St. Petersburg, Florida. While Richardson, Molin and Nering contributed little or no capital to the transaction, they obtained 100% of the capital stock of the mortgage banking operation. This was accomplished by the transfer of assets of Newspan, a wholly-owned subsidiary of Corporate Life, to the corporation owned by Richardson, Molin and Nering. Corporate Life has valued the assets transferred at more than $13 million. . . .
28. These are but a few of the facts which have come to light concerning Corporate Life Insurance Company, American Homestead, Inc., Frederic Richardson, Emil Molin, Ted Nering, and others. The Department shall prove each and every one of these facts as well as other information presently known to the Department that demonstrates further impairment of Corporate Life in excess of $20 million.
29. Corporate Life's fraudulent schemes were known to it, and, inter alia, Messrs. Richardson, Molin, Nering, and Shiffman at the time it was negotiating the purported settlement agreement which it now seeks to enforce. Throughout that time period, they and others in concert with them repeatedly represented to the Department that it was in compliance with all applicable Pennsylvania regulations and statutes. Moreover, it repeatedly represented to the Department that it was solvent. These affirmative misrepresentations were the basis for the Department's willingness to discuss the purported agreement identified above. Through these affirmative misrepresentations and failure to disclose the fraudulent schemes being perpetrated by Corporate Life, its counsel and its accountants, Corporate Life fraudulently induced the Insurance Commissioner to issue an . . . Amended Order of Supervision.
RR. 148a-151a (emphasis added).
On June 4, 1993, the commissioner filed a 158 page petition to liquidate Corporate Life. The commissioner sought to be appointed as Corporate Life's statutory liquidator. Among the alleged grounds for liquidation were wrongful diversion of *510 corporate assets, control by dishonest persons, and willful violations of Pennsylvania insurance law.
On July 2, 1993, the Commonwealth Court required the commissioner and Corporate Life to select an overseer for Corporate Life. The court stated that the commissioner's petition to liquidate would be determined based upon the overseer's findings and that the commissioner would not pursue any claims against Corporate Life or its officers and directors until after the overseer's decision.
In 1994, Lloyd's (for Spreckley Underwriters) and LIRMA (for Anglo and Zurich) (the 1994 Underwriters) provided Corporate Life with a 1994 insurance policy once again covering liability of the officers and directors of Corporate Life for claims made during 1994 for wrongful acts. An exclusion in the 1994 policy stated:
III. EXCLUSIONS
Underwriters shall not be liable to make any payment for loss in connection with any claim made against the Directors and Officers:
* * *
B. based upon, arising out of, directly or indirectly resulting from or in consequence of, or in any way involving:
(1) any Wrongful Act or any fact, circumstance or situation, event or transaction which has been the subject of any notice given prior to the effective date of this Policy under any prior policy, or
(2) any other Wrongful Act whenever occurring which, together with a Wrongful Act which has been the subject of such notice, would constitute Interrelated Wrongful Acts. . . .
Lloyd's Policy, III Exclusions, RR. 333a. "Interrelated wrongful acts" are defined as "wrongful acts which have as a common nexus any fact, circumstance, situation, event, transaction *511 or series of facts, circumstances, situations, events or transactions." Lloyd's Policy, II, Definitions, RR. 332a.
On December 29, 1994, the insurance commissioner, acting as Corporate Life's statutory liquidator, filed a writ of summons in Maleski et al v. Molin et al in the Commonwealth Court against fifteen defendants, all of whom are former officers or directors of Corporate Life. On June 19, 1995, a complaint was filed entitled Insurance Commissioner of the Commonwealth of Pennsylvania v. Molin et al, naming Emil Molin, Theodore Nering and Frederick Richardson, former directors and officers of Corporate Life (the Richardson defendants). The complaint alleged:
Count I. Breach of fiduciary duty to Corporate Life, its policyholders and creditors;
Count II. Fraud by concealing the true financial condition of Corporate Life from the public, policyholders and the Insurance Department;
Count III. Negligence in managing Corporate Life and controlling its assets;
Count IV. Waste and diversion of Corporate Life opportunities and assets by engaging in transfers of Corporate Life assets for the benefit of themselves and their other companies to detriment of Corporate Life;
Count V. Breach of contract against defendants Molin and Nering by their failure to perform their obligations and duties under a consulting agreement;
Count VI. Recovery of fraudulent transfers that were made while Corporate Life was insolvent; and
Count VII. Recovery of unlawful investments that violated provisions of Pennsylvania insurance law and regulations.
On July 27, 1995, 1993 Underwriters filed an interpleader action against the Richardson defendants and others, in which 1993 Underwriters attempted to interplead the limit remaining under the 1993 policy to resolve the Richardson defendants' claims relating to Maleski (the lawsuit filed by the insurance commissioner against the Richardson defendants). On November 6, 1995, the Commonwealth Court denied the *512 Richardson defendants' motion for a preliminary injunction which would compel 1993 Underwriters to pay their Maleski defense costs under the 1993 policy. Other lawsuits had been filed against various former officers and directors of Corporate Life and there were competing claims under the 1993 policy.[2]
On August 25, 1995, the 1994 Underwriters filed a complaint for declaratory judgment. The Richardson defendants filed a counterclaim that the 1994 Underwriters must pay their Maleski legal fees and defense costs. Thereafter, the Richardson defendants moved for a mandatory preliminary injunction compelling the 1994 Underwriters to pay their Maleski legal fees.
On February 27, 1996, the Commonwealth Court entered a mandatory preliminary injunction directing 1994 Underwriters to pay for the Richardson Defendants' defense costs in the Maleski matter.
1994 Underwriters then moved for reconsideration and a stay, and the Richardson defendants petitioned for contempt. On March 22, 1996, the Commonwealth Court denied the stay of its injunction.
On March 25, 1996, 1994 Underwriters filed a notice of appeal and posted an appeal bond in accord with Pa.R.A.P. 1731(a). On April 18, 1996, the Commonwealth Court held 1994 Underwriters in contempt, and on May 10, 1996 it required 1994 Underwriters to pay two thirds of the Richardson defendants' costs immediately.
This court then consolidated 1994 Underwriters' appeals, stayed the February 27, 1996 and April 18, 1996 orders, and granted the application for expedited appeal.
The issues on this appeal are whether it was error for Commonwealth Court to issue an injunction requiring 1994 Underwriters to pay legal fees and defense costs in Maleski and whether it was error for Commonwealth Court to have *513 held 1994 Underwriters in contempt, notwithstanding that they filed a timely notice of appeal and posted an appeal bond.
In general, the 1994 Underwriters are seeking a declaratory judgment that they are not liable under the 1994 insurance policy for the Richardson defendants' costs to defend the Maleski action, since the acts which underlay the Maleski action were reported in 1993 to 1993 Underwriters, and only 1993 Underwriters are liable under the terms of the 1994 policy. The Richardson defendants, on the other hand, are seeking a declaration that 1994 Underwriters are liable.
The Commonwealth Court noted that a preliminary injunction may be granted only where:
(1) the relief is necessary to prevent immediate and irreparable harm that cannot be compensated by damages; (2) greater injury will occur from denying the injunction than from granting it; (3) the injunction will restore the parties to the status quo as it existed prior to the alleged wrongful conduct; (4) the alleged wrongful conduct is manifest; and (5) the moving party's right to relief is clear. Lewis v. City of Harrisburg, [158 Pa.Cmwlth. 318], 631 A.2d 807 (1993). Being an extraordinary remedy, a preliminary injunction should not issue if the moving party's right thereto is not clear. Albee Homes, Inc. v. Caddie Homes, Inc., 417 Pa. 177, 207 A.2d 768 (1965). . . .
673 A.2d at 987. Thus, before a preliminary injunction may issue, we must examine whether the five factors stated by the Commonwealth Court are present. We begin with a consideration of whether the moving party's right to relief is clear. If it is not, an injunction may not issue.
The essence of the dispute, as stated above, is whether the 1994 claim is excluded by the terms of the 1994 policy. In general, the 1994 policy covers wrongful acts which are reported during 1994, except that (a) it does not include coverage for wrongful acts, or circumstances, situations, events or transactions which have been the subject of notice before 1994 under any prior policy; or (b) it does not include coverage for *514 wrongful acts which are interrelated to other wrongful acts which have been noticed to an insurance carrier prior to 1994.
The Commonwealth Court in its February 27, 1996 opinion took the view that even though the insurance commissioner made allegations of wrongful conduct in its 1993 Opposition Petition, she did not make any claims against the officers and directors of Corporate Life. Moreover, the lower court's view was that there are numerous allegations in the Maleski action that were not raised in the Opposition Petition. The Commonwealth Court concluded from this that it was appropriate to issue a preliminary injunction in the Richardson defendants' favor.
We disagree. In order for the injunction to issue, the Richardson defendants' right to relief must be clear. A viable argument can be made that in both 1993 and 1994 the insurance commissioner was alleging that the Richardson defendants were raping the insurance company and that their conduct involved fraud and numerous violations of law. The commissioner did not set out the allegations in detail in 1993, as she stated in the Opposition Petition, in order to avoid pointless duplication of work, but she made clear that the Richardson defendants, those in control of Corporate Life, were engaged in a systematic fraudulent scheme to divert more than $20 million of Corporate Life's assets.
It may be true, as the Commonwealth Court states, that matters are alleged in the Maleski lawsuit which were not mentioned in the Opposition Petition. That, however, is not dispositive. In order for the injunction to issue, it must be clear that the Richardson defendants will prevail, i.e., it must be clear that the Maleski matter was not "based upon" "a wrongful act whenever occurring . . . together with a wrongful act which has been the subject of [prior] notice" or "any other wrongful act whenever occurring, which together with a wrongful act which has been the subject of [prior] notice, would constitute interrelated wrongful acts." (Lloyd's Policy, III. Exclusions, RR. 333a, supra). "Interrelated wrongful acts," it will be recalled, are "wrongful acts which have as a common nexus, any fact, circumstance, situation event transactions *515 or series of facts, circumstances, situations, events or transactions." R.R. 332a. (Emphasis added.)
Although the Richardson defendants may, in fact, prevail in their claim that they are entitled to 1994 insurance coverage as well as 1993 coverage after the case has been fully litigated, we cannot say that their right to relief, on this record, is clear. It is plausible that the matters complained of in Maleski were wrongful acts which have a common nexus of facts, circumstances, situations, events and transactions and that they are, therefore, excluded from 1994 coverage. In the absence of a clear right to recover, it was error to issue the preliminary injunction.
The orders of February 27, 1996, April 18, 1996 and May 10, 1996 of the Commonwealth Court are reversed and the case is remanded for trial on the underlying issues in the declaratory judgment action.[3]
ZAPPALA, J., concurs in the result.
NOTES
[1] The 1994 Underwriters are Anglo-American Insurance Company, Colin Spreckley, an underwriter at Lloyd's London, on behalf of himself and all those other underwriters subscribing to policy number 595/DOO 114001 and Zurich Re (UK) Ltd.
[2] Maleski, the interpleader action and the instant case were heard or are pending before the same Commonwealth Court judge.
[3] The 1994 Underwriters also argue that it was error for Commonwealth Court to have found them in contempt of the preliminary injunction notwithstanding that they had filed a timely notice of appeal and posted an appeal bond. In view of our disposition of the case, we do not address this claim, which now is moot. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3359915/ | [EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.] MEMORANDUM OF DECISION
The issue in this tax appeal is whether the reduction to a taxpayer's federal basis in the stock of a subchapter S corporation, which was attributable to the pass-through of losses that were deducted for federal income tax purposes, is excluded when computing the taxpayer's adjusted gross income in determining his or her tax liability under the Connecticut personal income tax.
The plaintiffs, William and Marjory Berkley, are married individuals residing in Greenwich, Connecticut. William Berkley owned stock in three subchapter S corporations pursuant to section 1367(a) of the Internal Revenue Code of 1986, as amended (Code) known as Farm Acquisition Corp., Interlaken Grove Investors, Inc., and Caring Communities, Inc. When preparing their federal income tax return for 1994, the Berkleys reported that the stocks in the three S corporations were worthless. In computing the basis of these worthless stocks, for federal tax purposes, the Berkleys were required to report only the remaining federal basis in the stocks. The total amount of the losses passed through to the Berkleys from the three S corporations for 1988, 1989 and 1990, exclusive of depreciation or amortization, was $6,541,489. The parties agree that this figure is the "Contested Basis Adjustment," and the plaintiffs' claim is limited to this adjustment. Since Connecticut did not have an income tax prior to 1991, the losses incurred by the Berkleys from the three S corporations were never used in computing a Connecticut income tax return. This is so because Connecticut had CT Page 10611 no personal income tax prior to 1991. Prior to 1991 Connecticut had a capital gains, dividends, and interest income tax which was based on the federal adjusted gross income. This gives rise to the problem in this case where the taxpayer, because of the type of tax, must reduce his or her basis in assets because of losses, and therefore pays a higher tax when the asset is sold. In other words, if the taxpayer reduces his or her tax liability by deducting losses from income, later if the asset is sold at a profit, the government recaptures the value of the loss for tax purposes. However, it is the plaintiffs' claim that when computing the Connecticut capital gains, dividends and interest income tax, the taxpayer makes no use of the losses of the asset, yet must use the losses to reduce the basis of the asset when sold.
Pursuant to General Statutes § 12-730, the plaintiffs appealed the decision of the commissioner assessing against the plaintiffs an additional Connecticut income tax for taxable year 1994 of $393,263.01. The plaintiffs allege that the commissioner erroneously determined that the plaintiffs' 1994 income tax should be computed without regard to the principles enunciated inBello v. Commissioner, Superior Court, Tax Session, Docket No. 361968 11 CONN. L. RPTR. 339 (April 20, 1994, Blue, J.).
The plaintiffs argue that the treatment of S corporation shareholders prior to 1991, when Connecticut had a capital gains, dividend and interest income tax but no personal income tax, creates a disparity of treatment between the federal income tax and the Connecticut income tax. The plaintiffs rely on the "tax benefit rule" enunciated in Bello v. Commissioner, supra, that "[t]he purpose of the rule is to allay `some of the inflexibilities of the annual accounting system.' HillsboroNational Bank v. Commissioner, 460 U.S. 370, 377 (1983)." Id., p. 1.
The federal income tax system relies upon annual accounting.Allstate Ins. Co. v. U.S., 936 F.2d 1271, 1273 (Fed. Cir. 1991). The concept of annual accounting was recognized by the U.S. Supreme Court as a "practical necessity if the federal income tax is to produce revenue ascertainable and payable at regular intervals." Id., quoting Hillsboro National Bank v. Commissioner,supra, 460 U.S. 377. "Annual accounting, however, does not accommodate transactions which remain open at year's end or reopen in later years. Therefore, courts created the tax benefit rule to `approximate the results produced by a tax system based on CT Page 10612 transactional rather than annual accounting.'" Allstate Ins. Co.v. U.S., supra, 936 F.2d 1273-74, quoting Hillsboro National Bankv. Commissioner, supra, 460 U.S. 381.
"The tax benefit rule states that a taxpayer may exclude from income amounts recovered from a previously deducted loss to the extent the previous deduction generated no tax benefit. See26 U.S.C. § 111 (1954)." Allstate Ins. Co. v. U.S., supra, 936 F.2d 1274. The tax benefit rule is alive and well in Connecticut. See Bello v. Commissioner, supra. "The converse is also true. The rule also requires a taxpayer to include in income amounts recovered from a previously deducted loss to the extent the previous deduction generated a tax benefit. . . The rule, therefore, accommodates transactions which extend over several annual accounting periods." Allstate Ins. Co. v. U.S., supra. That is the position of the plaintiffs. The plaintiffs claim that they were not allowed to use the pass through losses of the three S corporations in calculating their 1988, 1989 and 1990 Connecticut capital gains dividends and interest income tax. Yet, in calculating their 1994 Connecticut personal income tax, the basis of the worthless stock of the three S corporations, declared in 1994 was required by the commissioner, to reflect the pass through losses by adding the losses to the basis in 1994.
The commissioner's basic argument is that the plaintiffs did use the pass through losses of the three S corporations when calculating their 1988, 1989 and 1990 Connecticut capital gains, dividend and interest income tax. The commissioner claims that when the plaintiffs were required by General Statutes §§12-505 through 12-522 to use the taxpayer's federally adjusted gross income, the taxpayers were in fact taking advantage of the pass through losses of the three S corporations because the federal adjusted gross income for 1988, 1989 and 1990 reflected these losses.
Plaintiffs' capital gains, dividends and interest income were as follows:
Year Capital Gains Dividends Interest Total 1988 $ 1,971,992 $ 920,035 $474,102 $ 3,366,129 1989 $ 2,640,528 $3,642,766 $651,771 $ 6,935,065 1990 $12,359,591 $1,878,457 $391,381 $14,629,429
$24,930,623
CT Page 10613
(See Stipulation of Facts, paras. 40, 44, 49.)
Plaintiffs' adjusted gross income reported on their federal income tax form 1040 was as follows:
Year Federal Adjusted Gross Income 1988 loss of $1,748,293 1989 loss of $2,489,113 1990 loss of $654,747
(See Stipulation of Facts, paras. 43, 47, 48, 52, 53.)
It is true, as plaintiffs argue in their brief (p. 13) that Connecticut had no provision for the use of pass through losses to reduce the capital gains, dividends and interest subject to the Connecticut capital gains, dividends and interest income tax in the period 1988 through 1990. This is so because Connecticut used the federal adjusted gross income principle rather than develop a separate process for reporting state gains, dividends and income. The plaintiffs use this argument to support their position that since the pass through losses of the three S corporations were not used to specifically reduce the Connecticut capital gains, dividends and interest, that in fact these pass through losses were not utilized to reduce their Connecticut income earned during the years 1988 through 1990.
The issue to be decided in this case is whether the pass through losses of the three S corporations were in fact used for Connecticut capital gains purposes during 1988-1990. The reason we center on this issue is because the tax benefit rule is equitable in nature, and if the taxpayers have benefitted [benefited] from the pass through losses of the S corporations, they cannot complain of inequities in the treatment of losses of the S corporations.
The plaintiffs seek to distinguish between "deductions" and "recoveries" on the one hand and "tax benefit" and "no tax benefit" on the other hand. Deductions and recoveries arise from the treatment given to losses and gains to income. The tax code allows for losses to be deducted against income to reduce tax liability, whereas recoveries are required to be taxed as recoupment of losses previously taken against income. Tax benefit however is founded on the question of whether the loss generated a tax benefit. Conversely, if there is a tax benefit generated by CT Page 10614 the losses, the income derived from these losses must be recovered upon the sale of the asset at a profit.
The plaintiffs also distinguish between losses and gains and tax rates. The plaintiffs acknowledge that their federal adjusted gross income for 1988 through 1990 would have been positive if the losses from the three S corporations had not been included in their federal tax returns for this same period.
Part of the reason why the plaintiffs reported losses for their 1988, 1989 and 1990 federal adjusted gross income was due to the inclusion of the pass through losses of the three S corporations owned by William Berkley. Although these pass through losses were applied to the basis of the three S corporations on the federal level thereby reducing their basis in the stocks of these corporations, no comparable adjustment was made on the state level since Connecticut did not have a state personal income tax which could account for pass through losses during the years 1988, 1989 and 1990. While the plaintiffs' basis in the stock of the three S corporations was reduced to a loss of $3,623,671 as of 1994, they claim that the losses were never used to reduce the basis of the three S corporations on the state level for 1988, 1989 and 1990. However, as the commissioner points out, the pass through losses of the three S corporations were used by the taxpayers in 1988, 1989 and 1990 to reduce their federal adjusted gross income which the taxpayers used to avoid paying any Connecticut capital gains, dividends and interest income tax. The parties stipulated that "[i]f Plaintiffs' federal adjusted gross income for each of the years 1988, 1989, and 1990 had not been reduced by deduction of the losses attributable to Mr. Berkley's ownership of the stock in the three S corporations discussed above, their Connecticut Capital Gains, Dividends, and Interest Income Tax liability for those years would have been as follows:
1988 $223,988.23 1989 $645,630.53 1990 $427,570.87"
(Stipulation of Facts, para. 55.)
Although the plaintiffs earned a total of $24,930,623 in capital gains, dividends and interest income during the period of 1988, 1989 and 1990, they paid no state tax on this income. The reason that the plaintiffs paid no state tax on over twenty-four CT Page 10615 million dollars of income was due to the structure of the state capital gains, dividend and interest income law being based on the federal system of adjusting income. As an example, in 1988, General Statutes § 12-506(a)(2) imposed a tax at a rate of 7% on all gains on the sale or exchange of capital assets. However, since the plaintiffs reported that their 1988 federal adjusted gross income was a loss of $1,748,293, no capital gains tax was due the state of Connecticut. In 1989, the plaintiffs reported that their 1989 federal adjusted gross income was a loss of $2,489,113, so no capital gains tax was due the State of Connecticut. In 1990, the plaintiffs reported that their 1990 federal adjusted gross income was a loss of $654,747, so no capital gains tax was due the State of Connecticut. Since the plaintiffs' federal adjusted gross incomes for 1988, 1989 and 1990 were reported as losses, the plaintiffs were also exempt from paying any state tax on dividend and interest income.
The tax benefit rule is an equitable rule designed to prevent unacceptable inequities and distortions in the field of taxation. See Bello v. Commissioner, supra, pp. 9-10.
Although the plaintiffs' argument is that they did not benefit from the pass through losses that depleted the basis of the three S corporations in 1988, 1989, and 1990; since Connecticut did not have a personal income tax to take advantage of these losses, clearly, the plaintiffs benefitted [benefited] from these same losses which were used to reduce the federal adjusted gross income in 1988, 1989, and 1990, upon which the Connecticut capital gains, dividend and interest income tax was based. We are guided by the case of Alice Phelan Sullivan Corp. v. UnitedStates, 381 F.2d 399, 401-402 (U.S.Ct. of Claims 1967), wherein the court stated that the tax benefit rule "permits exclusion of the recovered item from income so long as its initial use as a deduction did not provide a tax saving. . . But where full tax use of a deduction has been made and a tax saving thereby obtained, the extent of savings is considered immaterial. The recovery is viewed as income to the full extent of the deduction previously allowed."
In the present action, the Berkleys avoided paying a Connecticut capital gains, dividend and interest income tax on a substantial amount of income because of the pass through losses of the three S corporations were used in the determination of their adjusted gross income for 1989-90. They are not now entitled to a double benefit by excluding the losses in the determination of CT Page 10616 the basis of the three S corporations for capital gains purposes in determining their adjusted gross income under the Connecticut personal income tax.
Accordingly, the plaintiffs' appeal is dismissed without costs to either party.
Arnold W. Aronson Judge Trial Referee | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1969621/ | 282 A.2d 869 (1971)
STATE of Delaware
v.
Joseph A. BACCINO, Jr.
Superior Court of Delaware, New Castle.
August 2, 1971.
Martin A. Schagrin, Deputy Atty. Gen., Dept. of Justice, Wilmington, for the State.
Carl Schnee, Wilmington, for defendant.
*870 BIFFERATO, Judge.
The Court heard defendant's motion to suppress evidence in the above captioned case on April 6, 1971. The delay in deciding this case was due to the briefing. The Court finds the relevant facts to be as follows:
On October 20, 1970, at approximately 1:45 p. m. two students of Brandywine High School were brought to the Vice Principal's office after being found out of class illegally. The Vice Principal, Robert M. Barto, sent one of the boys to class and brought the second boy, Joseph A. Baccino, Jr., the defendant, to his assigned class. At that time the defendant was carrying a coat. The Vice Principal took the coat from the defendant to make sure that the defendant would go to class. Prior to the Vice Principal obtaining possession of the coat there was a tug-of-war over it, and, of course, the Vice Principal won. Because the defendant was out of class illegally and because the defendant was known to the Vice Principal to have experimented with drugs in the past, the Vice Principal made a search of the coat, finding ten packets of hashish. The State Police were called and the defendant was arrested for possession of a dangerous drug with intent to sell.
Defendant files this motion and claims that the Vice Principal, as an employee of the State Educational System, that he is bound to have probable cause before he makes a search and that the search made by the Vice Principal was without probable cause and, therefore, inadmissible.
The legal issue to be resolved is a narrow one. Is the principal of a high school a private individual to whom the prohibitions of the Fourth Amendment of the United States Constitution do not apply, Burdeau v. McDowell (1921) 256 U.S. 465, 41 S. Ct. 574, 65 L. Ed. 1048, 13 A.L.R. 1159 or government official or agent to whom the Fourth Amendment and the exclusionary rule applies. Mapp v. Ohio (1961) 367 *871 U.S. 643, 81 S. Ct. 1684, 6 L. Ed. 2d 1081, 84 A.L.R. 2d 933.
The rationale for the rule which allows unlawfully seized evidence by private individuals to be admitted, aside from the fact that it is not unconstitutional, is the notion that private individuals would not be deterred by an exclusionary rule. Ann. 36 A.L.R. 2d 553, 559. While this may be true in the case of isolated private searches, it is inapposite to the situation of a school principal who has a duty to investigate unlawful activity.
The Supreme Court stated in West Virginia State Board of Education v. Barnette, 319 U.S. 624, 63 S. Ct. 1178, 87 L. Ed. 1628: "The Fourteenth Amendment, as now applied to the States, protects the citizen against the State itself * * * Boards of Education not excepted." A principal of a public school is subject to the supervision and control of the Board of Education and the school board or governing body of the school in all activities connected with the business of the school. 78 C.J.S. School and School Districts § 237(a). A principal is a state employee, 14 Del. Ch. 741. Tinker v. Des Moines Independent Community School District, 393 U.S. 503, 89 S. Ct. 733, 21 L. Ed. 2d 731, supports the proposition that a high school principal is a state official for purposes of jurisdiction over a, 42 U.S.C. § 1983, action pursuant to 28 U.S.C. § 1343. Also see Burnside v. Byars (5th Cir. 1966) 363 F.2d 744; Ferrell v. Dallas Independent School District (5th Cir. 1968) 392 F.2d 697.
Since 42 U.S.C. § 1983 requires the principals' actions to be "state action" in order for a Federal Court to recognize a cause of action, it is difficult to see how a principal could also be a private official for purposes of the Fourth Amendment at the same time. Therefore, I conclude that a principal is not a private individual for purposes of the Fourth Amendment but that his actions are those of a state official and are subject to the Fourth Amendment. This does not mean, however, that the entire law of search and seizure as it applies in the criminal law is automatically incorporated into the school system of this state. The Fourth Amendment is the line which protects the privacy of individuals including students but only after taking into account the interests of society.
In Delaware a principal stands in loco parentis to pupils under his charge for disciplinary action, at least for purposes which are consistent with the need to maintain an effective educational atmosphere. 14 Del.C. § 701 (1970).
Thus, the question becomes what is the relationship of the doctrine of loco parentis to the Fourth Amendment. There is a split of authority in the cases which have considered the issue. In Mercer v. State, Tex.Civ.App., 450 S.W.2d 715 (1970) the Court held that since the principal was acting in loco parentis, he was not an arm of the government. In Re Donaldson, 269 Cal. App. 2d 509, 75 Cal. Rptr. 220 (1969). However, in People v. Jackson, 65 Misc. 2d 909, 319 N.Y.S.2d 731 (1971) the New York Supreme Court, Appellate Division, after classifying the Coordinator of Discipline as a government official, held that the doctrine of loco parentis was merely a compelling state interest to be balanced against the prohibitions of the Fourth Amendment. The result was the adoption of a standard of reasonable suspicion rather probable cause to justify a search in view of the "distinct relationship" between the high school official and the student.
New York has recognized that a student has a right to freedom from unreasonable searches and seizures. People v. Overton, 20 N.Y.2d 360, 283 N.Y.S.2d 22, 229 N.E.2d 596. Texas apparently does not. See Justice Hughes' dissent in Mercer v. State, supra, wherein he stated he believes the majority expanded the doctrine of loco parenti to unconstitutional proportions. 450 S.W.2d 715 at 718.
*872 I believe the decisions of the United States Supreme Court, however, have made it clear that the Bill of Rights applies to juveniles. In re Gault, 387 U.S. 1, 87 S. Ct. 1428, 18 L. Ed. 2d 527 (1967).
In Tinker v. Des Moines Independent Community School District, supra, the Supreme Court said that school officials do not possess absolute authority over their students and that students in state-operated schools are "persons" under the Federal Constitution, and are possessed of fundamental rights which the State must respect. Thus, in striking the balance we cannot ignore the students' constitutional rights. But various factual situations give rise to different standards and procedures in light of the Fourth Amendment. Compare Terry v. Ohio, 392 U.S. 1, 88 S. Ct. 1868, 20 L. Ed. 2d 889 (1968) [stop and frisk on reasonable suspicion] and Henderson v. United States, 390 F.2d 805 (9th Cir. 1967) [border search even mere suspicion not required to search bags and vehicle].
It is this court's duty to make sure schools do not become enclaves to totalitarianism, Tinker, supra, after taking into account the necessity to maintain discipline and an effective educational atmosphere.
Thus, I conclude that the doctrine of loco parentis 14 Del.C. § 701 must be balanced against the students' Fourth Amendment rights to determine whether or not those rights have been violated. The only question remaining is the standard to be used to strike the balance. I conclude, as did the majority in People v. Jackson, supra, that "[t]he in loco parentis doctrine is so compelling in light of public necessity and as social concept antedating the Fourth Amendment, that * * * a search, taken thereunder upon reasonable suspicion should be accepted as necessary and reasonable." 319 N.Y.S.2d 731, 736. This standard should adequately protect the student from arbitrary searches and seizures and give the school officials enough leeway to fulfill their duties.
Turning to the facts, the question is whether or not the principal had reasonable suspicion to believe that the defendant's jacket contained illegal drugs when he seized it. Or in the alternative, the question may be asked whether the principal was enforcing a reasonable school regulation when he seized the jacket and thereafter did he have reasonable suspicion that the jacket contained illegal drugs so that it became his duty to search it.
It is the Court's opinion that the Vice Principal had reasonable suspicion to believe that the defendant's jacket contained contraband. Defendant's motion to suppress the evidence is denied.
It is so ordered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1986460/ | 912 F. Supp. 512 (1996)
Patricia McANNALLY, Plaintiff(s),
v.
WYN SOUTH MOLDED PRODUCTS, INC., a corporation, Defendant(s).
No. CV-95-N-3070-S.
United States District Court, N.D. Alabama, Southern Division.
January 30, 1996.
*513 Robyn G. Bufford, Bennitt & Bufford, Birmingham, AL, for plaintiff.
James R. Cockrell, Leeds, AL, R. David Proctor, Lehr, Middlebrooks & Proctor, PC, Birmingham, AL, for defendant.
Order
EDWIN L. NELSON, District Judge.
The plaintiff, Patricia McAnnally ("Ms. McAnnally"), brings this action under the Family PPL and Medical Leave Act of 1993 ("FMLA"), 29 U.S.C. § 2601, et seq. The court has for consideration defendant's motion to dismiss filed December 25, 1995. Specifically, the defendant moves to dismiss plaintiff's claim for punitive damages and mental distress damages.
The FMLA does not provide for punitive damages, and the plaintiff admits that in her response to the defendant's motion. See Plaintiff's Response to Defendant's Motion to Dismiss Claim for Compensatory and Punitive Damages, at 1 [hereinafter Plaintiff's Response]. Thus, it is hereby ORDERED that plaintiff's claim for punitive damages paragraph 21(g) of the complaint is STRICKEN.
Where an employer has violated the FMLA, the employee is entitled to compensatory damages equal to the amount of any wages, salary, employment benefits, or other compensation which she was denied or lost by reason of the violation; interest on the compensatory damages; and, unless the court concludes that the employer acted in good faith and reasonably believed it had complied with the Act, liquidated damages equal to the amount of compensatory damages plus interest. 29 U.S.C. § 2617(a)(1)(A). The plaintiff argues that "[l]oss of job security and the resulting mental distress that it brings may certainly be argued to be included in other compensation denied or lost to such employee." Plaintiff's Response, at 2.
Plaintiff's argument that loss of job security and the resulting mental distress should be recoverable as "other compensation" belies the plain language of the statute. See State of Alabama v. Marshall, 626 F.2d 366, 368-69 (5th Cir.1980) ("[T]he law is well settled that a statute must be interpreted according to its plain language unless a clear contrary legislative intention is shown."). When the FMLA speaks of "other compensation" as a possible measurement of damages, it does so as the fourth item in a series, and the three other items include (1) wages, (2) salary, and (3) employment benefits. See 29 U.S.C. § 2617(a)(1)(A)(i)-(ii).[1] The terms wages, salary, and employment benefits imply some type of quid pro quo exchange between an employer and its employee. Appearing as it does with the terms wages, salary, and employment benefits, the term "other compensation" also implies some type of quid pro quo exchange between an employer and its employee. The term does not imply a reimbursement formula for "mental distress" stemming from loss of job security. Because the statutory provision does not demonstrate that Congress used the term "other compensation" in a fashion to encompass damages for mental distress, it is hereby ORDERED that the plaintiff's claim for mental distress damages paragraph 21(f) of the complaint is STRICKEN.
NOTES
[1] 29 U.S.C. § 2617(a)(1)(A)(i)-(ii):
(1) Liability
Any employer who violates Section 2615 of this title shall be liable to any eligible employee affected
(A) for damages equal to
(i) the amount of
(I) any wages, salary, employment benefits, or other compensation denied or lost to such employee by reason of the violation; or
(II) in a case in which wages, salary, employment benefits, or other compensation have not been denied or lost to the employee, any actual monetary losses sustained by the employee as a direct result of the violation, such as the cost of providing care, up to a sum equal to 12 weeks of wages or salary for the employee. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2758697/ | COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-13-00366-CR
Roger Eugene Fain § From the 372nd District Court
§ of Tarrant County (1023944D)
v. § December 4, 2014
§ Opinion by Justice Dauphinot
The State of Texas § (nfp)
JUDGMENT
This court has considered the record on appeal in this case and holds that
there was error in the trial court’s order. It is ordered that the order of the trial
court is affirmed in part and reversed in part. We affirm the trial court’s order as
to the blood on the Bic pen and in the closet. We reverse the trial court’s order
as to the hairs in Donahew’s hands, the pubic hair, blood on the bathroom faucet,
Donahew’s fingernail clippings, male DNA discovered on the bra and shirt
Donahew wore on the day of her death, and the knife. We remand this case to
the trial court for further proceedings in accordance with this opinion.
SECOND DISTRICT COURT OF APPEALS
By __/s/ Lee Ann Dauphinot_____________
Justice Lee Ann Dauphinot | 01-03-2023 | 12-09-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/1457742/ | 945 F. Supp. 1022 (1996)
Susan BALDWIN, M.D.
v.
The UNIVERSITY OF TEXAS MEDICAL BRANCH AT GALVESTON, Garland D. Anderson, M.D., John C. Jennings, M.D., Alvin L. Leblanc, M.D., Cathy Van Hook, M.D., Turner Sharp, M.D., Berel Held, M.D., each Individual sued Individually and in their Respective Official Capacity as Faculty Members of the University of Texas Medical Branch.
Civil Action No. G-95-362.
United States District Court, S.D. Texas, Galveston Division.
November 6, 1996.
*1023 *1024 *1025 *1026 Anthony P. Griffin, Galveston, TX, for plaintiff.
Christopher N. Johnsen, Office of Attorney General, Austin, TX, Susan Sturdivant Jones, Office of Attorney General, Austin, TX, for University of Texas Branch at Galveston.
Susan Sturdivant Jones, Office of Attorney General, Austin, TX, for Garland D. Anderson, John C. Jennings, Alvin L. LeBlanc, M.D., Cathy Van Hook, M.D., Berel Held, M.D., Turner Sharp, M.D.
ORDER GRANTING SUMMARY JUDGMENT
KENT, District Judge.
In this action, Plaintiff Dr. Susan Baldwin has alleged claims of intentional racial discrimination pursuant to 42 U.S.C. §§ 1981, 1983, and Title VI, conspiracy to discriminate pursuant to 42 U.S.C. § 1985, and state law defamation against Defendant UTMB and against the Defendant Drs. Anderson, Jennings, LeBlanc, Van Hook, Sharp and Held, in their individual and official capacities. Now before the Court is the Defendants' Motion for Summary Judgment dated April 17, 1996. For the reasons set forth below, the Motion is hereby GRANTED.
I. FACTUAL BACKGROUND
Susan Baldwin was a third year medical resident at UTMB during the 1994-95 academic year. Dr. Baldwin attended medical school at UTMB, then spent the first two years of her residency at Baylor College of Medicine in Houston before transferring to UTMB for her third year. Dr. Baldwin wrote to Dr. Jennings, director of the residency program in the Department of Obstetrics and Gynecology, requesting an interview for a third year residency position at UTMB. She specifically expressed an interest in the "extensive opportunities for gynecological experience that exist within your program." During the interview with Jennings, Dr. Baldwin again expressed that one of her primary interests in the program at UTMB was the volume of cases available in which she could enhance her surgical skills. Dr. Baldwin signed the UTMB House Staff Agreement on June 24, 1994, accepting a position as a PGY3 (Post-Graduate Year 3) in the obstetrics and gynecology residency program for a one year period, July 6, 1994 to June 3, 1995.
After each rotation of residents, all faculty members are offered an opportunity to evaluate the residents and are provided an evaluation form. Faculty members are only required to fill out an evaluation if they have personally observed the resident. Pursuant to this procedure, Dr. Baldwin's professors evaluated her performance throughout her tenure at UTMB. Several of those professors have also been named as defendants in this lawsuit; therefore, those evaluations are particularly relevant and deserve close attention by the Court. Dr. Cathy Van Hook, an assistant professor at UTMB, for example, first evaluated Baldwin on August 28, 1994. In that evaluation, Van Hook stated that *1027 Baldwin's overall knowledge base was weak and that as a PGY3 in obstetrics, she had a poor grasp of labor and delivery patients. Dr. Van Hook felt that Baldwin needed close supervision and that unless she markedly improved, she would not be able to advance to the PGY4 level. In Dr. Van Hook's second evaluation of Dr. Baldwin's performance, dated February 1, 1995, Van Hook rated Baldwin's surgical skills, teaching, acceptance of criticism and overall performance as unsatisfactory. Van Hook's evaluation states that she did not feel that Baldwin functioned at a third year level and at times Baldwin's performance was what Van Hook considered marginal for a second year resident. Specifically, Van Hook wrote:
Surgically, Susan does not seem to have a good grasp of pelvic anatomy and did not demonstrate an ability to picture the pelvis three-dimensionally essential for pelvic surgery. When trying to teach/coach/explain to her, she seems to ignore the comments or is incapable of applying the knowledge offered. She declined the opportunity to do a TAH on a large fibroid uterus to go to clinic instead! Lack of confidence? If so avoidance only makes it worse. My biggest concern with Susan is: 1) I do not at any level feel she could function completely as a 4th year; Marginally as a 3rd and preferably a 2nd at best. I doubt that she is capable of functioning as a 3rd year ever secondary to personality and an innate inability to be taught. 2) Is she in the wrong field? Are we doing the right thing by allowing Susan to continue on a career choice she seems unsuitable for?
Defendant's Exhibit 2-B (emphasis in original).
Dr. Turner Sharp, an associate professor at UTMB and a defendant in this case, also had the opportunity to evaluate Dr. Baldwin's performance at UTMB. His first evaluation is dated August 25, 1994. In the evaluation, Sharp rated Baldwin's surgical skills as marginal and her overall performance as average. Sharp's second evaluation of Baldwin, dated January 24, 1995, rates Baldwin's surgical skills as unsatisfactory and her acceptance of criticism unsatisfactory. Sharp further explains his evaluation in a memorandum to Jennings, dated January 23, 1995:
... I must give Dr. Baldwin a much less than satisfactory evaluation based on several points: 1) When she began her PGY III year here, her surgical skills were equivalent to a senior medical student, and therefore, totally unsatisfactory. In her most recent rotation, her surgical skills have improved, but certainly nowhere near the level we are expecting. I would now rate her at the level of a first year resident.... The things that really worry me about this young lady are: 1) her lack of surgical judgment, 2) the tendency to be oblivious to what is going on around her and 3) occasional shading of the truth....
Defendants' Exhibit 3-C. In Dr. Sharp's final evaluation of Baldwin in June of 1995, he continued to rank her surgical skills as somewhere between unsatisfactory and marginal, her acceptance of criticism as unsatisfactory, and her overall performance between unsatisfactory and marginal.
Defendant Dr. Berel Held, Professor and Chief of the Division of Gynecology at UTMB, also evaluated Baldwin's performance during the third year of her residency. His first evaluation on September 8, 1994, rates Baldwin's surgical skills as marginal. Dr. Held's second evaluation, on January 25, 1995, states that Baldwin was not performing at the PGY3 level judgmentally or technically.
Although she was a nice woman and kind to the patients, her progress over the last six months with respect to acquisition of knowledge and skill had not been at a pace to permit her to function satisfactorily at a PGY4 level in July of 1995.
Defendants' Ex. 4. In his final evaluation of Dr. Baldwin's performance in June of 1995, Dr. Held noted that Dr. Baldwin's general level of knowledge, which was satisfactory, did not translate to satisfactory clinical problem solving skills appropriate for her level of training.
Several other professors at UTMB, not named as Defendants in this lawsuit, also had an opportunity to observe and to evaluate Dr. Baldwin's performance. Those evaluations *1028 largely support the observations made by the Defendant faculty members. For example, Dr. Lisa Troyer, an assistant professor, evaluated Dr. Baldwin in November of 1994. In that evaluation; although Dr. Troyer stated that Baldwin had a good fund of knowledge, her surgical skills and decision making were not as strong. Dr. Troyer rated Baldwin's surgical skills as marginal at that time. Dr. Edward Yeomans, Chief of Division of Maternal Fetal Medicine at UTMB, also evaluated Baldwin. In his evaluation, dated November 24, 1994, Dr. Yeomans noted that Baldwin did not have a strong experience at Baylor and that her knowledge base in obstetrics was better than her clinical experience. In a memorandum to Dr. Jennings, dated February 7, 1995, Dr. Yeomans reports that after having had additional opportunities to observe Dr. Baldwin in labor and delivery, he felt that Baldwin needed remedial work in obstetrics in order to become a chief resident in the UTMB program. Finally, Dr. Leslie Powell, a clinical professor for obstetrics and gynecology, also evaluated Dr. Baldwin's performance. His first evaluation, although dated June 1, 1995, evaluated Baldwin's performance in December 1994 and January 1995. Dr. Powell rates her surgical skills as marginal and her acceptance of criticism as unsatisfactory. His comments included: "surgical technique is marginal; she seems unsure of herself at times," "Gets hostile to criticism," "Has chip on her shoulder." Defendants' Ex. 9-A. In a later evaluation in May of 1995, Powell rated her surgical skills as between marginal and average and her acceptance of criticism as marginal. Powell noted that she continued to accept criticism poorly and at times was reluctant to do a procedure in a certain way that was suggested or asked of her by the supervising physician. He recommended that Baldwin still be monitored closely on major cases.
Part of Dr. Jennings' responsibility as director of the residency program and as an assistant professor are to evaluate the residents' performance based upon his own observations and to give quarterly reviews to the residents. Jennings himself evaluated Baldwin for the first time in August of 1994. In that first evaluation, Jennings noted that "Susan is adapting to her program change and should manifest significant improvement in the months ahead." Based on his observations, he also rated Baldwin's surgical skills as marginal for her residency level. In preparation for Dr. Baldwin's quarterly performance review in October 1994, Jennings reviewed each of the evaluations submitted by the doctors who had worked with Baldwin during that period. Jennings noted that Dr. Baldwin was ranked as "average" by all evaluators. Some of the comments from the evaluating professors were: "She has some catching up to do," "overall knowledge base is weak," "Susan has poor surgical skills and requires a lot of teaching, she needs to be more open to criticism." At that time, Dr. Jennings encouraged Baldwin to study for inservice examinations and to continue in her attempt to improve her surgical skills.
Dr. Jennings second evaluation of Baldwin, dated January 26, 1995, rated Dr. Baldwin's surgical skills as unsatisfactory. Jennings further commented that, "Susan's surgical skills are lacking and she does not appear to have the initiative that it will take to overcome these difficulties." Jennings also noted that Baldwin was significantly behind the other students at her level. In preparation for Dr. Baldwin's second quarterly performance review, Jennings reviewed the faculty evaluations discussed above, finding lengthy evaluations regarding unsatisfactory performance, primarily in the area of surgical expertise. Furthermore, Baldwin's overall performance had been ranked as "marginal." Jennings discussed the faculty's evaluations with Baldwin[1] and wrote in her Quarterly Performance Review of February 1, 1995:
I have explained to Dr. Baldwin in a lengthy discussion that this type of performance warrants a non-renewal of contract in July 1995 and probationary status until *1029 completion of the contract duration on June 30, 1995.
Defendants' Exhibit 1-G. Jennings based his quarterly review on the evaluations of the other doctors and upon his personal observation of Baldwin during two rotations.
On February 28, 1995, Dr. Jennings wrote a memorandum to Dr. Al LeBlanc, Associate Dean for Graduate Medical Education, regarding the non-renewal of Baldwin's contract and the terms of her probationary status. Jennings sent copies of the memorandum to Dr. Garland Anderson, Chairman of the UTMB OB-GYN Program, and to Dr. Baldwin. Jennings was required to notify LeBlanc and Anderson regarding Baldwin's current status. The Defendants deny Baldwin's claim that her evaluation was circulated among the OB-GYN faculty. However, the Defendants admit that they did occasionally discuss Baldwin's performance among themselves.
Dr. Anderson, as head of the OB-GYN department, upheld Jennings' decision on March 2, 1995. He had never had the opportunity to observe Baldwin's performance personally and therefore, had never submitted an evaluation of her skills. As a part of his review of Baldwin's status, Anderson met with Baldwin to discuss Jennings' decision not to renew her contract for the fourth year residency. Anderson also reviewed all of the faculty evaluation in Baldwin's file and personally spoke with Drs. Held, Sharp, Van Hook, Jennings, Yeomans, and Fulcher.[2] Based upon this investigation, he decided to uphold Jennings' decision not to renew Baldwin's contract for the fourth year.
On March 2, 1995, Dr. Jennings wrote a letter to Dr. O'Connor, the Executive Secretary for the Accreditation Counsel for Graduate Medical Education, requesting that he be allowed to go over his allotment of nine residents per year to accommodate a remediation program for Dr. Baldwin. He requested that she be able to enter the fourth post-graduate year in January 1996 with a completion date of December 31, 1996. This meant that UTMB would have ten residents for the third post-graduate year for the six month period from July 1995 to December 1995, and ten residents for the fourth post-graduate year from July 1996 to December 1996. After Jennings wrote to O'Connor, he received Baldwin's national testings scores (the "CREOG" scores). Baldwin's CREOG scores were in the 89 percentile nationally and the highest of all UTMB's third year residents.
On April 6, 1995, Jennings wrote a letter to Baldwin outlining the remediation arrangements that he was pursuing. He informed her of the request to O'Connor, an accommodation which would allow her to have an additional six months of remediation time. Jennings was also pursuing arrangements with Brackenridge Hospital in Austin, St. Joseph's Hospital in Houston, and University of Texas' affiliated Hospital in Harlingen for additional gynecology rotations. Upon satisfactory completion of the residency training, as determined by the established evaluation system, all negative evaluations accumulated during Baldwin's third year would be deleted from her record.
Baldwin did not accept Jennings' remediation offer. Instead, she appealed her status to Dr. LeBlanc. LeBlanc met with Baldwin on May 12, 1995, when she explained that her grievance was based on her opinion that the failure to reappoint and that the evaluations that led to that decision were racially biased. Dr. LeBlanc's investigation included, but was not limited to: an examination of Baldwin's complete personnel file, including faculty and chief resident evaluations, and her CREOG scores; interviews with faculty members who had worked with or evaluated Baldwin, as well as PGY4 chief residents; and, a review of the S-Form summaries for all other current PGY3 OB-GYN residents for both the aggregate of PGY1 and PGY2 experience as well as PGY3 procedural experience.[3]
*1030 Dr. LeBlanc found that the primary concerns of the faculty were about OB-GYN procedural and surgical proficiency, surgical judgment, and responsiveness to faculty direction. Dr. Baldwin's basic knowledge had not been a common concern in her evaluations, so the CREOG in-service exam scores did not change the evaluations. Dr. LeBlanc did not find any pattern of racial bias in the evaluations, rotational assignments, or technical learning opportunities. Concluding that there was no racial animus in the evaluations or in Jennings' decision not to renew Baldwin's contract, LeBlanc upheld the decision not to reappoint Dr. Baldwin.
Baldwin left UTMB on July 1, 1995, entering the third year residency program at St. Joseph's Hospital in Houston.
II. SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate if there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. FED.R.CIV.P. 56. Rule 56(e) requires that when a motion for summary judgment is made, the nonmoving party must set forth set forth specific facts showing that there is a genuine issue for trial. Id.; See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Only disputes over facts that might affect the outcome of the lawsuit under governing law will preclude the entry of summary judgment. Anderson, 477 U.S. at 247-48, 106 S.Ct. at 2510. If the evidence is such that a reasonable fact-finder could find in favor of the nonmoving party, summary judgment should not be granted. Id.; see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986).
III. ELEVENTH AMENDMENT IMMUNITY
The Eleventh Amendment bars any claims brought against a state or state agency unless Congress has abrogated the state's immunity or the state has expressly waived its immunity to suit in federal court. Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89, 100, 104 S. Ct. 900, 908, 79 L. Ed. 2d 67 (1984). Congress must make its intention to abrogate the states' sovereign immunity "unmistakably clear in the language of the statute." Atascadero State Hospital v. Scanlon, 473 U.S. 234, 242, 105 S. Ct. 3142, 3147, 87 L. Ed. 2d 171 (1985). Thus, as Congress failed to make any such intention clear in the statutory language, Congress did not abrogate the states' Eleventh Amendment immunity by enacting 42 U.S.C. §§ 1981, 1983, and 1985. See, e.g., U.S. v. City of Yonkers, 880 F. Supp. 212 (S.D.N.Y.1995), vacated on other grounds by 96 F.3d 600 (2nd Cir.1996). Additionally, under Texas state law, the Texas Tort Claims Act does not waive sovereign immunity for intentional torts, such as defamation. TEX.CIV.PRAC. & REM.CODE ANN. § 101.057; City of Hempstead v. Kmiec, 902 S.W.2d 118, 122 (Tex.App. Houston [1st Dist.] 1995, no writ). Therefore, as the state of Texas has not consented to this suit, all claims against UTMB pursuant to §§ 1981, 1983, 1985 and state law defamation are barred by the state's sovereign immunity.[4] Accordingly, the Defendants' Motion for Summary Judgment against these claims is hereby GRANTED, and these claims are DISMISSED WITH PREJUDICE.
The Eleventh Amendment also shields state officials sued in their official capacity and bars all relief sought against official capacity defendants except prospective injunctive relief. "An official capacity suit against a state official `is not a suit against the official but rather a suit against the official's office. As such, it is no different from a suit against the state itself.'" Hafer v. Melo, 502 U.S. 21, 26, 112 S. Ct. 358, 362, 116 L. Ed. 2d 301 (1991) (citing Will v. Michigan Dept. Of State Police, 491 U.S. 58, 71, 109 S. Ct. 2304, 2312, 105 L. Ed. 2d 45 (1989)). Accordingly, for the reasons stated above, all *1031 claims for monetary relief pursuant to §§ 1981, 1983, 1985 and defamation against the official capacity defendants, Drs. Anderson, Jennings, LeBlanc, Van Hook, Sharp, and Held, are also DISMISSED WITH PREJUDICE and Defendants' Motion for Summary Judgment as to those claims is hereby GRANTED. Whether the official capacity defendants have liability for prospective injunctive relief depends on the evaluation of Baldwin's intentional discrimination claims, discussed in Section IV., infra.
IV. INTENTIONAL RACE DISCRIMINATION UNDER TITLE VI AND SECTIONS 1981 AND 1983
The Court's inquiry into intentional race discrimination is essentially the same for individual actions brought under §§ 1981 and 1983, Title VI and Title VII. Wallace v. Texas Tech Univ., 80 F.3d 1042, 1047 (5th Cir.1996); Marcantel v. State of Louisiana, Dept. of Transportation and Development, 37 F.3d 197, 198 (5th Cir.1994); NAACP v. Medical Center, Inc., 657 F.2d 1322 (3d Cir. 1981). The Fifth Circuit applies the burden shifting analytic framework first established in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973), to analyze claims of intentional discrimination.[5]
Under the familiar McDonnell Douglas/Burdine framework, the Court employs a three-part test designed to determine the motivation of the defendant in taking the challenged action. McDonnell Douglas, 411 U.S. 792, 93 S. Ct. 1817; Burdine, 450 U.S. 248, 101 S. Ct. 1089. First, the plaintiff is required to establish a prima facie case wherein she must establish the elements of the discrimination claim. If the plaintiff proves her prima facie case, a presumption of discrimination arises. Bodenheimer v. PPG Industries, Inc., 5 F.3d 955 (5th Cir. 1993).
The burden of production then shifts to the defendant to rebut this presumption by articulating a legitimate, nondiscriminatory reason for the alleged discriminatory action. Olitsky v. Spencer Gifts, Inc., 964 F.2d 1471 (5th Cir.1992), cert. denied, 507 U.S. 909, 113 S. Ct. 1253, 122 L. Ed. 2d 652 (1993). A defendant meets this burden by proffering admissible evidence of an explanation that would be legally sufficient to justify a judgment for the defendant. Guthrie v. Tifco Indus., 941 F.2d 374, 376 (5th Cir.1991), cert. denied, 503 U.S. 908, 112 S. Ct. 1267, 117 L. Ed. 2d 495 (1992). The defendant need not persuade the trier of fact that there was no intentional discrimination; she need only produce evidence on that point. Hicks, 509 U.S. at 507, 113 S.Ct. at 2747.
Third, once the defendant satisfies this burden, the presumption of discrimination established by the plaintiff's prima facie case dissolves. Burdine, 450 U.S. at 255 n. 10, 101 S.Ct. at 1095 n. 10. The plaintiff's burden of persuasion then arises, and the plaintiff must produce evidence that the defendant's proffered reasons are mere pretexts, the real reason for the action having been based on an impermissible animus. Id. at 256, 101 S.Ct. at 1095; Bodenheimer, 5 F.3d at 959. She may succeed in this either by persuading the Court that a discriminatory reason more likely motivated the defendant or by showing that the defendant's reason is unworthy of credence. Burdine, 450 U.S. at 256, 101 S.Ct. at 1095. The ultimate burden of proof of intentional racial discrimination rests at all times on the plaintiff. Hicks, 509 U.S. at 507, 113 S.Ct. at 2749.
Summary judgment is particularly appropriate when the Court is evaluating the evidence at the "pretext" stage of the McDonnell Douglas analysis.
[I]t is relatively easy both for a plaintiff to establish a prima facie case and for a defendant to articulate a legitimate, nondiscriminatory reason for his decision.... In the context of summary judgment ..., the question is not whether the plaintiff proves pretext, but rather whether the plaintiff raises a genuine issue of fact regarding pretext. *1032 Britt v. The Grocer's Supply Co. Inc., 978 F.2d 1441, 1450 (5th Cir.1992), cert. denied, 508 U.S. 960, 113 S. Ct. 2929, 124 L. Ed. 2d 679 (1993), quoting, Amburgey v. Refractories Corp., 936 F.2d 805, 811 (5th Cir.1991). Speculation and belief are insufficient to create a fact issue as to pretext. Britt, 978 F.2d at 1451. Nor can pretext be established by mere conclusory statements of a plaintiff who feels that she has been discriminated against. E.E.O.C. v. Exxon Shipping Co., 745 F.2d 967, 976 (5th Cir.1984).
The Plaintiff here has presented evidence to support a prima facie case of intentional discrimination. As an African American woman, Susan Baldwin is a member of a protected class. Her high CREOG scores support her argument that she was qualified to have her contract renewed. Despite her test scores, Baldwin's contract was not renewed, and instead, remediation was recommended. At the same time, all of the other PGY3 residents' contracts were renewed that year. Therefore, as Plaintiff has stated a prima facie case, the Defendants must produce evidence to rebut the presumption of discrimination in order to prevail on summary judgment.
The Defendants have met their burden of production in this case. Each of the evaluating doctors, Van Hook, Sharp, Held and Jennings, made professional observations regarding Dr. Baldwin's performance and found that she had unsatisfactory to marginal surgical skills, was unreceptive to constructive criticism, and that her overall performance was unsatisfactory to marginal. These evaluations, together with the S-Form summaries, clearly indicate that Baldwin did not have the same level of surgical experience and skill as the other PGY3 residents. Furthermore, this Court refuses to second guess the academic decisions of medical doctors as to Susan Baldwin's surgical skills. The Court has quite enough of its own professional responsibilities without undertaking the micro-management of a medical school. The Court, therefore, finds that Drs. Van Hook, Sharp, Held and Jennings have articulated a legitimate, nondiscriminatory reason for the decision not to renew Susan Baldwin's contract, and instead, to remediate her training.
The reviewing doctors, LeBlanc and Anderson, likewise have met their burden of production on this matter. Dr. Baldwin claims that LeBlanc and Anderson adopted the faculty's, in particular Dr. Van Hook's, racist views in upholding Dr. Jennings' decision. Both LeBlanc and Anderson individually reviewed all written evaluations and the number of procedures performed, spoke with evaluating faculty members, and interviewed Baldwin herself. Based on these investigations, in their professional judgment, both doctors upheld Dr. Jennings' decision. Again, the summary judgment evidence produced clearly supports the nondiscriminatory reason offered by the Defendants, i.e., that the decision to not renew Susan Baldwin's contract and to remediate her were based on her level of surgical skills.
Dr. Baldwin attempts to show that the reasons offered by the Defendants are mere pretexts for racial animus. Specifically,[6] she points to the use of the word "innate" *1033 by Dr. Van Hook in her evaluation dated February 1, 1995. Baldwin argues that the word "innate" means "genetic" and then equates "genetic" with "race." These leaps of inference are without evidentiary basis and without logical basis as well. Even if the Court grants, arguendo, the premise that innate means "genetic" or "in the blood," there is simply nothing that supports the logical leap that Dr. Baldwin's teachability has anything to do with the teachability of Dr. Baldwin's race. Dr. Baldwin could have used the same logic to claim that Van Hook had discriminated against her because she was a woman, for surely Dr. Baldwin's gender is innate as well. There is simply no end to the character traits that are possibly genelinked. Thus, Baldwin's argument on this point does not persuade the Court that a discriminatory reason more likely motivated the Defendants, nor does it persuade the Court that the Defendants' reason is unworthy of credence. In fact, it is the Plaintiff's argument that lacks credulity here.
Baldwin also points to her high CREOG test scores in her attempt to show that the Defendants' actions were really motivated by racial animus. However, Plaintiff's exam scores only serve to support her prima facie case here. The Defendants acknowledge Dr. Baldwin's general knowledge level. In fact, it was their faith in that knowledge level that caused them to believe that remediation would be worthwhile in Dr. Baldwin's case. However, as Dr. LeBlanc noted in his review, the faculty's concerns were largely focused on Baldwin's surgical proficiency and surgical judgment. In fact, more than one evaluator commented that Baldwin's surgical skills were not as strong as her general level of knowledge and that her general level of knowledge did not translate to clinical problem solving skills appropriate for her level of training. In short, the Defendants' evidence supports that their decision rested on Baldwin's lack of surgical skills, not a lack of testing skills or general medical knowledge. Plaintiff's evidence regarding her CREOG scores has not persuaded the Court otherwise.
The Plaintiff also points out that she was the only resident whose contract was not renewed that year. Baldwin argues that because her CREOG scores were higher than all of the other UTMB residents in her program, the Defendants' decision was more likely motivated by racial animus than by her abilities. This argument is a complete non sequitur for the reason articulated above, i.e., that Baldwin's CREOG scores were not indicative of her clinical surgical skills, upon which the Defendants' decision was based. Furthermore, the Plaintiff presents evidence which undercuts her own argument that the other residents were similarly situated. In fact, as the residents' evaluations show, none of the other residents were similarly situated to Dr. Baldwin. Their evaluations do not compare to the overwhelming number of similar comments regarding Baldwin's surgical skills and acceptance of criticism made by the faculty in Baldwin's evaluations. In her presentation of the other residents' evaluations, Baldwin takes negative comments out of context and ignores positive statements. In no way do isolated negative comments or one bad evaluation compare to Dr. Baldwin's situation where she consistently received overwhelmingly bad evaluations by virtually the entire faculty. Therefore, the Court is not persuaded that this evidence presented by the Plaintiff shows that the Defendants' were more likely motivated by racial animus.
Finally, the Plaintiff offers the fact that Dr. Fulcher, the only African-American on the OB-GYN faculty was not sent an evaluation form to fill out is suggestive of racial animus. Yet, the evidence shows that Dr. Fulcher could have picked up an evaluation form at any time. He did not because he had not personally observed Dr. Baldwin's performance. In fact, Drs. Anderson and LeBlanc made a point to interview Dr. Fulcher prior to making their final decisions. Therefore, the fact that Fulcher did not fill out a performance evaluation for Baldwin *1034 does not persuade the Court that the Defendants' actions were more likely motivated by racial animus rather than by their professional judgment of Baldwin's surgical skills.
As Plaintiff has presented no other evidence to support her argument that the Defendants' offered reasons are mere pretexts for racial animus, the Plaintiff has not carried her burden in this case. The Defendants have offered a legitimate non-discriminatory reason for their decision not to renew Susan Baldwin's contract and to remediate her medical training. The Court has not found any fact issues regarding the issue of pretext which would preclude summary judgment at this time. Speculation and belief are insufficient to create a fact issue as to pretext. Nor can pretext be established by mere conclusory statements of a plaintiff who feels that she has been discriminated against. Plaintiff's evidence here essentially amounts to speculation and conclusory statements of a plaintiff who feels she has been discriminated against. Accordingly, the Defendants' Motion for Summary Judgment is hereby GRANTED as to Plaintiff's claims pursuant to §§ 1981 and 1983 against the individual Defendants Anderson, Jennings, LeBlanc, Van Hook, Sharp and Held. Furthermore, the Defendants' Motion for Summary Judgment is hereby GRANTED as to the Plaintiff's Title VI claims against the Defendant UTMB.[7] All claims for monetary and injunctive relief pursuant to these statutory provisions are DISMISSED WITH PREJUDICE.
V. SECTION 1985 CONSPIRACY CLAIM
A single legal entity, such as UTMB and its employees, is incapable of conspiring with itself for the purposes of § 1985. See Hilliard v. Ferguson, 30 F.3d 649, 653 (5th Cir.1994). It is a longstanding rule in the Fifth Circuit that "a corporation cannot conspire with itself anymore than a private individual can, and it is the general rule that the acts of the agent are the acts of the corporation." Hilliard, 30 F.3d at 653 (citing Nelson Radio and Supply Company v. Motorola, Inc., 200 F.2d 911, 914 (5th Cir.1952), cert. denied, 345 U.S. 925, 73 S. Ct. 783, 97 L. Ed. 1356 (1953)). The Fifth Circuit and several district courts within the Circuit have applied this "intracorporate conspiracy" doctrine to entities other than corporations. See, e.g., Hilliard, 30 F.3d at 653 (finding that the doctrine applied to a school board and its members); Moody v. Jefferson Parish School Board, 803 F. Supp. 1158, 1166 (E.D.La.1992) (school board, principal, vice-principal, and various teachers are all employed by the Jefferson Parish School Board and, thus, are a single entity), aff'd, 2 F.3d 604 (5th Cir.1993); Hankins v. Dallas Independent School District, 698 F. Supp. 1323, 1330 (N.D.Tex.1988) (high school and its officials constitute a single entity); Chambliss v. Foote, 421 F. Supp. 12, 15 (E.D.La.1976) (university and its officials considered a single legal entity), aff'd, 562 F.2d 1015 (5th Cir. 1977), cert. denied, 439 U.S. 839, 99 S. Ct. 127, 58 L. Ed. 2d 137 (1978).
All of the individual Defendants here are employees of UTMB. Therefore, for the purposes of Plaintiffs § 1985 conspiracy claim, UTMB and its employees constitute a single legal entity which is incapable of conspiring with itself. Accordingly, the Defendants' Motion for Summary Judgment as to Plaintiff's § 1985 claims against all of the individual Defendants is GRANTED, and these claims are hereby DISMISSED WITH PREJUDICE.
VI. STATE LAW DEFAMATION CLAIM
Dr. Baldwin claims that her quarterly performance review was circulated amongst the OB-GYN faculty and that publication worked to discredit her and caused others to question her abilities. The Defendants deny that the quarterly performance review was circulated, but admit that the faculty did on occasion discuss Baldwin's performance amongst themselves. The Defendants argue that these communications are privileged.
*1035 To sustain her defamation claim, Baldwin must show that the Defendants published defamatory material about her in the quarterly performance review which injured or impeached her reputation. Schauer v. Memorial Care Systems, 856 S.W.2d 437, 446 (Tex.App. Houston [1st Dist.] 1993, no writ). Whether a document is reasonably capable of a defamatory meaning is an issue of law for the court. Musser v. Smith Protective Services, Inc., 723 S.W.2d 653, 654-55 (Tex.1987). Thus, the question is particularly ripe for summary judgment. Schauer, 856 S.W.2d at 446.
To determine whether a publication is defamatory, the Court must look at the entire communication and not separate sentences or portions. Id.; Musser, 723 S.W.2d at 655. "Statements may not be made defamatory by taking them out of context." Schauer, 856 S.W.2d at 446, citing Raymer v. Doubleday & Co., 615 F.2d 241, 245 (5th Cir.1980), cert. denied, 449 U.S. 838, 101 S. Ct. 115, 66 L. Ed. 2d 45 (1980). An expression of opinion is protected free speech. Carr v. Brasher, 776 S.W.2d 567, 570 (Tex.1989). The question of whether a communication is a protected expression of opinion or an actionable assertion of fact is a question of law to be decided by the Court. Id. at 570.
The evaluations and quarterly performance reviews prepared by the individual Defendants in this case are clearly expressions of their opinion of Plaintiff's performance while working under their supervision. First of all, the evaluation form used by the faculty indicates that the faculty should make an evaluation based on their own observations and opinions of the resident's performance. For example, the first section of the evaluation asks the professor to "Circle your rating for each category" (emphasis added) followed by a list of skills and attributes including "General Knowledge Base," "Surgical Skills," "Clinical Problem Solving," "Acceptance of Criticism," and "Overall Performance." Clearly, these ratings are simply statements of a supervising physician's opinion and are not defamatory as a matter of law. Other sections of the evaluation form ask the professors for comments and recommendations, areas of deficiency which the Program Director should discuss with the resident, and specifically, "In your opinion, at this time, should this resident continue training in obstetrics and gynecology?" (emphasis added). Again, the doctors' responses in this case clearly reflect their own opinions of Dr. Baldwin's abilities based on their own observations of her performance. Thus, after a thorough review of the performance evaluations relevant to this case, the Court concludes that the statements complained of within these evaluations are permissible expressions of opinion and are not defamatory as a matter of law. Furthermore, as the quarterly performance reviews prepared by Dr. Jennings are no more than a summary of the faculty evaluations and statistics regarding the actual number of procedures performed by the resident, they also fall under the umbrella of protected free speech and not defamatory as a matter of law.[8]
Furthermore, accusations or comments about an employee by her employer, made to a person having an interest or duty in the matter to which the communication relates, have a qualified privilege. Schauer, 856 S.W.2d at 449; see also Marathon Oil Co. v. Salazar, 682 S.W.2d 624, 630 (Tex.App. Houston [1st Dist.] 1984, writ ref'd n.r.e.) Whether a communication has qualified privilege is a question of law for the Court. Schauer, 856 S.W.2d at 449.
The privilege is not lost, so long as one believes the truth of the communication. Substantial truth is sufficient. A communication loses its privilege if it was made with malice or want of good faith.
Id. Once the Court finds that a party has qualified privilege, the plaintiff can overcome it only by a showing of actual malice. Id. Where statements are cloaked with a qualified privilege, the law presumes good faith *1036 and lack of malice. Id.; Marathon Oil, 682 S.W.2d at 630.
In this case, the evaluations made by the individual Defendants are also protected by a qualified privilege. The Defendants prepared the performance evaluations of Baldwin as a part of their supervisory duties. These evaluations contain the comments about a UTMB employee, Dr. Baldwin, and were directed to Dr. Jennings, who had a duty and an interest with regard to Dr. Baldwin's performance in the residency program. Likewise, Drs. Anderson and LeBlanc had a duty and an interest with regard to Baldwin's performance in the residency program. Therefore, because the performance evaluations contained comments about an employee made by her supervisors to a person having an interest or a duty in the matter to which the communication relates, the statements in the performance evaluations have a qualified privilege.
The Plaintiff cannot overcome the presumption of good faith and lack of malice to defeat qualified privilege here. Summary judgment is appropriate where a plaintiff has advanced no clear and convincing evidence of actual malice. Casso v. Brand, 776 S.W.2d 551, 559 (Tex.1989). Absent such an offering of "clear and convincing affirmative proof" by the non-movant, summary judgment is warranted. Id. at 558-59. The Defendants' affidavits establish there was no actual malice. Dr. Baldwin has not offered any clear and convincing affirmative proof to overcome her burden. Therefore, the Court concludes that to the extent that the statements complained of are not permissible expressions of opinion, they are protected by qualified privilege. Accordingly, Defendants' Motion for Summary Judgment as to the Plaintiff's state law defamation claims is hereby GRANTED, and those claims are DISMISSED WITH PREJUDICE.
VII. CONCLUSION
For the reasons set forth above, the Defendants' Motion for Summary Judgment is hereby GRANTED and all claims are DISMISSED WITH PREJUDICE. Furthermore, the Court assesses taxable costs against the Plaintiff. Therefore, in accordance with Rule 4 B of the Local Rules of the Southern District of Texas, the Defendants are ORDERED to file a Bill of Costs within ten (10) days after the entry of Final Judgment. Any objections by the Plaintiff must be filed within five (5) days after the filing of the Bill of Costs. If there are no objections, the costs will be assessed by the Clerk of Court. Upon receipt of objections to the Bill of Costs, the Court will rule on the matter or, if further information is required, may order a hearing or direct the parties to further brief the issue. Any costs awarded by this Court will strictly conform with the limits set forth in 28 U.S.C. § 1920. Therefore, to avoid unnecessary delay and debate, the Court encourages the Defendants to carefully scrutinize their costs and submit only those clearly authorized by section 1920.
IT IS SO ORDERED.
FINAL JUDGMENT
For the reasons set forth in the Order issued this date, Defendants' Motion for Summary Judgment is GRANTED and all claims are hereby DISMISSED WITH PREJUDICE. Furthermore, the Court assesses taxable costs against the Plaintiff. Therefore, in accordance with Rule 4 B of the Local Rules of the Southern District of Texas, the Defendants are ORDERED to file a Bill of Costs within ten (10) days after the entry of Final Judgment. Any objections by the Plaintiff must be filed within five (5) days after the filing of the Bill of Costs. Upon receipt of objections to the Bill of Costs, the Court will rule on the matter or, if further information is required, may order a hearing or direct the parties to further brief the issue.
THIS IS A FINAL JUDGMENT.
IT IS SO ORDERED.
NOTES
[1] Baldwin disputes how many of the evaluations were actually addressed by Jennings at that meeting. Baldwin claims only Van Hook's, Held's, and possibly Sharp's evaluations were discussed. Jennings says that he presented all of the evaluations to Baldwin, but not all were discussed.
[2] Although Dr. Fulcher had never observed Dr. Baldwin's performance and, therefore, had never evaluated her, Dr. Baldwin specifically requested that he be included in Dr. Anderson's review as Dr. Fulcher was the only African-American OBGYN faculty member.
[3] The S-Form summary lists the number of surgical procedures performed by each resident during each year of their residency. See Defendants' Ex. 6-D.
[4] As part of the University of Texas System, UTMB is a state agency. TEX.EDUC.CODE ANN. §§ 65.02(a)(8), 74.001 (Vernon 1972 & Supp. 1995).
[5] McDonnell Douglas was refined in Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 101 S. Ct. 1089, 67 L. Ed. 2d 207 (1981), and recently clarified in St. Mary's Honor Center v. Hicks, 509 U.S. 502, 113 S. Ct. 2742, 125 L. Ed. 2d 407 (1993).
[6] The Court uses this term loosely in describing Plaintiff's submission to this Court. It is this Court's opinion that the Plaintiff's Response is a better example of stream of consciousness writing than any form of legal argument. The first eleven pages of Plaintiff's brief directly quote her Complaint; the next five pages randomly cite various textbooks on racism, followed by ten pages haphazardly discussing Plaintiff's CREOG scores and the CREOG scores of the other residents; finally, the last ten pages ramble on pointlessly about the use of the word "innate." The Court is not impressed by expansive, impassioned gibberish. It is impressed by coherent factual and legal argument, something completely lacking in Plaintiff's Response. In fact, the Plaintiff makes absolutely no response to many of the arguments made by the Defendants in their Motion for Summary Judgment. Consequently, in those respects, the Court treats the Defendants' Motion as unopposed. As to the Plaintiff's request for additional time to respond to the unanswered arguments, the Court is unimpressed and unmoved by counsel's explanation that his understanding was that dispositive motions were to be limited to immunity issues (especially given that counsel makes no response to the Defendants' immunity arguments). The Court has historically and will always entertain any dispositive motion as soon as there is evidence available to support such a motion. Such artificial constraints limit the efficiency of this Court in managing one of the largest civil dockets in the United States. The Court refuses to be so constrained and suggests that in the future, counsel actually take the time and effort to thoughtfully respond to Defendants' arguments in his Response, rather than cobbling together dozens of pages of inane drivel, calculated to do nothing more than evade, obfuscate and confuse the issues at hand.
[7] As the recipient of federal funds, UTMB is the only possible defendant under Title VI. Therefore, to the extent Plaintiff has pled Title VI claims against the individual Defendants, those claims are also hereby DISMISSED WITH PREJUDICE.
[8] Moreover, to permit such claims in this environment would cast an appalling chill over candor in medical education. Professors must be free to exercise precise and insightful judgment, so that doctors may be properly trained, and the public will not be victimized by the incompetence which would invariably flow from timid evaluations. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1518945/ | 953 S.W.2d 478 (1997)
Geoffrey Gilbert DART, Appellant,
v.
Walter Graham BALAAM, Appellee.
No. 2-96-237-CV.
Court of Appeals of Texas, Fort Worth.
August 29, 1997.
Rehearing Overruled November 13, 1997.
*479 Steven Mark Strong, Dallas, for Appellant.
Lee L. Cameron, Wilson, Elser, Maskowitz, Edelman & Dicker, Dallas, for Appellee.
Before DAY, BRIGHAM and HOLMAN, JJ.
OPINION
BRIGHAM, Justice.
The issue presented is whether the trial court erred in recognizing an Australian judgment for money damages under the provisions of the Uniform Foreign Country Money-Judgment Recognition Act ("Recognition Act"). See Tex. Civ. Prac. & Rem.Code Ann. Ch. 36 (Vernon 1997). We affirm.
Background
Appellant Geoffery Gilbert Dart appeals from the trial court's order recognizing a foreign country judgment rendered by the Supreme Court of Victoria at Melbourne, Australia. Appellee Walter Graham Balaam filed an authenticated copy of the Australian judgment with the trial court under the Recognition Act. Section 36.004 of that act provides that a foreign country money judgment is recognizable in this state and "enforceable in the same manner as a judgment of a sister state that is entitled to full faith and credit," unless the judgment falls within one of the specific exceptions to recognition found in section 36.005 of the Recognition Act. Id. § 36.004. Section 36.005 provides for three grounds of mandatory nonrecognition and seven discretionary or permissive grounds. See id. § 36.005. In response to Appellee's request for recognition, Appellant filed a motion for nonrecognition, asserting that the judgment fit within five of the exceptions to recognition. In addition to filing the motion, Appellant requested an evidentiary hearing on the motion, which was set for June 27, 1996. Appellant failed to appear at the scheduled hearing, and his counsel filed a motion to continue the hearing. Concurrently, Appellant's counsel filed a "withdrawal of request for evidentiary hearing" and requested the trial court to "determine the matter based upon briefs and affidavits" on file. After considering the briefs and evidence on file, the trial court denied Appellant's motion for nonrecognition and recognized the Australian judgment. Appellant now challenges that decision, asserting the trial court erred by recognizing a foreign judgment (1) that was decided under a system that did not provide procedures compatible with the requirements of due process; (2) that was decided by a tribunal that lacked subject matter jurisdiction over the cause and personal jurisdiction over Appellant; (3) that was governed by a tribunal other than that designated in the parties' forum selection clause; and (4) that was decided in a seriously inconvenient forum for Appellant. Appellant's last point of error claims the trial court abused its discretion in denying Appellant's motion for continuance.
Uniform Foreign Country Money-Judgment Recognition Act
A foreign country judgment assessing money damages is conclusive between the *480 parties and is enforceable in Texas in the same manner as a judgment of a sister state, which is entitled to full faith and credit, unless the judgment debtor satisfies the burden of establishing one of the ten specific grounds for nonrecognition provided in section 36.005 of the Recognition Act. See id. §§ 36.002-.0044. In limiting the defenses that may be raised by a judgment debtor, the Recognition Act creates standards for recognizing foreign judgments and prevents parties from relitigating issues that were conclusively settled by courts of foreign countries, unless such issues create an exception to recognition. See id.; Banque Libanaise Pour Le Commerce v. Khreich, 915 F.2d 1000, 1004 (5th Cir.1990).
The party seeking to avoid recognition has the burden of proving a ground for nonrecognition. See Khreich, 915 F.2d at 1005. The Recognition Act strictly narrows the issues that may be raised and considered by the trial court when determining whether to recognize a foreign country judgment:
The Court may refuse recognition of the foreign country judgment if the motions, affidavits, briefs, and other evidence before it establish grounds for nonrecognition as specified in Section 36.005, but the court may not, under any circumstances, review the foreign country judgment in relation to any matter not specified in Section 36.005.
TEX. CIV. PRAC. & REM.CODE ANN. § 36.0044(g). Section 36.005 sets forth three mandatory and seven discretionary grounds for nonrecognition of foreign country judgments; these ten are the only defenses available to a judgment debtor. See id. § 36.005. Unless the judgment debtor satisfies his burden of proof by establishing one or more of the specific grounds for nonrecognition, the Recognition Act requires the court to recognize the foreign country judgment. See id. § 36.004.
The Recognition Act precludes a judgment debtor from collaterally attacking a foreign judgment where an issue was litigated before a foreign court or the party was given the opportunity to litigate the issue before that court. See John Sanderson & Co. (Wool) Pty., Ltd. v. Ludlow Jute Co., Ltd., 569 F.2d 696, 699 (1st Cir.1978); Bank of Nova Scotia v. Tschabold Equip., Ltd., 51 Wash.App. 749, 754 P.2d 1290, 1296 (1988). Grounds for nonrecognition may be waived if a party had the right to assert that ground as an objection or defense in the foreign country court but failed to do so. See Tschabold, 754 P.2d at 1296; Missouri-Kansas-Texas R.R. Co. v. Heritage Cablevision of Dallas, Inc., 783 S.W.2d 273, 280 (Tex.App. Dallas 1989, no writ).
Points of Error
In his first point of error, Appellant claims that the trial court erred by recognizing the judgment that "was rendered under a system that does not provide impartial tribunals or procedures compatible with the requirements of due process of law." See TEX. CIV. PRAC. & REM.CODE ANN. § 36.005(a)(1). This ground for nonrecognition that requires impartial tribunals and procedures compatible with due process of law does not dictate that procedures be identical to those in the United States. See Ingersoll Milling Mach. Co. v. Granger, 833 F.2d 680, 687 (7th Cir. 1987). "[A] mere difference in the procedural system is not a sufficient basis for nonrecognition. A case of serious injustice must be involved." Unif. Foreign MoneyJudgments Recognition Act § 4 cmt., 13 U.L.A. 268 (1986).
Appellant's complaint about Australian due process concerns the right to a jury trial. Appellant asserts that he "desired a trial by jury and the [Australian] limitation in this regard is not on par with one of ... the most sacred right[s] afforded to the citizens of this State." However, rule 47.02 of the Rules of Civil Procedure for the State of Victoria, Australia, allowed Appellant the right to request a trial by jury providing:
(1) A proceeding commenced by writ and founded on contract (including contract implied by law) or on tort (including a proceeding for damages for breach of statutory duty) shall be tried with a jury if the plaintiff in the writ or the defendant by notice in writing to the plaintiff and to the Prothonotary [Registrar] within 10 days after the last appearance signifies that he desires to have the proceeding so tried. *481 General Rules of Procedure in Civil Proceedings, 1986, ord. 47.02 (Austl.) (emphasis added).[1] Because the Australian action was commenced by a writ and founded on contract, rule 47.02(1) applied and afforded Appellant the right to request a jury trial.
To exercise his right, Appellant was required to file a timely notice requesting a jury trial. This requirement is comparable to our rule of civil procedure that "[n]o jury trial shall be had in any civil suit, unless a written request for a jury trial is filed with the clerk of the court a reasonable time before the date set for trial." TEX.R. CIV. P. 216. But, Appellant never requested a jury trial and, therefore, waived his right to have the requirement considered as a ground for nonrecognition under the Recognition Act. See John Sanderson & Co., 569 F.2d at 699; Tschabold, 754 P.2d at 1296. Appellant had the right and opportunity to request a jury trial in the Australian lawsuit, but elected not to. To conclude that the Australian trial court would have automatically denied Appellant a jury trial is mere speculation and does not support a finding of inadequate due process. Point of error one is overruled.
Appellant's second point of error relies on section 36.005(a) of the Recognition Act that provides that a foreign country money judgment is not conclusive if "the foreign country court did not have personal jurisdiction over the defendant." TEX. CIV. PRAC. & REM.CODE ANN. § 36.005(a)(2). Appellant argues that under a personal jurisdiction analysis in Texas and the United States, the Australian court would not have been able to establish that minimum contacts existed between Appellant and the forum state and that exercising personal jurisdiction over Appellant would offend traditional notions of fair play and substantial justice. See International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945); Schlobohm v. Schapiro, 784 S.W.2d 355, 356-57 (Tex.1990). However, regardless of a defendant's contacts or lack thereof with the forum state, where a defendant appears before a court or files a responsive pleading without asserting a jurisdictional defense, personal jurisdiction in that court is established by the defendant's consent, and the defendant's objections to personal jurisdiction are waived. See South Carolina Nat'l Bank v. Westpac Banking Corp., 678 F. Supp. 596, 598-99 (D.S.C.1987); Morris v. Morris, 894 S.W.2d 859, 862 (Tex.App.Fort Worth 1995, no writ); Estate of Griffin v. Sumner, 604 S.W.2d 221, 227 (Tex.Civ.App.San Antonio 1980, writ ref'd n.r.e.).
Similarly, the rules of procedure for the Australian court provide that a defendant may file a conditional appearance under protest, or object to the court's jurisdiction before filing an appearance. General Rules of Procedure in Civil Proceedings, 1986, ord. I 8.02.25 (Austl.). By filing an unconditional appearance, "the defendant submits to the jurisdiction of the court and waives any objection to it hearing and determining the proceeding." Civil ProcedureVictoria, ord. I 8.02.15 (Austl.).
Appellant filed an unconditional appearance, thereby consenting to the jurisdiction of the Australian court. Appellant also invoked the jurisdiction of the Australian court by filing a counterclaim seeking affirmative relief. Appellant's first objection to jurisdiction came when Appellee filed the judgment for recognition in Texas. Appellant's actions in the Australian lawsuit subjected him to the jurisdiction of the Australian court and would have had the same effect under Texas law.
By filing an unconditional appearance in Australia, Appellant waived his right to assert lack of personal jurisdiction as a ground for nonrecognition under the Recognition Act. Appellant had the opportunity to contest the Australian court's exercise of personal jurisdiction over him, but elected not to do so. He may not now attack the Australian *482 judgment on that basis. See John Sanderson & Co., 569 F.2d at 699; Enterprise-Laredo Assoc. v. Hachar's Inc., 839 S.W.2d 822, 835 (Tex.App.San Antonio), writ denied, 843 S.W.2d 476 (Tex.1992). Point of error two is overruled.
In his third point of error, Appellant claims the trial court should have found mandatory nonrecognition on the grounds that the Australian court lacked subject matter jurisdiction over the lawsuit. Appellant points to the forum selection clause within the contract at issue that stated that all disputes were to be submitted to the courts of Vanuatu.
When enforcing forum selection clauses, Texas courts have held that a forum selection clause does not deprive a court of subject matter or personal jurisdiction. See General Resources Org., Inc. v. Deadman, 907 S.W.2d 22, 27 (Tex.App.San Antonio 1995), writ denied, 932 S.W.2d 485 (Tex.1996); Greenwood v. Tillamook Country Smoker, Inc., 857 S.W.2d 654, 657 (Tex.App.Houston [1st Dist.] 1993, no writ); Barnette v. United Research Co., 823 S.W.2d 368, 370 (Tex. App.Dallas 1991, writ denied).
The forum selection clause at issue in this case did not deprive the Australian court of jurisdiction over the subject matter of Appellee's claims against Appellant. The Australian court properly exercised its jurisdiction to resolve a dispute between Australian citizens concerning a contract to develop real property located in Australia. Point of error three is overruled.
In point of error four, Appellant claims the trial court abused its discretion by recognizing the Australian judgment when "the proceeding in the foreign country court was contrary to an agreement between the parties under which the dispute in question was to be settled otherwise than by proceedings in that court." TEX. CIV. PRAC. & REM.CODE ANN. § 36.005(b)(5). The Texas Supreme Court has recognized that contracting parties may agree that the law of a particular state will apply to the contract, so long as the chosen law bears a relationship to the agreement or parties and does not contravene the public policy of the forum. See DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 677 (Tex. 1990) (op. on reh'g), cert. denied, 498 U.S. 1048, 111 S. Ct. 755, 112 L. Ed. 2d 775 (1991). The provisions of a forum selection clause may be waived just as any other contractual right. See Purvis Oil Corp. v. Hillin, 890 S.W.2d 931, 937 (Tex.App.El Paso 1994, no writ).
While the contract between Appellant and Appellee specified that disputes would be submitted to the courts of Vanuatu, neither party sought to enforce that right. Appellee waived his right by filing suit in Australia. Appellant in turn elected to waive his right by making an unconditional appearance and by filing a counter-claim seeking affirmative relief in the Australian court. Having failed to contest the issue in the Australian court, Appellant cannot now assert it as a basis for nonrecognition. Point of error four is overruled.
In point of error five, Appellant claims the trial court abused its discretion by recognizing a foreign judgment that was "based only on personal service, the foreign country court [being] a seriously inconvenient forum for the trial of the action." See TEX. CIV. PRAC. & REM.CODE ANN. § 36.005(b)(6). In this case, the Australian court's jurisdiction over Appellant was based on his unconditional appearance, filing of a counter-claim, and personal service. Thus, the claimed provision of the Recognition Act does not apply.
Furthermore, the convenience of the forum must be determined by examining the facts as they existed at the time suit was filed.[2] Appellant was a resident and citizen of Australia when Appellee filed suit, and *483 the agreement that formed the basis of the action related to the development of real property located in Australia. Therefore, the trial court did not abuse its discretion in rejecting nonrecognition based on an inconvenient forum. Point of error five is overruled.
Motion for Continuance
In his sixth point of error, Appellant contends that the trial court abused its discretion by denying his motion for continuance. To preserve error for our review, a party must make a timely objection and obtain an adverse ruling. See Tex.R.App. P. 52(a); Bushell v. Dean, 803 S.W.2d 711, 712 (Tex.1991) (op. on reh'g). Appellant failed to obtain a ruling from the trial court on his motion for continuance and therefore, failed to preserve error. See Rangel v. State Bar of Texas, 898 S.W.2d 1, 3 (Tex.App.San Antonio 1995, no writ) (refusing to consider appellant's complaints with respect to motion for continuance because trial court did not rule on motion). Point of error six is overruled.
Conclusion
Having overruled Appellant's points of error, the judgment of the trial court is affirmed.
NOTES
[1] The remainder of order 47.02 provides:
(2) [Supreme Court only] Any other proceeding shall be tried without a jury, unless the Court otherwise orders.
(3) Notwithstanding any signification under paragraph (1), the Court may direct trial without a jury if in its opinion the proceeding should not in all the circumstances be tried before a jury.
(4) Trial with a jury shall be with a jury of six. General Rules of Procedure in Civil Proceedings, 1986, ord. 47.02 (Austl.) (emphasis added).
[2] This section of the Recognition Act "authorizes a court to refuse recognition and enforcement of a judgment rendered in a foreign country on the basis only of personal service when it believes the original action should have been dismissed by the court in the foreign country on grounds of forum non conveniens." UNIF. FOREIGN MONEY-JUDGMENTS RECOGNITION Act § 4 cmt., 13 U.L.A. 268 (1986). Under Texas law, a motion to dismiss for forum non conveniens must be filed before or concurrently with a defendant's first plea, pleading, or motion. See TEX. CIV. PRAC. & REM.CODE ANN. § 71.051(e)(Vernon 1997); TEX.R. CIV. P. 86(1). Accordingly, courts evaluate the convenience of the forum considering the facts at that time. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1315198/ | 180 Kan. 291 (1956)
303 P.2d 186
WILLIAM L. POOL, et al., Appellees,
v.
H.C. HOLT, et al., Appellants.
No. 40,441
Supreme Court of Kansas.
Opinion filed November 3, 1956.
Payne H. Ratner, of Wichita, argued the cause, and Louise Mattox, Payne H. Ratner, Jr., Russell Cranmer, Dale B. Stinson, Jr., Cliff W. Ratner, William L. Fry, A. Wayne Murphy, Ray A. Overpeck, Bernard V. Borst, and D. Clifford Allison, all of Wichita, were with him on the briefs for the appellants.
Douglas Hudson, of Fort Scott, argued the cause, and Howard Hudson, and Douglas G. Hudson, both of Fort Scott, were with him on the briefs for the appellees.
The opinion of the court was delivered by
ROBB, J.:
This appeal is taken from an order of the trial court overruling the demurrers of defendants to plaintiffs' petition seeking to enjoin the sale and issuance of bonds by a rural high school district.
For clarity we will continue to refer herein to appellees as plaintiffs and to appellants as defendants.
The pertinent parts of plaintiffs' petition with which we are here concerned were that on November 30, 1954, an election was held in rural high school district No. 4, Bourbon county, whereby a $300,000 bond issue was authorized. At the time what is now part of common school district No. 92, Bourbon county, was included in district No. 4. On March 21, 1956, bonds No. 16 to No. 300, inclusive, totaling $285,000, which were a portion of the $300,000 authorized, were registered by district No. 4 with the state auditor.
Further allegations showed that on March 26, 1956, the electors *292 of common school district No. 99, Bourbon county, which was then a part of district No. 4, at a legal special election voted to annex all of the territory of that district to district No. 92. On April 25, 1956, the state superintendent of public instruction in accordance with law eliminated this territory from district No. 4 and placed it in district No. 92 for all purposes. The plaintiffs are the owners and taxpayers of this excluded territory.
It was alleged that none of the bonds authorized at the bond election or registered with the state auditor had been issued by defendants.
It was also alleged that any bonds which may be sold and issued by defendants shall be and become a lien and first mortgage only on the property which constitutes a part of district No. 4 at the time of the issuance of the bonds.
The defendants filed a general demurrer to this petition on the ground that the petition did not state facts sufficient to constitute a cause of action in favor of the plaintiffs and against defendants and they also filed a special demurrer on the ground that the plaintiffs had no legal capacity to sue.
These demurrers were overruled on June 15, 1956, by a memorandum opinion in which the trial court stated,
"The petition attempts to assert two causes of action, one to declare the Plaintiffs' property not liable for the lien of the bonds if and when they are issued. The other is to enjoin the sale of the bonds.. .,"
and also stated,
"This presents a clear-cut issue as to whether the bonds have been issued."
The memorandum opinion of the trial court further read:
"However, the Supreme Court of the State of Kansas seems to have laid down a definite rule to be followed in determining this fact. In State vs. Pierce, 52 Kan. 521, the decision recites:
"`To issue county warrants or orders means "to send out, to deliver or to put into circulation."'
"Commenting upon the case the Supreme Court concludes:
"`To issue county warrants or orders means "to send out; to deliver; to put forth; to put into circulation; to emit as to issue bank notes, bonds, scrip," etc. A County warrant or order is "issued" when made out and placed in the hands of a person authorized to receive it, or is actually delivered or taken away. So long as a county warrant or order is not delivered or put into circulation, it is not "issued," within the terms of P. 1888.'
"State vs. Pierce,
"52 Kan. 521, 528-529.
"In Steinbruck vs. Milford Township, 100 Kan. 93, we find:
*293 "`As to when bonds are deemed to be issued, see The State v. Pierce, 52 Kan. 521, 35 P. 19; Perkins County v. Graff, 114 Fed. 441, 444, 4 Words & Phrases, p. 3778; 8 Words & Phrases, p. 7693; Webster's International Dictionary. Numerous other points are presented, but the one already considered is determinative and the others need not be discussed.' (p. 94.)
"In Buckwalter vs. Henrion, 118 Kan. 13, on page 15 the court quotes with approval from an authority as follows:
"`It may be laid down that as a general rule the date of delivery of the bonds by the municipality to the creditor or purchaser is to be regarded as the date of issue.'
"As late as State, ex rel., vs. Woodruff, 164 Kan. 339, our Supreme Court has approved that measure of determining when bonds are issued, quoting as the law with reference to bonds, `to deliver, or give out, as for use; as to issue provisions ... To send out officially; ... to put into circulation ...,' and quoting as authority the cases heretofore cited.
"It is very evident, therefore, that the $285,000 worth of bonds are not `issued' within the terms of the statute and the law of the State of Kansas. Therefore, they will not be a lien upon the Plaintiff's real estate if and when they are sold in the sum of $285,000 or any lesser sum. The Plaintiffs' Petition states a good cause of action on that ground.
"Referring to the second phase of the Petition, the Plaintiffs' land not being subject to the lien of the bonds, it is no concern of the Plaintiffs when and in what manner they are issued. Therefore, the Demurrer would be good as to this part of the Petition. However, as hereinbefore cited, if the Petition is good in any particular, the Demurrer must be overruled.
"The Demurrer of the Defendants is accordingly overruled."
A notice of appeal was served and thus the case comes before us for consideration.
We are first met with plaintiffs' motion to dismiss the appeal. We have examined the record with special attention to the contentions set out in the motion to dismiss, but we find no merit in the contentions and that motion is overruled.
Both parties to this appeal have raised much extraneous and redundant matter which will not be considered in this opinion.
There can be no quarrel with the authorities cited by the trial court in its memorandum opinion, quoted above, upon which it based its determination that the bonds had not been issued. These authorities need not be restated here (see, also, State, ex rel., v. School Board, 110 Kan. 779, 782, 204 P. 742) but we will consider further its final determination of the demurrers.
We can find no grounds, nor are there any proposed in the record, for the conclusion of the trial court that since the petition in effect sets out that if the bonds are issued the property of plaintiffs will not be liable for the lien of the bonds, it states a cause of action. *294 Let us assume, without granting, that the trial court's interpretation has merit. In Lewis v. City of South Hutchinson, 162 Kan. 104, 117, 174 P.2d 51, this court said,
"... the petition alleges nothing more than that the proposed bonds will become conclusively valid, negotiable obligations of the city unless the defendants are restrained from proceeding to register the bonds as authorized by law. Of course, the allegations to such effect state no reason which would justify the restraint of the defendants." (p. 117.)
The provisions of the statute (G.S. 1949, 10-119) are clear and unequivocal that whenever a part of the territory of any municipality has been detached and attached to some other municipality such territory shall be liable for the payment of all bonds issued before such detachment. (See, also, G.S. 1955 Supp. 24-131 and 72-834 in which reference is made to G.S. 1949, 10-119.) We can say nothing that will lend impetus to this plain legislative mandate. (For an applicable case see Pessemier v. Plummer, 135 Kan. 429, 432, 10 P.2d 887.) In State, ex rel., v. Lost Springs Rural High School District, 176 Kan. 378, 384, 271 P.2d 812, there was a similar situation. However, the detached territory in that case was not subject to being taxed by the district from which it was detached but was liable to be taxed by the district to which it was attached. On page 385 of that opinion this court stated, in substance, that such attachment unless limited by statute and we note that no such statute exists here is for all purposes even though the attached territory may be included in some type of high school district.
Under the allegations of the petition we are still confronted with the proposition that the bonds have not yet been issued and under the latter discussion the state is the only proper party to bring such an action. (Haines v. Rural High School Dist. No. 3, 171 Kan. 271, 232 P.2d 437.) Thus we must hold that plaintiffs are not proper parties to maintain this action. To do otherwise would create endless confusion.
Since plaintiffs are not proper parties to maintain this action, which fact appears on the face of the petition, the special demurrer should have been sustained to the entitre petition and in view of the over-all result, the general demurrer should also have been sustained.
The order of the trial court is reversed with directions to sustain defendants' demurrers to plaintiffs' petition.
FATZER, J., not participating. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1641507/ | 6 So. 3d 613 (2009)
GIBSON
v.
STATE.
No. 2D07-5136.
District Court of Appeal of Florida, Second District.
April 8, 2009.
Decision without published opinion. Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2520056/ | 82 P.3d 269 (2003)
2003 WY 164
Darell Ten BROEK and Bonnie Ten Brock, and Barbara G. Chaney and Jay S. Chaney, Trustees of the Barbara G. Chaney Living Trust, Dated October 3, 1997, Appellants (Defendants),
v.
COUNTY OF WASHAKIE, Appellee (Plaintiff).
No. 03-45.
Supreme Court of Wyoming.
December 22, 2003.
Representing Appellants: Kent A. Richins, Worland, Wyoming.
Representing Appellee: G. Albert Sinn, Washakie County Attorney, Worland, Wyoming.
Before HILL, C.J., and GOLDEN, LEHMAN, KITE, and VOIGT, JJ.
HILL, Chief Justice.
[¶ 1] Darell and Bonnie Ten Broek, along with Barbara G. and Jay S. Chaney as trustees of the Barbara G. Chaney Living Trust (collectively the Defendants), appeal an order of the district court on a complaint for declaratory judgment filed by the County of Washakie (the County) to establish a stock trail over a portion of their land pursuant to a prescriptive easement. We conclude that a declaratory judgment is not the appropriate means to establish a prescriptive public easement because the legislature has established a specific statutory procedure that requires such claims to be brought initially before the respective board of county commissioners. Accordingly, we vacate the district court's order and reverse and remand with directions to dismiss the County's complaint without prejudice.
ISSUES
[¶ 2] The Defendants set forth two issues:
1. Did the district court commit reversible error when, as a matter of law, it concluded that Washakie County does have legal authority to establish a public stock trail by prescriptive easement on private property?
2. Are the findings and conclusions of the district court that a public stock trail has been established by Washakie County on private property by prescriptive easement clearly erroneous, not supported by substantial evidence and contrary to law?
The County's statement of the issues parallels that of the Defendants.
FACTS
[¶ 3] The Defendants own land in Washakie County. In October 1999, the Defendants, acting individually, purchased small strips of property adjacent to their own land. The purchased property lay between the Defendants' *270 land and U.S. Highway 16.[1] The property was in a state of neglect with sinkholes, dilapidated fences, overgrowing vegetation and abandoned vehicles on it. The Defendants cleaned up the property and moved their fence lines to encompass their purchases.
[¶ 4] In June 2000, the County filed a Declaratory Judgment action against the Defendants. The County alleged that the property purchased by the Defendants had been designated in historical documents as a stock trail. The County also asserted that the public had used the property as a stock trail continuously since at least 1904 and that the fencing of it interfered with that use. The County requested a declaration from the district court that the property was subject to an easement for a stock drive as part of the adjacent road and that the Defendants be ordered to relocate their fences. An unrecorded hearing was held before the district court. On May 4, 2001, the district court issued a decision letter concluding that the County had established a prescriptive easement over the Defendants' property. The district court held two more hearings where additional evidence was taken in response to motions for reconsideration and for rehearing filed by the Defendants. The district court issued an order on December 18, 2002 confirming its original conclusion that the County had established a prescriptive easement. The Defendants have appealed that order.
STANDARD OF REVIEW
[¶ 5] When a matter is tried before the district court without a jury, we review the court's findings of fact pursuant to a clearly erroneous standard. Any conclusions of law are reviewed de novo. Davis v. Chadwick, 2002 WY 157, ¶ 8, 55 P.3d 1267, ¶ 8 (Wyo.2002).
DISCUSSION
[¶ 6] The Defendants' main argument is that the County does not have any legal authority to establish a stock trail by prescription across private property.[2] The underlying premise to the argument is that there is no specific statutory provision authorizing a county to bring an action to establish a public stock trail by prescription. Under the facts of this case, the Defendants' argument is one of semantics. The phrase "stock trail" is just descriptive of a public use on the adjacent road. In other words, the County is claiming that the public has used U.S. Highway 16, also called Big Horn County Road No. 91, and the portion of the Defendants' land adjacent to that road to drive livestock. The allegations in the County's complaint clearly demonstrate the relationship between the Defendants' property and the road:
1. The Defendant's [sic] in this matter are owners and/or trustees in fee simple of the areas on the South portion of Section 17, Township 47N, Range 88W.
2. During the late fall of 1999, the Defendants' [sic] Chaney, removed a pole and post fence and re-erected it some feet south, where it is presently located.
3. Defendants' [sic] Ten Broek, built a post and wire fence some feet south from an old highway right-of-way fence, where it is presently located.
4. The Washakie County Commissioners commissioned R.L. Hudson, Land Surveyor, to survey this area which he did and a Letter of Transmittal and Report of Surveyor dated March 22, 2000, was given to the Washakie County Commissioners.
5. The Big Horn County Commissioners on or about July 6, 1904, declared the area on the boundary line between Section 17 and Section 20, in Tracts 65 and 55, and 56 of the re-survey Township 47N, Range 88W, to be a county road.
*271 6. A notation appears on the 1910 Plat of Ten Sleep, Big Horn County, Wyoming, on file in the Washakie County Clerk's Office, which labels this road as main street with a 66 foot right-of way centered on the section line center of county road with a bearing of S89, 42 minutes west. The road was reconstructed in 1922 and designated as a state highway on November 25, 1929, under project number 108E. The location was easterly along the tract line, then north easterly through a curve to the left and then a curve to the right in the vicinity of the Ten Broek and Chaney property lines.
7. That highway was in use until approximately 1936, when highway 16 was constructed in its present location and designated as such on November 28, 1939, still under project number 108E.
8. U.S. Highway 16 was re-constructed in the 1960's [sic] under project F-036-1(17) on which plan the road in question was noted as a stock drive.
9. The minutes of the Washakie County Board of Commissioners meeting on September 1, 1936, record a motion by Commissioner Horel, and its adoption whereby;
"Whereas a new highway is being constructed from Big Cottonwood Creek to Ten Sleep, Wyoming, re replace from said Cottonwood Creek to Ten Sleep, the present highway No.1 16;" and "Whereas, the State Highway Department of the State of Wyoming is agreeable to leaving in place the old treated timber bridges and all of the culverts on the present Worland-Ten Sleep road from Big Cottonwood Creek into Ten Sleep provided that said present road is designated as a stock driveway and cattle run instead of the new road which is in the process of construction; now therefore, Be it Resolved by the Board of County Commissioners of the County of Washakie, State of Wyoming, that the present Worland-Ten Sleep road, being highway No. 16, from Big Cottonwood Creek into Ten Sleep, be and the same is hereby designated as a stock driveway and cattle run."
10. A Warranty Deed from Nichols to a prior predecessor of the Defendants, the Wyoming Game and Fish Commission, recorded in 1944, contains a metes and bounds description concerning the Ten Broek lands that mentions a fence line. The existence of the old fence line varies between 33 and 23 feet north of the tract line prior to March 4, 1944.
11. A certified land corner recordation report prepared by Mr. Stanton Able, Licensed Professional Surveyor for the State of Wyoming, recorded on February 4, 1985, for corner 4 of tract 54, also being corner 1 of tract 56, states that corner as being 31 feet from the north fence. The map on the reverse side dated December 19, 1984, indicates a fence to exist along the north side of the old highway route.
12. R.L. Hudson's State of Wyoming Corner Report also shows a tie to one remaining old fence post north of the road to be 31 feet north of the tract line having been measured by Hudson on March 16, 2000.
13. The stock drive has been used as a public road and stock drive continuously since 1904 for parking cars, rodeo events, football games, driving livestock, etc. Livestock has been [sic] driven through the north 33 feet of the stock drive continuously since before 1937.
14. Sometime in the fall of 1999, the Defendants removed the old fence with the exception of one fence post on the North side and re-erected new fences further south into the 66 foot stock drive.
15. The Chaney fence encloses approximately.15 acres of the stock drive, thereby eliminating any use by the public.
16. The Ten Broek fence encloses approximately.75 acres of the stock drive, thereby eliminating any use by the public.
Whatever label is attached, the County is claiming that a portion of the Defendants' property is part of the adjacent road designated as U.S. Highway 16/Big Horn County *272 Road No. 91.[3] The parties agree that the resolution of that claim is dependent on whether the County established a prescriptive use across the Defendants' property. The legislature has specifically granted counties the right to establish public highways, including by prescription. Wyo. Stat. Ann. § 24-1-101 (Lexis/Nexis 2003). Accordingly, we reject the Defendants' contention that the County lacked the authority to establish the "stock trail" in question across their lands through the common law doctrine of prescription.
[¶ 7] We must, however, reverse and vacate the district court's decision granting the prescriptive easement to the County. As noted in the facts above, the County prosecuted this action through a declaratory judgment claim brought in the district court. The legislature has established a specific procedure for the establishment of a public road by prescription in the above-mentioned Wyo. Stat. Ann. § 24-1-101, which provides:
(a) On and after January 1, 1924, all roads within this state shall be highways, which have been or may be declared by law to be state or county highways. It shall be the duty of the several boards of county commissioners, within their respective counties, prior to said date, to determine what, if any, such roads now or heretofore traveled but not heretofore officially established and recorded, are necessary or important for the public use as permanent roads, and to cause such roads to be recorded, or if need be laid out, established and recorded, and all roads recorded as aforesaid, shall be highways. No other roads shall be highways unless and until lawfully established as such by official authority. Except, nothing contained herein shall be construed as preventing the creation or establishment of a public highway right-of-way with reference to state and county highways under the common-law doctrines of adverse possession or prescription either prior to or subsequent to the enactment hereof. If any such board shall resolve the creation or establishment of a public highway right-of-way based upon the common-law doctrines of adverse possession or prescription, it shall, following the filing of a plat and accurate survey required in accordance with the terms and provisions of W.S. 24-3-109, proceed with the publication of the proposed road for three (3) successive weeks in three (3) successive issues of some official newspaper published in the county, if any such there be, and if no newspaper be published therein, such notice shall be posted in at least three (3) public places along the line of the proposed road, which notice shall be exclusive of all other notices and may be in the following form:
[Form omitted]
(b) The county commissioners shall cause a copy of the above notice to be mailed by registered or certified mail to all persons owning lands or claiming any interest in any lands over or across which the road is proposed to be created or established. The publication, posting and mailings of such notice shall be a legal and sufficient notice to all persons owning lands or claiming any interest in lands over which the proposed road is to be created or established. No viewers or appraisers shall be appointed, nor shall any damage claims be considered or heard, and the sole objections to be heard by the board shall be directed against the creation or establishment of such right-of-way under the common-law doctrines of adverse possession or prescription. Any objector may appeal from the final decision of the board of the county commissioners to the district court of the county in which the land is situated. Notice of such appeal must be made to the county clerk within thirty (30) days after such decision has been made by the board, or such claim shall be deemed to have been abandoned. *273 Within ten (10) days after the notice of an appeal is filed in his office, the county clerk shall make out and file in the office of the clerk of the district court, in his county, a transcript of the papers on file in his office, and the proceedings of the board in relation to such creation and establishment. The proceedings on appeal shall be governed by the Wyoming Administrative Procedure Act. If the appeal is upheld the appellant shall be reimbursed by the county for all reasonable costs of asserting his claim.
(c) Only that portion of the state highways actually used, travelled or fenced, which has been used by the general public for a period of ten (10) years or longer, either prior to or subsequent to the enactment hereof, shall be presumed to be public highways lawfully established as such by official authority and unavailability of records to show such to have been lawfully established shall not rebut this presumption.
(d) Only that portion of county highways, not to exceed sixty-six (66) feet in width, which was actually constructed or substantially maintained by the county and traveled and used by the general public for a period of ten (10) years or longer, either prior to or subsequent to the enactment hereof, shall be presumed to be public highways lawfully established as such by official authority.
The County asserts that a declaratory judgment action is an appropriate means of determining this matter. The County notes that a declaratory judgment action is a remedial action that is to be liberally construed and applied. It also argues that the Defendants were provided with procedural and substantive due process in the proceedings before the district court.
[¶ 8] The problem with the County's approach is that it takes the authority to make the initial decision away from the legislatively designated body and places that authority with the entity that was legislatively designated as the appellate court in the matter. We have addressed this very issue before and clearly stated that it is not a proper utilization of a declaratory judgment action:
However, the added element which may be considered in cases such as this is the status of a declaratory judgment action filed in a court which is an appellate court for the same issue presented, or able to be presented, below. Here the declaratory judgment action was filed in the district court. The district court is designated the appellate court for judicial review of administrative actions.
Ordinarily, a declaratory judgment action is not a substitute for an appeal. School Districts Nos. 2, 3, 6, 9, and 10, Campbell County v. Cook, Wyo., 424 P.2d 751 (1967); Stahl v. Wilson, Fla.App., 121 So.2d 662 (1960); Sparks v. Brock & Blevins, Inc., 274 Ala. 147, 145 So.2d 844 (1962); and Bryarly v. State, 232 Ind. 47, 111 N.E.2d 277 (1953). But such direct action is often available "even though there was a statutory method of appeal," School Districts Nos. 2, 3, 6, 9, and 10, Campbell County v. Cook, supra, 424 P.2d at 755. Here, there is no appeal actually pending and the issues are not moot.
However, there is a restriction on the availability of a declaratory judgment action with reference to its applicability to administrative matters. Where the action would result in a prejudging of issues that should be decided in the first instance by an administrative body, it should not lie. This is because, if it be otherwise, all decisions by the several agencies could be bypassed, and the district court would be administering the activities of the executive branch of the government. Public Service Commission of Utah v. Wycoff Co., 344 U.S. 237, 73 S.Ct. 236, 97 L.Ed. 291 (1952); and City of Cheyenne v. Sims, Wyo., 521 P.2d 1347 (1974). This restriction on the scope of declaratory judgments is akin to the requirement that administrative remedies must be exhausted before judicial relief is available.
Accordingly, where the relief desired is in the nature of a substitution of judicial decision for that of the agency on issues pertaining to the administration of the subject matter for which the agency was created, *274 the action should not be entertained. If, however, such desired relief concerns the validity and construction of agency regulations, or if it concerns the constitutionality or interpretation of a statute upon which the administrative action is, or is to be, based, the action should be entertained. This is no more than that obviously and plainly provided for in the language of the Uniform Declaratory Judgments Act.
Rocky Mountain Oil and Gas Association v. State, 645 P.2d 1163, 1168-69 (Wyo.1982). See also, City of Cheyenne v. Sims, 521 P.2d 1347, 1349-50 (Wyo.1974) ("Declaratory judgment should not be used to usurp or replace specific administrative relief, particularly when the initial decision is committed to an administrative body.") A board of county commissioners is considered an agency under the Wyoming Administrative Procedure Act. Wyo. Stat. Ann. § 16-3-101(b)(i) (Lexis/Nexis 2003); Holding's Little America v. Board of County Commissioners of Laramie County, 670 P.2d 699, 701-02 (Wyo.1983). The subject of the County's action does not concern the validity or construction of an agency regulation or the constitutionality or interpretation of a statute. Rather, the relief requested by the County in this matter pertains to a matter that has been legislatively consigned to determination by an administrative agency. The use of a declaratory judgment action in these circumstances was improper.
CONCLUSION
[¶ 9] Since the proper procedures were not followed, we vacate the district court's order and reverse and remand the matter to the district court with instructions to dismiss the County's complaint. The County may pursue its claim, if it desires, as directed by Wyo. Stat. Ann. § 24-1-101.
NOTES
[1] The highway was designated a county road by the Big Horn County Commissioners in 1906. Washakie County was created out of part of Big Horn County in 1911. The highway is still referred to as Big Horn County Road No. 91.
[2] The Defendants' second issue challenges the sufficiency of the evidence supporting the district court's ruling. Given our conclusion that a county may not use a declaratory judgment action to establish a prescriptive easement, the issue is moot, and we will not address it in this appeal.
[3] We note that in Wyoming stock may be driven on any county road unless the respective board of county commissioners has specifically declared that a certain road is not to be used for that purpose. See Wyo. Stat. Ann. §§ 24-1-121 & 122 (Lexis/Nexis 2003). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2329457/ | 666 F.Supp.2d 693 (2009)
Jacquelyn PEDIGO, on Behalf of herself and Others Similarly Situated, Plaintiff,
v.
3003 SOUTH LAMAR, LLP, d/b/a Alligator Grill, Defendant.
Cause No. A-08-CA-803-JRN.
United States District Court, W.D. Texas, Austin Division.
October 30, 2009.
*694 Richard J. Burch, Bruckner Burch PLLC, Houston, TX, Robert R. Debes, Jr., Debes Law Firm, Houston, TX, for Plaintiff.
ORDER
JAMES R. NOWLIN, District Judge.
Before the Court in the above-entitled and styled cause of action are Plaintiffs Opposed Motion for Conditional Certification and Notice to Potential Class Members (Doc. #31), filed October 1, 2009; Defendant's Response (Doc. #33), filed October 12, 2009; and Plaintiffs Reply (Doc. # 37), filed October 15, 2009. After a studied review of the parties' arguments and the applicable law, the Court is of the opinion that the Motion to Conditionally Certify should be granted.[1]
*695 I. FACTUAL AND PROCEDURAL BACKGROUND
Defendant 3003 South Lamar, LLP (hereinafter "Defendant") operates a Cajun-style restaurant in Austin, Texas, which is doing business as Alligator Grill. See, Pl. Mot. (Doc. # 31) at 2. Plaintiff and named putative class representative Jacquelyn Pedigo (hereinafter "Plaintiff") is a former waitress and bartender at Alligator Grill. Id. and Ex. 1. On October 29, 2008, Plaintiff filed the present lawsuit alleging Defendant violated numerous provisions of the Fair Labor Standards Act (FLSA).
It is necessary to preface that the FLSA requires employers to pay employees a minimum wage of $7.25 an hour. See, 29 U.S.C. § 206(a)(1)(C). However, under section 203(m), employers are permitted to take advantage of a "tip credit" in order to meet the federal minimum wage requirements with respect to tipped employees. See, 29 U.S.C. § 203(m)(1)-(2). Subject to certain conditions, an employer may pay a tipped employee $2.13 per hour if the employee makes at least the minimum wage when the wages paid and the tips earned are combined. Id.
Specifically, there are two prerequisites employers must meet to be eligible for the "tip credit": (1) the employer must inform the employee of the provisions in section 203(m); and (2) all tips received by such employee must be retained by the employee, "except that [§ 203(m)] shall not be construed to prohibit the pooling of tips among employees who customarily and regularly receive tips." Id. If the employer fails to meet both prerequisites, it is not eligible to take the tip credit, and as a result, the employer must pay each employee the full minimum wage required under section 206. Additionally, numerous courts have held that if the employees are required to share their tips with employees who do not customarily and regularly receive tips then the employer cannot claim the tip credit. See, Pl. Mot. at 4 (citations omitted). Lastly, it is important to note that under section 207, an employer is still required to pay its tipped employees one and a half the regular rate of pay, i.e. $5.76 per hour, for all overtime hours worked. See, 29 U.S.C. § 207(a)(l).
As indicated, in the present case, Plaintiff alleges that Defendant violated three specific provisions of the FLSA. First, it is undisputed that Defendant pays its servers a direct wage of $2.13 per hour under the tip credit rule. See, Pl. Mot. at 2. However, the employee handbook explicitly requires every server to contribute a portion of their tips equal to 4% of their total net sales to a mandatory tip pool. Id. and Ex. 2. Plaintiff claims that the problem with this compensation system is that the employees who share in the tip pool impermissibly include expediters (expos), hostesses, dishwashers, prep cooks and nonservice bar backs because such employees do not customarily and regularly receive tips. Id. According to Tracy Barbarossa, a current waitress at Alligator Grill, this impermissible tip pool practice is evidenced by: (1) Defendant's pay report; (2) employees' own admissions; and (3) the fact that Defendant "gives out two paychecks to those employees who receive part of . . . the tip share: one check for the employee's hourly wage, and another check for the employee's share of the tip pool monies." *696 See, Pl. Mot. at Ex. 2; Ex. 1-B. As such, Plaintiff alleges that inclusion of dishwashers, prep cooks, and non-service bar backs in the tip pool violates the tip credit requirements of Section 3(m), and Defendant's resulting failure to pay its serves a direct wage of $7.25 per hours violates the minimum wage provisions of the FLSA. Id. at 4-5.
Second, it is undisputed that Defendant formerly failed to pay its servers and bartenders the appropriate overtime wages in violation of the FLSA overtime wage provisions. Id. at 5; Ex. 7, p. 42, lines 9-13; Ex. 9, p. 39, lines 20-25.[2] Finally, it is further undisputed that Defendant formerly required its servers to wear a particular shirt and/or apron, and that Defendant required its servers to pay $7.50 per shirt or apron. See, Pl. Mot. at Ex. 6, p.3 and 12; Ex. 8, pp. 35-37.[3] Plaintiff claims that this requirement effectively reduced servers' and bartenders' wages below the minimum wage required under the FLSA. Id. at 5 (citing 29 C.F.R. § 531.32).
Accordingly, on June 22, 2009, Plaintiff filed her Third Amended Complaint alleging that Defendant: (1) failed to pay Plaintiff the minimum wage required by the FLSA; (2) failed to pay Plaintiff the appropriate overtime wages required under the FLSA; and (3) made illegal deductions from Plaintiff's paycheck for uniforms in violation of the FLSA. See, Clerk's Docket #21. Based upon these three alleged FLSA violations, Plaintiffs present motion requests this Court to conditionally certify this case as a collective action and approve the issuance of notice to the putative class members in order, "to allow the employees similarly situated to [Plaintiff] to recover their unpaid minimum and overtime wages." See, Pl. Mot. at 1.
II. DISCUSSION
Section 216(b) of the FLSA creates a cause of action against employers who violate the overtime compensation and/or minimum wage requirements mandated in sections 206-207 discussed above. Section 216(b) also permits an employee to bring suit against an employer on "behalf of himself . . . And other employees similarly situated," i.e. a collective action. 29 U.S.C. § 216(b)(italics added).[4] "Although the Fifth Circuit has declined to adopt a specific test to determine when a court should certify a class or grant notice in a § 216(b) action, most federal courts . . . have adopted the Lusardi [v. Xerox Corp., 118 F.R.D. 351 (D.N.J.1987)] test when deciding these issues." Morales v. Thang Hung Corp., 2009 WL 2524601, at *2 (S.D.Tex. Aug. 14, 2009)(citing Mooney v. Aramco Servs. Co., 54 F.3d 1207, 1214 (5th Cir.1995), overruled on other grounds, Desert Palace, Inc. v. Costa, 539 U.S. 90, 90-91, 123 S.Ct. 2148, 156 L.Ed.2d 84(2003)).[5] Important to the present analysis, *697 this Court recently adopted the Lusardi test as the method for determining whether to certify a collective action under section 216(b). See, Gandhi v. Dell, Inc., No. A-08-CA-248-JRN, 2009 WL 1940144 (W.D.Tex. July 2, 2009)(Report and Recommendation adopted on August 4, 2009).
A. THE LUSARDI TEST
Under the Lusardi test, a district court approaches the question of whether the potential plaintiffs are "similarly situated" through an ad hoc two-stage analysis. Mooney, 54 F.3d at 1213. The two stages of the Lusardi test are the "notice stage" and the "decertification stage." Morales, 2009 WL 2524601, at *2 (citing Badgett v. Tex. Taco Cabana, L.P., 2006 WL 2934265, at *1 (S.D.Tex. Oct. 12, 2006)). "In the first stage, the Court must make an initial determination whether notice of the action should be sent to potential [opt-in] class members. This determination is based solely on the pleadings and affidavits." Bernal v. Vankar Enter., Inc., 2008 WL 791963, at *3 (W.D.Tex. March 24, 2008). Furthermore "this determination is made using a fairly lenient standard, and typically results in a `conditional certification' of a representative class." Mooney, 54 F.3d at 1214.[6]
"Once conditional certification is granted, the case proceeds through discovery as a representative action." Bernal, 2008 WL 791963, at *3. Upon completion of discovery and after notice has issued, the defendant may, if appropriate, file a motion for decertification, which initiates the second stage of the Lusardi analysis. Id. In this second stage, the Court must reexamine the class and make another factual determination under a more stringent standard as to whether the putative class members are, in fact, similarly situated. Id. "If [the class is similarly situated], then the representative action may proceed; if *698 not, then the class should be decertified, the opt-in plaintiffs dismissed [without prejudice], and the class representatives should be allowed to proceed on their individual claims." Id.; Albanil, 2008 WL 4937565, at *2.
The present case is still in the first stage, i.e. the notice stage. In the notice stage, "[t]he plaintiff bears the burden of making the preliminary factual showing that a similarly situated group of potential plaintiffs exists." Albanil v. Coast 2 Coast, Inc., 2008 WL 4937565, at *3 (S.D.Tex. Nov. 17, 2008)(citing Badgett, 2006 WL 2934265, at *2). "[T]he class member representatives must be similarly situated in terms of job requirements and similarly situated in terms of payment provisions." Ryan v. Staff Care, Inc., 497 F.Supp.2d 820, 824-825 (N.D.Tex. July 6, 2007). "However, the court `need not find uniformity in each and every aspect of employment to determine a class of employees are similarly situated (citations omitted).' The remedial nature of the FLSA and § 216 `militates strongly in favor of allowing cases to proceed collectively (citation omitted).'" Id. Therefore, "[t]he positions need not be identical but similar." Yaklin v. W-H Energy Servs., Inc., 2008 WL 1989795, at *3 (S.D.Tex. May 2, 2008).
Accordingly, in deciding whether to conditionally certify the class and give notice, "Plaintiffs simply must make, through their pleadings, and any affidavits,' substantial allegations that putative class members were together the victims of a single decision, policy or plan . . .'" Albanil, 2008 WL 4937565, at *6 (quoting Mooney, 54 F.3d at 1214). "Courts who have faced the question of whether movants have established substantial allegations have considered factors such as whether potential plaintiffs were identified; whether affidavits of potential plaintiffs were submitted; and whether evidence of a widespread discriminatory plan was submitted." H & R Block, Ltd. v. Housden, 186 F.R.D. 399, 400 (E.D.Tex.1999)(internal citations omitted). Ultimately, "[a] court may deny a plaintiffs right to proceed collectively only if the action arises from circumstances purely personal to the plaintiff, and not from any generally applicable rule, policy or practice." Ryan, 497 F.Supp.2d at 825 (quoting Donohue v. Francis Servs., Inc., 2004 WL 1161366, at *1 (E.D.La. May 24, 2004)).
B. CLASS MEMBERS ARE "SIMILARLY SITUATED"
Plaintiff has raised only two abbreviated objections to Plaintiffs request for conditional certification. First, in the present controversy, Defendant objects that, "all parties that are interested in being a part of this suit are already involved." See, Def. Reply at 2. However, contrary to Defendant's argument, the joinder of additional plaintiffs after the inception of the case is persuasive evidence that a putative class does exist. See, Shaffner v. Cash Register Sales & Serv. of Houston, 2006 WL 1007542, at *1 (S.D.Tex. Apr. 17, 2006).[7] In the present case, potential plaintiffs have been identified, and affidavits of potential plaintiffs have been submitted. Specifically, since the filing of the lawsuit, twelve current or former Alligator Grill employees have filed Notices of Consent to join a collective action. See, Clerks Docket # s 4 and 10.[8]*699 Four of the current employees who have subsequently joined the present lawsuit have filed affidavits supporting all of Plaintiffs allegations. See, Pl. Mot. At Ex. 2-5. Therefore, the record affirmatively establishes that other servers and bartenders desire to opt in to the class.
Equally important, Defendant has subsequently acknowledged that it underpaid overtime wages and may have improperly charged employees for their uniforms for the approximate four-year time period alleged in the present lawsuit. See, Pl. Mot. at Ex. 6, p.3 and 12; Ex. 7, p. 42, lines 9-13; Ex. 8, pp. 35-37; Ex. 9, p. 39, lines 20-25. As such, it is reasonable to presume that current and former employees would, if given notice, desire to seek compensation for the aforementioned underpayment of wages and allegedly improper charges. With these facts in mind, the Court is persuaded that a putative class does exist.
Furthermore, Plaintiff has presented evidence of a widespread plan to violate the FLSA. Specifically, with regard to Plaintiffs tip pool complaint, page 5 of the "Alligator Grill Team Member Manual" confirms that Defendant required a mandatory "Tip out" of "4% of total net sales." See, Pl. Mot. at Ex. 6, p.5. Additionally, Steven Wimberly, owner of Alligator Grill, and Paul Blanford, General Manager of Alligator Grill, both testified that the tip pool policy is mandatory for all bartenders and servers. See, Pl. Mot. at Ex. 7, p. 40, lines 12-20; Ex. 8, p. 47, lines 4-16. The Honorable Xavier Rodriguez has explained that, "Plaintiffs allegation that participation in the invalid tip pool was mandatory for all Defendants' bartenders is sufficient to meet the lenient standard for conditional certification." Bernal, 2008 WL 791963, at *4. As such, the allegations and evidence of mandatory participation in an invalid pool tip are more than sufficient to warrant conditional certification in the present case.
Additionally, with regards to plaintiffs overtime wages complaint, Mr. Wimberly and David Gebser, Bookkeeper for Alligator Grill, have both admitted that Defendant improperly underpaid Plaintiffs and other current and former employees' overtime wages. See, Pl. Mot. at Ex. 7, p. 42, lines 9-13; Ex. 9, p. 39, lines 20-25.[9] More specifically, Mr. Gebser acknowledged that the amount was "an error," and Mr. Wimberly acknowledged, "I think that we had made a mistake." Id. at Ex. 7, p. 42, lines 22-25; Ex. 9, p. 39, lines 20-25. The Court finds that Defendant's admissions are sufficient to support conditional certification. However, the Court also notes that as a result of Defendant's "mistake," the Department of Labor (DOL) conducted an audit of Defendant's pay practices. Id. at Ex. 7, p. 43. "Other courts have relied on DOL reports or audits as a grounds for certifying a collective action under § 216(b) based on the `similarly situated' requirement." Kuperman, 2008 WL 4809167, at *7. Therefore, the parties should be permitted to proceed through discovery, and be permitted to present evidence of the DOL audit at the decertification stage, if appropriate.
Lastly, with regard to Plaintiffs third claim, the Team Member Manual further confirms that, "Uniform requirements" include "Alligator T-shirt and black/dark apron (Employees will purchase shirts at cost) . . . Shirts are currently $7.50 for employees." See, Pl. Mot. at Ex. 6, p.3 and 12.[10] Moreover, Mr. Blanford has admitted that Defendant formerly required its servers and bartenders to purchase a *700 particular shirt and/or apron from Defendant for $7.50 per shirt or apron. Ex. 8, pp. 35-37. Therefore, for all of the above reasons, Plaintiff has made substantial allegations that putative class members were together the victims of a single decision, policy or plan that violated the FLSA.
Finally, Plaintiff has shown that the potential class members are similarly situated in terms of job requirements and similarly situated in terms of payment provisions. As illustrated in this Order, Plaintiff has, "amply demonstrated that Defendant's tip pool policy, overtime wage policy and uniform deduction policy applied to all waiters and bartenders." See, Pl. Reply at 2. Therefore, Plaintiff has shown that putative class members are similarly situated.[11]
Defendant's only objection in this regard is that the employees are not similarly situated because, "a number of the plaintiffs and the potential class members received income from the allegedly invalid tip pool, and that fact alone is enough to sufficiently distinguish claims in this case and preclude the conditional certification of a class." See, Def. Resp. at 1-2. First, Plaintiff is correct that, "Defendant fails to cite us to a single case wherein a court has held that certification is improper under these alleged circumstances." See, Pl. Reply at 1; See also, L.R. CV-7(d)("If any party opposes a motion, the respondent shall file a response . . . The response shall contain . . . citations of the specific legal authorities upon which the party relies."). Moreover, "This merely raises fact issues to be decided later and does not preclude conditional certification as Defendants argue." Bernal, 2008 WL 791963, at *3. Defendant may properly raise this issue, with supporting evidence and legal authorities, either in a subsequent motion for decertification or in a motion for summary judgment.
In sum, Plaintiff is correct that "[t]he attached declarations, depositions, and documentary evidence well establish that the wage policies were mandatory, applied to all members of Alligator Grill's service staff, that other servers wish to `opt in,' and that they are `similarly situated' to [Plaintiff]." See, Pl. Mot. at 8. Accordingly, the Court will conditionally certify a class that will include all waiters, waitresses and bartenders who worked at a single location of the Alligator Grill, i.e. 3003 South Lamar, from October 28, 2005 to the present, and suffered from the three alleged FLSA violations.
IT IS THEREFORE ORDERED that Plaintiff's Opposed Motion for Conditional Certification and Notice to Potential Class Members (Doc. # 31) is hereby GRANTED.
IT IS FURTHER ORDERED that the above-entitled case is hereby conditionally certified as a collective action.
IT IS FURTHER ORDERED that Defendant shall provide Plaintiff's counsel with a list of names and last known addresses for all waiters, waitresses, and bartenders employed by 3003 South Lamar, LLP d/b/a Alligator Grill during the period of October 28, 2005 to the present in electronic format within fourteen (14) days of this Order's issuance. Plaintiffs' counsel shall then send the Notice to Class and Consent Form, attached as Exhibit 11 to Plaintiff's Opposed Motion for Conditional Certification and Notice to Potential Class Members (Doc. # 31), to all potential class members.[12] Thereafter, the potential *701 class members shall have sixty (60) days from the date that Plaintiff's counsel mails the notice and consent forms to join the above-entitled case by filing a Notice of Consent form with the Court.
NOTES
[1] A district court has wide discretion in deciding whether to certify a class. Mullen v. Treasure Chest Casino, LLC, 186 F.3d 620, 624 (5th Cir.1999). "[T]he class determination generally involves considerations that are `enmeshed in the factual and legal issues comprising the plaintiff's cause of action. Sometimes the issues are plain enough from the pleadings. . ." (Gen. Tel. Co. of the Southwest v. Falcon, 457 U.S. 147, 160, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982)). Therefore, "a district court is not obliged to conduct an evidentiary hearing" on the issue of class certification. Bradford v. Sears, Roebuck & Co., 673 F.2d 792, 795 (5th Cir.1982); Merrill v. Southern Methodist Univ., 806 F.2d 600, 608 (5th Cir.1986).
Here, neither party has requested an evidentiary hearing. See, L.R. CV-7(g)("A movant or respondent may specifically request an oral hearing, but the allowance of an oral hearing shall be within the sole discretion of the judge to whom the motion is assigned."). Additionally, the Court is of the opinion that the issues determining whether a class can be conditionally certified are clear enough such that an evidentiary hearing is unnecessary.
[2] Mr. Wimberly testified that after the present lawsuit was filed, Defendant changed its policy with regard to the amount of overtime wages paid. See, Pl. Mot. at Ex. 1; Ex. 7, p. 42, lines 22-25.
[3] Paul Blanford, general manager of Alligator Grill, testified that after the present lawsuit was filed, Defendant stopped requiring employees to purchase uniforms and aprons. See, Pl. Mot. at Ex. 8, p. 37, lines 1-20.
[4] Employees who wish to participate in a § 216(b) collective action must affirmatively "opt in" by filing with the court a written consent to become a party. Id. To contrast, in a Rule 23 proceeding, persons within the class description are automatically considered class members and must "opt out" of the suit if they do not wish to participate, which is a "fundamental, irreconcilable" difference from § 216(b). LaChapelle v. Owens-Illinois, Inc., 513 F.2d 286, 288 (5th Cir.1975).
[5] District Courts within the Fifth Circuit, and District Courts within the Western District in particular, uniformly apply the Lusardi test. See, e.g, Kuperman v. ICF Intern., 2008 WL 4809167, at *5 (E.D.La. Nov. 3, 2008); Valcho v. Dallas County Hosp. Dist., 574 F.Supp.2d 618, 621 (N.D.Tex. Aug. 19, 2008); Treme v. HKA Enter., Inc., 2008 WL 941777, at *2 (W.D.La. April 7, 2008); Bernal v. Vankar Enter., Inc., 2008 WL 791963, at *3 (W.D.Tex. March 24, 2008); Hayes v. Laroy Thomas, Inc., 2006 WL 1004991, at *3 (E.D.Tex. April 18, 2006); England v. New Century Finan. Corp., 370 F.Supp.2d 504 (M.D.La.2005).
[6] Although neither party has addressed the issue, the Court acknowledges that several district courts have applied a more stringent "similarly situated" inquiry where parties have had the opportunity to conduct discovery on the issue of certification. Valcho, 574 F.Supp.2d at 622; Harris, 2006 WL 1994586, at *3. These district courts have explained that if substantial discovery has occurred then the rationale for a lenient standard is inapplicable, and the Court may proceed to the second stage of the analysis and consider the relevant factors to determine whether plaintiffs are similarly situated. Clary v. Southwest Airlines, 2007 WL 4947690, at *3 (N.D.Tex. Dec. 17, 2007).
First and foremost, this issue is being raised sua sponte. In the present case, Defendant has not requested the Court to bypass the initial notice stage and scrutinize Plaintiff's motion under the stricter decertification analysis. Regardless, "While such requests have been granted at times, they are ordinarily only granted when discovery is largely complete and the matter is ready for trial." Gandhi, 2009 WL 1940144, at *4. Here, the parties did not, as parties often do in such cases, agree to a scheduling order which explicitly contemplated discovery being conducted before a motion for class certification would be filed. Rather, the discovery period is not scheduled to expire for another six weeks on December 11, 2009, and as such, discovery is not complete. See, Clerk's Docket # 13. Furthermore, the case is not scheduled for trial until January of 2010, but a specific trial date has not been set yet. Id. Therefore, the matter is not ready for trial. Accordingly, the Court believes that it would be inappropriate to apply the stricter second-stage standard in this case. Nevertheless, the Court notes that Plaintiff has not just relied upon her pleadings but has submitted substantial evidence in support, and therefore, under either analysis, the result would be the same.
[7] See also, Kuperman v. ICF Intern., 2008 WL 4809167, at *6 (E.D.La. Nov. 3, 2008)("To Plaintiffs have opted in to this proposed collective action under § 216(b) since the filing of the instant motion, and thus certification at this point is appropriate."); Bernal, 2008 WL 791963, at *4 ("several plaintiffs have already opted in . . . It is clear from the pleadings, the affidavits and the additional plaintiffs that conditional certification is appropriate.").
[8] On December 24, 2008, Adrian Victorian filed a notice of consent, thereby making the count of potential plaintiffs thirteen. See, Clerk's Docket # 10. However, on April 22, 2009, the parties filed an agreed motion to dismiss Adrian Victorian without prejudice. Id. at # 18. The Court subsequently granted the motion to dismiss on April 23, 2009. Id. at # 19.
[9] Supra, note 2.
[10] Supra, note 3.
[11] Of course, "Discovery may clarify the need to create subclasses or narrow the class." Lopez v. Sam Kane Beef Processors, Inc., 2008 WL 565115, at *2 (S.D.Tex. Feb. 29, 2008). Of course, further discovery may also require decertification.
[12] The Court notes that in its Response to Plaintiff's Motion for Conditional Certification and Notice, Defendant did not raise any objections to the Notice and Consent Form attached as Exhibit 11 to Plaintiff's motion. After an independent review, the Court approves of the proposed form submitted as Exhibit 11. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2662818/ | UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
JUDICIAL WATCH, INC., )
)
Plaintiff, )
)
v. ) Civil Action No. 10-1834 (ABJ)
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NATIONAL ARCHIVES AND )
RECORDS ADMINISTRATION, )
)
Defendant. )
____________________________________)
MEMORANDUM OPINION
Plaintiff Judicial Watch, Inc. brings this action against defendant National Archives and
Records Administration (“NARA”) under the Administrative Procedure Act (“APA”), 5 U.S.C. §
701, et seq. Plaintiff asks the Court to declare audiotapes created by former President William
Jefferson Clinton and historian Taylor Branch during the Clinton administration to be
“Presidential records” under the Presidential Records Act (“PRA”), 44 U.S.C. § 2203(f), and to
order defendant “to assume custody and control” of them and deposit them in the Clinton
Presidential Library. Plaintiff contends that defendant has acted arbitrarily and capriciously
under the APA by failing to exercise control over the audiotapes and by not making them
available in response to a Freedom of Information Act (“FOIA”) request. Defendant has moved
to dismiss [Dkt. # 6] under Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction and
12(b)(6) for failure to state a claim upon which relief can be granted.
The Court will grant the motion to dismiss pursuant to Rule 12(b)(1) because plaintiff’s
claim is not redressable. NARA does not have the authority to designate materials as
“Presidential records,” NARA does not have the tapes in question, and NARA lacks any right,
duty, or means to seize control of them. In other words, there has been no showing that a remedy
would be available to redress plaintiff’s alleged injury even if the Court agreed with plaintiff’s
characterization of the materials. Since plaintiff is completely unable to identify anything the
Court could order the agency to do that the agency has any power, much less, a mandatory duty,
to do, the case must be dismissed.
I. BACKGROUND
A. Factual Background
According to plaintiff, President Clinton enlisted historian Taylor Branch to assist him in
creating “an oral history of his eight years in office.” Compl. ¶ 8. In 2009, Branch published a
book entitled, “The Clinton Tapes: Wrestling History with the President,” based upon extensive
conversations with President Clinton during his tenure in the White House and the events Branch
observed when he was in the President’s office. See Joe Klein, “Book Review: Bill Session,”
N.Y. Times (Sept. 25, 2009), http://www.nytimes.com/2009/09/27/books/review/Klein-t.html.
In 2010, plaintiff filed this action. [Dkt. #1]. Plaintiff avers that from January 20, 1993 to
January 20, 2001, Branch recorded seventy-nine audiotapes that “preserved not only President
Clinton’s thoughts and commentary on contemporaneous events and issues he was facing as
president, but, in some instances, recorded actual events such as presidential telephone
conversations.” Compl. ¶ 9.
Based on Branch’s book, plaintiff contends that the recordings captured a verbatim
record of President Clinton being President – performing his duties by engaging in conversations
while Branch happened to be there with the tape recorder running – as opposed to simply
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reflecting about the ongoing Presidency with the writer. 1 The gravamen of the complaint, then,
is that the tapes should have been included among the Presidential records transferred to the
Archivist of the United States at the end of the Clinton presidency, but President Clinton retained
them in his personal possession when he left office, and defendant is unable to produce them
now. Compl. ¶ 16. The parties agree that the audiotapes are not currently in the government’s
possession. Mot. to Dismiss Unedited Hr’g Tr. (“Tr.”) at 5:14–18, 28:19–29:2 (Oct. 14, 2011).
And the former President is not named as a party in this action.
B. The Presidential Records Act of 1978
Enacted in the wake of controversy surrounding the disposition of President Richard M.
Nixon’s Presidential records, the Presidential Records Act of 1978 (“PRA”), 44 U.S.C. §§ 2201–
2207 (2006), governs the preservation and disclosure of Presidential records. The PRA defines
“Presidential records” as:
[D]ocumentary materials, or any reasonably segregable portion thereof, created or
received by the President, his immediate staff, or a unit or individual of the
Executive Office of the President whose function is to advise and assist the
President, in the course of conducting activities which relate to or have an effect
1 The complaint alleges that the tapes captured a wide range of presidential matters,
including:
“potential changes to his cabinet, including whether to fire CIA Director R. James
Woolsey, Jr. and whether to nominate Madeleine Albright for Secretary of State;”
“foreign-policy decisions such as the United States’ military involvement in Haiti
and the contemplated relaxation of the United States’ embargo in Cuba;”
“President Clinton’s side of telephone conversations with foreign leaders, members
of the United States Senate, and cabinet secretaries;”
“President Clinton speaking to several members of the United States Senate in which
President Clinton attempted to persuade the Senators to vote against a specific
amendment before the Senate;”
“President Clinton’s side of a telephone conversation with Congressman William
Natcher of Kentucky in which President Clinton explained his reasoning for entering
into the North American Free Trade Agreement based on technical forecasts that he
received during presidential briefings;”
“President Clinton’s side of a telephone conversation with U.S. Secretary of State
Warren Christopher concerning a diplomatic impasse over Bosnia.” Compl. ¶ 11.
3
upon the carrying out of the constitutional, statutory, or other official or
ceremonial duties of the President.
44 U.S.C. § 2201(2). The statute provides that “[t]he United States shall reserve and retain
complete ownership, possession, and control of Presidential records,” id. § 2202, and it directs
the President to “take all such steps as may be necessary to assure that the activities,
deliberations, decisions, and policies that reflect the performance of his constitutional, statutory
or other official or ceremonial duties are adequately documented and that such records are
maintained as Presidential records,” id. § 2203(a).
The PRA distinguishes Presidential records from “personal records,” defining personal
records as “all documentary materials, or any reasonably segregable portion thereof, of a purely
private or nonpublic character which do not relate to or have an effect upon the carrying out of
the constitutional, statutory, or other official or ceremonial duties of the President.” Id.
§ 2201(3). The PRA provides that “diaries, journals or other personal notes serving as the
functional equivalent of a diary or journal which are not prepared or utilized for, or circulated or
communicated in the course of, transacting Governmental business” should be treated as
personal records. Id. § 2201(3)(A). The PRA requires that all materials produced or received by
the President, “to the extent practicable, be categorized as Presidential records or personal
records upon their creation or receipt and be filed separately.” Id. § 2203(b).
The categorization of the records during the Presidency controls what happens next: at
the conclusion of the President’s term, the Archivist is directed to “assume responsibility for the
custody, control, and preservation of, and access to, the Presidential records of that President.”
Id. § 2203(f)(1). The Archivist is required to “make such records available to the public as
rapidly and completely as possible consistent with the provisions of [the PRA].” Id. The statute
assigns the Archivist no role with respect to personal records once the Presidency concludes.
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As another court in this district has observed, “[t]he PRA incorporates an assumption
made by Congress (in 1978) that subsequent Presidents and Vice Presidents would comply with
the Act in good faith, and therefore Congress limited the scope of judicial review and provided
little oversight authority for the President and Vice President’s document preservation
decisions.” CREW v. Cheney, 593 F. Supp. 2d 194, 198 (D.D.C. 2009). Indeed, the PRA
permits the President to dispose of any Presidential records that “no longer have administrative,
historical, informational, or evidentiary value” after notifying the Archivist of the United States
and designated members of Congress of the proposed disposal. 44 U.S.C. § 2203(c),(d).
The PRA provides the Archivist with authority to invoke the same enforcement
mechanism found in another statute, the Federal Records Act (“FRA”). The PRA provides:
When the Archivist considers it to be in the public interest, he may exercise, with
respect to papers, documents, or other historical materials deposited under this
section, or otherwise, in a Presidential archival depository, all the functions and
responsibilities otherwise vested in him pertaining to Federal records or other
documentary materials in his custody or under his control.
44 U.S.C. § 2112(c). In addition, the FRA grants the Archivist authority to:
notify the head of a Federal agency of any actual, impending, or threatened
unlawful removal, defacing, alteration, or destruction of records in the custody of
the agency that shall come to his attention, and assist the head of the agency in
initiating action through the Attorney General for the recovery of records
wrongfully removed and for other redress provided by law.
44 U.S.C. § 2905(a).
C. Procedural Background
Plaintiff Judicial Watch, Inc. is a non-profit organization that “seeks to promote
transparency, integrity, and accountability in government and fidelity to the rule of law.” Compl.
¶ 3. In order to fulfill those goals, plaintiff “regularly requests access to the public records of
federal, state, and local government agencies, entities, and offices, and disseminates its findings
5
to the public.” Id. Defendant NARA is a governmental agency charged with the safekeeping of
documents and materials created in the course of business by the United States Federal
government that have particular legal or historical value. Id. ¶ 4; About the National Archives,
National Archives, http://www.archives.gov/about (last visited Feb. 28, 2012). Defendant
operates and maintains the Clinton Presidential Library and Museum (“the Clinton Library”),
which contains the Presidential records of President Clinton. Compl. ¶ 4.
1. Plaintiff’s FOIA Request
On October 7, 2009, plaintiff sent a FOIA request to the Clinton Library seeking access
to the seventy-nine tapes recorded by Branch. Compl. ¶ 12; Ex. 1 to Def.’s Mot. to Dismiss.
Plaintiff received a letter in response from Dana Simmons, Supervisory Archivist for the Clinton
Library, dated October 9, 2009, stating that the requested tapes “are not [P]residential records
and therefore are not subject to request under the PRA and FOIA.” Compl. ¶ 13 (internal
quotations omitted); Ex. 2 to Def.’s Mot. to Dismiss. The letter went on to state that “the tapes
are personal records, as defined in section 2201(3) of the PRA.” Ex. 2 to Def.’s Mot. to Dismiss.
On November 2, 2009, plaintiff appealed the determination that the tapes were not
Presidential records on the grounds that the tapes “clearly relate to or have effect upon the
official duties of President Clinton.” Ex 3. to Def.’s Mot. to Dismiss; Compl. ¶ 14. NARA
denied the appeal on March 16, 2010. Ex. 4 to Def.’s Mot. to Dismiss. In a letter to plaintiff
from Adrienne C. Thomas, Deputy Archivist of the United States, NARA provided the following
explanation:
In response to your appeal, first, and most importantly, the Taylor Branch audio
tapes are not and have never been physically located at the Clinton Library or at
any other NARA facility, and thus your FOIA request is premised on a faulty
assumption that these materials are somehow within the present custody of the
National Archives – which they are not.
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Id. The letter went on to say:
To the extent, however, that your FOIA appeal can be read as requesting that the
National Archives should make a further determination that the materials in
question ought to be considered “presidential records” within the meaning of the
PRA, we decline to do so. In making a decision on this matter I have to consider
the nature of the audio tapes, if they were created with the intent of their use as
government materials, and whether or not they were circulated within the
Administration or relied on as policy documents. On the facts made available to
me, I do not believe the materials in question fall within the ambit of the PRA.
***
For these reasons, I am of the opinion that the audio tapes created by Taylor
Branch are personal records of President Clinton as defined by the PRA.
Id.
2. The Lawsuit Before the Court
Plaintiff filed this action on October 28, 2010. The complaint alleges one count under the
APA, 5 U.S.C. § 701, et seq. Plaintiff avers that defendant took final agency action under the
APA on March 16, 2010, when it determined that the audiotapes were not Presidential records,
and that the determination was “arbitrary, capricious, an abuse of discretion, and otherwise not in
accordance with the PRA.” Compl. ¶¶ 19–20. Plaintiff alleges that it has been irreparably
harmed by the decision that the tapes were not Presidential records because that classification
“prevents [p]laintiff from gaining access to the audiotapes through FOIA.” Id. ¶ 21.
In its prayer for relief, the complaint asks the Court to (1) declare defendant’s action to be
arbitrary, capricious, an abuse of discretion, and in violation of the PRA; (2) declare the
audiotapes to be Presidential records under the PRA; (3) order defendant to “assume custody and
control” of the audiotapes; (4) order defendant to deposit the audiotapes at the Clinton Library;
(5) order defendant to process the records pursuant to FOIA; and (6) grant plaintiff’s attorney’s
fees and litigation costs as well as any other appropriate relief. Id. at 5–6 (prayer for relief).
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Defendant moved to dismiss [Dkt. # 6] pursuant to Rule 12(b)(1) for lack of subject
matter jurisdiction on the grounds that plaintiff has not alleged a redressable injury and therefore
lacks standing. Def.’s Mem. in Support of Mot. to Dismiss at 11–18. Defendant also moved to
dismiss under Rule 12(b)(6) for failure to state a claim upon which relief can be granted, arguing
that the PRA precludes judicial review of plaintiff’s claim under the APA, and that there has
been no final agency action. Id. at 18–37.
II. STANDARD OF REVIEW
In evaluating a motion to dismiss under either Rule 12(b)(1) or 12(b)(6), the Court must
“treat the complaint’s factual allegations as true . . . and must grant plaintiff ‘the benefit of all
inferences that can be derived from the facts alleged.’” Sparrow v. United Air Lines, Inc., 216
F.3d 1111, 1113 (D.C. Cir. 2000), quoting Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir.
1979) (citations omitted). Nevertheless, the Court need not accept inferences drawn by the
plaintiff if those inferences are unsupported by facts alleged in the complaint, nor must the Court
accept plaintiff’s legal conclusions. Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002).
A. Subject Matter Jurisdiction
Under Rule 12(b)(1), the plaintiff bears the burden of establishing jurisdiction by a
preponderance of the evidence. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992);
Shekoyan v. Sibly Int’l Corp., 217 F. Supp. 2d 59, 63 (D.D.C. 2002). Federal courts are courts of
limited jurisdiction and the law presumes that “a cause lies outside this limited jurisdiction.”
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); see also Gen. Motors
Corp. v. Envtl. Prot. Agency, 363 F.3d 442, 448 (D.C. Cir. 2004) (“As a court with limited
jurisdiction, we begin, and end, with an examination of our jurisdiction.”). Because “subject-
matter jurisdiction is ‘an Art[icle] III as well as a statutory requirement . . . no action of the
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parties can confer subject-matter jurisdiction upon a federal court.’” Akinseye v. District of
Columbia, 339 F.3d 970, 971 (D.C. Cir. 2003), quoting Ins. Corp. of Ireland, Ltd. v. Compagnie
des Bauxites de Guinee, 456 U.S. 694, 702 (1982).
When considering a motion to dismiss for lack of jurisdiction, unlike when deciding a
motion to dismiss under Rule 12(b)(6), the court “is not limited to the allegations of the
complaint.” Hohri v. United States, 782 F.2d 227, 241 (D.C. Cir. 1986), vacated on other
grounds, 482 U.S. 64 (1987). Rather, a court “may consider such materials outside the pleadings
as it deems appropriate to resolve the question of whether it has jurisdiction in the case.”
Scolaro v. D.C. Bd. of Elections & Ethics, 104 F. Supp. 2d 18, 22 (D.D.C. 2000), citing Herbert
v. Nat’l Acad. of Sciences, 974 F.2d 192, 197 (D.C. Cir. 1992); see also Jerome Stevens Pharm.,
Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005).
B. Failure to State a Claim
“To survive a [Rule 12(b)(6)] motion to dismiss a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v.
Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949 (2009) (internal quotation marks omitted); see also
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when the
pleaded factual content “allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Iqbal, 129 S. Ct. at 1949. “The plausibility standard is not
akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant
has acted unlawfully.” Id. “[W]here the well-pleaded facts do not permit the court to infer more
than the mere possibility of misconduct, the complaint has alleged — but it has not ‘show[n]’
‘that the pleader is entitled to relief.’” Id. at 1950, quoting Fed. R. Civ. P. 8(a)(2). A pleading
must offer more than “labels and conclusions” or a “formulaic recitation of the elements of a
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cause of action,” id. at 1949, quoting Twombly, 550 U.S. at 555, and “the tenet that a court must
accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.”
Id. In ruling upon a motion to dismiss, a court may ordinarily consider only “the facts alleged in
the complaint, documents attached as exhibits or incorporated by reference in the complaint, and
matters about which the Court may take judicial notice.” Gustave-Schmidt v. Chao, 226 F. Supp.
2d 191, 196 (D.D.C. 2002) (citations omitted).
III. ANALYSIS
A. Whether Judicial Review Is Available Under the Presidential Records Act
Plaintiff asks the Court to utilize the APA to review a determination it claims the
defendant made under the PRA that the audiotapes were personal, and not Presidential, records. 2
Tr. at 37. Defendant takes the position that plaintiff’s claim based is precluded because the D.C.
2 Plaintiff insists that it is not challenging President Clinton’s classification of the
audiotapes as personal, but rather defendant’s “erroneous decision the audiotapes are not
presidential records.” Pl.’s Opp. at 11–12. This is at odds with paragraph 16 of the complaint,
which specifically alleges that the President retained the tapes and did not transmit them to the
Archivist as part of his Presidential records at the conclusion of his presidency – in other words,
that it was his decision. But plaintiff’s confusion was engendered, at least in part, by the Deputy
Archivist’s decision to express an opinion in the course of denying the FOIA appeal: “To the
extent, however, that your FOIA appeal can be read as requesting that the National Archives
should make a further determination that the materials in question ought to be considered
‘[P]residential records’ within the meaning of the PRA, we decline to do so . . . . On the facts
made available to me, I do not believe the materials in question fall within the ambit of the
PRA.” Ex. 4 to Def.’s Mot. to Dismiss.
In the Court’s view, plaintiff reads too much into this statement. Under the statutory
scheme established by the PRA, the decision to segregate personal materials from Presidential
records is made by the President, during the President’s term and in his sole discretion, see 44
U.S.C. § 2203(b), so the Deputy Archivist could not and did not make a classification decision
that can be challenged here. When she posited that perhaps the plaintiff was asking NARA “to
make a further determination that the materials in question ought to be considered ‘[P]residential
records,’” she was, if anything, as counsel for the defendant suggested at the hearing, opining on
the question of whether there were grounds for the Archivist to choose to invoke the enforcement
mechanism embodied in the statute. Tr. at 8; 23–24. But, neither plaintiff nor defendant
believes that is a decision that is at issue in this lawsuit, see id., at 8–9, 37, 42, and 50, and, as is
discussed below, such a decision would not be reviewable in any event.
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Circuit determined in Armstrong v. Bush, 924 F.2d 282 (D.C. Cir. 1991) (“Armstrong I”), and
Armstrong v. Bush, 1 F.3d 1274 (D.C. Cir. 1993) (“Armstrong II”), that judicial review is not
available under the PRA except in narrow circumstances not present in this case. Def.’s Mem. in
Support of Mot. to Dismiss at 30. Putting aside for the moment the question of whether it was
the defendant that made the determination, the question of whether a court can review a records
classification decision under the PRA is not as open and shut as either side suggests. In the
Armstrong decisions, the court was not presented with – and did not rule upon – the question of
the availability of judicial review over a decision to deem a record to be private and not
presidential. So, the Armstrong decisions do not control the outcome here. But in light of the
parties’ joint insistence that the precedents have implications for this case, and their clashing and
ultimately incomplete readings of the decisions, the Court will address them here.
1. The Armstrong Decisions
In Armstrong I, a group of researchers and historians filed a lawsuit to prohibit President
George H.W. Bush from erasing material stored on the White House computer systems during
the last two weeks of the Reagan Administration. Armstrong v. Bush, 721 F. Supp. 343, 347
(D.D.C. 1989). The plaintiffs sought: (1) a declaration that the documents at issue, which had
been stored on a back-up computer system, were federal and presidential records under the FRA
and the PRA; (2) an injunction prohibiting the destruction of these documents; and (3) an order
directing the government to classify and preserve the documents as required by the FRA and the
PRA. Id.
The district court determined that under the APA, a court could review the President’s
compliance with the PRA and the FRA. Id. at 348. (“[T]he APA empowers a private plaintiff to
seek judicial review of presidential performance under these statutes.”). On appeal, the D.C.
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Circuit reversed, holding that the PRA precluded judicial review of the “President’s
recordkeeping practices and decisions” because such judicial review “would upset the intricate
statutory scheme Congress carefully drafted to keep in equipoise important competing political
and constitutional concerns.” Armstrong I, 924 F.2d at 290–91. The court deferred to the
legislature’s balancing of two competing policy goals: on one hand, the “public ownership of
presidential records and ensur[ing] the preservation of presidential records for public access after
the termination of a President’s term in office;” and on the other hand, “minimiz[ing] outside
interference with day-to-day-operations of the President and his closest advisors and []
ensur[ing] executive branch control over presidential records during the President’s term in
office.” Id. at 290. Thus, the PRA requires the President to “maintain records documenting the
policies, activities, and decisions of his administration,” but “leav[es] the implementation of such
a requirement in the President’s hands.” Id., citing 44 U.S.C. § 2203(a). The court underscored
that Congress “presumably relied on the fact that subsequent Presidents would honor their
statutory obligations to keep a complete record of their administrations.” Id. at 290.
The case was remanded to district court but appealed again, prompting the D.C. Circuit to
clarify its earlier ruling. This time, the Court of Appeals explained that although judicial review
was limited under the PRA, it was not precluded entirely. Armstrong II, 1 F.3d at 1293 (“The
Armstrong I opinion does not stand for the unequivocal proposition that all decisions made
pursuant to the PRA are immune from judicial review.”). Instead:
[C]ourts are accorded the power to review guidelines outlining, what is, and what
is not, a ‘presidential record’ under the terms of the PRA. The PRA does not
bestow on the President the power to assert sweeping authority over whatever
materials he chooses to designate as presidential records without any possibility
of judicial review.
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Id. at 1290. The court stated that Armstrong I only barred judicial review of “creation,
management, and disposal decisions” of the President and not “the initial classification of
existing materials.” Id. at 1294.
2. The Armstrong Decisions Do Not Govern the Question Presented in This Case.
Defendant asserts that the Armstrong cases stand for the proposition that there is no
judicial review of a president’s compliance with the PRA. Def.’s Mem. in Support of Mot. to
Dismiss at 25. Defendant reads Armstrong II as carving out a narrow exception that only permits
review of classification guidelines, which are not at issue here. Id. at 23. Plaintiff suggests that
Armstrong II’s clarification of the first opinion confirmed the availability of judicial review over
classification decisions, Pl.’s Opp. at 11–12, and it claims that it seeks permissible review of a
decision made by NARA that the audiotapes are not Presidential records, id.
The Court notes at the outset that there is broad language in Armstrong I stating that the
PRA accords the President “virtually complete control” over his records during his time in
office. 924 F.2d at 290. In particular, the court stated that the President enjoys unconstrained
authority to make decisions regarding the disposal of documents: “[a]lthough the President must
notify the Archivist before disposing of records . . . neither the Archivist nor Congress has the
authority to veto the President’s disposal decision.” Id., citing H.R. Rep. No. 95-1487, at 13
(1978), reprinted in 1978 U.S.C.C.A.N. at 5744. Since the President is completely entrusted
with the management and even the disposal of Presidential records during his time in office, it
would be difficult for this Court to conclude that Congress intended that he would have less
authority to do what he pleases with what he considers to be his personal records.
It is also true, as plaintiff points out, that the court observed in Armstrong II: “[t]he
Armstrong I opinion does not stand for the unequivocal proposition that all decisions made
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pursuant to the PRA are immune from judicial review.” 1 F. 3d at 1293. But the actual holding
of the case is much more narrow than this language that plaintiff recites. In the Armstrong
decisions, the D.C. Circuit did not consider the question of whether an individual decision to
exclude private materials from the set of Presidential records transmitted to the Archivist could
be subject to review. In fact, Armstrong II was addressing a concern that too many records were
being classified as Presidential, not too few: “[T]he courts may review guidelines outlining what
is, and what is not, a “presidential record” to ensure that materials that are not subject to the
PRA are not treated as presidential records.” Id. at 1294 (emphasis added).
The thrust of the Armstrong II opinion was the differentiation between agency records
and Presidential records – not, as in this case, between personal records and Presidential records.
Id. at 1292. The concern underlying the court’s analysis in Armstrong II was that agency records
that are subject to broader disclosure requirements under FOIA would be treated as Presidential
records and given more limited distribution. Id. at 1292–93 (“Congress sought to provide a clear
limitation on just which materials the President could legitimately assert control over and to
preserve the pre-existing body of FOIA law governing the disclosure of government agency
records.”) It was in addressing that point that the D.C. Circuit explained:
The Armstrong I opinion does not stand for the unequivocal proposition that all
decisions made pursuant to the PRA are immune from judicial review . . . .
[W]e held that those decisions that involve materials that are truly presidential
records are immune from judicial review. We did not hold in Armstrong I that the
President could designate any material he wishes as presidential records, and
thereby exercise “virtually complete control” over it, notwithstanding the fact that
the material does not meet the definition of “presidential records” in the PRA.
Id. at 1293–94 (internal citations omitted). Notably, the D.C. Circuit did not insist: “We did not
hold in Armstrong I that the President could designate any material he wishes as personal
records.” In other words, Armstrong II did not announce that there was any limit to the
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President’s discretion to segregate materials as personal even though it did conclude that the
courts could play some role in overseeing the decision to classify agency records as presidential.
Thus, a close reading of the Armstrong II decision suggests that the limited judicial
review authorized by the D.C. Circuit left untouched that portion of Armstrong I that gave the
President unfettered control over his own documents. Some of the language in Armstrong II led
another court in this district to comment that “Armstrong II does not necessarily foreclose
judicial review of a decision to denominate certain materials ‘personal records’ of a former
President.” Am. Historical Ass’n v. Peterson, 876 F. Supp. 1300, 1314 (D.D.C. 1995). While
that may be true, the D.C. Circuit has not yet blessed it either.
On a practical level, the possibility of judicial review raises a host of questions. If it is
available, why is the PRA entirely silent on the subject? 3 What standard of review would
3 Although the plain text of the statute is silent about judicial review, defendant argues that
the legislative history and purpose behind the PRA support the notion that Congress did not
intend for private litigants to be able to challenge classification decisions made by the President.
Def.’s Mem. in Support of Mot. to Dismiss at 32–37. The predecessor statute to the PRA was
the Presidential Recordings and Materials Preservation Act of 1974 (“PRMPA”), which was
enacted out of concern that President Nixon might destroy records related to the Watergate
Investigation. See note following 44 U.S.C. § 2111; Nixon v. United States, 978 F.2d 1269, 1271
(D.C. Cir. 1992). To prevent this, the PRMPA mandated that the government seize President
Nixon’s records and promulgate regulations allowing public access to those records. See note
following 44 U.S.C. § 2111 at §§ 101, 104. The controversy over President Nixon’s records and
whether the PRMPA interfered with his right to privacy in his personal records led to the passage
of the PRA in 1978. See H.R. Rep. No. 95-1487, at 5–7, 11 (1978), reprinted in 1978
U.S.C.C.A.N. 5732, 5737–38 (noting in particular the need “to properly protect a President’s
privacy interest and his first amendment associational rights”); see also Nixon v. Freeman, 670
F.2d 346, 349 n.2 (D.C. Cir. 1982). Defendants argue that this legislative history shows that
“Congress would not have authorized private litigants to obtain judicial review of a President’s
determination that certain records are personal.” Def.’s Mem. in Support of Mot. to Dismiss at
27.
Defendant also contends that other provisions of the PRA demonstrate Congress’s intent
to preclude judicial review, particularly, the provision that allows the President to restrict access
to certain Presidential records for up to twelve years. 44 U.S.C. § 2204(a). During that time
period, there is no judicial review of that decision. Id. § 2204(b)(3). If the Court adopted
plaintiff’s position that personal records could be subject to judicial review at any time, “it would
15
apply? 4 Would there not be a high level of deference accorded to a president’s decision about
which records are personal? How could a challenge to a president’s classification decision be
litigated without the decision-maker participating as a party to the lawsuit? If a classification
decision is reviewable, what is the statute of limitation that applies? And, would that period have
expired in this case given that President Clinton has been out of office for over twelve years?
Bearing in mind the Armstrong decisions and all of the considerations raised by the
parties, the Court has seriously doubts about whether the former President’s retention of the
audiotapes as personal is a matter that is subject to judicial review. But the Court need not
decide this question because whether judicial review is available or not, the relief that plaintiff
seeks – that the Archivist assume “custody and control” of the audiotapes – is not available under
the PRA.
B. Plaintiff’s Injury Is Not Redressable by the Court Because the Requested
Relief Is Not Available.
To satisfy the redressability requirement of jurisdictional standing, a court must find that
it is “likely, as opposed to merely speculative, that the injury will be redressed by a favorable
decision” on the merits. Lujan, 504 U.S. at 561, quoting Simon v. E. Ky. Welfare Rights Org.,
426 U.S. 26, 38, 43 (1976) (quotation marks omitted). An injury is not redressable where the
“only apparent avenue of redress for plaintiffs’ claimed injuries . . . . is unavailable.” Newdow v.
Roberts, 603 F.3d 1002, 1013 (D.C. Cir. 2010).
lead to an anomalous consequence that the President’s most sensitive papers would immediately
[be] subject to judicial review,” while others would not. Def.’s Mem. in Support of Mot. to
Dismiss at 28. These arguments have some force.
4 At the motions hearing, plaintiff could not begin to answer the Court’s question about
what the relevant standard of review would be. Tr. at 58.
16
The complaint asserts a single claim under the APA, 5 U.S.C. § 701, et seq., alleging that
plaintiff has been “irreparably harmed” because “[d]efendant’s determination [that the
audiotapes are not presidential records] prevents [p]laintiff from gaining access to the audiotapes
through FOIA.” Compl. ¶ 21. 5 To redress this injury, plaintiff asks the Court to declare the
audiotapes to be Presidential records and, because they are not currently in the government’s
possession, to compel defendant to “assume custody and control” over them pursuant to the
PRA. Id. at 5 (prayer for relief).
Plaintiff fails to specify which provision of the APA underlies its claim. Compl. ¶¶ 17–
22. 6 Because the complaint outlines the defendant’s failure to act with respect to the audiotapes,
including alleged failures to classify the tapes properly and to assume custody and control of
5 To the extent that plaintiff’s claim is premised on the PRA, there is no private right of
action under the PRA. CREW, 593 F. Supp. 2d at 218. Plaintiff does not contest this. Pl.’s Opp.
at 5. Although the Court in CREW went on to consider the Vice President’s plan for records
disposal under a mandamus analysis, that option is not available in this case because President
Clinton is no longer a sitting president. Id.
6 The complaint does not allege that it was arbitrary and capricious for the Archivist to fail
to use his discretion under section 2112 of the Federal Records Act to invoke the enforcement
mechanism provided in the PRA for retrieving missing Presidential documents. And at the
hearing, plaintiff’s counsel underscored that the lawsuit was not premised on these grounds. Tr.
at 37, 42, 50. Even if plaintiff’s complaint could be construed to include an implicit APA claim
challenging the Archivist’s failure to use the tools at his disposal to challenge the President’s
decision, that claim would not be ripe. Since no one has asked the Archivist to take such action,
there has been no final agency action denying the request. Furthermore, under the APA, a court
cannot review “agency action [that] is committed to agency discretion by law.” 5 U.S.C. § 701
(a)(2). And a court may only compel agency action that is “legally required.” Norton v. S. Utah
Wilderness Alliance, 542 U.S. 55, 55 (2004). The PRA gives complete discretion to the
Archivist to determine when to initiate the enforcement mechanism available under the FRA.
See 44 U.S.C. § 2112(c) (“When the Archivist considers it to be in the public interest, he may
exercise . . . all the functions and responsibilities otherwise vested in him pertaining to Federal
records or other documentary materials in his custody or under his control.”) (emphasis added).
So, even if plaintiff had predicated this action on §2112(c), there would be no relief available to
plaintiff.
17
them, the Court will construe the claim as one to “compel agency action unlawfully withheld.” 5
U.S.C. § 706(1) (2006). As the Supreme Court explained in Norton v. Southern Utah Wilderness
Alliance, 542 U.S. 55, 63 (2004): “[T]he only agency action that can be compelled under the
APA is action legally required.” Id.; see also Sierra Club v. Thomas, 828 F.2d 783, 793 (D.C.
Cir. 1987) (“[Where] an agency is under an unequivocal statutory duty to act, failure so to act
constitutes, in effect, an affirmative act that triggers ‘final agency action’ review.”).
1. The Court Cannot Compel the Archivist To Reclassify or Retrieve the
Audiotapes Because the PRA Does Not Mandate It.
Plaintiff’s entire APA claim is predicated on the notion that the Archivist of the United
States has a statutory duty to make his own classification decision and “to assume custody and
control” of all Presidential records. There are a number of flaws with this argument. To begin
with, the plain language of section 2203(f) of the PRA does not say what plaintiff claims it does
– that the Archivist must assume custody and control of all materials that fall within the
definition of Presidential records. Tr. at 29:23–30:2. Rather, it states: “the Archivist of the
United States shall assume responsibility for the custody, control, and preservation of, and access
to, the Presidential records of that President.” 44 U.S.C. § 2203(f)(1) (emphasis added). 7 The
7 In its reply brief and at the motions hearing before this Court, counsel for defendant cited
Am. Friends Serv. Comm. v. Webster, 720 F.2d 29 (D.C. Cir. 1983), for the proposition that
statutory language requiring the government to “assume responsibility” for something does not
create a mandatory duty that can be enforced. Tr. at 62. Defendant argued that in American
Friends, the court was asked to enforce a statute that gave the agency responsibility to conduct
inspections, and that the D.C. Circuit held that those words did not give the agency a
responsibility to conduct inspections. Id. at 62–63. But that argument does not accurately
capture the D.C. Circuit’s holding. While it is true that the statute that the court interpreted in
American Friends, 44 U.S.C. § 2904(c)(7), did confer “responsibility” on the government to
conduct inspections, in the section of the opinion on which the government relies, 720 F.2d at 64,
the Court of Appeals was actually discussing section 2906 of the statute, which states that an
agency “may” conduct inspections. 44 U.S.C. § 2906(a)(1). The Court held that the word
“may” does not create a statutory duty – not that language giving an agency responsibility is
insufficient to create a duty. Am. Friends Serv. Comm., 720 F.2d at 64.
18
Court construes this language as requiring the Archivist to take responsibility for records that
were designated as Presidential records during the President’s term. Even plaintiff tentatively
agreed that the obligation to assume custody and control arises after a determination has been
made that the documents are Presidential records. Tr. at 30:3–6. If certain records are not
designated as Presidential records, the Archivist has no statutory obligation to take any action at
all, and there is nothing to compel under the APA.
In order to accept plaintiff’s theory that section 2203(f)(1) of the PRA creates a
mandatory duty for the Archivist to assume custody and control of what he or she considers to be
Presidential records regardless of how the President designated the documents, the Court would
be required to ignore the rest of the PRA’s statutory scheme. This it cannot do. See Chemehuevi
Tribe of Indians v. Fed. Power Comm’n, 420 U.S. 395, 403 (1975) (stating that a statutory
provision must be “read together with the rest of the Act”).
Section 2203(a) of the PRA directs the President, not the Archivist, to take:
all such steps as may be necessary to assure that the activities, deliberations,
decisions, and policies that reflect the performance of his constitutional, statutory
or other official or ceremonial duties are adequately documented, and that such
records are maintained as Presidential records pursuant to the requirements of this
section . . . .
44 U.S.C. § 2203(a). The only reference in the entire statute to the designation of records as
personal versus Presidential also calls for the decision to be made by the executive, and to be
made during, and not after, the presidency. It provides: “materials produced or received by the
President, [and other Executive Office employees], shall, to the extent practicable, be categorized
as Presidential records or personal records upon their creation or receipt and be filed separately.”
Id. § 2203(b). The PRA contains no provision obligating or even permitting the Archivist to
assume control over records that the President “categorized” and “filed separately” as personal
19
records. At the conclusion of the President’s term, the Archivist only “assume[s] responsibility
for . . . the Presidential records.” Id. § 2203(f)(1). 8
Plaintiff contends that its factual allegations about the nature and substance of the
audiotapes clearly establishes them to be Presidential records, regardless of how they were
treated by President Clinton. Pl.’s Opp. at 12–13. The Court is not so sure. 9 But even if the
Court were inclined to agree with plaintiff’s reassessment of President Clinton’s decision, it
would not alter the conclusion that the injury cannot be redressed: the PRA does not confer any
mandatory or even discretionary authority on the Archivist to classify records. Under the statute,
8 Even plaintiff’s counsel seemed to recognize at the hearing that there was no clear
statutory duty he could point to:
THE COURT: They’re required to assume custody and control of the [P]residential
records after the [P]resident designates which are which?
[PLAINTIFF’S COUNSEL]: Possibly.
Tr. at 30 (emphasis added).
9 Presidential records are defined as those “documentary materials . . . which relate to or
have an effect upon the carrying out of the . . . official or ceremonial duties of the President,” 44
U.S.C. § 2201(2), and the statute defines personal records as those materials which do not, id.
§ 2201(3). Plaintiff’s suggestion that a verbatim recording of the President carrying out his
duties “relates to” his carrying out of those duties has some force. But that is not the end of the
inquiry. Section 2201(3)(A) goes on to specify that diaries or their functional equivalent, “which
are not prepared or utilized for, or circulated or communicated in the course of, transacting
Government business” are personal. Id. § 2201(3)(A). So the classification depends not upon
what the tapes contain, but what the President prepared them for and what he did with them.
Plaintiff has alleged no facts that would suggest that the tapes were circulated to anyone beyond
the former President and the historian, or that they were used (as opposed to generated) in the
course of transacting official business. More important, as plaintiff acknowledged at the hearing,
we lack any information about what President Clinton had in mind:
THE COURT: How can I make that decision without the information that would really
only be in the [P]resident’s head, what they were created and utilized for?
[PLAINTIFF’S COUNSEL]: Well, that’s the problem.
See Tr. at 41.
20
this responsibility is left solely to the President. 44 U.S.C. § 2203(a)–(b). While the plaintiff
casts this lawsuit as a challenge to a decision made by the National Archives, the PRA makes it
clear that this is not a decision the Archivist can make, and in this particular case, it is not a
decision the Archivist did make because President Clinton’s term ended in 2000, and the tapes
were not provided to the Archives at that time. To the extent that there was a subsequent
classification decision the Archivist purported to make, see supra note 2, or to be more accurate,
a decision to decline to revisit the President’s classification decision, any injury plaintiff claims it
suffered as a result would not be redressable because there is nothing under the statute that the
Court can compel the Archivist to do. 10
2. The Sole Enforcement Mechanism Available to the Archivist Is Committed to
Its Discretion.
Even if the Court agreed with plaintiff that the PRA authorizes the Archivist to assume
control of materials that fall within the definition of Presidential records regardless of how the
President classified them, and it agreed with plaintiff’s questionable characterization of the
materials, the Court still could not order the relief plaintiff seeks because the only enforcement
tools provided to the defendant under the PRA are committed to the agency’s sole discretion.
See 5 U.S.C. § 701(a)(2); Heckler v. Chaney, 470 U.S. 821, 831 (1985) (holding that “an
agency’s decision not to prosecute or enforce, whether though civil or criminal process, is a
decision generally committed to an agency’s absolute discretion”).
10 Plaintiff relies heavily on Judicial Watch, Inc. v. U.S. Dep’t of Commerce, 736 F. Supp.
2d 24 (D.D.C. 2012), for the proposition that it may bring its claims under the APA. But the
facts of that case are inapposite to the present case. In Judicial Watch v. Commerce, defendant
was subject to specific statutory obligations under the Federal Advisory Committee Act that
were within its power to discharge. Id. at 27. Here, the Archivist has no statutory powers related
to either the reclassification of records or the retrieval of improperly classified records.
21
The PRA authorizes NARA to invoke the same enforcement mechanism embodied in the
Federal Records Act, which begins with a request to the Attorney General to institute an action
for the recovery of missing records. Compare 44 U.S.C. § 2112(c) with 44 U.S.C. § 3106. The
statute does not mandate that NARA invoke this enforcement scheme but rather vests complete
discretion with the agency to utilize that mechanism. 44 U.S.C. § 2112(c) (“When the Archivist
considers it to be in the public interest, he may . . . .” (emphasis added). The Archivist has
chosen to invoke the mechanism in the past when it deemed such action appropriate. See, e.g.,
United States v. McElvenny, No. 02-3027, 2003 WL 1741422 (S.D.N.Y. April 1, 2003) (seeking
recovery of a map of Cuba annotated by President John F. Kennedy during the Cuban Missile
Crisis).
Plaintiff argues that defendant never had an opportunity to consider whether to invoke the
enforcement scheme because it “erroneously determined that the audiotapes are not presidential
records.” Pl.’s Opp. at 8. Not only is this argument circular, but it ignores the Supreme Court’s
guidance in Heckler v. Chaney that an agency’s assessment of whether a violation has occurred
is part and parcel of the decision whether to enforce. 470 U.S. at 831 (stating that “an agency
decision not to enforce often involves a complicated balancing of a number of factors which are
peculiarly within its expertise . . . . [including] assess[ing] whether a violation has occurred”).
By asking the Court to order defendant to “assume custody and control” of the audiotapes,
plaintiff essentially asks the Court to compel defendant to determine that a violation has occurred
and enforce the PRA. This is not permissible under the APA. See Massachusetts v. EPA, 549
U.S. 497, 527 (2007) (“[Agency] discretion is at its height when the agency decides not to bring
an enforcement action.”).
22
3. Plaintiff’s Suggestions Regarding How the Archivist Should Assume Custody
and Control of the Tapes are Impractical and Underscore the Lack of
Redressability in This Lawsuit.
Because the audiotapes are not physically in the government’s possession, defendant
submits that it would be required to seize them directly from President Clinton in order to
assume custody and control over them. Def.’s Mem. in Support of Mot. to Dismiss at 1, 15–18.
Defendant considers this to be an “extraordinary request” that is “unfounded, contrary to the
PRA’s express terms, and contrary to traditional principles of administrative law.” Id. at 1. The
Court agrees.
Plaintiff attempted to minimize the unprecedented nature of its request by imagining
scenarios that would result in an amicable recovery of the tapes from the former president:
THE COURT: [Y]ou’ve asked me to order them to go get them.
[PLAINTIFF’S COUNSEL]: To an extent. We asked the Court to require them to
assume custody and control of [the tapes] . . . . I mean it sounds awful that they
think we’re asking for this Court to bang down President Clinton’s door and seize
these audiotapes . . . . [A]rchives could make a phone call, they could write a
letter. There is nothing in the record stating that President Clinton wouldn’t just
give them the records . . . . We’re not specifically saying they have to go seize.
Tr. at 29:7–18. Plaintiff’s indulgence in wishful thinking in order to minimize the ramifications
of its own lawsuit underscores the lack of redressability fatal to the case. It is telling that counsel
for plaintiff was repeatedly unable to identify anything specific the Court could or should order
the Archivist to do under these circumstances:
THE COURT: What does “assume custody and control” mean in your view?
What do you want them to do?
[PLAINTIFF’S COUNSEL]: Because they are also required to make them
available to the public, “assume custody and control” would be to take control of
the records or have somebody else take control of the records . . . .
THE COURT: How do they take control? . . . He issues a press release[:] I’ve
got them . . . . Then what? What are they supposed to do?
23
[PLAINTIFF’S COUNSEL]: As I said, there are many options.
THE COURT: Tell me one.
[PLAINTIFF’S COUNSEL]: One option is they can call President Clinton and
ask . . . .
THE COURT: Okay. He says no. Now what?
[PLAINTIFF’S COUNSEL]: They write a nice letter. They maybe use one of
these enforcement mechanisms. Maybe they try something else.
Id. at 43:18–44:12. Throughout the hearing, plaintiff remained unable to identify any avenue for
relief or to specify the terms of the order it was seeking:
THE COURT: What enforcement mechanism, what thing, what power can they
exercise under the statute that I can order them to do that makes your injury
redressable?
[PLAINTIFF’S COUNSEL]: Once the records are determined to be
[P]residential records there is an obligation to assume custody and control of
them. How – and I will just say, once again, how they go about doing that –
Judicial Watch is not challenging how.
***
And once the determination is made [that they are] [P]residential records, it opens
the door. It leaves for the possibility that [A]rchives will go out and get the
records. It leaves the possibility that they’ll use one of their enforcement
mechanisms or they may use other avenues to get them.
***
THE COURT: We’re talking about very mushy unenforceable orders at this point
. . . . I just don’t think I could issue an order that says ‘try your best.’ Then how
would anybody be able to ascertain whether they’ve complied[?]
Tr. at 48:24–50:24 (internal quotations added).
Ultimately, plaintiff conceded that even an order deeming the materials to be Presidential
records and directing the defendant to make an effort to retrieve them would not bind the former
24
President to produce them, Tr. at 60:14–20, and it would not make them magically available
under FOIA:
THE COURT: So even if you win, what do you get?
[PLAINTIFF’S COUNSEL]: We get the possibility to discuss that when the time
comes.
***
[R]edressability could be [] simply having them declared [P]residential records
and then the ability to have the further process under FOIA. You know, there are
many different instances where an agency could go out and get records under
FOIA.
THE COURT: This is not one of those . . . . [I]f they don’t have them, FOIA
doesn’t help you.
[PLAINTIFF’S COUNSEL]: Most likely, yes.
Tr. at 60:22-61:15. This is the problem at the heart of the lawsuit that requires its dismissal.
4. To the Extent Plaintiff’s Claim Relies on FOIA, the Requested Relief is Not
Available Under the Supreme Court’s Decision in Kissinger.
Finally, while plaintiff labels its claim as an action under the APA, the lawsuit arises out
of a FOIA request. Compl. ¶ 12. 11 In particular, plaintiff alleges that the Clinton Library denied
its FOIA request and appeal on the grounds that the tapes were not Presidential records. Id. ¶¶
13–15. The complaint also avers that “President Clinton unlawfully retained the requested
audiotapes after leaving office.” Id. ¶ 16. Plaintiff asks the Court to order defendant to “assume
custody and control of the requested records[,]” “deposit the requested records in the Library[,]”
and “process the records pursuant to FOIA.” Id. at 5 (prayer for relief).
11 Other courts in this district have declined jurisdiction over APA claims that sought
remedies made available by FOIA. See, e.g., ExxonMobil Corp., v. Dep’t of Commerce, No. 10-
250, 2011 WL 6091470, at *9 (D.D.C. Dec. 8, 2011); Kenney v. DOJ, 603 F. Supp. 2d 184, 190
(D.D.C. 2009).
25
To the extent that plaintiff is seeking relief related to the availability of documents under
FOIA, that claim is governed by the Supreme Court’s holding in Kissinger v. Reporters Comm.
for Freedom of the Press, 445 U.S. 136 (1980). In that case, the Court held that FOIA does not
give rise to a private right of action to compel an agency to retrieve documents that are not in its
possession, even if one assumes that the documents were wrongfully withheld under the Federal
Records Act. Id. at 151–52. 12 The Court explained in that case: “It is therefore clear that
Congress never intended when it enacted the FOIA, to displace the statutory scheme embodied in
the Federal Records Act and the Federal Records Disposal Act providing for administrative
remedies to safeguard against wrongful removal of agency records as well as to retrieve
wrongfully removed records.” Id. at 154. 13 The same reasoning applies here. There is no
indication in the record that Congress intended to supplant the limited remedies available in the
PRA with FOIA.
12 While Kissinger may not control the resolution of plaintiff’s claim because this lawsuit
was ostensibly brought under the APA and not FOIA, the Court finds the analysis set forth by the
Supreme Court to be instructive.
13 In Kissinger, the Supreme Court left open the question of what remedies might be
available to private plaintiffs under the APA to complain that the government breached a duty to
enforce the FRA because no such action was brought in that case. Kissinger, 445 U.S. 136 at
150 n.5. The Court observes that no such action was brought in this case either.
26
CONCLUSION
Thus, because the Court is unable to provide the remedy plaintiff seeks by ordering that
defendant “assume custody and control” over the audiotapes, the Court is unable to redress
plaintiff’s claim. Accordingly, the Court will grant defendant’s motion to dismiss [Dkt. # 6]
under Fed. R. Civ. P 12(b)(1) for lack of standing. A separate order will issue.
AMY BERMAN JACKSON
United States District Judge
DATE: March 1, 2012
27 | 01-03-2023 | 04-03-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/1125194/ | 948 P.2d 757 (1997)
151 Or. App. 313
STATE of Oregon, Respondent,
v.
David Wayne CRITES, Appellant.
Nos. 95-6011; CA A93578.
Court of Appeals of Oregon.
Argued and Submitted May 28, 1997.
Decided November 19, 1997.
Kimi Nam, Deputy Public Defender, argued the cause for appellant. With her on the brief was Sally L. Avera, Public Defender.
Robert M. Atkinson, Assistant Attorney General, argued the cause for respondent. With him on the brief were Hardy Myers, Attorney General, and Virginia L. Linder, Solicitor General.
Before RIGGS, P.J., and LANDAU and LEESON, JJ.
LANDAU, Judge.
Defendant appeals a judgment of conviction for transporting special forest products without a permit. ORS 164.813. He contends that the trial court erred in denying a motion to suppress evidence of the crime that was obtained when an officer stopped his truck without reasonable suspicion that defendant had committed any crime. We affirm.
The relevant facts are not in dispute. Deputy Swanson, a forest patrol officer for the Clatsop County Sheriff's Department, was patrolling a rural section of Highway 26 when he observed defendant drive by. It was dark at the time, but as defendant's truck passed by Swanson's headlights, the officer noticed large blocks of cedar in the back of the truck. It is unlawful to cut or remove special forest products without a permit, ORS 164.813, and large blocks of cedar qualify as special forest products, ORS 164.813(6)(b)(D). Swanson was aware of a large cedar theft problem in the immediate area, which mostly consisted of forest land owned by the State of Oregon. Swanson knew that the Oregon State Forestry Department did not issue cedar permits. He also knew that the immediate area contained a large quantity of cedar and that a mill located down the highway sometimes purchased cedar. Swanson was aware that there was some private forest land in the area that contained cedar and that some of the private landowners permitted the sale of cedar.
Swanson did not see defendant commit a traffic infraction. He did, however, suspect that the cedar in the back of defendant's truck was stolen. Swanson pulled defendant over to ask if he had a permit for transporting the cedar. When defendant could produce no permit, Swanson cited him for unlawful transport of forest products and seized the cedar as evidence.
Defendant pleaded not guilty and moved to suppress the evidence obtained from the vehicle stop. The trial court denied the motion. On appeal, he argues that the trial court erred in doing so. He contends that because Swanson lacked reason to suspect that defendant *758 had committed any crime, the officer had no lawful basis to stop him, and, as a result, any evidence that resulted from the stop should have been suppressed. According to defendant, Swanson had no basis on which he could reasonably conclude that the cedar in the truck had been obtained without a permit. The state contends that Swanson reasonably did suspect that defendant had stolen cedar, given the time of day, the nature of the area and the history of cedar theft in the immediate area.
ORS 131.615(1) provides that a peace officer who "reasonably suspects that a person has committed a crime" may stop the person and make reasonable inquiry. "Reasonably suspects" means "a belief that is reasonable under the totality of the circumstances existing at the time and place the peace officer acts." ORS 131.605(4). The Supreme Court has elaborated on that statutory definition:
"The statutory standard for the stopping and questioning of a person concerning his or her possible criminal activity was intended to be less than the standard for probable cause to arrest. The standard is reasonable suspicion, and it requires an objective test of observable facts. Whether the suspicion is reasonable often will depend on the inferences drawn from the particular circumstances confronting the officer, viewed in the light of the officer's experience. If a police officer is able to point to specific and articulable facts that give rise to a reasonable inference that a person has committed a crime, the officer has `reasonable suspicion' and hence may stop the person for investigation."
State v. Ehly, 317 Or. 66, 80, 854 P.2d 421 (1993) (citations and footnote omitted).
In this case, Swanson derived his suspicions about defendant on the basis of objective and observable facts and the inferences that he drew from them. Specifically, he saw defendant transporting cedar on a public highway after dark in a forest area where the state owns most of the land and where it is illegal to cut cedar. From those facts it was not unreasonable to infer that defendant might have obtained and transported the cedar illegally. Defendant is correct that it certainly was possible that defendant had cut the cedar on private land and that he had done so lawfully. But the fact that there are possible lawful explanations for behavior does not mean that it does not also give rise to reasonable suspicion of criminality. See, e.g., State v. Bowcutt, 62 Or.App. 591, 594-95, 661 P.2d 565, rev den 295 Or. 773, 670 P.2d 1036 (1983) (officers' information that the defendant had a gun in a vehicle provided reasonable suspicion that the gun was carried without a permit).
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1125195/ | 779 So.2d 529 (2000)
CORVETTE SHOP & SUPPLIES, INC., and Daniel Morgan, Appellants,
v.
Emma Lou COGGINS and Susan Coggins, Appellees.
No. 2D99-3405.
District Court of Appeal of Florida, Second District.
December 15, 2000.
Rehearing Denied January 18, 2001.
*530 Wayne S. Timmerman, Tampa, and Thomas A. Smith, Tampa, for Appellants.
Dennis G. Diecidue, Tampa, and Charles P. Schropp of Schropp, Buell & Elligett, P.A., Tampa, for Appellees.
WHATLEY, Judge.
Corvette Shop & Supplies, Inc., and Daniel Morgan appeal a final judgment and an award of attorney's fees entered in favor of Emma Lou Coggins and Susan Coggins. The final judgment was entered in favor of the Cogginses as to their claims for deceptive and unfair trade practices and negligent misrepresentation. We find no error in the entry of the final judgment and affirm it without discussion. We also affirm the award of attorney's fees; however, we reverse the application of the contingency risk multiplier to the fee award.
The trial court granted attorney's fees pursuant to section 501.2105, Florida Statutes (1995). We first address the argument of Corvette Shop and Morgan that there was no basis for the fee award as the contingent fee contract was not reduced to writing until after the trial, and therefore, the Cogginses were not obligated to pay their attorney's fees. We note that the oral agreement for attorney's fees was reduced to writing before the final judgment was entered.[1] Therefore, the question presented is whether attorney's fees may be recovered by the prevailing party pursuant to section 501.2105 where the contingency fee agreement was signed after the trial but before the final judgment was entered. We conclude that attorney's fees may be awarded under these circumstances.
Florida Rule of Professional Conduct 4-1.5(f)(2) provides the following:
Every lawyer who accepts a retainer or enters into an agreement, express or implied, for compensation for services rendered or to be rendered in any action, claim, or proceeding whereby the lawyer's compensation is to be dependent or contingent in whole or in part upon the successful prosecution or settlement thereof shall do so only where such fee arrangement is reduced to a written contract, signed by the client, and by a lawyer for the lawyer or for the law firm representing the client. No lawyer or firm may participate in the fee without the consent of the client in writing. Each participating lawyer or law firm shall sign the contract with the client and shall agree to assume joint legal responsibility to the client for the performance of the services in question as if each were partners of the other lawyer or law firm involved. The client shall be furnished with a copy of the signed contract and any subsequent notices or consents. All provisions of this rule shall apply to such fee contract.
In support of their position, Corvette Shop and Morgan cite this rule and Chandris, S.A. v. Yanakakis, 668 So.2d 180 *531 (Fla.1995). In Chandris, the supreme court held that if a contingent fee contract fails to comply with the rules of professional conduct, it is against public policy and is not enforceable by the attorney who has violated the rule. See 668 So.2d at 185-186.
While we recognize that strict compliance with the rule is always prudent, we nevertheless conclude that the rule is intended to protect the client and is not intended to shield a nonprevailing party from the payment of attorney's fees. Compare Chandris, 668 So.2d 180 (client failed to honor a contingent fee contract that did not comply with the rule). Therefore, the award of attorney's fees in the present case was correct.
We next address the argument of Corvette Shop and Morgan that the trial court improperly applied a multiplier to the fee amount. We agree with this argument and reverse the multiplier amount. Stewart Select Cars, Inc. v. Moore, 619 So.2d 1037 (Fla. 4th DCA 1993), is directly on point. In Stewart, the Fourth District held that the application of the contingency risk multiplier is inappropriate where "the primary statute relied upon ... for recovery of attorney's fees is section 501.2105, Florida Statutes (1989) which provides a reasonable attorney fee for the prevailing party `for the hours actually spent on the case.'" 619 So.2d at 1038. We agree with Stewart and hold that the contingency risk multiplier should not have been applied in this case where the award of attorney's fees was based on section 501.2105.
Accordingly, we affirm the final judgment and the award of attorney's fees; however we reverse the application of a contingency risk multiplier to the fee award.
ALTENBERND, A.C.J., and DAVIS, J., Concur.
NOTES
[1] There has been no allegation suggesting unethical conduct. The failure to reduce the fee agreement to writing appears to have been an oversight. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1125197/ | 779 So.2d 1048 (2001)
Curtis ROBICHEAUX, et al.
v.
Camran G. ADLY, M.D., et al.
No. 00-1207.
Court of Appeal of Louisiana, Third Circuit.
January 31, 2001.
*1050 L. Clayton Burgess, Lafayette, LA, Counsel for Plaintiffs/Appellants, Curtis Robicheaux, et al.
Burleigh G. Doga, Crowley, LA, Counsel for Defendant/Appellee, Camran G. Adly, M.D.
Nicholas J. Sigur, Lafayette, LA, Counsel for Defendant/Appellee, American Legion Hospital d/b/a Pauline Faulk Centre for Behavior Health.
Marc W. Judice, Judice & Adley, Lafayette, LA, Counsel for Defendant-Appellee, Louisiana Medical Mutual Insurance Co. (LAMMICO).
Nicholas Gachassin, Jr., Gachassin & Hunter, Lafayette, LA, Counsel for Defendant/Appellee, Morris Lahasky Nursing Home.
Donald S. Zuber, Seale, Smith, Zuber & Barnette, Baton Rouge, LA, Counsel for Defendant/Appellee, Dauterive Hospital Corporation.
Court composed of Judge THIBODEAUX, Judge PETERS and Judge PICKETT.
THIBODEAUX, Judge.
The plaintiffs/appellants, Curtis Robicheaux, individually and on behalf of/and as natural tutor of the minor child, Kisha Robicheaux; Kelvin Robicheaux, Kirk Robicheaux, and Kasey Robicheaux, appeal the judgment of the trial court granting summary judgment in favor of the defendant/appellee, Louisiana Medical Mutual Insurance Company (hereinafter "LAMMICO"). The Robicheauxs filed a petition for damages against Camran G. Adly, M.D., and American Legion Hospital, Inc., d/b/a The Pauline Faulk Centre for Behavioral Health, for the alleged negligent treatment and misdiagnosis of schizophrenia given to Mrs. Judy Robicheaux. Dr. Adly was insured by LAMMICO under a "claims made" policy during the treatment of Mrs. Robicheaux. LAMMICO did not receive notice of the claim until after the policy had terminated. In response to the claim, LAMMICO filed a motion for summary judgment, maintaining there was no coverage under the terms of the policy. The trial court found that the medical malpractice claim was timely filed against Camran G. Adly, M.D. but was not timely filed against LAMMICO. Thus, the court held that the claim was not covered by the LAMMICO policy and granted LAMMICO's motion for summary judgment. Mr. Robicheaux appeals.
We affirm.
I.
FACTS
On August 16, 1996, the plaintiffs, Curtis Robicheaux, individually and on behalf of/and as natural tutor of the minor child, Kisha Robicheaux; Kelvin Robicheaux, Kirk Robicheaux, and Kasey Robicheaux, (hereinafter "the plaintiffs") filed a petition for damages for the alleged negligent treatment and misdiagnosis of Judy Robicheaux against Dr. Camran Adly, M.D., American Legion Hospital, d/b/a The Pauline Faulk Centre for Behavioral Health, Morris Lahasky Nursing Home, *1051 and Dauterive Hospital Corporation. The plaintiffs contend that Dr. Adly and the American Legion Hospital, Inc., d/b/a The Pauline Faulk Centre for Behavioral Health, failed to properly monitor the treatment rendered by Dr. Adly as well as the effects of the medication administered to Mrs. Robicheaux which resulted in extreme pain and suffering and, ultimately, the premature death of Mrs. Robicheaux.
At the time the plaintiffs filed their petition for damages, Dr. Adly could not be located and a curator ad hoc was appointed to protect his interests. The curator was served with the petition for damages on December 4, 1996. On January 25, 1999, the plaintiffs filed a First Supplemental Petition for Damages naming LAMMICO as a defendant in the case, alleging it was an insurer of Dr. Adly. LAMMICO was served with the Supplemental Petition on February 12, 1999.
Dr. Adly was insured by LAMMICO on a "claims made" basis from January 1, 1995 through January 1, 1996, with a retroactive date of May 7, 1994. Dr. Adly failed to renew his medical malpractice coverage upon its termination on January 1, 1996 and did not purchase a reporting endorsement.
On March 24, 2000, LAMMICO filed a motion for summary judgment. LAMMICO argued that although Dr. Adly treated Mrs. Robicheaux during the policy period, Dr. Adly did not report the claim by the plaintiffs during the policy period. Therefore, since the policy was not renewed and LAMMICO did not receive notice of the claim until after January 1, 1996, there would be no coverage under the terms of the policy.
The trial court granted LAMMICO's motion for summary judgment and it is this judgment that the plaintiffs appeal.
II.
ISSUE
The issue presented for review is whether the trial court erred in granting LAMMICO's motion for summary judgment despite the statutory language of La.R.S. 22:629, Louisiana's Direct Action Statute, precluding an insurer from limiting the prescriptive period in a policy for a period of less than twelve months.
III.
LAW AND DISCUSSION
Standard of Review
As a general principal, appellate courts review summary judgments de novo, under the same criteria which governs the district court's consideration of whether summary judgment is appropriate. Schroeder v. Board of Sup'rs of Louisiana State Univ., 591 So.2d 342 (La.1991). A motion for summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact, and that mover is entitled to judgment as a matter of law." La.Code Civ.P. art. 966(B).
The burden of production remains with the mover to show that no material issues of fact exist. La.Code Civ.P. art. 966(C)(2). The mover must present supportive evidence that the motion for summary judgment should be granted. Landry v. Fincke, 98-90 (La. App. 3 Cir. 5/20/98), 714 So.2d 826. Once the mover has made a prima facie showing that the motion for summary judgment should be granted, the burden of production shifts to the nonmoving party to present evidence demonstrating the existence of issues of material fact which preclude summary judgment. Hayes v. Autin, 96-287 (La.App. 3 Cir. 12/26/96), 685 So.2d 691, writ denied, 97-0281 (La.3/14/97), 690 So.2d 41.
Coverage Under "Claims Made" Policies
A "claims made" policy is distinguished from an "occurrence" policy as follows:
*1052 With the development of a more complex society, it became more reasonable, particularly with respect to the activities of professionals, to insure against the making of claims, rather than the happening of occurrences, and "claims made" insurance developed to meet a need for professionals to insure against the making of a claim as the insured event, rather than having to struggle with traditional concepts and difficulties inherent in determining whether the "event" insured against was the commission of an act, error or omission or the date of discovery thereof or the date of injury caused thereby.
The major distinction between the "occurrence" policy and the "claims made" policy constitutes the difference between the peril insured. In the "occurrence" policy, the peril insured is the "occurrence" itself. Once the "occurrence" takes place, coverage attaches even though the claim may not be made for some time thereafter. While in the "claims made" policy, it is the making of the claim which is the event and peril being insured and, subject to policy language, regardless of when the occurrence took place.
Sol Kroll, The Professional Liability Policy "Claims Made," 13 Forum 842, 843 (1978).
Thus, a "claims made" insurance policy is one in which coverage attaches only if the negligent harm is discovered and reported within the policy period. Ward v. Vizzini, 94-638 (La.App. 5 Cir. 5/14/97), 695 So.2d 1012, writ denied, 97-2142 (La.11/14/97), 703 So.2d 632. "Where a policy unambiguously and clearly limits coverage to acts discovered and reported during the policy term, such limitation of liability is not per se impermissible." Livingston Parish School Bd. v. Fireman's Fund Am. Ins. Co., 282 So.2d 478, 481 (La.1973). This is in accordance with the general principle that, in the absence of conflict with statute or public policy, insurers may by unambiguous and clearly noticeable provisions limit their liability and impose such reasonable conditions as they wish upon the obligations they assume by their contract. Anderson v. Ichinose, 98-2157 (La.9/8/99), 760 So.2d 302. However, an insurer cannot limit the prescriptive period in a policy for a period of less than twelve months. La.R.S. 22:629.
LAMMICO issued to Dr. Adly a professional liability policy of insurance, policy number 1-74492, for a period effective from January 1, 1995 through January 1, 1996, with a retroactive date of May 7, 1994. The pertinent policy language reads:
"NOTICEThis is known as a `claims made' policy. Except to the extent as may be provided herein, this coverage is limited to claims first made against the Company while the policy is in force and arising from the performance of professional services subsequent to the retroactive date stated in the declarations page. Please read the policy carefully."
The "Coverage Agreement" for "Coverage AIndividual Professional Liability" provides:
All sums which the insured shall become legally obligated to pay as damages because of injury to which this insurance applies, caused by a medical incident, which occurs subsequent to the retroactive date, and for which claim is first made against the insured and reported to the company during the policy period, the practice of the insured's profession as a physician or surgeon including service by the insured as a member of a formal accreditation, standards review or similar medical professional board or committee.
The language of the policy regarding when LAMMICO considers a claim to be made reads as follows:
A claim for injury shall be considered as being first made at the earlier of the following times:
(a) when the insured first gives written notice to the company that a claim had been made against him, or
*1053 (b) when the insured first gives written notice to the company of specific circumstances involving a particular person which may result in a claim.
Thus, according to the policy language, claims had to be made against the insured, Dr. Adly, and reported to the insurer, LAMMICO, during the policy period between January 1, 1995 and January 1, 1996. Also, Dr. Adly did not choose to purchase an extended reporting endorsement which would have provided coverage for claims which arose during the policy period but were not reported until after the expiration date of the policy.
There is no dispute that LAMMICO issued an insurance policy to Dr. Adly. There is also no dispute that Dr. Adly treated Mrs. Robicheaux during the policy period. The dispute is over "notice" to the company.
There is an apparent conflict between the policy language at issue and applicable statutory law. Further, "[a]n insurer is not at liberty to limit its liability and impose conditions upon its obligations that conflict with statutory law or public policy." Block v. Reliance Ins. Co., 433 So.2d 1040, 1044 (La.1983); See also Trevino v. Prudential Ins. Co., 504 So.2d 1179 (La.App. 3 Cir.), writ denied, 506 So.2d 1230 (La.1987).
In this case, the statute at issue is La. R.S. 22:629 which provides in pertinent part as follows:
A. No insurance contract delivered or issued for delivery in this state and covering subjects located, resident, or to be performed in this state or any group health and accident policy insuring a resident of this state, regardless of where made or delivered shall contain any condition, stipulation, or agreement:
. . . .
(3) Limiting right of action against the insurer to a period of less than twelve months next after the inception of the loss when the claim arises under any insurance classified and defined in R.S. 22:6(10), (11), (12), and (13), or to a period of less than one year from the time when the cause of action accrues in connection with all other insurances unless otherwise specifically provided in this Code.
B. Any such condition, stipulation, or agreement in violation of this Section shall be void, but such voiding shall not affect the validity of the other provisions of the contract.
Also, there are other specific provisions of Louisiana law including La.R.S. 9:5628 and La.R.S. 40:1299.45 which are relevant to this case. Time limitations for which a person may file a medical malpractice claim are governed by La.R.S. 9:5628 which provides in pertinent part:
A. No action for damages for injury or death against any physician, ..., whether based upon tort, or breach of contract, or otherwise, arising out of patient care shall be brought unless filed within one year from the date of the alleged act, omission, or neglect, or within one year from the date of discovery of the alleged act, omission, or neglect; however, even as to claims filed within one year from the date of such discovery, in all events such claims shall be filed at the latest within a period of three years from the date of the alleged act, omission, or neglect.
La.R.S. 40:1299.45 provides in pertinent part:
A. (1) Only while malpractice liability insurance remains in force ... are the health care provider and his insurer liable to a patient ... for malpractice to the extent and in the manner specified in this Part.
. . . .
C. Any provision in a policy attempting to limit or modify the liability of the insurer contrary to the provisions of this Part is void, except that a provision in a malpractice liability insurance policy approved by the board which limits the aggregate sum for which the insurer *1054 may be liable during the policy period shall be valid.
The clear statutory language quoted in both La.R.S. 9:5628 and La.R.S. 22:629 states that a policy of insurance cannot limit the right of an insured to bring an action to a period of less than one year. Mrs. Robicheaux died on December 6, 1995. The plaintiffs filed their suit against Dr. Adly and the hospital on August 16, 1996. Thus, under La.R.S. 9:5628, the plaintiffs suit was timely brought against Dr. Adly. LAMMICO first received notice of the claim against Dr. Adly on February 12, 1999, when personal service was made on its agent for service of process. LAMMICO received notice of the plaintiffs' claim well over two years after suit was timely brought against Dr. Adly and nearly four years after the death of Mrs. Robicheaux. However, given the facts of this case, the plaintiffs had ample time to bring suit against LAMMICO, Dr. Adly's insurer. Justice Tate, writing for the Louisiana Supreme Court in Livingston, recognized that "claims made" policies may be against public policy in some situations. See Livingston, 282 So.2d at 481, n. 4. A policy provision which effectively reduces the prescriptive period against the insurer to less that the statutorily mandated period is without effect. However, that was not the situation in this case. If the alleged incident occurs within the policy period, and a claim is filed outside of the policy period but within one year of the alleged incident, and the insurer is notified of the claim within one year of the alleged incident, coverage will be afforded under the claims made policy in order to conform to Louisiana law. Hedgepeth v. Guerin, 96-1044 (La.App. 1 Cir. 3/27/97), 691 So.2d 1355, writ denied, 97-1377 (La.9/26/97), 701 So.2d 983; Cf. Gary v. Witherspoon, 98-1810 (La.App. 3 Cir. 6/2/99), 743 So.2d 708.
Therefore, the limitation in the LAMMICO policy was not violative of the provisions of La.R.S. 22:629 because an application of the LAMMICO policy to the particular facts of this case did not serve to impermissibly limit the time in which the plaintiffs could bring a direct action claim against LAMMICO. Summarily, although Dr. Adly's "claims made" policy had a limitation, when the facts of this case are considered, it did not shorten the statutorily mandated period dictated by La. R.S. 9:5628 or La.R.S. 22:629.
Considering the fact that Dr. Adly could not be located when they filed their petition for damages against Dr. Adly, plaintiffs could have amended their petition to name LAMMICO as a defendant at that time. However, the plaintiffs did not amend their petition for damages to include LAMMICO until two years later putting LAMMICO on notice of the claim on February 12, 1999.
The Louisiana Supreme Court has clearly stated that the direct action statute does not extend the protection of the liability policy to risks that were not covered by the policy or were excluded thereby. Anderson, 760 So.2d 302.
The unambiguous terms of the policy in the present case limit coverage to professional services for which claims were made during the policy period. No claim was made against either the insured or the insurer during the policy period, and the insured has no right to coverage under the terms of the policy. Under these circumstances, the Direct Action Statute does not extend any greater right to third party tort victims who were damaged by the insured.
Anderson, 760 So.2d at 307. The plaintiffs have presented no evidence to suggest that LAMMICO had reason to know of the claim against Dr. Adly prior to February 12, 1999 or within a year of the accrual of plaintiffs' cause of action. No evidence has been presented to suggest that Dr. Adly ever notified LAMMICO of a potential claim within the effective policy period or within a year of the accrual of the cause of action. The event triggering coverage in a claims made policy is the making of a *1055 claim. The plaintiffs did not bring a claim within the LAMMICO policy period. Additionally, the plaintiffs did not report the claim to the insurer, LAMMICO, within one year of the date from accrual of the cause of action.
IV.
CONCLUSION
The Louisiana Supreme Court has determined that "claims made" policies whose explicit terms require the reporting or making a claim within the policy period in order for coverage to exist are not contrary to public policy. Anderson, 760 So.2d 302. Plaintiffs have failed to present evidence that a claim was made within the policy period or within a year of the accrual of the cause of action. The LAMMICO policy was effective between January 1, 1995 and January 1, 1996. The plaintiffs first filed a petition for damages against Dr. Adly on August 16, 1996, after the LAMMICO policy had terminated. Further, the plaintiffs did not notify LAMMICO, Dr. Adly's insurer, of the claim until February 12, 1999, well after a violation of Louisiana law or public policy would have occurred.
For the foregoing reasons, the judgment in favor of LAMMICO and against the plaintiffs, Curtis Robicheaux, individually and on behalf of/and as natural tutor of the minor child, Kisha Robicheaux; Kelvin Robicheaux, Kirk Robicheaux, and Kasey Robicheaux, is affirmed. Plaintiffs are ordered to pay all costs of this appeal.
AFFIRMED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1125198/ | 779 So.2d 520 (2000)
Antonio B. GONZALES, Appellant,
v.
STATE of Florida, Appellee.
No. 2D00-505.
District Court of Appeal of Florida, Second District.
December 13, 2000.
James Marion Moorman, Public Defender, and Kevin Briggs, Assistant Public Defender, Bartow, for Appellant.
Robert A. Butterworth, Attorney General, Tallahassee, and Anne S. Weiner, Assistant Attorney General, Tampa, for Appellee.
GREEN, Judge.
The appellant was sentenced under the 1995 guidelines that were found to be unconstitutional under Heggs v. State, 759 So.2d 620 (Fla.2000). We affirm the sentence.
Appellant's sentence was imposed after a hearing on a violation of probation. His sentence is at the bottom of the 1995 guidelines, but within the 1994 guidelines. Therefore, he is not entitled to resentencing under Heggs.
Affirmed.
BLUE, J., Concurs.
ALTENBERND, A.C.J., Concurs specially with an opinion in which BLUE, J., Concurs.
ALTENBERND, Acting Chief Judge, Concurring.
This result is required by the supreme court's decision in Heggs v. State, 759 So.2d 620 (Fla.2000). Mr. Gonzales pleaded nolo contendere in August 1996 to charges of aggravated battery and violation of a domestic violence injunction. Because he had no prior record, he received a year in county jail and 2 years' probation. He violated his probation by several actions that were not new substantive offenses. Although Judge Pack concluded that these rather technical violations warranted a revocation of probation and a new term of imprisonment, he sentenced Mr. Gonzales to 39 months' imprisonment, the shortest possible sentence on the scoresheet.
There is no dispute that the trial court used an unconstitutional 1995 scoresheet when it sentenced Mr. Gonzales on February 10, 2000. If the trial court had relied upon a correct 1994 scoresheet, his score would have been 14 points lower. Thus, the trial court could have imposed a sentence as short as 25 months' imprisonment. Even if the trial court had chosen to impose a sentence longer than the minimum sentence under the 1994 scoresheet, it is very likely that Mr. Gonzales would have fully served that sentence by today.[1]*521 Moreover, the supreme court issued its decision in Heggs on February 17, 2000. See 759 So.2d 620. Had Mr. Gonzales been sentenced a few days later, the trial court would have been obligated to use the proper 1994 scoresheet.
Nevertheless, under Heggs, Mr. Gonzales is not entitled to relief because the 39-month sentence would not be an upward departure sentence under the 1994 guidelines. In other words, although Mr. Gonzales' sentence is "erroneous" due to an error of law, he is not entitled to relief on direct appeal because his sentence is not "illegal." See State v. Callaway, 658 So.2d 983, 987-88 (Fla.1995), receded from on other grounds, Dixon v. State, 730 So.2d 265 (Fla.1999); Judge v. State, 596 So.2d 73, 76-77 (Fla. 2d DCA 1992) (en banc).
The error in this case is of constitutional dimension. It is also a facial scoresheet error. Prior to Heggs, when a scoresheet error reached this magnitude, appellate courts in Florida regularly reversed sentences and required the trial court to resentence the defendant with a correct scoresheet. See, e.g., Sellers v. State, 578 So.2d 339, 341 (Fla. 1st DCA 1991); Drayton v. State, 744 So.2d 584 (Fla. 2d DCA 1999); Horn v. State, 736 So.2d 728 (Fla. 2d DCA 1999); White v. State, 728 So.2d 322 (Fla. 2d DCA 1999); Carter v. State, 705 So.2d 582 (Fla. 2d DCA 1997); Vitanzo v. State, 750 So.2d 662 (Fla. 1st DCA 1999); Hayes v. State, 748 So.2d 1042 (Fla. 3d DCA 1999); Campbell v. State, 745 So.2d 399 (Fla. 1st DCA 1999); Hyman v. State, 744 So.2d 566 (Fla. 1st DCA 1999); Spioch v. State, 742 So.2d 817 (Fla. 5th DCA 1999); Jimerson v. State, 724 So.2d 170 (Fla. 4th DCA 1998); Lane v. State, 722 So.2d 288 (Fla. 5th DCA 1998). If we were correct in ordering resentencing for such errors when they were not of constitutional dimension, with all due respect to the supreme court, it is difficult to understand why Mr. Gonzales is not entitled to be resentenced in this case. The creation of the "illegal sentence" standard of review in Heggs to measure or determine whether a sentencing error is harmful on direct appeal will create confusion about the appropriate standard of review under which to determine the harmfulness of other sentencing errors in the future.
NOTES
[1] Mr. Gonzales had already earned 585 days of jail credit by the time of this sentencing. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1773998/ | 572 S.W.2d 4 (1978)
SIBONEY CORPORATION, Appellant,
v.
CHICAGO PNEUMATIC TOOL COMPANY, Appellee.
No. 17089.
Court of Civil Appeals of Texas, Houston (1st Dist.).
May 25, 1978.
Rehearing Denied June 22, 1978.
*5 Ellis F. Morris, Houston, for appellant.
Baker & Botts, David P. Cotellesse, Houston, for appellee.
PEDEN, Justice.
Siboney Corporation appeals from the granting of a deficiency judgment in favor of Chicago Pneumatic Tool Company, the owner and holder of a note. Chicago Pneumatic repossessed the collateral for the note, held a public sale and then brought this action for the deficiency. The jury found that Chicago Pneumatic sent reasonable notice of the sale to Siboney, declined to find that Chicago Pneumatic failed to act in a commercially reasonable manner or that the $100,000 received for the collateral was grossly inadequate but found that the fair market value of the equipment at the time of the sale was $150,000. The court entered judgment on this verdict in favor of Chicago Pneumatic for the amount of the deficiency plus interest and attorneys' fees. Siboney argues on appeal that the notice was insufficient, so the sale was not commercially reasonable as a matter of law, that the sale price was grossly inadequate as a matter of law, that the findings as to commercial reasonableness and as to adequacy of the sale price were not supported by the evidence, and that a remittitur should be ordered. Appellant also claims that the appellee failed to rebut a presumption that the value of the collateral equals the debt. We affirm.
In February, 1969 MoRoCo, Inc., executed a $296,255 note and a chattel mortgage in favor of Compression Fabricators, Inc. for the purchase of 3 Chicago Pneumatic air compressors. Compression Fabricators assigned the note to Chicago Pneumatic, and Siboney assumed the liabilities of Compression Fabricators when it acquired that company in 1969. In December of that year Siboney purchased the air compressors from MoRoCo and assumed the primary obligation on the note. Siboney gave Compression possession of the equipment, and Compression continued to make the payments for a time but stopped in the spring of 1971.
Chicago Pneumatic repossessed the compressors in Las Vegas, Nevada, shipped them to Houston and stored them at the yard of Texas Commercial Industries, Inc., where it conducted a public sale on October 4, 1971. Chicago Pneumatic purchased the compressors on its bid of $100,000, credited the proceeds of the sale to the note, unsuccessfully demanded the deficit and instituted this suit.
Appellant's first point of error is that the notice of sale given by Chicago Pneumatic to Siboney did not meet the reasonable notification requirements of § 9.504(c) of the Texas Business and Commerce Code, so the sale was not commercially reasonable as a matter of law.
§ 9.504(c) of the Texas Business and Commerce Code states that "... reasonable notification of the time and place of any public sale or reasonable notification of the time after which any private sale or other intended disposition is to be made shall be sent by the secured party to the debtor." This is the notice sent by Chicago Pneumatic and received by Siboney:
*6 Notice of Sale
"On October 4, 1971, at 1:00 p. m. at Texas Commercial Industries, Inc., 11601 North Houston-Rosslyn Road, the following described property of Compression, Inc. of Houston, Texas will be exposed to sale at public auction without reserve:
"3 High Chicago Pneumatic Air Compressors, as follows: (1) CP5FE-43 Serial Nos. 80893, 81254, 81256, 82260 and 80851, Caterpillar Engine D398B, Serial No. 75B-848. (2) CP5FE-43, Serial Nos. 80892, 81255, 81258, 82259 and 81006, Caterpillar Engine D398 B Serial No. 75B847. (3) CP-6FE-21 Serial Nos. 81715, 80309 and 81225, Caterpillar Engine D398B Serial No. 66B207. Plus miscellaneous items and equipment including controls used in connection therewith and necessary to make complete units.
"This sale is held to enforce the rights of Chicago Pneumatic Tool Company, New York, New York, as assignee arising under a Security Agreement covering the above-described property, the original parties to which were Moroco, Inc., a Nevada Corporation, debtor and Compression Fabricators, Inc., secured party.
"Terms: All Cash.
CHICAGO PNEUMATIC TOOL
COMPANY
By: /s/ Ray A. Gipson
Ray A. Gipson, Attorney
3000 One Shell Plaza
Houston, Texas 77002
XXX-XXX-XXXX"
Mr. Gipson testified that omission of the words "Houston, Texas" after the address of Texas Commercial Industries was an oversight. Siboney argues that this notice was insufficient as a matter of law because it failed to show the city in which the sale was to be held. Whether the acts of a party are reasonable is usually a question of fact. "Reasonable notification" is not defined in the article; we consider that less than a full and complete notice is required. We hold that a fact issue was raised and that the jury was entitled to conclude that the notice was sufficient to inform reasonable business persons of the place of the sale.
The notice was sent to Siboney's Dallas office. The attorney for the creditor who signed the notice gave a Houston address and phone number, the address of the place of sale was given as 11601 North Houston-Rosslyn Road, the name of the property's owner was shown to be Compression, Inc. of Houston, Texas, and Siboney did not produce any evidence that its representatives either did not understand or could not deduce the place of the sale from the notice. Siboney's testimony shows that it merely forwarded the notice to Compression, Inc., a company it had previously owned, and did nothing further. Siboney offered no showing that it was prejudiced by the omission of "Houston, Texas" after the address of Texas Commercial Industries in the notice.
Appellant urges as other points of error:
2. "The jury finding that the sale was commercially reasonable is not supported by the evidence."
4. "As a matter of law, the sale price of the collateral security was for a grossly inadequate price."
5. "The jury finding that the sale price was not grossly inadequate is not supported by the evidence and conflicts with the finding of fair market value."
Among others, the trial court submitted these issues and instructions and received these findings:
Special Issue No. 2
"Do you find from a preponderance of the evidence that Chicago Pneumatic failed to act in a commercially reasonable manner in connection with the public sale of the Equipment?
"ANSWER: `We do' or `We do not'.
"ANSWER: We do not.
"INSTRUCTION:
"By `commercially reasonable' is meant a sale so conducted as would have been conducted by an ordinary and prudent businessman operating under the same or similar circumstances. A commercially reasonable sale is a sale in the usual *7 manner for the Equipment in any recognized market therefor or at the current price in such market at the time of the sale or a sale in conformity with reasonable commercial practices among dealers. The fact that a better price could have been obtained at a different time or in a different method from that selected by Chicago Pneumatic is not of itself sufficient to establish that a public sale was not made in a commercially reasonable manner."
Special Issue No. 3
"Do you find from a preponderance of the evidence that the price of $100,000 for the three compressors at the alleged sale of October 4, 1971 was grossly inadequate consideration?
"ANSWER: `We do' or `We do not.'
"ANSWER: We do not.
"INSTRUCTION:
"The fact that a better price could have been obtained at a different time or in a different manner from that selected by Chicago Pneumatic is not itself sufficient to establish that the sales price realized was grossly inadequate.
"The term `grossly inadequate consideration' means a consideration so far short of the real value of the property as to shock a correct mind, and thereby raise a presumption that fraud attended the purchase."
The jury's answers to these issues are nothing more than a failure or refusal of the jury to find from a preponderance of the evidence that (Issue 2) appellee failed to act in a commercially reasonable manner and (Issue 3) that the sale price was grossly inadequate. The answers mean, in law, that Siboney failed to carry its burden of proving these allegations. C. & R. Transport, Inc. v. Campbell, 406 S.W.2d 191 (Tex. 1966).
Point of error 4 is a no evidence point. We will consider points 2 and 5 to be great weight points even though the appellant did not use that terminology. See Michol O'Connor's Evidence Points on Appeal, at 37 Texas Bar Journal 839, 842. A motion for new trial is no longer a prerequisite for appellate review of a great weight point. Rule 324, Texas Rules of Civil Procedure (1978).
In Pruske v. National Bank of Commerce, 533 S.W.2d 931, 937 (Tex.Civ.App.1976, no writ), the San Antonio Court of Civil Appeals reviewed the evidentiary support for a trial court finding that a sale was commercially reasonable. Elements mentioned by the court were (a) a depressed market, (b) notification to the debtor, (c) adequate newspaper publicity of the sale, (d) adequate opportunity for inspection, (e) acceptance of the highest bid, and (f) minimal expenses of the sale.
The units in question were designed and manufactured for drilling by compressed air. The former Houston district manager for Chicago Pneumatic testified that the condition of the air drilling business in 1971 was very low and people had compressor units standing on their lots. The president of Texas Commercial Industries described the condition of the market for air compressors in 1971 as very poor. We have held that the evidence supports the jury finding that Siboney received reasonable notification of the sale. Appellee published a newspaper ad for two days in a Houston daily newspaper and mailed notices to some 19 used equipment companies. An indication that adequate time was provided is shown by the fact that a Mr. Hart with Energy Incorporated of Oklahoma City, who received one of the mailed notices, came to Houston and inspected the equipment. All but two of the companies notified had done business with Texas Commercial, so they were not misled by failure to state in the notice that Texas Commercial was located in Houston. The units were brought to Houston, where the demand for them was said to be greatest.
The public sale was conducted as an auction, but only two bidders, Chicago Pneumatic and Guinn Equipment, participated. The bidding was opened at $50,000 and went up in $5,000 and $2,500 increments until Chicago Pneumatic placed the *8 top bid of $100,000. There is no evidence of the cost of conducting the sale. We hold this evidence sufficient to support the jury's answer to Issue No. 2.
We also hold that the jury's failure to find that the consideration was grossly inadequate is not contrary to the great weight of the evidence. The appellee's witness testified to the absence of demand for air drilling units. Although the used diesel engines were marketable, most of the demand for compressors is for compressing natural gas, where engines that run on the readily available gas are used instead of diesels. Further, there was testimony that when compressors are transferred from one use to another they usually need to be redesigned and rebuilt because the pressures they are called upon to develop vary a great deal. This is particularly true in compressing gas, the application where the demand is. Witnesses called by the appellee testified to the efforts made to obtain a better price and to their opinion that the one obtained represented the market value of the compressors.
After the collateral was bought at the sale by Chicago Pneumatic, it was later sold to Texas Commercial for the same price, $100,000. That company refabricated it, at some expense, sold it in pieces over a period of eight months, and could obtain only $140,000 for it, a fact suggesting that fraud did not attend the purchase and one that tended to contradict the opinion testimony of appellant's witness that the value of the used air compressors was from $275,000 to $300,000. Nor did the jury's conclusion that the fair market value was $150,000 convince it that the sales price was grossly inadequate. It is well known that full market value is seldom obtained at forced sales.
Appellant contends in its third point of error that appellee was not entitled to a deficiency judgment because it failed to rebut the presumption that the value of the collateral was equal to the amount of the debt. That presumption arises only when the secured party fails to comply with the notice requirement. O'Neil v. Mack Trucks, Inc., 533 S.W.2d 832, 837 (Tex.Civ.App. 1975), rev'd on other grounds, 542 S.W.2d 112 (Tex.1976), recalled and reissued, 551 S.W.2d 32 (Tex.1977); United States v. Whitehouse Plastics, 501 F.2d 692 (5th Cir. 1974), cert. denied, 421 U.S. 912, 95 S. Ct. 1566, 43 L. Ed. 2d 7 (1975). Since the notice question has been resolved in favor of the appellee in our case, that presumption does not arise.
The appellant's sixth and final point of error is that it should receive a $50,000 remittitur because the jury found a fair market value of the collateral to be $150,000. The fact that a better price could have been obtained does not render the sale commercially unreasonable. § 9.507(b) of the Texas Business and Commerce Code. The secured party received reasonable notice and the sale was commercially reasonable; appellee is entitled to recover the full amount of the deficiency.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1853196/ | 327 B.R. 220 (2005)
In re DYCOAL, INC., Debtor.
Dycoal, Inc., et al., Plaintiffs,
v.
Internal Revenue Service, et al., Defendants.
Bankruptcy No. 99-24594-MBM, Adversary No. 05-2206-MBM.
United States Bankruptcy Court, W.D. Pennsylvania.
June 30, 2005.
*221 Michael J. Kaminski, Thorp, Reed & Armstrong, LLP, Pittsburgh, PA, for Dycoal, Inc.
Robert G. Sable, David Swan, McGuire Woods LLP, Pittsburgh, PA, for Northwestern Synfuels LLC, et al.
Joel M. Helmrich, Meyer, Unkovic & Scott, Pittsburgh, PA, for H. Briquetters Ltd., et al.
Dara B. Oliphant, U.S. Department of Justice, Washington, D.C., for Internal Revenue Service.
MEMORANDUM OPINION
M. BRUCE McCULLOUGH, Chief Judge.
Dycoal, Inc., the instant debtor (hereafter "the Debtor"), and other entities who claim to presently hold ownership interests in five briquetters (hereafter collectively "Plaintiffs"), which briquetters (hereafter "the Briquetters") were owned by the Debtor pre-petition but have since been transferred to such entities, bring the instant three-count adversary action against, among other named defendants, the Internal Revenue Service (hereafter "the I.R.S."). Plaintiffs seek the following relief via such adversary action:
(a) a determination by the Court regarding ownership of title to the Briquetters, and, inter alia, a determination that such title no longer rests with the bankruptcy estate of the Debtor (Count I),
(b) a declaration, issued by the Court pursuant to 11 U.S.C. § 505(a)(1), to the apparent effect that synthetic fuel produced by the Briquetters prior to the confirmation of the Debtor's reorganization plan (hereafter "the Plan") qualified for, and thus generated pre-confirmation, tax credits under Internal Revenue Code (I.R.C.) § 29, notwithstanding that a federal income tax return has *222 yet to be filed with the I.R.S., either pre- or post-confirmation, that reflects the utilization of such tax credits so generated (Count II), and
(c) enforcement of the June 2, 2000 court order that confirmed the Plan (hereafter "the Confirmation Order") as against the I.R.S. on the ground that the Confirmation Order and the provisions of the Plan so confirmed bind the I.R.S. such that it may not now challenge factual findings set forth in the Confirmation Order that purport to establish all factual predicates necessary to a determination that the synthetic fuel produced by the Briquetters did, indeed, generate I.R.C. § 29 tax credits (hereafter "the Tax Credit Findings") (Count III).
The I.R.S., who is named as a party defendant in Counts II and III of Plaintiffs' adversary action, brings a motion for judgment on the pleadings. Counts II and III are the only counts for which the I.R.S. is a named party defendant, and the I.R.S. is the sole named party defendant for each such count.
The Court, in an Order of Court dated May 27, 2005, (a) granted such motion by the I.R.S. with respect to Count III, (b) deferred ruling on such motion as it regards Count II, and (c) continued Count I until the Debtor provides further information to the Court so as to enable the Court to grant the relief sought therein. Subsequent to the Court's May 27, 2005 ruling, Plaintiffs moved for reconsideration to alter or amend such ruling as it pertains to Plaintiffs' Count III, and simultaneously filed a memorandum both (a) in support of such motion to reconsider, and (b) with respect to issues touching upon Plaintiffs' Count II, which count the Court has yet to rule upon. The Court will not presently rule upon Plaintiffs' reconsideration request as it respects their Count III given that a future hearing has been scheduled and not yet held regarding the same. However, the Court will now enter its decision regarding Plaintiffs' Count II.
Because the Court's decision regarding Plaintiffs' Count III affects the Court's decision regarding Plaintiffs' Count II, the Court will first say a few words regarding such Count III. The Court ruled in the I.R.S.' favor on Count III because the Court determined, in turn, that the I.R.S. is not bound by the terms of the Plan and the Confirmation Order. The Court held that the I.R.S. is not so bound
because, even presuming arguendo that the I.R.S. was a party-in-interest with respect to the instant bankruptcy case pursuant to 11 U.S.C. § 1109(b), the I.R.S. nevertheless was not, as Plaintiffs apparently concede, one of the parties expressly described in 11 U.S.C. § 1141(a), which statutory provision, the Court holds, sets forth, with exceptions not applicable herein, the universe of parties that may be bound by a confirmed plan or order that confirms such plan, see In re Union Golf of Florida, Inc., 242 B.R. 51, 59-60 (Bankr.M.D.Fla.1998).
Order of Court, dat. May 27, 2005, at 2-3. Such decision is supported not only by the Union Golf decision but also by several decisions cited therein, see Union Golf, 242 B.R. at 56-57 (citing In re Food City, Inc., 110 B.R. 808, 813 (Bankr.W.D.Tex.1990) (holding that "the S.E.C. does not qualify as a `creditor' of the estate bound by the confirmed plan" pursuant to § 1141(a) and that, therefore, "[t]he S.E.C. would thus not be barred from enforcing the securities laws with respect to the violation arising out of the plan notwithstanding its confirmation by court order"), and In re Norwesco Development Corp., 68 B.R. 123, 127 *223 (Bankr.W.D.Pa.1986) (holding that a government agency seeking to enforce a prior order regarding pre-petition acts of a debtor is not bound by a confirmed plan (a) if such agency fails to participate in the confirmation of such plan, (b) if the obligations that such agency seeks to impose upon such debtor do not constitute claims, (c) notwithstanding that such plan purports to treat such debtor's obligations to such agency, and (d) since it thus is not a named entity within § 1141(a))), as well as the U.S. Supreme Court's decision in Holywell Corp. v. Smith, 503 U.S. 47, 58-59, 112 S. Ct. 1021, 1027-1028, 117 L. Ed. 2d 196 (1992) (although creditors with pre-petition claims are bound by a confirmed plan pursuant to § 1141(a), post-petition creditors, because they do not fall within the reach of § 1141(a), are not so bound, even if such post-petition creditors are given a chance to object to a confirmed plan and they choose not to so object). The Court acknowledged in its May 27, 2005 decision that at least one exception apparently exists with respect to the rule that § 1141(a) describes the universe of parties that may be bound by a confirmed plan or confirmation order, but the Court held that such exception does not apply with respect to the I.R.S. in the instant matter. Such exception is when an individual or entity appears and participates in litigation regarding an issue dealt with by a confirmed plan or confirmation order, or is in privity with such an individual or entity, such that such individual or entity (a) rises to the level of a party with respect to such plan or order, and (b) is thus subsequently bound by such plan or order by virtue of an application of the doctrine of res judicata regardless of whether such individual or entity is named within § 1141(a). See Union Golf, 242 B.R. at 59 (citing, and then distinguishing, the decision in In re Justice Oaks II, Ltd., 898 F.2d 1544 (11th Cir.1990), which decision is cited by Plaintiffs but also distinguished by this Court from the matter herein). The Court is presently unaware of any other such exception, and to the extent that any of the cases cited by Plaintiffs for the proposition that individuals and entities may be bound even if not named in § 1141(a) stand on anything other than the exception as just described, the Court declines to follow such cases. The Court held on May 27, 2005, and holds at the present time as well, that the exception as just described does not apply to the I.R.S. in the instant matter because, even presuming arguendo that the I.R.S. was a party-in-interest with respect to the instant bankruptcy case pursuant to 11 U.S.C. § 1109(b), thereby providing the I.R.S. with the right to appear and participate, the I.R.S. chose not to so appear and participate and thus did not become a party for purposes of the doctrine of res judicata.[1] In light of the foregoing, the Court held on May 27, 2005, and holds now, that the I.R.S. is not bound *224 by the terms of the Plan and the Confirmation Order.
Plaintiffs contend that, even if, as the Court has now ruled, the I.R.S. is not bound by the terms of the Plan and the Confirmation Order so that the I.R.S. is free, if it so chooses ultimately, to challenge the Tax Credit Findings, the Court may nevertheless, by now granting to Plaintiffs the § 505(a)(1) declaratory relief that they seek via Count II, reaffirm, and thus thereby henceforth preclude the I.R.S. from challenging, the Tax Credit Findings. The Court finds that Plaintiffs are correct that, if, as Plaintiffs wish, the Court declares, pursuant to § 505(a)(1), that the pre-confirmation I.R.C. § 29 tax credits asserted to have been earned by the Debtor by way of the synthetic fuel that was produced pre-confirmation by the Briquetters (hereafter "the Pre-Confirmation Tax Credits") are valid or viable, then the Court necessarily will (a) have reaffirmed the Tax Credit Findings given that such tax credits are dependent upon the making of such findings, and (b) thereby preclude the I.R.S. henceforth from challenging such findings.
The I.R.S., for several reasons, contends that (a) the Court may not, pursuant to 11 U.S.C. § 505(a)(1), declare that the Pre-Confirmation Tax Credits are valid or viable, and (b) judgment should thus be granted in its favor at this time on Count II. First, the I.R.S. contends that § 505(a)(1), by its express terms, only grants to the Court authority to make a determination, that is a declaration, regarding an existent tax liability of a debtor, not a declaration as to a mere tax issue that may impact upon a future tax liability of such debtor. The foregoing is fatal to Plaintiffs' Count II, argues the I.R.S., because, it argues in turn, Plaintiffs, by seeking a declaration as to the validity or viability of the Pre-Confirmation Tax Credits, could not possibly seek presently a determination as to an existent tax liability given that a federal income tax return has yet to be filed with the I.R.S., either pre- or post-confirmation, that reflects the calculation of a tax liability predicated in part upon the utilization of the Pre-Confirmation Tax Credits. Second, the I.R.S. maintains that declaratory relief regarding the validity or viability of the Pre-Confirmation Tax Credits would be inappropriate at this time since, argues the I.R.S. in turn, it has not yet (a) disallowed the Pre-Confirmation Tax Credits, or (b) challenged, for that matter, the Tax Credit Findings upon which such credits depend. Put differently, the I.R.S. contends that the declaratory judgment action as pled in Plaintiffs' Count II is not ripe for adjudication by the Court at this time, that is that an actual controversy is not pled therein. Finally, the I.R.S. contends that (a) the Court, as a matter of law, lacks subject matter jurisdiction to rule upon a post-confirmation tax liability via § 505(a)(1), (b) the validity or viability of the Pre-Confirmation Tax Credits could only be relevant to a future post-confirmation tax liability given that a federal income tax return has yet to be filed with the I.R.S., either pre- or post-confirmation, that reflects the calculation of a tax liability predicated in part upon the utilization of the Pre-Confirmation Tax Credits, and (c) the Court thus lacks jurisdiction to rule upon the validity or viability of the Pre-Confirmation Tax Credits via § 505(a)(1).
Plaintiffs, as one would expect, take issue with each of the foregoing arguments of the I.R.S. First, Plaintiffs maintain that the Court, when ruling under § 505(a)(1), is not confined to only ruling upon existent tax liabilities of such debtor Plaintiffs thus argue that the Court can, pursuant to § 505(a)(1), make determinations regarding tax issues that merely impact upon a future tax liability of a debtor. Second, *225 the Court understands Plaintiffs to argue that, and because, the successful implementation of the Plan is based, in large part, upon a present adjudication that the Pre-Confirmation Tax Credits are valid or viable, a declaratory judgment action regarding the validity or viability of such credits is thus ripe for adjudication. Finally, Plaintiffs argue that (a) the Court may pass upon a post-confirmation tax liability provided that, to do so, it need only consider pre-confirmation events, and (b) the earning of the Pre-Confirmation Tax Credits constituted a pre-confirmation event.
For the reasons set forth below the Court determines that it (a) may not, pursuant to 11 U.S.C. § 505(a)(1), declare that the Pre-Confirmation Tax Credits are valid or viable, and (b) thus shall grant the I.R.S.' motion for judgment on the pleadings with respect to Count II.[2]
DISCUSSION
I. What Plaintiffs actually seek via their Count II.
As an initial matter, the Court wishes to address the following representation made by Plaintiffs in one of their last responses to the I.R.S.' motion for judgment on the pleadings:
Plaintiffs are seeking reaffirmation of factual findings contained in the Confirmation Order that relate to facts that predate the bankruptcy case. These facts lay the factual foundation for entitlement to tax credits as of the date on which the Debtor filed its petition for relief under Chapter 11 of the Bankruptcy Code. The legal result which may follow that factual determination is not presently at issue here.
See Pls.' Br. dat. 5/25/05, at p. 4 (Resp.# 5). By making such a statement, what Plaintiffs essentially thereby represent to the Court is that, via their Count II, all that they wish to obtain in the way of relief is a reaffirmation of the Tax Credit Findings rather than, as well, a declaration that the Pre-Confirmation Tax Credits are valid or viable. The Court disagrees with such representation by Plaintiffs for two reasons. First, Plaintiffs, throughout their papers, make clear that they also wish to obtain a declaration from the Court that the Pre-Confirmation Tax Credits are valid or viable. Second, and perhaps more importantly, if what Plaintiffs wish to obtain via their Count II is a reaffirmation of the Tax Credit Findings that will now be binding upon the I.R.S. (and there is no question that such is precisely that which is sought by Plaintiffs), then Plaintiffs must (a) attempt to proceed under § 505(a)(1), as they in fact expressly seek to do via such count, given that such statutory provision is the only conceivable avenue by which Plaintiffs can so bind the I.R.S., (b) seek a tax-related declaration given that such is solely that which is the subject of § 505(a)(1), and (c) hope that, as a matter of law, they may obtain, via § 505(a)(1), a declaration regarding but a tax issue that impacts upon a tax liability of the Debtor, namely the validity or viability of the tax credits that depend upon the Tax Credit Findings, that is the Pre-Confirmation Tax Credits.
The Court rules that a § 505(a)(1) declaratory judgment action is the only conceivable avenue by which Plaintiffs can obtain a reaffirmation of the *226 Tax Credit Findings that will be binding upon the I.R.S. (a) because, even if Plaintiffs are correct that this Court, as a bankruptcy court, is not restricted by the Declaratory Judgment Act, 28 U.S.C. § 2201(a), in the type of federal tax-related declaratory judgment actions that it can preside over,[3] "courts of bankruptcy, like any other courts, [nevertheless] have no power to afford declaratory relief unless affirmatively authorized to do so by some statutory provision," In re Becker's Motor Transportation, Inc., 632 F.2d 242, 247 (3rd Cir.1980), and (b) since § 505(a)(1) is the only statutory provision that provides such affirmative authorization vis-a-vis the Tax Credit Findings that will be binding upon the I.R.S., see Id. (citing the Bankruptcy Act precursor to § 505(a)(1), as well as the Bankruptcy Act precursor to 11 U.S.C. § 105(a), as statutory provisions providing authorization to render declaratory judgments vis-a-vis federal tax claims). The Court holds that § 505(a)(1) provides the only statutory authorization for the declaratory relief that Plaintiffs seek for several reasons. First, § 105(a), by itself, does not provide the Court with sufficient authorization to render a declaratory judgment vis-a-vis a tax issue of a type that would be inconsistent with that which can be granted via § 505(a)(1). See In re Kaplan, 104 F.3d 589, 598 (3rd Cir.1997) ("The broad powers granted to the bankruptcy court under section 105 are insufficient alone to authorize" relief that would otherwise be unavailable under the Code). Second, the Court summarily holds, Plaintiffs' contrary pleas notwithstanding, that 11 U.S.C. § 1142(b) does not provide the Court with authority to grant declaratory relief that would be at odds with that which can be granted via § 505(a)(1) in fact, the Court questions whether § 1142(b) can provide authority for the grant of any type of declaratory relief.[4] Third, the Court summarily rejects Plaintiffs' contention that 11 U.S.C. § 541(a)(1) provides the Court with authority to grant declaratory relief as to the validity or viability of a tax credit. True, § 541(a)(1) vests the Court with authority to determine whether a tax credit constitutes property of a debtor's bankruptcy estate; however, § 541(a)(1) does not give the Court independent authority to do what cannot be done via § 505(a)(1), namely render an advisory opinion as to the validity or viability of such tax credit once it is determined that such tax credit is property of such bankruptcy estate. Finally, neither the decision in U.S. v. Energy Resources Co., Inc., 495 U.S. 545, 110 S. Ct. 2139, 109 L. Ed. 2d 580 (1990), upon which decision Plaintiffs heavily rely, nor the primary statutory authority for the decision therein, that is 11 U.S.C. § 1123(b)(6), see Energy Resources, 495 U.S. at 549, 110 S.Ct. at 2142 (the Supreme Court actually utilized § 1123(b)(5), which is the precursor to the present-day § 1123(b)(6)), authorize this Court to grant declaratory relief regarding the Tax Credit Findings that will bind the I.R.S. With *227 respect to the Energy Resources decision itself, the same is readily distinguishable from the instant matter because, whereas the I.R.S. was a creditor and a party that was bound by a plan and confirmation order in Energy Resources, the I.R.S. is not a creditor and such a party in the instant matter. Not surprisingly then, § 1123(b)(6), upon which the Energy Resources court heavily relied, is of no use regarding authority for the declaratory relief that Plaintiffs seek herein given that (a) such statutory provision provides for nothing other than a plan to "include any other appropriate provision not inconsistent with the applicable provisions of this title," 11 U.S.C.A. § 1123(b)(6) (West 2004), and (b) a plan provision thus authorized regarding the Tax Credit Findings which plan provision actually exists in the Plan and the Confirmation Order nevertheless could not, indeed cannot, for reasons already discussed, bind the I.R.S.
Therefore, and contrary to the substance of the above representation by Plaintiffs, what Plaintiffs seek via their Count II is, at bottom, a declaration, pursuant to § 505(a)(1), that the Pre-Confirmation Tax Credits are valid or viable.
II. Whether Plaintiffs can obtain a § 505(a)(1) declaration that the Pre-Confirmation Tax Credits are valid or viable?
Having held that what Plaintiffs seek via their Count II is, and that § 505(a)(1) is the only conceivable avenue by which Plaintiffs can obtain, a declaration that the Pre-Confirmation Tax Credits are valid or viable, the Court next holds that Plaintiffs cannot obtain, via § 505(a)(1), such declaration. The Court so holds for several reasons, each of which was advanced by the I.R.S. in support of its motion for judgment on the pleadings.
First, the Court, when ruling under § 505(a)(1), is, as a matter of law, confined to only ruling upon existent tax liabilities of a debtor, that is the Court cannot, pursuant to § 505(a)(1), make determinations regarding tax issues that merely impact upon a future tax liability of a debtor. See In re Grand Chevrolet, Inc., 153 B.R. 296, 298-300 (C.D.Cal.1993) ("there is no grant of jurisdiction [under § 505] to decide issues that are antecedent to the determination of tax liability" and no such jurisdictional grant "to determine one issue that will affect the amount of a tax liability on a tax return not yet filed"); In re Inter Urban Broadcasting of Cincinnati, Inc., 180 B.R. 153, 155-156 (Bankr.E.D.La.1995) (same). Second, Plaintiffs, by seeking a declaration as to the validity or viability of the Pre-Confirmation Tax Credits, necessarily seek a determination that cannot be made under § 505(a)(1). The Court so rules because Plaintiffs cannot possibly seek presently a determination as to an existent tax liability predicated in part upon the utilization of the Pre-Confirmation Tax Credits given that a federal income tax return has yet to be filed with the I.R.S., either pre- or post-confirmation, that reflects the calculation of such a tax liability. Third, Plaintiffs' declaratory judgment action regarding the validity or viability of the Pre-Confirmation Tax Credits is not presently ripe for adjudication since the I.R.S. has not yet (a) disallowed the Pre-Confirmation Tax Credits, or (b) challenged the Tax Credit Findings upon which such credits depend.[5]See *228 Grand Chevrolet, 153 B.R. at 299 (no denial by the I.R.S. of tax status sought by the Trustee and "more than a belief that the I.R.S. will deny the consolidated status is necessary to ripen the claim"); Inter Urban Broadcasting, 180 B.R. at 156. That the successful implementation of the Plan is based, in large part, upon a present adjudication that the Pre-Confirmation Tax Credits are valid or viable even if true does not alter the foregoing conclusion that Plaintiffs' Count II request for declaratory relief is presently not ripe for adjudication. See Inter Urban Broadcasting, 180 B.R. at 155-156 (that the debtor may not make distributions pursuant to a confirmed plan absent the declaratory judgment sought by the debtor "do[es] not get around the problem that the [declaratory judgment] complaint ... is not ripe for a decision as to the IRS").[6] Finally, substantial case authority exists for the proposition that a bankruptcy court, as a matter of law, may not pass upon a post-confirmation tax liability under § 505(a)(1), not even if such court can do so by only considering pre-confirmation events. See In re Stayner, 185 B.R. 557, 563 (Bankr.N.D.Ill.1995); In re Holly's, Inc., 172 B.R. 545, 562 (Bankr.W.D.Mich.1994); In re Maley, 152 B.R. 789, 792 (Bankr.W.D.N.Y.1992); In re Hartman Material Handling *229 Systems, Inc., 141 B.R. 802, 812-813 (Bankr.S.D.N.Y.1992). Furthermore, even if contrary case authority i.e., authority to the effect that a bankruptcy court can utilize § 505(a) to make a declaration regarding a post-confirmation tax liability provided that it can do so by only considering pre-confirmation events, see O'Cheskey v. United States, 2001 WL 1658144 at *18 (N.D.Tex.2001) is correct, such authority is of no use to Plaintiffs herein given that (a) not even a post-confirmation tax liability predicated in part upon the utilization of the Pre-Confirmation Tax Credits presently exists of which the Court is aware that could be the subject of a declaratory judgment action under § 505(a), and (b) any such post-confirmation tax liability, even were it to exist, necessarily could not be ruled upon without also considering post-confirmation events such as, for example, the earning of income sufficient to offset the taking of such tax credits.
In light of the foregoing, the Court holds that Plaintiffs cannot obtain a declaration, pursuant to § 505(a)(1), that the Pre-Confirmation Tax Credits are valid or viable.[7] Therefore, Plaintiffs cannot obtain the relief that they seek via their Count II under any set of circumstances. Thus, the Court shall grant the I.R.S.' motion for judgment on the pleadings with respect to Count II.
CONCLUSION
For all of the foregoing reasons, the I.R.S.' motion for judgment on the pleadings shall be granted with respect to Count II.
An appropriate order will be entered.
ORDER OF COURT
AND NOW, this 30th day of June, 2005, for the reasons set forth in the accompanying Memorandum Opinion of the same date;
and in light of the Court's Order dated May 27, 2005, in the same adversary proceeding;
and after notice and a hearing held on May 26, 2005, regarding the I.R.S.' motion for judgment on the pleadings;
and having taken into account the additional arguments made by the parties in their respective briefs filed subsequent to the May 26, 2005 hearing,
it is hereby ORDERED, ADJUDGED, AND DECREED that the I.R.S.' motion for judgment on the pleadings is GRANTED with respect to both Counts II and III of Plaintiffs' three-count adversary action.
NOTES
[1] Plaintiffs cite to the decisions in Stoll v. Gottlieb, 305 U.S. 165, 172, 59 S. Ct. 134, 137-138, 83 L. Ed. 104 (1938), and Nordhoff Investments, Inc. v. Zenith Electronics Corp., 258 F.3d 180, 190 (3rd Cir.2001), as additional authority for the proposition that the I.R.S. is presently bound by the Plan and the Confirmation Order. Unfortunately for Plaintiffs, such decisions do not support their position. The Stoll decision is inapplicable to the instant matter because it is entirely predicated upon an application of the doctrine of res judicata, see Stoll, 305 U.S. at 171-177, 59 S.Ct. at 137-140, which doctrine, as just set forth, does not apply to bind the I.R.S. to the terms of the Plan and the Confirmation Order. As for the decision in Nordhoff Investments, it provides little aid to Plaintiffs' cause in this Court given that it involved an application of the equitable mootness doctrine, which doctrine apparently provides nothing more than an equitable basis for an appellate tribunal which this Court obviously is not to dismiss a bankruptcy appeal that respects a confirmed plan, see Nordhoff Investments, 258 F.3d at 184-185.
[2] Because the Court grants the I.R.S.' motion for judgment on the pleadings with respect to all of the counts for which the I.R.S. is named as a party defendant, the Court need not, and thus will not, address the I.R.S.' position that, by virtue of the doctrine of sovereign immunity, it may not presently be sued by Plaintiffs.
[3] Plaintiffs appear to so argue because they argue, in turn, that a bankruptcy court is not a "court of the United States" within the meaning of the Declaratory Judgment Act, thus freeing such a court from the confines of such statute, which statute operates to substantially limit a "court of the United States" in its ability to render declaratory judgments vis-a-vis federal tax issues.
[4] 11 U.S.C. § 1142(b) only authorizes the Court to "direct the debtor and any other necessary party" to take particular actions. It does not provide authorization for a grant of declaratory relief. As an aside, it would appear that the I.R.S. cannot be a "necessary party" within the meaning of § 1142(b) since the I.R.S., as set forth above, is neither a party that can be bound by the Plan and the Confirmation Order nor is a party for purposes of res judicata.
[5] Plaintiffs also appear to argue that a declaratory judgment action regarding the Tax Credit Findings is presently ripe for adjudication because (a) the Debtor took depreciation deductions with respect to the Briquetters on its 1998 and 1999 federal income tax returns, and (b) such depreciation deductions, argues Plaintiffs, could only have been taken if the placed in service requirements of I.R.C. § 29 with respect to the Briquetters were met (that such requirements were met, of course, constitutes the substance of much, if not all, of the Tax Credit Findings). The Court identifies at least three problems with the preceding argument by Plaintiffs. First, as the Court understands it, whether the Debtor was eligible to take tax depreciation on the Briquetters in 1998 and 1999 depends not upon whether the Briquetters were placed in service within the meaning of I.R.C. § 29 but rather upon whether the Debtor satisfied depreciation eligibility requirements imposed by I.R.C. §§ 167 168 vis-a-vis such machinery (i.e., whether such machinery was owned and used during 1998 and 1999). Second, that the Debtor owned and used such machinery during 1998 and 1999 could not, by itself, establish that such machinery also met all of the placed in service requirements imposed by I.R.C. § 29 given that at least one of the requisite deadlines under § 29 substantially predates 1998 i.e., the requirement in I.R.C. § 29(g)(1)(A) that facilities be placed in service "pursuant to a binding written contract in effect before January 1, 1997." Finally, that the Debtor took tax depreciation on the Briquetters in 1998 and 1999 does not even serve to make ripe for adjudication at this time whether such depreciation deductions were proper given (a) that, as the Court understands it, the I.R.S. thus far has neither disallowed nor even challenged the propriety of such deductions, and (b) that a case or controversy regarding such deductions thus presently does not exist.
[6] The lone case cited by Plaintiffs that the Court finds of any note on the issues of ripeness and the applicability of § 505(a) to a tax question presented before a bankruptcy court is In re Popa, 218 B.R. 420 (Bankr.N.D.Ill.1998), wherein it was held that a declaration regarding the availability of the I.R.C. § 121 homestead exclusion to a bankruptcy estate was warranted under § 505(a), and was ripe as well, notwithstanding that a tax return had not yet been filed wherein was reflected both a sale of the subject realty and the taking of such exclusion. The Court frankly is persuaded neither by the distinction that the Popa court draws between the facts of its case and those presented in Grand Chevrolet and Inter Urban Broadcasting nor by the Popa court's analysis in general vis-a-vis the issues for which Plaintiffs herein cite to such decision. Nevertheless, even if the Popa decision is correct, such decision can be distinguished from the instant matter at least with respect to the issue of ripeness given that the tax exclusion issue raised in Popa was certain to result in a controversy between the bankruptcy trustee therein and the I.R.S. if such trustee attempted to sell the subject realty rather than abandon the same, whereas in the instant matter it is speculative at best whether (a) the Pre-Confirmation Tax Credits could ever be utilized (indeed, the I.R.S. maintains that such tax credits, even if they were at one time valid or viable, now have lapsed), and (b) a controversy would thus ever arise between Plaintiffs and the I.R.S.
[7] Plaintiffs contend, in their last brief at page 6, that, "[i]f the Court properly asserted jurisdiction to make placed in service findings in June, 2000 when it confirmed the [P]lan, then it certainly has jurisdiction to reaffirm such findings today." Unfortunately for Plaintiffs, the Court lacked jurisdiction to bind the I.R.S. in June 2000 even if it had jurisdiction, perhaps via § 1123(b)(6) for instance, to otherwise then make such findings. Because the predicate for such argument by Plaintiffs fails, the argument itself, of course, necessarily also fails. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1856928/ | 942 So. 2d 185 (2006)
O'Neal BIGGS, Appellant
v.
STATE of Mississippi, Appellee.
No. 2004-KA-01163-COA.
Court of Appeals of Mississippi.
January 3, 2006.
Rehearing Denied August 8, 2006.
*187 Ross Parker Simons, attorney for appellant.
Office of the Attorney General by W. Daniel Hinchcliff, attorney for appellee.
EN BANC.
MYERS, P.J., for the Court.
¶ 1. O'Neal Biggs was convicted of felony shoplifting in the Circuit Court of Jackson County and sentenced to serve a five year term in the custody of the Mississippi Department of Corrections, day-to-day. He has appealed his conviction to this court presenting four issues upon which he seeks to have that conviction reversed. These issues are:
I.
A. THE TRIAL COURT ERRED IN DENYING MR. BIGGS' MOTION IN LIMINE AND HIS REQUEST FOR A BIFURCATED TRIAL ON THE MISDEMEANOR SHOPLIFTING CONVICTIONS ALLEGED IN HIS INDICTMENT IN THAT:
1. THE INTRODUCTION INTO EVIDENCE OF MR. BIGGS' ALLEGED PREVIOUS MISDEMEANOR SHOPLIFTING CONVICTIONS VIOLATES THE LONG-HELD PRINCIPLE THAT A DEFENDANT SHALL BE TRIED ONLY FOR ONE CHARGE AT ONE TIME, WITHOUT EXTRANEOUS CONVICTIONS CLOUDING THE MINDS OF JURORS ON THE CASE BEING TRIED.
2. THE CASE LAW THAT PERMITS THIS BY DECLARING THE PRIOR MISDEMEANORS TO BE ELEMENTS OF THE FELONY WHICH MUST BE PROVED BY THE STATE VIOLATES VARIOUS COURT RULES BY PERMITTING JURORS TO INFER GUILT FROM PAST BEHAVIOR, RATHER THAN ON FACTS PRESENTED AT THE INSTANT TRIAL.
B. ADDITIONALLY, THE FAILURE OF TRIAL COUNSEL TO OFFER A LIMITING INSTRUCTION TO BUFFER THE EVIDENTIARY DAMAGE BY THE PRESENTATION OF THE TWO MISDEMEANOR CONVICTIONS SHOULD HAVE BEEN CORRECTED BY THE TRIAL COURT ISSUING ITS OWN LIMITING INSTRUCTION SUA SPONTE.
C. FINALLY, THIS COURT SHOULD RECOGNIZE WEAVER'S PREJUDICIAL EFFECT OF ALLOWING THE STATE TO PROVE PRIOR ENHANCERS TO A JURY AT THE TIME SAME FACTS ARE BEING LITIGATED ON AN IDENTICAL ENHANCED CHARGE AND HOLD THAT JURY BE PERMITTED TO HEAR THE EVIDENCE OF PRIORS ONLY AFTER IT HAS RENDERED A DECISION ON THE INDICTMENT.
*188 II. THE TRIAL COURT ERRED IN DENYING MR. BIGGS' PROFFERED MISDEMEANOR SHOPLIFTING INSTRUCTION WAS SUPPORTED BY CREDIBLE EVIDENCE, AND WITHOUT IT MR. BIGGS WAS PREVENTED FROM PRESENTING TO THE JURY HIS THEORY OF THE CASE, I.E. THAT THE STATE HAD FAILED TO PROVE BEYOND A REASONABLE DOUBT THE EXISTENCE OF ONE OF THE TWO MISDEMEANOR SHOPLIFTING CONVICTIONS CHARGED IN THE INDICTMENT.
III. MR. BIGGS' JURY WAS NOT SWORN WITH ANY TYPE OF PETIT JURORS' OATH, AND HIS VERDICT IS THEREFORE VOID AS HAVING BEEN RETURNED IN VIOLATION OF THE MISSISSIPPI STATUTE REGARDING SAME AS WELL AS THE CONSTITUTION.
IV. THE STATE ADDUCED INSUFFICIENT EVIDENCE TO PROVE THAT THE MR. BIGGS WHO WAS THE SUBJECT OF THE MISDEMEANOR SHOPLIFTING ABSTRACTS WAS THE SAME MR. BIGGS WHO WAS ON TRIAL FOR FELONY SHOPLIFTING. THUS, THE TRIAL COURT ERRED IN DENYING MR. BIGGS' MOTION FOR A DIRECTED VERDICT, HIS PROFFERED PEREMPTORY INSTRUCTION AND HIS POST-TRIAL REQUEST FOR A JNOV.
FACTS
¶ 2. O'Neal Biggs was convicted of felony shoplifting on April 15, 2004. He was indicted for shoplifting $18.59 worth of Duracell batteries from the Fast Lane Store in Pascagoula, Mississippi. Biggs also had been convicted of shoplifting in 1995 and 1999 which elevated the current charge from a misdemeanor to a felony under Mississippi Code Annotated § 97-23-93 (Rev.2000).
¶ 3. On September 17, 2001, a cashier, working at the Fast Lane Store, observed Biggs enter the store and behave in a suspicious manner. Biggs was observed standing near the battery display, when he suddenly exited the store with an obvious bulge in his clothing. While exiting the store Biggs had to grab the bulge to keep it from falling out of his clothes. Upon observing this activity the cashier contacted the police to report the incident. The police apprehended Biggs nearby and discovered batteries in Biggs' possession. The batteries were identified as belonging to the Fast Lane through store price tags. Following the arrest, a determination was made that Biggs had been convicted on two previous occasions for shoplifting and was charged with felony shoplifting. At trial Biggs called no witnesses and put on no evidence. He was convicted of felony shoplifting and was sentenced to a term of five years in the custody of the Mississippi Department of Corrections to serve the term day-to-day.
ANALYSIS
I.
A. THE TRIAL COURT ERRED IN DENYING MR. BIGGS' MOTION IN LIMINE AND HIS REQUEST FOR A BIFURCATED TRIAL ON THE MISDEMEANOR SHOPLIFTING CONVICTIONS ALLEGED IN HIS INDICTMENT IN THAT:
1. THE INTRODUCTION INTO EVIDENCE OF MR. BIGGS' ALLEGED PREVIOUS MISDEMEANOR SHOPLIFTING CONVICTIONS VIOLATES THE LONG-HELD PRINCIPLE THAT A DEFENDANT SHALL BE TRIED ONLY FOR ONE CHARGE AT ONE TIME, WITHOUT EXTRANEOUS *189 CONVICTIONS CLOUDING THE MINDS OF JURORS ON THE CASE BEING TRIED.
2. THE CASE LAW THAT PERMITS THIS BY DECLARING THE PRIOR MISDEMEANORS TO BE ELEMENTS OF THE FELONY WHICH MUST BE PROVED BY THE STATE VIOLATES VARIOUS COURT RULES BY PERMITTING JURORS TO INFER GUILT FROM PAST BEHAVIOR, RATHER THAN ON FACTS PRESENTED AT THE INSTANT TRIAL.
C. FINALLY, THIS COURT SHOULD RECOGNIZE WEAVER'S PREJUDICIAL EFFECT OF ALLOWING THE STATE TO PROVE PRIOR ENHANCERS TO A JURY AT THE TIME SAME FACTS ARE BEING LITIGATED ON AN IDENTICAL ENHANCED CHARGE AND HOLD THAT JURY BE PERMITTED TO HEAR THE EVIDENCE OF PRIORS ONLY AFTER IT HAS RENDERED A DECISION ON THE INDICTMENT.
STANDARD OF REVIEW
¶ 4. When reviewing motions in limine, "this Court applies the following standard:
[A] motion in limine `should be granted only when the trial court finds two factors are present: (1) the material or evidence in question will be inadmissible at a trial under the rules of evidence; and (2) the mere offer, reference, or statements made during trial concerning the material will tend to prejudice the jury.'"
McGilberry v. State, 797 So. 2d 940, 942 (Miss.2001) (quoting Whittley v. City of Meridian, 530 So. 2d 1341, 1344 (Miss. 1988)).
DISCUSSION
¶ 5. Biggs in his initial error concedes that he is aware that the supreme court has declared that the prior misdemeanor shoplifting convictions that elevate a third charge to a felony are elements of that charge and must be proven to the jury beyond a reasonable doubt. But, Biggs contends that these prior convictions should not be introduced in the guilt phase of the trial but, rather the elements of prior convictions should be decided in a bifurcated trial. We have previously addressed this argument and found it without merit in Bufkin v. State where we stated:
Bufkin contends on appeal that this was error and that the proper way to handle the matter of prior convictions was to bifurcate the trial with the trial court making the necessary determinations regarding the prior convictions as a part of the sentencing phase of the trial. She argues that permitting the jury to learn of her prior convictions hopelessly prejudiced her in the eyes of the jury and raised the possibility that the jury would convict upon reaching the conclusion that her prior conduct had demonstrated a propensity for such criminal activity. Bufkin claims that this constituted a violation of Mississippi Rule of Evidence 404(b), which prohibits the admission of evidence of prior bad acts for that purpose.
[W]e find no merit in the argument. Felony shoplifting is somewhat akin to felony driving under the influence in that both rely on multiple prior convictions for the same offending conduct in order to raise the level of offense from a misdemeanor to a felony. The Mississippi Supreme Court has plainly stated that, in the matter of DUI offenses, the prior convictions are elements of the *190 crime that must be determined by the finder of fact beyond reasonable doubt as a part of the prosecution's case in chief. Rigby v. State, 826 So. 2d 694, 700(¶ 9) (Miss.2002).
Bufkin v. State, 867 So. 2d 285, 288 (¶¶ 13 & 15) (Miss.Ct.App.2004). Agreeing with our previous decision, we find no merit to this error.
B. ADDITIONALLY, THE FAILURE OF TRIAL COUNSEL TO OFFER A LIMITING INSTRUCTION TO BUFFER THE EVIDENTIARY DAMAGE BY THE PRESENTATION OF THE TWO MISDEMEANOR CONVICTIONS SHOULD HAVE BEEN CORRECTED BY THE TRIAL COURT ISSUING ITS OWN LIMITING INSTRUCTION SUA SPONTE.
DISCUSSION
¶ 6. Biggs next contends that if the prior convictions are properly admitted as elements of felony shoplifting, he should have received a limiting instruction to the jury informing them for what purpose and to what extent the evidence of these prior convictions could be considered. He argues that these instructions are so important that the trial court should have given them sua sponte even when trial counsel did not request them. Our supreme court recently addressed this issue stating:
The burden should properly be upon the trial counsel to request a limiting instruction. This was our rule before Smith, in accord with Rule 105 of the Mississippi Rules of Evidence. The rule provides in pertinent part that "[w]hen evidence which is admissible . . . for one purpose but not admissible . . . for another purpose is admitted, the court, upon request, shall restrict the evidence to its proper scope and instruct the jury accordingly." Miss. R. Evid. 105 (emphasis added). We struggled in Smith to require judges to issue the sua sponte ruling, since that would contradict "a rule so clear" as M.R.E. 105. 656 So.2d at 100. Today we abandon Smith's requirement that a judge issue a sua sponte limiting instruction and return to the clear language of Rule 105. The rule clearly places the burden of requesting a Rule 404(b) limiting instruction upon counsel. The rule is controlling, and to the extent that Smith and its progeny contradict that plain language they are overruled.
Brown v. State, 890 So. 2d 901, 913(¶ 36) (Miss.2004). Finding the supreme court's decision controlling, this error is without merit.
II. THE TRIAL COURT ERRED IN DENYING MR. BIGGS' PROFFERED MISDEMEANOR SHOPLIFTING INSTRUCTION WAS SUPPORTED BY CREDIBLE EVIDENCE, AND WITHOUT IT MR. BIGGS WAS PREVENTED FROM PRESENTING TO THE JURY HIS THEORY OF THE CASE, I.E. THAT THE STATE HAD FAILED TO PROVE BEYOND A REASONABLE DOUBT THE EXISTENCE OF ONE OF THE TWO MISDEMEANOR SHOPLIFTING CONVICTIONS CHARGED IN THE INDICTMENT.
IV. THE STATE ADDUCED INSUFFICIENT EVIDENCE TO PROVE THAT THE MR. BIGGS WHO WAS THE SUBJECT OF THE MISDEMEANOR SHOPLIFTING ABSTRACTS WAS THE SAME MR. BIGGS WHO WAS ON TRIAL FOR FELONY SHOPLIFTING. THUS, THE TRIAL COURT ERRED IN DENYING MR. BIGGS' MOTION
STANDARD OF REVIEW
¶ 7. A lesser-included-offense instruction "should only be given after the *191 trial court has carefully considered the evidence and is of the opinion that such an instruction is justified by the evidence." Woodham v. State, 800 So. 2d 1148 (¶ 24) (Miss.2001).
DISCUSSION
¶ 8. Biggs argues that the trial court committed reversible error by not instructing the jury on misdemeanor shoplifting. His contention is based on his belief that the State failed to prove the prior two convictions for shoplifting. These two convictions are elements of the felony charge that must be proven in order for misdemeanor shoplifting to be elevated to felony shoplifting. Biggs claims that trial counsel challenged the credibility of the two convictions by calling into question the clerk's record keeping in 1995. Additionally, Biggs argues that the State did not prove that the O'Neal Biggs convicted in the two prior charges was the O'Neal Biggs on trial in the current case. Biggs argues that for these two reasons the trial court should have granted his request for a jury instruction on misdemeanor shoplifting.
¶ 9. During the trial the City Court Clerk of Pascagoula testified concerning Biggs' two prior convictions that were on record in the clerk's office. Abstracts of Biggs's prior convictions were introduced into evidence by the State and trial counsel did not object to their introduction. The clerk testified that she was certain that the two prior convictions were accurate. Biggs' identity was established by the arresting officer who determined that the O'Neal Biggs he arrested following the shoplifting of the Fast Lane and the O'Neal Biggs convicted of two prior shoplifting charges were one in the same.
¶ 10. A presumption of validity is attached to abstracts of convictions and will suffice to meet the burden of proof required by the statute. Ghoston v. State, 645 So. 2d 936, 939 (Miss.1994). Once these convictions have been introduced the burden shifts to the defendant to rebut that presumption. Id. When this burden shifts the defendant must produce evidence that there is an irregularity in the abstract, a silent record will not suffice. Id.
¶ 11. Biggs called no witnesses, presented no evidence and did not take the stand himself to contest the validity of the abstracts or the identity of the person represented in those abstracts. The only evidence presented by the trial counsel was an admission by the clerk that there was the possibility that the court record could be wrong. This does not meet the evidence necessary to rebut the validity of the prior convictions or the identity of Biggs as the person convicted previously and the person currently on trial.
¶ 12. We find this error without merit.
III. MR. BIGGS' JURY WAS NOT SWORN WITH ANY TYPE OF PETIT JURORS' OATH, AND HIS VERDICT IS THEREFORE VOID AS HAVING BEEN RETURNED IN VIOLATION OF THE MISSISSIPPI STATUTE REGARDING SAME AS WELL AS THE CONSTITUTION.
DISCUSSION
¶ 13. As his third assignment of error, Biggs contends that his conviction should be reversed due to there being no evidence in the record that the petit jury was sworn in as required by Mississippi Code Annotated § 13-5-71 (Rev.2002). Biggs argues that an unsworn jury is nothing more than mere spectators to the trial and is not aware of their solemn duty. The State counters this argument with trial counsel's failure to object or any mention of the purported lack of administration of the oath during the trial. The State contends that due to trial counsel's failures this issue is procedurally barred.
*192 ¶ 14. This Court has recently addressed this same issue in Acreman v. State, 907 So. 2d 1005, 1007-8 (¶¶ 6-8)(Miss.Ct.App.2005).
"[The supreme court] has held that a party who fails to make a contemporaneous objection [to a matter] at trial must rely on plain error to raise the issue on appeal because it is otherwise procedurally barred." Williams v. State, 794 So. 2d 181, 187(¶ 23) (Miss.2001) (citing Foster v. State, 639 So. 2d 1263, 1288-89 (Miss.1994)). "The plain error doctrine requires that there be an error and that the error must have resulted in a manifest miscarriage of justice." Williams, 794 So.2d at 187(¶ 23) (citing Gray v. State, 549 So. 2d 1316, 1321 (Miss.1989)). "Further, [the] Court applies the plain error rule only when it affects a defendant's substantive/fundamental rights." Williams, 794 So.2d at 187(¶ 23) (citing Grubb v. State, 584 So. 2d 786, 789 (Miss. 1991)).
In support of his argument that the failure to swear the jury was in violation of his fundamental rights and thus constitutes reversible error, [Biggs] relies on Miller v. State, 122 Miss. 19, 84 So. 161 (1920). In Miller, jurors were administered a preliminary oath for the purpose of ascertaining their qualifications to serve as jurors, but were not administered a subsequent oath until after the State and defense had concluded their case. Id. at 161. As a result, the supreme court reversed the defendant's murder conviction and held that because the jury had not been properly sworn, the jurors were unable to legally hear and consider the testimony. Id. at 162-63.
[Biggs] reliance upon Miller, however, is misplaced, and more on point are the cases of Bell v. State, 360 So. 2d 1206 (Miss.1978) and Young v. State, 425 So. 2d 1022 (Miss.1983). In both cases, the supreme court failed to find reversible error even though the record failed to reflect that the jury had been sworn. The court found that a rebuttable presumption existed that the trial judges had properly performed their duties and that the respective defendants had a burden to overcome this presumption.
¶ 15. The record in this case does not indicate that the jury was not sworn. When we look to the final sentencing, it states that the jury was composed of twelve jurors "who were duly sworn, empaneled and accepted by the State and the Defendant. . . ." There was no objection by trial counsel to the failure to administer the oath and there is no indication from the record that the oath was not administered. The sole mention of the oath in the record indicates that the oath was administered. Finding no evidence to contradict the oath being given, we find no merit to this error.
CONCLUSION
¶ 16. Finding no error, we affirm the judgement of the Circuit Court of Jackson County.
¶ 17. THE JUDGMENT OF THE CIRCUIT COURT OF JACKSON COUNTY OF CONVICTION OF FELONY SHOPLIFTING AND SENTENCE OF FIVE YEARS IMPRISONMENT IN THE CUSTODY OF THE MISSISSIPPI DEPARTMENT OF CORRECTIONS AS AN HABITUAL OFFENDER AND FINE OF $1,000 IS AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO JACKSON COUNTY.
KING, C.J, LEE, P.J., IRVING, CHANDLER, GRIFFIS, AND BARNES, JJ., CONCUR. ISHEE, J., NOT PARTICIPATING. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2486476/ | 2 F. Supp. 2d 909 (1997)
Steve GIFFORD, Plaintiff,
v.
LONE STAR STEEL COMPANY, Defendant.
No. 2:96-CV-0076.
United States District Court, E.D. Texas, Marshall Division.
December 1, 1997.
Steplen Eldred Smith, Longview, TX, for Plaintiff.
David McCarley Ellis, Clark West Keller Butler & Ellis, Dallas, TX, for Defendant.
MEMORANDUM OPINION
COBB, District Judge.
Before the court is Defendant's Motion for Summary Judgment, filed by Lone Star Steel *910 Company. Plaintiff, Steve Gifford, claims that he was fired from Lone Star Steel Company in violation of the Age Discrimination and Employment Act ("ADEA"), 29 U.S.C. § 621 et seq., and the Texas Commission on Human Rights Act ("TCHRA"), Texas Labor Code § 21.001 et seq. Although Gifford made a prima facie case of age discrimination, Lone Star Steel successfully rebutted any inference of unlawful discrimination by claiming a reduction in work force as the legitimate reason for the termination. Because Gifford failed to meet his burden of showing that the Defendant's articulated rationale for the termination was merely a pretext for discrimination, the Motion for Summary Judgment is GRANTED.
I. FACTUAL BACKGROUND
Lone Star Steel produces steel pipe for use in the petroleum industry. The pipe is produced through a multi-step process which includes forming and welding the pipe in the "Welding Department", and then finishing and testing the pipe in the "Finishing Department". The finishing department cuts the pipe to the lengths desired by the clients. The pipe is then threaded and a coupling device is attached so that it can be coupled with other lengths of pipe. The finishing department then tests the pipe to insure that the threading and structural integrity of the pipe meet American Petroleum Institute (API) requirements.
Steve Gifford was employed with Lone Star Steel in various capacities for the better part of 36 years. Gifford began his employment in 1958 in the security office and continued working in that capacity until the mid-1960s. He next worked as a pipe mill office assistant for a number of years. During his time as an office assistant, Gifford's duties included reviewing production records from the welding department and the finishing department to insure that they were in compliance with API requirements. Later, he was transferred to the position of labor foreman to supervise the clean-up operations in the pipe mills. He was eventually promoted through various production foreman positions to the position of general foreman of the welding department. As general foreman, he was responsible for all production operations in the # 2 welding operation, the stretch mill, and the standard pipe and galvanizing operations. In 1989, Gifford was terminated in a reduction in force.
In 1990, Gifford was rehired as a production foreman in the # 2 welding operation. He worked in that position until February 1993, when he was transferred to the finishing department to be a production foreman in the standard pipe area.[1] As production foreman for standard pipe, Gifford was responsible for supervising the cutting and facing of the ends of the pipe, the hydrostatic testing of the pipe, and the inspecting of the pipe for conformity with API specifications. Gifford was not involved in the threading process. Gifford was terminated in July 1994. He was sixty years old at the time. Gifford alleges that, at the time that he was given notice of his termination, he was told, "You can call it being retired, or fired, or a reduction in force, it really doesn't matter, you can call it anything you want." Gifford also alleges that, on a different occasion, Wingrove commented that Gifford should "be out fishing instead of working."
Lone Star Steel purports that Gifford was terminated in a company-wide reduction in force. The company's "Organizational Review" outlined the projected twenty-five percent reduction in force in the finishing department. Because of economic downturn, Lone Star intended to reduce the number of foreman in the finishing department by two and require that all the remaining foreman be capable of supervising every aspect of the finishing department, including the threading operations. The company claims that the quality and integrity of their product is greatly dependant on the threading work being done perfectly. Lone Star alleges that Gifford was chosen to be terminated because the other foreman in the finishing department had much more knowledge and experience in the threading process. The decisions to terminate were made on a department-by-department basis. Gifford had no experience *911 with pipe threading or supervising the threading process. Therefore, Gifford was the least qualified foreman in the finishing department for purposes of being retained. The company does not dispute that Gifford had a good employment record or that he was basically competent to perform the duties for the position he held. The company merely claims that two foremen had to be terminated from the finishing department, in spite of competent performance, and that he was the least qualified of the foremen.
Gifford was not the only employee or foreman who was terminated. In fact, one foreman, who was not in the class protected by the ADEA, was terminated in May 1994. Another younger foreman, who had a degree in engineering, was transferred out of the finishing department around July 1994, and then terminated in September 1994. Additionally, in spite of the reduction in force, a foreman who is older than Gifford was retained in the stretch mill. Finally, since the reduction in force, Lone Star has not assigned any foremen to solely supervise standard pipe.
Gifford filed a charge of age discrimination with the Equal Employment Opportunity Commission ("EEOC"). The EEOC, in turn, gave Gifford the right to sue, alleging violations of the ADEA and the TCHRA. Lone Star Steel has filed a Motion for Summary Judgment. Gifford relies on affidavits by colleagues and deposition testimony of supervisors in response to the summary judgment motion. Gifford alleges that this evidence raises a material factual question as to whether Lone Star demonstrated discriminatory intent in terminating and not reassigning Gifford because other younger and allegedly less-qualified employees were transferred and retained.
II. ANALYSIS
This court has federal question jurisdiction over the case, 28 U.S.C. § 1331, because the action was brought under the Age Discrimination and Employment Act, 29 U.S.C. § 621 et seq. Additionally, this court enjoys supplemental jurisdiction of Gifford's Texas Commission on Human Rights Act claim under 28 U.S.C. § 1367.
A.
Summary judgment is appropriate where the moving party establishes that "there is no genuine issue of material fact and that [it] is entitled to a judgment as a matter of law," Fed.R.Civ.P. 56(c). The moving party must show that, if the evidentiary material of record were reduced to admissible evidence in court, it would be insufficient to permit the nonmoving party to carry its burden of proof. Celotex v. Catrett, 477 U.S. 317, 327, 106 S. Ct. 2548, 2554, 91 L. Ed. 2d 265 (1986). Once the moving party has carried its burden under Rule 56, "its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986) (citations omitted). The opposing party must set forth specific facts showing a genuine issue for trial and may not rest upon the mere allegations or denials of its pleadings. Fed. R.Civ.P. 56(e); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 2511, 91 L. Ed. 2d 202 (1986). Mere conclusory allegations are not competent summary judgment evidence, and they are, therefore, insufficient to defeat or support a motion for summary judgment. Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir.1992).
B.
1.
Age Discrimination and Employment Act claims are analyzed under the same framework as claims brought pursuant to Title VII of the Civil Rights Act of 1964. Williams v. General Motors Corp., 656 F.2d 120, 127-28 (5th Cir.1981). Similarly, the Texas Commission on Human Rights Act is the state law correlative to Title VII of the Civil Rights Act of 1964. V.T.C.A., LABOR CODE § 21.001; see also Thompson v. City of Arlington, 838 F. Supp. 1137 (N.D.Tex.1993). Therefore, it is proper for this court to address the Plaintiff's state age discrimination claim concurrently with and in a manner perfectly consistent with the ADEA claim.
*912 2.
The Fifth Circuit, in Williams v. General Motors Corp., clearly defined the standard that plaintiffs must meet to make a prima facie case of age discrimination in job reduction cases. It held that plaintiffs must: (1) show that they are in the protected age group and that they have been adversely affected; (2) show that they were qualified to assume other positions at the time of discharge or demotion; and (3) produce evidence, circumstantial or direct, from which fact-finders might reasonably conclude that (a) the defendants consciously refused to consider retaining or relocating the plaintiffs because of their age, or (b) the defendants regarded age as a negative factor in such consideration. Williams, supra, at 129-30.
In cases where the plaintiff successfully makes a prima facie case, an inference arises that the decision to terminate or demote was based on discriminatory intent. Rhodes v. Guiberson Oil Tools, 75 F.3d 989, 992 (5th Cir.1996). The defendant can rebut that inference by presenting evidence that, if believed by the trier of fact, would support a finding that unlawful discrimination was not the cause of the employment action. Id. at 993. A successful rebuttal can be achieved by the defendant proffering an age neutral reason for the plaintiff's position being eliminated or for the plaintiff not being re-assigned to a different position. If the defendant successfully rebuts the inference, the inference disappears and the burden shifts back to the plaintiff to demonstrate that the defendant's articulated rationale was merely a pretext for discrimination. Id.
In order to meet the shifted burden, the plaintiff must present evidence that would support a finding that the employee's protected trait actually played a role in the employer's decision-making process and had a substantive influence on the outcome. Id. at 994. "[A] reason cannot be proved to be `a pretext for discrimination' unless it is shown both that the reason was false, and that discrimination was the real reason." Walton v. Bisco Industries, Inc., 119 F.3d 368, 370 (5th Cir.1997) (quoting St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 515, 113 S. Ct. 2742, 2751, 125 L. Ed. 2d 407 (1993)) (emphasis in original).
We now apply the above principles to the summary judgment evidence in this case to determine whether enough evidence was produced to allow a rational jury to find that Gifford made a prima facie case and then successfully proved that the articulated reason was false and that discrimination was the real reason for the employment actions. In answering these questions, we view all the evidence in the light most favorable to the non-moving party, Gifford. LeJeune v. Shell Oil Co., 950 F.2d 267, 268 (5th Cir.1992).
C.
1. Prima facie case
Taking the evidence in light most favorable to Gifford, this court finds that Gifford made a prima facie case of age discrimination. Gifford presented evidence that he was sixty years old at the time of the termination, in the protected age range, and that the termination adversely affected him. He also presented affidavit evidence that he was qualified to perform the job he was in at the time of the termination and that he was qualified to perform other jobs that were available in the company. Finally, Gifford presented circumstantial evidence that, if believed by the trier of facts, would reasonably lead to the inference that age must have played a part in the decision to terminate him.
Gifford's evidence included affidavits from co-workers which stated that he was more qualified to be a foreman in the finishing department or the welding department than other employees who were retained in their positions or transferred to other positions. Because Gifford had many years of experience performing a variety of duties around the production mills, his co-workers felt that he was capable of supervising the finishing department or the welding department. The affidavits also contained opinions that expertise in threading was not a prerequisite to being a good foreman in the finishing department. The affidavits concluded that Gifford should have been retained, transferred, or rehired after being terminated because he was more qualified than the foremen who were retained, transferred, or hired around the same time Gifford was terminated. Lastly, Gifford testified in a deposition that *913 he was told on one occasion by Burt Wingrove, the manager of the finishing department and the person charged with reducing the workforce in that department, that he should be "out fishing instead of working". Upon giving notice of termination to Gifford, Wingrove allegedly said, "You can call it being retired, or fired, or a reduction in workforce, it really doesn't matter, you can call it anything you want."
Based on that superficial opinion evidence alone, a reasonable jury could conclude that Lone Star regarded age as a negative factor in its determination to terminate Gifford. This, however, does not end the inquiry because Lone Star Steel has rebutted the inference of discriminatory intent by presenting age neutral reasons for its failure to retain, transfer, or rehire Gifford.
2. Defendant's rebuttal evidence
First, Lone Star Steel alleges that, because of an economic downturn, it was operating at a lower margin of profit. Therefore, Lone Star reviewed its organization and decided to implement a company-wide reduction in force. The formal Organizational Review earmarked a twenty-five percent reduction in workforce in the finishing department. Burt Wingrove, the manager of the finishing department and the person charged with reducing the workforce in that department, decided that two foremen had to be terminated. Wingrove also determined that, with a reduced number of foremen in the department, the remaining foremen must be capable of supervising every aspect of operation in the finishing department. This included the ability to supervise the threading operation in the finishing department. Wingrove chose to terminate Gifford because he was the foreman with the least experience and expertise in the threading operation.
Second, Lone Star asserts that another foreman was transferred to the welding department, in lieu of Gifford, because the other foreman had a degree in engineering and was specifically requested by the manager of the welding department for the specific purpose of troubleshooting a few particular problems in that department.
Third, Lone Star claims that Gifford was not rehired when positions became available because he never reapplied for the position. Gifford admitted in his deposition that foremen do not have a right to be rehired without reapplying, only union workers have that right. Gifford also testified that he knew that positions were available and that the procedure for previously terminated applicants was to reapply, yet he never did.
Based on that evidence, Lone Star successfully rebutted the inference of discriminatory intent and shifted the burden back onto Gifford. Bearing in mind that Gifford has the burden of putting forth specific facts which create a genuine issue for trial that the articulated reasons were false and that discrimination was the real reason for the termination, this court finds that Gifford failed to put forth sufficient credible evidence to meet its burden and overcome the rebuttal evidence.
3. Plaintiff's shifted burden
a. Termination
Gifford relies on the affidavits of co-workers and close acquaintances to try to rebut Lone Star's contention that Gifford was the least qualified foreman and to prove the falsity of that as a reason for the terminating him. The affidavits contain opinions that experience in pipe threading or supervising the threading process is not a reasonable gauge of how qualified a foreman is to serve in the finishing department. The affidavits suggest that general supervisory experience in pipe production is sufficient to make someone completely qualified to supervise threading operations.
Additionally, Gifford relies on passing or "stray" remarks that Gifford should be fishing or that he was being retired or fired as proof that age discrimination was the actual reason for the termination. The evidence on the remarks, however, is not very credible in light of the inconsistent recollection of the words spoken and the lack of context of the statements. When questioned about what was said, Gifford could only remotely remember inexactly what was said and he never provided any details of the context for the statements in relation to the entire exchanges.
*914 The affidavits do not raise a factual issue as to what is a reasonable method of gauging supervisory ability. Employment discrimination laws are not vehicles for federal courts to second-guess legitimate and reasonable business decisions. Walton, supra, 119 F.3d at 372. Deposition testimony and affidavits of opinions from disgruntled co-workers criticizing facially legitimate and objectively reasonable criteria for retaining employees do not create a fact issue as to whether the articulated reason was false. Furthermore, the alleged improper comments on their face do not refer to age and are not sufficient, with nothing more, to establish claim of age discrimination. Waggoner v. City of Garland, 987 F.2d 1160, 1166 (5th Cir.1993). This lack of persuasive evidence from Gifford, coupled with the fact that Lone Star has retained foreman older than Gifford in the welding department and terminated foremen younger than Gifford in the finishing department, supports the conclusion that Gifford has failed to proffer sufficient evidence to overcome Lone Star's reasoning in choosing to retain employees with expertise in the threading process.
Therefore, Gifford has failed to show that Lone Star's reason for terminating him was actually false or that discriminatory intent was the actual reason.
b. Transfer
Gifford failed to offer sufficient evidence to create a factual issue as to whether he should have been transferred instead of a different foreman, Bruce Rice. Again, Gifford relies on affidavits of co-workers and close acquaintances containing opinions that he was the most qualified foreman for transfer to the position in the welding unit. The affidavits stated that Gifford had more experience than Rice. They fail to rebut or contradict, however, the reason offered by Lone Star for selecting RiceRice had a degree in engineering and could help troubleshoot problems in the welding unit. Although Rice stated that he did not receive any special troubleshooting assignment, that alone (nor in combination with evidence that someone without a degree has more experience) does not raise substantial evidence that the reason was false. Nor does it establish that Lone Star's reliance on Rice's degree was a pretext for discrimination.
c. Rehiring
Gifford presents no evidence to overcome Lone Star's rationale that it had no reason to rehire Gifford without Gifford reapplying. Nor did Gifford present a factual issue as to whether age discrimination played a role in Lone Star hiring younger foremen to positions for which Gifford did not apply.
III. CONCLUSION
Gifford has failed to present sufficient evidence to raise factual issues regarding the real reason for terminating, not transferring, and not rehiring Gifford. Mere assertions of a factual dispute unsupported by probative evidence will not prevent summary judgment. Anderson, supra, 477 U.S. at 256-57. Lone Star is entitled, as a matter of law, to a favorable disposition of its Motion for Summary Judgment. It, therefore, is ORDERED, ADJUDGED, and DECREED that Defendant's Motion for Summary Judgment is hereby GRANTED.
NOTES
[1] Lone Star move the standard pipe division from the # 2 welding department to the finishing department in the early 1990s. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2591576/ | 50 N.Y.2d 426 (1980)
In the Matter of the Arbitration between the Board of Education of Middle Island Central School District No. 12, Respondent, and Middle Island Teachers Association et al., Appellants.
Court of Appeals of the State of New York.
Argued April 25, 1980.
Decided May 29, 1980.
James R. Sandner and Janis Levart Barquist for appellants.
John H. Gross for respondent.
Chief Judge COOKE and Judges JASEN, GABRIELLI, JONES, WACHTLER, FUCHSBERG and MEYER concur in Per Curiam opinion.
*428Per Curiam.
At issue is whether a probationary teacher, denied tenure for alleged professional incompetence in the performance of his nonclassroom duties, has a right to arbitrate alleged breaches of contract evaluation procedures specifically referable to classroom performance. The Appellate Division has stayed the arbitration noting that "the demand for arbitration avoids dealing with the fact that irrespective of respondent [teacher's] classroom performance he may have been an outstanding teacher the school board denied tenure for unrelated, nonarbitrable reasons."
There is no question, and both courts below agree, that the demand states a basis for arbitration. Although the decision whether or not to grant tenure is not within the permissible area of negotiation in the public employee sector, the performance of a probationary teacher preliminary to a tenure determination is (Matter of Candor Cent. School Dist. [Candor Teachers Assn.], 42 N.Y.2d 266; Matter of Cohoes City School Dist. v Cohoes Teachers Assn., 40 N.Y.2d 774).
In addition, the two-tier analysis established in Matter of Acting Supt. of Schools of Liverpool Cent. School Dist. (United Liverpool Faculty Assn.) (42 N.Y.2d 509) *429 would indicate that the reference to arbitration is authorized under the Taylor Law (Civil Service Law, art 14) and that the subject matter of the dispute is encompassed by the broad arbitration clause contained in the agreement.
Nevertheless the school board urges that the arbitration be stayed because the results of that proceeding would be violative of public policy. It fears, as does the Appellate Division, that the remedy fashioned by an arbitrator for a violation of the evaluation procedures would prevent the school board from exercising its authority to deny tenure. This is not a valid reason to stay the arbitration.
Even though the board has the right to deny tenure to a probationary teacher without an explanation, the bargained for right to procedural steps preliminary to the tenure determination cannot be considered a nullity (Matter of Cohoes City School Dist. v Cohoes Teachers Assn., supra, p 778; see, also, Matter of South Colonie Cent. School Dist. v Longo, 43 N.Y.2d 136; Board of Educ. v Bellmore-Merrick United Secondary Teachers, 39 N.Y.2d 167). The courts should not, by staying arbitration, "foreclose any remedy for alleged violations of procedural guarantees as well as substantive rights said to be afforded under the contract" (Matter of Port Washington Union Free School Dist. v Port Washington Teachers Assn., 45 N.Y.2d 411, 415).
The school board is bound by the agreement it negotiated and signed an agreement which requires certain teacher evaluation procedures. Its failure to perform as required is appropriately claimed as a grievance under the terms of the contract and may be submitted to arbitration. The procedural aspect of the contract is discrete from the denial of tenure and should be so treated.
The judgment of the Appellate Division should be reversed, with costs, and the order of Special Term reinstated.
Order reversed, with costs, and the judgment of Supreme Court, Suffolk County, reinstated. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1972964/ | 78 B.R. 221 (1987)
In re Norman Edward DURR and Garnet Aho Durr, d/b/a Ranchers, Debtors.
Bankruptcy No. 87-50047.
United States Bankruptcy Court, D. South Dakota.
September 25, 1987.
Wesley W. Buckmaster, Stephens, Quinn & Buckmaster, Belle Fourche, S.D., for creditor Norwest Bank South Dakota, N.A.
John M. Fousek, Fousek, Lefholz & Mairose, Rapid City, S.D., for debtors.
MEMORANDUM DECISION
INTRODUCTION
PETER K. ECKER, Bankruptcy Judge.
This matter is before the Court on an objection to confirmation of the debtors' Chapter 12 plan of reorganization on the ground that it does not comply with 11 U.S.C. § 1225(a)(5). Specifically, secured creditor Norwest Bank South Dakota, N.A. ("Norwest"), contends that the debtors may not transfer certain real property to Norwest in payment of the value of the allowed amount of Norwest's secured claim, when the real property Norwest is to receive pursuant to the plan did not secure the Norwest debt. Norwest maintains that it will not receive the benefit of its bargain with the debtors and, thus, will not be paid the value of its claim. A confirmation hearing on the plan was held in Rapid City, South Dakota, on July 28, 1987. The material facts are as follows.
BACKGROUND
The debtors filed for relief under Chapter 12 of the Bankruptcy Code on February 19, 1987. As listed in their schedules, the debtors own several parcels of real property in Butte County, South Dakota: the River Ranch property, consisting of approximately 2,100 acres; Farm No. 2, consisting of approximately 303 acres; Crow Creek Ranch, consisting of approximately 6,480 acres; and Arpan Ranch, totaling approximately 2,117 acres. In addition, the debtors own a residence situated on 120 acres.
The debtors are indebted to creditor Norwest on an "agricultural note," secured by a first mortgage on the River Ranch and Farm No. 2 properties. This note is also secured by a security interest in farm machinery, equipment, and vehicles, and an assignment of proceeds from certain contracts for deed. The debtors also are indebted to Norwest on a "residential note," secured by a first mortgage on the residential dwelling and its 120 acres.[1]
*222 Further, the debtors are indebted to creditor Metropolitan Life Insurance Company ("Metropolitan Life") of Billings, Montana, on an "agricultural note," secured by a first mortgage on the Crow Creek and Arpan properties. It appears that real estate taxes on the Arpan Ranch property have not been paid for 1986 and 1987. It is unclear whether there are outstanding irrigation water charges affecting the value of the Arpan Ranch property.
On May 22, 1987, the debtors filed their Chapter 12 plan of reorganization. In their plan, the debtors propose to deed to Norwest the Arpan Ranch, in full satisfaction of their debt. Upon receiving this deed, Norwest would be required to mark its notes paid and release all mortgages and security interests on the debtors' collateral.
The debtors also intend to transfer the Crow Creek Ranch to Metropolitan Life in full satisfaction of their obligations to that creditor. Again, Metropolitan Life will be required to mark its notes paid and release all mortgages and security interests in the debtors' collateral.[2]
In addition to its objection to its plan treatment, Norwest has asked for a hearing on the value of its secured claim pursuant to 11 U.S.C. § 506(a). At the confirmation hearing on July 28, the Court denied confirmation of the plan, due to the following unresolved issue.
ISSUE
Whether a Chapter 12 plan complies with 11 U.S.C. § 1225(a)(5)(B)(i) and (ii), if the debtors contemplate the retention of collateral real estate and the transfer of other real property in kind to the creditor in full satisfaction of that creditor's claim.
DISCUSSION
The Court holds that 11 U.S.C. § 1225(a)(5)(B)(ii) does not permit the debtors to transfer real property in payment of an allowed secured claim, unless the debtors' Chapter 12 plan provides safeguards to protect the value of the creditor's allowed secured claim. A determination of whether Norwest will receive the full value of its claim cannot be made "as of the effective date of the plan." Such a determination must wait until Norwest has sold the Arpan Ranch property. This holding is based on the following discussion.
Pursuant to 11 U.S.C. § 1225(a), this Court shall confirm a Chapter 12 plan if . . .
(5) with respect to each allowed secured claim provided for by the plan
(A) the holder of such claim has accepted the plan;
(B)(i) the plan provides that the holder of such claim retain the lien securing such claim; and
(ii) the value, as of the effective date of the plan, of property to be distributed by the trustee or the debtor under the plan on account of such claim is not less than the allowed amount of such claim; or
(C) the debtor surrenders the property securing such claim to such holder; and. . . .
Clearly, Norwest has not accepted the plan, nor have the debtors surrendered the property securing Norwest's claim, eliminating the possibility that Subsections 1225(a)(5)(A) or (C) apply in this instance. Thus, the debtors' plan must satisfy both conditions of Section 1225(a)(5)(B) to meet the requirements for confirmation.
The debtors propose that Norwest will retain its lien on the River Ranch and Farm No. 2 properties until it receives the deed to the Arpan Ranch. Because the lien retention requirement of Section 1225(a)(5)(B)(i) protects the secured claimant only until it receives the value of its allowed claim, the question becomes whether Norwest will have received the value of its secured claim at the time it receives the deed to the Arpan Ranch. See 11 U.S.C. § 1225(a)(5)(B)(ii).
*223 Pursuant to 11 U.S.C. § 506(a), the claim of a creditor secured by a lien on property is an allowed secured claim to the extent of the value of the creditor's interest in the estate's interest in the property. The value of this allowed secured claim may be established by consent of the parties or by the court. See In re Mikkelsen Farms, Inc., 74 B.R. 280, 291 (Bankr.D.Or. 1987). Traditionally, if the debtor seeks to retain the collateral in its reorganization plan, the creditor receives the value of its secured claim through a stream of cash payments which would have a present value equivalent to the amount of its secured claim. See Matter of Doud, 74 B.R. 865 (Bankr.S.D.Iowa 1987); In re Janssen Charolais Ranch, Inc., 73 B.R. 125 (Bankr. D.Mont.1987). As of the effective date of the plan, the creditor (and the court) is able to make a precise calculation of the value of the property the creditor will receive, over the term of the plan, on account of its secured claim.
In this case, however, the debtors propose to retain the real property securing Norwest's claim, and transfer to Norwest other real property as a substitute for the traditional cash payments. After a determination of the value of Norwest's secured claim, a hypothetical market value for the transferred property must be ascertained. See In re Mikkelsen, 74 B.R. at 291. Presumably, the debtors then would be credited with this specific dollar amount, when the Arpan property is deeded to Norwest. The plan intends to treat this transfer as payment in full of Norwest's claim.
There is no legal obstacle to the confirmation of an "asset payment" plan in a Chapter 12 case. No language in either Chapter 12 or Chapter 13 addresses the transfer of tangible property as payment to the creditor on account of its allowed secured claim. Id.[3] It has been stated, however, that the language of both Section 1322(b)(8) and Section 1222(b)(7) allows such a transfer. Id. Section 1322(b)(8) provides:
"(b) Subject to subsections (a) and (c) of this section, the plan may
. . . .
(8) provide for the payment of all or part of a claim against the debtor from property of the estate or property of the debtor;. . . ." (emphasis added)
Section 1222(b)(7) states:
"(b) Subject to subsections (a) and (c) of this section, the plan may
. . . .
(7) provide for the payment of all or part of a claim against the debtor from property of the estate or property of the debtor;. . . ." (emphasis added)
In addition, the secured creditor "cram-down" requirements of Section 1225(a)(5) are identical to those of Section 1325(a)(5).[4] The legislative history and commentary for Chapter 13 both indicate that "the secured creditor in a case under chapter 13 may receive any property of a value as of the effective date of the plan equal to the allowed amount of the creditor's secured claim rather than being restricted to receiving deferred cash payments." (emphasis added) 124 Cong.Rec. § 11,107 (daily ed. Sept. 28, 1978); see also In re Simmons, 765 F.2d 547, 554 n. 8 (5th Cir.1985) ("[o]ther property may be conveyed to the *224 secured creditor, in lieu of further payments, to meet the section 1325(a)(5)(B)(ii) standard"); 5 Collier on Bankruptcy § 1325.06[4][b][ii] (15th ed. 1987). Thus, the use of the word "property" in both Sections 1222(b)(7) and 1225(a)(5), rather than the restrictive term, "deferred cash payments,"[5] and the Congressional reference to "any property" in the Chapter 13 legislative history imply that an "asset payment" plan is permissible. See In re Mikkelsen, 74 B.R. at 291.
A practical problem, nonetheless, occurs in the confirmation of this plan, pursuant to 11 U.S.C. § 1225(a)(5)(B). The difficulty arises in determining whether the land offered to Norwest is worth "not less than" the amount of Norwest's secured claim. See In re Walat Farms, Inc., 70 B.R. 330, 333 (Bankr.E.D.Mich.1987). Given the inherent problem of fixing the value of real property, it is certain Norwest will not realize the exact amount of the Arpan property as set by this Court.[6] On one hand, Norwest's eventual sale of the Arpan Ranch may not produce sufficient proceeds to pay its secured claim. See id. at 336. At the same time, Norwest could receive more than one hundred percent of its allowed secured claim from the proceeds of the sale. See In re Elijah, 41 B.R. 348, 352 (Bankr.W.D.Mo.1984). The value of the real property to be distributed to Norwest on account of its secured claim cannot be calculated with any certainty until the property is actually sold. Thus, the plan fails to meet the requirements for confirmation pusuant to 11 U.S.C. § 1225(a)(5)(B)(ii), because the Court must determine, as of the effective date of the plan, whether Norwest will receive "not less than the allowed amount of its secured claim."
Furthermore, the "forced purchase" of the Arpan Ranch by Norwest must be carefully scrutinized by the Court pursuant to its equitable powers. In the legislative history of Chapter 12, it was recognized that "creditors should not shoulder all the burden of the current farm crisis and that creditors are at risk as well. When administrating this chapter 12, the courts should strive to preserve this equity balance between creditors' and debtors' rights." 132 Cong.Rec. § 15,075 (daily ed. Oct. 3, 1986) (statement of Sen. Thurmond). First, the asset payment plan of the debtors potentially will require at least two valuation hearings pursuant to 11 U.S.C. § 506(a). Second, many delays and complications are inevitable before Norwest receives the full amount of its secured claim, including the uncertainty of finding a buyer for the Arpan Ranch. At the least, this Court must be certain that the creditor is not shouldering an inequitable portion of the burden of the present farm crisis and must be assured that the secured creditor will receive, on the effective date of the plan, the full value of its secured claim.
This practical difficulty with the transfer of real property in payment of an allowed secured claim has been discussed in two Chapter 11 cases.[7] The debtor's plan in In re Walat Farms proposed to convey to the *225 major creditor a portion of that creditor's real property collateral in exchange for the discharge of its mortgage. In re Walat Farms, Inc., 70 B.R. at 332. The bankruptcy court found no legal impediment to this transfer, but it had practical objections to the creditor's treatment. No guarantee existed that the creditor's eventual sale of the surrendered acres would produce sufficient proceeds to pay its claim. Id. at 336. Therefore, the court held that the land being offered was not the "indubitable equivalent" of the creditor's claim due to the impossibility of fixing a value for farm real estate. Id. at 334.
The Walat Farms decision, however, discussed various plan safeguards to protect the holder of the secured claim, so that the creditor would eventually realize the full value of its claim. First, the plan could provide the creditor with a "sufficiently comfortable equity cushion." Id. at 335 n. 4.[8] Second, the plan could give the creditor a lien on other real property, in the event that a commercially reasonable sale of the property results in proceeds less than the allowed amount of its claim. Id. at 335. The lien on the other real property would be augmented by any deficiency from the sale. Id. Last, the plan could propose the outright market sale of the land until the creditor's claim is satisfied.[9]Id. at 337. The Walat Farms court denied confirmation because the debtor's plan lacked any of these protections for the creditor's fully secured claim. Id.
Likewise, the bankruptcy court in In re Sandy Ridge Development Corp., 77 B.R. 69 (Bankr.M.D.La.1987), denied confirmation of the debtor's reorganization plan. The plan proposed the transfer of real property to the creditor in satisfaction of its secured claim, but failed to include a surplus of value, a margin of allowance for error, so that the secured creditor would be sure to realize the "equivalent" of its claim. Id. at 72-73.
On the other hand, the court found that the inclusion of a substantial margin for valuation error could result in a transfer of more value to the creditor than necessary to satisfy its secured claim. Id. Thus, a plan proposing a payment with tangible property must also include a provision for recapture of funds if the sale of the property produces an excess over the present value of the claim of the creditor. Id., quoting In re Elijah, 41 B.R. at 352.
In the present case, the debtors' plan included none of the above-mentioned "safeguards" of a creditor's allowed secured claim. The plan estimated Norwest's claim on the "agricultural note" at approximately $216,938.83, but did not mention the "residential note." It valued the Arpan Ranch at approximately $263,196.00.[10] It does not specifically refer to any "margin for error," or equity cushion, in the event the sale of the ranch fails to bring the amount predicted. The plan also does not provide that Norwest will retain a lien on other property, which lien could be augmented, in the event a sale of Arpan Ranch results in proceeds less than the amount of the secured claim. Conversely, the plan does not allow for recapture of any excess proceeds, if the Arpan Ranch is sold for more than predicted. Therefore, unless the debtors provide some type of protection for the value of Norwest's allowed secured claim, and demonstrate that Norwest will receive "not less than the allowed amount of its secured claim," they may not transfer real property as payment in kind to creditor Norwest in satisfaction of the requirement of 11 U.S.C. § 1225(a)(5)(B).
Accordingly, the above and foregoing hereby constitutes the Court's Findings of *226 Fact and Conclusions of Law in the above-entitled matter pursuant to Bankr.R.P. 7052 and 9014 and Fed.R.Civ.P. 52. Counsel for Norwest Bank is directed to submit an appropriate order in accordance with Bankr.R.P. 9021.
NOTES
[1] Debtors have failed to provide for the treatment of the "residential note" to Norwest Bank, secured by a mortgage on the residence and 120 acres. This omission is one of the grounds for Norwest's pending motions for relief from the automatic stay, or, alternatively, adequate protection and an accounting.
[2] Metropolitan Life also has objected to its treatment under the plan and has filed a motion for valuation pursuant to 11 U.S.C. § 506.
[3] The legislative history of Chapter 12 indicates that Chapter 12 was "closely modeled after existing chapter 13." H.R.Rep. No. 958, 99th Cong., 2d Sess. 48, reprinted in 1986 U.S.Code Cong. & Admin.News 5227, 5246, 5249. In addition, the courts hold that Chapter 13 case precedents provide a valuable tool for the interpretation of Chapter 12 provisions because of the similar or identical language of each chapter. In re Janssen Charolais Ranch, Inc., 73 B.R. at 126.
[4] 11 U.S.C. § 1325(a)(5)(B) provides:
(a) Except as provided in subsection (b), the court shall confirm a plan if
. . . .
(5) with respect to each allowed secured claim provided for by the plan
(A) the holder of such claim has accepted the plan;
(B)(i) the plan provides that the holder of such claim retain the lien securing such claim; and
(ii) the value, as of the effective date of the plan, of property to be distributed under the plan on account of such claim is not less than the allowed amount of such claim; or
(C) the debtor surrenders the property securing such claim to such holder; and. . . . (emphasis added)
[5] See 11 U.S.C. § 1129(b)(2)(A)(i)(II) (the holder of a secured claim must receive on account of such claim deferred cash payments). Chapter 11 "asset payment" plans, however, have been confirmed pursuant to the "indubitable equivalent" cram-down alternative of 11 U.S.C. § 1129(b)(2)(A)(iii). See, e.g., Matter of Sun Country Development, Inc., 764 F.2d 406 (5th Cir.1985); In re Bernard, 70 B.R. 181 (Bankr.E. D.Ark.1986).
[6] Some authorities have stated that it is impossible to fix the value of real estate. See In re Walat Farms, Inc., 70 B.R. at 334.
[7] Although asset payment plans in Chapter 11 cases are confirmed under the "indubitable equivalent" provision of Section 1129(b)(2)(A)(iii), the objecting creditor must receive nothing less than the present value of its allowed secured claim. See In re Bernard, 70 B.R. 181, 185 (Bankr.E.D.Ark.1986); see also 5 Collier on Bankruptcy § 1129.03[4][c] (15th ed. 1987).
It should also be noted that only one Chapter 12 decision has authorized the farmer-debtor to deed an unencumbered parcel of land to a creditor in partial satisfaction of its claim. In re Mikkelsen, 74 B.R. at 291. The Mikkelsen case found no prohibitions against this transfer in kind, but failed to consider the practical consequences of the variable farm real estate market and the effect of this market on the requirements of Section 1225(a)(5)(B). Thus, the Mikkelsen decision is not helpful in determining how to protect a secured claim of a creditor.
[8] A sufficient equity cushion, nonetheless, could result in over-payment. The court noted that this situation would present no impediment to confirmation, if the plan did not modify its provision for one hundred percent payment of non-insider unsecured claims. Id. at 335 n. 4.
[9] It should be pointed out that Congress specifically created a method by which debtors could rid themselves of unnecessary real estate or other property in their Chapter 12 reorganization by the inclusion of 11 U.S.C. § 1206. See H.R.Rep. No. 958, 99th Cong., 2d Sess. 50, reprinted in 1986 U.S.Code Cong. & Admin.News 5246, 5251.
[10] Although the plan states that the real estate taxes for 1986 and 1987 are outstanding, it is unclear whether this amount was deducted from the debtors' value of the Arpan Ranch. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2292803/ | 830 F. Supp. 1446 (1993)
Sally A. McCORKLE, Plaintiff,
v.
LIFE GENERAL SECURITY INSURANCE COMPANY, etc., Defendant.
No. 91-1857-CIV-T-17.
United States District Court, M.D. Florida, Tampa Division.
September 15, 1993.
*1447 William Thomas Witt, Bernard F. Walsh, P.A., St. Petersburg, FL, Frank Joseph Currie, Bernard F. Walsh, P.A., Sarasota, FL, for plaintiff.
Anthony G. Woodward, Langford, Hill, Mitchell, Trybus & Whalen, P.A., William D. Mitchell, Mitchell & Bline, P.A., Tampa, FL, for defendant.
ORDER ON MOTION FOR SUMMARY JUDGMENT
KOVACHEVICH, District Judge.
The cause is before the Court on Defendant's motion for summary judgment, served June 3, 1993.
This circuit clearly holds that summary judgment should only be entered when the moving party has sustained its burden of showing the absence of a genuine issue as to any material fact when all the evidence is viewed in the light most favorable to the non-moving party. Sweat v. The Miller Brewing Co., 708 F.2d 655 (11th Cir.1983). All doubt as to the existence of a genuine issue of material fact must be resolved against the moving party. Hayden v. First National Bank of Mt. Pleasant, 595 F.2d 994, 996-7 (5th Cir.1979), quoting Gross v. Southern Railroad Co., 414 F.2d 292 (5th Cir.1969). Factual disputes preclude summary judgment.
The Supreme Court of the United States held, in Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986),
In our view the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Id., 477 U.S. at 318, 106 S. Ct. at 2549, 91 L.Ed. at 273.
The Court also said, "Rule 56(e) therefore requires that non-moving 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 there is a genuine issue for trial.'" Celotex Corp., 477 U.S. at 324, 106 S. Ct. at 2553, 91 L.Ed.2d at 274.
The evidence offered by the non-moving party in response to a motion for summary judgment must establish the existence of a genuine issue of material fact by the substantive evidentiary standard of proof that would apply at the trial on the merits. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S. Ct. 2505, 2512, 91 L. Ed. 2d 202 (1986). Specifically, as the Supreme Court held in Anderson, "[t]he judge's inquiry ... unavoidably asks whether reasonable jurors could find by a preponderance of the evidence that the plaintiff is entitled to a verdict." Id. The Court finds that the Plaintiff has not carried its burden in this instance.
FACTS:
Defendant Life General Insurance Company issued a policy of insurance for major medical benefits to Plaintiff, Sally A. McCorkle. The coverage afforded by the insurance policy commenced as of February 1, 1990, and was in effect on June 12, 1990. The policy issued by Defendant contained an exclusion of coverage for pre-existing conditions which were defined within section 15 of the policy as "... any condition for which symptom(s) were evident or for which the Insured Person received medical advice or *1448 treatment during the six (twelve under the Co-op Plan) month period prior to the Insured Person's effective date of medical care coverage for such condition under this group policy." Plaintiff was covered under the Co-op plan.
For the twelve month period prior to the effective date of the policy, Plaintiff was examined and treated by Craig Trigueiro M.D., a non-board certified family practitioner. During a routine office visit on October 23, 1989, Dr. Trigueiro found that Plaintiff had tender breasts that were glandular in nature, or nodular. A bilateral mammogram was done on April 13, 1990, which revealed moderately severe fibrosis and severe density to both breasts. The mammogram revealed no dominant mast. On a later visit, on April 24 1990, Plaintiff complained of a ten year history of increasing right greater than left breast pain. The examination of Plaintiff by Dr. Trigueiro on that date revealed a 1.5 centimeter mast in the right breast. On June 12, 1990, Plaintiff was admitted to L.W. Blake Memorial Hospital for major medical surgery for fibrocystic breast disease.
The medical expenses incurred by Plaintiff pursuant to the surgery performed on June 12, 1990 were submitted for payment under the insurance policy issued by Defendant. Payment of the submitted medical expenses was denied. As a result, on November 19, 1991 Plaintiff brought suit against Defendant Life General Insurance Company. In Plaintiff's Amended Complaint dated August 13, 1992, Plaintiff states that the complaint is based, under ERISA, on the denial of coverage for the medical expenses incurred as a result of the June 12, 1990, surgery. On June 3, 1993, Defendant filed the motion for summary judgment against Plaintiff. Defendant's motion for summary judgment and Plaintiff's response, filed August 17, 1993, both rely on the deposition of Plaintiff's physician, Dr. Triguiero.
DISCUSSION:
The Court has considered Defendant's motion for summary judgment, Plaintiff's response thereto, and all supporting documentation. Although the Court must view the evidence in the light most favorable to the non-moving party, the Court is mindful of the standard of proof necessary for Plaintiff to establish the existence of a genuine issue of material fact. As required by the Supreme Court in Celotex Corp., Plaintiff has gone beyond the pleadings and has attempted to establish a factual question through the depositions of her various treating physicians. However, Plaintiff's own evidence indicates symptoms of the subsequently diagnosed fibrocystic breast disease were present during the October 23, 1989 examination by Dr. Trigueiro.
In Winchester v. Prudential Life Insurance Co. of America, 975 F.2d 1479, 1488 (10th Cir.1992) a summary judgment order was affirmed due to the non-moving party's failure to prove by a preponderance of the evidence that the insured's condition was not pre-existing. The Winchester court's holding was based on the finding that the appellant's own evidence indicated it was more likely than not that the condition was pre-existing. The evidence submitted by Plaintiff in this action presents a similar situation.
The deposition of Dr. Trigueiro, offered by Plaintiff as evidence of the existence of a genuine issue of material fact, indicates that it is more likely than not that Plaintiff's condition, or at least symptoms of the condition, existed prior to the commencement of the insurance policy on February 1, 1990. Specific references within the deposition of Dr. Trigueiro, offered as Plaintiff's Exhibit C, indicate the existence of the illness, or symptoms which are indicative of the illness, on October 23, 1989. Specifically, within Dr. Trigueiro's deposition there is an indication, from Trigueiro's notes on the October 23, 1989, examination, that Plaintiff had tender breasts which were glandular in nature, or nodular. (Plaintiff's Exhibit C, Deposition of Dr. Trigueiro, Page 12, Line 7.) According to Dr. Trigueiro, tender, glandular breasts are almost always fibrocystic. (Exhibit C, Page 33, Lines 15-16) Trigueiro indicates that he suspected Plaintiff had fibrocystic disease on October 23, 1989. (Exhibit C, Page 19, Lines 4-5.) Later, Triguiero also states that he diagnosed fibrocystic breast disease as of October 23, 1989. (Exhibit C, Page 31, Line 24-25 and Page 33, Lines 14-16) In addition, Trigueiro indicates that the *1449 diagnosis of fibrocystic breast disease was the reason for the reduction in the dosage of Plaintiff's hormone medication. (Exhibit C, Page 33, Lines 20-24.)
In response to Defendant's motion for summary judgment, Plaintiff alleges that no diagnosis of fibrocystic breast disease, objective studies, or suspicions of the existence of the disease were undertaken or communicated during the twelve months prior to the effective date of the insurance policy. However, under the plain language of the insurance policy, these actions were not necessary in order for the subsequent treatment of the disease to be excluded under the pre-existing condition clause in section 15. The policy defines a pre-existing condition as "any condition for which symptom(s) were evident" during the applicable time frame prior to the effective date of the policy.
The absence of a recorded diagnosis of the illness prior to the commencement of the policy is not relevant due to the language used in pre-existing exclusion clause in section 15 of Plaintiff's policy with Defendant, Life General. (Plaintiff's and Defendant's Exhibit A) In order for the exclusion to apply, the plain language of the policy indicates that symptoms of the illness must have been evident within the restricted time period prior to the effective date of the policy. Although Trigueiro skirts the issue of a precise diagnosis earlier in the deposition, the information from his notes reviewed during the deposition and Trigueiro's responses set out above clearly indicate that symptoms of the disease were present prior to the commencement of Plaintiff's policy with Defendant.
Courts interpreting similar clauses excluding pre-existing conditions from coverage have consistently held that a diagnosis of the condition prior to the effective date of the policy is not required in order for the exclusion to apply. See, Kirk v. Provident Life and Accident Insurance Co., 942 F.2d 504, 506 (8th Cir.1991) (coverage denied where symptoms were present prior to the effective date of policy but were insufficient to allow an accurate diagnosis at that time); Fischman v. Blue Cross & Blue Shield of Connecticut, Inc., 775 F. Supp. 513, 516 (D.Conn. 1991) (summary judgment granted to insurer on basis of pre-existing condition exclusion since medical advice regarding condition or treatment, or accurate diagnosis, was not required by plain language of exclusion clause); Cury v. Colonial Life Ins. Co. of America, 737 F. Supp. 847, 854 (E.D.Pa.1990) (patient's knowledge of actual diagnosis, and definite medical diagnosis of illness not necessary in order for illness to fall within pre-existing condition exclusion).
As indicated by the court in Fischman v. Blue Cross & Blue Shield of Connecticut, Inc., 775 F. Supp. 513, 516 (D.Conn.1991), the rationale for the holdings in these cases is not only the plain language of the policies but is also to prevent fraudulent attempts to receive coverage for known, undisclosed pre-existing conditions. The court in Fischman succinctly opined that "... coverage should not turn on whether the physician suspected a number of different ailments or had reached a conclusive diagnosis." Id. at 516. The clear reasoning for this is the difficulty that the insurer would face in attempting to determine whether that line is crossed before or after the effective date of coverage. Accordingly, it is
ORDERED that Defendant's motion for summary judgment is granted. The Clerk is directed to enter a final judgment of dismissal in favor of the Defendant.
DONE and ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1165231/ | 33 Wash. App. 147 (1982)
652 P.2d 391
In the Matter of the Marriage of MARIAN S. SMITH, Respondent, and GERALD W. SMITH, Appellant.
No. 4207-0-II.
The Court of Appeals of Washington, Division Two.
October 15, 1982.
*148 Robert Briggs, for appellant.
H. Edward Haarmann, for respondent.
PETRICH, J.
The husband, a retired military officer, appeals from that portion of a marital dissolution decree awarding properties to the respective parties. The issue presented is whether the court may offset the award of a nondisability military pension to the military retiree by awarding community property of comparable or equal value to the other spouse. In light of McCarty v. McCarty, 453 U.S. 210, 69 L. Ed. 2d 589, 101 S. Ct. 2728 (1981), and In re Marriage of Dessauer, 97 Wash. 2d 831, 650 P.2d 1099 (1982), we must answer in the negative and, thus, reverse the order below.
Gerald Smith entered the Air Force in 1955 and married Marian Smith on June 10, 1956. After 20 years of service, the husband retired as a Lieutenant Colonel in 1975, at which time he began receiving his full military pension. In January of 1979, Marian Smith filed a petition for dissolution; a trial on this action took place that June. In his trial brief and in argument before the court, the husband argued that on the basis of Hisquierdo v. Hisquierdo, 439 U.S. 572, 59 L. Ed. 2d 1, 99 S. Ct. 802 (1979), his military retirement pension was his separate property, made exempt from the reach of state community property law by the federal supremacy clause. Although he admitted Hisquierdo dealt specifically with federal railroad retirement benefits, he contended that the same result obtained with military retirement pensions.
In his brief he proposed a disposition of community *149 property assets allocating $178,280.17 to his wife and $163,696.17 for himself. He also suggested that his military pension be awarded to himself in exchange for other items of community property awarded to his wife. During argument at trial, the wife requested a percentage of the pension. The husband said he would prefer to retain the full pension and offset any share his wife may have through other assets.
The court characterized all the assets, including the military pension, as community property. The details of the mathematical computation in dividing the property are unnecessary to this opinion. It is clear, however, that the court awarded to the husband the entire military pension, which it valued at $165,000, and that it offset this by awarding to the wife other property of equal value. The remaining properties were divided not on an equal value basis, but reasonably close considering the nature and quality of the items divided.
From this order the husband appeals.[1] We first note that although some statements of the husband to the trial court suggest an invitation to offset his military pension, other argument sufficiently apprised the trial court of his claim that the supremacy clause prohibits the application of state community property law to a military retirement pension. He repeatedly argued that, on the basis of Hisquierdo, the pension was his wholly separate property. Moreover, in its oral opinion, the court indicated its awareness that a recent case, Cose v. Cose, 592 P.2d 1230 (Alaska 1979), had interpreted Hisquierdo to mean that military pensions were not to come under the sway of a state's domestic relations law. The husband, therefore, did not waive his right to appeal.
The question presented by McCarty was whether, upon the dissolution of a marriage, federal law precludes a state court from dividing a nondisability military pension pursuant to state community property laws. After extensive *150 review of the congressional intent underlying the statutes providing for military retirement pay, it concluded not only that "there is a conflict between the terms of the federal retirement statutes and the community property right asserted by appellee here ..." but that "the application of community property principles to military retired pay threatens grave harm to `clear and substantial' federal interests", thus requiring nonrecognition of community property principles under the supremacy clause. McCarty v. McCarty, 453 U.S. at 232.
At this point we make two closely related observations. First, McCarty's holding was not dependent upon characterizing military retirement benefits as either property, in the form of deferred compensation, or current compensation for reduced, but currently rendered services. McCarty v. McCarty, 453 U.S. at 222-23. Rather, the Court viewed these benefits as the retiree's "personal entitlement" not subject to partition or diminution according to community property law. Washington has previously characterized military pensions as deferred compensation, thereby divisible under community property law. Wilder v. Wilder, 85 Wash. 2d 364, 534 P.2d 1355 (1975). Thus, although McCarty does not now permit military pensions to be so divided, we are still bound by the characterization of military pensions as deferred compensation.
Second, for purposes of following McCarty, it is immaterial whether or not the pension is characterized as separate property.[2] The only real issue is whether treatment of the pension in a property division conflicts with and sufficiently *151 frustrates or injures federal objectives. For example, in this state, community property as well as separate property is brought before the court for property divisions. And, in an appropriate case, the court may award the separate property of one spouse to the other. See, e.g., Moore v. Moore, 9 Wash. App. 951, 515 P.2d 1309 (1973). Obviously, even if a military pension was characterized as separate property, application of such Washington law would nevertheless be prohibited by McCarty. Thus, the application of McCarty to a dissolution proceeding dividing the spouses' property will not be affected by the pension's characterization as either separate or community property.
[1] We turn, now, to the issue before us. McCarty's only mention of offsetting appears in footnote 22.[3] While the majority's analysis may be subject to criticism,[4] its pronouncement against offsetting is clear. Indeed, although our Supreme Court has not been squarely faced with the issue of whether a court could offset the award of a military pension with other properties, it affirmed McCarty's prohibition of the same. "Neither may [a court] value the pension and offset property against that value." In re Marriage of Dessauer, 97 Wn.2d at 839.
We therefore conclude that the court below erred when it *152 characterized the military pension as community property and offset its award to the husband with an award to the wife of other properties of the community of equal or comparable value.
This does not mean that the trial court must be "blind" to the existence of actual or potential military retirement benefits. The court, in order to properly exercise its discretion and make a just and equitable distribution of the property, as it is required to do by statute,[5] must consider the parties' true economic circumstances. In re Marriage of Dessauer, supra. The actual or anticipated receipt of military retirement benefits is as much of a factor in gauging the true economic circumstances of the parties as is the potential earning power of either party taking into account the training, skill, background, and resources available. Furthermore, such consideration does not injure any federal objectives.[6]
We reverse the trial court's judgment dividing and apportioning the property. Since the original trial judge has retired, we remand to the superior court for a new trial to *153 determine an appropriate and equitable division of the property; provisions for maintenance and/or alimony; and awards for costs and attorney fees as may be appropriate and consistent with this opinion and the guidelines of In re Marriage of Dessauer, supra.
REED, C.J., and PETRIE, J., concur.
NOTES
[1] Subsequent to original appellate argument, the United States Supreme Court announced the McCarty decision. Reargument was then requested by this court.
[2] Indeed, McCarty is applicable to many common law property states where divorce courts are empowered to distribute property upon divorce no matter how title is held. Foster & Freed, From a Survey of Matrimonial Laws in the United States: Distribution of Property Upon Dissolution, 3 Comm'ty Prop. J. 231 (1976). Thus, at least one common law state has already applied McCarty to its own distribution scheme. See Webber v. Webber, 308 N.W.2d 548 (N.D. 1981). In sum, military retirement pay is not subject to division or equitable distribution under community property or other variations of marital property laws. Kornfeld, Supreme Court Majority Shoots Down Community Property Division of Military Retired Pay, 8 Comm'ty Prop. J. 187, 194 (1981).
[3] McCarty v. McCarty, 453 U.S. at 228 n. 22 states:
"In addition, an Army enlisted man may not assign his pay. 37 U.S.C. § 701 (c). While an Army officer may transfer or assign his pay account `[u]nder regulations prescribed by the Secretary of the Army,' he may do so only when the account is `due and payable.' § 701 (a). This limitation would appear to serve the same purpose as the prohibition against `anticipation' discussed in Hisquierdo, 439 U.S., at 588-589. Cf. Smith v. Commanding Officer, Air Force Accounting and Finance Center, 555 F.2d 234, 235 (CA9 1977). But even if there were no explicit prohibition against `anticipation' here, it is clear that the injunction against attachment is not to be circumvented by the simple expedient of an offsetting award. See Hisquierdo, 439 U.S., at 588. Cf. Free v. Bland, 369 U.S. 663, 669 [8 L. Ed. 2d 180, 82 S. Ct. 1089] (1962)."
[4] See Note, Federal Law Preempts State Treatment of Military Retirement Benefits as Community Property: McCarty v. McCarty, 101 S. Ct. 2728 (1981), 13 Tex. Tech. L. Rev. 212, 224-27 (1982); Comment, McCarty v. McCarty and Military Retired Pay: Avoiding the Test for Federal Preemption of State Community Property Law and the Problem of Unconstitutional Taking, 16 U.S.F.L. Rev. 377, 386-88 (1982).
[5] RCW 26.09.080 states:
"Disposition of property and liabilities Factors. In a proceeding for dissolution of the marriage, legal separation, declaration of invalidity, or in a proceeding for disposition of property following dissolution of the marriage by a court which lacked personal jurisdiction over the absent spouse or lacked jurisdiction to dispose of the property, the court shall, without regard to marital misconduct, make such disposition of the property and the liabilities of the parties, either community or separate, as shall appear just and equitable after considering all relevant factors including, but not limited to:
"(1) The nature and extent of the community property;
"(2) The nature and extent of the separate property;
"(3) The duration of the marriage; and
"(4) The economic circumstances of each spouse at the time the division of property is to become effective, including the desirability of awarding the family home or the right to live therein for reasonable periods to a spouse having custody of any children."
[6] Courts may also consider a military pension for purposes of establishing a maintenance decree. Significantly, military retired pay may be subject to garnishment for purposes of enforcing such decree. McCarty v. McCarty, 453 U.S. at 235-36. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567360/ | 408 F. Supp. 2d 773 (2006)
Delores B. KINZEBACH, Plaintiff,
v.
Jo Anne B. BARNHART, Commissioner of Social Security, Defendant.
No. 4:05 CV 195 RWP TJS.
United States District Court, S.D. Iowa, Central Division.
January 10, 2006.
Christopher D Hagen, U S Attorney's Office, Des Moines, IA, for Commissioner of Social Security unknown, Defendant.
Timothy N Tripp, Tripp, P.C., Pella, IA, for Delores B. Kinzebach, Plaintiff.
ORDER
PRATT, District Judge.
Plaintiff, Delores B. Kinzebach, filed a Complaint in this Court on April 4, 2005, seeking review of the Commissioner's decision to deny her claim for Social Security benefits under Title II of the Social Security Act, 42 U.S.C. §§ 401 et seq. This Court may review a final decision by the Commissioner. 42 U.S.C. § 405(g). For the reasons set out herein, the decision of the Commissioner is reversed.
PROCEDURAL BACKGROUND
Plaintiff filed an application for Social Security Disability benefits on May 10, 2002, claiming to be disabled since April 2, 2002. Tr. at 44-46. Plaintiff, whose date *774 of birth is May 27, 1961 (Tr. at 44), was 43 years old at the time of the hearing. Tr. at 337. Plaintiff is last insured to receive disability benefits on December 31, 2006. Tr. at 55. After the application was denied, initially and on reconsideration, Plaintiff requested a hearing before an Administrative Law Judge. A hearing was held before Administrative Law Judge Jean M. Ingrassia (ALJ) on June 22, 2004. Tr. at 334-63. The ALJ issued a Notice Of Decision Unfavorable on October 26, 2004. Tr. at 11-18. After the decision was affirmed by the Appeals Council on February 4, 2005, (Tr. at 6-10), Plaintiff filed a Complaint in this Court on April 4, 2005.
Following the sequential evaluation, the ALJ found that Plaintiff had not engaged in substantial gainful activity since her alleged onset of disability. At the second step the ALJ found that Plaintiff's severe impairment is dysthymia[1]. The ALJ found that this impairment does not qualify for benefits at the third step of the sequential evaluation. At the fourth step, the ALJ found that Plaintiff has the residual functional capacity to work with no physical or mental limitation. The ALJ found that Plaintiff is able to do her past relevant work, including the job she left on April 2, 2001 because of her husband's illness (Tr. at 149). Because the ALJ stopped the sequential evaluation at the fourth step, she found that Plaintiff was not disabled and not entitled to the benefits for which she applied. Tr. at 18.
MEDICAL EVIDENCE
On June 12, 2002, John Daniel, Ph.D., a licensed clinical psychologist at the Poweshiek County Mental Health Center, responded to a request for information from Disability Determination Services. Plaintiff had been seen at the Center since 1991, with current visits dating from 1998. Most recently, Plaintiff was being seen by psychiatrist Laura Van Cleve, D.O. In 1998, psychiatrist Kathryn Hall diagnosed bipolar disorder, hypomanic, and alcohol abuse and dependence in partial remission (see Tr. at 188-89). In addition, Plaintiff had been seen by two psychotherapists. In the previous three years, Plaintiff had two hospitalizations for treatment of alcoholism and recurrent symptoms of the bipolar disorder. Tr. at 186. At the time of the letter, Plaintiff was maintaining sobriety but experiencing "a good bit of anxiety and depression." Dr. Daniel wrote that Plaintiff was attending three AA meetings each week to maintain her sobriety. Plaintiff's medication was Zoloft 100 mg., and Seroquel 100 mg. Dr. Daniel wrote that Plaintiff left her job because she was unable to cope with the combination of stressors at home and at work. He said that if Plaintiff were granted benefits, she would need assistance in managing them because: ". . . having to deal with this responsibility would simply increase the stresses in her life and increase the likelihood of serious exacerbation of her Bipolar Affective Disorder symptoms and/or excessive drinking." Tr. at 187.
Plaintiff was hospitalized from August 19-23, 2001, at Iowa Lutheran Hospital because of her inability to stop drinking on her own. Upon discharge, she was transferred to the intensive outpatient dorm bed unit for additional treatment where she stayed until September 7, 2001. Tr. at 200-21.
Plaintiff was seen for an orthopedic examination by Kurt Vander Ploeg, M.D. on October 28, 2002. It does not appear that the doctor found any abnormalities. Tr. at *775 237-40. The doctor wrote: "About a year ago [she was] diagnosed with PTSD due to physical abuse by a brother when she was young." Tr. at 237.
Dr. Daniel wrote a report on October 27, 2003. He had last seen Plaintiff on October 9, 2003, when Plaintiff had come in "extremely distressed at that time, tearful and virtually sobbing some of the time during the session." The doctor pointed to "a number of very significant and extreme stressors that are effecting her at this time." Those stressors included: Her mother was ill; her chronically mentally ill brother had to be hospitalized and was making threats to burn down the mother's house; her 17 year old son was refusing to do his school work and was getting into trouble at school; her husband was chronically and seriously ill; her car had broken down; and, there was no money to pay for medical essentials. The doctor wrote: "All of these stressors strongly contribute to [Plaintiff] experiencing exacerbated PTSD symptoms, generalized anxiety, nightmares and flashbacks; depressive symptoms including problems with sleep, significantly depressed mood, irritability and difficulty controlling her temper." Tr. at 243. Dr. Daniel opined that the stressors Plaintiff was experiencing in October of 2003, were even greater than they were in the spring of 2002, when she had to give up her part time work. The doctor said that if Plaintiff tried to work, it was his opinion that she would increase the probability of more severe psychiatric symptoms including anxiety and depression, and there would be a "great likelihood of resuming excessive drinking." The doctor concluded: "I think her capacity for working full-time is even more limited than when I previously wrote to you on November 18, 2002." Tr. at 244.
The Court has read the treatment notes from the Mental Health Center (Tr. at 249-51 & 254-325). A complete summary of each entry would not add to this discussion. On November 5, 2002, Donna Sullivan, PA-C, psychiatric physician assistant at the Mental Health Clinic wrote to Disability Determination Services in support of Plaintiff's claim. Ms. Sullivan stated that both she and Dr. Van Cleve were both of the opinion that with a lower stress level, Plaintiff was able to maintain sobriety and cope with ongoing stressors. Tr. at 254. Ms. Sullivan's Axis I diagnosis was: "1. Evaluate for Dysthymia vs. BAD (Bipolar Affective Disroder). 2. History of alcohol dependence, in early remission. 3. Evaluate for PTSD." See, e.g. Tr. at 256, 258, 261, 263, 265, etc., etc. Ms. Sullivan pointed out that the Axis V diagnosis varied between 55 and 65, and that the diagnosis varied based on Plaintiff's level of anxiety. Tr. at 254. On the other hand, many of the treatment notes from the mental health center seem to suggest that the reason Plaintiff is unable to work is the stress she has due to her husband's illness and her daughter's situation being pregnant and giving birth to a baby. For example, on January 30, 2002, alleged onset of disability is not until April 2, 2002 Ms. Sullivan wrote: "Her husband is on disability for COPD. Her 16 year old daughter is six months pregnant. There have been significant behavior problems with her stepsons. Dolly is working about 15 hours a week at the nursing home and she feels this is about all she can handle since she takes care of her husband and runs the household." Tr. at 265. On February 21, 2002 again, before the alleged onset of disability Dr. Daniel wrote: "Both Donna and I agree that Dolly is unable to cope with all of the stresses and responsibilities at home and work full-time and yet we feel that working part-time is beneficial for her in terms of getting away from some of the issues at home, giving her some money that she has earned, etc." Tr. at 262.
*776 On June 7, 2004, Dr. Daniel wrote a report addressed to the Office of Hearings and Appeals. He stated that the current diagnoses were: 1) Post Traumatic Stress Disorder, chronic with moderate to sometimes severe symptoms . . . At times she experiences nightmares and flashbacks which can be quite incapacitating for her; 2) Dysthymia Disorder, adolescent onset. Even with treatment including medication she experiences significant anxiety and depressive symptoms including frequent difficulty sleeping, decreased energy and easy fatigability, agitation and significant difficulty in concentrating. The psychologist wrote that Plaintiff alcohol dependence had been in "sustained full remission for the past three years." Tr. at 326. Dr. Daniel concluded his report:
Even if she did not have other stressors at home, if she would attempt to work I think there would be a marked exacerbation of her anxiety and depressive symptoms. This is already exemplified in the difficulty she has in dealing with current life stressors. I think that it is virtually certain that she would miss significant work because of her symptoms, would be unable to concentrate adequately at work on a consistent basis, and would exhibit angry outbursts at work. It is also my opinion that there would be a strong likelihood of recidivism in terms of returning to excessive drinking resulting in the need for substance abuse treatment/hospitalization. I think that this is a woman who would very much like to be able to work but I don't believe she is capable of doing so. Requiring her to attempt to work full-time would almost certainly result in increased treatment costs.
Tr. at 327.
ADMINISTRATIVE HEARING
Plaintiff, with counsel, appeared and testified at the hearing on June 22, 2004. Tr. at 334-63. Plaintiff testified that she was 43 years old. Tr. at 337. Plaintiff testified that before she stopped working she would fly off the handle, that if she was told to do something, she would "start bawling and [lose] my temper." Tr. at 342.
Plaintiff testified that her husband did the budgeting for the family but that she delivered the bills for payment and did the shopping. Tr. at 344.
Plaintiff testified that her husband was disabled from COPD. She said that her care of him involves bathing him, cooking his meals, and making sure he takes his medication. Tr. at 346. Plaintiff said that she also baby sits for her grandchild two or three times per week. Tr. at 348. Care of the grandchild involves feeding, entertaining, changing diapers. Plaintiff said that she sometimes takes the child to the park. Tr. at 349.
The ALJ asked Plaintiff if she thought she could take care of all her household duties and work at the same time. Plaintiff said that she had found it to be too much. Tr. at 350. The ALJ asked why Plaintiff had chosen to stay home rather than work outside of her home. "I thought the one at home took priority," was the response. Plaintiff agreed that she could have had someone come in and take care of her husband:
Q. . . . you could get someone to come in and take care of your husband, couldn't you?
A. Yeah.
Q. And they'd pay somebody to do that, wouldn't they?
A. Yeah.
Q. Okay, so why did you decide that was a priority then?
A. Out of love.
Q. Okay. You felt it was your duty to do that?
*777 A. Yeah.
Tr. at 351.
Plaintiff testified that she had three years of sobriety. She said that she felt her alcohol problems were in response to the abuse she suffered as a child. Plaintiff said that she received medical care at the mental health center and from her family doctor. Tr. at 352.
After Plaintiff testified, the ALJ called Julie Svec to testify as a vocational expert. Tr. at 357. The vocational expert was asked to consider:
We have a 42 year old with a GED certificate. She's really not alleging any physical problems. She has to be able to do medium work activity, medium, light and sedentary without any restrictions on sitting, standing, walking, stooping, crouching, crawling, kneeling, etcetera. The record indicates she does have a dysthymic disorder. She's kind of over-stressed. She takes care of her disabled husband and she runs a household. She does engage in many normal daily activities, including driving, shopping, cooking, cleaning, taking care of a 2-year old grandchild, goes to church on Sunday, goes to a Wednesday night prayer group and basically uses the community mental health center as an opportunity to express her feelings, to relate with another understanding adult and to basically unwind. Her depression would not significantly interfere with her ability to function independently, appropriately and effectively in a competitive job market on a sustained basis. She has no restriction in her activities of daily living. Obviously her social functioning is intact. She's able to attend church on Sunday, attend a prayer group on Wednesday evening. There's nothing to indicate she would have any difficulty with concentration, persistence or pace. Thus on a scale of none to extreme, I would indicate that her dysthymic disorder would be mild, at times moderately impaired depending upon how stressed she is. She made the choice to stay at home and deal with the home stresses rather than the work stresses. With those restrictions, would she be able to do any work she's done in the past?
Tr. at 357-58. In response the vocational expert testified that Plaintiff would be able to do her past relevant work. Tr. at 358.
On cross examination, the vocational expert testified that if Plaintiff were not able to deal with supervisors or co-workers, she would be unable to do any kind of work. Tr. at 359. The vocational expert testified that if a person would miss work three times a month due to mental health impairments, that person could not work. Tr. at 359-60.
ALJ'S DECISION
In her decision of October 26, 2004, as stated above, the ALJ stopped the sequential evaluation at the fourth step by finding that Plaintiff is able to do her past relevant work. The ALJ wrote that while she considered Dr. Daniel's opinion, she did not find it persuasive.
While Dr. Daniel reported that the claimant's anxiety and depression limited her from working, he has not stated what limitations she had due to those impairments. Even more, it is noted that the most current GAF score revealed only moderate symptoms due to her impairments. (Exhibit 12F, p. 1). Again, this does not support a claim for disability.
Tr. at 17. The ALJ, wrote that Plaintiff's "depression does not significantly interfere with her ability to function independently, appropriately and effectively in a competitive job market on a sustained basis. She has no restriction in activities of daily living. Her social functioning is intact and *778 she has no difficulties with concentration, persistence or pace." Id.
DISCUSSION
The scope of this Court's review is whether the decision of the Secretary in denying disability benefits is supported by substantial evidence on the record as a whole. 42 U.S.C. § 405(g). See Lorenzen v. Chater, 71 F.3d 316, 318 (8th Cir.1995). Substantial evidence is less than a preponderance, but enough so that a reasonable mind might accept it as adequate to support the conclusion. Pickney v. Chater, 96 F.3d 294, 296 (8th Cir.1996). We must consider both evidence that supports the Secretary's decision and that which detracts from it, but the denial of benefits shall not be overturned merely because substantial evidence exists in the record to support a contrary decision. Johnson v. Chater, 87 F.3d 1015, 1017 (8th Cir.1996) (citations omitted). When evaluating contradictory evidence, if two inconsistent positions are possible and one represents the Secretary's findings, this Court must affirm. Orrick v. Sullivan, 966 F.2d 368, 371 (8th Cir.1992) (citation omitted).
Fenton v. Apfel, 149 F.3d 907, 910-11 (8th Cir.1998).
In short, a reviewing court should neither consider a claim de novo, nor abdicate its function to carefully analyze the entire record. Wilcutts v. Apfel, 143 F.3d 1134, 1136-37 (8th Cir.1998) citing Brinker v. Weinberger, 522 F.2d 13, 16 (8th Cir. 1975). See also Patrick v. Barnhart, 323 F.3d 592, 595 (8th Cir.2003).
The Court of Appeals held, as cited above, that if two inconsistent positions are possible and one represents the Secretary's findings, the Court must affirm. On the other hand, the Court is obligated to apply a balancing test to evidence which is contradictory in order to determine if the decision of the Commissioner is supported by substantial evidence on the record as a whole. In Gavin v. Heckler, 811 F.2d 1195, 1199 (8th Cir.1987), then Chief Judge Lay wrote:
"substantial evidence on the record as a whole," however, requires a more scrutinizing analysis. Smith v. Heckler, 735 F.2d 312, 315 (8th Cir.1984). In the review of an administrative decision, "[t]he substantiality of evidence must take into account whatever in the record fairly detracts from its weight." Universal Camera Corp. v. National Labor Relations Bd., 340 U.S. 474, 488, 71 S. Ct. 456, 464, 95 L. Ed. 456 (1951). Thus, the court must also take into consideration the weight of the evidence in the record and apply a balancing test which is contradictory. See Steadman v. Securities and Exchange Commission, 450 U.S. 91, 99, 101 S. Ct. 999, 1006, 67 L. Ed. 2d 69 (1981). It follows that the only way a reviewing court can determine if the entire record was taken into consideration is for the district court to evaluate in detail the evidence it used in making its decision and how any contradictory evidence balances out.
In the case at bar, the ALJ's view of the evidence has support in the record. In her testimony, and throughout the record, Plaintiff states that she cannot cope with both the demands of work and the demands of her responsibilities at home. According to Plaintiff, when she was forced to choose between working and taking care of her husband, she opted to stay at home. Likewise, as pointed out in the summary of fact above, some of the medical records suggest that but for the stressors Plaintiff experiences at home, she would be able to work. This is especially true of the treatment notes before Plaintiff's alleged onset of disability.
On the other hand, treating psychologist John Daniel, Ph.D., opined on four separate *779 occasions that Plaintiff would be unable to function in a competitive work setting. Once was shortly after Plaintiff made her application for disability benefits on June 12, 2002. Tr. at 186-87. On November 18, 2002 (Tr. at 252-53), and again on October 27, 2003 (Tr. at 252), Dr. Daniel wrote to Plaintiff's counsel to express his opinion that Plaintiff is unable to work. Finally, on June 7, 2004, Dr. Daniel sent a letter directly to the Office of Hearings and Appeals stating his opinion that even absent the home stressors, Plaintiff is not able to work due to her anxiety and depression. Tr. at 327.
Claimants often do not have insight into the reasons they are unable to work, especially when mental health illness are involved. For example, in Easter v. Bowen, 867 F.2d 1128 (8th Cir.1989), it was claimed that Mrs. Easter was unable to work due to a long list of impairments. Although the objective evidence of the physical ailments was of varying degrees of certainty and specificity, there was uncontradicted evidence of a mental condition known as somatoform or conversion disorder. The medical record also indicated depression, chronic insomnia and extreme fatigue, a low frustration tolerance level, and possibly a deficiency of logical memory function. Id. at 1129. The Court of Appeals held that it was error for the ALJ to substitute his judgment about Easter's condition for the judgment of both the treating and consulting physicians. Furthermore, the ALJ rejected the opinion of the vocational expert who answered that no work would be possible when asked to consider the opinions of the doctors. In Easter, Judge Arnold concluded the opinion by reminding courts of their duty to "evaluate all of the evidence in the record taking into account whatever in the record fairly detracts from the ALJ's decision. Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S. Ct. 456, 464-65, 95 L. Ed. 456 (1951); Piercy v. Bowen, 835 F.2d 190, 191 (8th Cir.1987)." The Court reversed and awarded benefits. Id. at 1131.
In the case at bar, the ALJ substituted her judgment of the nature and effects of Plaintiff's impairments for that of the only medical expert to submit reports on Plaintiff's condition. Dr. Daniel, a licenced clinical psychologist, made it very clear that even if Plaintiff did not have other stressors at home, an attempt to work would result in "a marked exacerbation of her anxiety and depressive symptoms." Relying on Plaintiff's view of her own illness, the ALJ told the vocational expert to consider that Plaintiff was "kind of over-stressed." The vocational expert was told that plaintiff's "depression would not significantly interfere with her ability to function independently, appropriately and effectively in a competitive job market on a sustained basis." Under those circumstances, the vocational expert testified that Plaintiff was able to do her past work.
The vocational expert's testimony, however, did not withstand cross-examination. When the expert was asked to consider the effects of Plaintiff's illness identified by her doctors, the expert testified that no work would be possible.
Substantial evidence on the record as a whole does not support the ALJ's decision that Plaintiff is able to return to her past relevant work. When the vocational expert was asked to consider the true extent of Plaintiff's limitations, she testified that no work is possible. The Court, therefore, finds no reason to remand for any purpose other than to compute Plaintiff's past due benefits. In so holding, the Court is aware that Plaintiff is a relatively young woman. In Easter, Judge Arnold closed the opinion: "We note that this claimant's condition may be remediable with treatment, and remind the Secretary of his authority to terminate her *780 benefits if she fails to pursue prescribed treatment that, to a reasonable degree of medical certainty, would restore her ability to work. 20 C.F.R. § 404.1530."
CONCLUSION AND DECISION
It is the holding of this Court that Commissioner's decision is not supported by substantial evidence on the record as a whole. The Court finds that the evidence in this record is transparently one sided against the Commissioner's decision. See Bradley v. Bowen, 660 F. Supp. 276, 279 (W.D.Ark.1987). A remand to take additional evidence would only delay the receipt of benefits to which Plaintiff is entitled.
The final decision of the Commissioner is reversed and the Commissioner is ordered to award Plaintiff the benefits to which she is entitled.
The judgment to be entered will trigger the running of the time in which to file an application for attorney's fees under 28 U.S.C. § 2412(d)(1)(B) (Equal Access to Justice Act). See also, McDannel v. Apfel, 78 F. Supp. 2d 944 (S.D.Iowa 1999) (discussing, among other things, the relationship between the EAJA and fees under 42 U.S.C. § 406 B), and LR 54.2(b)[2]. See also, Gisbrecht v. Barnhart, 535 U.S. 789, 122 S. Ct. 1817, 1821, 152 L. Ed. 2d 996 (2002); Mitchell v. Barnhart, 376 F. Supp. 2d 916 (S.D.Iowa July 15, 2005).
IT IS SO ORDERED.
NOTES
[1] The essential feature of Dysthymic Disorder is a chronically depressed mood that occurs for most of the day more days than not for at least two years. Diagnostic And Statistical Manual of Mental Disorders, Fourth Edition, Text Revision (DSM-IV-TR) at page 376.
[2] N.B. Counsel is reminded that LR 54.2(b), states that an EAJA application "must specifically identify the positions taken by the government in the case that the applicant alleges were not substantially justified." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567361/ | 116 P.3d 398 (2005)
STATE v. BORBOA
No. 76547-2.
The Supreme Court of Washington, Department I.
July 12, 2005.
Petition for review granted. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1148347/ | 517 So.2d 517 (1987)
Larry Alan MERRITT
v.
STATE of Mississippi.
No. 56030.
Supreme Court of Mississippi.
November 4, 1987.
Rehearing Denied January 13, 1988.
E.V.E. Joy, Jackson, for appellant.
Edwin Lloyd Pittman, Atty. Gen. by DeWitt Allred, Sp. Asst. Atty. Gen., Jackson, for appellee.
En Banc.
*518 ROBERTSON, Justice, for the court:
I.
Today, Larry Alan Merritt charges error in denial of his claim for post-conviction relief from a final judgment that he murdered his two-year-old daughter. Central to the case is a claim that he was denied effective assistance of counsel at his trial. Beyond this, Merritt seeks to present issues that either were or ought to have been decided on his original appeal, issues which for that reason are precluded from review here. For the reasons noted below, we affirm the Circuit Court's denial of post-conviction relief.
II.
On December 12, 1975, Merritt was found guilty in the Circuit Court of Marion County, Mississippi, of the murder of his daughter, Shannon Merritt. The essence of the verdict is that Merritt took out a $25,000.00 insurance policy on the life of his daughter and then suffocated her to collect the insurance proceeds. Merritt's conviction was affirmed on direct appeal. See Merritt v. State, 339 So.2d 1366 (Miss. 1976), wherein the facts of the case are set forth more fully and, for that reason, need not be recounted here.
On October 7, 1981, this Court granted Merritt's Application for Leave to File a Complaint for Post-Conviction Relief and remanded same to the Circuit Court "for the limited purpose of inquiring into the charge of ineffective assistance of counsel." The Circuit Court then held the prescribed hearing and on April 4, 1983, entered final judgment that Merritt's claim for post-conviction relief should be denied. From that ruling, Merritt prosecutes the present appeal.
III.
Merritt urges that the Circuit Court erred in rejecting his claim of ineffective assistance of counsel. The record reflects that the Circuit Court held a full evidentiary hearing on this question and then filed an opinion containing extensive findings of fact and conclusions of law.
At his original murder trial, Merritt was represented and defended by retained counsel, Sebe Dale, Jr., Esq., of the Columbia, Mississippi, Bar. Merritt charges that Dale's performance was ineffective in three general areas:
(1) failure to conduct an adequate pre-trial investigation;
(2) failure to file certain pre-trial motions; and
(3) certain omissions in trial procedures.
Under the general heading of failure to conduct an adequate pre-trial investigation, Merritt first charges that his attorney failed to investigate the background of his former wife, Toddie Lynn Merritt (Burns). To be sure, she was an important prosecution witness at Merritt's murder trial. The Court below observed that "without the wife's testimony ... the case would never have gone to the jury." The evidence at the post-conviction hearing, however, reflected that Merritt's attorney had known his former wife's family for a number of years and that he knew her mother and father. He had interviewed her when he represented Merritt in a divorce action brought by her. At the post-conviction hearing Merritt failed to show how such additional investigation would have significantly aided his cause at trial.
Second, counsel is charged with failure to obtain the services of a forensic pathologist. This charge is made in the context of the fact that the cause of death was an important issue at trial. In the first place, there is no law requiring employment of a forensic pathologist as a prerequisite to defense counsel being considered constitutionally effective. As a practical matter, defense counsel had a cousin who was a pathologist practicing in McComb, Mississippi. Counsel did in fact consult with his cousin and discussed reports of the prosecution's pathologist and was advised that "he [counsel's cousin] saw nothing which would be of any benefit."
Third, Merritt charges that counsel failed to interview the prosecution's witnesses. At trial in 1975, the prosecution called Toddie *519 Lynn Merritt (Burns), Joe Peavy, Mrs. Bill Russell, C.H. Tyrone, Milton S. Magee, Dr. J. Larry Smith, Dr. Sergio Gonzales, and O.L. (Buddy) Anderson. Counsel interviewed Mrs. Merritt (Burns), Peavy, Tyrone, Magee, and Smith. He attempted to talk with Anderson, but Anderson refused (although counsel had the opportunity to cross-examine Anderson at the preliminary hearing). Counsel adequately familiarized himself with the report of Dr. Gonzales. Counsel did not talk with Mrs. Russell who lived in Grand Isle, Louisiana. Mrs. Russell offered no testimony which in any way surprised the defense and hence, Merritt suffered no harm from counsel's failure to interview her.
In the end, the Circuit Court found "that counsel did conduct an adequate pre-trial investigation into the potential testimony of the State's witnesses with the exception of Mrs. Russell, ... [and that] no prejudice resulted from the failure to question Mrs. Russell."
Merritt's next cluster of complaints cites three pre-trial procedural opportunities of which counsel allegedly failed to avail himself. These are "failure to request a change of venue, failure to move for a continuance, and failure to object to exhumation of the body of the victim." These points need not detain us. We have reviewed the record and the thorough discussion of these three points by the Circuit Court. The Circuit Court concluded that counsel's conduct was "within the range of competence demanded of attorneys in criminal cases and, therefore, does not constitute ineffective assistance."
Third, Merritt cites nine trial omissions. These are:
A. Failure to "voir dire" either or both of the pathologists who testified at trial concerning their qualifications to render an opinion.
B. Failure to cross-examine either of the pathologists concerning their autopsy procedure.
C. Failure to present through his own pathologist alternative theories of death.
D. Failure to cross-examine the prosecutrix concerning certain matters.
E. Failure to call the petitioner as a witness.
F. Failure to cross-examine O.L. "Buddy" Anderson about certain matters.
G. Failure to introduce the Coroners Jury Report.
H. Failure to object to the testimony of C.H. Tyrone concerning a statement given by the petitioner.
I. Failure to call certain witnesses.
The claim of failure to voir dire the pathologists "relative to their credentials as forensic pathologists" is without merit. Dr. Gonzales' credentials are beyond question; indeed, the Circuit Court and this Court are well aware of the fact that he frequently testifies in similar cases. Voir dire cross-examination could have added nothing. At the hearing below, Merritt failed to produce any evidence that Dr. Smith was not qualified. Hence, this point fails. Merritt's suggestion of failure to cross-examine on the merits of the cause-of-death issue is met by his counsel's trial decision that there was "nothing to gain" by such cross-examination as it would do nothing but allow repetition of the facts and bolster the damaging testimony in the minds of the jurors.
The point regarding the failure to cross-examine Merritt's (now ex-) wife is a bit more troublesome. As our 1976 opinion on direct appeal reflects, the primary issue was whether Merritt's (at the time) wife was competent as a witness against him. Counsel's trial strategy was to keep the wife off the witness stand. The Circuit Court overruled his objection. At this point counsel feared that if he cross-examined her he would have waived the point for appeal.
Our case law as it stands today makes clear that this view was erroneous. Once an objection is overruled, the party making the objection may try the remainder of the case on the assumption that the ruling will stand. See Stringer v. State, 500 So.2d 928, 946 (Miss. 1986); Jones v. State, 461 So.2d 686, 702 (Miss. 1984). At the time of *520 the trial in 1975, however, the point was not nearly so clear. See Fielder v. State, 235 Miss. 44, 46, 108 So.2d 590, 591-92 (1959). The record convinces us that Merritt's best hope for a successful result lay in somehow excluding his wife's testimony. Based on the case law as it existed at the time, counsel's refusal to take a chance on waiving his objection to the wife's testimony by indulging in cross-examination does not render his assistance constitutionally inadequate.
Merritt did not take the stand in his own defense. He faults his counsel for the decision not to call him as a witness. First, there is no suggestion here that Merritt insisted upon taking the stand and that he was precluded from doing so by counsel or the court. Contrast Neal v. State (Miss. No. DP-36, dec. Sept. 23, 1987) (not yet reported); and Culberson v. State, 412 So.2d 1184, 1186 (Miss. 1982). Merritt was advised by his attorney that he should not take the stand because he would not be a good or effective witness on his own behalf and, further, that cross-examination would bring out information that would be highly damaging.
We have considered the other points mentioned above and find that they do not merit separate discussion. Suffice it to say that each of these nine alleged omissions was either within the realm of legitimate trial strategy on the part of the defense counsel, or was of such insufficient moment that the integrity of the trial or our confidence in the correctness of its outcome has not been shaken.
Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984), is our primary source of law for the increasingly familiar notion of ineffective assistance of counsel. A combined reading of the right to assistance of counsel secured by the Sixth and Fourteenth Amendments to the United States Constitution and by Article III, Section 26, of the Mississippi Constitution of 1890 mandates a two-fold inquiry: (1) whether counsel's performance was deficient, and, if so, (2) whether the deficient performance was prejudicial to the defendant in the sense that (a) our confidence in the outcome of the trial is substantially undermined, see, e.g., Neal v. State (Miss. No. DP-36, dec. Sept. 23, 1987) (not yet reported); Ferguson v. State, 507 So.2d 94, 95-97 (Miss. 1987); Waldrop v. State, 506 So.2d 273, 275-76 (Miss. 1987); Alexander v. State, 503 So.2d 235, 240-41 (Miss. 1987), or (b) the integrity or fairness of the trial process is substantially impugned, see Waldrop v. State, 506 So.2d 273, 275-76 (Miss. 1987); Stewart v. State, 229 So.2d 53, 55 (Miss. 1969); and Brooks v. State, 209 Miss. 150, 154, 46 So.2d 94, 96 (1950). We emphasize that these standards are objective ones. They apply everywhere. As life and liberty are at stake, there is no place for a locality rule in right to counsel jurisprudence. Cf. Hall v. Hilbun, 466 So.2d 856 (Miss. 1985).
Here we are reviewing a finding of ultimate fact, i.e., that Merritt enjoyed effective assistance of counsel at his murder trial, made by a trial court sitting without a jury. We will not set aside such a finding unless it is clearly erroneous. Put otherwise, we will not vacate such a finding unless, although there is evidence to support it, we are on the entire evidence left with the definite and firm conviction that a mistake has been made. See Gavin v. State, 473 So.2d 952, 955 (Miss. 1985); Neal v. State, 451 So.2d 743, 753 (Miss. 1984). We have made clear that this limitation upon our scope of review applies to both findings of ultimate fact and review of findings of evidentiary fact. See Norris v. Norris, 498 So.2d 809, 814 (Miss. 1986); Carr v. Carr, 480 So.2d 1120, 1122 (Miss. 1985). Faithful application of these substantive standards emanating from Washington, et al., together with established limitations on our scope of review leaves us no alternative but to reject the assignment that the Circuit Court erred when it rejected Merritt's claim of ineffective assistance of counsel.
IV.
Merritt presents numerous additional arguments why this Court should direct that he be granted post-conviction relief. The *521 question whether his then wife, Toddie Lynn Merritt (Burns), was competent as a witness has been decided on direct appeal, Merritt v. State, 339 So.2d 1366 (Miss. 1976), and that ruling is now the law of the case. That the point may have been close at the time is of no moment.
Merritt complains bitterly that this Court changed the law on the matter of spousal competency and then, in effect, applied that law retroactively to his case. Candor requires acknowledgment that this is precisely what happened. But such is the nature of the common law process, see, e.g., McDaniel v. State, 356 So.2d 1151, 1156-61 (Miss. 1978), wherein we have said all too often that there is a built in presumption of retroactivity in our judicial lawmaking efforts. Hall v. Hilbun, 466 So.2d 856, 876 (Miss. 1985). We worry most about that presumption in cases where a party may in good faith have relied upon a preexisting state of the law. It goes without saying that we have no obligation to honor the claim of a murderer that he planned and executed the killing of his child in reliance upon the then rule that his wife would not be competent as a witness against him.
Other points now raised either were or ought to have been presented on direct appeal. These include the challenges to the sufficiency and weight of the evidence supporting the verdict of guilty and the failure to give an instruction that the defendant was not required to testify in his own behalf. These issues are precluded from review here. Neal v. State, supra; Johnson v. State, 511 So.2d 1333, 1336, 1342 (Miss. 1987); Mann v. State, 490 So.2d 910, 911 (Miss. 1986).
Merritt claims that newly discovered evidence requires a new trial. This matter, however, is not properly before us. Merritt's application for post-conviction relief was remanded for an evidentiary hearing on the sole question of ineffective assistance of counsel. The newly discovered evidence point was not before the trial court and, accordingly, we may not consider it on this appeal.
Merritt further assigns as error with respect to the hearing below on his post-conviction application, the refusal of the circuit judge to recuse himself and the refusal of the Circuit Court to grant a continuance. We have considered these issues on their merits and find them without merit. Rejection of all other points raised on appeal is implicit in what we have said above.
AFFIRMED.
ROY NOBLE LEE, C.J., HAWKINS and DAN M. LEE, P.JJ., and PRATHER, SULLIVAN, ANDERSON, GRIFFIN and ZUCCARO, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1300610/ | 161 Mich. App. 67 (1987)
409 N.W.2d 725
REURINK BROTHERS STAR SILO, INC.
v.
CLINTON COUNTY ROAD COMMISSIONERS
Docket No. 88010.
Michigan Court of Appeals.
Decided February 4, 1987.
Robert G. Chaklos, Sr., and Thomas C. Wimsaty, for plaintiff.
Foster, Swift, Collins & Coey, P.C. (by James D. Adkins and James B. Doezema), for defendant.
Before: R.M. MAHER, P.J., and D.E. HOLBROOK, JR., and M.R. STEMPIEN,[*] JJ.
PER CURIAM.
This is an appeal by the plaintiffs, Reurink Brothers Star Silo, Inc., and Harry A. Stark, Jr. (Reurink Brothers), from the trial court's order of summary judgment on their claim for contribution against the Board of County Road Commissioners of the County of Clinton for failure to state a claim upon which relief may be granted.
The underlying injury occurred on August 2, 1983, at approximately 4:00 P.M. Harry A. Stark, Jr., was driving south on an unpaved section of Tallman Road at or near its intersection with Herbison Road in the County of Clinton. Stark's vehicle was registered to Reurink Brothers. At the same time, Elizabeth Musat, was driving another vehicle on an unpaved section of Herbison Road, *69 approaching the intersection with Tallman Road. The two vehicles collided and Mary Musat died of resulting injuries.
A wrongful death claim was brought against Reurink Brothers, on behalf of the estate of Mary Musat. Judgment was entered in favor of the estate of Mary Musat in the amount of $706,418.53 on September 11, 1984. A timely appeal was taken by Reurink Brothers. However, on March 29, 1985, that appeal was dismissed by stipulation pursuant to a settlement in the amount of $750,000.
On July 16, 1985, Reurink Brothers filed the instant claim in the Clinton Circuit Court, seeking contribution on the part of the defendant as a joint tortfeasor under Michigan's contribution statute, MCL 600.2925a et seq.; MSA 27A.2925(1) et seq. In its responsive pleading, on August 12, 1985, the county brought a motion to dismiss, alleging that Reurink Brothers failed to plead that the county was joined in the prior action, failed to plead that the settlement extinguished the county's liability and failed to plead that notice was provided to the county. That motion was granted, resulting in this appeal.
Reurink Brothers argues that the trial court erred by granting summary disposition. The county's motion was brought under MCR 1985, 2.116(C)(8), failure to state a claim upon which relief may be granted. As we have held on a number of occasions, motions brought under this subrule are decided on the pleadings alone. Haddrill v Damon, 149 Mich App 702, 704-705; 386 NW2d 643 (1986).
The motion tests the legal basis of the complaint, not whether it can be factually supported. Unless the claim is so clearly unenforceable as a matter of law that no factual development can *70 possibly justify a right to recovery, the motion should be denied. McCallister v Sun Valley Pools, Inc, 100 Mich App 131, 135; 298 NW2d 687 (1980), lv den 411 Mich 905 (1981).
The right to contribution in Michigan is controlled entirely by statute, since there was no right to contribution at common law. Paisley v United Parcel Service, Inc, 38 Mich App 450, 455; 196 NW2d 813 (1972), Wilhelm v The Detroit Edison Co, 56 Mich App 116, 157; 274 NW2d 289 (1974), lv den 393 Mich 787 (1975), and Sziber v Stout, 419 Mich 514, 527; 358 NW2d 330 (1984). Michigan's contribution statute, as amended by 1974 PA 318, provides in part:
(1) Except as otherwise provided in this act, when 2 or more persons become jointly or severally liable in tort for the same injury to a person or property or for the same wrongful death, there is a right of contribution among them even though judgment has not been recovered against all or any of them.
(2) The right of contribution exists only in favor of a tort-feasor who has paid more than his pro rata share of the common liability and his total recovery is limited to the amount paid by him in excess of his pro rata share. A tort-feasor against whom contribution is sought shall not be compelled to make contribution beyond his own pro rata share of the entire liability. [MCL 600.2925a; MSA 27A.2925(1).]
Here, paragraph 11 of the complaint alleged that the action was brought pursuant to MCL 600.2925a et seq.; MSA 27A.2925(1) et seq. Paragraphs 5 to 7 describe the fatal accident at or near the intersection of Tallman and Herbison Roads in Clinton County. Paragraphs 3 and 13 allege that the county had jurisdiction over the crossing and *71 therefore had responsibility for its care and control. Paragraph 8 states that a wrongful death claim was brought against Reurink Brothers on behalf of the deceased. Paragraphs 9 and 10 allege:
9.
That Judgment [sic] has been entered in the Circuit Court for the County of Clinton in favor of David L. Musat, Personal Representative of the Estate of Mary Elizabeth Musat, deceased, in the amount of Seven Hundred Six Thousand Four Hundred Eighteen and 53/100 ($706.418.53) Dollars, said Judgment having entered on the 11th day of September, 1984.
10.
That the appeal which was timely taken from said Judgment was dismissed by Stipulation on March 29, 1985, pursuant to a settlement in the amount of Seven Hundred Fifty Thousand ($750,000).
Numerous other paragraphs of the complaint allege various contributing acts or omissions of the county.
Nowhere in the complaint does Reurink Brothers allege that it paid more than its pro rata share of the common liability. However, the county's motion alleged only the following deficiencies in Reurink Brother's pleadings:
(a) Plaintiffs did not join this Defendant in the suit brought against the Plaintiffs by the Estate of the Deceased nor did the Plaintiffs make timely notification to the Road Commission of its intent to file a claim.
(b) Plaintiffs have not alleged that the settlement entered into by the Plaintiffs and the Estate of the Deceased extinguished the common liability arising from the accident.
The errors alleged by the county were intended *72 to refer to the following provision within the contribution statute:
(3) A tort-feasor who enters into a settlement with a claimant is not entitled to recover contribution from another tort-feasor if any of the following circumstances exist:
(a) The liability of the contributee for the injury or wrongful death is not extinguished by the settlement.
(b) A reasonable effort was not made to notify the contributee of the pendency of the settlement negotiations.
(c) The contributee was not given a reasonable opportunity to participate in the settlement negotiations.
(d) The settlement was not made in good faith. [MCL 600.2925a(3); MSA 27A.2925(1)(3).]
As the county asserts, Reurink Brothers failed to plead that the settlement it entered into extinguished the county's liability. Reurink Brothers also failed to allege that it had paid its pro rata share of the common liability or that a reasonable effort was made to notify the contributee (the county) of the negotiations.
The statute implicitly sets forth the elements of a claim for contribution by a settling tortfeasor:
(1) There must be joint liability on the part of the plaintiff and defendant;
(2) The plaintiff must have paid more than its pro rata share of the common liability;
(3) The settlement entered into by the plaintiff must extinguish the liability of the defendant;
(4) A reasonable effort must have been made to notify the defendant of the pendency of the settlement negotiations;
(5) The defendant must be given a reasonable *73 opportunity to participate in settlement negotiations; and
(6) The settlement must be made in good faith.
Since the complaint in this instance did not allege either (3) or (4), it fails to state a cause of action. We also note that the complaint fails to allege (2), (5) and (6), though that issue was not raised by the county in the trial court.
Despite its pleading that it "settled" the prior action and despite the fact that the county's motion was filed under MCR 2.116(C)(8), Reurink Brothers argues that this Court should look outside of the pleadings to determine that it in fact "satisfied the judgment." Thus, Reurink Brothers would have this Court conclude that its claim does not fall under paragraph (3) of the statute, MCL 600.2925a(3); MSA 27A.2925(1)(3), but under paragraph (5)
A tort-feasor who satisfies all or part of a judgment entered in an action for injury or wrongful death is not entitled to contribution if the alleged contributee was not made a party to the action and if a reasonable effort was not made to notify him of the commencement of the action. Upon timely motion, a person receiving such notice may intervene in the action and defend as if joined as a third party. [MCL 600.2925(5); MSA 27A.2925(1)(5).]
Even if Reurink Brother's complaint is read to state a cause of action under paragraph (5), it fails to properly allege that the county was made a party to the prior action and fails to allege that a reasonable effort was made to notify the county of the commencement of the proceedings. Similarly, although Reurink Brothers has argued that actual notice should be sufficient under paragraph (5), it *74 has also failed to allege that the county had actual notice. Thus, limiting our review to the face of the pleadings and assuming that Reurink Brothers has pled satisfaction of judgment, we would nevertheless conclude that summary judgment was properly granted under MCR 2.116(C)(8).
We further note, although it is unnecessary to our decision, that Reurink Brothers has failed to establish that the judgment was either fully or partially satisfied. In support of its assertion that its claim falls under MCL 600.2925a(5); MSA 27A.2925(1)(5), Reurink Brothers submitted a document entitled "Satisfaction of Judgment," under which the following terms were written:
I hereby acknowledge complete and total Satisfaction of a Judgment entered on the 11th day of September, 1984, in the above entitled cause in favor of David L. Musat, as Personal Representative of the Estate of Mary Elizabeth Musat, Deceased, the above named Plaintiff against Reurink Brothers Star Silo, Inc., a Michigan corporation, and Harry A. Stark, Jr., Jointly and Severally, the above named Defendants upon the payment of Seven Hundred Fifty Thousand ($750,000.00) Dollars, receipt of which is hereby acknowledged which is to be a complete and total Satisfaction of said Judgment which is to include interest, costs and expenses; also, as part of said Satisfaction, is an Agreement entered into between the aforementioned Plaintiff and Defendants and the Aetna Casualty & Surety Company, which this Court approves.
As quoted supra, the complaint alleges that judgment in the principal case was entered in the amount of $706,418.53. The complaint further indicates that the principal complaint was filed in 1983. MCL 600.6013; MSA 27A.6013 provides for prejudgment interest at twelve percent dating *75 from the filing of the complaint. Even assuming that the principal complaint was filed on the last day of 1983, more than nine months of prejudgment interest would have accrued by the date judgment was entered, September 11, 1984. An additional six months of interest accrued on the judgment before the date of the "satisfaction," March 29, 1985. Therefore, by the most conservative figures, $100,000 of interest had accrued on the judgment by the time that the satisfaction was entered. Yet the satisfaction was only in the amount of $750,000. Thus, it is apparent to this Court, as it was to the trial court, that the purported satisfaction of judgment was in fact, as Reurink Brothers pled, a settlement.
The distinction between a settlement, which falls under § 2925a(3) of the contribution statute, and a satisfaction of judgment, which falls under § 2925a(5) of the statute, is significant. As explained in Buckeye Union Ins Co v Lenawee Co Road Comm, 540 F Supp 634, 636 (ED Mich, 1982):
Sound policy considerations support the continued viability of [MCL 600.2925a(3)(a); MSA 27A.2925(1)(3)(a)]. When a settling co-tortfeasor negotiates a settlement, it is free to buy up all the claims, pay a higher price, obtain a full release, and thereby retain its right to contribution. Alternatively, the settling co-tortfeasor can pay a reduced price, receive only a limited release, forego its rights to contribution, and leave it to the settling plaintiff to seek further recovery from the nonsettling co-tortfeasor. This is sound policy and sound economics.
Thus, the extinguishing of the contributee's liability, required for settlements under MCL 600.2925a(3)(a); MSA 27A.2925(1)(3)(a), provides assurance that a contributee will not be forced to *76 pay more than its pro rata share by paying for its liability once to the settling plaintiff and once to the injured party in separate, subsequent proceedings. The joinder requirement of MCL 600.2925a(5); MSA 27A.2925(1)(5) provides the same assurance for the contributee of a tortfeasor who satisfied the judgment. If, on the other hand, a plaintiff has neither truly satisfied the judgment nor obtained a settlement and release for the contributee, the contributee would potentially be subject to payment of far more than its pro rata share. That result is clearly contrary to the intent of the contribution statute as set forth in MCL 600.2925a(2); MSA 27A.2925(1)(2) and MCL 600.2925b; 9MSA 27A.2925(2).
In short, even if we were to consider the county's motion as one for summary judgment under MCR 2.116(C)(10), if we were to include in our review the additional document filed by Reurink Brothers' and if we were to construe Reurink Brothers' complaint as one falling within MCL 600.2925a(5); MSA 27A.2925(1)(5), we would conclude that summary judgment was appropriate.
Affirmed.
NOTES
[*] Circuit judge, sitting on the Court of Appeals by assignment. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1300612/ | 409 N.W.2d 275 (1987)
STATE of Minnesota, Respondent,
v.
Marlin Guy LAU, Appellant.
No. C6-86-1733.
Court of Appeals of Minnesota.
July 28, 1987.
*276 Hubert H. Humphrey, III, Atty. Gen., Paul R. Kempainen, Sp. Asst. Atty. Gen., St. Paul, Joseph F. Weiners, Dodge Co. Atty., Mantorville, for respondent.
C. Paul Jones, State Public Defender, Lawrence Hammerling, Asst. State Public Defender, Minneapolis, for appellant.
Considered and decided by NIERENGARTEN, P.J., and FOLEY and RANDALL, JJ., with oral argument waived.
OPINION
FOLEY, Judge.
Appellant Marlin Lau was convicted of criminal sexual conduct in the second degree, Minn. Stat. § 609.343, subd. 1(a) (Supp.1985) (unlawful sexual contact). He contends the evidence was insufficient and that the five-year old complainant was incompetent to testify. We affirm.
FACTS
On October 8, 1985 appellant was alone in his trailer home while his wife was visiting their neighbors. The neighbors' five-year old daughter, R.D., went to appellant's trailer to bring him some candy bars. When R.D. returned home, she appeared pale, frustrated and curled up on the sofa. She told her mother she and appellant had a secret. Later that night she told her mother that appellant had touched her. R.D. also said appellant licked her and took her pants down.
The next day R.D. told her mother appellant had tickled her and asked her to go into the bedroom with him. R.D. said appellant laid her down on the bed, took down her pants and licked her "peepee". R.D. also told her mother's mother-in-law about what appellant had done to her. The incident was reported to authorities.
R.D. repeated what happened in an interview in which her parents, a social worker, and a police officer were present. Appellant was questioned and admitted that R.D. visited him that evening and brought him candy, but denied touching her other than giving her a hug, a kiss and a "little peck on the lips."
On October 21, 1985 R.D. was interviewed again. Present were her parents, a police officer, a social worker and the Dodge County Attorney. This interview was videotaped. R.D. again stated that appellant tickled her and kissed her on the "boobies" and licked her between the legs.
R.D. talked about the incident to her school psychologist who testified that five-year olds are capable of telling an accurate report of sexual abuse. Prior to trial, defense counsel contacted Dr. Ralph Underwager. Dr. Underwager reviewed the October 21, 1985 videotaped interview of R.D. and other reports. His testimony was videotaped.
Dr. Underwager opined that five-year olds cannot separate fact from what they have learned to say through multiple interrogations. He was concerned that R.D. was never specifically asked to tell the truth. Dr. Underwager also testified that in his opinion, R.D.'s cognitive inability to understand abstract concepts, the poor interviewing techniques which were used (e.g., many leading questions, questioning by R.D.'s mother, the room full of several *277 adults) and her prior learning about sexual abuse, all contributed to R.D.'s inability to relate truthfully what had happened. Dr. Underwager testified, however, that he does not believe a child cannot tell the truth in the sense of accurately describing events.
The trial court also conducted an in-camera hearing with R.D. prior to trial to assist in a competency determination. After considering Dr. Underwager's testimony and R.D.'s competency hearing testimony, the trial court ruled that R.D. was a competent witness and could testify at trial.
At trial R.D. testified that appellant "kissed my peepee and kissed my boobs." She testified that appellant pulled her pants down and licked her. R.D.'s earlier consistent statements were presented through the testimony of her mother, her mother's mother-in-law, a social worker, a police officer and the school psychologist.
The defense presented Dr. Underwager's videotaped testimony. The jury convicted appellant of criminal sexual conduct in the second degree and appellant was sentenced to 34 months imprisonment.
ISSUES
1. Was the evidence sufficient?
2. Did the trial court abuse its discretion in determining that R.D. was a competent witness?
ANALYSIS
I.
On review we must examine the evidence in the light most favorable to the verdict and assume the jury disbelieved any testimony conflicting with the result reached. State v. Parker, 353 N.W.2d 122, 127 (Minn.1984). Deference is given to jury verdicts and if the jury, giving due regard to the presumption of innocence and the State's burden of proving guilt beyond a reasonable doubt, could reasonably have found defendant guilty, the verdict will not be upset. Id.
This case hinged on the credibility of R.D. Credibility determinations and the weight to be given an individual's testimony lies with the jury. State v. Engholm, 290 N.W.2d 780, 784 (Minn.1980). Appellant presented abundant evidence which attacked R.D.'s credibility through Dr. Underwager's testimony. The jury apparently believed R.D. was telling the truth. We will not upset that determination on appeal.
While corroboration of a sexual abuse victim's testimony is not required, Minn.Stat. § 609.347, subd. 1 (1984), R.D.'s testimony was corroborated by her appearance immediately following the incident and her prior consistent statements made soon after the assault. See State v. DeBaere, 356 N.W.2d 301, 304 (Minn.1984); State v. Wrightington, 323 N.W.2d 793, 794 (Minn.1982).
II.
The determination of a witness' competency is one peculiarly for the trial court to consider. State v. Lasley, 306 Minn. 224, 227, 236 N.W.2d 604, 607 (1975), cert. denied, 429 U.S. 1077, 97 S.Ct. 820, 50 L.Ed.2d 796 (1977). The trial court is in the best position to evaluate a witness' demeanor. Under Minn. Stat. § 595.02, subd. 1(f) (1984), children under ten years of age are not competent witnesses unless they demonstrate 1) an ability to recall facts, and 2) the capacity to tell the truth.[1]
The trial court here, after conducting a preliminary examination of R.D. and considering Dr. Underwager's testimony, found that R.D. was able to understand the oath and was capable of narrating the facts to which her testimony related. State v. Amos, 347 N.W.2d 498, 501 (Minn.1984). In the preliminary examination R.D. demonstrated an ability to recall and relate facts and demonstrated she understood the difference between the truth and a lie.
We note that several cases have found that the trial court did not abuse its discretion *278 in ruling a five-year-old witness competent to testify in criminal trials. See State v. Fitzgerald, 382 N.W.2d 892, 894 (Minn. Ct.App.1986), pet. for rev. denied, (Minn. Apr. 24, 1986); State v. Carver, 380 N.W.2d 821, 824-25 (Minn. Ct.App.1986), pet. for rev. denied, (Minn. Mar. 27, 1986). Appellant's arguments on appeal essentially relate to R.D.'s credibility, a matter for the jury to consider.
Inasmuch as competency determinations are within the trial court's discretion, State v. Cermak, 350 N.W.2d 328, 332 (Minn. 1984), we find no abuse of discretion in the trial court's ruling that R.D. was competent to testify.
DECISION
The trial court did not abuse its discretion in ruling that R.D. was competent to testify and the evidence was sufficient to convict appellant of criminal sexual conduct in the second degree.
Affirmed.
NOTES
[1] We note that the 1987 Legislature recently modified this provision. See 1987 Minn. Laws ch. 120, § 1 and ch. 134, § 1. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1345919/ | 174 Ga. App. 620 (1985)
330 S.E.2d 769
BENDIX CORPORATION
v.
FLOWERS.
69710.
Court of Appeals of Georgia.
Decided April 10, 1985.
Rehearing Denied April 23, 1985.
Elaine W. Whitehurst, Robert D. Ingram, for appellant.
John D. Varnell, for appellee.
CARLEY, Judge.
Appellee-plaintiff Flowers had been an employee of appellant-defendant Bendix Corporation for approximately 20 years when, on September 30, 1980, he was separated from his employment for inability to perform his duties. Subsequently, appellee filed a multicount complaint against appellant alleging, among other assertions, claims for wrongful termination, corporate waste endangering appellee's pension rights, failure to deal fairly and in good faith, and age discrimination in violation of a Tennessee statute. The trial court granted summary judgment in favor of appellant "as to all issues except the issue as to wrongful termination . . . since there is an issue of fact based upon sworn testimony that certain representations were made to [appellee] regarding disability." (Emphasis supplied.) Pursuant to OCGA § 9-11-54 (b), the trial court directed the entry of final judgment as to all issues except that of wrongful termination, and appellee did not appeal the adverse adjudication as to those issues. Following further discovery, appellant filed a renewed motion for summary judgment. This motion was denied, but the trial court certified its order for immediate review. This court granted appellant's application for an interlocutory appeal from the order denying its motion for summary judgment as to the issues involving wrongful termination.
With regard to the claim based upon wrongful termination, appellee essentially asserts that he was wrongfully separated from his employment because he applied for full-time disability status. It is undisputed that there was never a written employment contract between the parties, and that appellee was paid on a monthly basis. Appellee does not allege, nor did he produce any evidence in opposition to appellant's motion for summary judgment, that his employment with appellant was for other than an indefinite period. "`Giving those facts all inferences favorable to the plaintiff they point to only one conclusion, that as a matter of law the plaintiff's contract of employment was indefinite and was, under [OCGA § 34-7-1], terminable at will by either party. [Cits.] Where a plaintiff's employment is terminable at will, the employer "with or without cause and regardless of its motives, may discharge the employee without liability. [Cits.]"' *621 [Cit.]" (Emphasis supplied.) Hall v. Answering Service, 161 Ga. App. 874, 875 (289 SE2d 533) (1982). See also Meeks v. Pfizer, Inc., 166 Ga. App. 815 (305 SE2d 497) (1983).
Thus, even if appellant's decision to separate appellee from his employment was prompted by his application for full-time disability benefits, this would not give rise to a cause of action for wrongful termination. The statutory rule that an indefinite hiring may be terminated at will "does not encompass [such an] exception. [Cit.]" Goodroe v. Ga. Power Co., 148 Ga. App. 193, 194 (1) (251 SE2d 51) (1978). See also West v. First Nat. Bank of Atlanta, 145 Ga. App. 808 (245 SE2d 46) (1978).
Furthermore, insofar as appellee alleges a conspiracy to bring about his wrongful discharge, "no actionable conspiracy arises from the authorized exercise of a legal right to discharge. [Cits.]" Meeks v. Pfizer, Inc., supra at 816.
Accordingly, we find that the trial court erred in denying summary judgment in favor of appellant as to the remaining wrongful termination count.
Judgment reversed. Birdsong, P. J., and Sognier, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1552913/ | 48 B.R. 326 (1985)
In re Franklin R. BIENERT and Frances I. Bienert, Debtors.
No. 2C 83-3150.
United States District Court, N.D. Iowa, C.D.
April 5, 1985.
John H. Neiman, Des Moines, Iowa, for appellants.
David M. Nelsen, Mason City, Iowa, for appellee.
ORDER
DONALD E. O'BRIEN, Chief Judge.
This matter comes before the Court on an appeal by the Debtors from an Order of the Bankruptcy Court filed November 9, 1983 and Appellee Norwest Bank's motion to dismiss the appeal. The Court heard arguments on both the motion to dismiss and the merits of the appeal in Fort Dodge, Iowa on February 15, 1985. For the reasons stated below, the motion to dismiss is denied and the decision of the Bankruptcy Court is affirmed.
I. Motion to Dismiss.
Norwest Bank moves to dismiss for untimely filing of a Designation of Record and Issues on Appeal. Bankruptcy Rule 8006 provides in part:
Within 10 days after filing the notice of appeal . . . the appellant shall file with the clerk of the bankruptcy court and serve on the appellee a designation of items to be included in the record on appeal and a statement of issues to be presented.
The Bankruptcy Court Order which is being appealed was filed on November 9, 1983. The Notice of Appeal was timely *327 filed on Monday, November 21, 1983. Pursuant to Rule 8006, the Designation of Record and Issues should have been filed on December 1, 1983, ten days after the Notice of Appeal. However, Debtors did not submit the Designation to the clerk of the bankruptcy court until January 3, 1984, at which time the clerk refused to accept the Designation on the grounds that jurisdiction no longer existed at the bankruptcy court level.
At oral argument, the parties agreed the critical issue was whether or not the admitted failure to comply with Rule 8006 is jurisdictional. While the United States Supreme Court has held that the thirty-day time limit in which to file notice of appeal in a civil case, Federal Rule of Appellate Procedure, Rule 4(a), is mandatory and jurisdictional, Browder v. Director, Illinois Department of Corrections, 434 U.S. 257, 264, 98 S.Ct. 556, 560, 54 L.Ed.2d 521 (1978), the same is not true of the time limit in which to file a designation of record and issues on appeal. In the context of an untimely designation, the Sixth Circuit reversed the district court's dismissal of an appeal from a bankruptcy court decision and stated:
We find no evidence of bad faith on the bank's part which would justify dismissal of its appeal.
In re Winner Corp., 632 F.2d 658, 661 (6th Cir.1980). Thus, the Court concludes Rule 8006 is not jurisdictional. Furthermore, there has been no showing of bad faith on the part of the Debtors or their attorney with reference to the untimely designation. This Court is of the view that justice is better served when controversies are decided on their merits rather than procedural technicalities. As a result, the motion to dismiss the appeal shall be denied and the Court will proceed to the merits.
II. Merits of Appeal.
On January 3, 1983, a hearing began concerning matters pending in Debtors' bankruptcy case. On June 6, 1983, the Honorable Judge William Thinnes entered an Order dismissing the Debtors' Chapter 11 petition and directing certain assignments of PIK corn but reserving jurisdiction to enter necessary administrative orders. At page 1 of that Order Judge Thinnes found:
At the reconvened hearing on June 4, 1983, the parties agreed that the Debtor would make certain assignments of PIK Program proceeds, and that the Court would then dismiss the Debtors' Chapter 11 case.
Exhibit 1. Problems arose regarding the assignment of the corn and various motions were filed with the Bankruptcy Court in an attempt to deal with these problems. As an end result, the Bankruptcy Court held a hearing on November 9, 1983 and entered an Order that same day regarding the assignment of PIK proceeds.
Exhibit 13. This Order directed the disposition of 74,211 bushels of corn, an amount 18,716 bushels greater than the disposition attempted in the June 6, 1983 Order.
All parties are in agreement that the payment of $75,660.10 to the landlord C.J. Larsen was appropriate. Since Debtors' appeal relates only to the 18,716 bushels not covered by the Order of June 6, 1983, their appeal does not and could not affect said payment to Larsen.
The Debtors contend that because the Bankruptcy Court dismissed the case on June 6, 1983, it did not have jurisdiction over the additional 18,716 bushels. The next step in the Debtors' argument is that Norwest Bank has no security interest in the 18,716 bushels of PIK proceeds because, unlike the security agreement at issue in In re Sunberg, 729 F.2d 561 (8th Cir.1984) (Iowa UCC, interpretation of "accounts" and "intangibles" such that rights under PIK covered), the Bank's security agreement with the Debtors does not cover "intangibles."[1] If the Debtors prevail in *328 these arguments, they would then be in a position to use the money from the 18,716 bushels to pay off a Commodity Credit Corporation loan which is the subject of a criminal indictment.
Although the parties have not analyzed the case in this way, the essential question raised is whether the Bankruptcy Court acted properly in enforcing what it perceived to be the terms of a settlement agreement. Recently the Fifth Circuit declared:
Although a district court has inherent power to enforce an agreement to settle a case pending before it summarily, when opposition to enforcement of the settlement is based not on the merits of the claim but on a challenge to the validity of the agreement itself, the parties must be allowed an evidentiary hearing on disputed issues of the validity and scope of the agreement.
Mid-South Towing Co. v. Har-Win, Inc., 733 F.2d 386, 390 (5th Cir.1984). In that case, the court remanded for an evidentiary hearing on the validity of the settlement in which the attacking party would have the burden of proof.
This Court holds that the Bankruptcy Court had the inherent power (read as jurisdiction) to enforce the settlement agreement, see Bergstrom v. Sears, Roebuck & Co., 532 F.Supp. 923, 934 (D.Minn. 1982), even when the case has been dismissed prior to the order enforcing that agreement. Indeed, even in cases where the court's original jurisdiction is suspect, a court has jurisdiction over settlement agreements entered in that case. Aro Corp. v. Allied Witan Co., 531 F.2d 1368, 1371 (6th Cir.1976), cert. denied, 429 U.S. 862, 97 S.Ct. 165, 50 L.Ed.2d 140 (1976).
The Court has reviewed the transcript of the November 9, 1983 hearing before Judge Thinnes. Exhibit 12. While the arguments given and positions taken by those involved in that hearing were not always crystal clear, the reasoning of the Bankruptcy Court is quite clear. First, the Bankruptcy Court concluded it had jurisdiction to enter further orders regarding the PIK proceeds. Exhibit 12, p. 42. Second, the Bankruptcy Court proceeded to enforce the intention of the parties which had been attempted to be expressed in the Court's Order of June 6, 1983. Exhibit 12, pp. 42-43.[2] In effect, the Bankruptcy Court found that the intent as to what the parties were trying to achieve was clear and that the Debtors should not be allowed to back out of that agreement merely because the language used in the June 6, 1983 Order could not be literally followed.
From the record before this Court, it is readily apparent what the reasoning process of the Bankruptcy Court was and, therefore, remanding for explicit findings of fact as to the validity and scope of the parties' agreement is not necessary nor a prudent use of judicial resources. Accordingly,
IT IS ORDERED that the decision of the Bankruptcy Court entered November 9, 1983 is affirmed.
IT IS FURTHER ORDERED that Appellee Norwest Bank's Motion to Dismiss the Appeal is denied.
NOTES
[1] The Court notes that In re Sunberg was decided by the Eighth Circuit after Debtors had filed this appeal. The Court further notes that the Debtors' brief does not contend that Norwest Bank's security interest does not cover "accounts." If Debtors win on their jurisdiction issue but ultimately lose on the security agreement issue, their victory at the step would have no practical effect other than to cause additional expenditures of legal talent and judicial resources.
[2] In view of the finding in the June 6, 1983 Order quoted above, and the record before this Court, see, e.g., Exhibit 12, p. 16, lines 6-16, it is clear the result the parties were trying to effect. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1842054/ | 898 So.2d 167 (2005)
John ORLANDO, Appellant,
v.
FEI HOLLYWOOD, INC., a Florida corporation d/b/a Club Body Tech and Eva Orlando, his wife, Appellees.
No. 4D03-3241.
District Court of Appeal of Florida, Fourth District.
March 9, 2005.
*168 Keith A. Schafer of Chikovsky, Ben & Schafer, Hollywood, for appellant.
John H. Richards and Warren B. Kwavnick of Cooney, Mattson, Lance, Blackburn, Richards & O'Connor, P.A., Fort Lauderdale, for Appellee-FEI Hollywood, Inc.
BERGER, WILLIAM J., Associate Judge.
This is an appeal from a final summary judgment for the defendant in a personal injury case. Plaintiff/appellant, John Orlando, alleged he was physically injured at defendant's gym when the patron next to him threw dumb bells to the floor. He alleged the resulting loud noise and the person's close proximity to him caused him to turn so suddenly to see if the weights were going to hit his feet (they did not) that his back "popped" and he fell, injuring himself. Orlando contended the gym was negligent by not providing adequate "maintenance, supervision and training for the safety of its patrons" and "negligently fail[ing] to instruct and/or train its patrons in the proper procedures to be utilized in working out with and in setting down the dumb bells."
The trial court granted the motion on the sole ground that a written release of liability appears in the membership contract Orlando signed. Orlando correctly argues the release is ambiguous and summary judgment should not have been entered on this ground. We affirm, nevertheless, based on the gym's alternative argument that on the undisputed facts, the gym did not breach any duty owed him.[1]
The standard of review for the entry of summary judgment is de novo. M.S. v. Nova Southeastern Univ. Inc., 881 So.2d 614, 617 (Fla. 4th DCA 2004). A party moving for summary judgment must show conclusively the absence of any genuine issue of material fact, and the court must draw every possible inference in favor of the non-moving party. If the evidence raises any issue of material fact, or if it tends to prove the issue, it should be submitted to the jury as a question of fact to be determined by it. Id.
The touchstone of a business owner's duty to protect its invitees against negligent injury from third parties is foreseeability. Warner v. Fla. Jai Alai, Inc., 221 So.2d 777 (Fla. 4th DCA 1969), cert. dismissed, 235 So.2d 294 (Fla.1970). In Warner, a jai alai patron was injured when a drunk patron pushed her to the floor. She sued the fronton for failing to control and supervise the facility and permitting the drunken patron to be present and push her. This court held the complaint failed to state a cause of action because it did not allege the fronton operator had actual or constructive knowledge of the risk posed by the specific intoxicated patron.
*169 Citing Warner, among other decisions, this court thereafter stated that a business owner is not liable in negligence for failing to prevent
a sudden, unexpected action by the tortfeasor where there was no prior indication that the tortfeasor was engaging in the type of conduct which caused the injury. Under such circumstances the business does not have actual or constructive knowledge of the existence of a dangerous condition, nor does it have any opportunity to correct it.
Kolosky v. Winn Dixie Stores, Inc., 472 So.2d 891, 894 (Fla. 4th DCA 1985).
In Warner and Kolosky, the plaintiffs were negligently injured by another. In such cases, the requisite knowledge on the part of the defendant/business operator concerned the risk posed by the particular tortfeasor. E.g., Heps v. Burdine's Inc., 69 So.2d 340 (Fla.1954); Warner, supra; Kolosky, supra; Cunningham v. City of Dania, 771 So.2d 12, 16 (Fla. 4th DCA 2000); Dennis v. City of Tampa, 581 So.2d 1345, 1350 n. 4 (Fla. 2d DCA 1991).
In cases where the injury resulted from a criminal or intentional act, the defendant's knowledge of past incidents at the premises by other persons in general may be sufficient. E.g., Hall v. Billy Jack's, Inc., 458 So.2d 760 (Fla.1984); Allen v. Babrab, Inc., 438 So.2d 356 (Fla.1983); Stevens v. Jefferson, 436 So.2d 33 (Fla.1983); Foster v. Po Folks, Inc., 674 So.2d 843, 844-45 (Fla. 5th DCA 1996); Dennis; Holiday Inns, Inc. v. Shelburne, 576 So.2d 322 (Fla. 4th DCA), dismissed, 589 So.2d 291 (Fla.1991), disapproved on other grounds, Angrand v. Key, 657 So.2d 1146 (Fla.1995).
Here, regardless whether the other patron acted carelessly or intentionally, Orlando failed to allege the gym knew or should have known the other patron posed a risk or there was ever a problem at the gym with anyone handling free weights.
Orlando fares no better if his complaint is broadly read under a theory of negligent entrustment; that is, he was injured by the other patron's misuse of free weights furnished by the gym. While Florida recognizes a cause of action for negligent entrustment, Weissberg v. Albertson's Inc., 886 So.2d 305 (Fla. 4th DCA 2004), this theory is predicated on "whether the harm was or should have been foreseeable by the person entrusting or delivering the [instrumentality] to another," Williams v. Bumpass, 568 So.2d 979, 981 (Fla. 5th DCA 1990), or stated another way, it "requires a showing that the entrustor knew or should have known some reason why entrusting the item to another was foolish or negligent." Mullins v. Harrell, 490 So.2d 1338, 1340 (Fla. 5th DCA 1986).
The supreme court has stated that "to bring a common law action for negligence in Florida, the `minimal threshold legal requirement for opening the courthouse doors' is a finding that a defendant's alleged action created a foreseeable `zone of risk' of harming others." Kitchen v. K-Mart Corp., 697 So.2d 1200, 1202 (Fla.1997)(emphasis in original). Orlando fails to meet this standard. When the complaint and record here are viewed in the light most favorable to him, there is no basis to conclude the other patron's harmful conduct was foreseeable by the gym. What occurred was "a sudden unexpected action" by that patron in dropping the weights close to Orlando's feet. On these undisputed facts, summary judgment was appropriate.
FARMER, C.J. and KLEIN, J., concur.
NOTES
[1] The gym did not raise the impact rule. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2128351/ | 35 Cal.App.3d 994 (1973)
111 Cal. Rptr. 285
JOHN M. ALEX, Plaintiff and Appellant,
v.
COUNTY OF LOS ANGELES et al., Defendants and Respondents.
Docket No. 41816.
Court of Appeals of California, Second District, Division One.
December 13, 1973.
*997 COUNSEL
Mohi, Morales, Dumas & Glasman and Frank C. Morales for Plaintiff and Appellant.
John D. Maharg and John H. Larson, County Counsel, Edward H. Gaylord, Joe Ben Hudgens and Edward G. Pozorski, Deputy County Counsel, for Defendants and Respondents.
OPINION
HANSON, J.
BACKGROUND
The petitioner-appellant John M. Alex is a judge of the Municipal Court for the Citrus Judicial District of Los Angeles County. His salary is paid by respondent County of Los Angeles. On or about March 20, 1970, appellant declared his intention and filed his candidacy for the office of United States Congressman, 24th Congressional District of California.
The judge was required by the County of Los Angeles, pursuant to article VI, section 17 of the California Constitution, to take a leave of absence without pay at the time of his declaration of candidacy. The judge requested permission from the Judicial Council to sit pro tempore during his period of candidacy. The request was denied. He (the judge) was not elected to Congress and returned to his judicial duties on June 3, 1970. He thereafter demanded from the County of Los Angeles back payment of his salary for the period March 20, 1970, to June 3, 1970. This demand was refused.
PLEADINGS
Petitioner-appellant John M. Alex (hereinafter Judge Alex) filed a complaint on December 1, 1971, for declaratory relief and a petition for writ of mandate in the Superior Court of Los Angeles County alleging facts as hereinbefore described and seeking back payment of salary in the *998 total sum of $6,012.38 for the period March 20, 1970, to June 3, 1970, in which he took a leave of absence for the purpose of running for Congress. The named defendants were the County of Los Angeles and its board of supervisors.
The defendants (respondents herein) demurred on the ground that plaintiff did not state facts sufficient to constitute a cause of action for declaratory relief or writ of mandate.
On April 28, 1972, the superior court sustained the demurrer to the complaint without leave to amend and denied the motion for peremptory writ of mandate.
Plaintiff appeals.
CONTENTIONS
Plaintiff-appellant contends that article VI, section 17 of the California Constitution (1) is discriminatory and a denial of the "equal protection" clause of the Fourteenth Amendment of the federal Constitution; (2) is unconstitutionally vague, uncertain and overly broad; and (3) is an unconstitutional attempt by the State of California to prescribe additional or different eligibility requirements to the constitutional office of United States Congressman.
This is a case of first impression.
THE PROVISION AT ISSUE
Article VI, section 17[1] of the Constitution of the State of California *999 (hereinafter section 17), added as an amendment by the electors of the State of California at the general election on November 8, 1966, provides in toto as follows:
"A judge of a court of record may not practice law and during the term for which he was selected is ineligible for public employment or public office other than judicial employment or judicial office. A judge of the superior or municipal court may, however, become eligible for election to other public office by taking a leave of absence without pay prior to filing *1000 a declaration of candidacy. Acceptance of the public office is a resignation from the office of judge.
"A judicial officer may not receive fines or fees for his own use."
DISCUSSION
DOES SECTION 17 VIOLATE THE "EQUAL PROTECTION" CLAUSE?
(1) The Fourteenth Amendment to the federal Constitution provides, in part, as follows: "... No State shall ... deny to any person within its jurisdiction the equal protection of the laws."
By judicial analysis, on both the federal and state levels, of a myriad of cases raising the "equal protection" clause, the following broad principles of its application have evolved.
Legislation must be "general" in its terms and application; "special" legislation is prohibited.
(2) Although not easy to define, a law is said to be "general" when it relates to and operates uniformly upon the whole of a validly selected single class of persons similarly circumstanced. A validly selected class is one in which there is a reasonable classification of persons for legitimate legislative purposes founded on a reasonable and rational basis as to matters which possess some natural or intrinsic or constitutional distinction as to justify and require special treatment.
(3) A law may be said to be "special" if it confers particular privileges or imposes peculiar disabilities or burdensome conditions, in the exercise of a common right, on a class of persons arbitrarily selected from the general body of those who stand in precisely the same relation to the subject of the law. (Serve Yourself Gas etc. Assn. v. Brock, 39 Cal.2d 813 [249 P.2d 545]; 11 Cal.Jur.2d, Constitutional Law, §§ 258-264; 3 Witkin, Summary of Cal. Law (7th ed. 1960) Constitutional Law, §§ 125, 129, 130; 16A C.J.S., Constitutional Law, § 505.)
Case law has developed a two-level standard in evaluating legislative classifications under the "equal protection" clause. The traditional test is that there is a presumption of constitutionality which will not be overthrown by the courts unless it is palpably arbitrary and beyond rational and reasonable doubt erroneous and no set of facts reasonably can be conceived that would sustain it. This traditional test is usually applied to "economic" regulations.
The other, and stricter, standard is employed in cases involving "suspect classifications" or "fundamental interests." Here the courts take a close *1001 look at the classification and require not only a compelling state interest which justifies the law, but also that the distinctions drawn by the law are necessary to further its purpose. (In re Antazo, 3 Cal.3d 100 [89 Cal. Rptr. 255, 473 P.2d 999]; California State Employees' Assn. v. Flournoy, 32 Cal. App.3d 219 [108 Cal. Rptr. 251].)
(4) It would be academic to analyze whether section 17 falls in the category of "economic" or "fundamental interest," or hybrid, and which standard would apply. We hold that, applying the stricter standard, section 17 is "general" in character, that the class was validly selected, operates uniformly and does not violate the "equal protection" clause.
The inherent nature of the judicial function demands it be divorced from the political arena to avoid exposure to possible conflicts of interest and political influence. The provision in its wisdom seeks to eliminate the risk of judges' decisions being subconsciously and improperly influenced by considerations of the effect of a popular or unpopular ruling on his candidacy for public office, being aware that his decisions may be reported by the news media or used by his political adversary.
In addition, the courts are inextricably married to the clock and calendar. Like a train, the court must start and run on schedule to accommodate the public and attorneys using the courts to dispose of their legal matters. It is common knowledge that a hard fought political campaign makes demands on the candidate which cut deeply into the working day. The taxpayers, who pay the bills, demand an impartial judiciary who perform a full day's work; fellow judges, inundated with litigation which must be disposed of, have a right to expect every colleague to perform his fair share of the heavy caseload; and the attorneys and litigants have a right to expect their matters will be handled expeditiously and fairly, free of outside interference or influence engendered by the political pursuits of judges.
Thus the compelling, legitimate state purpose and policy underlying the provision and the necessary distinctions drawn because of the natural, intrinsic and constitutional requirements of the judge's office are (1) to save the judges from the "entanglements, at times the partisan suspicions" which may result when a judge engages in the extrajudicial activity of campaigning for public office; and (2) "to conserve the time of the judges for the performance of their work" so as not to "embarrass, if not in fact impede, the orderly and proper discharge of their judicial functions." (See Abbott v. McNutt, 218 Cal. 225 [22 P.2d 510, 89 A.L.R. 1109].)
*1002 The requirements of section 17 are not empty. They are essential to maintain in the trial court an atmosphere in which justice can be done.[2]
The recent case of United States Civil Service Commission v. National Association of Letter Carriers, AFL-CIO, 413 U.S. 548 [37 L.Ed.2d 796, 93 S.Ct. 2880] (hereinafter CSC v. Letter Carriers) decided in June 1973, involved a direct appeal to the United States Supreme Court from a three-judge federal district court judgment in a class action by some *1003 individual federal employees, an employees' union, and certain local Democratic and Republican political committees challenging as unconstitutional on its face the prohibition in section 9(a) of the Hatch Act, now title 5 United States Code, section 7324(a)(2), against federal employees' taking "an active part in political management or in political campaigns." The three-judge district court recognized "well-established governmental interest in restricting political activities by federal employees," but held that the statutory definition of "political activity" was both vague and overbroad and therefore unconstitutional.
The United States Supreme Court reversed the ruling of the three-judge panel and held the Hatch Act constitutional. The Supreme Court noted 413 U.S. at page 553 [37 L.Ed.2d at page 802] that the three-judge court: "... recognized the `well-established governmental interest in restricting political activities by federal employees which [had been] arrested long before enactment of the Hatch Act,' 346 F. Supp. at 579, as well as the fact that the `appropriateness of this governmental objective was recognized by the Supreme Court of the United States when it endorsed the objective of the Hatch Act. United Public Workers v. Mitchell, 330 U.S. 75 [91 L.Ed. 754, 67 S.Ct. 556] ... (1947)....'"
The Supreme Court said 413 U.S. at page 556 [37 L.Ed.2d at page 804]: "We unhesitatingly reaffirm the Mitchell holding that Congress had, and has, the power to prevent Mr. Poole and others like him from holding a party office, working at the polls and acting as party paymaster for other party workers. An Act of Congress going no farther would in our view unquestionably be valid. So would it be if, in plain and understandable language, the statute forbade activities such as organizing a political party or club; actively participating in fund-raising activities for a partisan candidate or political party; becoming a partisan candidate for, or campaigning for, an elective public office; actively managing the campaign of a partisan candidate for public office; initiating or circulating a partisan nominating petition or soliciting votes for a partisan candidate for public office; or serving as a delegate, alternate or proxy to a political party convention. Our judgment is that neither the First Amendment nor any other provision of the Constitution invalidates a law barring this kind of partisan political conduct by federal employees." (Italics added.)
After tracing the history of the Hatch Act, the court stated 413 U.S. at pages 563-565 [37 L.Ed.2d at pages 808, 809]: "This account of the efforts by the Federal Government to limit partisan political activities by those covered by the Hatch Act should not obscure the equally relevant fact that all 50 States have restricted the political activities of their own employees.
*1004 "Until now, the judgment of Congress, the Executive and the country appears to have been that partisan political activities by federal employees must be limited if the Government is to operate effectively and fairly, elections are to play their proper part in representative government and employees themselves are to be sufficiently free from improper influences. E.g., 84 Cong.Rec. 9598, 9603; 86 Cong.Rec. 2360, 2621, 2864, 9376. The restrictions so far imposed on federal employees are not aimed at particular parties, groups or points of view, but apply equally to all partisan activities of the type described. They discriminate against no racial, ethnic or religious minorities. Nor do they seek to control political opinions or beliefs, or to interefere with or influence anyone's vote at the polls.
".... .... .... . .
"... A major thesis of the Hatch Act is that to serve this great end of Government the impartial execution of the laws it is essential that federal employees not, for example, take formal positions in political parties, not undertake to play substantial roles in partisan political campaigns and not run for office on partisan political tickets. [Italics added.] Forbidding activities like these will reduce the hazards to fair and effective government. See 84 Cong.Rec. 9598; 86 Cong.Rec. 2433-2434, 2864; Hearings on S 3374 and S 3417 Before the Committee on Post Office and Civil Service, 92d Cong., 2d Sess., 171.
"There is another consideration in this judgment: it is not only important that the Government and its employees in fact avoid practicing political justice, but it is also critical that they appear to the public to be avoiding it if confidence in the system of representative Government is not to be eroded to a disastrous extent."
A fortiori, if political restraints placed by the Hatch Act on a letter carrier in the executive branch of the federal Government are constitutional, why then would not such restrictions, as embraced in section 17, also be constitutional when placed on judges in the judicial branch of government in a sovereign state whose decisions affect the lives and property of its citizens? We hold they are.
Appellant cites the California Supreme Court case of Fort v. Civil Service Commission, 61 Cal.2d 331 [38 Cal. Rptr. 625, 392 P.2d 385], as controlling. The Fort case, authored by Chief Justice Gibson,[3] is factually *1005 distinguishable. Moreover, the Fort case recognized that "compelling" state purposes may restrict political activities if "not broader than are required to preserve the efficiency and integrity" of the public service in question. The connection in the instant case, between being a candidate for public office and performing the official duties of a judge, is not remote, as in Fort. The connection is directly related to the "efficiency and integrity" of the office of judge as heretofore discussed. The "compelling" factors absent in Fort are present in Alex.
Is SECTION 17 IMPRESSIBLY VAGUE, UNCERTAIN AND OVERLY BROAD?
(5) Petitioner's contention in this respect does not rise to the dignity requiring a minute, verbal dissection by the judicial scalpel.[4] Applying the "plain meaning" rule to section 17, taking the language of the second sentence alone and deleting the word "however," or as written, not in vacua, but in context with the sentences immediately preceding and following, we hold the language to be clear, concise, direct, unequivocal, and of proper scope, meeting constitutional requirements. The language, unencumbered with superfluous verbal baggage, succinctly, understandably and adequately designates the class and actions necessary to accomplish the overall object and purpose of the provision. One of the objectives of the commission was to frame amended provisions in "modern, concise and easily understandable language." (See fn. 1.) That objective, insofar as section 17 is concerned, was accomplished.
*1006 The United States Supreme Court in CSC v. Letter Carriers, supra, noted 413 U.S. at page 579 [37 L.Ed.2d at page 816]: "... Surely, there seemed to be little question in the minds of the plaintiffs who brought this lawsuit as to the meaning of the law, or as to whether or not the conduct in which they desire to engage was or was not prohibited by the Act."
We note in the case at bench that (1) although the personal desires were to the contrary, the petitioner, a judge, a member of the class covered and the one most directly affected, (2) the officials of respondent County of Los Angeles, and (3) those in the judiciary, who have a role to play in implementation of the mandate, all had no difficulty understanding the provision. All complied.[5]
Accordingly, we hold that section 17 is neither impermissibly vague or fatally overbroad.
DOES SECTION 17 IMPOSE ADDITIONAL OR DIFFERENT ELIGIBILITY REQUIREMENTS FOR A FEDERAL ELECTIVE OFFICE RENDERING IT UNCONSTITUTIONAL?
Article I, section 2, clause 2 of the United States Constitution prescribes the eligibility requirements for a congressman (House of Representatives) as follows: (1) that he be 25 years of age; (2) that he be 7 years a citizen of the United States; and (3) that he be an inhabitant of the state in which he shall be chosen.
*1007 (6) The thrust of appellant's contention is directed at the second sentence of section 17. He contends that since he had to take a leave of absence from the bench without pay, this constituted a fourth eligibility requirement to run for Congress and is therefore unconstitutional.
In Otsuka v. Hite, 64 Cal.2d 596 [51 Cal. Rptr. 284, 414 P.2d 412], the California Supreme Court said at pages 606-607: "It has long been a cardinal rule, of course, that if a provision of the California Constitution is `capable of two constructions, one of which would cause a conflict with the federal Constitution, the other must be adopted.' (Steinhart v. Superior Court (1902) 137 Cal. 575, 579 [70 P. 629, 92 Am.St.Rep. 183, 59 L.R.A. 404].)"
We hold that section 17 of the California Constitution does not add a fourth eligibility requirement to run for Congress and may reasonably be construed in a manner consistent with article I, section 2, clause 2 of the federal Constitution for the following reasons.
First, the second sentence of section 17 must be read in context with the sentences immediately preceding and following. The first sentence reads in part: "... during the term for which he was selected is ineligible [italics added] for public employment or public office other than judicial employment or judicial office." The second sentence, in part, states: "... may, however, become eligible [italics added] for election to other public office by taking a leave of absence without pay prior to filing a declaration of candidacy." The third sentence provides that: "Acceptance of the public office is a resignation from the office of judge."
Thus, section 17 does not single out federal public office but applies across the board to any nonjudicial "public office" and does not, in fact, impose additional or different eligibility requirements for a federal elective office. What it does is spell out certain conditions and limitations, as mandated by the citizens of California, which must be complied with in order to continue serving as a municipal or superior court judge in the State of California.
Second, in the case at bench, the petitioner, a judge, was federally eligible and (A) he wanted to run for Congress; (B) he did; (C) he lost; and (D) he returned to his employment (the bench). Clearly, section 17 did not affect (A) and (C) above. As to (D), section 17, in fact, afforded him a stronger position than most candidates by assuring his former job back if he lost. His contention, therefore, is directed solely at (B) and the requirement to take a leave of absence without pay during his candidacy for a public office.
We address ourselves to (B) above. The petitioner is in no different *1008 position and has experienced no greater hardship than innumerable candidates, successful or unsuccessful, who have aspired to any elective public office. He was confronted with the same problems which have and will confront every such aspirant. That is, each candidate must make his own plans and arrangements, financial and otherwise, to meet business and family obligations during his campaign. We are aware of no affirmative federal requirement, by constitution or otherwise, that employers, private or governmental, subsidize their (its) employees while running for elective office on the federal, state or local level. That is a matter strictly between the employer and employee. Once determining that he cannot sit on the bench while campaigning for public office, it logically follows that he should not be paid for work he is not performing.
Petitioner is a judge of his own free will. Being a judge, he must simply account for and make arrangements to cope with the requirements peculiar to his office of judge. He must accept the limitations and restrictions along with the benefits and prestige inherent to and attendant with the calling to the bench.[6]
Finally, section 17 tangentially tends not only to harmonize with, but to promote the basic doctrine of the tripartite separation of powers of government legislative, executive and judicial, as embodied in both the federal[7] and California[8] Constitutions.
CONCLUSION
We are living through a period of massive distrust and loss of confidence in all major institutions of government, including the judiciary.
The approximately 20 million citizens of California, speaking through the initiative process at the ballot box; the approximately 40,000 attorneys in California, speaking through the committees of the California State Bar; and the approximately 1,000 judges in California, speaking through the Judicial Council and the California Conference of Judges, want their trial judges to be free of the "suspicion" of being warped by political bias. They want their trial judges to "tend the store" and not be *1009 diverted from the impartial performance of their work by extrajudicial activities such as running for public office. These desires are reflected in section 17 and thus tend to foster confidence in our courts which is indispensable.
For the reasons discussed, whether the matter at bench is before this court on appeal from an order sustaining a demurrer without leave to amend or from the granting of a motion for summary judgment,[9] we hold that appellant's contentions are nonmeritorious.
Judgment affirmed.
Lillie, Acting P.J., and Thompson, J., concurred.
On January 9, 1974, the opinion was modified to read as printed above. Appellent's petition for a hearing by the Supreme Court was denied February 7, 1974.
NOTES
[1] History of section 17:
In 1963 the Judicial Council recommended that the general revision of the California Constitution's judicial article (art. VI) be undertaken only after full scale study and detailed consultation with interested groups. The 1963 Legislature created a Constitutional Revision Commission, responsible to its joint committee on legislative organization, and charged the commission with the responsibility for recommending desirable constitutional changes to the 1965 Legislature. The commission created a subcommittee on article VI, as one of the articles intended for consideration of revision.
The present section 17, as set forth in the body of this opinion, is the result of a full scale study and detailed consultation with groups most intimately involved. It combines former sections 18 and 15 of article VI, as modified.
The former section 18 provided: "The justices of the Supreme Court, and of the district courts of appeal and the judges of the superior courts and the municipal courts shall be ineligible to any other office or public employment than a judicial office or employment during the term for which they shall have been elected or appointed, and no justice or judge of a court of record shall practice law in or out of court during his continuance in office; provided, however, that a judge of the superior court or of a municipal court shall be eligible to election or appointment to a public office during the time for which he may be elected, and the acceptance of any other office shall be deemed to be a resignation from the office held by said judge."
The former section 15 provided: "No judicial officer shall receive to his own use any fees or perquisites of office."
(The last sentence in the present § 17, not at issue in the instant case, being separable, will not be discussed.)
The pamphlet supplied the voters prior to the general election of November 8, 1966, preceded the full text with a summary. The summary capsuled the changes in respect to section 17, as follows: "A superior or municipal court judge would be required to take a leave of absence without pay when seeking other public office."
The argument in favor of the proposition for the constitutional amendment preceding the full text, which included section 17, in part, was as follows:
"Argument in Favor of Proposition No. 1-a
"One of our most crucial needs in these times is effective government based on a modern Constitution.
"Yet, concerning the California Constitution, former State Supreme Court Justice Phil S. Gibson has stated:
"`(Our Constitution is) ... cumbersome, unelastic, and outmoded.... It is not only much too long, but it is almost everything a Constitution ought not to be.'
"California's Constitution is hardly modern. It is the third longest Constitution in the world and has been amended over 300 times since 1879. In short, it is a mess.
"In 1962, by more than a 2 to 1 vote, the people mandated modernization of their Constitution. As a result, a blue-ribbon Constitutional Revision Commission of 69 leading Californians was appointed to recommend a revised Constitution. These prominent citizens from all walks of life worked without pay for three years and spent thousands of hours at their task.
"The result is Proposition 1-a. It is the first phase of the Commission's work. It covers approximately one-third of the existing Constitution, and reduces that one-third from 22,000 to 6,000 words.
"The reforms in Proposition 1-a have been labeled by party leaders and non-partisan groups alike as essential to the effective operation of government.
"Proposition 1-a puts the Constitution into modern, concise and easily understandable language.
".... .... .... .... .
"State government today faces new challenges and new responsibilities not dreamed of in 1879. This new Constitution helps to meet those challenges by making government itself more flexible and able to do the job which our citizens have a right to expect.
"If states are to survive and prosper in our system, they need the tools of effective government Proposition 1-a is a giant step toward that. California can lead the way. Vote YES on 1-a."
There were no arguments printed against the proposed changes pertaining to the judicial department of government.
[2] California has long been a leader in keeping politics out of the courtroom. The "Canons of Judicial Ethics" adopted by the Conference of California Judges in 1949 provide in part:
"The Conference of California Judges, mindful that the character and conduct of a judge should never be objects of indifference, and that declared ethical standards become habits of life, deems it desirable to set forth its views respecting those principles which should govern the personal practice of members of the judiciary in the administration of their offices. The Conference accordingly adopts the following Canons, as a proper guide and reminder for justices and judges of courts of record in California, and as indicating what the people have a right to expect from them.
".... .... .... .... .
"24 Partisan Politics
"While entitled to entertain his personal views of political questions, and while not required to surrender his rights or opinions as a citizen, it is inevitable that suspicion of being warped by his political bias will attach to a judge who becomes the active promoter of the interests of one political party or candidate against another. [Italics added.] He should avoid making partisan political speeches, making or soliciting payment of assessments or contributions to party funds, the public endorsement of candidates for political office, or participation in party conventions.
"A judge should neither accept nor retain a place on any party committee nor act as party leader, nor engage generally in partisan activities.
"Nothing in this canon shall be deemed to prevent any judge from attending and speaking (a) on the subject of his own candidacy at any political gathering held within a reasonable time prior to an election at which he is a candidate for election or re-election (b) on any other nonpartisan subject."
The canons were originally adopted on August 30, 1949 (see 24 State Bar J. 298 (1949)) and have been amended in several instances. They are published in Appendix to California Rules of Court to make them readily available to all members of the judiciary. Section 17 raises this concept in California from a "canon," sans teeth, to a constitutional mandate, avec bite.
The trend is now nationwide. The American Bar Association has recently adopted "Canons of Judicial Ethics" which provide that a judge should resign his office when he becomes a candidate either in a party primary or in a general election for any nonjudicial office. Canon 7 provides in part: "A Judge Should Not Engage in Political Activity Except to the Extent Necessary to Obtain or Retain Judicial Office Through an Elective Process.
"A judge or candidate for elective judicial office should not solicit funds for, or pay an assessment or make a contribution to, a political organization or candidate except as authorized below; he should not act as a leader or hold any office in a political organization; he should not make speeches for a political organization or candidate or publicly endorse any candidate for non-judicial public office; and he should not engage in any other political activities except on behalf of measures to improve the administration of justice.
".... .... .... .... .
"A. A judge should resign his office when he becomes a candidate either in a party primary or in a general election for any non-judicial office...."
[3] Former Chief Justice Phil S. Gibson of the California Supreme Court, a member of the California Constitutional Revision Commission, said in respect to a proposal pertaining to nonjudicial campaigns: "Another measure proposed by the State Bar and Judicial Council would eliminate from the Constitution the exception created by a 1930 amendment that permits a Superior or Municipal Court judge to seek a nonjudicial public office during his term as judge. California has been a leader in the effort to establish a nonpartisan judiciary, and we believe that the adoption of this proposal would be an important further step in this direction." (32 State Bar J. (Nov.-Dec. 1957) pp. 727, 735.)
The measure proposed required a judge to resign upon declaration of his candidacy much more restrictive than the section 17 requirement to take a leave of absence without pay during his candidacy for public office.
[4] The United States Supreme Court in CSC v. Letter Carriers, supra, after tracing the legislative history and making an analysis of the language of the Hatch Act, which was infinitely more extensive and imprecise than section 17, stated 413 U.S. at pages 577-579 [37 L.Ed.2d at page 816]: "... There might be quibbles about the meaning of taking an `active part in managing' or about `actively participating in fund-raising' or about the meaning of becoming a `partisan' candidate for office; but there are limitations in the English language with respect to being both specific and manageably brief, and it seems to us that although the prohibitions may not satisfy those intent on finding fault at any cost, they are set out in terms that the ordinary persons exercising ordinary common sense can sufficiently understand and comply with, without sacrifice to the public interest. `The general class of offenses to which ... [the provisions are] directed is plainly within [their] terms, ... [and they] will not be struck down as vague, even though marginal cases could be put where doubts might arise.' United States v. Harriss, 347 U.S. 612, 618 [98 L.Ed. 989, 74 S.Ct. 808] (1954)."
[5] The petitioner, Judge Alex, filed the following affidavit which was considered by the court below and is part of the record on appeal:
"I HEREBY STATE under affidavit of perjury that prior to taking a leave of absence on March of 1970 in order to run for Congress in the 24th Congressional District Primary, I contacted all of the Judges of the Citrus Municipal Court including the Presiding Judge at a duly constituted Judges' Meeting and advised them of my situation and desire to serve as a Municipal Court Judge using my vacation time or serving as judge pro tempore. It was all our considered opinions that the only Agency that could decide such a matter was the Judicial Council of the State of California who makes appointments of Judges sitting in such capacity.
"Therefore I wrote a letter to Mr. Kleps, Administrative Officer and to the Presiding Judge of the Supreme Court, requesting that I be allowed to continue to sit as a Judge using my vacation time or to sit as a judge pro tempore in order to help alleviate a crowded calendar.
"I was advised by the Judicial Council that I not only was required to take a leave of absence, but that I could not work in any capacity particularly as an attorney during my leave of absence or I would forfeit my Judgeship. I was also denied my request to use my vacation time or to sit as a judge pro tempore therefore I had no alternative but to take a leave of absence upon the day of filing my papers for Congress. I delayed filing my papers until the last day in order to sit as a Judge and help alleviate a crowded calendar.
"DATED: 2/25/72 [/S/] JOHN M. ALEX, Judge"
[6] Undoubtedly petitioner was going to run for Congress irrespective of this requirement or he would have proceeded by way of writ of mandate prior to filing his candidacy.
[7] Articles I, II and III of the United States Constitution create three separate departments of government legislative, executive and judicial.
[8] Article III of the California Constitution provides: "Separation of Powers. The powers of state government are legislative, executive, and judicial. Persons charged with the exercise of one power may not exercise either of the others except as permitted by this Constitution."
[9] This court has reviewed the complete superior court file pursuant to authority of rule 12a, California Rules of Court. The minute order of February 28, 1972, reflects in part:
"... Pursuant to stipulation of counsel the Demurrer is deemed a Motion for Summary Judgment.
"Matters are argued, counsel stipulating as to certain facts. Petitioner's Exhibit 1 (Declaration of Judge John M. Alex, filed 2/28/72) is admitted in evidence by reference by stipulation of counsel...."
The matter was submitted. The minute order of April 28, 1972, sustains the "demurrer." Appellant's opening brief appeals from the sustaining of the demurrer without leave to amend. Respondents' brief acknowledges that appellant's opening brief correctly states the nature of these proceedings, the pertinent facts and the issues to be determined. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2594655/ | 670 F.Supp. 695 (1986)
Kimie SISK, Donald N. Stange, Larry Jager, Richard Wilson, James L. Smiszek, Eleanor L. Daniels, Gary Boomer, John K. Capron, Robert J. Kaiser, David L. Vanderploeg, Mary J. Tschirhart, and Charles Dwyer, Jointly and Severally, Plaintiffs,
v.
The FIRESTONE TIRE & RUBBER COMPANY, Defendant.
No. 83-CV-1448-DT.
United States District Court, E.D. Michigan, S.D.
September 25, 1986.
Murray J. Chodak, Detroit, Mich., for plaintiffs.
Richard E. Rassel, James Stewart, Detroit, Mich., for defendant.
MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
HACKETT, District Judge.
Plaintiffs in this case are former non-union salaried employees of Firestone Tire & Rubber Company's ("Firestone's") Romeo, Michigan plant. In November, 1982, Firestone sold the Romeo plant as an ongoing entity to the Brenlin Corporation ("Brenlin"). Pursuant to the sale, Firestone negotiated for and obtained a commitment from Brenlin to hire approximately half of the plant's former salaried employees. Each of the plaintiffs was hired by Brenlin at that time. Those employees who did not obtain continued employment under Brenlin ownership were paid "reduction in force" termination pay in accordance with Firestone's established policy. Those employees who were hired by Brenlin were not paid termination pay by Firestone. Plaintiffs are all within this latter group. It is their contention that pursuant to Firestone's policies and procedures they are entitled to termination benefits.
Claims for benefits under an employer's termination pay plan are governed by the Employee Retirement Income Security Act, 29 U.S.C.A. § 1001 et seq. (ERISA). Blakeman v. Mead Containers, 779 F.2d 1146 (6th Cir.1985); Holland v. Burlington Industries, 772 F.2d 1140 (4th Cir.1985). In order to prevail on their claim that they are entitled to termination pay, plaintiffs must establish that Firestone acted in an "arbitrary and capricious" manner in denying it. Holland, supra; Blakeman, supra.
Firestone has moved for dismissal of plaintiffs' claims on summary judgment. Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment shall be granted:
if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party *696 is entitled to judgment as a matter of law.
The Sixth Circuit has reiterated the principles governing consideration of a motion for summary judgment in Watkins v. Northwestern Ohio Tractor Pullers Ass'n., 630 F.2d 1155 (6th Cir.1980):
The District Court may grant a motion for summary judgment only if it finds from the whole record before it that there are no material facts which are in dispute. It may not make findings of disputed facts on a motion for summary judgment. The movant has the burden of showing conclusively that there exists no genuine issue as to a material fact and the evidence together with all inferences to be drawn therefrom must be considered in the light most favorable to the party opposing the motion.
Id. at 1158; see also Ghandi v. Police Department of the City of Detroit, 747 F.2d 338 (6th Cir.1984).
Firestone's policy regarding termination pay is articulated in its Salaried Employee Handbook (the "Handbook") and in its Salaried Personnel Manual (the "Manual"). The Handbook distributed to Firestone employees included the following statement regarding termination pay:
If your service is discontinued prior to the time you are eligible for pension benefits, you will be given termination pay if released because of a reduction in work force or if you become physically or mentally unable to perform your job.
The amount of termination pay you will receive will depend on your period of credited company service.
There is no suggestion in this case that plaintiffs were "unable to perform" their jobs. Thus, any claim plaintiffs may assert in reliance on this Handbook provision would depend on whether they were "released because of a reduction in work force."
Firestone's Manual is an extensive document consisting of several hundred pages and designed to assist in the administration of personnel decisions. The Manual is continually updated. Although it is apparently marked "confidential," Firestone asserts that its consistent policy has been to make the Manual available to employees upon request. An employee may review the Manual in a facility's personnel office with a representative of the company's personnel department. (Affidavit of Thomas Robinson ¶ 3, 11).
Firestone's termination pay policies are set forth in Section 2.11 of the Manual. It provides "basic" termination pay for separations and discharges, limited termination pay for certain resignations and "reduction in force" termination pay where appropriate. The circumstances constituting a reduction in force are described in three sections of the Manual. Section 1.5.4 defines reduction in force generally as "termination of employment by the company without prejudice to the employee." Section 1.5.6 addresses Firestone's policies with respect to such matters as vacation, tuition reimbursement, exit interview and termination pay. Section 2.11.3 defines the relationship between reduction in force and termination pay:
Despite the objectives of Firestone to provide stable employment, continued earnings and benefit coverages to its employees, there may be economic conditions that develop which make it necessary for the Company to temporarily or permanently terminate the employment of some of its work force.
In the event such releases must be made, the following reduction in force policies have been established with the goal of minimizing the economic and mental stress of terminated employees during the period of time between release from Firestone and securing other employment (or re-employment by Firestone).
The Manual includes a number of provisions applicable to employees terminated pursuant to a reduction in work force. Among them are provisions for selection of employees to be terminated, special consideration for rehire and temporary insurance benefits. There is no reference in the Manual to possible payment of termination pay in the event a plant or division is sold as an ongoing concern.
*697 Consistent with the policies expressed in the Handbook and the Manual, Firestone has never paid termination pay to salaried employees upon the sale of a plant as an ongoing concern where Firestone has obtained continued employment for its employees with its successor. The company has awarded termination pay to approximately 1,650 of the 2,900 salaried employees who ceased working for Firestone between 1976 and 1982 as a result of domestic plant disposition. All of those employees were either terminated at the time of plant closure or reduced in force prior to the sale of a plant as an ongoing business.
Firestone's history is consistent with its policy to provide compensation to employees who actually suffer in a reduction in force and to avoid windfalls for those who do not. An employee who never leaves his job when a plant is sold has no reasonable expectation of receiving termination payments. In the present case, no employee has suffered a loss as a result of the change in the plant's ownership. It was neither arbitrary nor capricious that Firestone refused to award plaintiffs a windfall in the form of termination pay.
This court's decision is in accord with several recent cases involving former salaried employees who sought termination payments from Firestone when plants were sold. Davidson, et al v. Firestone Tire & Rubber Company (United States District Court, Western District of Tennessee, No. 84-1215, May 30, 1986) [Available on WESTLAW, 1986 WL 15770]; Bruch et al v. Firestone Tire & Rubber Company, 640 F.Supp. 519 (E.D.Pa.1986); Adcock v. Firestone, 616 F.Supp. 409 (M.D.Tenn.1985).
The Adcock, court considered the same two primary factors in reviewing Firestone's denial of termination pay: the provisions of the severance pay plan and Firestone's past practices at other plant facilities. This court adopts, as did Adcock, the approach taken by a majority of federal courts:
[c]ontinued employment with a successor corporation following the transfer of ownership, although characterized by a termination of employment with the predecessor corporation, does not constitute an involuntary reduction in work force by the predecessor corporation thereby entitling the employees to severance pay benefits. Adcock, supra at 421.
This court concludes that there was no "reduction in work force" pursuant to the Manual, the Handbook or Firestone's previous practice, and that plaintiffs were not entitled to receive termination pay. Firestone's decision not to extend such termination pay was not arbitrary or capricious.
There remains no genuine issue of material fact. Therefore defendant's motion for summary judgment will be granted. Accordingly,
IT IS ORDERED that defendant's motion for summary judgment is granted. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/4517138/ | HTTP/1.1 200
Date: Tue, 17 Mar 2020 20:08:27 GMT
Content-Type: application/pdf | 01-03-2023 | 03-17-2020 |
https://www.courtlistener.com/api/rest/v3/opinions/2442944/ | 638 S.W.2d 624 (1982)
HIGHPOINT OF MONTGOMERY CORPORATION et al., Appellants,
v.
Peter R. VAIL et al., Appellees.
No. 01-81-0805-CV.
Court of Appeals of Texas, Houston (1st Dist.).
July 22, 1982.
Rehearing Denied August 26, 1982.
*625 G. William Rider, Galveston, for appellants.
Randall B. Wilhite, Houston, for appellees.
Before EVANS, C. J., and WARREN and BASS, JJ.
*626 OPINION
WARREN, Justice.
This is an appeal from a judgment of the trial court, sitting without a jury, holding that appellees were not in default of their obligations on a promissory note. We affirm.
The principal questions are whether appellants waived strict compliance with the terms of the note and whether the court erred in admitting into evidence a summary of appellees' payments made on the note.
On July 14, 1969, Elizabeth Fling sold her home to appellees, who executed a promissory note and a deed of trust, securing payment of the note. The note required appellees to make an installment payment on or before the 14th day of each month, for 20 years. From July 14, 1969, until August 8, 1980, appellees made 132 payments; 120 of the payments were late. On August 8, 1980, Elizabeth Fling transferred the note and deed of trust to appellant Highpoint of Montgomery Corporation.
By letter dated August 19, 1980, Highpoint notified appellees of the transfer and requested that all monthly payments be made on time. Apparently unimpressed by the reminder, appellees continued to make each payment late. After a payment check "bounced" in November of 1980, Mrs. Grace Wilcox, one of the appellants herein and a director and shareholder of Highpoint, called Mrs. Vail and told her that if appellees couldn't be more regular in their payments, "something would have to be done about it." Despite this warning, appellees continued making every payment late and Highpoint continued accepting them.
Appellees failed to make the March 1981 payment and made the April payment 12 days late. Highpoint refused to accept the April payment, and by letter, the substitute trustee notified the appellees that their residence was to be posted for foreclosure and sale in June. Appellees immediately sent the missed March payment as well as payments for June and July. Highpoint returned these checks, as well as the one for the April payment and appellees placed them in the registry of the court.
Appellants urge that the trial court erred: (1) in holding that as of May 14, 1981, appellees were not in default on the note, (2) in failing to hold that Highpoint legally accelerated the note by letter of May 4, 1981, (3) in holding that no tender of the entire principal balance, attorney's fees or trustee's fees was required, and (4) in holding that strict compliance with the terms of the note had been waived.
In its judgment, the court found that appellees were not in default on the note as of May 14, 1981, and in a conclusion of law the court found that appellants, by their past conduct, waived strict compliance with the terms of the note. Both of these findings are supported by sufficient evidence.
It is undisputed that during the note's existence, the required installments were paid late over 90% of the time. After Mrs. Fling transferred the note to Highpoint, all of the installments were made late. Until April 26, 1981, no late payment was refused. Although on two occasions appellees were given notice that the payments should be timely made, they were never notified that further late payments would not be accepted, or that the note would be accelerated if future payments were not timely made.
Ordinarily, acceptance of past due installments on a note waives only the option to accelerate on the past defaults and does not waive the option to declare the balance due for future defaults. Vaughan v. Crown Plumbing and Sewer Service, 523 S.W.2d 72 (Tex.Civ.App.Houston [1st Dist.] 1975, writ ref'd n. r. e.) However, where the holder of the note has accepted late payments on numerous occasions in the past, he is precluded from accelerating the maturity of an installment note because of a single late payment unless he has, prior to the late payment for which default is claimed, notified the maker that in the future he will not accept late payments. McGowan v. Pasol, 605 S.W.2d 728 (Tex.Civ. App.Corpus Christi 1980, no writ). Appellants argue that our case is distinguishable from those cases cited above and others *627 holding likewise, because the note signed by appellees expressly provided that "time is of the essence" and that the failure to exercise the option to declare the entirety of the note immediately due and payable "shall not constitute a waiver on the part of the holder of the right to exercise the same at any other time." In Miers v. Clark, 253 S.W.2d 941 (Tex.Civ.App.Dallas 1952, no writ), the court held that such a clause would not dispense with the necessity of notice to the buyer of an intention to terminate a sales contract, and giving the buyer an opportunity to pay, where the buyer, by the conduct of the seller had been led to believe that strict forfeiture would not be insisted upon. Provisions in a business contract which specify or limit the time of performance, even where time is of the essence of the contract, may be waived. Laredo Hides Co., Inc. v. H&H Meat Products Co., Inc., 513 S.W.2d 210 (Tex.Civ.App. Corpus Christi 1974, writ ref'd n. r. e.). The same rule is applicable to promissory notes. In a case such as ours, where numerous late payments have been accepted, equity will not allow an acceleration of the note unless the holder, within a reasonable time in advance of the receipt of a late payment upon which default is relied, has unequivocally notified the obligor that no further late payments will be accepted. The trial court's correct finding that the holder waived strict compliance with the terms of the note, and that the appellees were not in default renders moot appellant's points of error regarding acceleration and tender.
In two points of error, appellant contends that the trial court erred in failing to find that Mrs. Fling's prior actions were not material to Highpoint's conduct, and in failing to hold that Highpoint was not the alter ego of Mrs. Fling. We find no error in the court's refusal to make such findings. There was sufficient evidence for the court to find a waiver by Highpoint, regardless of the prior waiver by Mrs. Fling. Mrs. Fling assigned the note to Highpoint in August of 1980. After becoming the holder of the note, Highpoint accepted seven consecutive late payments without notifying appellees that no further late payments would be accepted. The evidence also showed that the note was transferred to relieve Mrs. Fling of the worry caused by appellees' late payments. The shareholders and directors of Highpoint were Mrs. Fling, her sister, Mrs. Wilcox, and a nephew and a son of Mrs. Wilcox. Mrs. Wilcox testified that each of them knew of the appellees' past record regarding late payments. These points of error are overruled.
Finally, appellants contend that the trial court erred in admitting into evidence a summary of appellees' payments. Appellants contend that the court's admission of the checks, which evidenced the installment payments, was an admission of a record of past recollection without requiring appellees to lay a proper predicate for their admission. We hold that the summary was properly admitted. Mr. Vail produced in court the checks evidencing each payment made on the note. He also produced a written summary made by him containing the dates of the checks and the dates they were cashed. Mr. Vail testified that the summary was made from the original checks, which were in the courtroom. Appellants objected on the ground that there was no indication that the summary was made near the events in question and argued that it was more likely that the summary was something constructed for the convenience of the witness.
In their supplemental brief, appellants argue that the lack of a proper objection is immaterial because without proof of the admissibility of the checks they are hearsay and thus the summary itself is hearsay and will not support a verdict. Steve's Sash and Door Company v. W.B.J. International, 575 S.W.2d 355 (Tex.Civ.App. San Antonio 1978, no writ). We first note that before the summary was introduced, appellee Peter Vail testified as to his making late payments to both Mrs. Fling and Highpoint. The only objection made was that this testimony, regarding late payments made to Mrs. Fling, would be immaterial as to Highpoint. The checks were the *628 best evidence of late payment by appellees and acceptance by appellants, Mrs. Fling and Highpoint. Further, the checks were not hearsay because they were the best evidence of an operational fact, i.e. acceptance of late payments. See R. R. Ray Texas Practice, Law of Evidence § 795 (3rd Edition 1980). As such there was no need, as appellants contend to lay a predicate under art. 3737c, V.A.C.S. Assuming the admissibility of the underlying records, a summary of records is admissible: (1) where the records are voluminous and (2) the records are produced in court and made available to the opposing party for inspection and cross examination. Black Lake Pipe Line Co. v. Union Construction Co., 538 S.W.2d 80 (Tex.1976).
We hold that the trial court properly admitted the summary and that even in absence of the summary there was sufficient evidence for the court to find a waiver of strict compliance with the terms of the note. Since the trial court sitting without a jury is presumed to disregard inadmissible evidence, even if there was error it would be harmless. Rule 434, Tex.R.Civ.Pro. This point of error is overruled.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/8326628/ | Sanders, Janet L., J.
This is a derivative action brought on behalf of two Delaware business trusts, the Ridgewood Electric Power Trust v. and Ridgewood Power Growth Trust (collectively, the “Trusts”). The defendants are: the Trusts’ managing shareholder, Ridgewood Renewable Power, LLC (“RRP”); RRP’s manager Robert Swanson; and Ridgewood Energy Holding Corporation (“Ridgewood”), Trustee of the Trusts. The plaintiffs, all minority shareholders in the Trusts, allege that RRP and the other defendants engaged in self dealing in breach of their fiduciary duty through a set of transactions involving the Trusts’ most valuable asset, a renewable energy company known as Envirogas. Trial in this four-year-old case is scheduled for November 29, 2011.
The issue before the Court is whether to dismiss this action based on the report of what is purportedly a “Special Litigation Committee” formed by the defendant RRP. That report concludes that the plaintiffs are not likely to succeed on the merits of their claims and that further prosecution of this action is not in the best interest of the Trusts. Relying on Zapata Corp. v. Maldonado, 430 A.2d 779 (Del. 1981) (“Zapata"), the defendants argue that dismissal is warranted if this Court concludes that the Committee was independent, acted in good faith and conducted a thorough investigation with reasonable bases for its conclusions. In opposition, the plaintiffs argue that the Committee has no authority to act on behalf of the Trusts so that the Motion to Dismiss (purportedly brought by the Trusts themselves) should be stricken in its entirety. This Court agrees with the plaintiffs that the Committee has no standing to speak for the Trusts and that the Motion to Strike the Motion to Dismiss should be Allowed, for reasons set forth below.
BACKGROUND
This Court only briefly summarizes the plaintiffs’ allegations. The Trusts were created in the 1990s as an investment vehicle for renewable energy projects. In 2000, the government for the United Kingdom began considering legislation that created lucrative subsidies for such projects. In late 2001 when it became clear this legislation would be enacted, RRP on behalf of the Trusts acquired a majority ownership stake in Envirogas, which had a portfolio of methane gas projects ready to be developed. Rather than undertaking a course of action which would maximize Envirogas’s value for the Trusts, the defendants instead orchestrated a series of complex transactions which had the net effect of transferring a substantial portion of Envirogas’s value to “PowerBanks” set up by the defendant Swanson and RRP. When Envirogas was sold in 2007 for $230 million, PowerBanks walked away with 69 percent of the proceeds, whereas the Trusts, which owned 88 percent of Envirogas, received a 31 percent share. The big winner was RRP, which (according to the plaintiffs) reaped $40 million more than it should have.
This lawsuit was commenced on March 20, 2007. After several procedural skirmishes and an unsuccessful mediation, RRP went about appointing what it described as a Special Litigation Committee pursuant to Zapata, supra. This so-called “SLC” consisted of two members, Grover Brown, a former Delaware Chancery Court judge, and Robert P. Wax, former vice president and general counsel of Northeast Utilities, Inc. Simultaneously, Brown and Wax were appointed as “Special Litigation Managers” on the Board of RRP. The defendant Swanson, holding a majority of RRP’s voting units, had the power to remove Brown and Wax from their positions at any time. Under their engagement letters with RRP, Brown was to receive $700 an hour for his time, and Wax $600 an hour, with a $30,000 *142advance. Collectively, they have been paid a total of $400,000 by RRP. The result of their work is a 197-page report outlining their investigation of plaintiffs’ allegations and the reasons why they conclude that the continuation of this lawsuit is not in the best interest of the Trusts. Wax and Brown, purporting to act on behalf of the Trusts, brought the instant Motion to Dismiss.
DISCUSSION
The starting point for this Court’s analysis as to Wax’s and Brown’s authority to act for the Trusts is the 1981 Zapata decision. In that case, a stockholder brought a derivative action on behalf of the corporation against ten officers and directors alleging various breaches of fiduciaiy duty. Four years after the action began, the defendant directors were no longer on the board and the remaining directors appointed two new outside directors for the corporation. The board then created a committee composed of these two new directors to investigate the plaintiffs allegations. The committee concluded that the continued maintenance of the action was not in the corporation’s best interest and moved to dismiss the derivative action or in the alternative for sum-maiy judgment. The Delaware Court of Chanceiy denied the motion, holding that under Delaware law, the Committee did not have the authority to seek dismissal of an action that a stockholder has an individual right to maintain. On appeal, the Delaware Supreme Court reversed. In doing so, it outlined the circumstances under which such a committee can speak for the corporation and seek termination of a lawsuit ostensibly brought on the corporation’s behalf.
Acknowledging the right of an individual stockholder to initiate a derivative action, the Court stated that the right to continue it is not absolute. Certainly, a board tainted by the very illegality alleged by the shareholder plaintiff cannot be expected to institute a lawsuit challenging actions of its own directors. On the other hand, it should not be held hostage to a single individual or group if, as the lawsuit unfolds, it becomes clear that the action is not in the best interests of the corporation itself. The question for the Delaware Supreme Court, then, was how to strike the proper balance:
If, on the one hand, corporations can consistently wrest bona fide derivative actions away from well-meaning derivative plaintiffs through the use of the committee mechanism, the derivative suit will lose much if not all of its generally recognized effectiveness as an intra-corporate means of policing boards of directors. If, on the other hand, corporations are unable to rid themselves of meritless or harmful litigation and strike suits, the derivative action, created to benefit the corporation, will produce the opposite, unintended result.
Zapata, 430 A.2d at 786-87. The case before the Court in Zapata created an opportunity to resolve this dilemma by recognizing the power of a truly disinterested committee (or “SLC’j to seek termination of litigation, subject to appropriate judicial review.
Critical to the Court’s decision was the fact that Delaware statutoiy law permitted a corporate board tainted by the self interest of a majority of its members to legally delegate its authority to a committee of disinterested directors'. 8 Del.C. §§141(c) and 144. The Court held that, if the committee was properly constituted and was conferred with the authority to act on behalf of the board of the corporation on whose behalf the derivative action was brought, then it could, after appropriate investigation, move to dismiss the action, in the same way a plaintiff may seek voluntary dismissal of a lawsuit under Rule 41(a)(2). As a further protection to the plaintiff shareholder who initiated the derivative action, a court presented with such a motion must be convinced that the committee was truly independent, acted in good faith and had a reasonable basis for its conclusions. Finally, a court must exercise its own “business judgment” to determine whether the motion should be granted. Zapata, 430 A.2d at 788-89.
Since the Zapata decision, Delaware courts have applied its reasoning to factual situations that have not necessarily been on all fours with it but where the SLC members are determined to have no personal stake in the disputed transactions or any relationship with the defendant directors which would call into question their objectivity. Thus, for example, where all the directors of a corporate board are tainted but they have the power to appoint new directors, they may do so in order to put together a Special Litigation Committee consisting of those new members so long as they are sufficiently disinterested to be independent. See e.g. Sutherland v. Sutherland, 958 A.2d 235 (Del.Ch. 2008). That the new members were appointed by the tainted ones does not disqualify them, since their fiduciaiy duty is to the corporation. The Zapata “special committee” doctrine has even been extended in one case to a limited partnership, although the chancery judge who did so acknowledged that such an extension was not without difficulty. See Katell v. Morgan Stanley Group Inc., No. 12343, 1993 Del.Ch LEXIS 92 *8 (Del.Ch. June 8, 1993).2 The common thread in each of these cases, however, is that the SLC was comprised of directors of the corporation (or their equivalent in the non-corporate setting) on whose behalf the derivative suit was begun. SLC members were not hired by nor did they work for the individuals (or entities) accused of wrongdoing. That is significant: their fiduciaiy duty was to the corporation of which they are a part, thus providing further assurance that they would operate only in its interest and not to protect those tainted by the alleged misconduct.
*143Applying these principles to the instant case, this Court concludes that Brown and Wax are not an SLC as defined in Zapata and its progeny. As their engagement letters reflect, they were hired and paid by RRP, not the Trusts, with defendant Swanson signing a personal guarantee of payment. RRP agreed to indemnify both men and to provide them with D&O insurance. It also paid Brown’s and Wax’s expenses, including the cost of counsel (who argued the instant motion on their behalf), and the cost of experts and administrative assistance. Indeed, Brown and Wax have received $400,000 from RRP coffers to come up with the report that recommends dismissal of a case that accuses RRP of wrongdoing.
In addition to being financially beholden to RRP, Brown and Wax are also legally obligated to RRP. Although RRP could have appointed another managing shareholder to the Trusts and then designated that individual as the SLC (so that the individual worked for the Trusts and not RRP), RRP chose not to do that. Instead, Brown and Wax were made members of RRP’s board, with the corresponding fiduciary duty to RRP which that position carries with it: they hold no position in the Trusts themselves. Although RRP’s Operating Agreement was amended to redefine their fiduciary duty — stating that any duty that Brown and Wax had to RRP would be satisfied if they exercised the same fiduciary duty with respect to the Trusts — this amendment is hardly a cure to the problem. Holding the majority of voting units in RRP, Swanson could eliminate the amendment at any time, just as he has the power to discharge Brown and Wax whenever he chooses. Moreover, the amendment cannot eliminate the fiduciary obligation that exists apart from the RRP Operating Agreement and that both men still have to RRP. They are thus placed in a position of serving conflicting interests simultaneously.
There is an additional reason for challenging Brown’s and Wax’s authority to act on behalf of the Trusts, which is that RRP did not have power to appoint them to act as an SLC for the Trusts in the first place. Critical to the Court’s decision in Zapata was that the board of directors of the corporation on whose behalf the derivative action was brought was empowered under a Delaware statute, 8 Del.C. §141, to appoint a committee and to delegate to it certain managerial decisions. Zapata, 430 A.2d at 785; see also Aronson v. Lewis, 473 A.2d 805, 813 (1984). Delaware law does not confer the same powers to those in charge of a limited partnership or of a business trust, however. Instead, the specific rights and responsibilities of the parties in such arrangements are determined by the partnership agreements or Trust documents themselves. Here, RRP’s power to set up an SLC on behalf of the Trusts depends on what rights were conferred upon it in each Trust’s Declarations. Those Declarations— which are virtually identical to each other — allow the Trusts’ Managing Shareholder (RRP) to lend money to theTrusts, approve transfer ofshares orwithdrawthe offering ofshares, and appoint certain officers. See Art. 12 of Declarations. Nowhere do the Declarations authorize the appointment of an SLC or any other committee conferred with managerial authority. Indeed, the Declarations allow the Trusts’ Managing Shareholder to appoint another managing shareholder only if it first obtains the approval of the Trusts’investors. See Art. 12.3(a)(4) of Declarations. RRP did not obtain approval from the Trusts’ investors for Brown’s and Wax’s appointments.
The defendants respond by citing another provision in the Declarations which generally confers on the Trusts all the powers of a corporation under Delaware law. Art. 1.8 of Declarations. This general provision says nothing about the Managing Shareholder’s powers, however, and does not override the more specific description of RRP’s rights and responsibilities — with the corresponding limitation on those rights — as set forth in Art. 12. See Brinckerhoff v. Texas E. Prods. Pipeline Co., LLC, 986 A.2d 370, 378 (Del. 2010) (more specific provision prevails over more general one). The defendants also argue that this entire line of inquiry as to RRP’s authority to name an SLC is beside the point since Brown and Wax comprise a committee not of the Trusts but of RRP. See Defendant’s Reply to Plaintiffs’ Cross Motion to Dismiss, p. 12, fn. 7. But then that is precisely why this Court is persuaded that this is not an SLC at all. Brown and Wax are not acting on behalf of the Trusts here, but are agents for one of the defendants. They are clearly not in a position to seek dismissal of this action on behalf of the Trusts as plaintiffs.
CONCLUSION AND ORDER
For all foregoing reasons and for other reasons set forth in the plaintiffs’ Memoranda of Law, this Court concludes that the purported Special Litigation Committee which brings the Motion to Dismiss now before the Court is both unprecedented and unauthorized. The plaintiffs’ Motion to Strike the Motion to Dismiss asserted by the two members of that Committee is therefore ALLOWED and it is ORDERED that the Motion to Dismiss be STRICKEN.
Although the parties discuss Katell extensively in their submissions, it is important to note that all of the Katell decisions (there being three of them) are unpublished opinions by a lower court judge and therefore have no precedential value. | 01-03-2023 | 10-17-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/1122637/ | 672 P.2d 1015 (1983)
MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., a Delaware corporation, Petitioner,
v.
The DISTRICT COURT In and For the CITY AND COUNTY OF DENVER, State of Colorado, and the Honorable Clifton A. Flowers, One of the Judges Thereof, Respondents.
No. 83SA343.
Supreme Court of Colorado, En Banc.
December 5, 1983.
Weinshienk, Miller, Borus & Permut, James L. Kurtz-Phelan, H. Michael Miller, Denver, for petitioner.
*1016 Roath & Brega, P.C., Charles F. Brega, Stuart N. Bennett, Denver, for respondents.
ERICKSON, Chief Justice.
This original proceeding seeks relief in the nature of mandamus. C.A.R. 21. The issue presented is whether the district court has the authority to grant preliminary injunctive relief to maintain the status quo in order to preserve the underlying dispute for arbitration. We issued a rule to show cause and now make the rule absolute.
I.
On May 4, 1981, defendant, Douglas M. Reilly (Reilly), in consideration of his being employed and trained by Merrill Lynch, Pierce, Fenner and Smith, Inc. (Merrill Lynch) as a securities broker, signed an Account Executive Training Agreement (Agreement). The Agreement provided that all records of Merrill Lynch were confidential information and were not to be transmitted verbally or in writing by Reilly except in the ordinary course of conducting business for Merrill Lynch.[1] The Agreement included in addition a clause which provided that if Reilly's services were terminated, Reilly would not, for any reason, solicit the clients of Merrill Lynch for a period of one year.[2]
On Friday, July 29, 1983, Reilly terminated his employment with Merrill Lynch and demanded arbitration of the dispute pursuant to the rules of the New York Stock Exchange.[3] On the following Monday, Reilly accepted employment as an account executive with Prudential-Bache Securities, Inc. (Prudential).
Merrill Lynch filed its complaint on Monday, August 9, 1983, in Denver District Court seeking a temporary restraining order, preliminary injunction, permanent injunction, and damages. At the August 9, 1983 hearing, the district court found that *1017 the dispute between Merrill Lynch and Reilly arose out of the termination of Reilly's employment with Merrill Lynch and was subject to arbitration under New York Stock Exchange Rule 347.[4] The court further found that it lacked jurisdiction over the parties because the issue was not submitted to arbitration, and stayed all further proceedings in the action pending resolution of the underlying dispute by arbitration.
II.
A.
Merrill Lynch characterizes the issue in this proceeding as "whether the district court has the power to grant preliminary injunctive relief in order to maintain the status quo between the parties and to preserve the arbitration process to resolve the dispute." (Emphasis added.) (Petitioner's Brief in Support of Writ Pursuant to C.A.R. 21.) The respondent district court, on the other hand, contends that Merrill Lynch did not seek a temporary restraining order or preliminary injunction to maintain the status quo pending arbitration, but instead sought preliminary injunctive relief as "part and parcel to a full determination on the merits of Merrill Lynch's claim for equitable relief and money damages." In respondent's view, as set forth in the response to the rule to show cause, the issue is "[d]id the district court have jurisdiction over a lawsuit seeking equitable relief and money damages where the substance of the dispute between the parties was subject to binding arbitration pursuant to Rule 347 and the Constitution of the New York Stock Exchange." (Emphasis added.) We conclude that the issue before the district court and in this original proceeding is whether the district court had the authority to grant preliminary injunctive relief to preserve the status quo pending the outcome of arbitration.
At the district court hearing, Merrill Lynch argued that the arbitration agreement under the New York Stock Exchange Rule 347 did not apply,[5] and that even if the dispute were subject to arbitration, Merrill Lynch was entitled to a temporary restraining order pending resolution of the underlying dispute by arbitration. The record indicates that Merrill Lynch's counsel stated: "Even if this matter were an issue that could be arbitrated, this court does have jurisdiction to issue injunctive relief to maintain the status quo until the arbitration can be convened and the matter resolved." In a memorandum to the court, Merrill Lynch stated in part III: "Plaintiff is, nonetheless, entitled to injunctive relief to maintain the status quo pending arbitration." In our view, the issue whether the district court has the authority to grant preliminary injunctive relief to preserve the status quo pending resolution of the underlying controversy by arbitration was properly presented to the district court and is now before us in this original proceeding.
B.
In support of its argument that the district court lacks jurisdiction to grant preliminary injunctive relief where there is a binding and enforceable agreement to arbitrate, respondent cites a number of Colorado cases which it considers dispositive of the issue in this case.[6] However, these cases are inapposite to the issue in this case as we have characterized it and are not controlling.
*1018 In Merrill Lynch v. District Court, 190 Colo. 239, 545 P.2d 1035 (1976), this court addressed an issue similar, in some respects, to the issue in this case. There, plaintiff brought an action in district court to recover $5,500 in compensation from defendant, Merrill Lynch, for services rendered by plaintiff as an account executive. Merrill Lynch filed a motion to dismiss for lack of jurisdiction and, in the alternative, a motion to stay the proceedings, asserting that an agreement between the parties required that all controversies arising out of the employment of plaintiff be resolved by arbitration. In that case, we held in favor of Merrill Lynch, and stated:
"As contended by petitioner [Merrill Lynch], we hold that adjudication of the controversy between the parties must be resolved by arbitration, and that the district court is without jurisdiction in the case."
190 Colo. at 241, 545 P.2d at 1036 (emphasis added).
Our holding in Merrill Lynch, supra, did not address, however, the situation where, as here, plaintiff seeks preliminary injunctive relief to maintain the status quo pending arbitration of the substantive elements of his claim for relief. In Merrill Lynch, supra, plaintiff sought, in effect, a judicial resolution of the matter on the merits.
C.
The issue is one of first impression for this court. Merrill Lynch is not asking this court to fashion a rule granting district courts authority to resolve the merits of a dispute otherwise subject by agreement of the parties to arbitration. Merrill Lynch asks only that this court recognize, as other courts have recognized, the authority of district courts to grant preliminary injunctive relief to maintain the status quo between the parties pending arbitration of the dispute on the merits.
Respondent is incorrect in its view that district courts have no jurisdiction whatsoever with respect to matters which are subject to arbitration. We have recognized previously that courts have certain limited jurisdiction with respect to disputes that are subject by agreement of the parties to arbitration. For example, in Guthrie v. Barda, 188 Colo. 124, 533 P.2d 487 (1975), we recognized that district courts have jurisdiction to ascertain whether an arbitration clause is valid. See also Cordillera Corp. v. Heard, 200 Colo. 72, 612 P.2d 92 (1980) (the court can determine whether the right to arbitrate a dispute has been waived).
The fact that an action will be stayed pending the outcome of arbitration does not deprive a court of the power in the interim to preserve the status quo. Janmort Leasing, Inc. v. Econo-Car International, Inc., 475 F. Supp. 1282 (E.D.N.Y.1979). Indeed, preliminary relief is particularly appropriate where arbitration may be futile if the status quo is not preserved pending the arbitrator's determination.[7]Erving v. Virginia Squires Basketball Club, 468 F.2d 1064 (2d Cir.1972). The unavailability of equitable injunctive relief in the arbitration context would present, under some circumstances, a serious impediment to the state's policy favoring the voluntary establishment of a mechanism for the peaceful resolution of disputes. Boys Markets, Inc. v. Retail Clerks Union, 398 U.S. 235, 90 S. Ct. 1583, 26 L. Ed. 2d 199 (1970).
We hold, accordingly, that the district court has the authority to grant preliminary injunctive relief to preserve the status quo pending outcome of the arbitration. *1019 The rule is made absolute and the cause is remanded for further proceedings.
NOTES
[1] Paragraph 1 of the Agreement provides:
"All records of Merrill Lynch, including the names and addresses of its clients, are and shall remain the property of Merrill Lynch at all times during my employment with Merrill Lynch and after termination of my employment for any reason with Merrill Lynch. None of said records nor any part of them is to be removed by me from the premises of Merrill Lynch either in original form or in duplicated or copied form, and the names, addresses, and other facts in such records are not to be transmitted verbally or in writing by me except in the ordinary course of conducting business for Merrill Lynch. All of said records or any part of them are the sole proprietary information of Merrill Lynch and shall be treated by me as confidential information of Merrill Lynch."
[2] Paragraph 2 of the Agreement provides:
"In the event of termination of my services with Merrill Lynch for any reason, I will not solicit, for a period of one year from the date of termination of my employment in any community or city served by the office of Merrill Lynch, or any subsidiary thereof, at which I was employed at any time, any of the clients of Merrill Lynch whom I served or whose names became known to me while in the employ of Merrill Lynch. In the event that any of the provisions contained in this paragraph and/or paragraph (1) above are violated I understand that I will be liable to Merrill Lynch for any damage caused thereby."
[3] Reilly's letter of termination provides:
"July 29, 1983
Merrill Lynch
Pierce Fenner & Smith Incorporated
1965 15th Street
P.O. Box 7120
Boulder, Colorado 80306
RE: Demand for Arbitration.
Dear Mr. Tupy:
Effective this morning, I resign my position in the Boulder Branch office of Merrill Lynch. It is my understanding that Merrill Lynch disputes my right to continue my business relationships with the clients I currently serve. I hereby demand that any dispute in this regard, or relating in any other way to my former employment with Merrill Lynch, be resolved through arbitration proceedings pursuant to applicable New York Stock Exchange rules.
I have retained the law firm of Roath & Brega, ....
Any communications, including but not limited to any official action, on the part of Merrill Lynch relating to this matter should therefore be directed to Charles Brega of that office.
I will expect any communications or actions by Merrill Lynch to be promptly brought to the attention of my attorneys.
Very truly yours,
/s/Doug M. Reilly"
[4] Rule 347 provides:
"Any controversy between a registered representative and any member or member organization arising out of the employment or termination of employment of such registered representative by and with such member or member organization shall be settled by arbitration, at the instance of any such party, in accordance with the arbitration procedure described elsewhere in these rules."
[5] In this original proceeding, Merrill Lynch did not contest that the underlying dispute was subject to arbitration.
[6] Respondent cites, in support of its argument, Ezell v. Rocky Mountain Bean & Elevator Co., 76 Colo. 409, 232 P. 680 (1925); Zahn v. District Court, 169 Colo. 405, 457 P.2d 387 (1969); Merrill Lynch v. District Court, 190 Colo. 239, 545 P.2d 1035 (1976).
[7] Merrill Lynch stated in its petition for mandamus:
"If this Court does not order the District Court to conduct a hearing on Merrill Lynch's Motion for Temporary Restraining Order and Preliminary Injunction immediately, there simply will not be a dispute left to arbitrate and Merrill Lynch will have suffered irreparable harm and injury to its business, its reputation and its good will, while being deprived of its ability to proceed in arbitration to protect its interests. The arbitrator will be placed in the impossible position of attempting to quantify Merrill Lynch's unquantifiable losses as the only possible remedy in arbitration if the violation of the Agreement is a fait accompli." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1398049/ | 932 F. Supp. 671 (1996)
Madeline A. PENCHISHEN, Plaintiff,
v.
The STROH BREWERY CO., Defendant.
No. 95-CV-7275.
United States District Court, E.D. Pennsylvania.
July 24, 1996.
*672 Richard J. Orloski, Orloski & Hinga, Allentown, PA, for Plaintiff.
Mark A. Fontana, Renee C. Mattei, Reed Smith Shaw & McClay, Harrisburg, PA, Eric Lemont, Reed Smith Shaw & McClay, Philadelphia, PA, for Defendant.
*673 MEMORANDUM AND ORDER
JOYNER, District Judge.
This is an employment discrimination action brought by Plaintiff Madeline A. Penchishen, a former employee of Defendant The Stroh Brewery Company. In her Complaint, Plaintiff alleges that Defendant unlawfully terminated her employment on account of: (1) her alleged disability, in violation of the Americans with Disabilities Act, 42 U.S.C. §§ 12101-13 (1995) ("the ADA") and (2) her age, in violation of the Age Discrimination in Employment Act, 29 U.S.C. §§ 621-34 (1985 & Supp.1996) ("the ADEA").[1] Defendant seeks summary judgment on the entire Complaint.
STANDARD OF REVIEW
This Court is authorized to award summary judgment "if the pleadings, depositions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In order to survive a summary judgment motion, the non-moving party must raise "more than a mere scintilla of evidence in its favor" and may not merely rely on unsupported assertions, conclusory allegations, or mere suspicions. Williams v. Borough of W. Chester, 891 F.2d 458, 460 (3d Cir.1989) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986) and Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S. Ct. 2548, 2554, 91 L. Ed. 2d 265 (1986)). Boiled to its essence, the summary judgment standard requires the non-moving party to create a "sufficient disagreement to require submission [of the evidence] to a jury." Liberty Lobby, 477 U.S. at 251-52, 106 S.Ct. at 2511-12.
FACTUAL BACKGROUND
Taken in the light most favorable to Plaintiff, the facts are as follows.[2] In 1994, when she was discharged, Plaintiff was a 51 year old long-time employee of Defendant, working as a key punch operator in Defendant's data processing unit. In 1993, Plaintiff had been seriously injured in an automobile accident. As a result of the accident, she missed six months of work, but then returned in July, 1994 to her old position as a key punch operator.
A lasting result of Plaintiff's injury is the existence of a metal plate in her left ankle. Because of the plate, Plaintiff does not have full flex in her ankle and cannot walk at a normal gait or pace; rather, her pace is ½ as fast as it was before the accident. In addition, Plaintiff must use stairs by placing both feet on each step before moving to the next step.
Two months after Plaintiff returned to work, her key-punch job was eliminated in a cost-cutting measure along with several other jobs. Pursuant to her labor agreement with Defendant, Plaintiff was given the opportunity to "bid into" other open positions at Defendant. At a meeting with the Human Resources Director, Dave Lichtle, Plaintiff was told that there were two open positions; one in Packaging, one in Quality Assurance. Also at this meeting, Plaintiff and Lichtle discussed which job was best suited for Plaintiff based on her impairment. Lichtle allegedly told Plaintiff that the best job was in Quality Assurance and that he would assign her to that position. Plaintiff alleges that because of her seniority level, if she had elected the Packaging position, she would *674 have been awarded that job over the two women who did move to that department.
Far from being the best job for her, Quality Assurance turned out to be a very poor choice. The position involved walking between the plant laboratory and the plant floor several times a day to gather samples. These areas were divided by two sets of stairs totalling about 26 steps. The position also required Plaintiff to perform laboratory tests on the beer itself and the seals placed on the bottles.
Once on the job, Plaintiff's weekly performance reviews were not favorable and reflected that Plaintiff had difficulty learning the technical aspects of her job. Plaintiff alleges that many of her problems arose from the difficulty she had moving from place to place in a timely fashion. Because of Plaintiff's poor performance, Defendant arranged a meeting with her to terminate her before her 30-day probation period ended.
At that meeting, Plaintiff insisted that she could learn the Quality Assurance position if she had more time. In the alternative, she requested a transfer to Packaging, to a position she believed did not involve much walking. This request was subsequently denied and Plaintiff was terminated.
Plaintiff alleges that her Quality Assurance position was filled by a man in his twenties named Ronald Mihalko who had previously worked for Defendant as Summer Temporary Help. Mihalko started in Quality Assurance at the same time as Plaintiff and they were trained for the job simultaneously.
DISCUSSION
I. AMERICANS WITH DISABILITIES ACT
The ADA prohibits discrimination against qualified people with disabilities. A disability is:
1) a physical or mental impairment that substantially limits one or more of the major life activities of such individual;
2) a record of such an impairment; or
3) being regarded as having such an impairment.
42 U.S.C. § 12102(2)(A). Courts must determine on a case by case basis whether a particular person has a disability. Smaw v. Commonwealth of Va., 862 F. Supp. 1469 (E.D.Va.1994).
It is well established that not every physical impairment is a disability, because not every impairment substantially limits a life activity. Nedder v. Rivier College, 908 F. Supp. 66, 74 (D.N.H.1995). To determine whether an impairment is a disability, courts take a pragmatic, fact-intensive look at each plaintiff and determine:
1) the nature and severity of the impairment,
2) the duration or expected duration of the impairment, and
3) either the actual or the expected permanent or long term impact of or resulting from the impairment.
29 U.S.C. § 1630.2(j)(2). The key is whether the limitation is substantial, that is, what effect the impairment has on the life of the individual. 29 C.F.R. § 1630.2(j).
For example, if the affected major life activity is the act of working, courts ask whether the impairment poses a substantial barrier to all or most employment, or bars just one particular class or type of job. Hughes v. Bedsole, 48 F.3d 1376 (4th Cir.), cert. denied, ___ U.S. ___, 116 S. Ct. 190, 133 L. Ed. 2d 126 (1995); Welsh v. City of Oklahoma, 977 F.2d 1415, 1417 (10th Cir.1992). If the major life activity is the act of walking, the plaintiff must show that he or she is substantially limited in walking. Not, for example, simply that plaintiff must use a handrail to climb stairs or must limit walking to less than one mile. Kelly v. Drexel Univ., 907 F. Supp. 864, 874 (E.D.Pa.1995).
Defendant asserts that Plaintiff is not substantially limited in any major life activity and that therefore, she is not protected by the ADA. In opposition, Plaintiff maintains that she is disabled because she walks slowly and cannot use stairs as most people do. Further, Plaintiff points to her medical records, which show that her injury will worsen over time.
After carefully considering the matter, we hold that Plaintiff has not created an *675 issue of fact as to whether she is currently disabled. There is no evidence that she was substantially limited in walking; only that she walks and climbs stairs slowly. We find that her case is very similar to Kelly, 907 F.Supp. at 874, where our Court found that plaintiff was not substantially limited in the major life activity of walking even though plaintiff's ability to walk was limited in some ways.
In the alternative, Plaintiff contends that Defendant perceived her as disabled. It is undisputed that many of Defendant's management knew about Plaintiff's accident and injury and also that her impairment was apparent to any observer. In addition, Plaintiff points to Defendant's Human Resources director's testimony that he suggested the Quality Assurance job to Plaintiff because he thought it would be easier on her leg. Plaintiff maintains that she has demonstrated that Defendant perceived her as being disabled because anyone could tell that she was impaired and because one person in management made business decisions based on her impairment.
We agree that this evidence could show that Defendant believed Plaintiff had an impairment. We disagree, however, that the evidence creates a genuine issue of fact as to whether Defendant perceived Plaintiff's impairment as a substantial limitation on any major life activity. In fact, it tends to show that Defendant did not perceive Plaintiff as substantially limited in the activities of walking or working because it encouraged her to work in a position that required walking. Taking Plaintiff's evidence as true, therefore, there is no evidence that could support a reasonable jury's verdict that Plaintiff was perceived to be substantially limited in any major life activity. For these reasons, summary judgment is appropriately granted on Plaintiff's ADA claim.
II. AGE DISCRIMINATION IN EMPLOYMENT ACT
Plaintiff alleges that Defendants violated the ADEA by firing her on account of her age. The ADEA is intended to "promote employment of older persons" and prohibits firing people on account of their age. 29 U.S.C. §§ 621, 623. To state a prima facie case under the ADEA, a plaintiff must show that age was a determinative, but not necessarily sole, factor in the decision to discharge. Billet v. CIGNA Corp., 940 F.2d 812, 816 (3d Cir.1991). This can be done circumstantially by showing that the plaintiff (1) is within a protected class, (2) was qualified for the position, (3) was dismissed despite those qualifications and (4) was replaced by someone sufficiently younger to permit an inference of age discrimination. Gray v. York Newspapers, Inc., 957 F.2d 1070, 1078 (3d Cir.1992).
Here, Plaintiff insists that she has made out a prima facie case because she (1) was 51 years old when she was terminated, (2) was qualified for either a clerical position or another position with reasonable accommodation, (3) was terminated despite those qualifications and (4) was replaced by someone younger than her.
Defendant takes issue with Plaintiff's contentions that she was qualified and that she was replaced with a younger worker. We first look to whether Plaintiff has created an issue of fact as to whether she was replaced with a younger worker. Plaintiff's argument is basically that she, a 51 year old employee, was discharged, whereas Mihalko, a young employee, was retained.
Plaintiff concedes that Mihalko started in Quality Assurance at the same time she did, and that no one was specifically hired to replace her.[3] Our understanding of her argument is that, in fact, there was only one Quality Assurance position available when she and Mihalko were hired. Because Mihalko had worked on the factory floor, he adapted to his Quality Assurance job faster than she did and that therefore, Defendant retained Mihalko and discharged Plaintiff.
Although Plaintiff's brief on this point is murky, as we understand it, she contends that the fact that no one was hired to replace her proves that there was never a position for her. Rather, her hiring and then poor *676 reviews may have been a subterfuge to allow Defendant to terminate Plaintiff and be able to truthfully say that no person "replaced" her, because the true occupant of the only available Quality Assurance position was already in place. If this is, in fact, Plaintiff's theory, it fails. She proffers absolutely no evidence that could support any aspect of this nefarious plot.
That being said, we turn now to the evidence Plaintiff has proffered to determine whether it creates an issue of fact as to whether she was replaced by a younger worker. First, Plaintiff averred in her affidavit that her "Quality Assurance Job" was given to Ronald Mihalko, a young male in his 20's, who was a new hire with no seniority, and whose only experience with the company was as a "Summer Temporary Help." Pl.'s Aff. ¶ 57. This averment, however, is contradicted by Plaintiff's own deposition wherein she was questioned about this averment. In her deposition, Plaintiff conceded that Mihalko did not "replace" her, but was assigned to Quality Assurance and trained at the same time she was. Without sufficient explanation, a non-movant cannot create a genuine issue of fact via an affidavit that contradicts the party's own deposition testimony. Hackman v. Valley Fair, 932 F.2d 239, 241 (3d Cir.1991) (quoting Martin v. Merrell Dow Pharms., Inc., 851 F.2d 703, 706 (3d Cir. 1988)).
The only other evidence Plaintiff could base her age claim on is what a co-worker told her he overheard one manager tell another, namely, that management wanted Plaintiff out of the lab. Pl.'s Dep. at 170. Plaintiff conceded though, that she did not know whether management did not want her because of her age or for some other reason. Id. at 171.
Given the lack of any evidence to support a finding that Defendant replaced Plaintiff with a younger worker, we cannot find that Plaintiff has made out a prima facie case under the ADEA. For that reason, we grant summary judgment on Plaintiff's ADEA claim.
An appropriate Order follows.
ORDER
AND NOW, this 24th day of July, 1996, upon consideration of Defendant The Stroh Brewing Company's Motion for Summary Judgment and response thereto and in accordance with the attached Memorandum, the Motion is hereby GRANTED and Summary Judgment is hereby ENTERED in favor of Defendant The Stroh Brewing Company and against Plaintiff Madeline A. Penchishen on all counts.
NOTES
[1] In addition, the Complaint alleges a violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e 2000e-17 (1994). In response to Defendant's motion, Plaintiff concedes that she cannot support her Title VII claim. Accordingly, summary judgment shall be granted on Count III.
[2] Plaintiff fails to cite to the record in the Fact section of her brief. This Court has tried its best to track down the sources of Plaintiff's allegations, but has not been entirely successful. For example, Plaintiff asserts in her brief that "[i]n his deposition, [Defendant's director of Human Resources] Mike Gray admitted that he never even reviewed Plaintiff's personnel file, and he was turning down Plaintiff's request for a reasonable accommodation because of his bias against Plaintiff because of her age and handicap." Pl.'s Br. p. 10. After reading all of Mike Gray's deposition, this Court only found a concession that Mr. Gray never read Plaintiff's personnel file, but nothing about a bias based on her age or disability. In this and like situations, this Court has not included those alleged facts in the instant Memorandum nor considered them in its decision.
[3] It is apparently uncontested that several months after Plaintiff's discharge, Defendant filled an empty Quality Assurance position with a 52 year old man. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1545131/ | 216 B.R. 551 (1998)
In re Jimmy Ray REES, Vicki Lee Rees, Debtors.
Bankruptcy No. 196-10587-12.
United States Bankruptcy Court, N.D. Texas, Abilene Division.
January 13, 1998.
Howard A. Borg, Assistant United States Attorney, Fort Worth, TX, for U.S.
Marc McBeath, Sweetwater, TX, for Debtors.
Walter O'Cheskey, Lubbock, TX, for Chapter 12 Trustee.
MEMORANDUM OF OPINION ON INSURANCE INDEMNITY
JOHN C. AKARD, Bankruptcy Judge.
The issue before the court is whether the Farm Service Agency has a perfected security interest in Jimmy Ray Rees and Vickie Lee Rees' (Debtors) 1996 cotton crop insurance indemnity payment. The court finds that the FSA has a perfected security interest in the payment.[1]
Facts
On August 21, 1996, the Debtors filed for relief under Chapter 12 of the Bankruptcy Code in the captioned case. On December 6, 1996, they filed their plan of reorganization. On February 26, 1997, objections to the plan were filed by the Farm Service Agency of the United States Department of Agriculture (FSA), the successor agency to the Farmers Home Administration, and the Rural Housing Service of the United States Department of Agriculture (RHS).[2] The FSA voiced several objections to the Debtors' plan, most of which were resolved. The objection which is not resolved is the one which states "The *552 Plan fails to recognize or treat the FSA's lien on 1996 crops consisting of crop insurance related to the 1996 cotton crop. To the extent to which the Debtors may have used crop proceeds on which the FSA had a lien to finance the 1996 crop, the FSA claims a partial lien on the 1996 crop proceeds." On February 27, 1997, the FSA filed a supplemental objection on matters not presently in issue.
On April 23, 1997, the Debtors filed a first amended plan of reorganization. On May 15, 1997, FSA and RHS filed an objection to the amended plan. In pertinent part, the objection repeated the allegations concerning the 1996 crop insurance.
At the hearing on this matter, the parties acknowledged that the confirmation of the amended plan depended upon the treatment of the FSA. If the FSA has a lien on the proceeds of the insurance for the Debtors' 1996 cotton crop, the plan cannot be confirmed. If the FSA does not have a lien on those insurance proceeds, then the court can undertake an examination of feasibility and the other matters which must be determined in order to confirm a Chapter 12 plan. The parties agreed that the court could consider the lien issue first.
The parties stipulated to the admission of the following exhibits: The Proof of Claim filed by the FSA along with the exhibits attached to it; 1996 Multiple Peril Crop Insurance Policy No. MP-027315 issued by State Farm Fire and Casualty Company; a Security Agreement executed by the Debtors dated August 11, 1994; and variously dated financing statements. The parties further stipulated to the following facts:
1. The Debtors owe the FSA $50,618.29 in principal plus interest to August 1, 1996 of $3,445.72.
2. The Debtors duly executed the August 11, 1994 security agreement and various other security documents attached to the FSA's proof of claim.
3. The Debtors purchased multiple peril crop insurance for the 1996 year. The insurance was issued pursuant to the Federal Crop Insurance Act.
4. The FSA did not advance any funds for the Debtors' 1996 cotton crop.
5. The FSA did not obtain a written assignment of the crop insurance proceeds.
6. The Debtors received $30,155.00 net of the insurance premium, as proceeds of the insurance policy for the loss of their 1996 cotton crop.
7. The 1996 cotton crop was grown on land covered by the FSA's security agreements.
The Debtors concede that under the August 11, 1994 security agreement and other security documents, the FSA has a lien on the proceeds of multiple peril crop insurance and that such liens are properly perfected under state law. However, they assert that because federal regulations require assignment of crop insurance proceeds to be filed with the appropriate federal agency, such procedure preempts state law and prevents the FSA from perfecting a lien on the crop proceeds under state law.[3] The FSA asserts that the assignment procedure is a method of having the proceeds paid directly to the creditor, but once the proceeds are received by the Debtors, they become subject to the FSA's liens under state law. The court heard no evidence as to the disposition of the proceeds by the Debtors, so the court must assume that the Debtors retain the proceeds.
The Multiple Peril Crop Insurance contract issued to the Debtors by State Farm Fire and Casualty Company contains the following statement: "This policy is reinsured by the Federal Crop Insurance Corporation (FCIC) under the provision of the Federal *553 Crop Insurance Act, as amended (7 U.S.C. § 1501 et seq.). All provisions of the policy and rights and responsibilities of the parties are specifically subject to the Federal Crop Insurance Act."
The purpose of the FCIC is "to promote the national welfare by improving the economic stability of agriculture through a sound system of crop insurance. . . ." 7 U.S.C. § 1502.[4] Through a system of reinsurance, the FCIC protects farmers from suffering losses due to crop damage. Under the general supervision of the Secretary of Agriculture (Secretary), the FCIC is managed by a board of directors and a manager. 7 U.S.C. § 1505. The general powers of the FCIC include:
The [FCIC] may enter into and carry out contracts or agreements, and issue regulations, necessary in the conduct of its business, as determined by the Board. State and local laws or rules shall not apply to contracts, agreements, or regulations of the [FCIC] or the parties thereto to the extent that such contracts, agreements, or regulations provide that such laws or rules shall not apply, or to the extent that such laws or rules are inconsistent with such contracts, agreements, or regulations.
7 U.S.C. § 1506(l) (Supp.1997).
With respect to the indemnities payable under the Federal Crop Insurance Act (FCIA), it provides:
Claims for indemnities under this chapter shall not be liable to attachment, levy, garnishment, or any other legal process before payment to the insured or to deduction on account of the indebtedness of the insured or the estate of the insured to the United States except claims of the United States or the [FCIC] arising under this chapter.
7 U.S.C. § 1509 (Supp.1997). (emphasis added).
Regulations concerning the FCIC are contained in Chapter IV, Part 400, of the Code of Federal Regulations. In response to a number of problems, the FCIC added a sub-part P entitled "Preemption of State Laws and Regulations" to Part 400 of its General Administrative Regulations effective June 6, 1990. See 55 Fed.Reg. 23,066 (June 6, 1990). One of the problems which the regulations were intended to cure was:
A number of instances have been reported where indemnities have not reached the intended recipient because of garnishments, liens, attachments, etc., served upon the reinsured companies under the various State laws. The clear statutory intent was that these assistance benefits be exempt from such interference. (See 7 U.S.C. § 1509).
55 Fed.Reg. 23,066 (1990). The source of authority for these regulations is stated to be 7 U.S.C. §§ 1506, 1516. The pertinent parts of those regulations read as follows:
§ 400.352. State and local laws and regulations preempted.
(a) No State or local governmental body or non-governmental body shall have the authority to promulgate rules or regulations, pass laws, or issue policies or decisions that directly or indirectly affect or govern agreements, contracts, or actions authorized by this part unless such authority is specifically authorized by this part or by the [FCIC].
(b) The following is a non-inclusive list of examples of actions that State or local governmental entities or non-governmental entities are specifically prohibited from taking against the [FCIC] or any party that is acting pursuant to this part. Such entities may not:
(1) Impose or enforce liens, garnishments, or other similar actions against proceeds obtained, or payments issued in accordance with the Federal Crop Insurance Act, these regulations, or contracts or agreements entered into pursuant to these regulations.
. . . .
Other portions of the regulations relate to creditors.
*554 PART 401-GENERAL CROP INSURANCE REGULATIONS-REGULATIONS FOR THE 1988 AND SUBSEQUENT CONTRACT YEARS.
§ 401.5. Creditors.
An interest of a person in an uninsured crop existing by virtue of a lien, mortgage, garnishment, levy, execution, bankruptcy, involuntary transfer or other similar interest shall not entitle the holder of the interest to any benefit under the contract.
PART 457-COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR 1994 AND SUBSEQUENT CONTRACT YEARS.
§ 457.5. Creditors.
An interest of a person in an uninsured crop existing by virtue of a lien, mortgage, garnishment, levy, execution, bankruptcy, involuntary transfer or other similar interest shall not entitle the holder of the interest to any benefit under the contract.
Two provisions of the policy issued to the Debtors in this case (which is a standard policy prescribed by the FCIC)[5] are applicable to the issues under consideration.
26. ASSIGNMENT OF INDEMNITY
You may assign to another party your right to an indemnity for the crop year. The assignment must be on our form and will not be effective until approved in writing by us. The assignee will have the right to submit all loss notices and forms as required by the policy.
28. APPLICABILITY OF STATE AND LOCAL STATUTES
If the provisions of this policy conflict with statutes of the State in which this policy is issued, the policy provisions will prevail. State and local laws and regulations in conflict with federal statutes, this contract, and the applicable regulations do not apply to this policy.
Discussion
A reading of the above quoted regulations could lead one to the conclusion that the only way to obtain a lien on the proceeds of a crop insurance policy is by an assignment secured in the manner described in the policy. This is particularly true in reading the first example under § 400.352(b) which prohibits the imposition or enforcement of liens on the "proceeds obtained" or the "payments issued" under the policy. However, such a reading would clearly conflict with the language of the statute which prohibits liens on policy proceeds "before payment to the insured." 7 U.S.C. § 1509. The United States Supreme Court directed that clear Congressional intent be followed when it said:
When a court reviews an agency's construction of the statute which it administers, [the court] is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.
Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-843, 104 S. Ct. 2778, 2781, 81 L. Ed. 2d 694 (1984). Since Congress clearly mandated that these protections apply only "before payment to the insured" this court, and the FCIC cannot place restrictions on those funds after payment to the insured. There is no evidence that the FCIC intended that its regulations exceed the mandate of 7 U.S.C. § 1509, nor does the court interpret the FCIC's regulations to exceed that mandate.
The Debtors assert that the FSA could have a security interest in the insurance payments only by assignment in the manner described in the policy because the policy was issued pursuant to the FCIA and the FCIA completely preempts state law, including the Texas version of the Uniform Commercial Code, TEXAS BUS. & COM. CODE *555 ANN. (Vernon 1997). In support of their position, the Debtors cite Owen v. Crop Hail Management, 841 F. Supp. 297 (W.D.Mo. 1994). This court finds the Debtors' reading of Owen too broad. In Owen, the farmer secured a crop insurance policy from Crop Hail Management. The FCIC reinsured the policy pursuant to the FCIA. A dispute arose concerning policy coverage and the farmer sued Crop Hail Management in state court. The matter was removed to federal court. The federal district court held that when the farmer sued the insurer, the farmer also sued the reinsurer, FCIC, and that pursuant to the FCIA the FCIC may be sued only in federal court. Id. at 297 (citing State ex rel. Todd v. United States, 995 F.2d 1505-1510 (10th Cir.1993)) ("Even if Congress did not expressly provide for preemption of state law in private insurance contracts which are reinsured by the FCIC, the FCIC's decision to preempt state law in the reinsurance situation was eminently reasonable."). In so holding, however, the Owen court stated:
While, unlike the Brown court, this court does not decide whether federal courts have exclusive jurisdiction to hear all claims under the [FCIA], the court agrees that the [FCIA] does specify the jurisdiction, venue and damages for most cases. This is sufficient to meet the last prong of the complete preemption test.
Id. at 304. This court distinguishes both Owen and Brown v. Crop Hail Management, Inc., 813 F. Supp. 519 (S.D.Tex.1993) mentioned in the quote from Owen above, from the case at bar. In both Owen and Brown, the insureds filed state actions against the insuring company. In the instant case, the FSA is attempting to follow state court procedures to enforce its lien on proceeds which are already in the hands of the insured. There is no mention in either case of the FCIA preempting creditors' lien rights as set forth in the Uniform Commercial Code.
It is evident from a reading of Owen and Brown that "complete" preemption means something less than complete. It is complete as it preempts states from interfering with the FCIA's regulation of insurance to farmers and complete as to the federal jurisdiction and venue of suits brought against the FCIC and the companies it reinsures, but that is the extent of it. See also R & R Farm Enters., Inc. v. FCIC, 788 F.2d 1148, 1150 (5th Cir.1986) (stating that to the extent that [state] laws are inconsistent with [the contract], they are not applicable).
In Holman v. Laulo-Rowe Agency, 994 F.2d 666 (9th Cir.1993), the Ninth Circuit Court of Appeals stated that while the wording of 7 U.S.C. § 1506(d) placed exclusive jurisdiction in federal courts to resolve suits by or against the FCIC, it did not require suits against insurance agents for their own errors to be brought in federal court. Id. at 669. Thus, the Ninth Circuit concluded that while some areas of state law are preempted by the FCIA, where there is no conflict, state law is still enforceable.
Although an assignment of indemnity is possible under the contract, that provision does not preclude a creditor from enforcing its state law lien rights against the proceeds in the hands of an insured Debtor. See Meyer v. Nat'l Farmers Union Prop. & Cas. Co., 957 F. Supp. 1492 (D.Wyo.1997) (stating that the court must conclude that Congress has not so comprehensively occupied the entire field of crop insurance law that it has left no room for state law).
The court finds that Butner v. United States, 440 U.S. 48, 99 S. Ct. 914, 59 L. Ed. 2d 136 (1979) is still good law. In Butner, the Supreme Court stated:
Property interests are created and defined by state law. Unless some federal interest requires a different result, there is no reason why such interests should be analyzed differently simply because an interested party is involved in a bankruptcy proceeding. Uniform treatment of property interests by both state and federal courts within a State serves to reduce uncertainty, to discourage forum shopping, and to prevent a party from receiving a "windfall merely by reason of the happenstance of bankruptcy."
Id. at 55, 99 S.Ct. at 918 (citing Lewis v. Manufacturers Nat'l Bank, 364 U.S. 603, 81 S. Ct. 347, 5 L. Ed. 2d 323 (1961)).
*556 Conclusion
For the reasons stated above, the court finds that the FSA can enforce its lien against the crop insurance proceeds in the hands of the insured Debtors. Confirmation of the amended plan of reorganization proposed by the Debtors will be denied, without prejudice to the filing of another plan.
ORDER ACCORDINGLY.[6]
NOTES
[1] This court has jurisdiction of this matter under 28 U.S.C. § 1334(a), 28 U.S.C. § 157(a), and Miscellaneous Rule No. 33 of the Northern District of Texas contained in Order of Reference of Bankruptcy Cases and Proceedings Nunc Pro Tunc dated August 3, 1984. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(1), (b)(2)(K).
[2] The objections of the RHS are not the subject of this opinion.
[3] Paragraph 26 of the policy in question describes the assignment procedure. The Debtors do not cite, nor has the court been able to locate, any provisions of the Code of Federal Regulations describing the assignment procedure. The court in Buttonwillow Ginning Company v. FCIC, 767 F.2d 612 (9th Cir.1985) in discussing the assignment of indemnities under a crop insurance policy, referred to 7 C.F.R. § 1402.7, paragraph 8. Apparently, that section has been repealed because in the current Code of Federal Regulations, part 402 is entitled "Catastrophic Risk Protection Endorsement" and contains only §§ 402.1 through 402.4. The source is given as 62 F.R. 2002, Jan. 6, 1995.
[4] Owen v. Crop Hail Management, 841 F. Supp. 297 (W.D.Mo.1994) at pp. 300-302 contains a history of the Federal Crop Insurance Act.
[5] The Debtors' "multiple peril crop insurance policy" is similar to the "common crop insurance policy" which follows 7 C.F.R. § 457.8. Paragraphs 26 and 28 of the Debtors' policy are identical to paragraphs 26 and 28 of the common policy.
[6] This Memorandum shall constitute Findings of Fact and Conclusions of Law pursuant to FED. R.BANKR.P. 7052. This Memorandum will be published. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1713203/ | 330 S.W.2d 459 (1959)
Edward L. MITCHELL, Appellant,
v.
STATE of Texas, Appellee.
No. 30856.
Court of Criminal Appeals of Texas.
November 4, 1959.
Rehearing Denied December 2, 1959.
*460 Seymour Lieberman, Houston, for appellant.
Dan Walton, Dist. Atty., Howell E. Stone, Asst. Dist. Atty., Houston, Leon B. Douglas, State's Atty., Austin, for the State.
WOODLEY, Judge.
The offense is passing as true a forged instrument in writing; the punishment two years.
The sole ground for reversal relates to the sufficiency of the indictment, the contention being that the trial court erred in overruling the defendant's motion to quash; motion for instructed verdict, and motion for new trial.
Appellant's position is that the instrument set out in the indictment without explanatory averments is insufficient to constitute forgery, hence could not support the count of the indictment predicated upon its passing.
The instrument alleged to be forged is a conditional sales contract and reads:
"Conditional Sales Agreement
"This agreement, made and entered into by and between Edward L. Mitchell dba Washmobile Company of Texas of Houston, Harris County, Texas hereinafter referred to as Washmobile Company and Charles I. Tweedel, Jr. of Port Arthur (City) Jefferson County, Texas State, hereinafter referred to as Purchaser.
"Witnesseth:
"The Purchaser hereby orders from Washmobile Company and does hereby purchase one complete automatic car wash laundry more specifically described as follows:
"1-2-30 H. P. Dryer
"1-2½ H. P. conveyor100 Ft.
15 hooks
"1pre-rinse
"1Final rinse
"1Autoside brushesnylon
"1AutoTop " "
"2-230 AutoSteam cleaners
"1-5 H. P. Vacuum, with all accs.
"1Auto. Wheel Washer
*461 for a total consideration of the sum of $18,395.00 to be payable in cash at the time of completion of installation of said equipment.
"The said Washmobile Company does hereby agree to sell the aforementioned equipment for the consideration set out above F.O.B. either Chicago or California (all freight charges to destination to be borne by Purchaser) and further agrees to erect and install said equipment in proper operating condition to the electrical outlets and plumbing connections specifically installed at the premises designated by Washmobile Company on the premises in accordance with the plans and specifications for the building to be furnished by the Purchaser. In the event the plans and specifications furnished by the Purchaser make it impractical to make such connections to utilities referred to above, the Washmobile Company shall have the option either to require said plans and specifications changed accordingly or to make such corrections as necessary in the physical premises and charge the purchaser for the additional material and labor required thereby.
"Purchaser hereby deposits the sum of $2,395.00 as down payment on said equipment and does hereby agree to pay the balance of $16,000.00 at the time of completion of said installation. The completion of said installation shall be contigent, of course, upon its proper functioning for a period of twenty-four (24) hours in test run.
"The Purchaser shall, within a period of 30 days after the execution of this agreement, furnish to Washmobile Company a suitable location under proper lease or ownership suitably prepared with all foundation, drive-way and utility work complete to permit said equipment installation. In the event the Washmobile Company is prevented, for any reason outside of their own fault or control, to install said equipment within 60 days thereafter the Washmobile Company may, at its option, declare a forfeiture of downpayment and keep said sums as liquidated damages and expense.
"Washmobile Company agrees that said equipment shall be new in first class condition properly installed and in proper working condition. Washmobile Company further agrees that such installation shall be complete within 30-60 days after the premises are ready.
"It is specifically understood and agreed that time is the essence of this contract. It is further agreed that the Purchaser will pay all freight charges of the public carrier for delivering equipment from Chicago or California as previously referred to and that in the event the premises are not suitable for the storage of the equipment upon its arrival that the Purchaser shall be responsible for storage charges in a proper and safe place. In the event the Purchaser fails to make arrangements for proper storage, Washmobile Company shall have the option of making such arrangements and charging Purchaser for the cost thereof. "It is specifically understood and agreed between the parties that Washmobile Company retains a lien on said equipment until the full completion of this contract including any additional proper charges having been paid to Washmobile Company by the Purchaser.
"It is agreed that this contract shall not be cancellable after execution hereof and that is constitutes a binding and specific agreement.
"The Washmobile Company reserves the right to assign this contract or the proceeds therefrom.
"Washmobile Company further agrees that the equipment properly installed and functioning will be delivered *462 to the Purchaser free of any lien or obligation of any nature.
"In Witness Whereof we hereby set our hands this the 8th day of March A.D., 1955.
"Washmobile Company of Texas
"By Edw. L. Mitchell
"Edward L. Mitchell
"Proprietor
Witnesses:
___________ "Purchaser
___________ "Charles I. Tweedel, Jr.
___________ "Owner"
___________
Appellant cites Cagle v. State, 39 Tex. Cr.R. 109, 44 S.W. 1097, 1099, and relies especially upon the following quotation therefrom:
"If, however, the paper is not one of the ordinary instruments used in commercial transactions, but is contractual in form, and depends on extrinsic facts to create a liability, then it would appear that such extrinsic facts must be averred in the indictment."
The conditional sales contract set out in the indictment, on its face, clearly imports an obligation on the part of the Purchaser Tweedel to buy the equipment therein described for a total consideration of $18,395 and to pay a purported balance of $16,000 upon the other party's performing his obligations under the contract; to pay the freight charges on the property, and to pay storage charges, to say nothing of the obligation appellant agreed to perform.
The instrument shows that the seller reserved a lien upon the equipment and the right to assign the contract or the proceeds therefrom.
Had Charles I. Tweedel, Jr. signed the instrument set out in the indictment, no allegation other than such as showed its execution and the manner of its breach would have been necessary for recovery in a civil proceeding against him.
The Cagle case does not support appellant's attack upon the indictment herein.
In the Cagle case the missing allegation did not relate to the default which might occasion the enforcement of the lien, but to omitted allegations necessary to establish that the landlord's lien, which the instrument purported to release, existed.
In the case before us, the pecuniary obligation of the purported purchaser fully appears in the instrument set out in the indictment and no explanatory everments were necessary. Chimene v. State, 133 Tex. Crim. 43, 106 S.W.2d 692.
Appellant puts much emphasis upon the fact that the instrument was dated March 8, 1955 whereas the indictment alleged it was passed on or about June 14, 1956.
The State is not bound by the date on or about which the indictment alleges an offense to have been committed. See cases listed in 1 Branch's Ann.P.C.2d, Sec. 459, p. 457.
It follows that the date shown on the instrument alleged to have been forged could not affect the sufficiency of the indictment.
The evidence clearly shows that the name Charles I. Tweedel, Jr., the purported purchaser, was forged, and that no such contract had in fact been entered into; that appellant passed the forged contract to Robert S. Durno and in connection therewith delivered to Mr. Durno a bill of sale to the equipment therein described.
Appellant received from Mr. Durno in this transaction $9,000, $6,000 of which was contributed by Mrs. Stevens and $3,000 by Mr. Durno.
Appellant afterward confessed to Mr. Durno that the signature of Tweedel was forged, as were the buyer's signature to *463 similar contracts he had passed by which appellant had extracted from Mr. Durno and his friends some $33,000.
We find the evidence and the indictment sufficient to sustain the conviction.
The judgment is affirmed.
On Appellant's Motion for Rehearing
MORRISON, Presiding Judge.
In our original opinion we said: "Appellant puts much emphasis upon the fact that the instrument was dated March 8, 1955 whereas the indictment alleged it was passed on or about June 14, 1956." On rehearing he asserts that on June 14, 1956, this contract would not enable its holder, had it been true, to have maintained a civil suit thereon without alleging additional facts because by its terms it was to have been performed and all obligations thereunder ceased long prior to June 14, 1956. He further asserts that on such date because of the passage of time the contract would not have sufficient apparent validity to defraud a person of ordinary prudence, that is, it was a past due instrument as defined by the Negotiable Instruments Act.
Reliance is now had upon Hickman v. State, 44 Tex. Crim. 533, 72 S.W. 587, which was followed in Donald v. State, Tex.Cr. App., 306 S.W.2d 360, and which holds that where the indictment shows on its face that it is barred by the statute of limitations, it is essential that the pleader incorporate therein extrinsic allegations to show that it is not in fact so barred.
This contract does not show on its face that it was barred by the statute of limitations and therefore Hickman is not authority here.
We quote from 19 Texas Juris. sec. 24, p. 840: "In addition to the requisites heretofore mentioned, a writing, in order to be the subject of forgery, must ordinarily have sufficient apparent validity to defraud a person of ordinary prudencealthough a superficial validity is all that is required."
The instrument in question here certainly purported a pecuniary obligation and had more than superficial validity.
We are at a loss to know what extrinsic allegations could have been made that would not themselves have been false. Certainly the state could not allege that the parties to the contract had mutually extended the time of performance since this was a forgery in the beginning and no contract had been entered into.
Remaining convinced that we properly decided this case originally, appellant's motion for rehearing is overruled. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2128353/ | 35 Cal. App. 3d 507 (1973)
110 Cal. Rptr. 849
THE PEOPLE ex rel. DEPARTMENT OF PUBLIC WORKS, Plaintiff and Respondent,
v.
ADCO ADVERTISERS, Defendant and Appellant.
Docket No. 13767.
Court of Appeals of California, Third District.
November 20, 1973.
*508 COUNSEL
Miller & Ford and Charles J. Miller for Defendant and Appellant.
Harry S. Fenton, Emerson Rhyner, John B. Matheny and Stephen A. Mason for Plaintiff and Respondent.
*509 OPINION
JANES, J.
Plaintiff, acting through its Department of Public Works, filed a complaint for an injunction to compel the removal of a certain outdoor advertising display (hereinafter, "billboard") owned by defendant Air Park Development Co., a corporation, sued herein as Adco Advertisers.[1] Upon plaintiff's motion, the trial court entered a summary judgment which declared that the billboard "is unlawfully placed and is being unlawfully maintained in violation of the Outdoor Advertising Act [Bus. & Prof. Code, § 5200 et seq.[2]]," and which ordered defendant to cease maintaining the billboard, and to remove it forthwith. Defendant appeals from the judgment.
FACTS
The controlling facts were undisputed on the motion for summary judgment, and were shown by declarations supporting and opposing the motion, as well as by admissions made by defendant in its answer and in response to plaintiff's request for admissions.
Plaintiff department is the state agency responsible for administering and enforcing the Outdoor Advertising Act (hereinafter, "Act"). It exercises that authority through the Outdoor Advertising Section of the Division of Highways. (§ 5250, formerly § 5215.) On September 12, 1967, defendant received from the Outdoor Advertising Section a permit to erect the subject billboard on the east side of State Route 99 at a location 2,000 feet south of Florin Road in Sacramento County. Within two or three weeks thereafter, in full compliance with the permit, the billboard was constructed at the authorized site at a cost to defendant of $3,266.94. The placement of the billboard complied with the Act as it read at the time the billboard was erected.
However, in response to the federal Highway Beautification Act of 1965 (23 U.S.C. § 131), the California Legislature in 1967 enacted various *510 amendments and additions to the Outdoor Advertising Act by legislation effective a few weeks after the billboard was constructed. (Stats. 1967, chs. 1252 and 1408, effective Nov. 8, 1967.) Other additions and amendments to the Act followed. (Stats. 1968, chs. 169, 964; Stats. 1969, ch. 1294.) Effective November 23, 1970, the Act was simultaneously repealed and reenacted as part of the Business and Professions Code (Stats. 1970, ch. 991), at which time the code sections which are here determinative were renumbered but not changed in any way significant to this action. There were later additions and amendments to the Act prior to the judgment entered herein on June 7, 1972. (Stats. 1971, ch. 1782.) The 1968 and 1969 legislation has no relevance to the instant case, nor does an amendment of the Act subsequent to judgment (Stats. 1972, ch. 853).
It was in effect conceded by defendant in the trial court, and it is expressly conceded by defendant on this appeal, that the location of the subject billboard although originally complying with the Act did not conform with the changes which were subsequently effected in the Act in 1967 and which are still in force. Defendant admitted in its answers to plaintiff's request for admissions, as supplemented by the absence of relevant denials in the answering pleading, that on the effective date of the 1967 legislation (Nov. 8, 1967), and at all times thereafter, the billboard was located within 660 feet of the edge of the right of way of a federal-aid primary highway (State Route 99) from which the advertising copy on the billboard was visible; that, at all such times, the billboard was located within 500 feet of another outdoor advertising display on the same side of the highway;[3] and that certain statutory exceptions were factually inapplicable. The same facts were substantially reiterated in plaintiff's supporting declarations.
As a consequence of these agreed facts, it is manifest that the location of the billboard did not conform with the Act on and after November 8, 1967.[4] (§ 5405, subd. (a), formerly § 5288, subd. (b); § 5408, subd. (d), *511 formerly § 5288.1b, subd. (d).) Defendant's appellate brief concedes such to be the case, and defendant further concedes that, pursuant to the Act (§ 5410, formerly § 5288.2a), such noncompliance made the billboard "subject to removal on or after July 1, 1970...."
The permit for the billboard was canceled as of July 1, 1970. Defendant refused the demand of plaintiff department that the billboard be removed. Plaintiff filed suit on November 5, 1971. At the time of the motion for summary judgment (the spring of 1972), the billboard had an economic value of $5,160; it had a remaining useful life of at least 40 years with normal repairs, but could not be relocated; it was being amortized over a 10-year period pursuant to regulations of the Commissioner of Internal Revenue; and it would not be fully amortized until September 1977. Removal costs would be approximately $600.
CONTENTIONS
1. Alleged Triable Issues of Fact
(1) Defendant contends in its appellate brief that there is a triable issue of fact as to whether the billboard "is a nuisance...." The contention plainly lacks merit. The Act provides that "All advertising displays which are placed or which exist in violation of the provisions of [the Act] are public nuisances and may be removed by any public employee as further provided in [the Act]." (§ 5461, formerly § 5311.) (Italics added.)[5] The controlling facts being undisputed, it follows that the billboard is a public nuisance as a matter of law.
Defendant also asserts that there is a triable issue of fact as to "[w]hether plaintiff has an adequate remedy at law or whether it will suffer irreparable injury." This point likewise fails as a matter of law. Civil Code section 3491 provides that "The remedies against a public nuisance [include] ... Abatement." As was pointed out in L.A. Brick etc. Co. v. City of Los Angeles (1943) 60 Cal. App. 2d 478, at page 486 [141 P.2d 46], "injunction is the traditional method of abating a nuisance." (2) A legislatively declared public nuisance constitutes a nuisance per se against which an injunction may issue without allegation or proof of irreparable injury. *512 (L.A. Brick etc. Co. v. City of Los Angeles, supra; McClatchy v. Laguna Lands Limited (1917) 32 Cal. App. 718, 725 [164 P. 41].)
Without argument or citation of authority, defendant's brief further contends that there is a triable issue of fact as to "[w]hether the attempted taking is in violation of defendant's right under the Fifth and Fourteenth Amendments to the United States Constitution, and Article I, Section 14, of the Constitution of the State of California...." This is an apparent reiteration of the allegation in defendant's answer that "the removal of said sign would constitute the taking of defendant's property for public use without fair compensation...." The contention is unavailing.
(3) At least insofar as its provisions are here relevant, the Act constitutes a valid exercise of the police power of the state. (See, § 5226, formerly § 5288, subd. (a); Bohannan v. City of San Diego (1973) 30 Cal. App. 3d 416, 423 [106 Cal. Rptr. 333]; Carlin v. City of Palm Springs (1971) 14 Cal. App. 3d 706, 712 [92 Cal. Rptr. 535]; National Advertising Co. v. County of Monterey (1962) 211 Cal. App. 2d 375, 377 [27 Cal. Rptr. 136]; Opinion of the Justices (1961) 103 N.H. 268 [169 A.2d 762]; Ghaster Properties, Inc. v. Preston (1964) 176 Ohio St. 425, 433-438 [27 Ohio Ops.2d 388, 200 N.E.2d 328, 335-337]; Kelbro, Inc. v. Myrick (1943) 113 Vt. 64, 70 [30 A.2d 527, 530]; Markham Advertising Co. v. State (1968) 73 Wash. 2d 405, 420-427 [439 P.2d 248, 258-261].)
"Regulations regarding and restrictions upon the use of property in an exercise of the police power for an authorized purpose, do not constitute the taking of property without compensation or give rise to constitutional cause for complaint." (Bohannan v. City of San Diego, supra, 30 Cal. App.3d at p. 423; see also, § 5412, formerly § 5288.3a; House v. L.A. County Flood Control Dist. (1944) 25 Cal. 2d 384, 388 [153 P.2d 950]; Adams v. Shannon (1970) 7 Cal. App. 3d 427, 435 [86 Cal. Rptr. 641]; Opinion of the Justices, supra, 103 N.H. at p. 271 [169 A.2d at p. 764]; Ghaster Properties, Inc. v. Preston, supra, 176 Ohio St. at pp. 430-431 [200 N.E.2d at p. 333]; Kelbro, Inc. v. Myrick, supra, 113 Vt. at pp. 66, 71 [30 A.2d at pp. 528, 531]; Markham Advertising Co. v. State, supra, 73 Wn.2d at p. 427 [439 P.2d at p. 261].)[6]
*513 2. Reasonableness of Amortization Period
As heretofore mentioned, by virtue of an addition to the Act effective November 8, 1967, defendant's nonconforming billboard was not required to be removed until July 1, 1970. (§ 5410, formerly § 5288.2a.) Relying upon National Advertising Co. v. County of Monterey (1970) 1 Cal. 3d 875 [83 Cal. Rptr. 577, 464 P.2d 33], defendant contends that the "amortization" period thus allowed by the Act (nearly two years and eight months) is unreasonably short as applied to defendant's billboard, and, for that reason, denies defendant due process of law.
(4) The contention fails. In the Monterey case, supra, 1 Cal. 3d 875, the state Supreme Court held that a provision in a county zoning ordinance, which allowed a one-year "amortization" period for removal of nonconforming advertising signs, was unreasonable as applied to billboards which had not yet been fully amortized under rules of the Internal Revenue Service. The court did not attempt to fix a reasonable time within which removal should be delayed, merely stating that "removal should await expiration of a reasonable amortization period in order to permit plaintiff to recover [the billboards'] original cost." (Id. at p. 880.) (Fn. omitted.) In the instant case, however, where the removal period provided by the Act is over twice as long as that in Monterey, defendant offers no argument to support its bare conclusion that the Monterey decision shows the period allowed by the Act to be unreasonably short.
Moreover, there is a fundamental difference between the Act involved in the present case and the zoning ordinance involved in Monterey: the Act declares nonconforming displays to be public nuisances (§ 5461, formerly § 5311) whereas no similar characterization was given to nonconforming uses by the ordinance in Monterey. Within reasonable limits, the Legislature has the power to declare certain uses of property to be public nuisances. (McClatchy v. Laguna Lands Limited, supra, 32 Cal. App. at p. 725.) The reasonableness of such declaration in the Act was unassailed by defendant in the trial court, and is unchallenged in defendant's appellate brief. Subject to constitutional barriers against unreasonable or arbitrary action, the Legislature may declare a pre-existing use to be a public nuisance and may forbid it without providing an amortization period. (See, City of Escondido v. Desert Outdoor Advertising, Inc. (1973) 8 Cal. 3d 785, 790 [106 Cal. Rptr. 172, 505 P.2d 1012]; Livingston Rock etc. Co. v. County of L.A. (1954) 43 Cal. 2d 121, 127-128 [272 P.2d 4]; Jones v. City of Los Angeles (1930) 211 Cal. 304, 316 [295 P. 14]; McCaslin v. City of Monterey Park (1958) 163 Cal. App. 2d 339, 346-347 [329 P.2d *514 522]; Ghaster Properties, Inc. v. Preston, supra, 176 Ohio St. at pp. 440-442 [200 N.E.2d at pp. 339-340]; Markham Advertising Co. v. State, supra, 73 Wn.2d at pp. 425-426 [439 P.2d at pp. 260-261].)
The judgment is affirmed.
Richardson, P.J., and Friedman, J., concurred.
NOTES
[1] Defendant's answer filed January 4, 1972, admitted ownership of the billboard by failing to deny the allegation of the complaint to that effect. Subsequently, in response to plaintiff's request for admissions, defendant asserted that it had ceased to be the owner as of March 3, 1972, when the billboard was allegedly sold to "Ormand Industries." The court made no findings thereon. Defendant's appellate brief, however, admits ownership.
[2] Unless otherwise indicated, all section references herein are to the Business and Professions Code. We cite relevant code provisions by the section numbers given to them upon the reenactment of the Outdoor Advertising Act in 1970, as amended (see text, infra); and, where applicable, we show also the section numbers assigned prior to such reenactment.
[3] The latter display, also owned by defendant, was erected pursuant to a permit granted June 22, 1967.
[4] The statutory prohibition against placing an outdoor advertising display within 500 feet of another one on the same side of an interstate or primary highway applies only if such highway "is a freeway." (§ 5408, subd. (d), formerly § 5288.1b, subd. (d).) On the motion for summary judgment, there was no showing of the latter fact. We assume in support of the judgment that the trial court situate in Sacramento County judicially noticed that State Route 99, at the site in that county involved in this action, is and was at all relevant times a freeway. Moreover, defendant does not challenge the omission of any showing of freeway status; indeed, defendant's appellate brief expressly concedes that "[u]nder section 5408(d) of the Act the sign became non-conforming because it was within 500 feet of another advertising display...."
[5] As previously stated, the judgment in the instant case ordered defendant to remove the billboard, rather than permitted plaintiff department to do so. Defendant does not question the trial court's authority to put the owner of an advertising display to such expense where the display does not comply with the Act.
[6] Inasmuch as the Act is an application of the police power, rather than the power of eminent domain, it is unnecessary for us to assess plaintiff's argument that defendant is not exercising any property right (in public highways) when it engages in outdoor advertising, and thus is not subjected to an unconstitutional taking without just compensation. (See, Ghaster Properties, Inc. v. Preston, supra, 176 Ohio St. at pp. 431-432, 442 [200 N.E.2d at pp. 333-334, 340]; Kelbro, Inc. v. Myrick, supra, 113 Vt. at pp. 67-70 [30 A.2d at pp. 529-530].) | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2128355/ | 35 Cal. App. 3d 53 (1973)
110 Cal. Rptr. 435
SAM JAFFE et al., Plaintiffs and Appellants,
v.
RICHARD CARROLL et al., Defendants and Respondents.
Docket No. 41350.
Court of Appeals of California, Second District, Division One.
November 1, 1973.
*54 COUNSEL
Simon, Sheridan, Murphy, Thornton & Medvene, Edward M. Medvene and Michael R. Rogers for Plaintiffs and Appellants.
David G. Licht for Defendants and Respondents.
OPINION
HANSON, J.
THE CASE
Plaintiffs Sam and Mildred Jaffe filed a complaint against Richard Carroll and Richard Carroll & Co. on April 8, 1972. The complaint set forth two causes of action; the first cause of action for declaratory relief and the second cause of action apparently seeks relief based on a gift and misrepresentation *55 and fraud theory. Both causes of action were based on a letter, a copy of which is attached as "Exhibit A" and incorporated by reference as though fully set forth in the complain, given to plaintiffs by Richard Carroll in 1951. The letter in its entirety is as follows:
"9453 Charleville Boulevard
Beverly Hills, California
May 21, 1951
"Mr. Sam Jaffe
1151 Summit Drive
Beverly Hills, California
"Dear Sam:
"The following shall constitute the formal transfer by me to you and your wife, Mildred, of that certain interest in and to the men's haberdashery business which I own and operate at 9453 Charleville Boulevard, Beverly Hills, California, known as Carroll and Company, as is more specifically set forth hereinafter.
"This transfer is made by me on this, the occasion of your fiftieth birthday, as a tribute to your complete faith in my ability, and as a small token of my esteem for you as a man and, more particularly, as a friend.
"Now, therefore, in consideration of your many acts of kindness, for your love and devotion and for other good and valuable consideration, receipt of which is hereby acknowledged, I hereby set over, assign and convey to you, Sam Jaffe, and your wife, Mildred, in joint tenancy and with the right of survivorship, as long as you or either of you shall live, five (5%) percent of the net profits in and to the aforesaid Carroll and Company, subject to the following contingencies and conditions only:
"1) It being my intent and desire that you two shall personally benefit by this transfer and, knowing your charitable nature and fearing that you may wish to reconvey this interest to me, or otherwise, I hereby make this transfer irrevocable and nontransferrable by either you or your wife, Mildred, except that if it should become necessary, in my opinion, for me to change the legal form of the business to a corporate form or otherwise, this interest which you now have may be converted to that same share in the profits of that future organization, and no such change shall in any way effect [sic] your interest in this business or its successor.
"2) I hereby reserve unto myself the sole discretion as to when the said profits shall be distributed, and also the sole discretion as to whether the said profits shall be distributed or returned to the business, these two reservations *56 being necessary in order for me to protect the solvency, growth and general stability of the business.
"3) Net profits shall be defined as that term is used in standard accounting practices, which shall, of course, include the prior payment of taxes.
"Nothing herein contained shall constitute this a partnership or joint venture, nor in any way obligate you or your wife upon any liability or obligation of the said Carroll and Company, either in tort, contract or otherwise, it being my express desire to transfer to you a right to participate in the future profits of a business in which you were so instrumental in establishing and improving.
"If, for any reason, it shall become necessary for me to execute any further documents in order to complete this transfer, I hereby agree to do so as soon as is reasonably practicable.
"Very truly yours,
"RICHARD CARROLL"
Defendants Richard Carroll and Richard Carroll & Co. demurred generally to plaintiffs' complaint on the grounds that the first and second causes of action did not state facts sufficient to constitute a cause of action in that, on the face thereof, each cause of action was barred by the statute of limitations (Code Civ. Proc., § 337) and that each cause of action did not state facts sufficient to constitute a cause of action. Richard Carroll also specially demurred, alleging the complaint was uncertain, ambiguous and unintelligible. Defendant Richard Carroll & Co. generally demurred in a separate pleading to plaintiffs' complaint on the ground the complaint failed to state facts sufficient to constitute a cause of action.
The court sustained both defendants' demurrers to the original complaint as to both causes of action, without leave to amend.
The plaintiffs appeal from this order.
DISCUSSION
General:
The complaint is entitled "Complaint for Declaratory Relief and for Misrepresentation and Fraud." The first cause of action is entitled "Declaratory Relief." The second cause of action has no title but words such as "gift," "nondisclosure ... with intent to deceive," "induced and lulled," etc. are used. The complaint incorporates by reference as an exhibit a letter dated May 21, 1951, addressed to plaintiff Sam Jaffe, referring to his wife, Mildred, and signed by one of the defendants, Richard Carroll. The letter, *57 Exhibit "A," unique in content and dating back over 20 years, poses a multitude of questions as to its legal significance, if any. The status of the letter depends upon facts and the pleadings of the plaintiffs.
(1) Even though the plaintiffs labeled their causes of action, that does not mean they are bound by those labels. "It is an elementary principle of modern pleading that the nature and character of a pleading is to be determined from its allegations, regardless of what it may be called, and that the subject matter of an action and issues involved are determined from the facts alleged rather than from the title of the pleadings or the character of the damage recovery suggested in connection with the prayer for relief." (McDonald v. Filice, 252 Cal. App. 2d 613, 622 [60 Cal. Rptr. 832].)
Also, in Barquis v. Merchants Collection Assn., 7 Cal. 3d 94, at page 103 [101 Cal. Rptr. 745, 496 P.2d 817], the court stated: "[W]e are not limited to plaintiffs' theory of recovery in testing the sufficiency of their complaint against a demurrer, but instead must determine if the factual allegations of the complaint are adequate to state a cause of action under any legal theory. The courts of this state have, of course, long since departed from holding a plaintiff strictly to the `form of action' he has pleaded and instead have adopted the more flexible approach of examining the facts alleged to determine if a demurrer should be sustained. [Citations.]"
In Scott v. City of Indian Wells, 6 Cal. 3d 541 at pages 549-550 [99 Cal. Rptr. 745, 492 P.2d 1137], the court said: "In determining the sufficiency of a complaint against a general demurrer, we consider the demurrer as admitting all material and issuable facts properly pleaded. (Daar v. Yellow Cab Co. (1967) 67 Cal. 2d 695, 713 [63 Cal. Rptr. 724, 433 P.2d 732].) Although facts should be averred in `ordinary and concise language' (Code Civ. Proc., § 426), precise form and language are not essential. `[T]he rule is, that if upon a consideration of all the facts stated it appears that the plaintiff is entitled to any relief at the hands of the court against the defendants, the complaint will be held good, although the facts may not be clearly stated, or may be intermingled with a statement of other facts irrelevant to the cause of action shown, or although the plaintiff may demand relief to which he is not entitled under the facts alleged.' (Matteson v. Wagoner (1905) 147 Cal. 739, 742 [82 P. 436].)"
The First Cause of Action:
In paragraph 5 of plaintiffs' first cause of action[1] plaintiffs allege that the defendant received $3,500 along with acts of kindness, love and devotion *58 in consideration for the letter that defendant gave plaintiffs on May 21, 1951 and that the letter gave to plaintiffs 5 percent of the net profits of defendant's business.
Paragraph 8 of plaintiffs' first cause of action states that on January 21, 1954, defendant's company was duly incorporated as a California corporation. The pleadings are indefinite as to any relationship between the defendant Richard Carroll and codefendant Richard Carroll & Co. The letter in question, signed by Richard Carroll, stated that "if it should become necessary, in my opinion, for me to change the legal form of the business to a corporate form or otherwise, this interest which you now have may be converted to the same share in the profits of that future organization, and no such change shall in any way effect [sic] your interest in this business or its successor."
Paragraph 9 states that the plaintiffs have performed all the conditions and covenants to be performed in the letter of May 21, 1951. Paragraph 10 alleges that defendant Carroll has failed to perform his obligations under the letter.
Paragraph 11 alleges that not until 10 months prior to the date of the filing of the complaint were plaintiffs made aware that the "defendant was refusing to give plaintiffs the distribution of profits in and to the Company as provided for" in the letter.
Paragraphs 12, 13 and 14 allege that defendant never intended to comply with the terms of the letter and that defendant's nondisclosure of his intent "was further made to induce and lull plaintiffs into not inquiring of defendant Richard Carroll as to an accounting of their interest in the net profits in and to the Company."
The first question to arise is whether the letter is a contract and, if so, was a contract pleaded in the first cause of action? Since the pleadings are a means to an end and not an end in themselves, we must determine the status of the pleadings from the facts pleaded rather than from the title or prayer for relief. (Edwards v. Edwards, 90 Cal. App. 2d 33 [202 P.2d 589].)
Section 1549 of the Civil Code defines a contract as an agreement to do or not to do a certain thing. Section 1550 of the Civil Code states that "[i]t is essential to the existence of a contract that there should be: 1. Parties capable of contracting; 2. Their consent; 3. A lawful object; and, 4. A sufficient cause or consideration." In pleading, "[t]he statement of a cause of action for breach of contract requires a pleading of (1) the contract; (2) plaintiff's performance or excuse for nonperformance; (3) defendant's *59 breach; and (4) damage to plaintiff therefrom." (3 Witkin, Cal. Procedure (2d ed. 1971) p. 2050, citing numerous case authority.)
(2) The statutory limitations period for breach of contract commences when the party wronged knows, or reasonably should know of the breach. (Budd v. Nixen, 6 Cal. 3d 195, 203, fn. 6 [98 Cal. Rptr. 849, 491 P.2d 433].) From the pleadings presented it is possible that the statute of limitations may be tolled if a contractual relationship existed between the parties.[2] "It is the general rule that a cause of action accrues when a suit may be maintained thereon, and the statute of limitations then begins to run. [Citing cases.]" (Maguire v. Hibernia S. & L. Soc., 23 Cal. 2d 719, 733 [146 P.2d 673, 151 A.L.R. 1062].) (3) Whether or not the cause of action is barred by the statute of limitations is a question of fact for the trier of fact.
Second Cause of Action:
Appellants contend that their second cause of action is based on a gift theory.
California Civil Code section 1146 defines a gift as "a transfer of personal property, made voluntarily, and without consideration." Section 15104 of the Revenue and Taxation Code states that: "`Transfer' or `gift' includes the passage by gift of any property, or any interest therein or income therefrom, in possession or enjoyment, present or future, in trust or otherwise, directly or indirectly, or any transfer made with donative intent."
Case law has defined the elements of a gift as follows: (1) competency of the donor to contract; (2) a voluntary intent on the part of the donor to make a gift; (3) delivery, either actual or symbolical; (4) acceptance, actual or imputed; (5) complete divestment of all control by the donor; and (6) lack of consideration for the gift. (Bank of America v. Cottrell, 201 Cal. App. 2d 361, 363 [20 Cal. Rptr. 126]; Connelly v. Bank of America, 138 Cal. App. 2d 303, 307 [291 P.2d 501]; Lynch v. Lynch, 124 Cal. App. 454, 461 [12 P.2d 741].)
There is nothing in the pleadings or the letter that shows that the donor was not competent; hence, on the face of the pleading, Carroll was competent *60 to contract; the wording of the letter shows that the letter and its contents were voluntarily made with an intent to give it to the plaintiffs; that the letter was delivered to Sam Jaffe;[3] since the plaintiffs are suing on the letter, they undoubtedly accepted its contents; and the letter itself reflects that it was given for past acts and not for any consideration.
An element that apparently presents a question is whether there was complete divestment of all control by the donor. This element has been interpreted as complied with in cases where the alleged gift was delivery of a check which was later put in a joint tenancy bank account between the donor and the recipient (Turnbull v. Thomsen, 171 Cal. App. 2d 779, 782 [341 P.2d 69]); where the donor retains custody and control over the subject of the gift and where that possession and control relate only to the use and enjoyment of the gift and "does not vest in the donor any interest of title in the property itself, and that where such custody nd control is to be exercised by the donor as agent of the donee, all other essentials of a completed gift existing, the gift is not to be affected or invalidated" (Connelly v. Bank of America, 138 Cal. App. 2d 303, 307 [291 P.2d 501], referring to Lynch v. Lynch, 124 Cal. App. 454 at p. 461 [12 P.2d 741]).
"In Calkins v. Equitable B. & L. Assn., 126 Cal. 531, 535 [59 P. 30], it was held that the gift and transfer of the stock involved was accomplished by the written assignment and delivery of the stock with the intention to make a gift thereof to plaintiffs, and the fact that the donor reserved to himself the dividends during his lifetime did not affect the validity of the gift." (Connelly v. Bank of America, supra, pp. 306-307.)
Where the donor transfers a promissory note to the donee voluntarily and without consideration, with the intention of making a gift and reserves to the donor the right to collect the principal and interest due on the notes through installment payments until his death, the reservation made by the donor does not invalidate the gift. (Connelly v. Bank of America, supra.)
In Eklund v. Eklund, 76 Cal. App. 2d 389 at page 394 [173 P.2d 50], the court stated: "The closing brief stresses the contention that there was no gift because there was no delivery of the policies. The retention by appellants of the policies is a neutral factor which does not, standing alone, assist either party without evidence concerning the intent of such retention. Ordinarily where a donor exercises custody and control over property, an implied agency arises from the relationship, as appears in this case `all *61 other essentials of a completed gift existing, the gift is not thereby affected or invalidated.' (Lynch v. Lynch, 124 Cal. App. 454, 461 [12 P.2d 741].)"
However, "[w]hether a gift is complete and effectual is a question of fact to be determined from all the evidence." (Turnbull v. Thomsen, 171 Cal. App. 2d 779, 783 [341 P.2d 69].)
Richard Carroll filed a general demurrer and a special demurrer to plaintiffs' complaint. The court sustained the demurrer without comment on the special demurrer. In Stowe v. Fritzie Hotels, Inc., 44 Cal. 2d 416, 425 [282 P.2d 890], the court stated: "... When a demurrer based upon both general and special grounds is sustained and the order mentions only the general ground, impliedly the ruling was made either without consideration of the special grounds or upon a determination that they are not well taken. If the general demurrer was sustained erroneously, the trial judge should be directed to consider the special grounds." (See also Briscoe v. Reader's Digest Association, Inc., 4 Cal. 3d 529, 544 [93 Cal. Rptr. 866, 483 P.2d 34].)
CONCLUSION
(4) While the complaint is hardly a model of precise pleading, a careful reading of the record on appeal in light of the general rule of liberality of pleading compels us to conclude that the complaint can withstand a general demurrer. The facts as to what occurred during the intervening years between the letter (Exhibit A) and the filing of the action by plaintiffs are peculiarly within the knowledge of the parties and are a matter of proof.
The judgment of dismissal as to both causes of action is reversed. The case is remanded to the trial court for consideration of the special demurrer.
Lillie, Acting P.J., and Thompson, J., concurred.
NOTES
[1] Plaintiffs' labeled first cause of action includes paragraphs 1-16.1.
[2] "Until some conventional right of action has accrued, the statute of limitations does not operate independently to cut off the right to bring one for declaratory relief, and after a `coercive' right of action has accrued the alternative right to bring an action for the declaratory remedy continues concurrently with the `coercive' right of action." (Phillis v. City of Santa Barbara, 229 Cal. App. 2d 45 at p. 53 [40 Cal. Rptr. 27], citing Tostevin v. Douglas, 160 Cal. App. 2d 321 at p. 330 [325 P.2d 130].) The contract in this case is the underlying coercive right for declaratory relief, and if the statute had not run, then these parties are entitled to declaratory relief.
[3] Plaintiffs' complaint, paragraph 19, clerk's transcript, page 5. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2128357/ | 93 Ill. App. 3d 111 (1981)
416 N.E.2d 1217
THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee,
v.
ALFREDO ALVAREZ, Defendant-Appellant.
No. 79-1699.
Illinois Appellate Court First District (4th Division).
Opinion filed February 5, 1981.
*112 James J. Doherty, Public Defender, of Chicago (John Lanahan, Assistant Public Defender, of counsel), for appellant.
Bernard Carey, State's Attorney, of Chicago (Marcia B. Orr, Richard F. Burke, and John Ashenden, Assistant State's Attorneys, of counsel), for the People.
Judgment affirmed.
Mr. JUSTICE JOHNSON delivered the opinion of the court:
Defendant, Alfredo Alvarez, was charged with the offense of burglary (Ill. Rev. Stat. 1975, ch. 38, par. 19-1). Following a jury trial, defendant was convicted and sentenced to serve a minimum of not less than 1 year nor more than 4 years in the Illinois Department of Corrections. From that judgment and sentence, defendant appeals.
The issues presented for review are (1) whether the court improperly denied defendant's motion to suppress his statement where the police testimony was insufficient to rebut defendant's testimony, corroborated by photographs, that he had been beaten; (2) whether defendant was proved guilty beyond a reasonable doubt with credible evidence; and (3) whether defendant was denied a fair trial where the prosecutor informed the jury that defendant was on felony probation, commented on other facts not in evidence, and offered her personal opinion of defendant's allegation that he was coerced into a confession. We affirm.
On August 30, 1977, at 11:20 p.m., police officers John Carney and Kenneth Quinn received a radio call directing them to go to the Grand Lincoln-Mercury dealership at 4001 West Grand, in Chicago. The officers pulled up into the rear of the location and noticed a hole in the door. Officer Carney positioned himself near the hole in the door while Officer *113 Quinn drove down the alley, positioning himself at the other end of the building. Officer Carney saw two people exit the building through an overhead door. Officer Carney called for them to stop, but they ran westbound in the south alley directly behind the building. While attempting to flee, they dropped what appeared to be blankets or automobile covers. When they jumped over one fence, one of the men, later identified as the defendant, fell. They continued to run, jumping over a second fence. Defendant fell again. At that point, the two offenders separated. Officer Carney pursued defendant to the end of the block where defendant stopped. After defendant stopped, the officer took out his baton. He searched defendant, handcuffed him, and told him he was under arrest. Officer Carney walked defendant back to where the chase began. He advised defendant of his constitutional rights and defendant indicated he understood those rights.
Officer Carney conversed with the defendant in the presence of Officer Quinn. Defendant stated that he had gone through the hole in the door with two other people, one of whom he identified only as "Jose," and that there might be another person still in the building. Defendant was asked why he limped; he answered that he was in a motorcycle accident and had a metal pin in his "knee." Defendant was transported to the police station where he indicated he was injured; thereafter, he was taken to Saint Elizabeth's hospital.
The canine unit was called to assist the officers. Officer Quinn stated that when he entered the building, he noticed tools and other items had been stockpiled near the door. The red auto blankets, which defendant and the other offender were carrying, contained a pair of binoculars and a crescent wrench.
Defendant's testimony contradicted that of Officers Carney and Quinn. Defendant stated that he was at Jimmy's Hot Dog Stand on Grand and Pulaski at 11 p.m. After purchasing something to eat, he pulled his car onto Hirsch Street and parked it near a gas station; there, he finished eating. He became nauseated, left the car, and took a walk up Hirsch Street. Because he was still feeling nauseated, he sat down on some stairs. According to the witness, a police officer suddenly appeared and grabbed him. The officer pulled out his night stick. Defendant asked the officer what was wrong. The officer ordered defendant to turn around, searched him, handcuffed him, and dragged him toward the alley on Pulaski where Officer Quinn was waiting.
Further testifying, defendant stated that Officer Carney showed him a hole in the door of the auto dealership and accused him of burglarizing the place. Defendant denied the burglary. Then Officer Carney struck him very hard; defendant lost his breath and fell. He then hit defendant in the stomach with the night stick. While defendant was down, the officer *114 hit him in the back, making him fall to the ground. Officer Carney again stated that defendant had burglarized the auto dealership, and defendant again denied it. The officer attempted to get defendant to stand, but defendant stated he remained in a bent position so as to avoid being hit in the stomach again. Carney jabbed defendant with the club, hit him, and kicked him. When Officer Carney pulled out his gun, the defendant became frightened and admitted committing the burglary. Subsequently, defendant admitted everything he was asked.
Defendant stated he was wearing a T-shirt, a pair of blue pants, and boots when he was arrested. Officer Carney had testified that the two men were wearing dark clothing. Defendant told the police he was driving a 1965 Chevrolet because he did not want them to impound his wife's car. At the police station, defendant called his wife and told her where her 1976 Grand Prix was located. During questioning at the station, defendant denied ever being in the Grand Lincoln-Mercury dealership on August 30, 1977, denied running from Officer Carney, and denied committing the burglary. Defendant testified that the officers asked him whether he wanted to go to the hospital since his leg was hurting. Defendant answered affirmatively. Defendant also stated that while he was at Saint Elizabeth's, he told hospital personnel he was beaten by the police.
At Saint Elizabeth's Hospital, Dr. Evangelista examined defendant. The doctor indicated the injuries to defendant were abrasions on the right upper side of the chest wall and an abrasion on defendant's left thigh. Dr. Evangelista testified that scratches are not consistent with someone hitting the person with a club.
At 2:15 a.m. on August 31, 1977, Alvarez was questioned by Robert Lombardo, an investigator with the Chicago Police Department. Defendant told the investigator he was advised of his constitutional rights by the arresting officers and denied committing the burglary. Defendant stated he admitted committing the burglary because "you tell the police whatever they want." Defendant did not tell the investigator he was beaten by the police. Lombardo did not notice any marks on defendant's face, arms or body.
Robert Juskiewuic, a law clerk, was given an assignment by the defense to interview Alfredo Alvarez at the jail and to take pictures of him. Juskiewuic testified that on September 2, 1977, at 2:30 p.m., he visited and took pictures of defendant. He noticed several bruises on defendant's chest, back, shoulder, thigh and right leg. The pretrial record indicated that the photographs of defendant were taken on September 21, 1977.
On defendant's motion to suppress, the trial court found that Officer Carney did advise defendant of his constitutional rights; that defendant *115 understood those rights and made a knowing waiver of them; that neither Officer Carney nor Officer Quinn inflicted any injury upon defendant; that if any injuries were suffered by defendant on the date in question, they were suffered prior to the time of the arrest; and that there was probable cause to make the arrest. The motion to suppress was denied.
Defendant's first assignment of error is whether the court improperly denied the motion to suppress his statements where the police testimony was insufficient to rebut defendant's testimony, corroborated by photographs, that he had been beaten. Prior to trial, defendant filed a petition to suppress all statements, admissions, and confessions for the reasons that he was not advised of his constitutional rights to counsel or given Miranda warnings. He also alleges that any statements obtained from him were coerced after the police officers threatened physical harm to him and beat him, thus, rendering those statements involuntary.
1 The test for the admission of a confession is whether it was made freely, voluntarily and without compulsion. (People v. Lewis (1979), 75 Ill. App. 3d 259, 278, 393 N.E.2d 1098, 1113.) Whether a statement is voluntarily given will depend upon the totality of the circumstances. When the trial court makes its decision, it is not required to be convinced beyond a reasonable doubt. If the trial court finds that the statement was voluntary, the ruling will not be disturbed unless it is contrary to the manifest weight of the evidence. (People v. Zamp (1980), 84 Ill. App. 3d 688, 693-94, 406 N.E.2d 96, 100.) In this case, the trial court found that the statements made by defendant were voluntary. Testimony by Dr. Evangelista indicated defendant's injuries were not the result of a physical beating. Officer Lombardo, who interviewed defendant a few hours after his arrest, did not notice any marks or injuries on defendant, nor did defendant suggest to Lombardo that he had been beaten by the police. The only evidence offered by defendant in support of physical coercion were photographs taken by Robert Juskiewuic.
Since the trial court had the opportunity and was in a better position to observe the witnesses, determine their credibility, and the weight to be given their testimony, we will not disturb its ruling that the defendant's statements were given voluntarily.
2 Defendant contends he was not proved guilty beyond a reasonable doubt with credible evidence. The essence of the crime of burglary is breaking and entering with the intent to commit a theft. The statement attributed to defendant acknowledges the fact that he entered the building with two other people and the group separated once inside the auto dealership. This constituted an admission of the ultimate fact that defendant was guilty of the crime charged and, thereby, constituted a confession. People v. Rand (1975), 29 Ill. App. 3d 873, 875, 331 N.E.2d 15, 18.
*116 It is well established that a reviewing court will not set aside a jury's verdict unless the evidence presented at trial is so improbable or so palpably contrary to the verdict as to raise a reasonable doubt of guilt. The credibility of the witnesses and the weight to be given to their testimony and the inferences to be drawn therefrom are solely for the jury. Conflicts or discrepancies in the testimony do not destroy credibility but, rather, go only to the weight to be given to such testimony. (People v. Lewis (1979), 75 Ill. App. 3d 259, 281, 393 N.E.2d 1098, 1114.) In the case at bar, there was substantial evidence that defendant was one of the men Officer Carney chased. The fact that defendant had a metal pin in his leg does not make the arresting officers' testimony so improbable or unconvincing as to overturn defendant's conviction. The conflicts in testimony, as pointed out in defendant's brief, between the arresting officers and the defendant are discrepancies that affect the witnesses' credibility and are not of such magnitude as to create a reasonable doubt of guilt. Lewis, at 282.
Based on the record as a whole, we conclude the evidence is not so improbable as to raise a reasonable doubt of defendant's guilt, and there is ample evidence to support the jury's finding.
Defendant's final contention is that he was denied a fair trial where the prosecutor informed the jury he was on felony probation, commented on other facts not in evidence, and offered her personal opinion of defendant's allegation that he was coerced into a confession.
The general rule is that remarks by counsel alleged to be prejudicial to defendant must be objected to at trial or the issue is waived. (People v. Madden (1978), 57 Ill. App. 3d 107, 114, 372 N.E.2d 851, 856.) Improper remarks during closing argument deny defendant a fair trial and constitute reversible error where the comments influenced the jury to such an extent that substantial prejudice to defendant resulted, or where they operated as a material factor in the conviction. (People v. Lewis (1979), 75 Ill. App. 3d 259, 288, 393 N.E.2d 1098, 1120.) Defendant made objections to prosecutor's closing argument referring to him as being on felony probation and commenting that he was wearing dark clothing when arrested. The trial court overruled both objections. The prosecutor may comment unfavorably on the defendant, place defendant in a bad light, and draw legitimate inferences from facts in evidence. (Lewis, at 288.) In the instant case, defendant testified that he had a prior conviction for burglary, and the police officers testified that defendant was wearing dark clothing when apprehended. Reviewing the prosecutor's comments, we cannot say that substantial prejudice to defendant resulted or that they were a material factor in defendant's conviction.
Defendant also asserts that the prosecutor committed reversible error when she commented that it was an insult to her for defendant to testify *117 that Officer Carney beat him into a confession and then offer photographic evidence to prove it. The trial record does not show an objection to this comment. In the absence of an objection, improper remarks will be considered only if we are able to say they were so prejudicial that defendant did not receive a fair trial or were so flagrant as to threaten deterioration of the judicial process. (People v. Smith (1977), 53 Ill. App. 3d 395, 404, 368 N.E.2d 561, 568.) We are unable to say that the improper remarks were so prejudicial that defendant did not receive a fair trial or were so flagrant as to threaten deterioration of the judicial process.
3-5 The trial court determines the character and scope of argument to the jury, and it is presumed the trial judge has performed his duty and properly exercised the discretion vested in him. The general atmosphere of the trial is observed by the court, and it cannot be reproduced in the record on appeal. The trial court is, therefore, in a better position than a reviewing court to determine the prejudicial effect, if any, of a remark made during argument and, unless clearly an abuse of discretion, its ruling should be upheld. (People v. Smothers (1973), 55 Ill. 2d 172, 176, 302 N.E.2d 324, 327.) We do not find the prosecutor's remarks to be so flagrant as to constitute reversible error, nor do we find the trial court abused its discretion.
For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed.
Affirmed.
ROMITI, P.J., and JIGANTI, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2147454/ | 429 N.E.2d 990 (1982)
Shirley ROSANDER, Plaintiff-Appellant,
v.
COPCO STEEL & ENGINEERING COMPANY, James H. Pankow, Agent and John Doe, Whose True Name Is Unknown, Defendants-Appellees.
No. 3-681A155.
Court of Appeals of Indiana, Third District.
January 13, 1982.
Rehearing Denied February 23, 1982.
Frank J. Petsche, Matthews-Petsche-Zych & Associates, South Bend, for plaintiff-appellant.
Edward N. Kalamaros and Thomas F. Cohen, Edward N. Kalamaros & Associates, P.C., South Bend, for defendants-appellees.
HOFFMAN, Presiding Judge.
Shirley Rosander is appealing the decision of the trial court which granted Copco's motion for summary judgment thereby dismissing *991 her lawsuit. The singular issue raised by this appeal is whether Rosander's cause of action for loss of consortium, resulting from injuries sustained by her husband from alleged negligent acts of Copco, should be barred due to the fact her husband settled his claim against Copco and executed a release.
At the time of the accident, Shirley's husband, Darwin Rosander, was employed by Colip Brothers Electric Company. While working at Copco's plant, he was struck in the back with a piece of wood by an employee of Copco, causing injury to his back, hip, and leg. Darwin received workmen's compensation benefits from his employer. He settled his claim with Copco and at that time executed a release of all claims. Shirley was not a party to the release, and she filed a separate action against Copco for loss of consortium. The trial court granted Copco's motion for summary judgment and stated in its written opinion:
"Inasmuch as the right of the wife is derivative of her husband's right, it appears to this Court that a settlement by the husband of his claim is likewise a settlement of his spouse's derivative suit and that the failure to settle both causes at the same time should bar a spouse from subsequently maintaining an independent action for loss of consortium."
By this time it is well settled in Indiana that a wife has a cause of action for loss of consortium resulting from injury sustained by her husband from negligent acts of a third person. Troue v. Marker (1969), 253 Ind. 284, 252 N.E.2d 800. However, the issue of whether a non-injured spouse's cause of action for loss of consortium must be joined with the injured spouse's action for personal injuries is a question of first impression in Indiana. Our Supreme Court in Troue implied the existence of actions filed independently and distinctly from each other,[1] however, the issue was not decided at that time.
It cannot be denied that a claim for loss of consortium is derivative in that without an injury to one spouse, the other spouse would have no action. As such, it is subject to some of the same defenses as the action from which it is derived. Arthur v. Arthur (1973), 156 Ind. App. 405, 296 N.E.2d 912. Nevertheless, placing actions in a derivative posture does not give one party the right to waive the rights of another. Shirley was not a party to the settlement and release negotiated by Darwin, thus she is not bound by it and is free to pursue her separate cause of action. See Gimbel, Administrator v. Smidth (1856), 7 Ind. 627.
Copco contends that joinder of the actions is required in the interest of judicial economy and to prevent the danger of double recovery and inconsistent verdicts. The argument concerning inconsistent verdicts is not well taken in this action. The situation at hand involves a release and a release is not dispositive of the merits of an action.
Troue v. Marker, supra, settled the problem of double recovery caused by loss of consortium claims. In Troue the Court said:
"We therefore hold that a wife in this state is entitled to recover for loss of consortium against a wrong-doer who has injured her husband, but she is not entitled to recover for loss of support due from the husband to such wife in such action." 252 N.E.2d at 806.
Copco further argues that the Indiana Workmen's Compensation Act, specifically the exclusive remedy provisions, precludes Shirley from bringing any action against it. This argument is not persuasive. IC 1971, 22-3-2-6 (Burns Code Ed.) and IC 1971, XX-X-X-XX (1981 Burns Supp.) must be construed together. Section 6 applies only to an employee and his employer. Artificial Ice, etc., Co. v. Waltz (1925), 86 Ind. App. 534, 146 N.E. 826. Section 13 merely passes the right of an employee to sue on to his dependent in the case of his death. Neither provision bars a spouse's right to bring an action for loss of consortium against third parties.
Granted, mandatory joinder would promote judicial economy. However, judicial *992 economy should never be the basis for the elimination of a party's right to maintain a valid cause of action. Perhaps the best rule to follow in order to achieve both results is to require joinder unless it is not possible to join the actions. This is the proposal contained in the Restatement of Torts. At the same time, it must be acknowledged that there will be situations when it is impossible to join the causes of action.
"There will be situations in which it is not possible to join the causes of action for the single trial. Thus the impaired spouse's cause of action may have been abated by death. Or the action of the impaired spouse may be barred by a workmen's compensation act, which does not bar the deprived spouse's action. Or the impaired spouse may have settled and released the claim for bodily harm without the knowledge of the deprived spouse. Or the impaired spouse may simply refuse to sue. There are no doubt other possible situations.
"It is possible to join the actions within the language of Subsection (2), however, in all situations in which the deprived spouse has had full opportunity to join in the impaired spouse's action and assert a claim and has failed to do so. Thus if the impaired spouse has begun an action for bodily harm, and then settled it and given a release, and the deprived spouse has stood by throughout with full knowledge of the conduct, it has been possible to join in the action at any time before it has become barred by the release, and the deprived spouse cannot now be permitted to maintain a separate action." Restatement, Second, Torts § 693.
The situation before us involves a settlement and release which were entered into without the knowledge of the non-injured spouse. While the trial court expressed its belief that such an occurrence is improbable, nonetheless, it is possible. Shirley was not a party to the release executed by Darwin and thus is not bound by it. She may pursue an independent action for loss of consortium and recover what damages she can prove, other than loss of support. None of the contentions raised by Copco presents a problem which necessitates mandatory joinder in this instance. Therefore, the summary judgment of the trial court is reversed and this cause of action is remanded for further proceedings.
Reversed and remanded.
GARRARD and STATON, JJ., concur.
NOTES
[1] See 252 N.E.2d 800, at 806. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1817664/ | 908 So. 2d 1231 (2005)
Thomas Ray HUTSON, Plaintiff-Appellant
v.
Gladys May Dampier Claunch HUTSON, Defendant-Appellee.
No. 39,901-CA.
Court of Appeal of Louisiana, Second Circuit.
August 9, 2005.
*1232 Wright & Underwood by Patrick H. Wright, Jr., Bobby N. Underwood, Monroe, for Appellant.
Robert Alan Breithaupt, for Appellee.
Before BROWN, STEWART and CARAWAY, JJ.
*1233 STEWART, J.
Thomas Ray Hutson, seeks reversal of the of the trial court's judgment finding his former spouse, Gladys Hutson, free from fault in the dissolution of the marriage for the purposes of awarding final periodic spousal support. For the reasons set forth below, we affirm the judgment of the trial court.
FACTS
Thomas Ray Hutson ("Mr. Hutson"), and Gladys May Dampier Claunch Hutson ("Ms. Hutson"), were married on September 27, 1985, in Hamburg, Arkansas, and subsequently established a matrimonial domicile in Ouachita Parish. No children were born of the marriage. On August 28, 2003, Mr. Hutson filed for divorce, pursuant to La. C.C. art. 102, in the Fourth Judicial District Court for the Parish of Ouachita. On September 22, 2003, Ms. Hutson filed an answer and reconventional demand in which she alleged that she was free from fault in the break up of the marriage and was in need of final periodic support. Mr. Hutson filed an answer to the reconventional demand generally denying Ms. Hutson's assertion that she was free from fault in the break up of the marriage, but made no factual allegations as to any conduct on her part which would constitute fault.
On March 11, 2004, Mr. Hutson filed a rule for a final judgment of divorce and a determination on the issue of fault in the break up of the marriage. At the hearing, the court heard from the parties and various friends and relatives as to the circumstances surrounding the break up of the marriage.
Mr. Hutson testified that during the marriage, Ms. Hutson subjected him to criticism and nagging "almost daily." She criticized his children and his fishing, and she nagged him about doing yard work. Mr. Hutson indicated that his children quit coming to the house, but he did not explain how this was attributable to Ms. Hutson since he admitted she never criticized the children in their presence. He also indicated he quit fishing because she would tease him when he did not catch anything.
Mr. Hutson also alleged that Ms. Hutson constantly accused him of having extramarital affairs. However, his testimony reflected that Ms. Hutson was more inquisitive than accusatory about his relationships with other women. He also testified that Ms. Hutson controlled the family finances, but gave no testimony that he was in disagreement with the arrangement.
He testified that the parties did not have sexual relations or share a bedroom during the last two years of their marriage, but he admitted that it was because he did not want to have anything to do with "somebody that just, uh, is a bitch." He admitted that about a year before Ms. Hutson moved out of the matrimonial domicile, he told her he did not love her anymore. He testified that he was relieved when she moved out and admitted that he never asked her to return. Even though she moved out, Mr. Hutson stated he believed that Ms. Hutson did not want a divorce.
The court also heard from Lisa Woods, a self-described estranged niece of Ms. Hutson's. After admitting that she had not been on speaking terms with her aunt for four years, she testified that her aunt was very controlling and insulting. Most of her testimony was based on hearsay as she was not a witness to the day-to-day events in the marriage. And while she undeniably had no kind words for her estranged aunt from a personal perspective, her testimony is less than instructive on the fault issue.
Mr. Hutson also submitted the testimony of his son, Clint Hutson who testified *1234 that he had not been out to his father's home in six years. Therefore testimony could not corroborate any of his father's allegations as to Ms. Hutson being the source of any problems in the marriage or between Clint and his father.
Lastly, Mr. Hutson submitted the testimony of Carolyn Morris, the woman who has been his barber for the past 15 years and with whom Ms. Hutson allegedly accused him of having an affair. Morris confirmed that Ms. Hutson, who was also a client, always made Mr. Hutson's haircut appointments. Morris testified that the Hutsons' hardly spoke about each other while getting their hair cut. However, Mr. Hutson would occasionally tell her of Ms. Hutson's jealous streak, and Ms. Hutson was sometimes critical of Mr. Hutson's inability to repair things around the house.
After the parties separated and divorce proceedings were initiated, Mr. Hutson asked Morris to dinner. After the parties' outing, Ms. Hutson accused Morris of having an affair with Mr. Hutson, which Morris denied.
On Ms. Hutson's behalf, the trial court heard from Candy Edwards, her granddaughter, who testified that she was a frequent guest in the Hutsons' home and even vacationed with the parties on occasion. Ms. Edwards stated that she never witnessed the parties argue or raise their voices at each other. She also noted that her grandmother performed the majority of the household chores including the cooking, cleaning and laundry. She also prepared breakfast for Mr. Hutson and packed him a lunch every day even after he told her that he did not love her anymore. She worked in her garden and even mowed occasionally. Ms. Edwards denied ever hearing her grandmother voice suspicions about her husband's fidelity prior to the parties' separation.
Ms. Edwards' testimony was substantively corroborated by Judy Fondren, Ms. Hutson's sister who lived on the parties' property between 1987 and 1989. Ms. Fondren believed the parties had a good marriage and never witnessed any bickering, nagging or arguing between the parties.
The trial court also heard from two of the parties' neighbors, Gay Montgomery and Beverly Powell. Both women testified that they spent a considerable amount of time in the presence of the parties. Both witnesses testified about their perception that the parties had a good marriage and that Ms. Hutson was an attentive spouse who regularly cooked and kept a clean house. Neither witness could recall hearing the parties argue, or hearing Ms. Hutson nagging or berating Mr. Hutson. They also denied ever hearing Ms. Hutson voice suspicions about whether her husband was having an extramarital affair prior to their separation.
Lastly, the trial court heard from Ms. Hutson herself. Ms. Hutson testified that she and Mr. Hutson had a good relationship during their marriage until he told her he did not love her anymore and moved out of their bedroom. She cooked, cleaned and did the laundry. She worked in her garden and helped with the mowing. She also handled the family finances without objection from Mr. Hutson until the very end of their 18-year marriage. She also testified that while she had some persistent health problems, she never refused him sex unless she was acutely ill.
Ms. Hutson testified that while she and Mr. Hutson's daughter had a somewhat strained relationship at the outset, she generally had a good relationship with his children. She denied that they fought or argued on a regular basis, or that she accused him of having affairs. She also affirmatively stated that she did nothing to *1235 break up the marriage and that it broke down when he told her that he did not love her and wanted a divorce.
At the conclusion of the hearing, the trial court rendered a judgment of divorce. A final judgment of divorce was signed on May 14, 2004. The trial court ordered the parties to submit briefs on the issue of fault and took the matter under advisement. On June 3, 2004, the trial court issued reasons for judgment finding that there was insufficient evidence to support a finding that Ms. Hutson was at fault in the break up of the marriage. In its ruling, the trial court stated that Mr. Hutson failed to meet his burden that Ms. Hutson was at fault. A written judgment to this effect was signed on June 21, 2004, and certified as final by the trial court. Mr. Hutson took an appeal from that judgment. This court subsequently dismissed that appeal and remanded the matter to the trial court after concluding that the certification of the judgment as final was inappropriate.
After remand, Ms. Hutson filed a rule to show cause why final periodic spousal support should not be awarded which was set for hearing on November 29, 2004, with a preliminary conference before a hearing officer to be heard on November 9, 2004. After the preliminary conference, the hearing officer issued a report recommending that Mr. Hutson be ordered to pay $900.00 per month in final periodic support. Mr. Hutson filed a timely objection to the hearing officer's recommendations, and the matter was taken up at the previously scheduled rule date of November 29, 2004. After the hearing, the trial court signed a judgment adopting the hearing officer's recommendations. Mr. Hutson appeals, arguing that the trial court erred in finding that Ms. Hutson was free from fault and in placing the burden of proof on him to prove her fault in the break up of the marriage.
DISCUSSION
Burden of Proof
First, we address Mr. Hutson's assignment of error regarding the misapplication of the burden of proof by the trial court. The jurisprudence is unequivocal on the issue of who bears the initial burden on the fault question in final periodic support proceedings. The burden is squarely on the claimant spouse who must show that she is free from fault in the dissolution of the marriage. Jones v. Jones, 35,502 (La.App. 2d Cir.12/05/01), 804 So. 2d 161; Lyons v. Lyons, 33,237 (La.App. 2d Cir.10/10/00), 768 So. 2d 853, writ denied, XXXX-XXXX (La.1/5/01), 778 So. 2d 1142. In brief, Ms. Hutson concedes that the trial court erred in placing the initial burden on Mr. Hutson to prove that she was at fault in the break up of the marriage.
Where one or more trial court legal errors interdict the fact-finding process, and the record is otherwise complete, the reviewing court should make its own independent de novo review and assessment of the record. Campo v. Correa, 01-2707 (La.6/21/02), 828 So. 2d 502. Because the trial court's misplacement of the initial burden in the present case prevented it from making a finding of fact on whether Ms. Hutson met the burden of proving her freedom from fault, we will conduct a de novo review of the record.
The jurisprudence provides little guidance on how a claimant spouse is to perform the task of proving freedom from fault. While the case law indicates that the burden can be shifted to the non-claimant spouse when the divorce is obtained on the basis of adultery of the non-claimant spouse, see Lagars v. Lagars, 491 So. 2d 5 (La.1986), there is no indication of *1236 how one shifts the burden when a divorce is obtained on the basis of living separate and apart for the requisite period of time.
Ms. Hutson presented evidence in the form of her own testimony and that of her niece, sister and neighbors. She affirmatively stated that she did nothing to break up the marriage. Her niece, sister and neighbors, who had been exposed to the couple at various times throughout the marriage, testified that Ms. Hutson had been a good wife who performed her fair share of the household duties. They testified that the parties rarely argued, and they denied witnessing any of the nagging which Mr. Hutson alleges plagued their marriage.
We find that this evidence is sufficient to establish freedom from fault in instances where the divorce is not obtained on the fault grounds delineated in La. C.C. art. 103. Ms. Hutson made a prima facie showing that she was not at fault in the break up of the marriage by presenting testimony to support her version of the events leading to the break up of the marriage. Such a prima facie showing was sufficient to meet her initial burden of proof. Once that burden was met, the burden shifted to Mr. Hutson to prove conduct on the part of the claimant spouse which rises to the level of fault.
Fault
Fault is a threshold issue in a claim for spousal support. Roan v. Roan, 38,383 (La.App. 2d Cir.4/14/04), 870 So. 2d 626. In a proceeding for divorce or thereafter, the court may award final periodic support to a party free from fault prior to the filing of a proceeding to terminate the marriage, based on the needs of that party and the ability of the other party to pay. La. C.C. art. 111. Statutory law does not specify what constitutes fault so as to bar an award of final periodic support. However, the jurisprudence has characterized the necessary conduct as synonymous with the fault grounds which previously entitled a spouse to a separation under former La. C.C. art. 138 or the fault grounds which currently entitle a spouse to a divorce under La. C.C. art. 103.
Prior to its repeal, Article 138 provided the grounds for separation which included adultery, habitual intemperance, excesses, cruel treatment or outrages, making living together insupportable, and abandonment. La. C.C. art. 103 currently entitles a spouse to seek a fault-based divorce on the basis of the other spouse's adultery or conviction of a felony sentence punishable by death or hard labor. A spouse who petitions for permanent support need not be totally blameless in the marital discord. Only misconduct of a serious nature, providing an independent contributory or proximate cause of the break up, equates to legal fault. Roan, supra; Lyons v. Lyons, supra. A party is not deprived of alimony due to a reasonably justifiable response to the other spouse's initial acts. A spouse who perceives infidelity may become quarrelsome or hostile. Such a reasonable reaction does not constitute legal fault. The commission of adultery causes the break up, not the reaction. A spouse who reacts should not be precluded from receiving alimony solely because of his or her own response. Lyons, supra.
The only two grounds raised by Mr. Hutson in relation to potential fault on the part of Ms. Hutson were cruel treatment and abandonment. In order to prove abandonment, a party must show that the other party has withdrawn from the common dwelling without lawful cause or justification, and the party has constantly refused to return to live with the other. Roan, supra. Mr. Hutson did not satisfy these requirements because he admitted *1237 that he had told his wife he did not love her, was relieved when she moved out of the house and had never asked her to return.
To prove cruel treatment, Mr. Hutson needed to show a continued pattern of mental harassment, nagging and griping by one spouse directed at the other so as to make the marriage insupportable as mere bickering and fussing do not constitute cruel treatment for purposes of denying alimony. Lyons, supra. We find that Mr. Hutson's allegations as to the amount of nagging he endured during the marriage, which were not corroborated by his own witnesses and were contradicted by ample testimony from Ms. Hutson's witnesses, do not rise to the level of cruel treatment.
While many spouses may be tempted to characterize repeated requests to perform household chores such as mowing and yard work as cruel treatment, the level testified to by Mr. Hutson falls far short of that which would be required to make a marriage insupportable. Also, the record does not support Mr. Hutson's contentions that Ms. Hutson repeatedly accused him of infidelity. She denied having any such suspicions before the parties separated, and no one recalled Ms. Hutson ever confiding any such suspicions. Nor does the record support his contention that Ms. Hutson alienated him from his children. Even Mr. Hutson's own son would not corroborate the allegation. All in all, the evidence failed to establish a continued pattern of mental harassment.
CONCLUSION
For the foregoing reasons, the judgment of the trial court awarding final periodic support to Ms. Hutson in the amount of $900.00 per month is hereby affirmed. Costs of this appeal are to be borne by Mr. Hutson.
AFFIRMED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1843299/ | 307 B.R. 849 (2002)
Jeffrey H. MIMS, Chapter 7 Trustee of Auto International Refrigeration, Inc., Appellant,
v.
FIDELITY FUNDING, INC. and Guaranty Business Credit Corporation, Appellees.
No. CIV.A.3:02-CV-0973-P.
United States District Court, N.D. Texas, Dallas Division.
October 15, 2002.
*850 *851 *852 Kevin M. Lippman, Jeffrey D. Dunn, Mark L. Nastri, Munsch, Hardt, Kopf & Harr, Dallas, TX, for Appellant.
Richard Ernest Anderson, Richard, Jaramillo & Associates, Bruce W. Bowman, Jr., Godwin Gruber, Dallas, TX, for Appellees.
MEMORANDUM OPINION AND ORDER
SOLIS, District Judge.
Before the Court is Brief of Appellant Jeffrey H. Mims, Chapter 7 Trustee of Auto International Refrigeration, Inc. ("Appellant") filed July 1, 2002, response brief and cross-appeal of Guaranty Business Credit Corporation ("GBCC") d/b/a Fidelity Funding, Inc. ("Fidelity") filed July 22, 2002, and Appellant's reply brief filed August 5, 2002.
Appellant and Cross-Appellant seek reversal of a March 15, 2002 Bankruptcy Court Order holding the loan at issue was not usurious, GBCC did not breach the loan agreement, equitable subordination was not proper, and disallowing $54,243.06 in unmatured interest. For the reasons set forth below, this Court finds that the March 15, 2002 order of the Bankruptcy Court granting summary judgment should be AFFIRMED in part, and REVERSED and REMANDED in part.
PROCEDURAL HISTORY
This is an appeal from a bankruptcy proceeding before the Honorable Judge Harold C. Abramson which stems from a Loan and Security Agreement (the "Loan Agreement") entered into on June 30, 1998 between borrower AIR and lender Fidelity. On June 11, 1999, GBCC entered into an Asset Purchasing Agreement with Fidelity in which the Loan Agreement was transferred to GBCC. On May 28, 1999 Auto Refrigeration, Inc. ("AIR") filed a petition for relief under Chapter 11 of the Bankruptcy Code. Apnt.'s Br. at 1. On September 27, 1999, GBCC, a creditor of AIR, filed a Proof of Claim in the AIR bankruptcy case for $224,730.51. On November 2, 1999, the bankruptcy case was converted to a Chapter 7 bankruptcy case, with Appellant subsequently appointed Chapter 7 Trustee for the AIR Estate. Id.
On September 11, 2000, Appellant initiated an adversarial proceeding against Fidelity asserting claims for usury, breach of contract, and for equitable subordination of GBCC's claim in AIR's bankruptcy. On December 6, 2000, GBCC was added as a joint and several defendant. On March 15, 2002, the Bankruptcy court ruled the Loan Agreement was not usurious, the Loan Agreement had not been breached and equitable subordination was not proper. Furthermore, the Court disallowed $54,243.06 as unmatured interest. Mims v. Fid. Funding, Inc. (In re Auto Int'l Refrigeration), 275 B.R. 789 (Bankr.N.D.Tex.2002). It is from this decision which Appellants and Cross-Appellants appeal.
RELEVANT FACTS
The Court finds the Bankruptcy Court's fact statement to be accurate, and therefore adopts it as follows. As of the date of the bankruptcy petition, AIR had outstanding debt under the terms of the Loan Agreement which was entered into on June 30, 1998. Under the Loan Agreement, Appellees offered AIR a revolving credit loan (the "Loan"), secured by, among other things, all of AIR's accounts receivable, allowing AIR to borrow and repay advances of principal up to a Facility Limit of $1,500,000. Pursuant to the Loan Agreement, the amount of principal that *853 could be borrowed by AIR at any one time was limited under a prescribed Borrowing Base formula based on AIR's accounts receivable,[1] with the aggregate amount of outstanding principal limited to the lesser of the Borrowing Base or the Facility Limit. The stated interest rate under the Loan Agreement was prime plus 2.5%, with the interest rate fluctuating between 10.25% and 11% over the eleven months prior to bankruptcy.
In addition, the Loan Agreement also called for various fees and charges to be paid by AIR, including Initial and Annual Facility Fees, Due Diligence Deposit, Attorney's Fees, Collateral Monitoring Fee, Audit Fee, and other Additional Expense Reimbursements. When these fees became payable by AIR, they were recorded on AIR's account, with interest accruing on the fees from the date recorded. The initial advance of principal under the Loan Agreement was made on June 30, 1998 in the amount of $581,661.07, but this amount included the Initial Facility Fee in the amount of $22,500.
Under the terms of the Loan Agreement, the filing of a bankruptcy petition constituted an event of default ("Event of Default"). While the majority of the Events of Default gave the Appellees the option of accelerating the entire principal amount of the debt by notifying AIR of its intent to do so, if the Event of Default was AIR's filing of bankruptcy, all of the obligations under the Loan Agreement would automatically be immediately due and payable. However, if an Event of Default did occur, and the Loan Agreement was accelerated resulting in usurious interest being charged, the Loan Agreement included a Savings Clause requiring Appellees to reduce the interest to a non-usurious amount.
On July 9, 1999, Appellees, believing that the Loan Agreement had exceeded the legal interest rate of 18% allowed under Texas law,[2] sent a letter attempting to cure the situation ("Cure Letter") to AIR's counsel, pursuant to Texas Finance Code § 305.103(a),[3] stating that AIR's account had received a credit of $68,825.40.[4] Then *854 on July 12, 1999, Appellees sent a second Cure Letter to AIR's counsel confirming a second credit of $4,070.96.[5] Appellant responded to these Cure Letters by sending a letter to Appellees on September 14, 1999, alleging certain matters which it contended made the Loan Agreement usurious.
Appellant alleged the Loan Agreement was not only facially usurious, but when the Loan Agreement was accelerated, which Appellant claims occurred not only by the express terms of the Loan Agreement, by operation of bankruptcy law, and by affirmative action of the Appellees, the Loan Agreement became usurious. Appellant believes that the maximum amount of interest that could have been charged over the term from closing to bankruptcy was $40,794.41, but when the $33,993.71 in interest actually charged by Appellees was added to the $144,467.44 in fees which it alleges to be interest, the total interest charged over that same time period was $178,460.97. Subtracting the maximum amount of interest that could have been charged from the alleged interest, Appellant believed that Appellees charged AIR $137,669.56 in usurious interest.
Appellant alleged that Appellees charged AIR usurious interest and asked the Bankruptcy Court to assess triple penalty pursuant to Texas Finance Code § 305.001,[6] equaling $413,008.68. In addition, Appellant alleged that more than twice the legal amount of interest was charged, and Appellant asked the Bankruptcy Court to award it the principal on which the usurious interest was charged, plus the interest and fees charged by Appellees pursuant to Texas Finance Code § 305.002,[7] which amounted to $1,933,716.92. Appellant asked that those penalties, totaling $2,346,725.60, be assessed against the Appellees, which if done, would net $2,131,995.09 after elimination of Appellees' Claim of $224,730.51. Appellant also alleged that Appellees were in breach of the Loan Agreement because they did not "promptly" refund the usurious interest Appellant believes to have been charged, and thus requested an amount at least equal to the usurious interest charged of $137,669.56. Finally, Appellant requested that Appellees' allowed claim in the bankruptcy be equitably subordinated, pursuant to 11 U.S.C. § 510(c), to all other allowed claims based *855 upon Appellees charging of usurious interest under the Loan Agreement.
Appellees responded by alleging that not only was the Loan Agreement not facially usurious, but even if the Loan Agreement had been accelerated, which it alleges did not occur, the Loan Agreement would still not be usurious because the fees which Appellant believed to be interest, were actually "bona fide" fees, and as such could not be interest. Appellees also asserted that even if the fees were in fact interest, they were to be spread over the contracted-for term of the Loan Agreement, and not the shorter time from closing to bankruptcy, which would make the Loan Agreement non-usurious. Finally, Appellees raised the defenses of the Cure Letters and the Savings Clause to defeat any potential usury.[8] As to Appellant's breach of the Loan Agreement claim, Appellees believed that they were not in breach because no usurious interest was charged, AIR had not performed under the Loan Agreement by paying back principal and interest, and any usurious interest that was charged was "promptly" cured by Appellees' Cure Letters.
The Bankruptcy Court held that the Loan at issue was not usurious, GBCC did not breach the Loan Agreement, equitable subordination was not proper, and the Court disallowed $54,243.06 in unmatured interest.
Based on the foregoing, the issues which the parties have put before this Court for determination are as follows:
1. Whether the Bankruptcy Court erred in its analysis and conclusions as to whether or not certain fees charged by Appellees should be characterized as additional interest on the Loan,
2. Whether the Bankruptcy Court erred in holding that the term of the Loan was not automatically accelerated as of the Petition Date,
3. Whether the Bankruptcy Court erred in the methodology used to spread interest over the term of the Loan,
4. Whether usury violation was prevented by the Savings Clause,
5. Whether usury violation was cured by GBCC's Cure Letters, and
6. Whether GBCC was an assignee without knowledge, and not liable for the usury violation.
DISCUSSION
I. Standard of Review
This Court reviews a bankruptcy court's conclusions of law de novo. In re Hinsley, 201 F.3d 638 (5th Cir.2000). Accordingly, the de novo standard of review is applicable to each issue presented on appeal from the Bankruptcy Court's Summary Judgment Order as they pertain to issues of law.
II. Classification of Fees
A. Usury
The Texas Finance Code prohibits creditors from contracting for, charging or receiving interest in excess of the statutory limit on a loan of money. Tex. Fin. Code § 305.001. To prevail on a claim of usury, a plaintiff must show "(1) a loan of *856 money; (2) an absolute obligation to repay the principal; and (3) the exaction of a greater compensation than allowed by law for the use of the money by the borrower." First Bank v. Tony's Tortilla Factory, Inc., 877 S.W.2d 285, 287 (Tex.1994)(citing Holley v. Watts, 629 S.W.2d 694, 696 (Tex.1982)). Typically, lenders do not charge an interest rate above the legal rate. More commonly, usury is committed when the lender charges the borrower fees disguised as interest which, when added to the interest rate, result in the borrower paying higher than allowable interest rates.
The Texas Supreme Court has stated that "amounts charged or received in connection with a loan are not interest if they are not for the use, forbearance, or detention of money." First USA Management Inc. v. Esmond, 960 S.W.2d 625, 627 (Tex.1997). To determine this, the Court has held that "fees which are an additional charge supported by a distinctly separate and additional consideration, other than the simple lending of money, are not interest and thus do not violate the usury laws." Tony's Tortilla, 877 S.W.2d at 287. Furthermore, Courts may look past the label assigned to the fee in order to determine if the fee is a service charge or disguised interest. Id.
B. Initial and Annual Facility Fee
According to the Loan Agreement, AIR was required to pay an Initial Facility Fee of 1.5% of the Facility Limit. Loan Agreement § 2.7. Appellee argues that the Initial Facility Fee was not interest but a legitimate fee charged which would allow AIR the "option to borrow" money at other times. Aple.'s Rsp. at 16. The Bankruptcy Court noted that in Stedman, the Texas Supreme Court held that "a fee which commits the lender to make a loan at some future date does not fall within [the] definition of [interest]. Instead, such a fee merely purchases an option which permits the borrower to enter into the loan in the future." Stedman v. Georgetown Sav. & Loan Ass'n, 595 S.W.2d 486, 488 (Tex.1979). However, this Court agrees with the Bankruptcy Court in that the Initial Facility Fee is different from the fee in Stedman. The Initial Facility Fee was not paid in advance to hold open an option to borrow money at another time. If it had been, this would be distinct and separate additional consideration. Here, the fee was a condition precedent to the advance of principal under the Loan Agreement after the Loan had already been entered into. Thus, the Court affirms the Bankruptcy Court's holding that the Initial Facility Fee was interest, disguised as an additional fee.
Likewise, the Bankruptcy Court held the Annual Facility Fee was also interest. AIR was required to pay an Annual Facility Fee of 1% of the facility limit, payable on the anniversary date of the Loan. Loan Agreement § 2.7. This fee was supposedly a fee charged to ensure that the line of credit would be available for the term of the Loan Agreement. As the Bankruptcy Court noted, "once a lender agrees to enter into a loan, the lender is required to make the agreed amount of principal available to the borrower or be in breach of the loan." Mims, 275 B.R. at 803. Because it is clear that there is no distinctly separate and additional consideration for the Annual Facility Fee, the Court affirms the Bankruptcy Court's holding that the Annual Facility Fee was additional interest.
C. Due Diligence Deposit
Fidelity charged AIR a Due Diligence Deposit which was necessary to determine if Fidelity should loan money to AIR. The fee of $15,000 was used to conduct *857 background searches, lien searches, field audits, credit reports, and other investigatory activities to determine if the Loan should be made. The portion of the fee that Fidelity did not use in the due diligence process was later refunded to AIR. The Bankruptcy Court outlined factors to assist in evaluating if there was separate and additional consideration for the Due Diligence Deposit including:
(A) what expenses the due diligence deposit is designed to defray; (B) whether the due diligence deposit is a one-time charge or is assessed throughout the life of the loan; (C) whether the due diligence deposit was charged regardless of whether the lender loaned any money or not; (D) whether the due diligence deposit was a separate charge in addition to a commitment fee; and (E) the difference between the lender's internal accounting treatment of the due diligence deposit and that of interest.
Mims, 275 B.R. at 805.
The Court agrees with the Bankruptcy Court's reasoning in using this test to determine that the Due Diligence Deposit was not interest, but rather a fee that was supported by additional and separate consideration. Therefore, the Bankruptcy Court's finding that the Due Diligence Deposit was not interest is affirmed.
D. Attorney's Fees
Pursuant to the Loan Agreement, AIR paid all attorney's fees connected with the Loan which amounted to $12,500 paid to in-house counsel and $2594.05 to Thompson & Knight, outside counsel. Appellant contends that Thompson & Knight's fees are not interest, while the in-house legal fees are hidden interest. In doing so, Appellant differentiates between fees retained by the lender and fees paid to third-party service providers. In Texas Commerce Bank-Arlington v. Goldring, 665 S.W.2d 103 (Tex.1984), the Texas Supreme Court held that attorney fees paid by Petitioner to outside counsel were not interest because they were consideration in addition to the lending of money. The Bankruptcy Court attempted to distinguish Goldring from the case at bar by finding that the nexus between attorney's fees and the Loan was not the making of the Loan, as it was in the case at bar. However, even if there is a nexus to the Loan, the legal services provided by outside counsel were provided as consideration for the fees paid. The Court agrees with Appellant in that separate and additional consideration exists for the legal services provided by Thompson & Knight. Furthermore, the Court agrees with the Bankruptcy Court's finding that in-house Attorney's Fees represent additional disguised interest on the Loan because those fees were not supported by distinctly separate and additional consideration apart from the Loan. Therefore, the Court reverses the Bankruptcy Court's holding that the legal fees paid to Thompson & Knight were disguised interest and finds the fees were supported by separate and additional consideration. Likewise, the Court affirms the Bankruptcy Court's finding that the in-house Attorney's Fees were disguised interest.
E. Collateral Monitoring Fee, Audit Fee and Other Additional Expense Reimbursement
AIR paid a Collateral Monitoring Fee each month, to reimburse Fidelity for expense in evaluating, inspecting, and analyzing AIR's collateral in connection with the Loan. AIR also paid an Audit Fee for costs associated with any audits of AIR's collateral, books and records by Fidelity's appraisers, auditors or accountants. Moreover, AIR paid Additional Expense Reimbursement for expenses incurred in *858 connection with the execution and processing of the Loan. The Bankruptcy Court held all of these fees to be disguised interest. In doing so, the Bankruptcy Court stated that "without the Loan, there would have been no occasion to charge fees at all, and as such, no separate and additional consideration was given." Mims, 275 B.R. at 808-09. The test, as outlined by the Texas Supreme Court is "amounts charged or received in connection with a loan are not interest if they are not for the use, forbearance, or detention of money." Esmond, 960 S.W.2d at 627. Applying this test, the Court finds that the fees at issue are for the use of the money, and according to Esmond, are disguised interest. The Court therefore affirms the Bankruptcy Court's holding that the Collateral Monitoring Fee, Audit Fee and other Additional Expenses Reimbursement are interest.
III. Automatic Acceleration of the Loan
Characterization of the Loan is the initial step in determining if the Loan was usurious. Next, the Court must perform a spreading analysis. "`Spreading' can best be defined as a method of allocating over the life of a loan (or a portion of the loan, in the event the loan maturity is accelerated or the loan is prepaid) charges that the parties themselves have called interest or that a court would deem interest regardless of the label given the charge by the parties." Armstrong v. Steppes Apartments, Ltd., 57 S.W.3d 37, 47-48 (Tex.App. Fort Worth, pet. denied.). Thus, the Court must ascertain the term of the Loan for the purpose of the spreading analysis.
According to the Loan Agreement, upon the filing of bankruptcy, "all of the Obligations owing by [AIR] to [Fidelity] under any of the Transaction Documents shall thereupon be immediately due and payable, without demand, presentment, notice of demand or of dishonor and nonpayment, or any other notice or declaration of any kind, all of which are hereby expressly waived by [AIR]." Loan Agreement § 9. Clearly, Fidelity drafted this section in the Loan Agreement to allow for automatic acceleration upon filing for bankruptcy. The Bankruptcy Court is correct in holding that "clauses that terminate or modify a debtor's rights in an executory contract upon the filing of a bankruptcy petition are generally rendered unenforceable and are known as ipso facto clauses." Mims, 275 B.R. at 810 (citing 11 U.S.C. § 365(e)(1)). However, the Bankruptcy Court erred in holding the acceleration clause unenforceable in this instance because it overlooked the exception to the general rule. Section 365(e)(2)(B) of the Bankruptcy Code provides in pertinent part,
(e)(2) Paragraph (1) of this subsection does not apply to an executory contract or unexpired lease of the debtor, whether or not such contract or lease prohibits or restricts assignment of rights or delegation of duties, if
(B) such contract is a contract to make a loan, or extend other debt financing or financial accommodations, to or for the benefit of the debtor, or to issue a security of the debtor.
Thus, it is clear that the Bankruptcy Code's invalidation of ipso facto clauses does not apply in this situation involving a contract to make a loan for the benefit of the debtor. Accordingly, the Court reverses the Bankruptcy Court's holding that the Loan was not accelerated. The Loan's maturity date was accelerated upon AIR's bankruptcy filing on the Petition Date.
IV. Spreading Analysis
Because the Court holds that the Loan was accelerated on the Petition date, we *859 next turn to the spreading analysis. The spreading analysis should be performed by comparing the maximum amount of interest for which the Appellees were entitled to lawfully contract, charge or receive through the Petition Date with the total amount of interest actually charged, including fees that are judicially determined to be interest. We adopt the Bankruptcy Court's analysis in finding that $41,357.85 is the maximum interest Fidelity could have charged AIR through the Petition Date. The Court also adopts the Bankruptcy Court's finding that $165,903.22 is the total amount of interest actually charged after subtracting Thompson & Knight's attorney's fees which this Court found was not interest.[9] Thus, the Court holds that Fidelity collected usurious interest.
V. Savings Clause
The Loan Agreement savings clause provided that:
The parties hereto intend to contract in strict compliance with applicable usury law from time to time in effect. In furtherance thereof, the parties hereto stipulate and agree than none of the terms and provisions contained in this Agreement or any other Transaction Document shall ever be construed to create a contract to pay, for the use, forbearance or detention of money, interest in excess of the maximum amount of interest permitted to be charged by applicable law from time to time in effect . . .
Loan Agreement § 2.14.
Usury savings clauses are valid in Texas and, in appropriate circumstances, are enforced to defeat a violation of the usury laws. Armstrong, 57 S.W.3d at 46. The mere presence of a usury savings clause in a Loan Agreement will not save a transaction that is usurious on its face. Id. In analyzing the transaction to determine if it is usurious on its face, the Texas Supreme Court held that "[t]he contract under construction will not be found usurious on its face unless it expressly entitles the lender, upon the happening of a contingency or otherwise, to exact interest at a rate greater than that allowed by law." Smart v. Tower Land & Inv. Co., 597 S.W.2d 333, 341 (Tex.1980). The Bankruptcy Court held that the Minimum Usage Fee was pure interest. The Minimum Usage Fee was a fee charged to AIR every month because the amount of interest income accruing on the outstanding principal balance was less than the stated amount. While it was hypothetically possible for AIR to borrow enough that the Minimum Usage Fee would not be charged, this never occurred. The effect of this was to require AIR to pay usurious interest on the actual amount of principal advanced to AIR for its use, from the inception of the Loan to the maturity date. In light of this usurious interest, the Court holds that the Loan Agreement was usurious on its face. Under this interpretation, the Court finds the Savings Clause is ineffective because it is directly contrary to the explicit terms of the contract.
VI. GBCC's Defenses
A. Cure
July 8, 1999, GBCC discovered the possibility that the Minimum Usage Fee as collected under the Loan Agreement was usurious. On July, 9 1999, GBCC gave written notice to AIR of the possible violation *860 and credited AIR's account $68,825. On July 12, 1999, GBCC sent a second letter to AIR indicating that an additional $4,070.96 had been credited to AIR's account. GBCC then sent a third letter November 12, 1999 reconfirming the credits given for any arguable excess interest and stating that no Minimum Usage Fee had been charged since May 28, 1999, nor would it be. GBCC asserts that these letters cured any usury law violation. The Bankruptcy Court held that "because the Loan Agreement was not facially usurious, nor was usurious interest charged because acceleration did not occur, it is therefore not necessary to reach a decision as to the other issues raised by the parties as to [Appellant]'s claim for usury," namely the effectiveness of GBCC's Cure Letters. In light of this Court's findings that the Loan was usurious on its face and that usurious interest was charged, the case is remanded to the Bankruptcy Court to determine if the Cure Letters did, in fact, cure the violation.
B. Assignee Liability
Assuming, arguendo, that the letters did not cure the violation, GBCC next asserts that it was an assignee without knowledge on the Loan Agreement. As such, GBCC claims it should not be liable for any and all usury under the Loan. The Court likewise remands this issue to the Bankruptcy Court to resolve in the first instance.
VII. Statutory Penalties
If the Bankruptcy Court determines that the letters did not cure the violation, and also that GBCC was liable as an assignee under the Loan Agreement, then the Bankruptcy Court must also determine the penalties applicable to GBCC in accordance with this Court's holding as to the usury violation.
CONCLUSION
Having thoroughly reviewed the appellate record, the arguments of the parties, and the relevant law, the Court is of the opinion that the March 15, 2002 order of the Bankruptcy Court granting summary judgment should be AFFIRMED in part, and REVERSED and REMANDED in part.
So Ordered.
NOTES
[1] Section 1.1 of the Loan Agreement provides in pertinent part:
"Borrowing Base" means an amount equal to the sum, determined by [Appellees] from time to time, of (a) 80% of the face amount of Eligible Accounts, plus (b) the lesser of 50% of the value of Eligible Inventory, valued at the lower of cost or market. [Appellees] may change the percentage of Eligible Accounts or Eligible Inventory constituting the Borrowing Base from time to time based upon dilution and other factors deemed appropriate by [Appellees].
[2] Section 303.009(a) of the Texas Finance Code provides in pertinent part that "if the rate computed for the weekly, monthly, quarterly, or annualized ceiling is less than 18 percent a year, the ceiling is 18 percent a year."
[3] Section 305.103(a) of the Texas Finance Code provides:
(a) A person is not liable to an obligor for a violation of this subtitle if:
(1) not later than the 60th day after the date the creditor actually discovered the violation, the creditor corrects the violation as to that obligor by taking any necessary action and making any necessary adjustment, including the payment of interest on a refund, if any, at the applicable rate provided for in the contract of the parties; and
(2) the person gives written notice to the obligor of the violation before the obligor gives written notice of the violation or files an action alleging the violation.
[4] The July 9, 1999 letter from Appellees to AIR provides in pertinent part:
. . . pursuant to applicable law, this letter is to notify [AIR] that on July 9, 1999, [Appellees] discovered that [they] had violated the interest rate limitation provisions of Texas law by charging AIR interest in excess of the maximum amount authorized by law in connection with the Loan and Security Agreement dated June 30, 1998 . . . [and] pursuant to applicable law, on July 9, 1999, [Appellees] corrected the above violation by crediting the account of AIR the amount of [$68,825.40].
[5] The July 12, 1999 letter from Appellees to AIR provides in part that "on July 12, 1999, [Appellees] credited the account of AIR the additional amount of [$4,070.96]. [Appellees have] now credited the AIR account for all interest charged in excess of the maximum rate allowed by law plus interest on such amount".
[6] Section 305.001(a) of the Texas Finance Code provides:
(a) A person who contracts for, charges, or receives interest that is greater than the amount authorized by this subtitle is liable to the obligor for an amount that is equal to the greater of:
(1) three times the amount computed by subtracting the amount of interest allowed by law from the total amount of the interest contracted for, charged, or received; or
(2) $2,000 or 20 percent of the amount of the principal, whichever is less.
[7] Section 305.002(a) of the Texas Finance Code provides in pertinent part: "[A] person who contracts for, charges, or receives interest that is greater than twice the amount authorized by this subtitle is liable to the obligor for the principal amount on which the interest is contracted for, charged, or received as well as interest and all other charges."
[8] Appellant argued that Appellees' Cure Letters defense failed not only because the letters lacked the required content, but the letters also failed because they did not correct the usury violation that Appellant believed occurred. Appellant also argued that the Savings Clause failed not only because the Loan Agreement was facially usurious, but for a Savings Clause to be effective, the Clause must be effectuated by the lender and also correct the entire violation that Appellant believes occurred.
[9] This amount is determined by subtracting $2,594.05 (Thompson & Knight Attorney's fees) from 132,640.19 (the Bankruptcy Court's fee determination), to get $130,046.14. Then, the amount of interest Fidelity actually charged as interest ($35,857.08) is added, which is $165,903.22. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1263086/ | 641 S.E.2d 858 (2007)
STATE of North Carolina
v.
Arles EUCEDA-VALLE.
No. COA06-898.
Court of Appeals of North Carolina.
March 20, 2007.
Attorney General Roy Cooper, by Assistant Attorney General Mary Carla Hollis, for the State.
Paul F. Herzog, Fayetteville, for defendant.
LEVINSON, Judge.
Defendant (Arles Euceda-Valle) appeals judgments entered upon his convictions for trafficking in cocaine by transportation in excess of 400 grams; conspiracy to traffic in cocaine by transportation in excess of 400 grams; and intentionally maintaining a vehicle for the keeping of controlled substances. We find no error in part and reverse in part.
The pertinent facts may be summarized as follows: Officer S.R. Spence of the Henderson Police Department testified that on 20 April 2005, at approximately 9:00 a.m., he observed a 1996 Nissan Maxima traveling north on Interstate 85. He believed the vehicle was exceeding the posted speed limit of 65 miles per hour and was following another vehicle too closely. Spence pulled his patrol unit behind the vehicle and ascertained that it was traveling 71 miles per hour. Spence also received information from "communications" that the vehicle was registered to an individual residing in Graham, North Carolina. Spence initiated a vehicle stop.
*861 Spence approached the vehicle on the passenger side and asked defendant, the driver, for his license and the vehicle registration. Defendant's license indicated that he lived in Burlington, North Carolina. The Nissan was registered to Fabricio Sosa Valle. The car's passenger was later identified as Nelson Gallo-Barahona (Barahona). In response to Spence's inquiry regarding ownership of the vehicle, defendant replied that it belonged to "a friend . . . Frabricio." Spence further testified that defendant and Barahona were extremely nervous, to the point that both men's shirts were "bouncing off" their chests. And Barahona would not look at Spence during the traffic stop. In addition, there were several empty Red Bull (energy drink) cans inside the Nissan, and Spence smelled a strong odor of air freshener emanating from inside the vehicle.
Spence requested that defendant have a seat in the patrol car. Spence continued to observe that defendant was "overly nervous" and that the carotid artery in his neck was "beating profusely." Due to defendant's nervous behavior, Spence contacted Deputy W.R. Parrish of the Vance County Sheriff's Department and requested that he assist with the traffic stop. Defendant would not look at Spence when they conversed. Defendant informed Spence that he had been in possession of the car for two to three days. Defendant also stated he and Barahona were traveling to Richmond, Virginia and that the two would be there for one day.
When Parrish arrived, Spence was in the process of writing defendant a warning ticket for speeding. Spence then handed the ticket to defendant. When defendant attempted to exit Spence's patrol unit, Spence told defendant to remain in the car while he spoke with Parrish. The officers decided to conduct an exterior canine sniff by "Argo," a specially trained police canine under Parrish's supervision.
Argo "alerted" at the driver's side door; driver's side rear bumper; and on the passenger side. Parrish then placed Argo inside the car, and he alerted to the base of the rear seat. Based upon the alerts, the officers conducted a search of the Nissan and located ten cellophane packages on top of and around the spare tire under a mat in the trunk. The packages were wrapped in layers of fabric softener sheets and were later determined to consist of 4.98 kilograms of cocaine hydrochloride.
Defendant was convicted of trafficking in cocaine by transportation in excess of 400 grams, conspiracy to traffic in cocaine by transportation in excess of 400 grams, and intentionally maintaining a vehicle for the keeping of controlled substances. Defendant now appeals.
In defendant's first argument, he contends that the trial court erred by failing to dismiss the charge of intentionally maintaining a vehicle for keeping controlled substances. Specifically, defendant asserts that the State failed to present substantial evidence indicating that defendant had used the vehicle for keeping the cocaine for a sufficient duration of time.
N.C. Gen.Stat. § 90-108(a)(7) (2005) provides, in pertinent part, that:
[i]t shall be unlawful for any person . . . [t]o knowingly keep or maintain any . . . vehicle, . . . which is resorted to by persons using controlled substances in violation of this Article for the purpose of using such substances, or which is used for the keeping or selling of the same in violation of this Article.
We do not reach the merits of this argument because defendant presents a different argument on appeal than that which he argued to the trial court. See State v. Sharpe, 344 N.C. 190, 194, 473 S.E.2d 3, 5 (1996) (cannot "swap horses" between courts). Accordingly, "[w]hen a party changes theories between the trial court and an appellate court, the assignment of error is not properly preserved and is considered waived." State v. Shelly, ___ N.C.App. ___, ___, 638 S.E.2d 516, 524 (2007)(defendant may not change arguments concerning his "motion for judgment of acquittal"). In the *862 present case, defendant's motion to dismiss at trial was based upon his contention that he did not have an "ownership interest [in the vehicle] short of possession," and because he had no actual knowledge that there was a controlled substance in the vehicle. However, on appeal, defendant argues the trial court erred by denying his motion to dismiss because the State failed to prove that he possessed the Nissan with the cocaine in the trunk for a substantial period of time. Accordingly, as defendant presents a different theory to support his motion to dismiss than that he presented at trial, this assignment of error is waived. See Shelly, ___ N.C.App. at ___, 638 S.E.2d at 524 (defendant argued lack of premeditation and deliberation at the trial level, but argued a corpus delicti theory on appeal).
Defendant next contends that the trial court erred by denying his motion to suppress the evidence of the cocaine discovered in the vehicle. Specifically, defendant asserts that the trial court's findings of fact made after the suppression hearing fail to support its legal conclusions that the exterior canine sniff was conducted in accordance with his Constitutional protections.
An appellate court accords great deference to the trial court's ruling on a motion to suppress because the trial court is entrusted with the duty to hear testimony (thereby observing the demeanor of the witnesses) and to weigh and resolve any conflicts in the evidence. Our review of a trial court's denial of a motion to suppress is strictly limited to a determination of whether [its] findings are supported by competent evidence, and in turn, whether the findings support the trial court's ultimate conclusion. However, the trial court's conclusions of law are reviewed de novo and must be legally correct.
State v. Hernandez, 170 N.C.App. 299, 303-04, 612 S.E.2d 420, 423 (2005) (internal quotation marks and citations omitted). As defendant has not specifically assigned error to the trial court's findings of fact, those findings are binding on appeal, and the sole question for this Court is whether the trial court's findings support its conclusions of law. State v. Cheek, 351 N.C. 48, 63, 520 S.E.2d 545, 554 (1999).
The relevant findings of fact follow:
4. That Officer Spence approached the vehicle and determined that the defendant was the driver and that the vehicle was not registered to the defendant. He also determined that the driver and the occupant did not speak English very well. He also observed a strong smell of air freshener in the vehicle. And he observed that both the driver and the occupant were very nervous.
5. Officer Spence asked the defendant to step to his vehicle. The defendant continued to be very nervous. After determining that the vehiclethat the Nissan vehicle did not belong to the defendant and that the defendant had been in possession of that vehicle for only a few days, Officer Spence called for Deputy Parrish with the canine dog, Argo to join him at that location.
6. . . . Immediately after writing the traffic warning ticket Officer Spence instructed the defendant to remain in his vehicle while Deputy Parrish walked the dog, Argo, around the exterior of the Nissan vehicle.
. . . .
10. . . . Officer Spence requested the canine unit to do a walk-around of the exterior of the Nissan vehicle after writing the traffic warning ticket and after giving the ticket to the defendant and after instructing the defendant to remain in his controlhis patrol vehicle. Based upon certain factors, including: that the car was not owned or registered to the driver or the passenger; that numerous cans of Red Bull were in the vehicle indicating the driver may have traveled some distance and consumed these beverages to stay alert; that there was a single key in the ignition; that there was a strong odor of air freshener in the vehicle; that the occupants *863 of the vehicle were very nervous and there appeared to be some confusion between the occupants as to specifically where they were going in Virginia.
The pertinent conclusions of law follow:
2. [T]hat under the totality of the circumstances Officer Spence had a reasonable and articulable suspicion that there may be some criminal activity afoot, including the possibility of possession of controlled substances sufficient to temporarily detain the defendant for a brief period to permit a drug detection dog, who was already on the scene, to walk around the Nissan vehicle for the purpose of sniffing the vehicle for the presence of drugs;
. . . .
5. That the delay occasioned by the drug dog's walk around the vehicle was brief and the dog was on the scene before Officer Spence had completed his traffic investigation and had written the traffic warning citation;
6. That the conduct of Officer Spence and Parrish was not unlawful or unreasonable and did not violate any statutory constitutional right of the defendant in the traffic stop, in the canine sniffvehicle sniff, in the search of the trunk and in the seizure of the drugs located in the trunk and in the arrest of the defendant.
The Fourth Amendment to the federal constitution provides, in pertinent part, that "[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated. . . ." U.S. Const. amend. IV. Article I, Section 20 of the North Carolina Constitution provides that:
General warrants, whereby any officer or other person may be commanded to search suspected places without evidence of the act committed, or to seize any person or persons not named, whose offense is not particularly described and supported by evidence, are dangerous to liberty and shall not be granted.
The United States Supreme Court has articulated "that the Fourth Amendment does not give rise to a legitimate expectation of privacy in possessing contraband or illegal drugs, and as such, a well-trained dog that alerts solely to the presence of contraband during a walk around a car at a routine traffic stop `does not rise to the level of a constitutionally cognizable infringement.'" State v. Branch, 177 N.C.App. 104, ___, 627 S.E.2d 506, 508-09 (quoting Illinois v. Caballes, 543 U.S. 405, 409, 125 S. Ct. 834, 838, 160 L. Ed. 2d 842, 847 (2005)), dis. review denied, 360 N.C. 537, 634 S.E.2d 220 (2006). However, in order to further detain a suspect from the time the warning ticket is issued until the time the canine unit arrives, there must be "reasonable suspicion, based on specific and articulable facts, that criminal activity is afoot." State v. McClendon, 350 N.C. 630, 636, 517 S.E.2d 128, 132 (1999). "The specific and articulable facts, and the rational inferences drawn from them, are to be `viewed through the eyes of a reasonable, cautious officer, guided by his experience and training.'" Hernandez, 170 N.C.App. at 308, 612 S.E.2d at 426 (quoting State v. Watkins, 337 N.C. 437, 441, 446 S.E.2d 67, 70 (1994)). "In determining whether the further detention was reasonable, the court must consider the totality of the circumstances." Id. (citing State v. Munoz, 141 N.C.App. 675, 682, 541 S.E.2d 218, 222 (2001)).
Because the canine sniff occurred after defendant was handed the warning ticket, we analyze this case in accordance with McClendon. We hold that the trial court's findings of fact support its legal conclusion that law enforcement had a reasonable suspicion necessary to conduct the exterior canine sniff of the vehicle. Defendant was extremely nervous and refused to make eye contact with the officer. In addition, there was smell of air freshener coming from the vehicle, and the vehicle was not registered to the occupants. And there was disagreement between defendant and the passenger about the trip to Virginia. We conclude that these facts support a basis for a reasonable and cautious law enforcement officer to suspect that criminal activity is afoot. See McClendon, 350 N.C. at 637, 517 S.E.2d at 133 (initial confusion *864 as to owner of the vehicle, extreme nervousness, refusal to make eye contact and other circumstances supported reasonable suspicion); see also Hernandez, 170 N.C.App. at 309, 612 S.E.2d at 426-27 (reasonable suspicion supported by nervousness and strong odor or air freshener in vehicle). This assignment of error is overruled.
In defendant's final argument, he contends that the trial court erred by failing to dismiss the charge of conspiracy to traffic in cocaine by transportation in excess of 400 grams. In particular, defendant asserts that the State failed to present substantial evidence that defendant and Barahona entered into an express or implied agreement to traffic in the cocaine. This argument has merit.
When ruling on a motion to dismiss, "the trial court must determine only whether there is substantial evidence of each essential element of the offense charged and of the defendant being the perpetrator of the offense." State v. Crawford, 344 N.C. 65, 73, 472 S.E.2d 920, 925 (1996).
Evidence is substantial if it is relevant and adequate to convince a reasonable mind to accept a conclusion. In considering a motion to dismiss, the trial court must analyze the evidence in the light most favorable to the State and give the State the benefit of every reasonable inference from the evidence. The trial court must also resolve any contradictions in the evidence in the State's favor. The trial court does not weigh the evidence, consider evidence unfavorable to the State, or determine any witness' credibility.
State v. Robinson, 355 N.C. 320, 336, 561 S.E.2d 245, 255-56 (2002) (internal quotation marks and citations omitted). "`[T]he rule for determining the sufficiency of evidence is the same whether the evidence is completely circumstantial, completely direct, or both.'" State v. Crouse, 169 N.C.App. 382, 389, 610 S.E.2d 454, 459 (quoting State v. Wright, 302 N.C. 122, 126, 273 S.E.2d 699, 703 (1981)), disc. review denied, 359 N.C. 637, 616 S.E.2d 923 (2005).
"A criminal conspiracy is an agreement, express or implied, between two or more persons to do an unlawful act . . ., and a conspiracy generally is established by a number of indefinite acts, which taken collectively point to the existence of a conspiracy." State v. Burmeister, 131 N.C.App. 190, 199, 506 S.E.2d 278, 283 (1998) (citations omitted). "In order to find defendant is guilty of conspiracy to traffic in cocaine in the instant case, the State must prove that defendant entered into an agreement to traffic by possessing cocaine weighing at least 28 grams and less than 200 grams, and intended the agreement to be carried out at the time it was made." State v. Jenkins, 167 N.C.App. 696, 700, 606 S.E.2d 430, 433 (citing State v. Diaz, 155 N.C.App. 307, 319, 575 S.E.2d 523, 531 (2002), aff'd, 359 N.C. 423, 611 S.E.2d 833 (2005). "In order to prove conspiracy, the State need not prove an express agreement; evidence tending to show a mutual, implied understanding will suffice." State v. Morgan, 329 N.C. 654, 658, 406 S.E.2d 833, 835 (1991)(citing State v. Bell, 311 N.C. 131, 141, 316 S.E.2d 611, 617 (1984)).
In the instant case, we conclude the State did not present substantial evidence of an agreement between defendant and Barahona. Taken in the light most favorable to the State, Crawford, 344 N.C. at 73, 472 S.E.2d at 925, the evidence shows essentially that defendant and Barahona were seated in an automobile where cocaine was confiscated in the trunk; that both men were nervous; and that an odor of air freshener emanated from the vehicle. There was no evidence of, e.g., conversations between the two men; unusual movements or actions by defendant and/or Barahona; large amounts of cash on Barahona; the possession of weapons; or anything else suggesting an agreement. "While conspiracy can be proved by inferences and circumstantial evidence, it `cannot be established by a mere suspicion, nor does a mere relationship between the parties or association show a conspiracy.'" State v. Benardello, 164 N.C.App. 708, 711, 596 S.E.2d 358, 360 (2004)(quoting State v. Massey, 76 N.C.App. 660, 662, 334 S.E.2d 71, 72 *865 (1985)); compare Jenkins, 167 N.C.App. at 701, 606 S.E.2d at 433 (evidence sufficient to support a charge of conspiracy when defendant was discovered in a truck with two other men, illegal narcotics were found sitting between defendant and one of the other men, one of the men had a large amount of cash in his lap and a pistol was discovered inside the passenger compartment). We agree with defendant that there was insufficient evidence to support the conviction for conspiracy to traffic in cocaine by transportation in excess of 400 grams, and therefore reverse the judgment for this offense.
No error in part, reversed in part.
Judges McCULLOUGH and BRYANT concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1279623/ | 279 N.W.2d 609 (1979)
203 Neb. 589
STATE of Nebraska ex rel. NEBRASKA STATE BAR ASSOCIATION, Relator,
v.
Leonard DUNKER, Respondent.
No. 41434.
Supreme Court of Nebraska.
June 5, 1979.
*610 James W. Hewitt, Lincoln, for relator.
Paul L. Douglas, Atty. Gen., and Chauncey C. Sheldon, Asst. Atty. Gen., Lincoln, for respondent.
Heard before KRIVOSHA, C. J., BOSLAUGH, McCOWN, CLINTON and BRODKEY, JJ., and STUART, District Judge, and KUNS, Retired District Judge.
BRODKEY, Justice.
This is an original disciplinary proceeding brought in the name of the State of Nebraska on relation of the Nebraska State Bar Association against Leonard Dunker, a lawyer duly admitted and licensed to practice his profession in this state. Following hearings held before the Committee on Inquiry of the Third Judicial District and the Advisory Committee, formal charges against the respondent were filed in the Supreme Court of Nebraska on May 6, 1977. This court then appointed a referee to hear the matter, who then held a hearing on the charges. The testimony adduced at that hearing, by stipulation of the parties, consisted principally of the testimony adduced at the hearing held before the Committee on Inquiry of the Third Judicial District. The referee filed his report in this court on October 11, 1978. The respondent filed his exceptions to the report of the referee on October 13, 1978, and thereafter perfected his appeal to this court.
The formal charge, as filed in this matter, consists of 14 separate paragraphs containing specific allegations of misconduct on the part of the respondent, plus an unnumbered concluding paragraph alleging violations of certain sections of the Code of Professional Responsibility. In his report, the referee summarized the factual allegations of the formal charge against the respondent into 12 separate items, alphabetically designated as A through L, as follows:
"A. Filed an Affidavit of Mailing Notice that is claimed to have been back-dated.
*611 "B. Threatened more expense and delay if they got their own lawyer.
"C. Filed a waiver of notice and recommendation in the District Court of Saunders County, Nebraska, signed by Reynold M. Kubik, when the Respondent was guardian of Reynold M. Kubik and knew Reynold M. Kubik to be incompetent.
"D. Filed in the County Court of Saunders County a recommendation that Respondent not be removed as Administrator signed by Reynold M. Kubik, when Respondent knew Kubik to be incompetent and knew that Respondent was Reynold M. Kubik's guardian.
"E. Respondent filed with the County Court of Saunders County an approval of settlement agreement signed by Reynold M. Kubik without informing the Court that Reynold M. Kubik was incompetent and that Respondent was his guardian.
"F. Respondent filed with the County Court of Saunders County a stipulation and consent of heirs signed by Reynold M. Kubik without informing the Court that Reynold was incompetent and that Respondent was his guardian.
"G. Respondent filed with the County Court of Saunders County a waiver of notice of hearing on petition for final settlement, approval of final report, determination of fees and commissions, payments of mortgages and notes, distribution of estate, and discharge, signed by Reynold M. Kubik without informing the Court that Reynold M. Kubik was incompetent and that Respondent was his guardian.
"H. That the estate of which Respondent was administrator and acting as attorney was required to file a Federal Estate Tax Return on September 24, 1970. That Respondent made no arrangements to file the Federal Estate Tax Return or pay the Federal Estate Tax until after the due date. That Respondent finally arranged for another attorney to prepare and file the Federal Estate Tax Return, which was done on June 9, 1972. That the late filing and payment resulted in penalties and interest in the amount of $3,826.64 assessed against the estate.
"I. That on April 30, 1973, Judith R. Kubik, as an heir of the estate, assigned a portion of her proceeds of the estate to Gateway Bank and that respondent ignored the assignment and made payment direct to Judith R. Kubik.
"J. That Respondent failed to promptly pay premiums on his surety bond, payment not being made until March 1, 1974.
"K. That the Judge of Saunders County Court, claiming failure on the part of Respondent to render an account of his administration within the time ordered by the Court, ordered the Respondent to show cause why he should not be removed as Administrator.
"L. That the Administrator in making distribution from the estate deducted from the share of certain of the beneficiaries an amount of $400 each, which was to be withheld to apply on another attorney's fees in the land sale proceeding." In his report, the referee has also added an additional item M in summary of the foregoing items A to L, reading as follows: "That all of the allegations, if true, would establish a pattern of neglect, misrepresentation, conflict of interest, and conduct that adversely reflects on Respondent's fitness to practice law in violation of Section 7-104 R.R.S. and Canon I Dr. 1-102A 4 and 6, Canon V Dr. 5-105A and B, Canon VI Dr. 6-101A 3." In his report, the referee found that the charges designated as A, B, and I, were not established by clear and convincing evidence; but that the charges referred to as C, D, E, F, G, H, J, K, and L were all established by clear and convincing evidence. The referee also found that the evidence established a pattern of neglect reflecting on respondent's fitness and competence to practice law; and recommended that respondent be suspended from the practice of law for 3 years.
In his brief, respondent alleges only two assignments of error: (1) The referee erred in failing to consider evidence favorable to respondent on charges H and K set forth in the referee's report; and (2) the discipline recommended by the referee is excessive.
*612 It is the latter issue that we are principally concerned with in this case, as it appears that there is no real dispute as to the underlying facts of what transpired, nor of the fact that respondent was guilty of infractions of the Code of Professional Responsibility of the Nebraska State Bar Association. In his argument on appeal, counsel for respondent concedes this is true, but alleges that the referee failed to take into consideration certain mitigating circumstances and evidence on certain of the charges, and that the recommended period of suspension for a term of 3 years is excessive and unjustified.
By way of a general factual background to aid in understanding this case, it appears from the record that William Kubik, Sr., who was a farmer living near Prague, Nebraska, died intestate on June 24, 1969, leaving as his heirs his widow Judith; his sons Wilfred, Reynold, and William, Jr.; and his daughters Rita, Ramona, Marie, and Judith Ann. Shortly before the death of the decedent, respondent had filed divorce proceedings against him on behalf of Mrs. Kubik. Shortly thereafter, respondent was asked by the surviving widow, Judith, to serve as the administrator of decedent's estate, and he accepted.
During the course of the estate proceedings, William, Jr., and Wilfred, two of the sons of the decedent, filed lawsuits in the District Court for Saunders County, alleging an oral agreement with their father to convey certain lands to them. Another attorney represented the sons in the action. Respondent filed a motion to make more definite and certain in each lawsuit and then recommended to the heirs that they engage William L. Walker, a Lincoln attorney, as their attorney. A settlement agreement was finally reached and the real estate in question was sold on August 5, 1972.
One of the principal categories of charges, found by the referee to be substantiated by the evidence, involved respondent's dealings with another son of the deceased, Reynold Kubik. There is little question in the evidence but that Reynold was lacking in intellect and mentally slow, the degree thereof, however, being a matter of dispute. On February 9, 1971, Reynold was committed to the Lincoln Regional Center by the mental health board of Lancaster County. On November 11, 1971, he was placed on convalescent leave by the Regional Center, and was discharged from the Regional Center on August 17, 1972. On October 24, 1972, he was readmitted to the Regional Center a second time, following a second determination of incompetency by the mental health board. Prior to this time, however, on March 16, 1971, respondent was appointed the guardian of Reynold Kubik by the county court of Lancaster County, and he continued in that capacity until he was discharged on October 2, 1973. While acting as administrator of the estate of William Kubik, Sr., and during the time the estate proceeding was pending in Saunders County, respondent presented various filings and papers, on one occasion to the District Court and on four instances to the county court of Saunders County, which filings and papers did not reveal that Reynold was under guardianship as an incompetent. In his report the referee found five of the violations, supported by the evidence, involved Reynold Kubik. Specifically, on March 31, 1972, respondent filed with the county court of Saunders County a recommendation that he not be removed as administrator. The recommendation was signed by Reynold M. Kubik. On April 25, 1972, respondent filed with the Saunders County court an approval of settlement agreement, which was also signed by Reynold Kubik. On March 14, 1973, respondent filed a stipulation and consent of heirs signed by Reynold Kubik. On June 27, 1973, respondent filed with the Saunders County court a waiver of notice on the petition for final settlement, which was also signed by Reynold Kubik. At no time did respondent notify the county court of Saunders County that Reynold Kubik had been declared incompetent or that he, respondent, was Reynold Kubik's guardian. Counsel for respondent concedes that respondent did not advise the court of Reynold Kubik's guardianship, but points out that everyone knew Reynold's condition and *613 that the other heirs also signed the various pleadings and documents along with Reynold. Counsel for respondent argues that respondent's sins were sins of omission and not commission, and that no one suffered financial loss as a result thereof. In his report, however, the referee found that the respondent lacked an accurate understanding of a guardian's duties to his ward, an attorney's duty to his client, and an administrator's duty to the court and to the beneficiaries of the estate.
Item H of the referee's report refers to respondent's failure to file a federal estate tax return, which was due on September 24, 1970. Respondent's explanation for this failure was that he knew such a return would have to be made but because of his inexperience in dealing with estates of that size he did not know the date such a return would be required, and the matter slipped his mind until attorney William L. Walker, who was consulting with him about the estate, inquired about the return. The record reveals that the estate tax return was prepared by attorney Walker, although it is not completely clear whether in so doing he was actually employed by the heirs, or was assisting respondent. In any event, attorney Walker prepared the estate tax return in June 1972, and on October 12, 1972, respondent paid the Internal Revenue Service $11,914.73, of which $3,098.72 was penalty and interest. Respondent contends that the referee failed to take into consideration certain ameliorating circumstances, to wit, that he advised the heirs by letter that he would reduce his fee for his services (estimated to be in the neighborhood of $10,000) to the figure of $7,000, in order to reimburse the heirs for the penalties and interest assessed against the estate as the result of the late filing of the federal estate tax return. In a subsequent meeting in April 1974, respondent testified he told the heirs he would reduce his fees; and the heirs present at the meeting, with their respective counsel, Walker and Inbody, agreed to the plan. The record also reveals respondent did not file the Nebraska or federal fiduciary returns in the estate when they were due, and, as a result, penalties and interest in the amount of $1,095.33 were assessed against the estate. Respondent paid the penalties and interest out of his own funds. He also points out that neither the heirs nor the estate suffered any loss as the result of the late filing.
Item K of the referee's summary of charges concerns the allegations contained in paragraph XIII of the charges themselves with reference to the respondent's citation by County Judge Edstrom for failure to render an account of his administration within the time ordered by the court, and also the order to show cause issued on January 21, 1972, why respondent should not be removed from office as the administrator of the estate for the reasons stated therein. Respondent points out that the hearing was never held on the order to show cause nor was he ever removed as administrator; and he further contends he did not receive a copy of the citation entered by Judge Edstrom, and that the first time he was aware of the citation was when he received the order to show cause some 3 weeks later, at which time he immediately went to Wahoo and discussed the matter with Judge Edstrom.
We now turn to a consideration of the proper sanction to be imposed in this case. As previously stated, the referee recommended that respondent be suspended from the practice of law for a period of 3 years. The Attorney General's office, as counsel for the State of Nebraska ex rel. Nebraska State Bar Association, relator, in its brief, finds merit in respondent's assignment of error with regard to the excessiveness of the discipline recommended by the referee; and, notwithstanding its conclusion that the matters in this case were handled in an irregular fashion and with inexcusable disregard for potential conflicts of interest, states: "that suspension for a period of no more than six months would be appropriate." The Attorney General's brief also states, however: "It is neither our province nor desire to advocate rejection of the referee's recommendation as being clearly wrong."
*614 In this case, respondent is 59 years of age and has been practicing law in this state for approximately 35 years. Respondent points out that were we to follow the recommendations of the referee and suspend him for 3 years, he would be 62 or 63 years of age by the time his suspension expired, with scarce hope of retaining his present clients, and would be faced with the necessity of attempting to reestablish his law practice at an advanced age. The records of this court, however, reveal that respondent has had prior disciplinary problems with the Nebraska State Bar Association. In 1955, respondent was subjected to a judgment of censure by this court because of his professional misconduct. State ex rel. Nebraska State Bar Assn. v. Dunker, 160 Neb. 779, 71 N.W.2d 502 (1955). In determining the sanction to be applied for violations of the Code of Professional Responsibility we may properly consider respondent's history and record in this regard. State ex rel. Nebraska State Bar Assn. v. Hollstein, 202 Neb. 40, 274 N.W.2d 508 (1979); Bluestein v. The State Bar of California, 13 Cal. 3d 162, 118 Cal. Rptr. 175, 529 P.2d 599 (1975). It is a well-established rule in this state that lawyers who are granted licenses to practice their profession in this state thereby voluntarily assume certain obligations and duties as officers of the courts, and in the performance thereof they must conform to certain standards in relation to clients, to the courts, to the profession, and to the public. State ex rel. Nebraska State Bar Assn. v. Dunker, supra. In view of the totality of the circumstances existing in this case, we conclude that the recommendation of the referee for suspension of respondent for a period of 3 years is, perhaps, too severe; on the other hand, we also feel that suspension for a period of only 6 months, as recommended by the Attorney General, is, under the facts of this case, inadequate. We think the ends of justice will be properly served by suspending respondent from the further practice of law in this state for a period of 1 year, to commence 30 days after our judgment herein becomes effective. If, at the end of 1 year from the effective day of his suspension, respondent makes an affirmative showing, sufficient to satisfy this court, that he has fully complied with the order of suspension and that he will not, in the future, engage in any practices offensive to the legal profession, then he will be reinstated and allowed to engage in the practice of law; however, if he fails to do so, then the suspension herein provided for is to become permanent. Judgment of suspension accordingly. All costs of this proceeding are taxed to respondent.
JUDGMENT OF SUSPENSION. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1859687/ | 634 So.2d 1234 (1994)
Cyrus RATCLIFF, Sr., et al., Plaintiffs-Appellees,
v.
Earl P. THERIOT, et al., Defendants-Appellants.
No. 93-973.
Court of Appeal of Louisiana, Third Circuit.
March 2, 1994.
Writ Denied May 6, 1994.
R. Scott Ramsey Jr., Morgan City, for Cyrus Ratcliff Sr., et al.
Robert Murray Mahony, Lafayette, for Earl P. Theriot, et al.
William Allen Repaske, New Iberia, for Transp. Ins. Co.
Leslie Jo Mahfouz, Lafayette, for Aetna Cas. & Sur. Co.
Before KNOLL and COOKS, JJ., and CULPEPPER,[*] J. Pro Tem.
*1235 WILLIAM A. CULPEPPER, Judge Pro Tem.
Transportation Insurance Company appeals a declaratory judgment holding that it provided uninsured/underinsured motorist coverage to Cyrus Ratcliff.
FACTS
It is not disputed that on October 10, 1991, Cyrus Ratcliff, Sr. was injured when a vehicle driven by Earl P. Theriot collided into the rear of a vehicle owned and driven by Ratcliff. At the time of the accident, Ratcliff was in the course and scope of his employment with Quality Diesel Service, Inc. Transportation Insurance Co. had issued a business automobile insurance policy to Quality Diesel Service, Inc. Cyrus Ratcliff and his wife, Katherine Duval Ratcliff, filed suit for damages arising out of the accident. By first supplemental and amending petition, the Ratcliffs named Transportation Insurance Co. as a defendant, claiming UM coverage under the policy issued to Quality Diesel Service, Inc. The Ratcliffs subsequently filed a motion for declaratory judgment on the issue, which the trial court granted.
TRIAL COURT'S REASONS
The trial court gave the following reasons for ruling:
"The cover (or first page) of the copy of the insurance policy submitted to the Court shows that the policy as it insures for underinsured or uninsured motorist loss applies to "Auto Symbol 02". Symbol 2 is defined on Page 1 of 11 (Tab 3) as owned autos only. Therefore, by the wording of the policy, UM coverage applies only to owned vehicles.
"The policy provides liability coverage for any auto (Symbol 01 or 1), but UM coverage only for owned autos.
"In order for the insured to restrict the UM coverage to less than the coverage for liability, the insured must make a specific rejection or choice thereon. R.S. 22:1406. The UM application contained in the policy shows no such restriction or rejection. (Tab 5). Therefore the liability coverage written by Transportation Insurance Company must be extended to the UM coverage. Since the liability coverage would apply to the instant accident had the plaintiff been at fault, the UM coverage must apply."
OPINION
On appeal, Transportation Insurance Co. asserts that the trial court erred in finding that the policy would have provided liability coverage to Ratcliff, thereby mandating the extension of UM coverage under the UM statute, LSA-R.S. 22:1406(D)(1)(a)(i).
LSA-R.S. 22:1406(D)(1)(a)(i) mandates UM coverage for persons who are insured under an automobile liability insurance policy (unless rejected in writing). Plaisance v. Fogg, 568 So.2d 1119 (La.App. 3d Cir.1990), writ denied, 572 So.2d 63 (La. 1991). Under "SECTION IILIABILITY COVERAGE" of the Transportation Insurance Co. policy, subsection 1.b.(2) defines "insureds" as:
"b. Anyone else while using with your permission a covered `auto' you own, hire or borrow except:
* * * * * *
(2) Your employee if the covered `auto' is owned by that employee or a member of his or her household."
We agree with Transportation Insurance Co. that since Ratcliff was the owner of the vehicle and an employee of Quality Diesel Service, Inc., he was not an "insured" under the liability provisions of the policy. Accordingly, UM coverage under LSA-R.S. 22:1406(D)(1)(a)(i) is not required. See Plaisance, supra. It is immaterial that Ratcliff's auto was a covered auto for liability purposes since he was not an insured for liability purposes. See generally, Plaisance, supra.
However, the policy contains a UM endorsement which provides in part:
"A. COVERAGE
1. We will pay all sums the `insured' is legally entitled to recover as damages from the owner or driver of an `uninsured motor vehicle.' The damages must result from `bodily injury' sustained by the `insured' caused by an *1236 `accident.' The owner's or driver's liability for these damages must result from ownership, maintenance or use of the `uninsured motor vehicle.'
* * * * * *
B. WHO IS AN INSURED
1. You.
2. If you are an individual, any `family member.'
3. Anyone else `occupying' a covered `auto' or a temporary substitute for a covered `auto.' The covered `auto' must be out of service because of its breakdown, repair, servicing, loss or destruction.
4. Anyone for damages he or she is entitled to recover because of `bodily injury' sustained by another `insured.'
5. Anyone else `occupying' an `auto' you do not own and that is a covered `auto' under this coverage part for Liability Insurance and is licensed or principally garaged in Louisiana."
(Emphasis added.)
Ratcliff asserts that the definition of "Who is an Insured" under the liability coverage part was amended by this UM endorsement. He asserts that he would have been an insured under section B(3) or B(5).
The declaration page designates covered autos for UM purposes as "owned `autos' only" (covered auto symbol "02"). Ratcliff would not be an insured under B(3) because he was not occupying a "covered `auto'" for UM purposes.
The endorsement appears to be a standard form and purports to modify insurance provided under business auto coverage, garage coverage, and truckers coverage forms. On its face, the endorsement would seem to provide coverage to Ratcliff under section B(5) since (1) Ratcliff was occupying a vehicle that Quality Diesel Service, Inc. did not own; (2) Ratcliff's auto is a "covered `auto'" under the coverage part for liability insurance ("any `auto'"); and (3) it is not disputed that Ratcliff's automobile is licensed or principally garaged in Louisiana. Indeed, the endorsement, literally construed, purports to extend UM coverage to anyone while occupying any auto, as long as the auto is not owned by Quality Diesel Service, Inc. and is principally licensed or garaged in Louisiana. Thus, conceivably, even the members of this court could claim UM coverage under the policy as literally construed. We can see that under certain selections for covered autos the B(5) provision of the endorsement would not lead to absurd consequences; however, because of the selection for covered autos (i.e. "any `auto'") for liability purposes in this policy, the B(5) provision leads to absurd consequences.
When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent. LSA-C.C. art. 2046; Cashio v. Shoriak, 481 So.2d 1013 (La.1986). In Cashio, the court explained:
"Even if the words are fairly explicit, it is our duty to refrain from construing them in such a manner as to lead to absurd consequences. Texaco v. Vermilion Parish School Board, 244 La. 408, 152 So.2d 541 (1963); National Roofing and Siding Co. v. Giaise, 434 So.2d 85 (La.App. 5th Cir.1982), writ denied, 435 So.2d 443 (La.1983). When a literal interpretation will produce absurd consequences, the court may consider all pertinent facts and circumstances, including the parties' own conclusion of the instrument's meaning, rather than adhere to a forced meaning of the terms used. La.Civ.Code art. 2046; Kendrick v. Garrene, 233 La. 106, 96 So.2d 58 (1957); Cardos v. Cristadoro, 228 La. 975, 84 So.2d 606 (1955)."
481 So.2d at 1015.
See also Ainsworth v. Association Life Insurance Co., Inc., 325 So.2d 708 (La.App. 4th Cir.), writ denied, 328 So.2d 105 (La.1976), where the above rule was applied to an insurance policy.
In our opinion, the facts suggest that the parties did not intend to extend UM coverage to Ratcliff under the circumstances of this case. As set forth above, Ratcliff was excluded as a named insured under the liability coverage part, and therefore, statutory UM coverage was not required. Additionally, on the declaration page, UM coverage is *1237 expressly restricted to owned autos only. Furthermore, Quality Diesel Service, Inc. did not need to insure itself against potential tort claims by employees through UM coverage because employees are generally limited to worker's compensation benefits. See also Plaisance, supra. Rather, it appears to us that the combination of the standard form endorsement and the covered auto coverage selections resulted in an inadvertent and unintended extension of coverage, as evidenced by the potential for absurd consequences.
Thus, we hold that the Transportation Insurance Co. policy does not provide UM coverage to Ratcliff. We disagree with Bays v. Estate of Zeringue, 584 So.2d 715 (La.App. 5th Cir.), writs denied, 590 So.2d 79 and 590 So.2d 576 (La.1991) insofar as it conflicts with our decision.
Finally, finding that Ratcliff was not insured under the policy, we need not address the applicability of LSA-R.S. 22:1406(D)(1)(e) which provides:
"(e) The uninsured motorist coverage does not apply to bodily injury, sickness, or disease, including death of an insured resulting therefrom, while occupying a motor vehicle owned by the insured if such motor vehicle is not described in the policy under which a claim is made, or is not a newly acquired or replacement motor vehicle covered under the terms of the policy. This provision shall not apply to uninsured motorist coverage provided in a policy that does not describe specific motor vehicles."
DISPOSITION
For the foregoing reasons, we reverse the judgment of the trial court at plaintiffs' cost.
REVERSED AND RENDERED.
NOTES
[*] Honorable William A. Culpepper participated in this decision by appointment of the Louisiana Supreme Court as Judge Pro Tempore. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2758698/ | COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-14-00354-CR
Rhonda Lorene Ladon § From the Criminal District Court No. 3
§ of Tarrant County (1373995D)
v. § December 4, 2014
§ Per Curiam
The State of Texas § (nfp)
JUDGMENT
This court has considered the record on appeal in this case and holds that
the appeal should be dismissed. It is ordered that the appeal is dismissed.
SECOND DISTRICT COURT OF APPEALS
PER CURIAM | 01-03-2023 | 12-09-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/1868800/ | 684 So. 2d 1024 (1996)
STATE of Louisiana, ex rel. Richard P. IEYOUB, Attorney General, et al.
v.
BORDENS, INC.
No. 95-CA-2655.
Court of Appeal of Louisiana, Fourth Circuit.
November 27, 1996.
Rehearing Denied January 16, 1997.
*1025 Richard P. Ieyoub, Attorney General, Jane Bishop Johnson, Assistant Attorney General, Baton Rouge, for Plaintiff/Appellee.
Alston & Bird, Michael A. Doyle, Atlanta, GA, and Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., Edward H. Bergin, Pauline F. Hardin, Nan Roberts Eitel, New Orleans, for Defendant/Appellant.
Before BARRY, KLEES and ARMSTRONG, JJ.
*1026 BARRY, Judge.
On October 10, 1994 the State ex rel. the Attorney General filed a petition for treble damages (pursuant to Louisiana Anti-Monopoly Statute, La. R.S. 51:132, 51:137 and 51:138) against Borden's Inc. (Borden) in state court.[1] The Attorney General sued on behalf of a number of Louisiana school systems alleging the schools did not receive competitive bids or pay competitive prices for milk; and on behalf of school children who paid inflated prices due to bid-rigging.[2] Attached to the petition was: an October 12, 1993 federal criminal antitrust complaint; Borden's guilty plea agreement; a federal judgment which fined Borden $750,000 for its participation in a conspiracy to rig bids (Sherman Antitrust Law) which was signed April 14, 1994 and entered April 18, 1994.[3] Borden removed the case to federal court, but it was remanded to state court with a declaration that the Louisiana Attorney General had authority to sue in a parens patriae capacity, and Louisiana had a quasi-sovereign interest in the economic well-being of its citizens and was a real party in interest. In state court Borden filed an exception of prescription which was overruled.
THE LAW
La. Const. art. IV, § 8 and La. R.S. 13:5036 provide the Attorney General's authority to institute proceedings to protect the state's interests. La. R.S. 51:138 provides authority to file suit to enforce the Antitrust Law. Here the State filed the action on behalf of the school systems and the citizens of the state as parens patriae, literally "parent of the country," the concept of "standing" which is utilized to protect quasi-sovereign interests such as the general economy of the state. State attorney generals have parens patriae authority to bring antitrust actions on behalf of state citizens. See generally Alfred L. Snapp and Son, Inc. v. Puerto Rico ex rel., Barez, 458 U.S. 592, 102 S. Ct. 3260, 73 L. Ed. 2d 995 (1982); State v. Time, Inc., 249 So. 2d 328 (La.App. 1st Cir.1971), writ denied 259 La. 761, 252 So. 2d 456 (La. 1971); Black's Law Dictionary, 1003 (5th Ed.1979); National Association of Attorneys General, L. Ross, ed., State Attorneys General: Powers and Responsibilities, 91-92.[4] A final judgment in a criminal prosecution by the United States "shall be prima facie evidence" against the defendant in any civil proceeding as to all matters which would be res judicata between the parties to the suit or prosecution. "[R]unning of prescription of a private right of action arising under these laws and based in whole or in part on any matter complained of in the proceeding shall be suspended during the pendency of the [federal criminal] proceeding." La. R.S. 51:132.
There is no statute of limitation in La. R.S. 51:121 et seq., the Louisiana Anti-Monopoly Law, more particularly R.S. 51:137 which provides for recovery of treble damages. There is one Louisiana case which discusses a prescriptive period. In Loew's, Incorporated v. Don George, Inc., 237 La. 132, 110 So. 2d 553 (La.1959), the Supreme Court held that an antitrust action sounds in tort and the one year prescriptive period of La. C.C. art. 3492 applies in a private action. See also Delaughter v. Borden Company, 364 F.2d 624 (5th Cir.1966); Diliberto v. Continental Oil Company, 215 F. Supp. 863 (E.D.La. 1963)[5]; ABA Antitrust Section, State Antitrust Practice and Statutes: Chapter 20 for the State of Louisiana, 20-21 (1990).
The one year prescriptive period begins to run from the date actual or appreciable *1027 damage is sustained. La. C.C. art. 3492. The damage need not be calculable or fully incurred but cannot be speculative. Harvey v. Dixie Graphics, Inc., 593 So. 2d 351 (La.1992). The commencement of prescription is delayed when a complex business tort, similar to a continuing tort, is involved. Prescription does not begin to run until the continuing tort ceases. National Council on Compensation Insurance v. Quixx Temporary Services, Inc., 95-0725 (La.App. 4 Cir. 11/1/95), 665 So. 2d 120. There must be continuing acts coupled with continued damages. Id.; South Central Bell Telephone Company v. Texaco, Inc., 418 So. 2d 531 (La.1982).
Prescriptive statutes are strictly construed against prescription and in favor of the claim. Bustamento v. Tucker, 607 So. 2d 532 (La.1992). If there are two possible constructions of a prescriptive statute, the one that maintains the action should be adopted. Louisiana Health Services and Indemnity Company v. Tarver, 93-2449 (La.4/11/94), 635 So. 2d 1090.
The burden of proving that a suit has prescribed rests with the party pleading prescription. Boyd v. B.B.C. Brown Boveri, Inc., 26,889 (La.App. 2 Cir. 5/10/95), 656 So. 2d 683, writ not considered 95-2387 (La.12/8/95), 664 So. 2d 417. When a petition reveals on its face that prescription has run, the plaintiff has the burden of showing that the claim has not prescribed. Wimberly v. Gatch, 93-2361 (La.4/11/94), 635 So. 2d 206; Lima v. Schmidt, 595 So. 2d 624 (La.1992).
La. R.S. 51:122 et seq. is a counterpart to § 1 of the Sherman Antitrust Act. The U.S. Supreme Court's interpretation of the Sherman Act is a persuasive influence on the interpretation of our state statutes. Louisiana Power and Light Company v. United Gas Pipe Line Company, 493 So. 2d 1149 (La.1986), rehearing granted on other grounds. Generally, an antitrust cause of action accrues when a defendant commits an act which injures a plaintiff's business. However, in the context of a continuing conspiracy to violate antitrust laws, each time a plaintiff is injured by the act of a defendant, a cause of action accrues to recover damages caused by that act and the statute of limitations runs from the commission of the last act. Al George, Inc. v. Envirotech Corporation, 939 F.2d 1271 (5th Cir.1991), quoting Zenith Radio Corporation v. Hazeltine Research, Inc., 401 U.S. 321, 91 S. Ct. 795, 28 L. Ed. 2d 77 (1971). See also Imperial Point Colonnades Condominium, Inc. v. Mangurian, 549 F.2d 1029 (5th Cir.1977), cert. denied 434 U.S. 859, 98 S. Ct. 185, 54 L. Ed. 2d 132 (1977); Bell v. Dow Chemical Company, 847 F.2d 1179 (5th Cir.1988); Poster Exchange, Inc. v. National Screen Service Corporation, 517 F.2d 117 (5th Cir.1975). Federal cases interpreting the statute of limitations involved in antitrust actions (four years under 15 U.S.C. § 15b) hold that in a conspiracy action the period begins with an overt act pursuant to the conspiracy; cases look to the last bid in which wrongdoing is alleged in bid rigging cases. See State of Texas v. Allan Construction Company, 851 F.2d 1526 (5th Cir.1988).
In an antitrust action the plaintiff must know or should have known that he is sustaining an actionable injury before the prescriptive period begins to run. When an act does not effect a traumatic injury but produces ill effects by passage of time, and it is impossible to designate the exact moment when the act produced the requisite damage to start prescription, recovery should be allowed for all damages sustained within one year prior to the filing of the suit. Delaughter, 364 F.2d at 624.[6]
However, there are two grounds for allowing an antitrust suit to be filed more than four years after the events that create the *1028 cause of action: the continuing conspiracy or continuing violation exception that allows a cause of action to accrue whenever the defendant commits an overt act to further the antitrust conspiracy; and the revival of the cause of action outside the limitations period because the plaintiff's damages were speculative or unprovable when the act originally occurred. Kaiser Aluminum & Chemical Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045 (5th Cir.1982). See also Zenith Radio Corporation, 401 U.S. at 321, 91 S.Ct. at 795.
In order to avoid the federal statute of limitations a plaintiff may also invoke the fraudulent concealment doctrine, which is similar to Louisiana's doctrine of contra non valentem. Fraudulent concealment involves proof that the defendant concealed the injurious conduct and that the plaintiffs did not discover the conduct despite due diligence. Some federal circuits have held that antitrust violations arising from bid-rigging conspiracy are self-concealing and affirmative acts of concealment need not be shown. New York v. Hendrickson Brothers, Inc., 840 F.2d 1065 (2d Cir.1988), cert. denied 488 U.S. 848, 109 S. Ct. 128, 102 L. Ed. 2d 101 (1988); State of Colorado ex rel. Colorado Attorney General v. Western Paving Construction Co., 833 F.2d 867 (10th Cir.1987), panel opinion vacated en banc 841 F.2d 1025 (1988). See also Hobson v. Wilson, 737 F.2d 1 (D.C.Cir.1984), cert. denied 470 U.S. 1084, 105 S. Ct. 1843, 85 L. Ed. 2d 142 (1985). The Fifth Circuit rejects that argument, but holds that actions to show fraudulent concealment need not be separate from the acts underlying the bid-rigging. State of Texas, 851 F.2d at 1531.
DISCUSSION
Borden argues that prescription runs where the State asserts claims in its parens patriae capacity and here the one year prescriptive period has run. The Attorney General counters that prescription does not run against the State based on La. Const. art. XII, § 13, which declares that "prescription shall not run against the state in any civil matter unless otherwise provided in the constitution or expressly by law." A parens patriae action brought by the State on behalf of its citizens has elements of private and public enforcement. The passage of the four year period under federal law is used to bar actions by the states. See State of Texas, 851 F.2d at 1526. The Attorney General quotes the constitutional article which grants the State immunity, but provides no support for that proposition in this case where the State filed suit on behalf of citizens and school systems against whom prescription runs. See State of Louisiana Through Department of Highways v. City of Pineville, 403 So. 2d 49 (La.1981). The passage of the prescriptive period has barred antitrust actions by states. See State of Texas, 851 F.2d at 1526.
The Attorney General also argues that La. R.S. 51:121 et. seq. does not set out a prescriptive period for antitrust actions, and a ten year period is appropriate because Borden was unjustly enriched. Borden correctly notes that the petition below did not raise an unjust enrichment claim. The Petition For Treble Damages Pursuant To The Louisiana Monopolies Law referred to La. R.S. 51:132, 51:137 and 51:138 and sought treble damages as a result of Borden's acts. The petition alleged a bid-rigging scheme that affected the ability of the schools to receive fair competitive bids and pay competitive prices on milk sold to Louisiana schools. The petition claimed that Borden and its co-conspirators had a continuing agreement to allocate among themselves all or part of contracts to supply milk to schools, to refrain from submitting bids or to submit collusive, non-competitive and rigged bids, to supply milk to Louisiana schools at non-competitive prices. The petition claimed that Borden and the other co-conspirators discussed submission of bids, designated which conspirator was to be the low bidder, discussed and agreed upon prices to be bid, and submitted intentionally high bids. There is no mention of Borden's unjust enrichment except in an opposition to Borden's prescription exception. The petition did not allege unjust enrichment or quasi-contract. The one year prescriptive period of the antitrust law, La. 51:121 et seq., applies. Loew's Incorporated, 110 So.2d at 553; Delaughter, 364 F.2d at 624; Diliberto, 215 F.Supp. at 863.
*1029 Borden contends that the petition predicates liability entirely upon the federal criminal antitrust judgment. Borden argues that the state civil claim is limited to the time frame of the federal judgment ending in June, 1989 and the October 10, 1994 petition has prescribed.
Paragraph 3 of the State's petition declares that "[d]uring the critical period, defendant engaged in the sale, processing and distribution of fluid milk...." Paragraph 10 of the petition filed October 10, 1994 states: "During the pertinent period, relative to the criminal judgment ...." without directly stating the time period. The description of the offense in the federal information filed October 12, 1993 against Borden Inc. states: "Beginning at least as early as 1985 and continuing thereafter until at least June 1989, the exact dates being unknown to the United States, the defendant and others entered into and engaged in a combination and conspiracy to suppress and eliminate competition by rigging bids...." Borden pleaded guilty pursuant to a plea bargain agreement on October 12, 1993 and judgment, which declared that the conduct concluded in June, 1989, was entered on April 18, 1994.
The civil petition does not clearly set out the time periods. The federal complaint, which arose pursuant to a federal grand jury investigation, stated that Borden's activities continued at least until June, 1989. The criminal antitrust judgment is prima facie evidence against Borden in the civil proceeding as to all matters which would be res judicata between the parties in the prosecution. Borden points out that the state court civil petition encompassed claims by 27 school systems not included in the federal complaint. Borden also declares that the civil suit "appears to go far beyond the limited scope of the earlier federal proceeding." The federal complaint involved bid-rigging in western Louisiana; the civil suit includes a number of school systems in eastern Louisiana as well. The state civil petition covered far more than the federal complaint; it included a bid-rigging scheme involving many school systems not in the federal complaint. The parens patriae suit was not limited to the allegations and time periods in the federal complaint.[7]
Regardless, the one year tort period runs from the time the plaintiff acquired sufficient knowledge of the offense to realize there was an injury. Delaughter, 364 F.2d at 624. The federal complaint was filed October, 1993 and Borden concedes that prescription as to the civil suit was suspended until the judgment of April 18, 1994. The state petition filed October 10, 1994 was not prescribed on its face. In its memorandum in support of its prescription exception, Borden argued that the civil action had prescribed one year after the June, 1989 date in the federal judgment. It did not allege or show that bid-rigging was known prior to the date the federal complaint was filed. Nothing was presented to show there was sufficient knowledge about Borden's antitrust violations more than one year prior to filing the civil petition (deleting the time suspended because of the federal prosecution) or that the last act of bid-rigging in furtherance of the antitrust conspiracy occurred more than one year prior to that date.
Borden concedes that under La. R.S. 51:132 prescription was suspended from October 12, 1993 to April 18, 1994, and bid-rigging occurring after April 14, 1993 (counting the date backward from October 12, 1994) fell within one year. Although Borden contends that such conduct was not properly alleged, we conclude the trial court did not err by overruling the prescription exception. The exception may be raised if the claims are subsequently shown to have prescribed.
The judgment is affirmed.
AFFIRMED.
NOTES
[1] The petition is stamped October 10, 1994 and has an entry date of October 12, 1994.
[2] In two paragraphs the state alleges that the children who suffered damages are plaintiffs but they are not listed in the caption. Only the school systems are in the caption.
[3] The Attorney General and Borden make reference to an amended petition which included a number of Catholic dioceses. The record does not contain an amended petition.
[4] The Hart-Scott-Rodino Antitrust Act of 1976 provides that any Attorney General of a state has the authority to sue parens patriae for treble damages for a Sherman Act violation. 15 U.S.C. § 15c.
[5] Loew's Incorporated, Delaughter, and Diliberto use La. C.C. art. 3536, which was subsequently incorporated into La. C.C. 3492.
[6] At issue in Delaughter, 364 F.2d at 624, was Borden's alleged offering and paying of rebates and discounts, violations of the Louisiana Orderly Milk Marketing Act, which declared that each day's violation constituted a separate offense. The U.S. Fifth Circuit adopted Louisiana's one year prescriptive period because the Louisiana Supreme Court utilized the one year period in Loew's Inc., 237 La. at 132, 110 So.2d at 553, which was a private anti-monopoly action. The Fifth Circuit reversed the district court's decision that the action prescribed because prescription ran from the month that Delaughter knew of Borden's injurious activities, and the action was filed more than one year afterward, and allowed Delaughter's claims for injuries sustained within one year of the filing of suit.
[7] The petition is poorly drafted, but Borden did not complain about the drafting; it only filed a prescription exception. The petition erroneously declares that "antitrust liability is established, leaving only damages to be proven at trial."
However, the petition, which includes a number of school systems not mentioned in the federal complaint, is not limited to the ending date in the federal judgment. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2622378/ | 173 P.3d 763 (2007)
2007-NMCERT-011
STATE
v.
WILLIAMS.
No. 30,740 (COA 25,529).
Supreme Court of New Mexico.
November 29, 2007.
Denials of Certiorari. | 01-03-2023 | 11-01-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1461714/ | 734 F. Supp. 1289 (1989)
Debra WALKER, et al., Plaintiffs,
v.
UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, et al., Defendants.
No. CA 3-85-1210-R.
United States District Court, N.D. Texas, Dallas Division.
August 4, 1989.
Revised September 22, 1989.
Michael M. Daniel, Elizabeth K. Julian and Kenneth L. Schorr, North Central Texas Legal Services, Inc., Dallas, Tex., for plaintiffs.
Arthur Goldberg, Leslie K. Shedlin, Thomas H. Peebles and Jonathan Strong, Dept. of Justice, Civil Div., Washington, D.C., Joseph G. Werner, Haynes & Boone, Marvin Collins, U.S. Atty., and Donald W. Hicks, Hill, Hicks & Collins, Dallas, Tex., for defendants.
MEMORANDUM OPINION-WALKER III: JOINDER OF THE CITY OF DALLAS AS A DEFENDANT SUBJECT TO THE CONSENT DECREE
BUCHMEYER, District Judge.
This is a class action that involves racial discrimination in low-income public housing in the City of Dallas and its suburbs. The original parties were the plaintiff class ("plaintiffs"), the Dallas Housing Authority ("DHA"), and the United States Department of Housing and Urban Development ("HUD").
*1290 This opinion,[1] however, concerns the City of Dallas.[2] And, it holds:
(i) that the City of Dallas will be joined as a party defendant in this case;
(ii) that the Consent Decree approved on Jan. 20, 1987 will be modified so that it is binding on the City of Dallas;
(iii) that the plaintiffs are entitled to summary judgment as to liability against the City of Dallas because the undisputed facts establish that the City was a substantial cause of DHA's deliberate racial segregation and discrimination in its public housing programs in Dallas; and
(iv) the scope of the injunction to be entered against the City of Dallas and the specific modifications that will be made to the Consent Decree as well as the financial obligations to be imposed upon the City as a result of this opinion will be determined after a hearing and the presentation of evidence by all parties.
These rulings should come as no surprise. In April of 1988, the "Housing Mediation Team" appointed by the Mayor recommended that "the City of Dallas should voluntarily agree to enter into the Walker v. HUD Consent Decree," stating:
"... We believe that there is strong sentiment by all parties with whom we have talked that the City has had an active, historical involvement in the DHA's operations and, therefore, bears some responsibility for the condition of public housing in Dallas. As a result, we have concluded that the City will be brought into the lawsuit involuntarily and will likely face enormous legal expenses in its defense. If the City is found liable, it then faces the likelihood of considerable financial outlays. It is for these reasons that we believe the City should enter the Consent Decree voluntarily."
To show why the City of Dallas should be joined as a defendant in this case subject to the Consent Decree and why summary judgment as to liability should be entered against the City this opinion will discuss (i) the procedural history, (ii) the relationship between DHA and the City, (iii) the long, unbroken history of deliberate segregation and discrimination in public housing by DHA and by the City of Dallas (iv) the conduct of the City and its officials concerning the Consent Decree, and (v) the applicable law.
I. The Procedural History
The complete procedural history of this action both before and after the original parties settled the case with a Consent Decree approved by the Court on Jan. 20, 1987 is detailed in the Walker I companion opinion. However, these additional facts are necessary to show the procedural setting for this opinion.
On Sept. 8, 1988, the plaintiffs filed a Motion to Modify the Consent Decree and to Enjoin the City of Dallas.[3] Then, on Dec. 21, 1988, the plaintiffs filed an "alternative" Motion to Add the City of Dallas as a Party Defendant (and to file a Supplemental Complaint against the City). Both motions sought injunctive relief against the City of Dallas for the following reasons:
"1) There is a need for additional resources to accomplish the purposes and programs of the Consent Decree,
"2) The City of Dallas has a legal obligation to assist in the disestablishment of the racial segregation in DHA's programs and the housing patterns of the City of Dallas,
*1291 "3) The City of Dallas has opposed and attempted to obstruct the operation of the Consent Decree,
"4) The City of Dallas was a substantial cause of the creation and maintenance of racial segregation and discrimination in the housing assistance programs administered by the Housing Authority of the City of Dallas [DHA]."
The City of Dallas filed its reply to the plaintiffs' first motion (the motion to modify the Consent Decree) on Oct. 7, 1988. However, the City did not respond to the second motion (the motion to add the City as a party defendant); instead, it simply filed an answer to the plaintiffs' Supplemental Complaint on Jan. 11, 1989.[4]
On Dec. 12 and 14, 1988, a hearing was held on the plaintiffs' Motion to Modify the Decree and to Enjoin the City of Dallas.[5] The evidence presented at that time primarily concerned the plaintiffs's liability claims against the City, and it did not focus on what specific relief should be granted. However, the plaintiffs sought a broad injunction which would:
(i) prohibit the City of Dallas from racial discrimination in "housing-related actions" and from obstructing the operation of the Consent Decree;
(ii) require the City to provide a "local program of housing assistance that meets the replacement housing requirements of 42 U.S.C. § 1437p" for the units to be demolished at the West Dallas Project;[6]
(iii) require the City to provide "the counseling and transportation services" necessary to help black families move to non-minority areas in Dallas and its suburbs under DHA's § 8 assistance program;[7]
(iv) require the City to improve the "facilities and neighborhoods of DHA's family housing projects" so they are equal to the facilities and neighborhoods of the "predominately white-occupied HUD assisted projects"; and
(v) require the City to implement an effective code enforcement program "to eliminate substandard conditions" at DHA's public housing projects and § 8 assisted units.
The plaintiff's Dec. 21, 1988 motion (to add the City as a party defendant) was expressly based upon the testimony and exhibits presented at the Dec. 12, 1988 hearing. This was also true of the plaintiffs' motion for summary judgment (also filed Dec. 21, 1988). And, the response by the City of Dallas to this summary judgment motion was based upon "the exhibits and testimony admitted into evidence at the Dec. 12, 1988 hearing."[8]
II. Relationship Between DHA And The City of Dallas
1. The City's Control of DHA In General
In 1938, DHA was created by the City of Dallas under Texas law. The five-member Board of Commissioners, which has responsibility for the operation of DHA, is appointed by the Mayor of Dallas.[9] The relationship *1292 between the City and DHA was correctly described by City Council Member Lori Palmer:
"So while it is true that there are times when public officials in the City Council claim we have no direct responsibility or authority over that (DHA) board, that is not true. As a matter of fact, we make those appointments. And I have no doubt whatsoever that the policies and traditions which have been developed by the Dallas Housing Authority are a direct reflection of what has been the spoken or unspoken political climate in the city. I do not think that the DHA has been out on a limb in the development of those policies over many years."
Similarly, DHA Executive Director Jack Herrington testified that, in his experience, "members of the [DHA] Board have been responsive to the Mayor who appoints them."
In addition, under the "Cooperation Agreement" between the City of Dallas and DHA,[10] the City agrees to "cooperate with [DHA] by such action as the City and [DHA] may find necessary in connection with the development and administration of the public housing" in Dallas. Accordingly, the City has described its relationship with DHA in this manner:
"The Housing Authority of the City of Dallas was created by City Council resolution. It provides a specific public service in response to a need found by the Dallas City Council. State law recognizes this relationship as different from relationships the City has with other legal entities or governments.... The Authority is, in effect, an `arm of convenience' of the city government."[11]
Recognizing that DHA has no power to levy taxes, the City of Dallas has provided assistance to DHA in numerous ways, including: performing many of the Housing Quality Standard inspections for DHA's § 8 program; acting as a co-administrator of DHA's § 8 Moderate Rehabilitation Program; and providing relocation services for residents displaced by DHA's acquisition of land for its projects.
More significantly, the City of Dallas through its employees, as well as the Mayor and members of the City Council has directly intervened in the operations of DHA and has, on numerous occasions directed DHA to take certain actions.[12] Examples of this control which the City of Dallas has historically exercised over DHA include:
... the City's selection of sites for DHA's public housing;
... its direction that DHA construct the 3500-unit West Dallas Housing Project; and
... the City's placement of one of its own employees into the position of Executive Director of the DHA.
These and many other situations in which the City exercised control over DHA are discussed in part III ("Deliberate Segregation in Public Housing by DHA and by the City of Dallas").
2. The City's Responsibility Under the CDBG Program to Prevent Discrimination by DHA
Since August of 1974, the City of Dallas has participated in the federal Community Development Block Grant ("CDBG") program, which is administered by HUD. By 1988, the City had received $195 million in CDBG funds, an average of $15 million per year over the past 15 years.
Because of its receipt of these CDBG funds, the City had these obligations: to refrain from racial discrimination in its housing-related activities; to eliminate the effects of any past housing-related discrimination; and to administer all programs and activities related to housing and community development in a manner to affirmatively *1293 further fair housing. 42 U.S.C. § 5304(b)(2); 24 CFR § 570.601.
Under these CDBG requirements, it is clear that the City of Dallas also had an obligation to prevent DHA from engaging in racial discrimination and segregation in its public housing programs and to further the goal of "fair housing" by requiring DHA to eliminate the effects of its past discrimination in public housing. This is particularly true since the City used DHA as a substantial source of the "housing assistance" which the City had to show to HUD in order to qualify for the $195 million in CDBG funds.[13] Cf. NAACP v. Secretary of HUD, 817 F.2d 149, 154-157, 160-161 (1st Cir.1987).
3. But The Tragic Facts
The City of Dallas can, without question, control the activities of DHA. It has actually done so since 1938 under its general relationship with DHA. And, after August of 1974, it had the responsibility to do so under the CDBG program.
At any time yes, at any time the City of Dallas could have forced DHA to stop its deliberate policy of strict racial segregation in low-income public housing in Dallas. But instead, the tragic facts are these: Throughout the history of DHA, the City has known of DHA's blatant policies and practices of racial segregation and discrimination but, as detailed in the next section of this opinion, not only did the City refuse to intervene to stop these illegal practices, it actually participated in this conscious discrimination against minorities in public housing in Dallas.
III. Deliberate Segregation in Public Housing by DHA and by the City of Dallas
From its beginning, the primary purpose of DHA's public housing program was to prevent blacks from moving into white areas of this city. The City of Dallas knew of this intentional segregation; and, it repeatedly took actions either to cause this racial discrimination and segregation, or to help DHA maintain it.
1. The Beginning (1938)
After DHA was created in 1938 by resolution of the Dallas City Council, the very first site for DHA public housing was selected by the City of Dallas. Specifically, a 1938 survey by the City Manager recommended "one of the Negro slum areas" for the first low-income public housing project in Dallas:
"These areas [for the Roseland Homes project] are close in, located in the center of a well established Negro district and ideally suited as a possible location for a Negro housing project...."[14]
In the same survey, the Dallas City Manager recommended the location of a "Mexican project" as close as possible to "the Mexican area."[15] There was, however, no recommendation for a "white project" site.[16]
*1294 2. Public Housing in Dallas: 1942-1953
Not surprisingly, DHA located the "Negro housing project" (Roseland Homes) and the "Mexican project" ("Little Mexico") exactly where the Dallas City Manager had "recommended." When they opened in 1942, Roseland Homes (611 units) was 100% black and Little Mexico (102 units) was 100% Hispanic. In October of 1988 some 21 months after the Consent Decree was approved (Jan. 20, 1987) Roseland Homes was still 94.45% black.[17]
In 1937, DHA opened its first white project, Cedar Springs Place. When this suit was filed in 1985, Cedar Springs (385 units) was 37% black, and in October 1988 it was 41.42% black. (White occupancy at Cedar Springs was less than 18% in 1985, dropped to 13% by Jan. 20, 1987.)
In 1943, DHA opened a second all-white project: Washington Place. However, by 1974, Washington Place (347 units) was 54% black, and it ranged from 76%-81% black from 1977-1984. In 1985, when this suit was filed, Washington Place was gone, having been demolished after its controversial sale to Baylor University Medical Center.
The next four projects opened by DHA were, of course, 100% black: Frazier Courts (550 units) in 1943; Brackins Village (102 units) in 1952; and Turner Courts (294 units) and Rhodes Terrace (426 units) in 1953. In October of 1988, these four projects are still from 96-98% black.
3. Not In My Neighborhood: Chapter One (1950)
The first recorded instance of DHA yielding to political pressure and neighborhood opposition in selecting sites for public housing took place in 1950. Then, DHA was considering property at Haskell and Dolphin for "a Negro project." However, whites who owned land across the street objected; the DHA Board minutes for October 30, 1950 describe the meeting of DHA's Executive Director with a committee representing the opposition to this "Negro project":
"This committee was representing a group of approximately 100 property owners who opposed the location of Project TEX-9-9 on the northwest corner of Dolphin and Haskell Avenues. He reported that they insisted that the line of demarkation between colored residents and white residents in that area was Haskell Avenue. He reported that he had explained to these people the plan of the Housing Authority to erect a very tall fence and to put shrubs, effectively separating the housing project which may be occupied by Negroes and the property now occupied by these people but he had had little success in securing cooperation from them. He reported that the committee was aroused emotionally over the situation, and the people they represented were so aroused there is a possibility that racial difficulties which have existed in the past in South Dallas may become serious if the Authority continues its plan to erect a public housing project in this particular spot...."
As a result, DHA abandoned its consideration of this site and continued to honor the racial "areas of the City" outlined by the Dallas City Manager in his 1938 survey.[18]
*1295 4. The West Dallas Project (1950-55): A Solution to the "Negro Housing Problem"
In 1950, the City of Dallas and DHA faced a severe test: the need for additional low-income housing to keep blacks from moving into white areas. This became known as the "Negro Housing Problem."
Whites in South Dallas were demanding that the City of Dallas take action to prevent black families from buying homes in white districts. Several bombings of homes bought or built by blacks in white areas were reported. A Feb. 26, 1950 Dallas Morning News article depicted the "Negro Housing Problem" with a map:
"This map shows the Negroes' housing plight in Dallas. In the shaded areas, most of the city's 75,000 negroes live, spotted in between white neighborhoods. They cannot expand without spilling over into white sections."
The same article summarizes the plan of a Dallas City Council member (Roland Pelt) for "an entire Negro city" to be built next to the Trinity River.[19]
The 1950 Joint Report on Negro Housing found that "the shortage of housing for Negroes in Dallas is acute and critical"; that a "serious tension has resulted, not only among the colored people, but also among a considerable portion of our white population"; that some of the "present Negro residential districts are `hemmed in' and cannot possibly be expanded" without the consequent "displacement of white residents"; that this "makes for forced sales and losses, disturbed and distressed communities, unrest, tension and trouble"; and that "portions of South Dallas particularly have been subjected to this kind of disturbance."
Accordingly, the 1950 Joint Report on Negro Housing expressed "sincere approval" of the recently announced plans for the West Dallas project. This Report also stated:
"(a) The Negro housing sections, if carefully zoned and properly restricted by the City or county, will attract Negro families of good character, people who, under proper environment, will make citizens of whom our community can be proud.
"(b) We remind the people of Dallas that if we do not provide home sites for Negroes who want to, and can afford to, buy or rent suitable and decent homes, the alternative is terrible overcrowding, dissatisfaction, disease, tension resulting from Negroes buying into white neighborhoods, and many other serious consequences....
"...
"The Committees feel that the only satisfactory and permanent solution to this problem can be realized where there is racial segregation. It is the opinion of the Committees that this basic factor is recognized by the Negro leadership of our community, so long as segregation in the sense that it is applied here does not mean discrimination."
The 1950 Joint Report also said "that Dallas is fortunate in having a very high type of Negro leadership, the leaders being men of intelligence, vision, and a fine sense of civic responsibility."[20]
It was with this climate that the City of Dallas requested DHA to build the largest low-rise public housing project in the nation: *1296 the 3500 unit West Dallas project.[21] Specifically, in a letter dated Sept. 25, 1950, Dallas Mayor Wallace H. Savage requested:
(i) DHA to select West Dallas for "the location of approximately 3500 low-rent housing units for Negroes, Latin Americans, and Whites";
(ii) DHA to apply for 1700 new construction public housing units, and combine these with the 1800 that DHA already had, for the West Dallas project.[22]
The City Council authorized the Mayor to send this request to DHA; indeed, City Attorney Henry Kucera is described in contemporaneous DHA documents as the "chief architect" of the West Dallas plan.
Of course, DHA acceded to the City's request to solve the "Negro Housing Problem." And, it planned and developed the West Dallas project under an overt policy of racial discrimination. So, when West Dallas was opened in 1955:
(i) Edgar Ward Place (1500 units) was 100% black;
(ii) Elmer Scott Place (500 units) was 100% Hispanic; and
(iii) George Loving Place (1500 units) was 100% white.
The segregation at West Dallas was so complete that separate parks and commercial areas were set aside for the separate races.
However, within two years after the West Dallas project was opened, DHA was having substantial vacancy rates for the white and the Hispanic units. DHA attributed this to the "stigma attached to the area known as West Dallas"; to the "lack of adequate shopping facilities, churches and cultural facilities"; to significant "environmental disadvantages, such as odors, smoke and dust from neighboring industrial plants"; and to the need for additional security.[23] However, in this same document, DHA noted:
"It should be pointed out that no occupancy problem has been encountered in connection with [Edgar Ward Place], 1500 units for Negro occupancy. Although the latter project is also located in West Dallas and is subjected to the same adverse factors influencing [George Loving] and [Elmer Scott], it is apparent that the heavy and constantly increasing demand for low-rent public housing for Negroes and the lack of other adequate housing for Negroes in this community have combined to overcome all adverse factors and this has resulted in a stabilized occupancy with a long waiting list of Negro applicants."
This report was the first indication that the "white" George Loving Place and the "Hispanic" Edgar Ward Place might also become part of the "solution" to the "Negro Housing Problem."
5. Not In My Neighborhood Chapter Two (1962)
In 1962, DHA proposed the construction of an additional 3,000 units of low-rent public housing in Dallas. A referendum was called in opposition to the expansion of public housing. The City Council endorsed this referendum opposing new public housing for Dallas despite the fact that it was needed for the poor in Dallas.
In the resulting campaign, there was opposition to the 3,000 units because they were not going to be placed in West Dallas. There were also numerous ads which raised the specter that the housing would be integrated and would be placed in white neighborhoods. The anti-public housing referendum *1297 passed, and no new low-rent public housing[24]would be built in Dallas from 1955 (when West Dallas was opened) to August of 1989.[25]
6. Assignment of Tenants By Race (1965-70): The Loss By DHA of Over $31 Million
DHA maintained the segregated nature of its public housing by its tenant assignment and selection practices under which whites were assigned to all-white projects and blacks were assigned to all-black projects. Accordingly, in 1965,[26] DHA had two all-white units (George Loving, Cedar Springs), two all-Hispanic units (Elmer Scott, Little Mexico), and six projects that were 100% black. However, in 1965, HUD acting under the provisions of Title VI of the 1964 Civil Rights Act, 42 U.S.C. § 2000d insisted that DHA cease its assignment of tenants by race.[27]
... freedom of choice?
After some delay and resistance, aided by City Attorney Alex Bickley, DHA finally adopted a "Freedom of Choice" desegregation plan which it claimed had been approved by the Dallas Mayor and other local officials.[28]
Incredibly, under this "Freedom of Choice" plan, no notice was to be given to applicants that they could apply to the project of "their choice." In addition, the plan required DHA Board approval if an applicant for a particular project was not of the predominate race at that project. Not surprisingly, under this "Freedom of Choice" plan with the exception of West Dallas there was no change in the racial composition of DHA's public housing; the white units remained 100% white and the minority units remained 100% minority.
With respect to West Dallas, the 1965 "Freedom of Choice" plan called for the "careful selection" of four black families to move, without publicity, into George Loving Place (which had numerous vacancies in 1965). By 1967, George Loving had become 35% black; and it was 72% black by 1969, over 90% black by 1971, and 95% black by 1974.[29]
... first-come, first-served?
In 1967, HUD rejected the use of "Freedom of Choice" plans by DHA and other public housing authorities because such plans were perpetuating racial segregation in low-income housing. And, HUD required all public housing authorities to adopt a "first-come, first-served" tenant selection policy and to use a community-wide waiting list for all projects administered by the authority.[30]
In response, DHA's Board simply rejected HUD's Title VI mandate to stop the use of the "Freedom of Choice" plan. HUD responded by threatening to sue DHA to withhold federal funds from both DHA and the City of Dallas. The City then advised DHA to terminate the "Freedom of Choice" plan, and DHA reluctantly agreed *1298 to do so and to adopt a "first-come, first-served" plan.
Dallas City Attorney Alex Bickley participated with DHA in the negotiations with the U.S. Department of Justice concerning the specifics of the plan to be adopted. However, the final plan which Mr. Bickley and DHA negotiated, was one which, in the opinion of the Justice Department, was:
"... likely to result in little or no change in the racial composition of any of your other locations, all of which are presently segregated."[31]
... back to "freedom of choice"?
Even this did not satisfy DHA which simply continued to operate under its "Freedom of Choice" plan. HUD found this out in 1969, and instructed DHA to comply with Title VI by implementing the "first-come, first-served" plan. The DHA Board responded with a resolution instructing the staff (i) to ask HUD for a waiver of the "first-come, first-served" requirement, and (ii) if this waiver was not given "immediately," then to "return" to the "freedom of choice" plan. HUD received this request for a waiver, but took no action on it. Accordingly, the DHA Board formally rescinded its "first-come, first served" plan which had never really been put into effect and "returned" to its "Freedom of Choice" plan.
... over $31 million: the price of "freedom of choice"
In February 1970, the federal government notified DHA that its blatant refusal to change the tenant assignment plans was in violation of Title VI. HUD then deferred funding for all DHA projects which had not been approved. And, from 1969 through 1974, DHA forfeited in excess of $31 million because the DHA Board refused to try to end racial segregation in public housing in Dallas. This loss included:
(i) the allocation for several hundred units of new public housing for Dallas;
(ii) the cancellation of HUD's approval for the funding of Cliff Manor, a low-income project for the elderly;
(iii) the loss of all modernization funds for over four years, and the deferral of any modernization funds for West Dallas for almost a decade.
HUD specifically asked the City of Dallas for its assistance in getting DHA to stop its blatant violation of Title VI and in requiring DHA to adopt tenant assignment policies that would help desegregate public housing in Dallas. However, this time unlike 1967 the City was not threatened with any loss of federal funds. So the City of Dallas did nothing.
This conduct by the City of Dallas and by HUD in the period from 1969 through 1974 was inexcusable. And, as the City recognized years later, this now-meaningless battle by DHA (aided by the City) to maintain an illegal tenant assignment plan had a devastating effect upon the condition of low-income public housing in the City of Dallas:
"Until 1969 the Dallas Housing Authority maintained its properties in a reasonable manner and kept its financial reserves high. During this period DHA accepted no federal money for modernization and much equipment and structural components (roofs, doors, windows, etc.) were near the end of their economic life and would soon need replacement. From 1969 to 1974, DHA did not participate in federal modernization programs. Faced with declining real income, DHA management attempted to preserve financial soundness at the expense of physical maintenance. The physical condition of DHA properties deteriorated rapidly and most projects have never been returned to the condition they were in before ..."[32]
7. Public Housing In Dallas: 1971-74
In 1971, DHA opened two projects for the elderly: Brook Manor (233 units) and *1299 Park Manor (201 units). When George Loving Place in West Dallas started to become a predominately black unit,[33] a substantial number of white elderly tenants requested transfers from West Dallas to an "elderly-only" project. DHA got HUD approval for these transfers. In addition to reducing the number of whites in West Dallas, these transfers enabled DHA to open Brook Manor as a 100% white elderly unit.
The Park Manor elderly project opened in 1971 with a 79% black occupancy. That same year (1971), DHA also opened two "Turnkey III" projects: College Park (125 units) and Bonnie View Estates (107 units). Both of thee projects, of course, were 100% black. And, in 1974, DHA opened another white unit: Cliff Manor (185 units).
This meant that in 1974 after some 36 years of DHA's operations as an "arm of convenience" of the City of Dallas DHA had:
(i) Eight all black units, plus George Loving (originally all-white) which was now 95% black and Elmer Scott (originally all-Hispanic) which was now 79.3% black;
(ii) only one Hispanic unit, Little Mexico;
(iii) only three white units (Cliff Manor, Brook Manor and Cedar Springs);[34]
(iv) one unit that was originally all-white, but which was now "mixed," Washington Place (54% black); and
(v) only one public housing unit that had not started as all-white or all-minority, Park Manor (which began as a 79% black unit in 1971 and which was 88% black in 1974).
However, with its illegal "Freedom of Choice" plan, DHA managed to convert Park Manor into a 95% black unit by 1977 and Washington Place into an 82% black unit in 1982, just three years before it was demolished.[35]
8. A Slight Change of Heart in 1974: The Community Development Block Grant Program
On August 22, 1974, the federal Community Development Block Grant Program ("CDBG") came into existence. Under this HUD-administered program, the City of Dallas was to receive some $195 million over the next 15 years. The CDBG program prohibited race discrimination by recipients, 42 U.S.C. § 5309, so a "reform movement" concerning DHA was stimulated.
The Mayor appointed a new DHA Board. Then, in November of 1974, a City employee William Darnall became Acting Executive Director for DHA (while keeping his position with the City as Assistant Director for the Department of Housing and Urban Rehabilitation). An Assistant City Attorney was also provided to represent DHA.[36]
Darnall wanted to amend the DHA tenant assignment and selection plan so DHA could again receive federal funding from HUD. So, with the assistance of the City of Dallas Fair Housing Administrator, a City Fair Housing department law student intern, and the Assistant City Attorney, Darnall proposed a series of tenant selection and assignment plans.[37] The Board adopted these plans, and HUD did make a determination that DHA was finally in compliance with Title VI. However, by DHA's own admission, these new tenant *1300 assignment plans drafted and proposed by City of Dallas employees really did nothing to offer the black residents of DHA projects an opportunity to move into desegregated housing.
Indeed, the tenant assignment and selection plans were still discriminatory when this suit was filed in 1985. In the Consent Decree, DHA agreed to revise these plans, and finally after still more delay by DHA did so in after July of 1987.[38] This meant that DHA had operated with illegal tenant assignment plans for over 30 years (from at least 1955 through 1987) which maintained the segregated nature of public housing by assigning tenants to projects on the basis of their race. And, the City of Dallas through the direct involvement of its City Attorney in the DHA-HUD dispute over tenant assignment plans (1965-1974), through its threatened loss of federal funds in 1967, and through its employee (William Darnall) who drafted a new plan in 1975 was fully aware of these deliberate segregation policies of DHA.
9. Public Housing In Dallas: 1975-1986
... the § 8 program
In 1975, DHA began to operate its § 8 assistance program which provided rent subsidies to tenants seeking low-income housing and which certainly provided DHA with an opportunity to desegregate its public housing by moving black families into non-minority areas in Dallas and its suburbs.
Indeed, in 1978, DHA's own attorney stated in a letter to HUD that DHA not only had the authority to honor § 8 certificates in the suburbs, but it also had the constitutional duty to do so to help correct the effects of its past racial discrimination. However, DHA allowed only a few tenants to go to the suburbs and, subsequently, it completely refused to honor § 8 certificates in the suburbs.
In February of 1980, HUD advised DHA that it had to adopt a new tenant assignment and selection plan which would comply with Title VI. Specifically, DHA was notified that:
(i) Title VI requires DHA to remedy the situation under which white tenants find other public housing, while black families must rely on DHA for housing assistance;
(ii) DHA's § 8 program should be used to increase housing opportunities for current DHA minority tenants, so non-minority applicants could be placed in the resulting project vacancies, thus reducing the segregated nature of DHA's entire program.
DHA's primary response to HUD's demand was to adopt a new policy which required persons who were tenants at any DHA project to wait for 90 days after vacating their apartments before they were eligible to apply for § 8 assistance. Obviously, the practical effect of this policy was to prohibit DHA's black tenants from using the § 8 program since few public housing families had the resources necessary to move into private housing for the 90-day waiting period.
DHA also adopted a revised tenant selection and assignment plan. However, it contained nothing which would allow black DHA tenants to use the § 8 program to move into non-segregated housing. This plan did receive local HUD approval, but there is no record of it ever being submitted for national HUD approval.
... § 8 elderly projects
In 1979 and 1980, DHA was completing two § 8 new projects for the elderly: Lakeland Manor (172 units) and Forest Green Manor (252 units). Instead of using the regular applicant waiting list (18% black), DHA used a special waiting list composed of persons who had specifically requested Lakeland Manor; that list was 7% black, so when Lakeland Manor opened in 1980, it was only 3.6% black. Similarly, when Forest Green was opened in 1980, it was 16% black. In 1981, DHA opened a § 8 Rehabilitation project for the elderly: Oakland Apartments (56 units). It was located in a black neighborhood and was 100% *1301 black. Then, in 1984, Audelia Manor (123 units) was opened as an elderly project; it was a white project (with a 9.8% black occupancy when this suit was filed in 1985).
From 1982 through 1986, DHA continued to assign most elderly whites to its "white" projectsand most elderly blacks to its "black" projects. This resulted, of course, in predominately one-race projects for the elderly in need of public housing. For example, when this lawsuit was filed in 1985, Park Manor was 93% black and Oakland Apartments was 94% blackwhile Lakeland Manor was 95% white, Audelia Manor was 90% white, Cliff Manor was 85% white, Brook Manor was 80% white, and Forest Green was 74% white.
10. Not In My NeighborhoodChapter Three (1978)
In 1978, DHA received authorization from HUD to construct 224 new units of low rent public housing ("LRPH"). If these units had been constructed in non-impacted areas, DHA would have been able to offer black tenants a choice of housing outside of minority areas.
Instead, the City of Dallasacting through its City Manager and an Assistant City Managersuccessfully obstructed the development of these 224 LRPH units on "scattered sites" in non-impacted areas of Dallas. Specifically:
(i) the DHA proposals were vetoed because the number of units exceeded the maximum allowed (80 units) under "the current year goal" set for the City's Housing Assistance Plan; and
(ii) the City's Housing Plan formally declared that Dallas would accept no more than its "fair share" of federally-assisted housing.
When the suburb cities refused to accept any of the 224 units, the City of Dallas also rejected this needed public housing. Finally, in 1980, HUD revoked the authorization for these 224 units.
11. Not In My NeighborhoodChapter Four (1982-1986)
There was one break in the unrelenting segregation by DHA in its public housing projects and § 8 programs. It occurred as the result of a 1982 lawsuit which challenged the sale of Washington Place to Baylor University Medical Centerand the consequent demolition of the 347 units of public housing at Washington Place. In the settlement of this suit (filed by Washington Place tenants), DHA and HUD agreed to a "one-for-one" replacement of these 347 units in this manner:
(i) rehabilitation of "the 91 units at the DHA owned apartment complex known as Simpson Place" (which was adjacent to Washington Place);
(ii) rehabilitation of 150 units in the "Near East Dallas Neighborhood" with the use of § 8 Modern Rehab funds; and
(iii) construction of 106 units of new low-rent public housing with funding provided by HUD.
DHA did rehabilitate Simpson Place (with 92 units); this project was 100% black when it opened in 1985, but the black occupancy rate dropped to 64% in 1986. Also, the § 8 Moderate Rehab units were used to modernize Town Park (with 156 units) in a predominately white area on Shadyside Lane in East Dallas; Town Park was 57.2% black when it opened in 1985.
There was substantial opposition to the location of Town Park in East Dallas. However, unlike the previous "Not in My Neighborhood" opposition to public housingit's not in the "Negro residential areas" set by City ordinance (Chap. One, the Haskell-Dolphin location in 1950); they are not going to be put in West Dallas (Chap. Two, the 3000 new units proposed in 1962); we'll only accept our "fair share" of public housing (Chap. Three, the 224 new units proposed in 1978)the opposition took a new form in the 1980's. For example, the "Lakewood Homeowners Association" vigorously argued:
... Town Park is too far from adequate facilities for the poor, such as grocery stores, retail shops, laundromats, hospitals, etc.
... there is not adequate public transportation for low-income tenants at Town Park;
... the selection of Town Park will not further desegregation of public housing;
*1302 ... there will be an adverse effect on the public schools in this neighborhood;[39] and
... it is a "bad deal" because DHA is paying too much for Town Park.
These very same objections would be raised, again and again, to other public housing proposed in non-minority areas including the numerous sites considered by DHA for the 106 replacement units for Washington Place and the 100 units of new public housing required by the Consent Decree in this case.[40]And, this is understandable.
No one wants low-income public housing in their neighborhood, certainly not a project that may be predominantly black. It should be placed in someone else's neighborhoodor just kept in the minority areas of town, as has been done historically by DHA (with the support of the City of Dallas). However, unless this pattern is broken, then public housing in Dallas will continue to be segregatedand, as the inevitable corollary, public housing for minorities will continue to be substandard, at best, and it will never even approach the quality of low-income housing being provided for whites.[41]
Another recurring objection to public housing in my neighborhoodone that is not without justification in light of the miserable history of public housing in Dallas is that DHA will not properly maintain these low-income projects, so they will rapidly deteriorate into eyesores and slums, and dramatically increase the crime rates in their neighborhoods.
But does this have to be true? What if political and neighborhood oppositionlike that which opposed the location of the Town Park and Country Creek projects in non-minority areaswere directed at DHA's failure to properly operate and maintain these units? And at the City of Dallas, as well, for not requiring DHA to do so? Is there any real doubt that such political and neighborhood opposition would be effectiveand that it would prevent the deterioration of public housing projects like Town Park and Country Creek?[42]
12. Not In Any NeighborhoodChapter Five (1984-1988)
As discussed above, the Washington Place settlement in 1984 also provided for the construction of 106 units of new low-rent public housing. Under the April 14, 1984 Agreed Judgment, these were to be located in "non-minority impacted areas," and DHA agreed to "make all reasonable efforts to complete site selection" within 6 months (i.e., by Oct. 14, 1984)and to have the 106 units ready for occupancy within two years (i.e., by April 14, 1986).
Of course, DHA did not meet either of these deadlines. At the Sept. 18, 1987 hearing, DHA Executive Director Jack Herrington testified about the various sites that had been considered by DHA for the Washington Place unitsbut rejected in the face of political and neighborhood opposition.[43]
*1303 Finally, in August of 1984two months before the site selection deadlineDHA asked HUD to approve the placement of these 106 units at its existing Cedar Springs project. It did this with full recognition of the fact that this violated the Agreed Judgment because Cedar Springs was located in an impacted area; indeed, a May 1984 DHA memo to Executive Director Herrington stated:
"Both projects [Cedar Springs and Little Mexico] are located in census tracts which are, in HUD's definition, impacted. We may be able to fight that through EO if we can group several tracts in the area together and show an `integrated' racial balance. This will be subject to arbitrary decisions here and at HUD."
At this time, Cedar Springs (385 units) was located in a census tract which was 48.3% minority; although Cedar Springs was only 29% black in 1984, by 1985 it was 37% black and by 1987 it was 51% black.
Nevertheless, DHA requested the City of Dallas to amend its CDBG Housing Assistance Plan to allow these 106 units to be constructed at Cedar Springs site. The City complied with this request. However, HUD rejected this, as well as the City's attempted modification of its Housing Assistance Plan, because the Cedar Springs area "is lower income and contains a high proportion of assisted housing units"and, therefore, was not a "location acceptable for construction" of the 106 new units.[44]
Then, in Oct. 1985one year after the deadline for completion of the 106 units DHA sought help from the city in locating these Washington Place replacement units in non-impacted areas; specifically, it asked permission to use $300,000 in CDBG fundsthat had already been awarded to DHAto help in the acquisition of sites outside of minority areas. However, the City refused this request on the grounds that this proposal did not meet the intent of the City's initial grant for the use of this $300,000.
Finally, in 1987over three years after the deadline for site selectionDHA managed to purchase five "scattered locations on which the 106 replacement units will be constructed. There was, of course, opposition to these five sites by neighborhood groups and local politicians because "no one wants public housing in their neighborhood."
13. Housing Quality Inspections (1978-1988)
Beginning in 1978, the City of Dallas conducted many of the Housing Quality Standards inspections for DHA's § 8 programs. The city inspectors consistently approved units for black families, and in black neighborhoods, which were in flagrant violation of HUD Housing Quality Standards. Indeed, between Jan. 20, 1987 and Jan. 20, 1988, DHA's quality control inspections found that 60% of the units which had previously been inspected and "passed"most by city inspectorsdid not meet Housing Quality Standards upon reinspection.
Moreover, even when the City did fail a unit for quality violations, it took no action to bring code enforcement proceedings against the landlords. The city inspection process has, without question, been a major factor causing the both the segregation of black § 8 tenants and the substandard quality of the housing received by blacks when compared to the quality of the housing of white DHA tenants.
14. The City's CDBG Program (1974-1988)
The Dallas Housing Assistance Plan, filed under the Community Development Block Grant Program, lists a number of activities that purport to qualify the City for the $15 million per year in CDBG *1304 funds. Yet, the City does not review these activities to determine if they are increasing open housing opportunities or furthering the critical goal of fair housing. In fact:
... the City of Dallas has no policy to encourage the location of low-income housing outside of minority areas;
... according to the Assistant City Manager with housing responsibilities, there is not even one City activity that is specifically directed at the goal of increased open housing opportunities; and
... the City's own reports to HUD list only one item, "helping to sponsor a fair housing poster contest," under its obligations to further "fair housing."[45]
Moreover, the City's "fair housing" enforcement has been almost non-existent. The total housing enforcement staff was one half-time Housing Administrator and one half-time worker until 1989when Assistant City Manager Harry Jones was finally able to get an increased budget and four new employees for the "fair housing" staff.[46] There have been no prosecutions filed, and no settlement agreements reached, under the "fair housing" ordinance since at least 1981. And, the City has chosen to effectively exempt DHA and other federally assisted housing providers from its enforcement activities.
In addition, despite requests from HUD, the City has failed to request "substantially equivalent status" for its "fair housing" program. If the City had done so, it would be receiving federal funding for its fair housing effort. 24 CFR Part 111. However, the City's present "fair housing" ordinance does not meet the standards for recognition as a "substantially equivalent" ordinance because of its substantive and procedural weaknesses. 24 CFR §§ 115.3, 115.4.[47]
Finally, with respect to CDBG funds which have been given to DHA, the plaintiffs contend:
"Past City grants of CDBG funds have been given to DHA when it was engaged in overt segregation and without requiring an end to the segregation and its effects. This must be compared with the City's refusal to provide funds for DHA's present desegregation effort. The City is willing to fund segregation, but not its elimination."
Unfortunately, as is shown by this "history" of segregation in public housing in Dallas, this contention is true.[48] It is also inexcusable.
15. The Robin Square Apartments (1980-1988)
In 1980, DHA submitted an application to HUD for § 8 Moderate Rehabilitation Program *1305 ("Moderate Rehab") fundsbased on the explicit certification that units located in an area of minority concentration would not be selected for the program. The City of Dallas Housing and Urban Rehabilitation Department was a co-administrator of this program.
However, these § 8 Moderate Rehab funds were used only to "rehabilitate" housing in minority and low income areas.[49] For example, the City of Dallasthrough two different City Managerssupported DHA's use of § 8 Moderate Rehab funds at the Robin Square Apartments near Fair Park. The Robin Square site met none of HUD's site selection requirements: it was located in a blighted, minority and low-income concentrated area; it had consistently failed Housing Quality Standard inspections; and it had even been rejected in 1979 by DHA as an appropriate location for public housing.
Nevertheless, § 8 Moderate Rehab funds were used to supposedly renovate 156 apartments at Robin Square. Yet, in a 1987 lawsuit filed by tenants of Robin Square against DHA and the landlord of these apartments[50]because the project had not been maintained in a decent, safe, and sanitary position for yearsDHA Executive Director Jack Herrington testified that the conditions at Robin Square have never met the DHA standards for the quality of housing should be provided to DHA tenants. Herrington also testified:
"Q. At the time you were considering Robin Square for this moderate rehab participation, was the neighborhood a desirable one?
A. No.
Q. Is it a desirable neighborhood today?
A. No.
Q. Has it ever been a desirable neighborhood?
A. No.
Q. As long as it's been on the moderate rehab program?
A. No.
Q. Did you ever take a position opposed to the use of Robin Square as a moderate rehab project site?
A. No.
Q. Did anyone at DHA ever take a position opposed to the use of Robin Square as a moderate rehab program site?
A. The official position of the authority would have been mine, so I would answer that no."
Herrington's testimony in Banksthat even though Robin Square was totally unsuitable, he did not oppose its use for the § 8 Moderate Rehab assistancemight be explained by the plaintiffs' allegation in that case that:
"In conversations during 1981 between Jack Herrington and local HUD officials about the inclusion of Robin Square as a § 8 Moderate Rehab project, Herrington explicitly stated that he wanted Robin Square on the program in order to avoid placing units in the white part of town targeted by the Moderate Rehab application. Herrington stated that he was under political pressure [from certain members of the Dallas City Council] to keep the units out of white neighborhoods."[51]
This allegation was supported by the Affidavit of Elbert T. Winn, filed in support of the plaintiffs' request for a preliminary injunction in the Banks case. In addition to reciting certain statements which Herrington supposedly made about local political pressurestatements which Herrington *1306 denies making, in his affidavit also filed in BanksElbert Winn, the Deputy Manager of the HUD Dallas Area Office in 1981, described the reaction of the local HUD officials to the Robin Square project:
"Irving Statman [HUD Dallas Area Manager] initially responded to Herrington's request for HUD approval by objecting to the location and the condition of the [Robin Square] project. Statman referred to the project as `cruddy' and `horrible' and said `This project has been sent to us so many times, it's a pity. It should be torn down.' Statman also told Herrington that `the site and neighborhood standards will not permit us to do this.' Statman was referring to the § 8 Moderate Rehabilitation Program site and neighborhoods and their application to the Robin Square Apartments.
"Statman told Herrington that HUD would approve the Robin Square site only if the City of Dallas would write a letter endorsing the inclusion of the Robin Square Apartments as a Moderate Rehabilitation project and strongly enforce its housing codes in the area...."[52]
The Dallas City Manager did, in fact, write the letter requested by Statman; and, because of the City's support, HUD approved the use of the § 8 Moderate Rehab funds for Robin Squarea "cruddy" and "horrible" project which "should have been torn down."[53]
The credibility dispute between Winn (HUD) and Herrington (DHA) concerning "political pressure" on Herringtonwhich does not form the basis for any finding of fact in this opinionwas not resolved in Banks. Neither Winn nor Herrington testified in that case. Instead, on June 13, 1988, an agreed injunction was entered in favor of the plaintiffs which, in substance, gave them rights to move out of Robin Square immediately with the use of § 8 certificates. Then, on October 4, 1988, HUD instructed DHA to cancel its contract with the owner of Robin Square; and, DHA did this effective November 1, 1988 just six years after Robin Square had been opened as a § 8 Moderate Rehab project in a deteriorating all-black neighborhood at the instance of DHA and with support of the City of Dallas.
16. The West Dallas Project (1975-1988): A Gigantic Monument to Segregation and Neglect
The West Dallas project was not a "solution" to anything, much less the "Negro Housing Problem." It is, instead, "a gigantic monument to segregation and neglect."[54]
... a publicly-owned slum
By 1975, after only 20 years of existence, the West Dallas project had become "a publicly-owned slum." The housing was in horrible condition because no money had been spent on maintenance and rehabilitation for over ten years[55]the period during which DHA received no federal funding because both the City and DHA felt it was more important to continue the segregation of public housing in Dallas.[56]
There were numerous vacancies in the West Dallas project, and many of these vacant units had been boarded up because *1307 they were unfit for human occupancy.[57] And, this was not surprising because:
(i) persons who lived at West Dallas were almost 5 times as likely to be murdered as other Dallas residents;
(ii) rapes were over 6 times more frequent in West Dallas than in other parts of the City;
(iii) according to Dallas police officers, drug dealing was rampant at West Dallas, and hundreds of transients were hiding or living in the vacant units; and
(iv) there were substantial health risks because a large portion of the project had been subjected to serious lead contamination by a nearby lead smelter.[58]
Because of these conditions, West Dallas was not a "solution." It was a problema very serious and incredibly difficult problem that defied every effort to remedy the "publicly-owned slum."
... the "quick fix" in 1976
In 1976, DHA obtained $13 million from HUD as a "rehabilitation grant" for the West Dallas project. However, this money was totally inadequate since it gave DHA only $3,700 to spend on each of the 3500 units at West Dallasinstead of the $22,000-25,000 per unit that has been required for the rehabilitation of other public housing projects in Dallas.[59]
Moreover, because of mismanagement and incompetenceif not theft and fraud the grant resulted in little, if any, improvement of the West Dallas project. Indeed, after the $13 million was spent, there were still approximately 1,300 units at West Dallas that were vacant and uninhabitable.
... The 1983 "master plan" (and others)
In 1983, the 1983 City Task Force on Public Housing found:
(i) that at least 35% of the West Dallas units were so deteriorated that they were uninhabitable; and
(ii) "The underlying assumption for upgrading the West Dallas projects is that simply rehabilitating the housing units will not solve all the problems. The large concentration of units in the West Dallas area has created poor security conditions and the overall perception that West Dallas is not a desirable place to live. The revitalization strategy must attempt to reverse this perception through provision of not only decent housing but also retail centers, security, and jobs."
In that same year (1983), DHA prepared a "master plan" for the rehabilitation of the West Dallas project and the revitalization of the surrounding community. The cost for this plan was $88 million.[60] However, DHA was not able to get anyone HUD, the City of Dallas, or private sourcesto agree to contribute any financing for this $88 million master plan.
Accordingly, later in 1983, DHA applied to HUD for $54 million to rehabilitate all of the West Dallas units. HUD refused, and gave notice to DHA that it would provide only $18 million for this projectand that it would provide this amount only upon the conditions (i) that DHA would not apply for any more HUD funds for West Dallas; and (ii) that DHA would submit a workable plan that would restore both the Project and the surrounding community to "viability."[61]
*1308 Then, in 1984, the "Mayor's Task Force on Public Housing" recommended that the City of Dallas use CDBG funds to rehabilitate 200 West Dallas units a year, at-below-minimum standards, for a per-unit cost of $7,000. There is serious question whether this minimum rehabilitation would have met HUD's standards for "viability." In any event, the City Council refused to commit even this amounta total of $24.5 million over 17.5 yearsand it rejected the Task Force proposal.
... just before the Consent Decree
The conditions at West Dallas in late 1986, just before approval of the Consent Decree in this case, were summarized by the testimony of DHA Executive Director Jack Herrington at a Congressional Sub-committee hearing:
"In the three West Dallas housing projectsGeorge Loving Place, Edgar Ward Place and Elmer Scott Place there is an urgent need to reverse 30 years of wear, deterioration, vandalism, poor maintenance and inadequate funding. The overall housing conditions and 1,200 vacant, uninhabitable units have a negative impact on surrounding neighborhoods, business, industry and the city as a whole. More than 8,000 adults and children live in a square mile area which has become, in many respects, a publicly owned slum."
Because of the appalling conditions at West Dallashousing that was barely fit to live in; almost 1300 vacant units that were boarded up; severe problems with drug dealers, with other crimes, with transients, and with vandalism; health risks due to lead contamination; a bitter life with roaches and rats and rubbish; and little or no hope that these things would change people in need were refusing to accept housing in the West Dallas project. In 1986, the rejection rates for George Loving, Edgar Ward and Elmer Scott ranged from 58% to 60%; and, this was true even though the DHA staff had been instructed to deny any housing assistance to a family that refused to take a unit in West Dallas.[62]
And, because of the same horrible conditions, a substantial number of the West Dallas tenants wanted to get out of the project. Evidence at the Dec. 12, 1986 fairness hearing established that as many as 85% of the tenants at West Dallas wanted to move out of the "publicly-owned slums" and that from 15-20% of the tenants left West Dallas each year. As one of the plaintiffs (Mary Dews, a counselor for the Dallas Tenants Association) testified:
"... It was an awful experience. She talked about taking her own life if she couldn't do better and she did not want to take her family to West Dallas. She was just that firm about it. She did not want West Dallas....
"... [And] many of the tenants [at West Dallas] come into the office and ask for housing or want to relocate or want to transfer. And because of the 90-day policy it's real hard ... very hard, next to impossible. And they begin to cry. They talk about things like seeing children raped and syringes outside, the children going outside and picking up the syringes. And they want a better lifestyle for their children and for themselves. It's justit's heart breaking, [they] just break into tears and start crying `WE WANT OUT!'"
At the time of the entry of the Consent Decree (Jan. 20, 1987), there were 1,917 black families subjected to these conditions at West Dallas. The remaining 1,583 units at West Dallas were vacant, and almost 1,300 of these had been boarded-up for at least ten years because they were not fit for humans.
17. Summary: "This City Has Not Been Kind to the Poor and to Minorities"
It is obvious, from this history of public housing in Dallas, that the City knew of DHA's deliberate discrimination and segregation in its § 8 assistance programs and in its public housing projects. The City of *1309 Dallas could have intervened to stop these illegal practices of DHAbut it did not.
In addition, the undisputed facts establish that the City itself was a substantial cause of this racial discrimination in public housing in Dallas. These are just some of the examples discussed above:
... the City Manager selected the site for DHA's first "Negro" housing project;
... the Mayor (and City Council) requested DHA to construct the 3500-unit West Dallas Housing project, as a solution to the "Negro Housing Problem" of the 1950's, in order to kkep blacks from moving into "white areas of the city";
... because of the City Council's opposition, the additional 3,000 units of public housing available in 1962 were denied to those in need of low-income housing;
... because of the City support for (and the active participation of the City Attorney in) DHA's illegal tenant assignment and selection plans, DHA was permitted to forfeit over $31 million in federal funds from 1969 to 1974and this loss resulted in the rapid and irreversible deterioration of every DHA housing project, including West Dallas;
... the City blocked DHA's development of the 226 units of needed public housing that were available in 1978;
... the City did nothing to help DHA locate sites for housing in non-minority areas or to help DHA use § 8 programs to move black public housing families out of minority areas;
... the City supported the opposition to DHA's efforts to locate the Town Park and Country Creek projects, and the 106 Washington Place replacement units, in non-impacted areas;
... the City has taken no action to correct the sub-standard quality of DHA housing by the use of code enforcement proceedings;
... the City has done very little to enforce "fair housing," or to increase the housing opportunities for the poor outside of minority areas, despite its obligation to do so under its CDBG program;
... the City, despite DHA's policies of blatant discrimination, has made (or promised) grants of CDBG funds to DHA when the particular project furthers segregation (e.g., Robin Square), but has refused CDBG grants to DHA for efforts to correct its past policies of discrimination (e.g., funding for the mobility and relocation benefits under the Consent Decree in this case); and
... the City simply continues to refuse to recognize that it has any responsibility to help solve the monumental problems that are the legacy of the City's mistake in having the West Dallas project built to keep at least 3,500 blacks out of the white areas of Dallas.
This, then, is a summary of deliberate segregation in public housing in Dallas by DHA and by the City itself. It has not been a pleasant history to record. But, if nothing else, it does demonstrateas City Council Member Lori Palmer testified that:
"... This particular city has not been kind to poor people and to minorities. It has not been kind in providing the adequate availability of low-income housing, and it has not been kind to the availability of housing for families with children in particular. We are finding ... a major lack of low-income housing in our city, and we do not yet find the public will or the private will to change that ..." (Dec. 12, 1986 Hearing, Tr. 24).
IV. Conduct By The City of Dallas And Its Officials After The Consent Decree
The conduct of the City of Dallas, and some of its officials, after the Court's approval of the Consent Decree (Jan. 20, 1987), also supports the joinder of the City in this case.
1. Initial Participation and Support
The City of Dallas, of course, was not a party to the Consent Decree. However, the Mayor of Dallas (then, Starke Taylor) was instrumental in the settlement. He, lawyers from the City Attorney's office, and other City employees participated in the negotiations in 1986. The Mayor promised that the City would support the settlement and would assist DHA in meeting its *1310 obligations under the Decree[63]and DHA viewed the support and endorsement of the City to be essential to the success of the Consent Decree.
Indeed, without this assurance, neither the plaintiffs nor HUD would have entered into the settlement. The Consent Decree recognized that DHA needed resources to comply with all of its obligations under the Decree.[64] And, just as importantlyin view of the long, dismal history of DHA's deliberate racial discrimination and segregation it is obvious that the plaintiffs wanted to have the City's support so DHA would honor its commitments under the Consent Decree. HUD had already recognized that the only successful attempts to desegregate public housing have taken place where "the City Council, the Mayor, the [Housing] Board, or some key political personage supported the effort."[65]
The City argues that Mayor Starke Taylor did not have authority to speak for the entire City Council. This is true. However, it is also true that Starke Taylor was not acting as a private individual in the settlement negotiationshe was participating in his official capacity as the Mayor or of Dallas. It is also obvious that Mayor Taylor consulted with other members of the City Council, since a majority of the Council initially supported the Consent Decree. For example, DHA's First Annual Report (Jan. 20, 1988) to this Court under the Consent Decree contains this entry in the "Chronological Events" narrative (pp. 31-32):
"October, 1986: DHA Executive Director and attorneys for Plaintiffs brief City Council on the Consent Decree. It is viewed by local leadership as a welcome solution to the longstanding community problems that West Dallas has caused since it was completed in the mid-1950's."
The "welcomed solution" was the complete renovation of 800-900 units at West Dallas; the demolition of at least 1300 units that had been vacant and uninhabitable for over ten years; the one-for-one replacement of all units demolished at West Dallas with § 8 assistance; and, using this § 8 program, the transfer of those who wanted to leave West Dallas into non-segregated housing in non-minority areas of Dallas and its suburbs. (See this Court' opinion in Walker II).
2. City Opposition to The Decree
This initial support by the City Council appeared to dissipate, in mid or late 1987,[66] in the face of opposition from an unusual combination of diverse groups[67] to the demolition of any units at West Dallas. *1311 And, ignoring the fact that the entire Consent Decree was being supported by those who mattered mostthe black families who wanted out of the squalor, the crime, and the hopeless life in West Dallas[68]the City of Dallas, and its elected officials and employees, began to oppose the Decree and to obstruct it in various ways.
First, the Mayor of Dallasacting in her official capacity as Mayor[69]contacted both local and national HUD officials to oppose any demolition in West Dallas. Second, the Mayor and other City Council Members supported "the Frost Amendment," which purports to deny federal funding for the West Dallas demolition.[70] Third, the Mayor appointed Mattie Nash, an avowed and dedicated opponent of the Consent Decree, to the DHA Board of Commissioners.[71]
Fourth, not only has the City of Dallas refused to do anything to support the Decree,[72] or to help stop the massive violations of the Decree by DHA (see the Walker I opinion), it has actually contributed to some of these violationsby continuing to approve substandard housing for use in the DHA's § 8 programs and by failing to use code enforcement proceedings to remedy these Housing Quality Standard violations.[73]
Finally, the Mayor and some City Council Members have opposed both the construction of the 100 units of new public housing at the Country Creek site and the demolition of any units at West Dallas.[74] Although this Court certainly does not question the sincerity of this opposition, one cannot help noting that consistency is not a requirement for opposing the Consent Decree:
(i) some oppose the location of the 100 units at County Creek because this is "simply too large" a project for low-income public housing;
(ii) but they also oppose the demolition of any of the 3500 units at West Dallaseven those that have been vacant and boarded-up for over 10 years because *1312 they are unfit for human occupancy;
(iii) some oppose the demolition of any public housing at any location because of the need to preserve even dilapidated and uninhabitable units of low-income public housing;
(iv) but they also supported the demolition of Washington Place in 1975, and then did nothing to assist DHA in replacing these units with public housing in non-minority areas.
Some of the opposition to the Decree was also based upon a desire for more time in which to find alternatives to the West Dallas demolition. But over two and one-half years have passed since the approval of the Consent Decreeand not a single, viable "alternative" has been presented to this Court. There have been no offers from Washington for the $88 million (or more) that it will take to rehabilitate West Dallas and its surrounding neighborhood.[75] And, of course, the City of Dallas has not been willing to commit any money for this purposeor to follow the recommendation of the "Mayor's Housing Mediation Team" that the City should "voluntarily agree to enter into the Walker v. HUD Consent Decree."
V. The Applicable Law
Under the law, there are two separate justifications for compelling the joinder of the City of Dallas in this case: the "All Writs Act," 28 U.S.C. § 1651; and Rule 21, Fed.R.Civ.P.
1. The All Writs Act
28 U.S.C. § 1651(a) provides:
"The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law."
Under the "All Writs Act," it has been repeatedly held that federal district courts may issue such orders "as may be necessary or appropriate to effectuate and prevent the frustration of orders it has previously issued." United States v. New York Telephone Co., 434 U.S. 159, 172, 98 S. Ct. 364, 372, 54 L. Ed. 2d 376 (1977). And, as stated in New York Telephone:
"The power conferred by the Act extends, under appropriate circumstances, to persons who, though not parties to the original action or engaged in wrongdoing, are in a position to frustrate the implementation of a court order or the proper administration of justice, Mississippi Valley Barge Line Co. v. United States, 273 F. Supp. 1, 6 (ED Mo.1967), summarily aff'd, 389 U.S. 579 [88 S. Ct. 692, 19 L. Ed. 2d 779] (1968); Board of Education v. York, 429 F.2d 66 (CA 10 1970), cert. denied, 401 U.S. 954 [91 S. Ct. 968, 28 L. Ed. 2d 237] (1971), and encompasses even those who have not taken any affirmative action to hinder justice. United States v. McHie, 196 F. 586 (ND Ill.1912); Field v. United States [United States v. Field], 193 F.2d 92, 95-96 (CA2), cert. denied, 342 U.S. 894 [72 S. Ct. 202, 96 L. Ed. 670] (1951)" (434 U.S. at 174, 98 S.Ct. at 373).[76]
2. Rule 21
Rule 21, Fed.R.Civ.P., provides that "parties may be dropped or added by order of the court on motion of any party ... and on such terms as are just."
Under this rule, a party may be added at any stage on the case. For example, parties have been added after trial and even while an appeal was pending.[77] Indeed, in one case, Rule 21 was used to add parties after the appeal had reached the United *1313 States Supreme Court.[78]
3. Joinder of the City
In this case, it is necessary to join the City of Dallas, as a defendant subject to the Consent Decree, in order to prevent the frustration of the Decreeand in order to prevent the City from obstructing the implementation of the Decree.[79]
The City of Dallas is not an innocent bystander. Instead, as discussed above, the City has been a substantial cause of the racial segregation in public housing in Dallas the very problems sought to be corrected by the Consent Decreeboth through its own actions and through its failure to stop DHA's blatant practices of discrimination and segregation in all of its public housing programs.
In addition, the Consent Decree was explicitly conditioned on the premise "that the resources currently available to DHA to implement the Decree are inadequate" and that "substantial resources will have to be made available from institutions and organizations other than DHA." (Decree, Summary p. 2). There is no question that resources are not available to accomplish the remedial purposes of the Consent Decree; for example:
(i) there has not been a sufficient supply of § 8 housing to meet the quality standards and locational requirements of the Decree;
(ii) there has not been adequate resources to fund the demolition of all vacant units at West Dallas, particularly in view of the "Anti-Demolition Statute," 42 U.S.C. § 1437p;[80]
(iii) there has not been sufficient "fair housing" or code enforcement efforts by the City to accomplish the purposes of the Decree to assure housing opportunities for minority in non-impacted areas and to improve the quality of the public housing in all of DHA's programs; and
(iv) there has not been sufficient resources to improve the facilities and neighborhoods of the predominately minority DHA projects, so that they are substantially equivalent to the HUD assisted units currently housing white low-income families.[81]
In addition to these and other resources needed to effectuate the Consent Decree,[82] DHA has engaged in repeated and pervasive violations of the Decree. See the Walker I opinion. However, instead of assisting DHA in obtaining the necessary resourcesor intervening to stop DHA's violations of the Decreethe City (through its elected officials and its employees) has chosen to oppose the Consent Decree and to frustrate its implementation.
Accordingly, the joinder of the City of Dallas is not only appropriateit is essential to the Consent Decreeunder the "All Writs Act," 28 U.S.C. § 1651(a), and under Rule 21, Fed.R.Civ.P.[83]
*1314 VI. Conclusion
For these reasons, the City of Dallas will be joined as a party defendant in this caseand summary judgment as to liability will be entered against the City on the plaintiffs' claims that the City of Dallas was a substantial cause of DHA's deliberate racial segregation and discrimination in its public housing programs in Dallas.
The Consent Decree will be modified so that it is binding on the City of Dallas. However, the specific modifications to be made and the scope of injunctive relieftogether with the financial obligations to be imposed on the Citywill be determined only after a hearing and the presentation of evidence by all parties.
NOTES
[1] Two companion opinions are being released at the same time. They are "Walker I: DHA Violations of the Consent Decree and Appointment of a Special Master," 734 F. Supp. 1231, and "Walker II: The Frost Amendment and the Anti-Demolition Statute," 734 F. Supp. 1272, and they will be cited in this opinion as "Walker I" and "Walker II."
[2] This opinion (originally filed Aug. 4, 1989) has been revised for publication, primarily by the deletion of some 59 footnotes (which only contained references to exhibits and testimony in support of the undisputed facts stated in this opinion).
[3] The plaintiffs threatened to do this in early 1988, and that resulted in the Mayor's appointment of the Housing Mediation Team in February of 1988.
[4] The order permitting the plaintiffs to file their Supplemental Complaint against the City of Dallas is being entered on the same day as this opinion.
[5] Originally, in its Oct. 7, 1988 response to this motion, the City of Dallas objected on the grounds that it had not been given an opportunity to contest the evidence introduced at prior hearings or to cross-examine any witness. At the Dec. 21, 1988 Hearing, the City was given the full right to do this, as well as to introduce its own evidence and to challenge the testimony and exhibits offered by the plaintiffs, DHA and HUD at the Dec. 12, 1988 Hearing.
[6] The significance and magnitude of this requirement is discussed in Walker II.
[7] The significance and magnitude of this requirement is discussed in Walker I.
[8] Although none of the material facts shown by the exhibits and testimony at the Dec. 12, 1988 Hearing were disputed, see the opinion in Walker I, at fn. 16, for this Court's credibility determinations regarding the witnesses who testified at each hearing in this case. Nor is this opinion intended to reflect in any way upon the performance of Mr. Alphonso Jackson, who became Executive Director of DHA after the Dec. 12, 1988 Hearing in this case. See Walker I, at fn. 4. Finally, as in Walker I, this opinion constitutes the Court's findings of fact and conclusions of law required by Rule 52, Fed.R.Civ.P.
[9] State law authorizes the creation of public housing authorities, but provides that only the city council may activate such an authority. Tex.Local Gov.Code §§ 392.011(a), 392.031, 392.034.
[10] This cooperation agreement is required by 42 U.S.C. §§ 1437(c)(e)(2) as a condition to the receipt of federal assistance for public housing programs.
[11] Dec. 12, 1988 Hearing: Pls. Exh. 2, pp. 7-9 (Dallas Department of Housing & Neighborhood Services, Report of the Task Force on Public Housing Jan. 1983).
[12] Since 1974, under federal law the City has the specific authority to determine the location of any new public housing in Dallas. 42 U.S.C. § 5304(c)(1)(C).
[13] In order to receive CDBG funds, the City's Housing Assistance Plan filed with HUD must meet certain criteria including the promotion of a greater choice of housing opportunities and the avoidance of undue concentrations of assisted persons in areas which contain a high proportion of low and moderate income persons. The Plan must also specify a realistic goal of the number of housing units that will assist low-income persons. 42 U.S.C. § 5304(c)(1)(B) and (C). The City has repeatedly included the DHA public housing programs as part of the means by which the City's "realistic goals" for the use of CBDG funds will be met.
[14] This survey specified the specific areas of the City tjat were designated for whites, for "Negros," and for "Mexicans." Dec. 12, 1988 Hearing: Pls. Exh. 1 (General Survey of Housing Conditions, pp. 10-13).
[15] In a chilling forecast of the eventual demise of the historic "Little Mexico" area of Dallas, this same 1938 survey states:
"Due to the zoning classification, the high value placed on the property and its future use as industrial property, this [the Mexican Area] is not a desirable location to house the Mexican slum dwellers. The Mexican project should be removed from this immediate area but should be located as near as possible to the district in which they now reside."
[16] Most low-income white families in Dallas have always been able to receive federal housing assistance without the use of DHA programs by living in projects which receive subsidies directly from HUD. Dec. 12, 1988 Hearing: Pls. Exh. 89 (summary of location and occupancy characteristics of HUD-assisted projects in Dallas County).
[17] The statistics throughout part III of this opinion are taken from Dec. 12, 1988 Hearing: Pls. Exh. 31 and Dec. 12, 1986 Hearing: Pls. Exh. 1.
[18] At this time (1950), state law gave Texas cities the power to enact ordinances under which there was residential segregation by race. Tex.Rev.Civ.Stat.Ann. art. 1015b (repealed 1969). Section 321 of the 1907 Dallas City Charter expressly provided for the City's power to "provide for the use of separate blocks for residences, places of abode, places of public amusement, churches, schools and places of assembly by members of white and colored races." The United States Supreme Court declared such ordinances unconstitutional in 1917, Buchanan v. Warley, 245 U.S. 60, 38 S. Ct. 16, 62 L. Ed. 149 (1917), but the City of Dallas continued to enforce its racially restrictive ordinances. See City of Dallas v. Liberty Annex Corp., 19 S.W.2d 845 (Tex.Civ.App. Dallas 1929); Housing Authority of the City of Dallas v. Higginbotham, 143 S.W.2d 95 (Tex.Civ.App. Dallas 1943). This ordinance which provided separate areas of residence for whites and minorities was finally repealed by City Charter amendment in 1968. Dec. 12, 1988 Hearing: Pls. Exh. 7 (Dallas City Charter 1952). The City of Dallas admits that these laws established "racially segregated housing patterns [that] have not yet fully been eradicated" but it denies that there is "any current policy within the City of Dallas to provide housing on a racially discriminatory basis."
[19] Dec. 12, 1988 Hearing: Pls. Exh. 8 (1950-51 newspaper articles); Pls. Exh. 9 ("Report of Joint Committee on Negro Housing" of the Dallas Chamber of Commerce, the Dallas Citizens Council, and the Dallas Inter-Racial Committee, dated May 24, 1950 and January 24, 1951) ("the Joint Report on Negro Housing"); Pls. Exh. 10 (1962-66 documents, p. 1).
[20] The 1950 Joint Report on Negro Housing, p. 20, also noted that "Negro School students" could "by special arrangements" use the Dallas Public Library and it recommended that "a study be made relative to adult negroes being given access to the Dallas Public Library for the securing of books they desire."
[21] Dec. 12, 1988 Hearing: Pls. Exh. 44. The West Dallas project is the second largest public housing project of any type in the United States.
[22] At this time, West Dallas was not even in the Dallas city limits. DHA's application for the West Dallas project gave this description:
"The area selected is in what is known as `West Dallas,' a sprawling slum community of approximately five square miles ... West Dallas is the largest concentration of substandard dwellings and slum conditions in and around Dallas ..."
[23] Dec. 12, 1988 Hearing: Pls. Exh. 5 (1950's documents, Oct. 1955 Application, pp. 17, 22) (also noting "the general restlessness, mobility and instability of many of the white and latin-American families comprising the segment of the low-rent market who have been willing to move to `West Dallas'").
[24] Except for projects for the elderly. Dec. 12, 1986 Hearing: Pls. Exh. 1.
[25] The anticipated completion date for the 100 units of new public housing being constructed at Country Creek under the Consent Decree. See this Court's opinion in Walker I.
[26] Despite the fact that de jure racial segregation in public housing was declared unconstitutional in 1955. Detroit Housing Commissioners v. Lewis, 226 F.2d 180, 183-184 (6th Cir.1955).
[27] Before this, HUD had accepted segregated public housing under a "separate but equal policy." Dec. 12, 1988 Hearing: Pls. Exh. 25 (Hearing Before The U.S. Commission on Civil Rights, June 1959). Heyward v. PHA, 238 F.2d 689, 697 (5th Cir.1956); Cohen v. PHA, 257 F.2d 73, 74 at fn. 5 (5th Cir.1958).
[28] This 1956 plan was prepared in consultation with the Dallas Citizens Council, a civic organization that had supported racial segregation in public housing. Dec. 12, 1988 Hearing: Pls. Exh. 10 (1962-1966 documents); Pls. Exh. 9 (1950 Joint Report on Negro Housing).
[29] The all-Hispanic Elmer Scott Place had a similar transition; it had become 21% black by 1968, 57% black by 1970, and 85% black by 1975.
[30] Under these HUD requirements, offers were to "be made first in [projects] having the most vacancies" and, after an applicant had rejected three offers of vacancies, "he is subject to being dropped to the bottom of the [waiting] list."
[31] Dec. 12, 1988 Hearing: Pls. Exh. 13 (1968 documents, pp. 27, 34, 66) (Oct. 12, 1968 from Justice Department to DHA attorney).
[32] Dec. 12, 1988 Hearing: Pls. Exh. 2 (Report of the Task Force on Public Housing, Jan. 1983, pp. 22-23).
[33] George Loving was 55% black in 1968, 72% in 1969, 87% in 1970, and 91% in 1971. Dec. 12, 1988 Hearing: Pls. Exh. 31.
[34] In 1974, Cedar Springs was 7.5% black and Little Mexico was 4% black. Dec. 12, 1988 Hearing, Pls. Exh. 31.
[35] Similarly, Elmer Scott would be 85% black in 1975 and 94% black by Oct. 1988.
[36] Dec. 12, 1988 Hearing: Pls. Exh. 92 (Darnall/Bacon documents, pp. 7, 5, 10-11). Darnall served as Acting Executive Director from Nov. 26, 1974 to July 1, 1975, when he was employed by DHA as its Executive Director. The Assistant City Attorney acted as DHA's lawyer for about eight months (from Oct. 1984 to July 1985).
[37] Darnall had prepared the DHA's application for West Dallas rehabilitation funds before he became Acting Executive Director for DHA. He knew that one conditions for receiving these funds was to adopt a legal tenant assignment plan. However, the Darnall plans were, in effect, rejected by HUD in 1980.
[38] See this Court's opinion in Walker I.
[39] Overcrowding is the "adverse impact" upon the schools if a low-income housing project is placed in a non-minority area; but under-utilization of the schools is the "adverse impact" if units are demolished at an all-black project. Compare the opposition to Town Park with the inconsistent opposition to Country Creek and the demolition of units at West Dallas. DHA First Annual Report (Jan. 20, 1988), pp. 54-55; Sept. 18, 1987 Hearing: Testimony of Jack Herrington; presentation by Sidney Stahl, attorney for the Oak Cliff Chamber of Commerce.
[40] Compare the Town Park opposition (Pls. Exh. 14) to the opposition that DHA met in connection with the Washington Place units and with the selection of the Country Creek site. Sept. 18, 1987 Hearing: Testimony of Jack Herrington. And see this Court's opinion in Walker I.
[41] That is, both the "white" elderly projects of DHA and the public housing assistance which low-income whites have been furnished by HUD outside of the DHA programs. Dec. 12, 1988 Hearing: Testimony of Craig Gardner; Pls. Exh. 35; Pls. Exh. 36; Pls. Exh. 39 (summary of location and occupancy characteristics of HUD-assisted projects in Dallas County).
[42] These are intended merely as rhetorical questions, not as a sermon. But in any event, they are certainly not findings of fact, and they do not form the basis for any finding of fact or conclusion of law in this opinion.
[43] Sept. 18, 1987 Hearing: Testimony of Jack Herrington; Rulings of the Court, pp. 1-4. One of the sites rejected for these 106 units, because of neighborhood opposition and political pressure, was Country Creekwhich DHA, at the Court's direction, selected in Sept. 1987 for the 100 new LRHP units required by the Consent Decree in this case. See the Walker I opinion.
[44] Dec. 12, 1988 Hearing: Pls. Exh. 42 (16 unit documents, pp. 15-25). However, Assistant City Manager Harry Jones candidly testified that placing these 106 units at Cedar Springs would not have served "the goal of increasing housing opportunities for minorities outside of areas of low income and minority concentrations." Pls. Exh. 66 (Jones deposition, pp. 11-12).
[45] Dec. 12, 1988 Hearing: Pls. Exh. 67 (Harold Wasson deposition, pp. 19-20, 24-25); Pls. Exh. 66 (Harry Jones deposition, pp. 33-37); Pls. Exh. 58 (City reports of actions to further fair housing). Assistant City Manager Harry Jones did testify that HUD has conducted an annual audit of the City's "fair housing program." However, effective Sept. 1988, a HUD regulation sets standards for determining whether a CDBG recipient has complied with the duty to "affirmatively further fair housing"; under this regulation, the City will be required to conduct its own analysis of its CDBG programs.
[46] This opinion is not intended to reflect in any way upon Assistant City Manager Harry Jones who is obviously a very dedicated, extremely competent, and very concerned City employee; if Mr. Jones had been given adequate resources by the City, he would have corrected many of the problems that existed with the inspection and "fair housing" programs. Harry Jones is also very credible and, at times, painfully honest. See, e.g., Dec. 12, 1988 Hearing, Tr. 110, 121. See also Dec. 12, 1988 Hearing: Testimony of Harry Jones, Tr. 33, 45, 104-106, 109); Pls. Exh. 67 (Harold Wasson deposition, pp. 9-10, 17, 24-25); Pls. Exh. 66 (Harry Jones deposition, p. 33).
[47] Dec. 12, 1988 Hearing: Pls. Exh. 67 (Harold Wasson deposition, pp. 21-23); Pls. Exh. 85 (City of Dallas Fair Housing Ordinance); Pls. Exh. 93 (City memo on "substantially equivalent status"). Assistant City Manager Harry Jones did testify that the City planned to seek "substantially equivalent status," probably in 1989. Testimony of Harry Jones, Tr. 33-34.
[48] See, e.g., the City's refusal to permit DHA to use CDBG funds for the housing mobility and relocation benefits provided in the Consent Decree in this casebut promising the use of CDBG funds for street and gutter improvements so § 8 Modern Rehab funds could be obtained in 1980 for the all-black Robin Square Apartments near Fair Park. Dec. 12, 1988 Hearing: Pls. Exh. 40 (Robin Square documents, pp. 52-53).
[49] The § 8 Moderate Rehab Program of DHA and the City resulted in a 90.6% black occupancy rate, with projects located only in minority and low-income impacted areas. Dec. 12, 1988 Hearing: Pls. Exh. 37; Pls. Exh. 40.
[50] Banks, et al. v. Robin Square Apartments, CA 3-87-1713-R (N.D.Tex.).
[51] Plaintiffs' Statement of Evidence in Support of Motion for Preliminary Injunction, p. 14 (Banks, CA 3-87-1713-R). The choice of Robin Square is certainly not explained by Herrington's statements that he or City employees thought Robin Square "might improve that section of the community" (Pls. Exh. 40, p. 11) because that is directly contrary to DHA's certifications to HUD (Pls. Exh. 40, p. 20) and to the facts about the condition of Robin Square (see Pls. Exh. 40, pp. 84-86, 101-105, 109-110, 128-133).
[52] Statement of Elbert T. Winn, Pls. Exh. 6 to the Plaintiffs' Statement of Evidence in Support of Motion for Preliminary Injunction, filed May 23, 1988 in Banks, CA 3-87-1713-R. The statements just quoted were not denied in the Herrington Affidavit filed in Banks on June 14, 1988.
[53] In connection with the entry of the agreed injunction in Banks, one of the participants made this comment: "If a tornado were to hit the Robin Square Apartments, it would do over $5.5 million in improvements."
[54] Jan. 2, 1987 letter to the Court by Dallas City Council Members Al Lipscomb and Diane Ragsdale.
[55] Without the $31 million that was forfeited from 1969 through 1974, "DHA management attempted to preserve financial soundness at the expense of physical maintenance. The physical condition of DHA properties [such as West Dallas] deteriorated rapidly and most projects have never been returned to the condition they were in before ..." Dec. 12, 1988 Hearing: Pls. Exh. 2, pp. 22-23. See part 6 above, "Assignments of Tenants by Race (1965-74): The Loss By DHA of over $31 million."
[56] Because of this policy of deliberate segregation, West Dallas was over 95% black in 1975. Dec. 12, 1988 Hearing: Pls. Exh. 31.
[57] HUD expressed concern about the high vacancy level at West Dallas as early as 1963. DHA responded by claiming that it was considering modernization of the project, providing day care, and "creating small community areas within each project" to develop tenant pride in these areas. Dec. 12, 1988 Hearing: Pls. Exh. 10, pp. 5-8.
[58] Findings of Fact and Conclusions of Law Approving the Consent Decree, pp. 9-13 (filed Jan. 20, 1987).
[59] A 1980 survey funded by the City of Dallas estimated that it would cost $47.8 million for the complete rehabilitation of West Dallas. Dec. 12, 1988 Hearing: Pls. Exh. 46, (Millkey & Brown Study of West Dallas Project, pp. 20, 39, 59).
[60] The plan would have reduced the number of low-income units at West Dallas from 3,500 to between 1,400 and 2,000. Dec. 12, 1988 Hearing: Pls. Exh. 49 (Lake West Master Plan, pp. 78-86).
[61] Dec. 12, 1988 Hearing: Pls. Exh. 50 (West Dallas modernization documents). Under the HUD "viability" requirement, DHA would have to show that both it and the City of Dallas would improve the community by correcting the crime problem, the physical deterioration of the neighborhood, and the concentration of federally-assisted housing in the area. Pls. Exh. 50, pp. 7-10.
[62] Dec. 12, 1988 Hearing: Pls. Exh. 51, p. 2; Pls. Exh. 52 (DHA summary of West Dallas rejection rates). On March 25, 1988, DHA began offering West Dallas units to new applicnts on a voluntary basis; however, from that date until Oct. 31, 1988, only 21 persons out of 1000 applicants (2.1%) chose to move into West Dallas. Dec. 12, 1988 Hearing: Pls. Exhs. 55-56.
[63] March 25, 1988 Hearing: Testimony of Jack Herrington (Mayor Taylor participated in the settlement negotiations, and his support was an important factor in concluding the settlement). Dec. 12, 1988 Hearing, Testimony of Assistant City Manager Harry Jones (Jones, the Mayor and two city attorneys participated in the negotiations), Tr. 32; Pls. Exh. 60, Mayor's letter of Nov. 5, 1986 to DHA Executive Director Herrington.
[64] "The parties enter into this Decree on the explicit premise that the resources currently available to DHA to implement the Decree are inadequate. In order to implement the Decree, substantial resources will have to be made available from institutions and organizations other than DHA." Consent Decree, p. 2.
[65] Dec. 12, 1988 Hearing: Pls. Exh. 30 ("Final Report/Feasibility Research for a Public Housing Desegregation Demonstration, May 15, 1985"); Pls. Exh. 29.
[66] The first notice of the City's opposition in the DHA Reports to this Court stated: "Nov. 5, 1987: Executive Director attends meeting in Mayor Strauss' office with the Mayor, Councilpersons, HUD representatives and those opposing the settlement. No decision results, but the position of HUD and DHA were made clear regarding a firm commitment to accomplish Decree objectives." DHA First Annual Report, p. 60 (Jan. 20, 1988).
[67] Some groups objected to the West Dallas demolitionbut not to any other part of the Consent Decreefor obviously political reasons, such as the loss of votes or a power base if blacks were moved out of West Dallas. Other groups sincerely objected to the demolition of any public housing. Still others were sincere in wanting the West Dallas demolition delayed, to see "if there were any alternative solutions." But some groups objected to the attempted desegregation of public housing in Dallas; they suddenly discovered how important it was to keep 3500 units of low-income housing for blacks in West Dallas (even though they had not been concerned with the 1300 units that had been vacant and boarded for over ten years).
[68] Of the 1,917 black families at West Dallas when the Consent Decree was approved, 598 moved out of West Dallas during the first year of the Decreewith some 231 of these relocating with the use of § 8 assistance. DHA First Annual Report (Jan. 20, 1988). From March through Oct. 1989, the rejection rate for West Dallas was almost 98%. By October of 1988, there were only 1,074 occupied units at West Dallas, and the number of families who want to stay in West Dallas seem to have stabilized between 1000-1075. DHA Reports to the Plaintiffs, Jan.-Dec. 1988; DHA Report No. 7 to the Court (July 20, 1989). Dec. 12, 1988 Hearing: Pls. Exhs. 55, 56.
[69] This Court certainly does not mean to suggest that the opposition by the Mayor and other City Council Members was not sincere and for reasons that they felt valid. Indeed, in early 1988, the Mayor appointed a "Housing Mediation Team" which met, under the Court's supervision, with the plaintiffs, DHA, and City of Dallas attorneys in an attempt to resolve the controversy about the West Dallas demotion part of the Decree. And, Council Member Lori Palmer's opposition to the Consent Decree was based, in part, on her belief thatunfortunatelyDallas was simply not ready for blacks to move to suburbs and non-impacted areas with § 8 assistance. Dec. 12, 1986 Hearing: Testimony of Lori Palmer.
[70] The City of Dallas opposition to the Consent Decree was cited by Congressman Martin Frost in support of "the Frost Amendment." Dec. 12, 1988 Hearing: Pls. Exh. 76; Pls. Exh. 77, p. 2.
[71] Mrs. Nash testified in opposition to the Decree at the Dec. 12, 1986 fairness hearing; and, at the time of her appointment to the DHA Board, Mrs. Nash was an appellant in an abortive appeal to have the consent decree set aside. Dec. 12, 1986 Hearing: Testimony of Mattie Nash. See Walker v. City of Mesquite, 858 F.2d 1071 (5th Cir.1988).
[72] The City rejected DHA's request for the use of CDBG funds to help pay for the housing mobility services and the relocation benefits provided in the Decree. The attempt to justify this by arguing that the City offered DHA a loan at 7.5% is unavailing; such a "loan" was of no value since, at the City's insistence, DHA had already received HUD approval to use funds from the settlement of the lead contamination suit for the mobility and relocation expenses. DHA First Annual Report, pp. 35-37 (Jan. 20, 1988).
[73] See the discussion above in III(13): "Housing Quality Inspections (1978-1979)."
[74] Dec. 12, 1988 Hearing: Pls. Exh. 60 (Mayor Strauss letter to HUD); Pls. Exh. 62 (Country Creek letters); Pls. Exh. 68 (newspaper stories re opposition); Pls. Exh. 69 (Mayor Strauss letter to HUD); Pls. Exh. 70 (Mayor Strauss remarks at press conference); Pls. Exh. 64 (Deposition of City Council Member Charles Tandy, pp. 13-15).
[75] The cost of renovating only the 3500 units at West Dallas was estimated at $47.8 million in 1980 (Dec. 12, 1988 Hearing: Pls. Exh. 46, pp. 20, 39, 59), and at $65 million at the Dec. 12, 1986 fairness hearing (testimony of Jack Herrington). The cost of rehabilitating both the West Dallas units and the surrounding neighborhood was estimated at $88 million in 1983 (Dec. 12, 1988 Hearing: Pls. Exh. 49, pp. 78-86).
[76] See also Washington v. Fishing Vessel Assn., 443 U.S. 658, 692 at n. 32, 99 S. Ct. 3055, 3078 at n. 32, 61 L. Ed. 2d 823 (1979) ("nonparties who interfere with the implementation of court orders establishing public rights may be enjoined"); Clients' Council v. Pierce, 711 F.2d 1406, 1426 (8th Cir.1983); Valley v. Rapides Parish School Board, 646 F.2d 925, 943 (5th Cir.1981); United States v. State of Texas, 495 F.2d 1250, 1251 (5th Cir.1974).
[77] Reichenberg v. Nelson, 310 F. Supp. 248 (D.C. Neb.1970) (after trial); Reed v. Robilio, 376 F.2d 392 (6th Cir.1967) (on appeal).
[78] Mullaney v. Anderson, 342 U.S. 415, 72 S. Ct. 428, 96 L. Ed. 458 (1952).
[79] The appropriateness of adding, as parties, additional political subdivisions who have participated in the creation of racially segregated systems in order to accomplish a full remedy for that segregation is well established. Bradley v. Milliken, 484 F.2d 215, 221-224 (6th Cir.1973), reversed on other grounds, 418 U.S. 717, 744-745, 94 S. Ct. 3112, 3127, 41 L. Ed. 2d 1069 (1974); Reed v. Rhodes, 662 F.2d 1219, 1221 (6th Cir. 1981); Hart v. Community School Board, 383 F. Supp. 699, 752-755 (E.D.N.Y.1974); Bradley v. School Board of City of Richmond, 51 F.R.D. 139 (E.D.Va.1970).
[80] This is discussed in the Walker II opinion.
[81] The need for these additional resources (and others)and the obligation of the City of Dallas to cooperate in providing themwas recognized in the "Mayor's Housing Mediation Team Report (April 13, 1988)."
[82] The City has argued that its joinder is not necessary because other parties, primarily HUD, can provide the "additional resources" that are needed. This is wrong. The Consent Decree provides that "under no circumstances ... shall any modification increase, alter, otherwise affect the financial or other obligations of HUD pursuant to this Decree without the written consent of HUD." Consent Decree, Summary p. 3.
[83] The City also contends that the plaintiffs waived the right to join the City by not suing it before the entry of the Consent Decreeand that "the Court concurred with the decision that complete relief did not require joining the City." Again, this is simply wrong. As discussed above, although the City was not a party to the Decree, it joined in the negotiations and its support for the Decree was promised and expected; otherwise, there would have been no settlement. Therefore, there was no "waiver" by the plaintiffs' decision not to sue the City at that timeand this Court, when approving a Consent Decree which recited that "substantial additional resources" were necessary, certainly expected the City to support, not oppose, the Consent Decree. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1468625/ | 96 N.J. 419 (1984)
476 A.2d 763
WALTER P. COONS, PLAINTIFF-PETITIONER,
v.
AMERICAN HONDA MOTOR CO., INC., A CORPORATION, ET AL., DEFENDANTS, AND HONDA MOTOR COMPANY, LTD. OF JAPAN, A CORPORATION, DEFENDANT-RESPONDENT, AND ATTORNEY GENERAL OF NEW JERSEY, INTERVENOR-RESPONDENT.
The Supreme Court of New Jersey.
Argued January 24, 1984.
Decided June 13, 1984.
*420 Robert H. Jaffe argued the cause for petitioner (Jaffe & Schlesinger, attorneys; Robert H. Jaffe and Howard G. Schlesinger, on the brief).
Harry Haushalter, Deputy Attorney General, argued the cause for intervenor-respondent (Irwin I. Kimmelman, Attorney General of New Jersey, attorney; James J. Ciancia, Assistant Attorney General, of counsel).
John I. Lisowski argued the cause for respondent Honda Motor Company, Ltd. of Japan, etc. (Morgan, Melhuish, Monaghan, Arvidson, Abrutyn & Lisowski, attorneys; John I. Lisowski and Paul A. Lisovicz, on the brief).
Karl Asch argued the cause for amicus curiae pro se (Karl Asch, attorney; Karl Asch and Philip A. Tortoreti, on the briefs).
I. Michael Greenberger, a member of the District of Columbia bar, argued the cause for amicus curiae Brinco Mining Limited (Robinson, Wayne, Levin, Riccio & La Sala, attorneys; I. Michael Greenberger, Susan S. Collins and Elizabeth Runyan Geise, members of the District of Columbia bar, of counsel).
Raymond M. Tierney, Jr., argued the cause for amicus curiae G.D. Searle & Co. (Shanley & Fisher, attorneys; Raymond M. Tierney, Jr. and Susan M. Sharko, on the brief).
*421 Walter R. Cohn submitted a brief on behalf of amicus curiae Walter Cohn and Susan Cohn (Walter R. Cohn, attorney; Thomas E. Cohn, on the brief).
George J. Botcheos submitted a brief on behalf of amicus curiae Kelsey-Hayes Company (Laskin & Botcheos, attorneys; Lowell A. Reed, Jr. and Patricia A. Mattern, members of the Pennsylvania bar, of counsel).
William H. Sheil submitted a brief on behalf of amicus curiae Association of Trial Lawyers of America, New Jersey affiliate (Kronisch & Schkeeper, attorneys).
J. Llewellyn Mathews submitted a brief on behalf of amicus curiae Roy Allen Hopkins (Apell and Mathews, attorneys).
The opinion of the Court was delivered by CLIFFORD, J.
In Coons v. American Honda Motor Co., 94 N.J. 307 (1983) (Coons I), this Court addressed the constitutionality of N.J.S.A. 2A:14-22 in the face of an attack under the commerce clause, U.S. Const. art. 1, § 8, cl. 3. That statute tolls the running of the statute of limitations in actions against foreign corporations not represented in this state. We ruled that in order to achieve representation under the tolling statute, a corporation not organized in New Jersey and not represented in this state by any person upon whom process may be served must obtain a certificate to do business in New Jersey, pursuant to N.J.S.A. 14A:13-4, and thereby submit to the jurisdiction of the forum. 94 N.J. at 309. We further held that to require an unrepresented foreign corporation to satisfy that provision before it could gain the benefit of the statute of limitations imposed on such a corporation so impermissible a burden as to amount to a violation of the commerce clause. Id. Finally, we stated that our decision was to be given retrospective effect, "consistent with the general rule applied in civil cases that a new ruling shall apply to all matters that have not reached final judgment." 94 N.J. at 319 (citing Fox v. Snow, 6 N.J. 12, 14 (1950)).
*422 Following our decision in Coons I, plaintiff filed a petition for rehearing on all the issues that had been determined in that appeal. We directed defendant to respond solely on the question of retroactivity, and invited other counsel to address the same issue. The positions staked out in the supplemental briefs found plaintiff, supported by amici curiae Walter and Susan Cohn, Roy Hopkins, Karl Asch, P.A., and ATLA-NJ (The Association of Trial Lawyers of America, New Jersey Affiliate), arguing that our ruling should be prospective in application, a position shared by the Attorney General as intervenor-respondent. Defendant, who contends that Coons I should be applied retroactively, is joined by amici curiae G.D. Searle & Co., Kelsey-Hayes Company, and Brinco Mining Limited.[1]
We granted the petition for rehearing, 95 N.J. 234 (January 3, 1984), limited to the retroactivity issue. We now hold as a matter of state law that Coons I is to be applied prospectively only, from the date of that decision, August 3, 1983.
I
In order that the issue may be set forth in the proper context, we advert to the significant facts and procedural history, borrowing at the outset from our recitation in Coons I, supra, 94 N.J. at 309.
Plaintiff commenced this suit in 1978 against defendant Honda Motor Co., Ltd. (Honda) and its wholly-owned American distributor, American Honda Motor Co., Inc. (American Honda). The action seeks damages for personal injuries and consequential losses occasioned by an accident on October 30, 1974, when plaintiff was thrown from a motorcycle manufactured by Honda and distributed by American Honda. At all relevant times American Honda was a California corporation that maintained facilities in New Jersey. In contrast, Honda is a Japanese corporation that has never been authorized to do business *423 in this or any other state and carries on no activities here or elsewhere in the United States.
Because plaintiff had started suit four years after the accident, both Honda and American Honda raised as a defense the two-year statute of limitations for personal injury actions, N.J.S.A. 2A:14-2, and moved for summary judgment. The trial court granted American Honda's motion but denied that of Honda, ruling that the two-year statute of limitations had been tolled by N.J.S.A. 2A:14-22 because Honda was a foreign corporation that was not "represented" in New Jersey by a person upon whom process could be served. In addition, the trial court held that there were sufficient bases for the exercise of in personam jurisdiction against Honda and that the tolling statute did not violate the equal protection clause of the federal Constitution.
The Appellate Division affirmed the judgment of the trial court. Coons v. Honda Motor Co., Ltd., of Japan, 176 N.J. Super. 575 (1980). After this Court denied cross-motions for leave to appeal, the parties sought review by the Supreme Court, which consented to hear only Honda's appeal. That Court vacated the judgment below and remanded to the Appellate Division. Honda Motor Co., Ltd. v. Coons, 455 U.S. 996, 102 S.Ct. 1625, 71 L.Ed.2d 857 (1982). Thereafter we certified the cause on our own motion. R. 2:12-1.
[Id., at 309-11 (footnote omitted).]
The Supreme Court's remand was designed to afford the state court the opportunity to reconsider its earlier determination in light of G.D. Searle & Co. v. Cohn, 455 U.S. 404, 102 S.Ct. 1137, 71 L.Ed.2d 250 (1982). In Searle, Susan and Walter Cohn sought damages allegedly caused by Enovid, an oral contraceptive manufactured by Searle, a Delaware corporation not authorized to do business in New Jersey, with its principal place of business in Illinois. Upon plaintiffs' filing suit, more than ten years after the injury, in the Superior Court of New Jersey, later removed to the District Court, Searle set up as a defense the two-year statute of limitations. Judge Meanor found that the tolling provision relied on by the Cohns violated the equal protection clause. Cohn v. G.D. Searle & Co., 447 F. Supp. 903, 912 (D.N.J. 1978).
Issues substantially identical to those raised in Searle surfaced some months later in Hopkins v. Kelsey-Hayes, Inc., 463 F. Supp. 539 (D.N.J. 1978). In that case District Court Judge Brotman expressly rejected the reasoning of Judge Meanor in Searle and found that N.J.S.A. 2A:14-22 withstood constitutional scrutiny under the equal protection clause. Id. at 542.
*424 Prior to a decision in the consolidated appeal of Hopkins and Searle in the United States Court of Appeals for the Third Circuit, Hopkins v. Kelsey-Hayes, Inc., 628 F.2d 801 (1980), this Court decided Velmohos v. Maren Eng'g Corp., 83 N.J. 282 (1980), in which we upheld the tolling provision in the face of equal protection and due process challenges. The Third Circuit then adopted the Velmohos rationale and rejected defendants' constitutional attacks, 628 F.2d at 811-12.
Both Searle and Kelsey-Hayes sought certiorari in the United States Supreme Court, which granted the petition of Searle, filed one day earlier than that of Kelsey-Hayes. The Court held that N.J.S.A. 2A:14-22 withstood constitutional scrutiny arising under equal protection and due process of law. Justice Blackmun, writing for the majority, did not, however, decide the issue raised by Searle's commerce clause argument. Because that issue was "clouded by an ambiguity in state law", 455 U.S. at 413, 102 S.Ct. at 1144, 71 L.Ed.2d at 259, the Court instead remanded the case to the Third Circuit, along with Kelsey-Hayes after vacating the judgment in that case. 455 U.S. 985, 102 S.Ct. 1605, 71 L.Ed.2d 844 (1981) (mem.). In a single decision the Third Circuit remanded both Searle and Kelsey-Hayes to the District Court for resolution of the commerce clause question. Hopkins v. Kelsey-Hayes, Inc., 677 F.2d 301, 302 (1982). When the Supreme Court remanded Coons to the state court for determination of the commerce clause issue in light of Searle, the District Court adjourned its consideration of the same question pending a binding interpretation on a question of state law, namely, the requirement of "representation" in our tolling statute, N.J.S.A. 2A:14-22. There followed our decision in Coons I.
II
As long ago as 1940 Chief Justice Charles Evans Hughes lamented that questions of retroactivity had for years been considered "among the most difficult" problems that engage *425 the attention of the courts, both state and federal. See Chicot County Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 374, 60 S.Ct. 317, 319, 84 L.Ed. 329, 333. That the passage of time and a maturing of retroactivity law have not rendered those issues any the less vexatious is borne out by our experience in this case, in which after earnest reflection, aided by full briefing and argument, we now view as ill-considered our earlier statement (made without the benefit of an adversary hearing directed to the point) that gave Coons I retrospective effect. We are brought to that conclusion by application of principles drawn from our own state court decisions as well as from United States Supreme Court cases.
There are four common approaches to retroactivity that have emerged from our case law. A court may:
(1) make the new rule of law purely prospective, applying it only to cases whose operative facts arise after the new rule is announced; (2) apply the new rule to future cases and to the parties in the case announcing the new rule, while applying the old rule to all other pending and past litigation; (3) grant the new rule limited retroactivity, applying it to cases in (1) and (2) as well as to pending cases where the parties have not yet exhausted all avenues of direct review; and, finally, (4) give the new rule complete retroactive effect, applying it to all cases, even those where final judgments have been entered and all avenues of direct review exhausted.
[State v. Burstein, 85 N.J. 394, 402-03 (citing State v. Nash, 64 N.J. 464, 468-70 (1974)).]
Which of these approaches is taken depends largely on "the court's view of what is just and consonant with public policy in the particular situation presented." State v. Nash, 64 N.J. 464, 469 (1974). Most frequently "a weighing of the various policies involved [has] called for retrospectivity", Darrow v. Hanover Twp., 58 N.J. 410, 413-14 (1971). Consequently, retrospectivity is acknowledged to be the "traditional" rule, see, e.g., Mirza v. Filmore Corp., 92 N.J. 390, 396 (1983); hence our reference in Coons I to the "general rule" of retrospectivity as adverted to in Fox v. Snow, 6 N.J. 12, 14 (1950). 94 N.J. at 319.
However, as suggested by Nash, supra, 64 N.J. at 469, sound policy reasons may persuade a court to accord a judicial decision prospective application. Under the rubric of Nash, followed *426 in numerous cases since then, "sound policy grounds" may justify limiting the retroactive effect of overruling precedent. See id. at 471. They are (1) justifiable reliance by the parties and the community as a whole on prior decisions, (2) a determination that the purpose of the new rule will not be advanced by retroactive application, and (3) a potentially adverse effect retrospectivity may have on the administration of justice. Mirza v. Filmore Corp., supra, 92 N.J. at 397; see, e.g., State v. Catania, 85 N.J. 418, 447 (1981); State v. Burstein, supra, 85 N.J. at 406; State v. Carpentieri, 82 N.J. 546, 549 (1980).
Although more than one retroactivity analysis is available in fact, as one scholar has recently pointed out, "there are several, with the precise number unclear and possibly changing", Carr, "Retroactivity: A Study in Supreme Court Doctrine `As Applied'," 61 N.C.L.Rev. 745, 761 (1983) it appears that New Jersey retroactivity law has been inspired by the same considerations that underlie retroactivity theory as developed by the Supreme Court. See State v. Gervasio, 94 N.J. 23 (1983); Salorio v. Glaser, 93 N.J. 447 (1983). On the specific issue before us whether a civil statute's invalidity is to be applied prospectively or retroactively the Supreme Court has developed an equitable balancing test, perhaps best typified by Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971), and Lemon v. Kurtzman, 411 U.S. 192, 93 S.Ct. 1463, 36 L.Ed.2d 151 (1973) (Lemon II).
Chevron involved a claim for personal injuries sustained while plaintiff was working on defendant's drilling rig located on the Outer Continental Shelf off the Gulf Coast of Louisiana. The suit was filed more than two years after plaintiff's accident. Louisiana had a one year statute of limitations governing personal injury suits. Originally, defendant did not raise a statute of limitations defense because the parties assumed, on the basis of a long line of federal decisions, that admiralty law including the doctrine of laches applied to the case. During discovery, however, the Supreme Court announced its *427 decision in Rodrigue v. Aetna Casualty & Sur. Co., 395 U.S. 352, 89 S.Ct. 1835, 23 L.Ed.2d 360 (1969), that state law, including state statutes of limitations, rather than admiralty law applied to personal injury actions brought under the Outer Continental Shelf Lands Act, relating to fixed structures on the Outer Continental Shelf. The District Court in Chevron, relying on Rodrigue, applied the Louisiana one-year limitations period and dismissed the case. The Circuit Court reversed and remanded for trial. In affirming that result the Supreme Court ruled that Rodrigue should be applied prospectively. The Court articulated three factors that influenced its decision:
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 106-07, 92 S.Ct. at 355, 30 L.Ed.2d at 306 (citations omitted).]
Justice Stewart observed that inasmuch as Rodrigue not only was a case of first impression but also overruled prior lower court decisions that were binding, it was to be expected that plaintiff would rely on the law as it was "[w]hen [he] was injured, for the next two years until he instituted his lawsuit, and for the ensuing year of pretrial proceedings * * *." Id. at 107, 92 S.Ct. at 355, 30 L.Ed.2d at 306. The Court pointed to the substantial inequitable results that would be produced were Rodrigue given retroactive effect, since plaintiff stood to be barred from further relief because of a sudden change in the applicable statute of limitations. Id.
In Lemon v. Kurtzman, 403 U.S. 602, 91 S.Ct. 2105, 29 L.Ed.2d 745 (1971) (Lemon I), the Supreme Court invalidated a Pennsylvania statutory program to reimburse nonpublic sectarian schools for designated secular educational service. In Lemon *428 II, supra, 411 U.S. 192, 93 S.Ct. 1463, 36 L.Ed.2d 151, the Court held that Lemon I should be accorded prospective effect. Chief Justice Burger, repeating Chevron's comment that the Supreme Court had come to recognize the doctrine of non-retroactivity outside the criminal area many times, in both constitutional and non-constitutional cases, 411 U.S. at 197, 93 S.Ct. at 1467, 36 L.Ed.2d at 159-60, emphasized that reliance interests weigh heavily in the shaping of appropriate equitable relief. Id. at 203, 93 S.Ct. at 1471, 36 L.Ed.2d at 163. Particularly pertinent to today's inquiry is the Court's observation that "statutory or even judge-made rules of law are hard facts on which people must rely in making decisions and shaping their conduct." Id. at 199, 93 S.Ct. at 1468, 36 L.Ed.2d at 160.
That Chevron's underscoring of reliance continues as a significant feature of retroactivity analysis at the federal level is clear from Wachovia Bank & Trust v. National Student Mktg., 650 F.2d 342, 343 (D.C. Cir.1980). The result in that case, which involved a suit under federal securities law, turned on a determination of which of two statutes of limitations applied. Although the court had recently applied the shorter of the two, at the time the cause of action arose and plaintiff filed suit, the longer limitations period had been in use. Finding Chevron's reliance factor to be "the most fundamental," 650 F.2d at 347, the court concluded that plaintiff was entitled to rely on the law as it was when suit was started. Id. at 348.
The development of New Jersey's retroactivity law has proceeded on a track roughly paralleling that represented by the cases discussed above. Indeed, one might fairly claim that Oxford Consumer Discount Co. v. Stefanelli, 104 N.J. Super. 512 (App.Div. 1969), modified, 55 N.J. 489, appeal dismissed, 400 U.S. 923, 91 S.Ct. 183, 27 L.Ed.2d 182 (1970), anticipated the Chevron and Lemon II analysis, at least to the extent of its heavy emphasis on the element of reliance.
There is no question but that appellate courts in this State and elsewhere have long regarded themselves as empowered and justified in confining the effect of a decision of first impression or of novel or unexpected impact to *429 prospective application if considerations of fairness and justice, related to reasonable surprise and prejudice to those affected, seemed to call for such treatment. [104 N.J. Super. at 520.]
Our continued regard for the reliance factor is demonstrated by last term's decision in Salorio v. Glaser, supra, 93 N.J. 447, in which a unanimous Court declared the Emergency Transportation Tax Act, N.J.S.A. 54:8A-1 to -57, to be unconstitutional. In recognition, however, of the state's fiscal problem and of its reliance on the taxing statute as a significant revenue-raising law, we applied our ruling prospectively to allow the taxing authorities to collect the tax until January 1, 1984. Resorting to authority in support of the decision to invalidate statutory law, Justice Schreiber wove together the equitable considerations espoused in Lemon II, supra, 411 U.S. 192, 93 S.Ct. 1463, 36 L.Ed.2d 151, and Oxford Consumer Discount, supra, 104 N.J. Super. 512, to find that fairness and reliance warranted prospective application. 93 N.J. at 464-65.
For other cases involving prospective application of decisions, see New Jersey Bd. of Higher Educ. v. Shelton College, 90 N.J. 470, 490 (1982) (enjoining unlicensed college from granting degrees but allowing award of credits and degrees to junior and senior students in recognition of students' pursuit of educational goals in "good faith" reliance on credibility of institution); Passaic v. Local Fin. Bd., 88 N.J. 293, 303 (1982) (despite municipality's possible lack of good faith in adopting emergency appropriation request in violation of N.J.S.A. 40A:4-46, Court would not review appropriation and financing inasmuch as expenditures in reliance thereon could not be undone); Jersey Shore v. Estate of Baum, 84 N.J. 137, 152 (1980) (common-law principle of protecting wife from liability for husband's necessary expenses, without according similar protection to husband, invalidated on equal protection grounds; holding applied prospectively only to debts incurred after date of decision because of "primary factor" of "[r]eliance on the prior law"); Barone v. Harra, 77 N.J. 276, 281 (1978) (in view of reliance on prior law, *430 Court's holding of compensability under workers' compensation law for injuries sustained during lunch period applied prospectively); Merenoff v. Merenoff, 76 N.J. 535, 560 (1978) (abolition of interspousal tort immunity in personal injury actions applied prospectively); Tomarchino v. Township of Greenwich, 75 N.J. 62, 78 (1977) (invalidation of proof of dependency requirement in workers' compensation statute applied prospectively); Mercer Council #4 v. Alloway, 119 N.J. Super. 94, 101 (despite invalidation of Civil Service Commission rule, Commission's "substantial * * * reliance to date" on rule justified declaration that all prior actions as well as actions to be taken within 45 days of court's opinion would be valid), aff'd, 61 N.J. 516 (1972); Darrow v. Hanover Twp., supra, 58 N.J. at 420 (abrogation of interspousal tort immunity in automobile negligence actions applied prospectively).
III
In applying to this case the principles discussed in the preceding section, we are mindful of two admonitions in Salorio v. Glaser, supra, 93 N.J. 447. The first is perhaps obvious: that the ruling, the retrospective-prospective application of which is at issue, must be "the equivalent of a new rule of law." Id. at 464-65; see State v. Burstein, supra, 85 N.J. at 403 ("As the very term implies, retroactivity can arise only where there has been a departure from existing law."). The second may be more subtle but is of equal significance:
It is important to recognize that we are acting within the framework of appropriate equitable relief with respect to an unconstitutional * * * statute and not with regard to the retrospective effect of a new rule of criminal procedure, United States v. Johnson, 457 U.S. 537, 102 S.Ct. 2579, 73 L.Ed.2d 202 (1982); or a substantive constitutional principle, United States v. United States Coin & Currency, 401 U.S. 715, 91 S.Ct. 1041, 28 L.Ed.2d 434 (1971); or a rule of judge-made law applicable to civil proceedings, Mirza v. Filmore Corp., 92 N.J. 390 (1983); Cogliati v. Ecco High Frequency Corp., 92 N.J. 402 (1983). Factors that may be relevant in the criminal field, such as integrity of the judicial process, impairment of the basic purpose of the jury to determine the truth, or in the common law in civil matters in which other policy considerations are involved, may or may not be applicable here. [93 N.J. at 463-64.]
*431 The concerns expressed in this passage are related to what factors we select and what approach we take in deciding the issue before us. Defendant and the corporate amici argue that because our earlier ruling did not represent a "clear break with the past" a prerequisite to prospectivity under United States v. Johnson, 457 U.S. 537, 102 S.Ct. 2579, 73 L.Ed.2d 202 (1982) we must give retroactive effect to Coons I. We do not agree.
Johnson held that, subject to limited exceptions, "a decision of [the Supreme] Court construing the Fourth Amendment [was] to be applied to all convictions that were not yet final at the time the decision was rendered." 457 U.S. at 562, 102 S.Ct. at 2594, 73 L.Ed.2d at 222. A fourth-amendment decision was to be applied retroactively unless it represented "a clear break with the past," as to which the Court said:
Such a break has been recognized only when a decision (1) explicitly overrules a past precedent of this Court, or (2) disapproves a practice this Court arguably has sanctioned in prior cases, or (3) overturns a longstanding and widespread practice to which this Court has not spoken, but which a near-unanimous body of lower court authority has expressly approved. [Id. at 551, 102 S.Ct. at 2588, 73 L.Ed.2d at 215 (citations omitted).]
Because, in the case before us, the law concerning the effect of the tolling statute on unlicensed foreign corporations was, at best, uncertain at the time plaintiff and the claimants-amici started suit, defendant argues that Coons I does not represent a "clear break" in any of the senses contemplated by Johnson.
Although this Court has adopted the Johnson "clear break" test in the context of a fourth amendment retroactivity issue, see State v. Gervasio, supra, 94 N.J. 23, we have not looked to strict "clear-break" analysis in the civil context, in which the emphasis has been on considerations of fundamental fairness and justice. See, e.g., Salorio v. Glaser, supra, 93 N.J. 447. Indeed, the final point of Johnson itself is that "all questions of civil retroactivity continue to be governed by the standard enunciated in Chevron * * *". 457 U.S. at 562, 102 S.Ct. at 2594, 73 L.Ed.2d at 222-23. And Chevron, as we have seen, supra at 427 tells us that for a decision to be applied non-retroactively, *432 it is sufficient that it 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." See Johnson, supra, 457 U.S. at 550 n. 12, 102 S.Ct. at 2587 n. 12, 73 L.Ed.2d at 214 n. 12. Chevron does not use "clear-break" language. See also Solem v. Stumes, ___ U.S. ___, 104 S.Ct. 1338, 79 L.Ed.2d 579 (1984) (affording prospective application to Edwards v. Arizona, 451 U.S. 477, 101 S.Ct. 1880, 68 L.Ed.2d 378 (1981), which established per se rule that once suspect has invoked right to counsel, any subsequent initiation of conversation by one other than suspect violates that right; held, police could reasonably have relied on pre-Edwards law, which inquired into facts of each case, even though state of that law was unsettled; despite absence of "clear break," Edwards did establish new rule).
It is clear that Coons I satisfied the Chevron-Salorio formulation of how the requirement of establishing a new principle of law may be met. We must look to the law as it was at the time plaintiff contemplated starting suit, namely, 1978. See Wachovia Bank & Trust v. National Student Mktg., supra, 650 F.2d at 347. In 1978 N.J.S.A. 2A:14-22 was in full bloom. It had been on the books since 1949, see Coons I, supra, 94 N.J. at 313, and a tolling provision in some form had been a fixture of our law for over a century and a half, its origins being traceable to 1820, see Lemke v. Bailey, 41 N.J. 295, 298 (1963). After Coons I, however, there was effectively no tolling provision for foreign, unrepresented corporations.
Until 1980, in Velmohos v. Maren Eng'g Corp., supra, 83 N.J. 282, this Court had not addressed the effect of N.J.S.A. 2A:14-22 on corporate defendants, having specifically declined to do so in Lemke v. Bailey, supra, 41 N.J. at 301. And although, as pointed out in both Lemke, id., and Velmohos, supra, 83 N.J. at 286, that issue had yielded contradictory results in trial court decisions, compare Ferraro v. Ferro Trucking Co., Inc., 72 N.J. Super. 519 (Law Div. 1962), with *433 Whalen v. Young, 28 N.J. Super. 543 (Law Div. 1953), no appellate court anywhere had even hinted at a commerce clause problem until the Supreme Court's decision in G.D. Searle & Co. v. Cohn, supra, 455 U.S. 404, 102 S.Ct. 1137, 71 L.Ed.2d 250. Up to that point the only reported mention of commerce clause implications was tucked away in Judge Meanor's footnote in his Searle opinion, 447 F. Supp. at 911 n. 17. Hence, the declaration of Coons I was hardly foreshadowed; and although the case did not literally alter precedent because there was none on the holding of the case, it amounted to a "statement" in a matter of first impression and thus "new law."
The overruling of prior judicial construction of a statute is generally not given retroactive effect, even as legislative change itself normally applies only prospectively. Although we are not literally altering precedent, the principle in this matter of first impression appears to us to be indistinguishable in view of that which appears almost incontestably to have been a not wholly unreasonable reliance on a contrary doctrine. [Turner v. Aldens, Inc., 179 N.J. Super. 596, 605 (App.Div. 1981) (citation omitted).]
Turning to the critically important factor of reliance, we focus at the outset on what it is that litigants "may have relied" on in 1978 a long-standing statute that announces that as to foreign, unrepresented corporations, no action need be taken. The effect of the statute is to give assurance that causes of action against foreign, unrepresented corporations will be preserved. In a sense its underlying subject is non-action. To be sure, it would be most difficult, if not impossible, to forecast the number of claimants who might be affected by a holding that Coons I should be applied retroactively or, as the Attorney General points out, to measure "the extent and nature of the prejudice to be suffered by those potential plaintiffs who justifiably relied on the validity of the tolling statute."
Despite those difficulties, we conclude that given the nature of this statute, we are justified in presuming that because of the tolling feature, many suits may not have been brought against unrepresented foreign corporations. The foreign corporations did not take any action to avoid whatever vulnerability the enactment created; they did not register in New Jersey. *434 The history of non-action by both those corporations and potential plaintiffs satisfies us that participants in the events before us ordered their affairs in accordance with the tolling statute.
Moreover, this conclusion has the virtue of practicability: we cannot construct a workable rule by questioning, in each case, whether the particular plaintiff has successfully demonstrated actual reliance. Some level of generality is required. The result we achieve satisfies that need while at the same time honoring the equitable considerations that must inform our decision.
Finally, following Chevron, supra, 404 U.S. at 106-07, 92 S.Ct. at 355, 30 L.Ed.2d at 305-06, we look to the purpose of the rule in Coons I. In its starkest terms, that determination had as its purpose the outlawing of so much of the tolling statute as violates the commerce clause. Defendant contends that not to apply the ruling retroactively would be to countenance unconstitutionality. But the argument overlooks the balancing of interests and impact, called for by our commitment to equitable principles. Those concerns are addressed above the reliance of plaintiff and those similarly situated, and the absence of any showing that in fact defendant and corporate amici suffered a burden borne of a compulsion to register in New Jersey to permit recourse to the statute of limitations. On balance we are satisfied that the purpose of the prior ruling is fulfilled by excluding from the scope of the Coons I ruling only those actions already commenced as of August 3, 1983.
That leaves for determination only the question of whether Honda, as the successful litigant in Coons I, or any of the corporate amici as champions of the cause, should be given the benefit of the ruling in Coons I. We conclude not. Prospectivity is to be accorded "across the board." Whereas ordinarily the fruits of the struggle are awarded the successful litigant, and likewise to one here Searle and Kelsey-Hayes with whom the prevailing theory originated or who, like Brinco, has with great tenacity and persistence espoused the cause we *435 perceive no injustice in limiting the operative time of Coons I to the date of that decision, August 3, 1983. Defendant and amici are institutional litigants. They are of a class that will in the future frequently have resort to the statute of limitations, unimpeded by so much of N.J.S.A. 2A:14-22 as deprived them of that benefit. In addition, the hiatus effected by our conclusion in this regard affords the Legislature an opportunity to address any public policy concerns that are implicated by Coons I.
Our prior judgment in Coons I, under the terms of which the cause was remanded to the Law Division for entry of judgment for defendant Honda, is modified. Coons I is to be made effective as of August 3, 1983 that is, the statute of limitations as to foreign, unrepresented corporations commences to run as of that date. The cause is remanded to the Law Division for further proceedings consistent with this opinion.
GARIBALDI, J., dissenting.
On August 3, 1983 in Coons v. American Honda Motor Co., 94 N.J. 307 (1983) (Coons I), we held that N.J.S.A. 2A:14-22 imposes an unconstitutional burden on interstate commerce in violation of the commerce clause, U.S. Const. art. 1, § 8, cl. 3. We further stated that this decision "should be given retrospective effect, consistent with the general rule applied in civil cases that a new ruling shall apply to all matters that have not reached final judgment." Id. at 319. Today, less than 8 months later, the majority reverses our decision in Coons I with respect to retroactivity and holds that the decision in Coons I should be applied prospectively to all parties from the date of that decision August 3, 1983. We disagree.
Justices Schreiber and Pollock would apply our decision in Coons I retroactively to all parties presently before the Court including amici: G.D. Searle & Co., Kelsey-Hayes Co. and Brinco Mining Limited, but would apply the decision prospectively as to everyone else. I agree with my dissenting brethren, *436 but would go further and accord our Coons I decision retroactive effect "across the board."
I
Irrespective of the general retroactivity of the Coons I decision, there should be no question that those responsible for effecting the change in law should benefit by their efforts. It has long been the position of this Court that "fundamental fairness" compels that "champions of the cause" should be rewarded for their effort and expense in challenging existing law. We need private attorneys to push forward the frontiers of the law, but we will not have them if they stand to gain nothing through their efforts.
As we have held in Goldberg v. Traver, 52 N.J. 344, 347 (1968), "[u]nless the immediate litigant can hope to gain, there would be no incentive to challenge existing practices or prior holdings which, in the public interest ought to be reviewed." And as Chief Justice Weintraub observed in Willis v. Department of Cons. & Econ. Dev., 55 N.J. 534, 541 (1970):
As to the plaintiffs in this case, the decision should be applied, and this for the practical reason that case law is not likely to keep up with the needs of society if the litigant who successfully champions a cause is left with only that distinction.
This Court set forth similar policy reasons when we held that our decisions would be prospectively applied, except as to the litigants before the Court, in the following cases: Cogliati v. Ecco High Frequency Corp., 92 N.J. 402, 417 (1983) (decisions extending responsibility of predecessor in title for maintenance of public sidewalks, applied prospectively except as to parties); Spiewak v. Rutherford Bd. of Educ., 90 N.J. 63, 82-83 (1982) (overruling of prior decision in Point Pleasant Beach Teachers' Ass'n v. Callam, 173 N.J. Super. 11, certif. den., 84 N.J. 469 (1980), applied prospectively except as to parties before court); Pascucci v. Vagott, 71 N.J. 40, 50-51 (1976) (setting aside of classification standards under welfare statute applied prospectively except as to litigants); and Darrow v. Hanover Township, *437 58 N.J. 410, 420 (1971) (abrogation of doctrine of interspousal immunity in automobile negligence cases applied prospectively except as to litigants).
Recently, we held that as a matter of fundamental fairness a new rule of strict liability in a products liability case should be extended to all plaintiffs similarly situated. Ramirez v. Amsted Industries, 86 N.J. 332 (1981). In Ramirez we said:
Therefore, we apply the new rule to the present case and its companion, Nieves v. Bruno-Sherman Corp. & Harris Corp., 86 N.J. 361. Moreover, we conclude that on balance and as a matter of fundamental fairness, the benefit of today's rule should be extended to other similarly situated plaintiffs with products liability suits against successor manufacturers affected by this rule, which suits were in progress as of November 15, 1979, the date of the Appellate Division decision. There is a basic justice in recognizing that persons who have exercised the initiative to challenge the existing law should be accorded relief if their claims not yet resolved when the new rule of law is announced are ultimately vindicated. (emphasis added) [Id., [86 N.J.] at 357.]
The fundamental principles of basic fairness contemplated by this Court in Ramirez are particularly appropriate in the instant case. For years the parties here have waged protracted legal battles over the constitutionality of the tolling statute. Defendant Honda has been fighting this suit for over 5 years. It has been an extraordinarily hard fought battle in both the state and federal courts, as a brief history of the litigation demonstrates. The majority opinion, ante at 422-423, sets forth the procedural history of this case. That history reveals: arguments in this state's trial court and Appellate Division; denial of cross-motions for leave to appeal to this Court; vacation of the judgment and remand by the United States Supreme Court; certification by this Court on our own motion; our Coons I decision, declaring that the tolling statute unconstitutionally burdens interstate commerce and that our decision should be given retroactive effect; and finally, this case, Coons II, a rehearing of the retroactivity issue only. Even the most superficial glance at this procedural history indicates that the road to today's decision has been a tortuous one.
The amici likewise have engaged in an extraordinarily protracted and tenacious pursuit of this issue through the Federal *438 District Court to the United States Court of Appeals and finally to the United States Supreme Court. As the majority recognizes, Searle and Kelsey-Hayes are the originators of the prevailing commerce clause theory and Brinco has persistently espoused the cause. Ante at 434-435.
Certainly Searle and Kelsey-Hayes have "championed the cause." They have challenged the constitutionality of this statute longer than any other party. But for the Supreme Court decision in G.D. Searle & Co. v. Cohn, 455 U.S. 404, 102 S.Ct. 1137, 71 L.Ed.2d 250 (1982) and the subsequent remand of the Coons case, the commerce clause issue would not have been decided by this Court at this time.
Brinco likewise long has challenged the tolling statute's constitutionality. It joined the Searle case as an amicus in the Supreme Court and filed an amicus brief devoted exclusively to the commerce clause. After the Supreme Court remanded Coons to the Appellate Division in light of its decision in Searle, Brinco obtained leave to file an amicus brief and to argue before us.
Given the especially long and arduous history of this appeal, there is no valid reason to depart from established judicial principles. Basic justice and principles of fundamental fairness demand that the defendant and amici in this case have the Coons I decision applied retroactively to them. When a statute's unfair and discriminatory features render it offensive to the supreme law of our land, it is just to resolve the matter so that the challenging litigants be spared further constitutional deprivation. Only in this fashion may the unconstitutional burden which has heretofore been placed upon them be eradicated.
The majority's excuse for not applying these well-recognized standards to the defendant and amici is that they are institutional litigants and hence will suffer no injustice. Whatever merit attends that argument is insufficient to carry the day. All litigants should be treated equally before the courts. Moreover, *439 defendant and amici certainly will suffer an injustice if Coons I is not applied to them retrospectively. Under today's decision not only the present plaintiffs in this action and in cases in which amici are involved will have an unconstitutional cause of action, but until August 3, 1985 (two years from our decision in Coons I) plaintiffs who have sat on their rights will be able to institute actions against these parties and impose additional unconstitutional burdens upon them.
II
While my fellow dissenters would limit the retroactive application of Coons I to the parties before the Court today, I would go further; I would hold that Coons I should be given complete retroactive effect. This Court has generally adhered to the principle that "the presumption is in favor of retrospectivity, and that presumption can be overcome only by a clear demonstration in a particular case that there are sound policy reasons for according a judicial decision prospective application only." Cogliati v. Ecco High Frequency Corp., supra, 181 N.J. Super. at 583. In my opinion, plaintiffs have failed to meet their burden of demonstrating good reasons for prospective application in this case. See Mirza v. Filmore Corp., 92 N.J. 390, 396-97 (1983); Busik v. Levine, 63 N.J. 351, 360-61, app. dism. 414 U.S. 1106, 94 S.Ct. 831, 38 L.Ed.2d 733 (1973); Darrow v. Hanover Township, 58 N.J. 410, 413 (1971); Fox v. Snow, 6 N.J. 12, 14 (1950); Ross v. Board of Chosen Freeholders of Hudson Cty., 90 N.J.L. 522 (E. & A. 1917); Goncalvez v. Patuto, 188 N.J. Super. 620, 626 (App.Div. 1983); Cogliati v. Ecco High Frequency Corp., supra, 181 N.J. Super. at 582.
Our law of retroactivity is based on the same considerations that underlie retroactivity theory of the Supreme Court. In civil actions, we have recognized standards similar to the tests set forth in Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971). In that case the Supreme Court looked to three factors to determine the retroactivity question: *440 (1) whether the decision establishes a "new principle of law;" (2) whether retroactive operation of the decision would further or retard the purpose of the new rule; and (3) whether retroactive application would work an injustice upon those who had reasonably relied upon the old rule. 394 U.S. at 106-107, 92 S.Ct. at 355, 30 L.Ed.2d at 306; see Mirza v. Filmore Corp., 92 N.J. 390, 397 (1983) (applying similar test when overruling prior judicial precedent in civil action); see also State v. Burstein, 85 N.J. 394, 406 (1981) (applying similar test in the context of changing interpretation of criminal statute).
The threshold issue in any retroactivity decision is whether or not a new rule of law or judicial principle has been announced. In defining the threshold question in the court context, we have consistently followed the liberal "new rule of law" standard set forth in Chevron. See Salorio v. Glaser, 93 N.J. 447, 465 (1983).
Although the tolling statute had been criticized and court decisions challenged its constitutionality, my review of the statute's history and the relevant cases leads me, as it did the majority, to conclude that our decision in Coons I amounted to a statement of first impression. Therefore, applying the first Chevron test, I agree with the majority that the decision in Coons I established a new rule of law.
My disagreement with the majority stems from my belief that it is improperly applying the second and third tests of Chevron. Turning to an examination of the second Chevron test, the prospective application of Coons I clearly frustrates the purpose of that decision. In applying Coons I prospectively, the majority ignores that its purpose was to strike down an unconstitutional statute. Today the majority countenances the very unconstitutionality that we sought to abrogate in Coons I. When the very law that prejudices the litigant cannot withstand a constitutional challenge, only extraordinarily strong policy reasons (as present in Salorio) justify limiting the new rule to prospective application.
*441 The majority primarily bases its holding upon its analysis of the third Chevron factor and erroneously holds that retroactive application would be unjust to the plaintiff in this case because of his reliance upon the unconstitutional statute. An examination of the record discloses, however, that the parties in this case did not place any reliance whatsoever upon the tolling statute. Plaintiff Coons brought suit against Honda as soon as he realized that he had a cause of action; Amicus Cohn did not file suit immediately because he believed that the theory of causation was too tenuous. Finally, Roy Hopkins asserted that he was unaware that he might have a cause of action against Kelsey-Hayes, Inc., until after the statute of limitations had run.
Today the majority holds that actual reliance need not be shown, but that the potential for reliance is sufficient to trigger a prospective application of the rule. Ante at 434. I disgree. In the past we have required a showing of actual reliance before limiting a new decision to purely prospective effect. Wangler v. Harvey, 41 N.J. 277, 286 (1963) (no evidence of actual reliance by defendant); Arrow Builders Supply Corp. v. Hudson Terrace Apts., 16 N.J. 47, 50 (1954) (record contained nothing to suggest party actually relied upon old rule). I would require actual reliance or at least a reasonable likelihood of reliance before I would allow this factor to determine whether a decision should be applied retroactively or prospectively.
III
In conclusion, I still hold to our presumption of retroactivity. The reason for the presumption is that in most instances the advancement of the purpose of the new ruling is best served and the equities are not substantially disserved by applying the ruling to all actions. This general rule is clearly applicable to the present case.
Here the purpose of our ruling was to correct an unconstitutionally discriminatory statute. The Court's decision, to apply that ruling prospectively only, does nothing to advance the *442 equities of this case since, as we have seen, the parties did not rely on the old rule. The decision, however, does delay the effect of the new rule, and thereby retards its purpose.
I would not give these or other plaintiffs who slept on their rights a windfall action allowing them to sue foreign corporations for another year without any showing that they either knew or relied on our statute. The proper remedy for these plaintiffs is the discovery exception to the statute of limitations. If they cannot succeed under that provision, they should not be allowed to succeed under this one. New Jersey cannot afford to create inconsistent decisions based on this Court's desire to give a certain class of plaintiffs a remedy to which they are not entitled.
Justice SCHREIBER and Justice POLLOCK join in Part I of this opinion.
For modification Chief Justice WILENTZ, and Justices CLIFFORD, HANDLER and O'HERN 4.
Dissenting Justices SCHREIBER, POLLOCK and GARIBALDI 3.
NOTES
[1] The various amici are interested in the outcome of this appeal as it affects other litigation, including many asbestos exposure cases, to which they are party or in which they represent parties. Amicus ATLA-NJ expresses a concern "for the numerous people who are or will * * * become directly affected by the ultimate decision in this case * * *." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1469458/ | 610 F. Supp. 19 (1985)
RICHARD HOFFMAN CORPORATION, Plaintiff,
v.
INTEGRATED BUILDING SYSTEMS, Defendant.
No. 83 C 5612.
United States District Court, N.D. Illinois, E.D.
February 25, 1985.
*20 *21 Gerald C. Bender, Chicago, Ill., for plaintiff.
John T. Duax, Mark L. Hellner, Schwartz & Freeman, Chicago, Ill., for defendant.
MEMORANDUM OPINION AND ORDER
ASPEN, District Judge:
Plaintiff Richard Hoffman Corporation ("Hoffman") sued Integrated Building Systems, Inc. ("Integrated") and the Village of Glendale Heights ("Village") for violations of the Sherman Antitrust Act, 15 U.S.C. §§ 1 et seq., the Illinois Antitrust Act, Ill. Rev.Stat. ch. 38, § 60-3, and for breach of the duty of good faith. On February 15, 1984, this Court granted the Village's motion to dismiss under the doctrine of "state action immunity." 581 F. Supp. 367 (N.D. Ill.1984). However, the Court denied Integrated's motion for dismissal. The parties have since completed discovery, and Integrated has moved for summary judgment. For the reasons set forth below, Integrated's motion is granted.
The following material facts are undisputed. In early 1983, the Village, without taking competitive bids, contracted with Integrated to draw up architectural specifications for the construction and remodelling of a Village recreational center. Integrated and the City signed this contract even though Integrated employed no registered architects. Integrated sub-contracted with Pence and Schwartz, an architectural firm, which then prepared the specifications. Pence and Schwartz's plan specified the use of a pre-engineered building system, manufactured by Kirby Building Systems ("Kirby"). Integrated is the sole local distributor of Kirby systems.
After the specifications were finished, the Village solicited bids for the construction of the project. The reports about the bids appeared from May 18 through May 25, 1983, in a trade publication, the "Dodge Construction News Report." The reports did not disclose that Integrated, which had drawn up the plans, was also bidding on the construction project. On May 26, 1983, Integrated's role as both designer and bidder was first revealed.
Three firms, including Hoffman and Integrated, submitted bids by May 31, 1983, the due date. The two firms other than Integrated did not include a Kirby system in their bids. The Village did not reject the bids because of that, however. Hoffman bid $816,500, the third firm bid $818,751, and Integrated bid $777,705. The Village accepted Integrated's bid, the lowest one offered.
Hoffman claims that the above practices of Integrated and the Village unreasonably restrained trade in violation of Section 1 of the Sherman Act. Its theory can be summarized as follows. Because Integrated received the specification contract on March 25, 1983, it had at least nine weeks to prepare its construction bid.[1] In contrast, Hoffman had but 12 days to prepare its bid when the City went public about the project in May 1983. This difference in preparation time gave Integrated an unfair advantage, argues Hoffman. Moreover, Integrated also derived an unfair advantage by drawing up the architectural plans and then bidding on the construction contract. This practice violated an industry custom. Finally, Integrated enjoyed an unfair advantage because the architectural plans specified the use of Kirby products, which Integrated distributes. In sum, argues Integrated, the above facts show that the bidding process was a sham; that the process inherently and unfairly favored Integrated in a way which unlawfully restrained *22 trade. Integrated counters in its motion for summary judgment that its practices, even if considered unfair, did not violate the Sherman Act.
In considering Integrated's motion, we are aware that summary judgment is ordinarily inappropriate in antitrust cases because the cases often turn on hidden motive and intent. See Poller v. Columbia Broadcasting Co., 368 U.S. 464, 473, 82 S. Ct. 486, 491, 7 L. Ed. 2d 458 (1962); O'Bryne v. Checker Oil Co., 727 F.2d 159, 163 (7th Cir.1984). However, summary judgment is proper in antitrust cases where no significant probative evidence tends to support the complaint. O'Bryne, 727 F.2d at 163; Havoco of America v. Shell Oil Co., 626 F.2d 549, 553 (7th Cir.1980). As in any case, summary judgment may be granted only if the record shows that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R. Civ.P. 56(c). As the moving party, Integrated must show that no genuine issue of material fact exists. Korf v. Ball State University, 726 F.2d 1222, 1226 (7th Cir. 1984). We must view the evidence, and the reasonable inferences drawn from the evidence, in the light most favorable to Hoffman, the party opposing the motion. Big O Tire Dealers, Inc. v. Big O Warehouse, 741 F.2d 160, 163 (7th Cir.1984). With these standards in mind, we turn to Integrated's motion.
Section 1 of the Sherman Act, 15 U.S.C. § 1, provides in relevant part, "[e]very 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." To prevail on a Section 1 claim, Hoffman must allege and prove a "conspiracy in restraint of trade," resulting anticompetitive effects and "antitrust injury," that is, injury of a type that antitrust laws were designed to prevent. See, e.g., Independence Tube Corp. v. Cooperweld Corp., 691 F.2d 310, 320-23 (7th Cir.1982); rev'd on other grounds, ___ U.S. ___, 104 S. Ct. 2731, 81 L. Ed. 2d 628 (1984); Havoco of America, Ltd. v. Shell Oil Co., 626 F.2d 549, 554-57 (7th Cir.1980). It appears that a genuine factual dispute exists on the first, or conspiracy, element.[2] But even assuming that to be true, we think that Hoffman cannot establish the second or third elements of its Section 1 claim.
The parties agree that Hoffman cannot prove a per se violation of the Sherman Act. Instead, the usual test, "the rule of reason," controls our analysis of whether Integrated's acts violated Section 1. See Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 49-50, 97 S. Ct. 2549, 2557, 53 L. Ed. 2d 568 (1977); Standard Oil Co. v. United States, 221 U.S. 1, 31 S. Ct. 502, 55 L. Ed. 619 (1911). As the test's name suggests, "reasonableness" of the challenged practice is the touchstone. Under the Rule, the factfinder must weigh all the circumstances of a case to decide whether a practice unreasonably restrains competition. Continental T.V., 433 U.S. at 49, 97 S.Ct. at 2557; Bunker Ramo Corp. v. United Business Forms, Inc., 713 F.2d 1272, 1283 (7th Cir.1983). The Rule of Reason requires that the plaintiff show anticompetitive *23 effects, or actual harm to competition. Bunker Ramo, 713 F.2d at 1283. The question is not whether the defendant's practices were unfair or tortious, but whether those practices hobbled competition. Id.; see also Havoco of America, Ltd. v. Shell Oil Co., 626 F.2d 549, 558 (7th Cir.1980). After weighing all of the material facts, we conclude below that Integrated's practices, while arguably unfair and unethical, did not unreasonably restrain competition. Thus, Hoffman cannot recover on its Sherman Act claim.
Hoffman's most significant argument, we think, was that Integrated's specification of Kirby pre-engineered materials, which it distributed, eliminated competition from the bidding process. This concern in large part motivated our denial of Integrated's motion to dismiss. See 581 F.Supp. at 373-74. But the facts now in the record do not support a claim that the specifications had any significant anticompetitive effects. Hoffman's Vice-President admitted in his deposition that Kirby systems "are essentially the same as" or "interchangeable" with other systems, including the Mitchell system that it had submitted in its bid. The Village did not reject Hoffman's bid as not conforming to specifications, even though Hoffman had based its bid on the Mitchell system. In fact, the Village had not limited the project to Kirby systems, as it had specified:
The Village hereby reserves the right to approve as an equal, or reject as not being equal, any article the bidder proposes to furnish which contains major or minor variations from specification requirements.
Moreover, Hoffman had attached to its bid more than a hundred pages of materials "touting the virtues" of the Mitchell system. Thus, Security Fire Door Co. v. County of Los Angeles, 484 F.2d 1028 (9th Cir.1973), which we distinguished in our earlier opinion, see 581 F.Supp. at 373-74, is no longer distinguishable,[3] since Hoffman and other bidders were free to "tout the virtues" of similar building systems. Finally, it is also significant that the part of Hoffman's bid based on the Mitchell system was actually about $24,000 lower than the part of Integrated's bid which was based on the Kirby system. Thus, Integrated ultimately derived no actual benefit from specifying use of the Kirby system. In sum, the above uncontroverted facts reveal that Integrated's specification of a Kirby system hindered competition little, if at all.
Hoffman also argues that the additional time Integrated had to prepare its bid supports its antitrust claim. Looked at in the light most favorable to Hoffman, the facts reveal that Integrated had perhaps as much as four months to prepare its bid, while Hoffman had less than two weeks to do so. Integrated gained this advantage because it had known it was going to bid on the construction contract after preparing the specifications. According to Hoffman, industry custom forbids this practice of a firm bidding on a project for which it had prepared specifications. The purpose of this custom is apparently to prevent collusion or the appearance of collusion. Hoffman relies heavily on the fact of the violation of industry custom. However, as *24 we noted in our opinion last year, we have found no support in case law for the proposition that a violation of industry custom amounts to a violation of antitrust law. 581 F.Supp. at 373. Hoffman has still not cited us any authority to the contrary. The relevant question is not whether the practice violated industry custom, but whether it significantly hindered competition in the industry. Cf. Havoco of America v. Shell Oil Co., 626 F.2d at 556 (unfair competitive practices do not automatically violate federal antitrust law; conduct may be actionable only if effect is to restrain free competition unreasonably). It might be that in some cases violation of the custom would also substantially hinder competition. As noted above, Integrated's position as designer of the specifications allowed it to specify Kirby systems. If Kirby were exclusive, Integrated could have frozen out competition for the later bid. But Kirby systems were not in fact required, as Hoffman was free to "tout the virtues" of its Mitchell system. And Hoffman has not submitted evidence that twelve days was too little time for it to prepare a competitive bid. Thus, while Integrated might have derived some advantage from having had more time to prepare its bid, no evidence suggests that this advantage affected competition to the extent necessary to support a federal antitrust claim.
In sum, we conclude that Hoffman cannot prove on this record that Integrated's practices had significant anticompetitive effects. As such, Integrated is entitled to summary judgment on Hoffman's Section 1 claim. Although we express no opinion on the issue, it could be that Integrated's conduct was tortious under some state law theory. However, the antitrust laws did not federalize the field of unfair competition.
Otherwise the mere fact that one party bid successfully against another party for a contract would be equivalent to an anticompetitive effect and would raise the specter of an antitrust action being used as a remedy for any tortious conduct during the course of the competition. This would be contrary to the repeated view of the Supreme Court that the antitrust laws do "not purport to afford remedies for all torts committed by or against persons engaged in interstate commerce." Hunt v. Crumboch, 325 U.S. 821, 826, 65 S. Ct. 1545, 1548, 89 L. Ed. 1954 [(1945)].
Havoco, 626 F.2d at 558. Although a conspiracy among competitors to rig a bidding process would generally amount to a per se violation of the Sherman Act, see, e.g., United States v. Brighton Bldg. & Maintenance Co., 598 F.2d 1101, 1106 (7th Cir.) (criminal prosecution), cert. denied, 444 U.S. 840, 100 S. Ct. 79, 62 L. Ed. 2d 52 (1979), in the usual "rule of reason" case it is much more difficult for a bidder to establish that unfair practices on one contract amount to an anticompetitive effect on the general market. Havoco, 626 F.2d at 558; see also General Leaseways v. National Truck Leasing Ass'n, 744 F.2d 588, 596 (7th Cir.1984) (rule of reason generally requires threshold showing that defendant had enough market power to restrain competition substantially); but see F. Buddie Contracting, Inc. v. Seawright, 595 F. Supp. 422, 437-38 (N.D.Ohio 1984) (single contract situation does state antitrust claim under a rule of reason analysis). Whether or not unfair practices on a single contract can ever violate the Sherman Act, Hoffman has failed to prove significant anticompetitive effects in this case.
The rest of Hoffman's complaint alleges only state law claims. Our dismissal of the Sherman antitrust claim dissolves our pendent jurisdiction over those state law claims. See United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S. Ct. 1130, 1139, 16 L. Ed. 2d 218 (1966). Those claims are therefore dismissed for lack of subject matter jurisdiction. Accordingly, the case as a whole is dismissed.[4] It is so ordered.
NOTES
[1] Hoffman presented some evidence that Integrated might have had as much as four months to prepare its bid. In our discussion below, we assumed that this longer number is correct.
[2] Integrated is correct that no direct evidence supports the conspiracy claim. However, it ignores the fact that bits of circumstantial evidence support a finding of collusion, and that circumstantial evidence can suffice to render summary judgment improper. See, e.g., Independence Tube Corp., 691 F.2d at 320. The following evidence in the record tends to support an inference of collusion between the Village and Integrated: (1) the Village awarded Integrated the specifications contract, without competitive bidding, even though Integrated employed no registered architects; (2) some evidence suggests that Village officials knew that Integrated would later bid on the construction project, and that this was highly unusual; (3) the Village failed to disclose Integrated's role as bidder in its initial solicitations in the Dodge Construction News. These facts imply that the Village and Integrated might have agreed to weight the bidding process in Integrated's favor. We are not suggesting that collusion actually took place. Rather, we are saying that circumstantial evidence in the record supports a finding of collusion, thus making summary judgment inappropriate on the conspiracy element of the Sherman Act claim.
[3] Security Fire Door, held that plaintiff had failed to state a Sherman Act claim where it had alleged that architects and county representatives had drawn up specifications to exclude all dumbwaiters manufactured by firms other than one of the defendants. The Court observed:
There is nothing alleged in the complaint to suggest that this choice was made other than in an atmosphere of free competition among suppliers. So far as the complaint alleges, each supplier was perfectly free to tout the virtues of his particular dumbwaiter system in an effort to secure favorable specifications. It would appear that the architects simply favored the Guilbert system. In doing so they and their principals can hardly be charged with an antitrust conspiracy.
484 F.2d at 1301. In our previous opinion we noted that Integrated, the successful bidder, had specified use of its own product and that it was unclear whether competitors could tout the virtues of their own products. Security Fire Door was thus distinguishable. However, in light of the undisputed facts that Kirby and Mitchell systems are essentially equivalent, and that Hoffman was free to tout the virtues of the Mitchell system, this case no longer differs significantly from Security Fire Door.
[4] In light of this holding, we need not consider Integrated's alternative summary judgment motion on the issue of damages. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1672565/ | 510 S.W.2d 879 (1974)
John Arthur BOWDEN, Petitioner,
v.
STATE of Arkansas, Respondent.
No. CR 74-6.
Supreme Court of Arkansas.
June 24, 1974.
Harold L. Hall, Public Defender by John W. Achor, Chief Deputy Public Defender, Little Rock, for appellant.
Jim Guy Tucker, Atty. Gen., by Robert S. Moore, Jr., Asst. Atty. Gen., Little Rock, for appellee.
HOLT, Justice.
The petitioner, by a writ of certiorari, seeks a review of the validity of a search and seizure warrant issued by the circuit court at respondent's request. In approving the search warrant, after an evidentiary hearing, the trial court suggested and permitted the petitioner sufficient time to apply to this court for a temporary stay which we granted. This case is one of first impression. The area of the search is the lower part of the petitioner's spinal canal where the object of the search, a bullet, is lodged. Petitioner is a suspect in a robbery-murder. He fits the description of one of two men seen fleeing the scene of the crime. One ran bent forward clutching his stomach, apparently wounded. Within a few minutes an unidentified individual brought petitioner to a local hospital. He was suffering from a stomach wound. An x-ray revealed that a bullet resembling a .38 caliber had come to rest in his spinal canal. The deceased had fired a .38 caliber pistol at the robbers. Petitioner has denied complicity to the officers and told them he had suffered a .22 caliber gunshot wound in a gambling game.
Petitioner first asserts that the search warrant is constitutionally impermissible on the basis that it constitutes an unreasonable search and seizure in contravention of the Fourth Amendment of our United States Constitution. That amendment reads:
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, ....
The identical provision is found in our Ark.Const. Art. 2, § 15 (1874). The standard *880 by which a state can conduct reasonable Fourth Amendment searches is delineated in Schmerber v. California, 384 U.S. 757, 86 S. Ct. 1826, 16 L. Ed. 2d 908 (1966). There the issue was whether the taking of a blood sample from the defendant without his consent was admissible in evidence against him. The purpose was to determine the state of intoxication. There the United States Supreme Court held the evidence was admissible and met the Fourth Amendment test of reasonableness since that minor intrusion into the body was an effective means of determining intoxication, imposed no risk, trauma, or pain and was performed in a reasonable manner (a needle) in the hospital by a physician.[1] However, the Schmerber decision issued a restrictive warning in clear and unmistakable language articulating the permissible extent of an intrusion or invasion of the human body to secure evidence. The court said:
That we today hold that the Constitution does not forbid the States minor intrusions into an individual's body under stringently limited conditions in no way indicates that it permits more substantial intrusions, or intrusions under other conditions. (Emphasis added.)
The Fourth Amendment requirements for such a procedure as was there prescribed are further bolstered by a fundamental due process consideration that ".... inescapably imposes upon this Court an exercise of judgment upon the whole course of the proceedings in order to ascertain whether they offend those canons of decency and fairness which express the notions of justice of English speaking peoples even toward those charged with the most heinous offenses." Malinski v. New York, 324 U.S. 401, 65 S. Ct. 781, 89 L. Ed. 1029 (1945), cited in Rochin v. California, 342 U.S. 165, 72 S. Ct. 205, 96 L. Ed. 183 (1952). In Rochin, petitioner swallowed two narcotic capsules as officers approached him. After an unsuccessful manual attempt to remove the capsules from petitioner's throat, his stomach was pumped at a hospital against his will. The evidence was held admissible at trial. In reversing, the court characterized the procedure as offensive to "even hardened sensibilities" and "too close to the rack and the screw to permit of constitutional differentiation." There the late Mr. Justice Frankfurter analogized this method of search and seizure to that of coerced confessions by saying:
Coerced confessions offend the community's sense of fair play and decency. So here, to sanction the brutal conduct which naturally enough was condemned by the court whose judgment is before us, would be to afford brutality the cloak of law. Nothing would be more calculated to discredit law and thereby to brutalize the temper of a society.
Within the framework of the Fourth Amendment and due process restrictions, we turn now to the propriety of an operation for the removal of a bullet from the human body where the individual objects. Two state jurisdictions have addressed the matter. Indiana appears to flatly reject the procedure, relying on Schmerber and Rochin, as being prohibited by the Fourth Amendment and due process even if the operation would only require a local anesthetic to remove the bullet or metallic fragments lodged in the flesh of the buttocks of a felony murder suspect. Adams v. State, 299 N.E.2d 834 (Ind.1973), cert. denied, 415 U.S. 935, 94 S. Ct. 1452, 39 L. Ed. 2d 494 (February 19, 1974). Georgia allowed the operation where a medical examination determined no danger to life or health was involved since the bullet could be removed in no more than fifteen minutes with a local anesthetic. Creamer v. State, 229 Ga. 511, 192 S.E.2d 350 (1971). Creamer was reluctantly followed in Allison v. State, 129 Ga.App. 364, 199 S.E.2d *881 587 (1973), where the evidence was uncontradicted that the bullet could be removed without danger to life or limb. In Creamer the bullet was lodged in the fat, subcutaneous area of the right side of the chest, within the area of the muscle. In Allison the bullet was lodged in defendant's right side just beneath the skin.
In the case at bar, at the evidentiary hearing two doctors testified about the required surgical procedure to remove the bullet from the petitioner who had remained in the hospital under their observation. They located the bullet in the lower spinal canal. Both agreed that surgical removal could cause a worsening of petitioner's condition due to the involvement of spinal nerves. A general anesthetic would be required. Although both doctors recommended the removal of the bullet, the opinion was also expressed that a fatal risk was involved by surgical intervention. Each doctor described the operation, medically, as a "major intrusion" into the human body.
We are not insensitive to the strong showing of petitioner's involvement presented by the state. However, it is our appellate responsibility to maintain an awareness of the potential misuse which could arise if we approved such a procedure which so clearly is contrary to the mandate in Schmerber and Rochin. In applying the requirements of Schmerber, in the case at bar, we hold that the issuance of the search warrant does not meet the stringent standard of reasonableness there enunciated. It is uncontroverted that the proposed operation constitutes medically a major intrusion into the petitioner's body involving trauma, pain and possible risk of life even when performed in a proper medical environment with the most careful and skilled attention. The medical testimony most favorable to the state is that the risk of serious complication of petitioner's injury by removal of the bullet at least equals the risk of such complication with the bullet left in place. Other testimony was that there was a greater percentage of risk of complication in removal of the bullet than there would be if it were not removed. Just as coerced confessions are inadmissible evidence because they are offensive to a community's sense of fair play and decency and our American jurisprudence, it follows that a substantial intrusion into a defendant's body, without his consent, involving pain, trauma and risk of serious complications, is equally offensive to due process standards as well as the test of reasonableness required by the Fourth Amendment and also the same provision in our Arkansas Constitution. Therefore, it becomes unnecessary to discuss petitioner's other contentions for quashing the search and seizure warrant.
The temporary stay is made permanent and the warrant is quashed.
NOTES
[1] It is interesting to note the similarity of the workmen's compensation test for discontinuing benefits when a claimant refuses surgery. See, 1 Larson, Workmen's Compensation Law § 13.22 (1972) and cases cited therein. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1550110/ | 262 B.R. 371 (2001)
In re George Monroe BENSEN, Debtor.
No. 00-60535-7.
United States Bankruptcy Court, N.D. Texas, San Angelo Division.
May 17, 2001.
*372 *373 *374 Charlie V. Gamblin, Brownwood, TX, for debtor.
Ben A. Culpepper, San Antonio, TX, for J.D.C. Recovery, Inc.
MEMORANDUM OPINION
ROBERT L. JONES, Bankruptcy Judge.
A consolidated hearing was held on March 2, 2001, on J.D.C. Recovery, Inc.'s (JDC's) objection to George Monroe Bensen's (Bensen's) claim of exemption to funds in an account at First America Bank, S.S.B., and Bensen's motion, under § 522(f) of the Bankruptcy Code, to avoid JDC's purported lien against the funds in the account arising from service of a writ of garnishment on the bank. After hearing, the parties submitted briefs on the issues presented.
This court has jurisdiction of this matter under 28 U.S.C. §§ 1334 and 157(b). This is a core proceeding pursuant to 28 U.S.C. § 157(b)(1) and (b)(2). This memorandum opinion contains the court's findings of fact and conclusions of law. FED.R.BANKR.P. 7052 and FED.R.BANKR.P. 9014.
Facts and Contentions of the Parties
The facts in this case are simple and undisputed. In 1991, Federated Southwest Company obtained a default judgment against Bensen in Cause No. 91-07-444 in the 35th Judicial District Court of Brown County, Texas. JDC, as assignee of the claim, sought to enforce the judgment through a writ of garnishment. JDC filed an application for a writ of garnishment with the 35th Judicial District Court of Brown County, Texas on October 19, 2000. On October 20, 2000, JDC caused the writ of garnishment to be served on the First America Bank, S.S.B. (the Bank). On such date, Bensen had funds on deposit in a checking account with the Bank totaling approximately $8,414.00. Before the Bank answered the writ of garnishment, Bensen, on November 6, 2000, filed for relief under Chapter 7 of the Bankruptcy Code.[1] Bensen claimed the account as exempt under § 522(d)(5) of the Bankruptcy Code.
JDC makes two basic arguments, which are conceptually inconsistent. First, by its objection to Bensen's claim of exemption, JDC contends that it caused a writ of garnishment to be served on the Bank thereby creating a valid lien against the account in favor of JDC; that such lien is inviolate because it was served prior to Bensen's bankruptcy filing. Second, in direct response to Bensen's motion to avoid JDC's purported lien, JDC contends that Bensen's failure to replevy the funds prior to the bankruptcy filing caused title to the funds to vest in JDC. Presumably, by this theory, JDC argues its lien and ownership interests merge. Bensen therefore has no interest in the funds, and there is no longer any lien to avoid.
As an alternative argument to Bensen's motion to avoid lien, JDC contends that § 522(f)(2)(C) which states "[t]his paragraph shall not apply . . . to a judgment *375 arising out of a mortgage foreclosure" prevents Bensen from avoiding the lien because the underlying judgment has its genesis in a mortgage foreclosure.
Bensen contends that service of the writ of garnishment creates, at best, a judicial lien in favor of JDC that is subject to avoidance under § 522(f) of the Bankruptcy Code. As such, the writ of garnishment is irrelevant to the question of whether the account (and the funds on deposit) is exempt.
The case trustee also responded to JDC's objection to exemption by arguing that the service of the writ of garnishment constitutes a preferential transfer within ninety days of the bankruptcy filing, subject to avoidance under § 547 of the Bankruptcy Code. Presumably, the Trustee's interest in this matter arises from a belief or understanding that the amount of funds on deposit exceeds Bensen's allowed exemption. However, the court notes that JDC admitted at hearing on the matter that the writ of garnishment attaches only to the amount of funds on deposit at the time the writ was served, such amount being $8,414.31. As there is some evidence that there is presently in excess of $9,000.00 in the account, see Bensen's Ex. A-1, JDC is apparently not making claim to the additional sum. There was no evidence presented that the $8,414.31 exceeds the exemption, either claimed by Bensen or allowed. It is therefore unnecessary to address the Trustee's claim. To the extent the funds exceed $8,414.31, JDC is not asserting a claim to such funds and such funds would pass to the bankruptcy estate for the Trustee's administration.
To resolve the issues presented, the court will examine the nature of a garnishment action under Texas state law, the effect an intervening bankruptcy filing has on a pending garnishment action, and whether a writ of garnishment creates a lien subject to avoidance under § 522(f) of the Bankruptcy Code. The court will also address JDC's claim that Bensen's motion to avoid lien is precluded by § 522(f)(2)(C).
Garnishment under Texas Law
"Garnishment is a statutory proceeding whereby the property, money, or credits of a debtor in the possession of another are applied to the payment of the debt."[2]Bank One v. Sunbelt Sav., 824 S.W.2d 557, 558 (Tex.1992); see TEX.CIV. PRAC. & REM.CODE § 63.001; TEX.R.CIV.P. 661. "The burden is on the person claiming the benefit of the statute to establish his right to recover." In re Olivas, 129 B.R. 122, 124 (Bankr.W.D.Tex.1991); Downs v. Cason, 250 S.W. 471, 472 (Tex. Civ.App. San Antonio 1923, no writ). "The judgment against the garnishee should be in the amount of the indebtedness shown at trial to have been absolutely owed in an amount certain at the time the garnishee is served." See Olivas, 129 B.R. at 124; U.S. v. Wakefield, 572 S.W.2d 569, 571 (Tex.Civ.App. Fort Worth 1978, writ dism'd). The central issue in a garnishment action is whether the garnishee was indebted to the judgment debtor or had in its possession effects belonging to him at the time of the service of the writ and the *376 filing of the answer. See Olivas, 129 B.R. at 124; Chandler v. Cashway Building Materials, Inc., 584 S.W.2d 950, 953 (Tex. Civ.App. El Paso 1979, no writ) (emphasis added).
A writ of garnishment, upon its service, is operative in personam as against the garnishee and is operative in rem upon property of a judgment debtor in the hands of the garnishee. See Olivas, 129 B.R. at 124; Citizens Nat. Bank in Ennis v. Hart, 321 S.W.2d 319, 320 (Tex. Civ.App. Fort Worth 1959, writ ref'd); see also TEX.R.CIV.P. 668. A lien created by the service of a writ of garnishment creates a lien on property subject to such writ from the date of service of the writ. See Olivas, 129 B.R. at 124; In the Matter of Latham, 823 F.2d 108, 110 (5th Cir. 1987) ("According to Texas case law, a garnishment lien attaches from the date of service of the summons"); In the Matter of T.B. Westex Foods, Inc., 950 F.2d 1187, 1192 (5th Cir.1992); U.S. v. Standard Brass & Mfg. Co., 266 S.W.2d 407, 408 (Tex.Civ.App. Beaumont 1954, no writ) (emphasis added). Additionally, a writ of garnishment not only impounds funds in the hands of a garnishee when the writ is served but also such funds belonging to the debtor up to and including the day the garnishee is to answer. See Olivas, 129 B.R. at 124-125; Rome Industries, Inc. v. Intsel Southwest, 683 S.W.2d 777, 779 (Tex.App. Houston [14th Dist.] 1984, writ ref. n.r.e.); First National Bank in Dallas v. Banco Longoria, S.A., 356 S.W.2d 192, 196 (Tex.Civ.App. San Antonio 1962, writ ref. n.r.e.). A garnishor's rights are determined by priority in time, itself determined by the date of service of the writ of garnishment. See Olivas, 129 B.R. at 125; Small Business Inv. Co. of Houston v. Champion Intern. Corp., 619 S.W.2d 28, 30 (Tex.Civ.App. Houston [1st Dist.] 1981, no writ). Finally, and noting Chapter 63 of the Texas Civil Practice and Remedies Code, "after service of a writ of garnishment, the garnishee may not deliver any effects or pay any debt to the defendant." TEX.CIV.PRAC. & REM.CODE § 63.003.
The defendant shall be served in any manner prescribed for service of citation or as provided in Rule 21 a with a copy of the writ of garnishment, the application, accompanying affidavits and orders of the court as soon as practicable following the service of the writ. TEX.R.CIV.P. 663a.[3] At any time before judgment, the defendant may replevy the garnished property by posting a sufficient bond, as provided by statute. TEX.R.CIV.P. 664. Additionally, a defendant whose property or account has been garnished may seek to vacate, dissolve, or modify the writ of garnishment for any grounds or cause. TEX. R.CIV.P. 664a. The garnishee is required to answer and shall state, "what, if anything, the garnishee is indebted." Burkitt v. Glenney, 371 S.W.2d 412, 414 (Tex.Civ. App. Houston [1st Dist.] 1963, writ ref'd n.r.e.); TEX.R.CIV.P. 665. Failure to answer at or before the time indicated on the writ may result in a default judgment for the plaintiff.[4] TEX.R.CIV.P. 667. However, a garnishee may answer after the time specified in the writ has passed if a default judgment has not yet been entered. See id. If the answer reveals the garnishee is indebted to the defendant, than judgment will be rendered for the garnishor against the garnishee for the amount admitted, sufficient to satisfy the underlying judgment. TEX.R.CIV.P. 668. Generally, execution *377 on a judgment against the garnishee occurs in the same manner and under the same conditions as in other cases. See id. Upon entry of such judgment, the court shall render a decree directing the garnishee to deliver the effects. TEX.R.CIV.P. 669.
Effect of Bankruptcy Filing on a Pending Writ of Garnishment in Texas
Most creditor actions against a debtor are immediately and automatically stayed upon the filing of a bankruptcy petition and no court order is required. 11 U.S.C. § 362. The automatic stay acts as a blanket injunction and prevents creditors from attempting to collect any pre-bankruptcy claim or from enforcing any pre-bankruptcy judgment (i.e. creditors may not levy upon the debtor's assets, demand payment, or use any other enforcement procedure to satisfy a judgment). 11 U.S.C. § 362(a); Southern County Mutual Ins. Co. v. Powell, 736 S.W.2d 745, 747 (Tex.App. Houston [14th Dist.] 1987, no writ). For the duration of the stay, creditors are also barred from creating, perfecting or enforcing liens against the property of the bankruptcy estate. 11 U.S.C. § 362(a)(4).
In Baytown State Bank v. Nimmons, 904 S.W.2d 902 (Tex.App. Houston [1st Dist.] 1995, no writ), a bank filed a bill of review seeking to set aside a garnishment judgment against a Chapter 7 debtor's bank deposits. The facts were largely uncontested. In November of 1991, the creditor obtained a judgment against the debtor and, subsequently, in April of 1992, filed an application for a writ of garnishment naming the bank as garnishee. Id. at 904. The bank answered, admitted it was indebted to the debtor and a judgment was entered allowing the creditor to recover the amount of his judgment from the bank. Id. at 904. Two weeks after the judgment was signed, the debtor filed for bankruptcy under Chapter 7 of the Bankruptcy Code. Id. at 904. The bank argued that the debtor's bankruptcy filing deprived the trial court of jurisdiction to enforce the judgment in garnishment, and automatically stayed the creditor's attempts to enforce the judgment in garnishment. Id. at 905. The Baytown court pointed out that a bankruptcy filing stays enforcement of any judgment against the debtor or the debtor's property and deprives state courts of jurisdiction until the stay is lifted. Id. at 905, citing 11 U.S.C. § 362(a)(2).[5] The court summarized the law in Texas on garnishment proceedings, explaining that the "only real issue in a garnishment action is whether the garnishee is indebted to the judgment debtor, or has in its possession effects belonging to the debtor, at the time of service of the writ on the garnishee, and at the time the garnishee files its answer." Id. at 905-906. "Funds placed with a bank become general deposits which create a debtor-creditor relationship between the bank and the depositor." Id. at 905-906 citing Bank One, Texas, N.A. v. Sunbelt Sav., F.S.B., 824 S.W.2d 557, 558 (Tex.1992). With respect to the effect a bankruptcy filing has on a pending writ of garnishment or other judicial proceeding the court noted:
When an action is for garnishment of funds to satisfy a prior judgment against a debtor, the action is considered to be "against the debtor" and is stayed by bankruptcy proceedings of the debtor. Owen Elec. Supply, Inc. v. Brite Day Const., Inc., 821 S.W.2d 283, 287 (Tex. App. Houston [1st Dist.] 1991, writ denied); American Precision Vibrator Co. *378 v. National Air Vibrator Co., 771 S.W.2d 562, 563 (Tex.App. Houston [1st Dist.] 1989, no writ). As a garnishee, the bank in effect holds the debtor's property as an officer or receiver for the court. Intercontinental Terminals Co. v. Hollywood Marine, Inc., 630 S.W.2d 861, 863 (Tex.App. Houston [1st Dist.] 1982, writ ref'd n.r.e.). Service of the writ of garnishment creates a lien on the judgment debtor's property, impounding the funds in the hands of the garnishee bank. Rome Indus. Inc. v. Intsel Southwest, 683 S.W.2d 777, 779 (Tex. App. Houston [14th Dist.] 1984, writ ref'd n.r.e.).
Id. at 906.[6]
The creditor in Baytown, citing a Colorado bankruptcy court opinion[7] as support, argued that "under Colorado law, the garnishment is final and conclusive at the moment the order is entered; once the court orders disbursement to the judgment creditor, the debtor's ownership rights in the property terminate." Id. at 906. The Baytown court rejected this argument by distinguishing the Colorado and Texas statutes and finding that a judgment in garnishment in Texas, like any other judgment, is not self-executing. Id. at 906. The court stated:
In general, judgments "shall be enforced by execution or other appropriate process." Tex.R.Civ.P. 621. The Texas Rules of Civil Procedure provide that in garnishment actions "execution shall issue thereon in the same manner and under the same conditions as is or may be provided for the issuance of execution in other cases." Tex.R.Civ.P. 668. The rule governing execution expressly provides that execution shall issue "after the expiration of thirty (30) days from the time a final judgment is signed," or if a motion for new trial is timely filed, then thirty days after the motion is overruled by signed order or by operation of law. In other words, the execution may issue after the judgment becomes final. Tex.R.Civ.P. 627. The Colorado rules contain no similar provision. In Texas, ownership of property subject to a judgment does not transfer until a writ of execution is issued and levied. Tex.R.Civ.P. 622, 629, 637-43.
Id. at 906-907.
The court ultimately held that the debtor's Chapter 7 bankruptcy filing deprived the trial court of jurisdiction to enforce the judgment in garnishment, and automatically stayed the creditors' right to enforce the judgment in garnishment. Id. At 907.
Lien Avoidance Pursuant to 11 U.S.C. § 522(f)
When a debtor files a bankruptcy petition, all of the debtor's legal and equitable interests in property, with some exceptions, become property of the estate. 11 U.S.C. § 541(a). An individual debtor may exempt from property of the estate certain types and amounts of property provided for under a list of either federal exemptions or a list of state exemptions, unless the state law of the debtor restricts the debtor to the state list. 11 U.S.C. § 522(b). A valid lien or security *379 interest on exempt property securing a prepetition debt remains enforceable unless the lien is void or is avoided pursuant to one of a number of avoidance provisions in the Bankruptcy Code. 11 U.S.C. § 522(c). One such provision is § 522(f)(1)(A) which provides:
(f)(1) Notwithstanding any waiver of exemptions but subject to paragraph (3), the debtor may avoid the fixing of a lien on an interest of the debtor in property to the extent that such lien impairs an exemption to which the debtor would have been entitled under subsection (b) of this section, if such lien is
(A) a judicial lien . . .
For a debtor to avoid a judicial lien on exempt property as impairing an exemption, the debtor must show: (1) the lien is a judicial lien; (2) the lien is fixed against an interest of the debtor in property; (3) and the lien impairs an exemption to which the debtor would otherwise be entitled. In the Matter of Henderson, 18 F.3d 1305 (5th Cir.1994); In re Inman, 131 B.R. 789, 791 (Bankr.N.D.Tex.1991); 11 U.S.C. § 522(f)(1). A debtor may avoid a judicial lien when the judicial lien "fastens liability to and impairs the debtor's exempt property." In the Matter of Henderson at 1305. "Generally, judicial liens can be avoided by a debtor in bankruptcy as a matter of course." In re Levi, 183 B.R. 468, 472 (Bankr.N.D.Tex.1995).
(1) Does a writ of garnishment create a judicial lien?
Federal law, not state law, determines whether a lien is a "judicial lien" for purposes of § 522(f). Id. at 471. The Bankruptcy Code defines "judicial lien" as "a lien obtained by judgment, levy, sequestration, or other legal or equitable process or proceeding." Id. at 471; 11 U.S.C. § 101(36). It is well established that a writ of garnishment constitutes a judicial lien for purposes of the lien avoidance provisions of § 522(f). In re Thomas, 215 B.R. 873 (Bankr.E.D.Mo.1997) (Lien created by service of summons and writ of garnishment was "judicial lien," which Chapter 7 debtor could avoid as impairing exemption to which he would otherwise have been entitled in wages); In re Buzzell, 56 B.R. 197, 198 (Bankr.D.Md.1986) (A wage garnishment may be both a preferential transfer and a judicial lien); In re Vasquez, 205 B.R. 136 (Bankr.N.D.Ill.1997) (Chapter 7 debtor could avoid creditor's wage deduction lien, given that lien was judicial lien, debtor had claimed funds held by employer as exempt, lien impaired exemption, and debtor still had interest in property); In re Page, 171 B.R. 349 (Bankr.W.D.Wis.1994) (Garnishment lien is judicial lien, avoidable if impairing exemption).
(2) Is the lien fixed against the debtor's property?
As previously noted, under Texas case law a writ of garnishment is fixed and perfected on the date the writ is served on the garnishee. See Olivas, 129 B.R. at 124; In the Matter of Latham, 823 F.2d 108, 110 (5th Cir.1987); In the Matter of T.B. Westex Foods, Inc., 950 F.2d 1187, 1192 (5th Cir.1992). However, is the lien "fixed against an interest of the debtor in property," as required by the second prong under the Henderson three-part test? See In the Matter of Henderson, 18 F.3d at 1305; 11 U.S.C. § 522(f)(1). Stated another way: Does the debtor retain an interest in the funds on deposit once the funds have been "impounded" pursuant to a properly served writ of garnishment or does the title to those funds pass to the garnishor? The case law in Texas, as well as in the Fifth Circuit, is sparse on this *380 debate.[8] Notwithstanding, one bankruptcy court in the Southern District of Texas has addressed the issue. See In re Moran, 112 B.R. 197 (Bankr.S.D.Texas 1989).
In Moran, a former Chapter 7 debtor sought to hold a creditor in contempt for continuing a garnishment proceeding post-discharge. Id. at 197. The creditor had obtained a judgment in a Texas state court on October 29, 1986. Id. at 198. On January 16, 1987, the creditor caused a writ of garnishment to be served on the garnishee. Id. at 198. The garnishee answered on February 6, 1987, and denied holding any property of the defendant. Id. at 198. No judgment was rendered by the Texas state court on the writ of garnishment. Id. at 198. Moran filed bankruptcy on February 10, 1987. Id. at 198. The debtor received his discharge on June 8, 1987, and the bankruptcy case was closed on July 29, 1987. Id. at 198. However, after the debtor received his discharge, the garnishee withheld money owing to the debtor because the garnishment proceeding was retained by the Texas state court during the pendency of the bankruptcy proceeding. Id. at 198. The debtor argued the creditor violated the automatic stay and should be forced to withdraw the garnishment action and pay punitive damages. Id. at 198. The creditor contended that "what began as a garnishment action is now a personal liability suit against the garnishee, and not against the debtor." Id. at 198. The creditor further contended that it had a right to pursue an in rem action on the garnishment on the theory it held a valid, perfected judicial lien which survived the bankruptcy because the debtor failed to avoid the lien. Id. at 198.
The Moran court found that the "garnishment action is a process of executing on a previously rendered judgment or debt, and it does not create a separate right against the garnishee until an order of garnishment has been rendered." Id. at 198. The court found that since the creditor did not attempt to enforce the garnishment during the pendency of the bankruptcy, there was no violation of the automatic stay. Id. at 199. The court also determined that the underlying claim supporting the writ of garnishment had been discharged. Id. at 199. Commenting on the garnishment action and the effect thereof, the court reasoned:
The purpose of a "Writ of Garnishment" is to notify the garnishee when and where he is required to answer interrogatories propounded and to impound assets and property of debtor in the hands of a third person. . . . It is clear that the garnishment process, like any other cause of action, is not complete until an order is entered which, in a garnishment *381 proceeding, results in directing the denial or delivery of funds to the garnishor.
Id. at 199 (citations omitted). Further, the court noted "it has been established for some time that a writ of garnishment, appropriates only what the garnishee may owe to the debtor-in-garnishment at the time of the issuance of the writ and then to the time of answer by the garnishee." Id. at 199 citing Gause v. Cone, 73 Tex. 239, 11 S.W. 162 (1889) and Security National Bank v. Morgan, 245 S.W. 455 (Tex.Civ. App. Dallas 1923). The creditor in Moran caused a writ of garnishment to be served on the garnishee and, consistent with the rules governing garnishment proceedings, the garnishee answered. Id. at 199. The court stated, however, "there has not been adjudication of the garnishment action as that action was stayed due to the debtor having filed his bankruptcy petition." Id. at 199. The court determined that the action in garnishment had not been completed because of the bankruptcy filing and, therefore, the creditor "had not perfected the right to the property in question, but, by service of the writ, has only impounded any money or property held by the garnishee and has acquired a lien in favor of the creditor on any money or property held." Id. at 200.
Therefore, under the Moran holding, title to garnished property does not pass merely upon service of the writ of garnishment. The court's reasoning is consistent with Texas law which states that "service of a writ of garnishment creates a lien on property subject to such writ of garnishment from the date of service of the writ." Palandjoglou v. United Nat. Ins. Co., 821 F.Supp. 1179, 1186 (S.D.Tex.1993). Further, the "writ of garnishment impounds the funds in the hands of the bank when the writ is served and also such funds belonging to the debtor up to and including the day the garnishee has to answer." Chandler v. El Paso National Bank, 589 S.W.2d 832, 836 (Tex.Civ.App. El Paso, 1979). The garnishee impounds the funds and acts as a "receiver or officer of the court." See Baytown v. Nimmons, 904 S.W.2d at 903.
(3) Does the lien impair Bensen's exemption?
To satisfy the third prong of the Henderson analysis, Bensen must show the lien impairs an exemption to which he would otherwise be entitled. See In the Matter of Henderson, 18 F.3d at 1305; 11 U.S.C. § 522(f)(1). "Whether a judicial lien impairs a debtor's exemption under § 522(f) is a question of federal law." See In the Matter of Henderson, 18 F.3d at 1309. The court need not engage in an exhaustive analysis to resolve this element, however. Apart from JDC's argument that title to the funds in the account passed to JDC prior to Bensen's bankruptcy filing, no question has been raised concerning Bensen's right to claim the funds in the account as exempt property.[9] As the court rejects JDC's passage of title argument, it cannot be disputed that the writ of garnishment, as a judicial lien, impairs Bensen's exemption. The Fifth Circuit has construed the concept of impairment very broadly. In the Matter of Henderson at 1310 ("impairs" includes not just legal impairment but also means "weakens, makes worse, lessens in power, diminishes, and affects in an injurious manner"). If not avoided, the judicial lien would eliminate Bensen's exemption.
Effect of § 522(f)(2)(C) on Bensen's Motion
JDC argues in the alternative that the garnishment action arises ultimately *382 out of a mortgage foreclosure and, therefore, § 522(f)(2)(C) precludes Bensen from avoiding the lien. The (2)(C) provision of subsection 522(f) states: "This paragraph shall not apply with respect to a judgment arising out of a mortgage foreclosure." The (f)(2) provision of § 522 sets forth a mathematical formula for determining the extent of impairment.[10] It is the opinion of this court that the language of the statute, "This paragraph shall not apply . . .," refers only to § 522(f)(2) and not, as JDC argues, to the entirety of subsection (f), which provides for the avoidance of certain liens (including, as here, judicial liens, along with non-purchase money liens against household goods and tools of the trade) by a debtor to the extent they impair exempt property. JDC cited no case law to indicate otherwise. The court notes that when other provisions of § 522 refer to a subsection, it refers to the entirety of the subsection, which is the first major category under the section. For example, § 522(b)(1) specifically refers to "subsection (d) of this section," that being all of subsection 522(d). Section 522(b)(1) also refers to "paragraph (2)(A) of this subsection," which obviously refers to only paragraph (2)(A) of subsection (d) of § 522.
The reference in § 522(f)(2)(C) to "[t]his paragraph" is not entirely consistent with other provisions of § 522, however. Taken literally, it illogically refers back to itself. In addition, § 522(f)(2)(B) refers to the calculation under "subparagraph (A)." This clearly refers to the (f)(2)(A) provision of § 522. But this relegates (2)(A) of § 522(f) to a subparagraph, unlike paragraph (2)(A) of § 522(d). Despite this seeming inconsistency, it is apparent that under § 522 all references to a subsection specifically refer to the first major category under the section. See generally § 522. Accordingly, the court concludes the reference to "[t]his paragraph" in § 522(f)(2)(C) is, at most, a reference to § 522(f)(2) which incorporates the mathematical formula for determining the extent of impairment. It does not preclude application of all of subsection (f) of § 522 if there is a "judgment arising out of a mortgage foreclosure."
Even if § 522(f)(2)(C) were construed to preclude an avoidance action under § 522(f) if the lien in question is somehow derived from a "judgment arising out of a mortgage foreclosure," JDC has not convinced this court that its lien arises out of a mortgage foreclosure. While the original petition filed in state court upon which JDC bases its claim seeks a judgment on a note in the amount of $4,519.94, plus attorney's fees and costs, and, in addition, requests foreclosure of security interests, the judgment entered is a default judgment awarding the sum of $5,858.05, plus attorney's fees and costs. JDC's Ex. 1 and Ex. 2. No mention is made, and no evidence was presented, regarding a mortgage foreclosure. This assumes a "mortgage foreclosure" can mean a foreclosure of both personal property and real property.[11]*383 JDC's application for writ of garnishment recites the judgment of $5,858.05, plus attorney's fees of $2,500.00, and states that there are no "credits or offsets." JDC's Ex. 4. The note sued upon may have been secured by personal property owned by Bensen, but the court cannot conclude that this fact alone warrants a finding that the judicial lien arises out of a mortgage foreclosure as contemplated by § 522(f)(2)(C).
Conclusion
Bensen's motion to avoid lien will be granted. A writ of garnishment is a judicial lien for purposes of lien avoidance under § 522(f). See In re Thomas, 215 B.R. 873 (Bankr.E.D.Mo.1997); In re Buzzell, 56 B.R. 197, 198 (Bankr.D.Md.1986); In re Vasquez, 205 B.R. 136 (Bankr. N.D.Ill.1997); In re Page, 171 B.R. 349 (Bankr.W.D.Wis.1994). Moreover, the judicial lien here was fixed and perfected on the date the writ of garnishment was served on the garnishee bank.[12]See Olivas, 129 B.R. at 124; In the Matter of Latham, 823 F.2d 108, 110 (5th Cir.1987); In the Matter of T.B. Westex Foods, Inc., 950 F.2d 1187, 1192 (5th Cir.1992). It was fixed "against property of the debtor," being the funds held by the garnishee bank in Bensen's checking account. Bensen retained an interest in the property as the funds were merely "impounded" by the garnishee bank. See Baytown v. Nimmons, 904 S.W.2d at 903. The garnishee bank acted only as a receiver for the court. See id. Status as a garnishee empowers the garnishee to impound the property and "not deliver any effects or pay any debt to the defendant." See TEX.CIV.PRAC. & REM. CODE § 63.003.
As in In re Moran, the garnishment action was not completed prior to the bankruptcy filing, and, therefore, JDC "had not perfected the right to the property in question, but, by service of the writ, has only impounded any money or property held by the garnishee and has acquired a lien in favor of the creditor on any money or property held." Id. at 200. No order or judgment has been entered by the garnishment court directing the garnishee to deliver the effects.[13] Indeed, the Bank, as of the date of the bankruptcy filing, had not yet filed an answer to the writ.[14] Title to the funds on deposit had not passed to JDC. The judicial lien impairs a valid exemption claimed by Bensen. The court denies JDC's objection to exemption. The court will prepare an appropriate order.
NOTES
[1] The writ of garnishment stated the Bank should file an answer before the expiration of twenty days from the service of the writ.
[2] Section 63.001 of the Texas Civil Practice and Remedies Code provides that a writ of garnishment is available if (1) an original attachment has been issued; (2) a plaintiff sues for a debt and makes as affidavit stating that: (A) the debt is just, due, and unpaid; (B) within the plaintiff's knowledge, the defendant does not possess property in Texas subject to execution sufficient to satisfy the debt; and (C) the garnishment is not sought to injure the defendant or the garnishee; or (3) a plaintiff has a valid, subsisting judgment and makes an affidavit stating that, within the plaintiff's knowledge, the defendant does not possess property in Texas subject to execution sufficient to satisfy the judgment. TEX.CIV. PRAC. & REM.CODE § 63.001.
[3] The rule also requires a notice be "prominently displayed" on the face of the copy of the writ. The required language is recited in Rule 663a. See TEX.R.CIV.P. 663a.
[4] The date for answer will be specified in the writ.
[5] The record in Baytown indicated that the automatic stay was never lifted or modified by the bankruptcy court. See Baytown, 904 S.W.2d at 905.
[6] The creditor in Baytown attempted to distinguish the holding in Owen by focusing on the fact that in Owen the bankruptcy filing was made after the application for the writ of garnishment was filed but before the judgment against the garnishee was entered whereas in the Baytown case the bankruptcy filing came after the judgment. Id. at 905. The Baytown court rejected this argument and stated "this is a distinction without a difference. In the present case, the bankruptcy court filing was made before the judgment against the garnishee even became final." Id. at 906.
[7] In re Seay, 97 B.R. 41, 45 (Bankr.D.Colo. 1989).
[8] There is, however, a significant body of case law in other jurisdictions on this point. Unfortunately, resolution of this issue depends upon interpretation of each individual state's law and, thus, case law from other jurisdictions is not particularly helpful. Notwithstanding, several jurisdictions hold that title to personal property subject to garnishment liens is transferred only upon a final court order for payment to the creditor following certain proceedings after the initial institution of garnishment proceedings which has resulted in the following courts holding that 11 U.S.C. § 522(f)(1) may be invoked to avoid such liens at any time prior to the issuance of such final order, since the debtor, prior to that point, retains a sufficient interest in the property to sustain a lien avoidance under § 522(f)(1). In re Rianna, 61 B.R. 924 (Bankr.D.R.I.1986); In re Nunally, 103 B.R. 376 (Bankr.D.R.I.1989); In re Buzzell, 56 B.R. 197 (Bankr.D.Md.1986); In re Christie, 218 B.R. 27, 47 (Bankr.D.N.J.1998), order vacated on other grounds on motion for reconsideration, 222 B.R. 64 (Bankr.D.N.J.1998); In re Harville, 63 B.R. 371 (Bankr.W.D.Ky.1986); In re Bates, 161 B.R. 965 (Bankr.N.D.Ill. 1993); In the Matter of Yetter, 112 B.R. 301 (Bankr.S.D.Iowa 1990); In re Moore, 56 B.R. 7 (Bankr.M.D.Ala.1985).
[9] As previously noted, Bensen's claim of exemption is made under § 522(d)(5) which allows a debtor to exempt any property, not exceeding in value $850 plus up to $8,075 of any unused exemption provided under paragraph (1) of § 522(d).
[10] Section 522(f)(2) provides:
(A) For the purposes of this subsection, a lien shall be considered to impair an exemption to the extent that the sum of
(i) the lien;
(ii) all other liens on the property; and
(iii) the amount of the exemption that the debtor could claim if there were no liens on the property;
exceeds the value that the debtor's interest in the property would have in the absence of any liens.
(B) In the case of a property subject to more than 1 lien, a lien that has been avoided shall not be considered in making the calculation under subparagraph (A) with respect to the other liens.
(C) This paragraph shall not apply with respect to a judgment arising out of a mortgage foreclosure.
[11] Some may argue that a mortgage may be restricted to a real property security interest. See, e.g., BLACK's LAW DICTIONARY 1026-1027 (7th ed.1999) (definition of mortgage to include "any real-property security transaction").
[12] October 20, 2000.
[13] TEX.R.CIV.P. 669: Judgment for Effects
Should it appear from the garnishee's answer, or otherwise, that the garnishee has in his possession, or had when the writ was served, any effects of the defendant liable to execution, including any certificates of stock in any corporation or joint stock company, the court shall render a decree ordering sale of such effects under execution in satisfaction of plaintiff's judgment and directing the garnishee to deliver them, or so much thereof as shall be necessary to satisfy plaintiff's judgment, to the proper officer for that purpose.
[14] It is significant to note the garnishee bank was not in default for failing to timely answer the writ of garnishment. The time for answering the writ had not yet expired when Bensen filed his bankruptcy petition. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1883520/ | 980 F.Supp. 864 (1997)
UNITED STATES of America, ex rel. Carol Rae Cooper FOULDS, Plaintiff,
v.
TEXAS TECH UNIVERSITY, Texas Tech University Health Sciences Center, Lubbock County Hospital District, and University Medical Center, Defendants.
No. Civ. A. 5:95-CV-135-C.
United States District Court, N.D. Texas, Lubbock Division.
October 3, 1997.
*865 *866 Gene Storrs, Mark A. Wilson, Smith, Storrs, Wilson & McConnell, P.C., Amarillo, TX, Randall B. Pyles, Pyles & Holloway, Plainview, TX, Mary Louise Cohen, Phillips & Cohen, Washington, DC, for Plaintiff.
Toni Hunter, Chief Litigation Div., Atty. Gen. of TX, Austin, TX, for Defendants.
MEMORANDUM OPINION AND ORDER
CUMMINGS, District Judge.
The court's order filed September 30, 1997, is WITHDRAWN. This order is substituted in its place.
Presently before the Court is the defendants' motion to dismiss a qui tam action[1] filed by relator[2] Carol Rae Cooper Foulds ("Foulds") under the False Claims Act, 31 U.S.C. § 3729 et seq. (West Supp.1997). Foulds alleges that Texas Tech University ("Texas Tech") and Texas Tech University Health Sciences Center ("TTUHSC")[3] submitted false claims to the United States of America (the "Government") in violation of the False Claims Act by permitting physician-residents who were ineligible for Medicare or Medicaid provider numbers, and who were not under the personal and identifiable guidance from a staff physician, to provide services to patients which were later billed to Medicare or Medicaid as "physician's services." Texas Tech and TTUHSC have moved to dismiss this lawsuit pursuant to 12(b)(1) and (6) of the Federal Rules of Civil Procedure asserting three theories: (1) the relator is precluded from suing Texas Tech and TTUHSC because of sovereign immunity; (2) the "real party in interest" exception to sovereign immunity in a qui tam action is unavailable as it relates to section 3730(h) of the False Claims Act; and (3) the state is not a "person" for purposes of the False Claims Act.
Since the filing of the motion to dismiss, the court dismissed defendant Lubbock County. Therefore, Lubbock County Hospital District, University Medical Center, Texas Tech, and TTUHSC remain as defendants. The court granted a joint motion for stay and administratively closed this case after the motion to dismiss was filed so that an audit could be conducted by the Office of Inspector General. On August 19, 1997, the court lifted the stay and re-opened the case. Additionally, and important to the resolution of portions of the motion to dismiss, the Government elected not to intervene in this qui tam action. After reviewing the motion and briefs filed by the parties, and in light of recent case law since the administrative closure of this case, the court is of the opinion that the motion to dismiss must be DENIED.
Brief History of Qui Tam Provisions and the False Claims Act
Qui tam provisions in statutes are nothing new to American jurisprudence and have been in existence for hundreds of years in England. United States ex rel. Marcus v. Hess, 317 U.S. 537, 541 n. 4, 63 S.Ct. 379, 383 n. 4, 87 L.Ed. 443 (1943). They were a routine feature of early federal legislation, starting with the First Congress, and continuing through subsequent early Congresses and administrations. See generally, Stuart M. Gerson, Issues and Development in Qui *867 Tam Suits Under the False Claims Act, in CITIZEN SUITS AND QUI TAM ACTIONS: PRIVATE ENFORCEMENT OF PUBLIC POLICY (1996)(listing several informer statutes passed by the early Congresses). Therefore, qui tam suits were well established when the False Claims Act was passed in 1863.
The purpose behind the enactment of the False Claims Act was to stop the "massive frauds perpetrated by large contractors during the Civil War." United States v. Bornstein, 423 U.S. 303, 309, 96 S.Ct. 523, 528, 46 L.Ed.2d 514 (1976). Though the motivation of present-day qui tam relators has been questioned and likened to that of a bounty hunter or privateer, Hughes Aircraft Co. v. United States ex rel. Schumer, ___ U.S. ___, ___, 117 S.Ct. 1871, 1877, 138 L.Ed.2d 135 (1997), the recruitment of paradigms with high morality was never the intent of the statute stopping fraudulent claims and bringing rogues to justice was the motivation. Senator Howard, sponsor of the False Claims Act, opined that the False Claims Act was intended to
hold out to a confederate a strong temptation to betray his coconspirator, and bring him to justice.... I have based the [provisions] upon the old-fashioned idea of holding out a temptation, and "setting a rogue to catch a rogue," which is the safest and most expeditious way I have ever discovered of bringing rogues to justice.
Cong. Globe, 37th Cong., 3d Sess. 955-56 (1863). As evidenced from the present suit, the False Claims Act's qui tam provision is not limited to actions brought against defense contractors who have overcharged the Government. The qui tam provision has been used in the past, as is presently being attempted, to stop fraud in the medical arena. See, e.g., United States ex rel. Glass v. Medtronic, 957 F.2d 605 (8th Cir.1992); United States ex rel. Woodard v. Country View Care Ctr. Inc., 797 F.2d 888 (10th Cir. 1986).
The False Claims Act's Current Provisions
Title 31 of the United States Code § 3730 provides for a cause of action for any person who violates 31 U.S.C. § 3729. The current version of the False Claims Act, as amended in 1986, provides that a person who commits any of several specified violations "is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person." 31 U.S.C. § 3729(a). This action may be instituted by either the Attorney General or by a private person, the relator, in order to enforce the provisions of the False Claims Act. Id. § 3730(a), (b)(1). Primary responsibility for enforcing the False Claims Act is vested in the Attorney General, who is required to diligently investigate violations of the False Claims Act. Id. § 3730(a). The False Claims Act, however, also has a qui tam provision that allows any private person with knowledge of a violation to bring an action in his individual capacity, as a qui tam relator, and on behalf of the Government. 31 U.S.C. § 3730(b). If the Attorney General institutes the suit prior to a private person with knowledge of a violation of the False Claims Act doing the same, the qui tam provision of the False Claims Act is not implicated.
The amount of the relator's recovery is dependant upon whether the Government elects to intervene. If the Government elects to intervene, the relator may recover, subject to some limitations, "at least 15 percent but not more than 25 percent of the proceeds of the action or settlement of the claim." Id. § 3730(d)(1). The relator's recovery is significantly higher if the Government elects not to intervene. In such a situation, the relator would recover "not less than 25 percent and not more than 30 percent of the proceeds of the action or settlement." Id. § 3730(d)(2).
Having explained the False Claims Act qui tam provision and the relator's motivation for instituting a qui tam action, the court turns now to the alleged false claims.
Alleged Facts
At the time Foulds instituted this lawsuit, she was a physician and a dermatology resident employed by the dermatology clinic of the TTUHSC School of Medicine in Lubbock, Texas. Her duties required her to attend to patients admitted to University Medical Center, *868 which is controlled and supervised by the Lubbock County Hospital District, a political and taxing entity of Lubbock County whose board members are appointed by the Lubbock County Commissioner's Court.
Foulds began working for the TTUHSC School of Medicine in July of 1993 in various clinics operated by TTUHSC. While working in these clinics she would examine patients, make diagnoses, and prescribe treatment for patients. Although these duties were supposed to be performed under the supervision of staff physicians, Foulds alleges that when she began working in the dermatology department, those duties were being performed by the residents, without any supervision by staff physicians. Foulds alleges that staff physicians would not personally examine the patients, and most of the time, were not even in the clinic at the time those services were rendered to the patients. She contends that patient charts and Medicare/Medicaid billing forms were signed by the staff physicians after the residents rendered medical services certifying that the services were personally rendered by the staff physician or by the staff physician's employee under his or her personal supervision when such was not the case. According to Foulds, the charts of these patients were placed on the desk of the faculty member in charge for that day so that the chart and the Medicare/Medicaid billing form could be signed by a staff physician, using the staff physician's provider number, even though the staff physician never actually saw the patient or provided any personal and identifiable guidance to the residents. Foulds contends that approximately seventy patients per day, five days a week, were seen in this manner in the dermatology clinic prior to July 1994, and approximately eighty percent of these patients were Medicare/Medicaid patients.
Foulds' complaint chronicles the alleged errors and fraudulent claims of the staff physicians. According to Foulds, staff physicians failed or refused to review the patient's history; to personally examine the patients; to confirm or revise diagnoses; to determine the course of treatment to be followed; to ensure that the supervision needed by the interns and residents was furnished; and to review the patient's progress. She maintains that the dermatology department was not the only department making false and fraudulent claims. Foulds concludes that the departments of surgery and internal medicine were following the same practice and the combined fraudulent claims of the departments resulted in an estimated $21,840,000.00 in overpayments by the Government. As a result of bringing these things to the attention of Texas Tech and TTUHSC, Foulds alleges that she was retaliated against.
Motion to Dismiss
Texas Tech and TTUHSC have moved to dismiss this action under 12(b)(1) and/or 12(b)(6). Fed.R.Civ.P. 12. Although alternatively pleaded, the standard for granting a dismissal under each is slightly, yet importantly, different. However, the factual allegations of a complaint must be accepted as true whether a motion for dismissal is made on the basis of lack of subject matter jurisdiction or for failure to state a cause of action. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Saraw Partnership v. United States, 67 F.3d 567, 569 (5th Cir.1995); Capital Parks v. Southeastern Adver. and Sales System, 30 F.3d 627, 629 (5th Cir.1994).
Standard for Dismissal under 12(b)(1)
A 12(b)(1) motion, Fed.R.Civ.P. 12, strikes at the heart of a district court's jurisdiction and must be resolved before addressing other motions, including Rule 12 motions. Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 776, 90 L.Ed. 939 (1946). The motion is made whenever the movant asserts that the district court lacks jurisdiction over the subject matter of the lawsuit. Fed.R.Civ.P. 12(b)(1). This motion must be considered before all others because it is axiomatic that the district court loses jurisdiction to entertain other motions once it determines that it lacks jurisdiction. Menchaca v. Chrysler Credit Corp., 613 F.2d 507, 512 (5th Cir.), reh'g denied, 622 F.2d 1043, cert. denied, 449 U.S. 953, 101 S.Ct. 358, 66 L.Ed.2d 217 (1980). In such cases, those motions become moot. Peoples State Bank v. Garrett, 142 F.R.D. 438, 441 (N.D.Tex.1991).
*869 In the Fifth Circuit, a motion to dismiss for lack of subject matter jurisdiction may be granted on any of three separate bases: "(1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." Voluntary Purchasing Groups, Inc. v. Reilly, 889 F.2d 1380, 1384 (5th Cir.1989)(citing Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir.), cert. denied, 454 U.S. 897, 102 S.Ct. 396, 70 L.Ed.2d 212 (1981)). Because there are no disputed or undisputed facts which are relevant to the resolution of the motion to dismiss, the motion will be considered based solely upon the complaint.
Standard for Dismissal under 12(b)(6)
A 12(b)(6) motion is a "lineal descendant of the common law general demurrer" and is used to test the formal sufficiency of the statements of the claims for relief. 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1355 (1990). Although it is the lineal descendant of a general demurrer, actual demurrers are no longer used and have been abolished by the Federal Rules of Civil Procedure. Fed. R.Civ.P. 7(c). Notwithstanding the history of the demurrer or its descendant, a court usually will not look beyond the four comers of the pleadings to resolve a 12(b)(6) motion as this will convert the motion to dismiss into a motion for summary judgment. See Fed. R.Civ.P. 12(b); Fleischer v. United States Dep't of Veterans Affairs, 955 F.Supp. 731, 734 (S.D.Tex.1997).
Sovereign Immunity
Sovereign immunity involves two distinct rules which are not always separately recognized. One limits the reach of substantive law, the other, the jurisdiction of the courts. Seminole Tribe of Florida v. Florida, 517 U.S. 609, ___, 116 S.Ct. 1114, 1146, 134 L.Ed.2d 252 (1996)(Souter, J., dissenting) (citing 77 Harv. L.Rev. 1, 3-4 (1963)). Texas Tech and TTUHSC's motion, in so far as it relates to sovereign immunity, addresses the latter.
The Eleventh Amendment to the United States Constitution provides:
The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.
U.S. Const. amend. XI. Although the amendment expressly prohibits suits against states by citizens of other states and does not mention states being sued by their own citizens, the Supreme Court has long held that the Eleventh Amendment also bars suits by citizens of the state being sued. See Hans v. Louisiana, 134 U.S. 1, 10 S.Ct. 504, 33 L.Ed. 842 (1890); Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89, 99, 104 S.Ct. 900, 907, 79 L.Ed.2d 67 (1984); Welch v. Texas Dep't of Highways and Public Transp., 483 U.S. 468, 472-73, 107 S.Ct. 2941, 2945-46, 97 L.Ed.2d 389 (1987)(plurality opinion). There are of course exceptions to this general rule. For example: a state may consent to suit in federal court; a state may waive its right to assert immunity; or the nature of the suit may determine whether sovereign immunity is available. See, e.g., Edelman v. Jordan, 415 U.S. 651, 673, 94 S.Ct. 1347, 1360-61, 39 L.Ed.2d 662 (1974)(holding that a state's consent to suit in federal court must be unequivocally expressed); Clark v. Barnard, 108 U.S. 436, 447-48, 2 S.Ct. 878, 883-84, 27 L.Ed. 780 (1883)(holding that a state may waive its sovereign immunity); Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908)(recognizing an exception to the Eleventh Amendment when an individual sues a state officer in order to ensure that the officer's conduct is in compliance with federal law). Despite the above exceptions, however, a state's sovereign immunity is not an issue in a suit by the federal government against the state because the state has no sovereign immunity. West Virginia v. United States, 479 U.S. 305, 311, 107 S.Ct. 702, 707, 93 L.Ed.2d 639 (1987).
That Texas Tech and TTUHSC are state institutions and therefore enjoy Eleventh Amendment immunity, when not sued by the Government, is clear. Wallace v. Texas Tech Univ., 80 F.3d 1042, 1047 n. 3 *870 (5th Cir.1996)(citing Henry v. Texas Tech Univ., 466 F.Supp. 141, 144-46 (N.D.Tex. 1979).[4] What is not entirely clear is whether states or state agencies enjoy the same immunity in a qui tam action when the Government has elected not to intervene. Although apparently res nova in the Fifth Circuit, the Fourth Circuit has addressed this issue and determined that sovereign immunity is unavailable when the Government elects not to join in the qui tam action because the Government is the real party in interest.[5]United States ex rel. Milam v. University of Texas M.D. Anderson Cancer Ctr., 961 F.2d 46 (4th Cir.1992). The Second Circuit has held that the Government is the real party in interest but has not explicitly stated that sovereign immunity is unavailable to a state defendant, presumably because it determined that the relator was not the original source of information and therefore lacked standing. United States ex rel. Kreindler v. United Technologies Corp., 985 F.2d 1148 (2d Cir.) cert. denied, 508 U.S. 973, 113 S.Ct. 2962, 125 L.Ed.2d 663 (1993).
Despite the holdings of these circuits, however, Texas Tech and TTUHSC assert that the False Claims Act's qui tam provision cannot be enforced against them because of the Supreme Court's recent decision in Seminole Tribe of Florida v. Florida, 517 U.S. 44, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996). They wish to have this court find that Seminole Tribe of Florida, though not express, was a de facto overruling of the Fourth and Second Circuits' holdings. For the reasons that follow, this court finds their argument unpersuasive.
In Seminole Tribe of Florida, the Supreme Court addressed the issue of whether the "Eleventh Amendment prevent[s] Congress from authorizing suits by Indian tribes against States for prospective injunctive relief to enforce legislation enacted pursuant to the Indian Commerce Clause." Id. at ___, 116 S.Ct. at 1122. In holding that the Eleventh Amendment did prevent such suits, the Supreme Court engaged in a two step analysis. First, the Court determined whether Congress' intent to abrogate the states' immunity from suit was unmistakably clear." Id. at ___, 116 S.Ct. at 1123. After answering the first prong in the affirmative, the Court went on to the second step. The Court then asked whether the act was passed "`pursuant to a valid exercise of power.'" Id. at ___, 116 S.Ct. at 1124 (quoting Green v. Mansour, 474 U.S. 64, 68, 106 S.Ct. 423, 426, 88 L.Ed.2d 371 (1985)). Finding that it was not, the Court determined that it was without jurisdiction. Id. at ___ - ___, 116 S.Ct. at 1131-32.
Texas Tech and TTUHSC's motion to dismiss asserts that the qui tam provision of the False Claims Act is not unmistakably clear in abrogating a state's Eleventh Amendment rights, and therefore, does not pass the first step of the analysis found in Seminole Tribe of Florida. Texas Tech and TTUHSC's reliance upon Seminole Tribe of Florida is misplaced and this court need not address its holding because the defense of sovereign immunity is unavailable. This court is of the opinion that the Fourth Circuit's holding in United States ex rel. Milam is sound and should be followed. The Government is the real party in interest to this qui tam action. Therefore, sovereign immunity is unavailable and the Supreme Court's analysis and holding in Seminole Tribe of Florida has no bearing upon this case.
Therefore, Texas Tech and TTUHSC's motion to dismiss for lack of subject matter *871 jurisdiction, as it relates to sovereign immunity, is DENIED.
Eleventh Amendment and Section 3730(h)
Texas Tech and TTUHSC argue that the anti-retaliation provision of the False Claims Act, § 3730(h), does not waive their sovereign immunity, even if this court finds that the Government is the real party in interest, because there can be no injury to the Government in a retaliation claim, and therefore, the real-party-in-interest analysis does not apply. Although no case was cited for this bold assertion, two cases were cited for the proposition that subsection (h) of section 3730 does not abrogate a state's Eleventh Amendment immunity. United States ex rel. Moore v. University of Michigan, 860 F.Supp. 400 (E.D.Mich.1994); Wilkins ex rel. United States v. State of Ohio,[6] 885 F.Supp. 1055 (S.D.Ohio 1995). Notwithstanding these cases and their holdings, they must be considered in light of the rationale behind the False Claims Act.
The Fifth Circuit has well stated the purpose behind section 3730(h) and the False Claims Act to discourage fraud against the Government and to encourage those with knowledge of fraud to come forward. Robertson v. Bell Helicopter Textron, Inc., 32 F.3d 948, 951 (5th Cir.1994), cert. denied, 513 U.S. 1154, 115 S.Ct. 1110, 130 L.Ed.2d 1075 (1995). If the Government is the real party in interest, then there is no logical reason why sovereign immunity should prevent a relator from utilizing section 3730(h) when a state or state agency is the defendant. If section 3730(h) is eviscerated, then the Government is truly the one that will suffer the greatest harm. This is because a "whistleblower" will not be encouraged to come forward with information for fear of being retaliated against. Accordingly, Texas Tech and TTUHSC's 12(b)(1) motion is DENIED.
A State Must be a "Person" Within the Meaning of the False Claims Act
Having addressed the issue of whether Texas Tech and TTUHSC are immune from suit because of their status as state institutions, and having found that they are not entitled to sovereign immunity, the court turns now to unraveling the mystery of what is a "person" for purposes of the False Claims Act. The False Claims Act does not define the word person. See 31 U.S.C. § 3729. Ordinarily, "`in common usage, the term "person" does not include the sovereign, [and] statutes employing the [word] are ordinarily construed to exclude it.'" Will v. Michigan Dep't of State Police, 491 U.S. 58, 64, 109 S.Ct. 2304, 2308, 105 L.Ed.2d 45 (1989) (holding that "person" in 42 U.S.C. § 1983 does not include states)(quoting Wilson v. Omaha Indian Tribe, 442 U.S. 653, 667, 99 S.Ct. 2529, 2537, 61 L.Ed.2d 153 (1979)). Although this "clear statement rule," as it has been called, would seem to indicate that a state or state agency cannot be sued under the False Claims Act, this would be an illogical step to make in light of this court's finding that the Eleventh Amendment does not bar Fould's suit against Texas Tech and TTUHSC. The Fifth Circuit's recent decision in Searcy, 117 F.3d at 156, indicates that the Fourth Circuit's holding that the Government is the real party in interest is correct and will be followed in the future. Therefore, to find that Texas Tech and TTUHSC are not persons under this qui tam statute would be allowing them to assert sovereign immunity again, this time bringing it through the back door. Until the Fifth Circuit indicates otherwise, this court is unwilling to find that Texas Tech and TTUHSC are not persons under the statute. Therefore, the court DENIES Texas Tech and TTUHSC's 12(b)(6) motion.
SO ORDERED.
NOTES
[1] The term "qui tam" derives from the Latin phrase "qui tam pro domino rege quam pro si ipso in hac parte sequitur," meaning, "Who sues on behalf of the King as well as for himself." Black's Law Dictionary 1251 (6th ed.1990). Thus a qui tam action is one "brought by an informer, under a statute which establishes a penalty for the commission or omission of a certain act, and provides that the same shall be recoverable in a civil action, part of the penalty to go to any person who will bring such action and the remainder to the state or some other institution." Id.
[2] A "relator" is an informer plaintiff and "[a] party in interest who is permitted to institute a proceeding in the name of the People or the Attorney General when the right to sue resides solely in that official." Black's Law Dictionary 1289 (6th ed. 1990).
[3] Foulds' complaint actually sues Texas Tech Health Sciences Center rather than Texas Tech University Health Sciences Center. The court finds this to be a misnomer as Texas Tech University Health Sciences Center is the party who received service and one of the parties to the motion to dismiss.
[4] The text of Henry v. Texas Tech University, 466 F.Supp. 141 (N.D.Tex.1979), refers to both Texas Tech University and Texas Tech University School of Medicine enjoying sovereign immunity. This privilege applies to Texas Tech University Health Sciences Center as well, as the Texas legislature changed the name of Texas Tech University School of Medicine to Texas Tech University Health Sciences Center. See Act of May 18, 1979, 66th Leg., R.S., ch. 319, § 1, 1979 Tex. Gen. Laws 724, 724.
[5] In Searcy v. Philips Electronics North America Corp., 117 F.3d 154 (5th Cir.1997), the Fifth Circuit, in dictum, seemed to imply that it would follow the Fourth Circuit's holding in United States ex rel. Milam v. University of Texas M.D. Anderson Cancer Center, 961 F.2d 46 (4th Cir. 1992). The focus of the Searcy court, however, was not on whether the Government was a real party in interest during the trial, but whether the Government was a party for appellate purposes even when it elected not to intervene but wished to challenge a settlement between the relator and defendant. Searcy, 117 F.3d at 157, 158.
[6] Usually an "ex rel." lawsuit is captioned with the governmental entity, usually the United States of America or a state, preceding the name of the relator, such that the caption of this case would normally be United States ex rel. Wilkins v. State of Ohio. Black's Law Dictionary 582 (6th ed. 1990). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1948196/ | 187 N.J. Super. 25 (1982)
453 A.2d 556
STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
WILLIE LEE LAWSON, DEFENDANT-APPELLANT.
Superior Court of New Jersey, Appellate Division.
Submitted July 1, 1982.
Decided August 5, 1982.
Before Judges BOTTER, ARD and KING.
Stanley C. Van Ness, Public Defender of New Jersey, attorney for appellant, (Thomas Menchin, Deputy Public Defender, of counsel and Edward S. Peranio on the brief).
*26 Irwin I. Kimmelman, Attorney General of New Jersey, attorney for respondent, (George L. Schneider, Essex County Prosecutor, of counsel and Marc J. Friedman, Deputy Attorney General, on the letter brief).
The opinion of the court was delivered by KING, J.A.D.
This case presents the issue of the right of the State to have a bullet surgically removed from a suspect's body for use as evidence in a murder prosecution. Because the issue is important and has not been addressed in this State, we granted defendant's motion for leave to appeal from the Law Division order of May 4, 1982. R. 2:5-6.
That order granted the State the right to proceed by surgical means to extract a metallic object, suspected to be a .38-calibre bullet, lodged in the soft tissue of defendant's thigh. We have chosen to accelerate the matter and reach the merits. R. 2:11-2.
On December 11, 1980 defendant was indicted for the murder of a Newark police officer and other related crimes committed during a bank robbery on December 6, 1980. He promptly confessed. Thereafter, on January 14, 1981 defendant, through his counsel, filed a notice of alibi, R. 3:11, contending that he was not at the scene of the bank robbery. The prosecutor's interest in retrieving the bullet thereupon heightened. On May 13, 1981 the State moved for judicial permission to compel defendant to submit to a physical examination, x-rays and ultimately surgery for removal of the suspected bullet.
The State's application for surgical intervention contained a verified petition alleging that defendant had been arrested on the day of the homicide and "had given a sworn statement to police in which he admitted his participation in the robbery of the Howard Savings Bank and the murder of Police Officer Gottfried." In that statement defendant also had admitted being shot in the left leg by Officer Gottfried during an exchange *27 of gunfire during the robbery. On the day after his arrest, defendant had been taken to College Hospital for treatment of the gunshot wound in his left thigh. An x-ray of his thigh revealed a metallic object which appeared to be a .38-calibre slug.
Based on the probable cause established by the prosecutor's verified petition, the judge ordered a medical examination by Dr. Donald Brief, a general surgeon, and an x-ray examination. Thereafter, he reported as follows:
I have reviewed the films and the accompanying records in the matter of Willie Lawson. The bullet lies in the soft tissues in the posteromedial side of the upper thigh inferior to the ischiac tuberosity. In this location it is readily accessible and is not in bone. It can be removed without jeopardizing limb function or circulation to the limb. I do not think surgery imposes any unusual problems in this matter.
In June Dr. Brief, upon re-examination filed a follow-up report stating, "The position of the bullet [is] unchanged" from February, and repeating, "using proper localization procedures pre-operatively in the x-ray department with the insertion of needles to further secure the position of the metallic object, this bullet can be safely removed without threatening the patient's life or jeopardizing his limb."
In the fall of 1981 an evidentiary proceeding was conducted. Dr. Brief, a graduate of Harvard Medical School, who received his surgical training at the Peter Bent Brigham Hospital and was board-certified in general surgery, testified. He said that the patient would be placed in the safe lithotomy position with the legs flexed. Then, "through a relatively small incision in the back of the thigh the bullet would ... be extracted with minimal tissue damage." He said that the bullet was not lodged in the bone, nor was it near any major nerve or vascular structure. The bullet was three-quarters to one inch below the surface of the skin. Local anesthesia could be used if the patient cooperated; if not, general anesthesia would be used. The doctor conceded that there was no medical reason to remove the bullet presently. However, it might cause trouble in the future. The proposed operation, said Dr. Brief, "will produce no *28 functional impairment of the limb and is not a serious operation in ... itself," adding, that "from a surgical point of view it's [a] relatively minor procedure" taking about one-half hour at most. He estimated blood loss at 15 to 20 cubic centimeters, "a teaspoonful or two." The incision would be two to three inches long. There would be some temporary, mild discomfort post-surgically but no permanent residual other than very minimal added scarring.
Dr. Howard Kortis, a board-certified anesthesiologist, also testified. He concluded that this procedure should be done under local anesthesia but agreed that lack of cooperation by the patient might require resort to general anesthesia. Even under general anesthesia, the risk to defendant "would be about the same as walking across the street and getting hit by a car negligible risk, if any." Dr. Kortis concluded that "there is essentially no difference" in the degree of risk to this defendant whether general or local anesthesia is used since he appeared to be in Class One, or the lowest-risk category on the standard medical scale. The defendant offered no testimony.
In his written opinion the Law Division judge properly recognized that the right against self-incrimination was not here implicated. Schmerber v. California, 384 U.S. 757, 86 S.Ct. 1826, 16 L.Ed.2d 908 (1966). He considered four factors relevant to the request for a surgical retrieval of the evidence: (1) the serious nature of the crime, (2) probable cause that defendant committed the crime, (3) relevance and impact of the evidence on the issue of guilt and (4) the degree of risk to defendant and the magnitude of the surgical intervention. The judge concluded from the proofs that "based upon reasonable medical certainty ... the bullet can be removed from defendant's body with virtually no risk ... caused by the utilization of a local anesthetic." He further concluded that the proposed surgery "does not shock the conscience of the court and does not offend those canons of decency and fairness sought to be preserved by our Federal and State Constitutions." In addition to authorizing surgery under local anesthesia, the order stated that "should *29 defendant offer any resistance ... the surgeon may take such appropriate and necessary steps as would be utilized in accordance with accepted medical standards and practices, to control any difficult patient under similar circumstances," having due regard for the defendant's well being.
We are satisfied that the record supports the Law Division judge's order. This is not conduct, as Justice Frankfurter said, "too close to the rack and the screw to permit of constitutional differentiation." Rochin v. California, 342 U.S. 165, 172, 72 S.Ct. 205, 209, 96 L.Ed. 183 (1952) (stomach pumped to secure evidence of ingested narcotics). Rather, we conclude that the procedure here proposed falls on the constitutionally-permissible side of the due process standard announced in Schmerber v. California, supra 384 U.S. at 772, 86 S.Ct. at 1836, and constitutes "a minor intrusion into an individual's body under stringently limited conditions" in a medical environment. See also, Breithaupt v. Abram, 352 U.S. 432, 77 S.Ct. 408, 1 L.Ed.2d 448 (1951).
The State has not proceeded unilaterally or imperiously but has triggered a judicial, adversarial hearing in which defendant had the full right to question the proposed procedure and offer evidence. Defendant has been afforded prompt, preoperative appellate review. See United States v. Crowder, 543 F.2d 312, 316-317 (D.C. Cir.1976) (en banc) cert. den. 429 U.S. 1062, 97 S.Ct. 788, 50 L.Ed.2d 779 (1977); State v. Overstreet, 551 S.W.2d 621, 626 (Mo.Sup.Ct. 1977), similar cases where the courts held that the availability of an adversarial hearing and prompt appellate review were salutary aspects of procedural due process. The surgical procedure here proposed is relatively minor; general anesthesia will be needed only if defendant is uncooperative; the charge is serious and the evidence highly relevant.
Courts throughout the country have generally approved procedures to recover bullets from the bodies of criminal suspects in prosecution of serious cases where the slug was lodged close to the skin surface, the operative procedure was minor, minimal risk was posed, local anesthesia was employed, and no residual disability would ensue to the suspect. United States v. Crowder, *30 supra (bullet just below skin); Doe v. State, 409 So.2d 25 (Fla. Dist. Ct. App. 1982) (bullet 1/2 inch below skin); Creamer v. State, 229 Ga. 511, 192 S.E.2d 350 (Sup.Ct. 1972) (bullet in fatty, subcutaneous tissue in chest); Allison v. State, 129 Ga. App. 364, 199 S.E.2d 587 (Ct.App. 1973) (superficially lodged beneath skin); State v. Richards, 585 S.W.2d 505 (Mo. Ct. App. 1979) (bullet in hip flesh four inches below surface); contra, Adams v. State, 260 Ind. 663, 299 N.E.2d 834 (Sup.Ct. 1973), cert. den. 415 U.S. 935, 94 S.Ct. 1452, 39 L.Ed.2d 494 (1974) (per se rule against any surgical intrusion established by a 3-2 decision). Where serious or major surgery was required, judicial permission for surgery has been refused. See Bowden v. State, 256 Ark. 820, 510 S.W.2d 879 (Sup.Ct. 1974) (bullet in spinal canal); People v. Smith, 80 Misc.2d 210, 362 N.Y.S.2d 909 (Sup.Ct. 1974) (bullet lodged underneath the muscles of the chest wall); see also State v. Allen, 291 S.E.2d 459 (S.C. 1982).
We are satisfied that the Law Division order entered by Judge Martino adequately protects defendant's rights in the circumstances of this proposed minor surgical procedure. His order is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2021966/ | 404 N.E.2d 585 (1980)
William JOHNSON and Connie Johnson, Appellants,
v.
ST. VINCENT HOSPITAL, INC., St. Vincent Emergency Physicians, Inc., Stephen Watson, Robert A. Blackburn, and H. Pete Hudson, Commissioner of Insurance of the State of Indiana, Appellees. Sharon S. Bova and Joseph A. Bova, Husband and Wife, Appellants,
v.
CHESTER KMAK, M.D., Robert Goldstone, M.D., and Broadway Methodist Hospital, Inc., a Corporation, Appellees. Abed Mansur, Appellant,
v.
DONALD J. CARPENTER, M.D., Indiana Department of Insurance, and H.P. Hudson, As Commissioner of Insurance, Appellees. Carl W. Hines and Andrew J. Fetsch, As Special Administrators of the Estate of Paula J. Hines, Carl W. Hines, Individually, and Karen Kay Hines, Sandra Carol Hines and William Walter Hines by Carl W. Hines, Their Mutual Guardian and Best Friend, Appellants,
v.
Elkhart General Hospital and E.L. Fosbrink, M.D., Appellees.
Nos. 1078 S 216, 779 S 178, 379 S 79, and 1179 S 315.
Supreme Court of Indiana.
May 16, 1980.
*588 Forrest Bowman, Jr., Indianapolis, for appellants Johnson.
Karl J. Stipher, James H. Ham, III, Indianapolis, for amicus curiae Indiana State Medical Association.
James J. Stewart, Edward Squier Neal, Indianapolis, for appellee Robert Blackburn.
Geoffrey Segar, Ralph A. Cohen, Indianapolis, for appellee St. Vincent Hospital, Inc.
Aribert L. Young, Donald L. Dawson, Peter G. Tamulonis, Indianapolis, for appellees St. Vincent Emergency Physicians Inc. and Stephen Watson.
Theodore L. Sendak, Atty. Gen., Robert J. Black, Deputy Atty. Gen., Indianapolis, for appellee H.P. Hudson, Commissioner of Insurance of the State of Indiana.
Timothy S. Schafer, Merrillville, for appellants Bova.
David C. Jensen, Hammond, for appellee Robert Goldstone.
Lester F. Murphy, East Chicago, for appellee Chester Kmak.
Jon F. Schmoll, James D. McQuillan, Gary, for appellee Broadway Methodist Hospital.
Theodore L. Sendak, Atty. Gen., Dan S. LaRue, Deputy Atty. Gen., Indianapolis, for Attorney General.
John J. Dillon, William T. Rosenbaum, Indianapolis, for amicus curiae Rockwood Insurance Company and Independent Insurance Agents of Indiana.
Mark W. Gray, Indianapolis, for amicus curiae Indiana Hospital Association.
Saul I. Ruman, Hammond, for amicus curiae Indiana Trial Lawyers Association.
J.B. Smith, Timothy F. Kelly, Randall J. Nye, Hammond, for appellants Hines and Fetsch.
Vernon J. Petri, John J. Fuhs, Spencer, Leon D. Cline, William H. Stone, Columbus, for appellant Mansur.
*589 Geoffrey Segar, Indianapolis, for amicus curiae Indiana Medical Federation.
Karl J. Stipher, James H. Ham, III, Indianapolis, for amicus curiae Indiana State Medical Association.
Arthur A. May, Thomas J. Hall, South Bend, for appellees Elkhart General Hospital and E.L. Fosbrink.
James J. Stewart, Edward Squier Neal, Indianapolis, for appellee Donald Carpenter.
DeBRULER, Justice.
In these cases we consider the constitutionality of aspects of the Indiana Medical Malpractice Act. Ind. Code §§ 16-9.5-1-1 through 16-9.5-10-5. Appellants Johnson brought their medical malpractice claim for death of a minor child occurring in the aftermath of a tonsillectomy in the trial court without first submitting it to a medical review panel for an opinion as required by the Act. Ind. Code § 16-9.5-9-2. The complaint included a separate paragraph seeking a declaratory judgment upon the constitutionality of the statute. Upon their summary judgment motion the trial court determined that the statute governed the claim, upheld the statute, and then dismissed their complaint upon motion of appellees.
Appellants Bova brought their claim for medical malpractice in the trial court for wrongful injury to the ureter and kidney of Mrs. Bova occurring as a consequence of a hysterectomy. This complaint was also filed in the trial court without first submitting it to a review panel as required by the Act, and included a paragraph of complaint for declaratory judgment upon the constitutionality of the statute. The trial court found the Act governing, the Act consistent with the Constitution, and the motion of appellees for summary judgment for noncompliance with the Act well taken.
Appellant Mansur brought his claim for wrongful injury and loss of vision to his right eye resulting from the negligence of a physician in examining, treating, and diagnosing him. He also challenged the Act in a paragraph of his complaint on constitutional grounds. The trial court determined that the claim was subject to the Act, that the Act was constitutional, and that the malpractice claim should be dismissed because claimant had not complied with the provisions of the Act.
The Hines case involves a claim seeking damages for the wrongful death of Paula J. Hines on behalf of her husband and dependent children, such death being attributed to the negligence of her physician and the hospital in providing her with treatment and care. The trial court dismissed the complaint, finding that the Act was constitutional, and that appellant had failed to comply with its requirements. This case was previously filed in the Federal District Court and was dismissed for failure to comply with the Indiana Act. That court found the Act constitutional. Hines v. Elkhart General Hospital et al.., (N.D.Ind. South Bend Div., 1979) 465 F. Supp. 421. The district court's judgment was affirmed on August 3, 1979.
Pursuant to Ind.R.App.P. 4(A)(10) we have permitted transfer to this Court. These appeals were heretofore consolidated for the purposes of argument and are now consolidated for opinion.
In the Mansur case a great deal of proof descriptive of the conditions in the health care and insurance industries which gave rise to the Act was brought forth and developed at a trial for constitutional purposes. Immediately prior to its enactment seven of the ten insurance companies writing the majority of medical malpractice insurance policies in the State ceased or limited writing such insurance because of unprofitability or an inability to calculate an adequate premium. Premiums had already increased as much as 1200 percent over a period of fifteen years because of the increase in the number and size of claims. Physicians practicing high risk specialties such as anesthesiology were hard pressed or totally unable to purchase insurance coverage. In some rural areas surgery was reported cancelled. Emergency services were discontinued at some hospitals. Health care providers *590 had become fearful of the exposure to malpractice claims and at the same time were unable to obtain adequate malpractice insurance coverage at reasonable prices.
According to the Legislature's appraisal, these conditions implicated the vital interests of the community in the availability of the professional services of physicians and other health care providers. The Legislature responded with this Act in an effort to preserve those services and thereby to protect the public health and wellbeing of the community. It reflects a specific legislative judgment that a causal relationship existed at the time between the settlement and prosecution of malpractice claims against health care providers and the actual and threatened diminuation of health care services. The exceptionally high cost and even unavailability of malpractice insurance were major links in the relational chain. They in turn were connected through the large settlements and judgments being paid to patients. To the extent that these sums were excessive or unjustifiable, they had become so large because the processes by which evidence of negligent conduct was being gathered, evaluated, and used were faulty. Subsidiarily, these sums were being unnecessarily increased because the habitually negligent health care providers were not being identified and dealt with, very large attorney fees were being charged, and the time limitations upon bringing malpractice actions were too long.
With these judgments as its basis the Act created voluntary state-sponsored liability insurance for doctors and other health care providers, created a patient compensation fund, took measures to prevent injuries to patients through the negligence of health care providers, and subjected negligence claims against health care providers to special controls limiting patient remedies.
The issue in this appeal is whether those special controls and limitations are consistent with the guarantees of the Indiana and Federal Constitutions. Appellants complain of the following features of the Act:
(I) Before filing suit in court, plaintiffs must submit their complaints to the Commissioner for consideration by a medical review panel. The panel renders an opinion which is admissible at trial. Appellants contend these and related provisions violate the (A) jury trial provisions of Art. I, § 20, of the Indiana Constitution; (B) due process and (C) equal protection clauses of the Fourteenth Amendment, and the Indiana Constitution, the rights and privileges clause of Art. I, § 23, of the Indiana Constitution; and (D) the separation of powers doctrine of Art. III, § 1, of the Indiana Constitution.
(II) Recovery in malpractice cases is limited to $500,000 when health care provider has elected to come under the Act. Appellants challenge this limitation relying upon the due process and equal protection clauses of the Fourteenth Amendment and the Indiana Constitution, the rights and privileges clause of Art. I, § 23, of the Indiana Constitution, the right to trial by jury guaranteed by Art. I, § 20, of the Indiana Constitution.
(III) Attorney fees to be paid plaintiff's attorney are limited by the Act. This limitation is challenged as contrary to the due process and equal protection clauses of the Fourteenth Amendment and the Indiana Constitution.
(IV) The time in which a malpractice action may be brought is severely limited by the Act. This limitation is challenged as contrary to the guarantee of the due process and equal protection clauses of the Fourteenth Amendment and the Indiana Constitution.
(V) The plaintiff's complaint may not ask for a specific amount in the prayer. This limitation is challenged as contrary to the due process and equal protection clauses of the Fourteenth Amendment and the Indiana Constitution, the free speech and writing provision of Art. I, § 9, of the Indiana Constitution, the separation of powers mandate of Art. III, § 1, of the Indiana Constitution, and it furthermore conflicts with the trial rules.
(VI) The Act provides for the creation and management of a patient's compensation fund. This provision is challenged *591 as contrary to the prohibition against special legislation in Art. IV, § 23, of the Indiana Constitution and Art. XI, § 12, of the Indiana Constitution which prohibits the State from giving or loaning its credit in aid of any person.
The records before us amply demonstrate that the four trial courts below were vested with authority to adjudicate the many constitutional claims; that appellants had standing to assert those claims; and that the claims themselves were fully litigated in a suitable adversarial atmosphere and permit of reasonable judicial resolution. Board of Commissioners of Howard Co. v. Kokomo City Plan Commission, (1975) 263 Ind. 282, 330 N.E.2d 92. Plaintiffs below, appellants here, sought to litigate their claims directly in court and were turned away because specific requirements of the statute, not previously imposed by law upon them, had not been followed. No avenue to dispose of these cases on non-constitutional grounds have been suggested by the parties and we perceive of none. Reilly et al. v. Robertson, et al., (1977) 266 Ind. 29, 360 N.E.2d 171; Passwater v. Winn, (1967) 248 Ind. 404, 229 N.E.2d 622.
In considering these constitutional challenges, we accord this Act with every reasonable presumption supporting its validity and place the burden upon the party challenging it to show unconstitutionality. Sidle v. Majors, (1976) 264 Ind. 206, 341 N.E.2d 763; Robertson v. Reilly, supra. Before a statute will be declared repugnant to the Constitutions its fatal constitutional defects must be clearly apparent. Board of Commissioners of Howard Co. v. Kokomo City Plan Commission, supra. A statute is not unconstitutional simply because the court might consider it born of unwise, undesirable, or ineffectual policies. Sidle v. Majors, supra; Reome v. Edwards, (1948) 226 Ind. 229, 79 N.E.2d 389.
Medical malpractice acts similar in nature and scope to Indiana's Act have recently been enacted in other states. The vast majority of state and federal appellate level courts have found them consistent with due process, equal protection, and jury trial guarantees. Attorney General of Maryland v. Johnson, (1978) 282 Md. 274, 385 A.2d 57; Carter v. Sparkman, (1976) Fla., 335 So.2d 802; Comiskey et al. v. Arlen et al., (1976) 55 A.D.2d 304, 390 N.Y.S.2d 122; Eastin v. Broomfield, (1977) 116 Ariz. 576, 570 P.2d 744; Everett v. Goldman, (1978) La., 359 So.2d 1256; Parker v. Children's Hospital of Philadelphia, (1978) 483 Pa. 106, 394 A.2d 932; Paro v. Longwood Hospital, (1977) Mass., 369 N.E.2d 985; Prendergast v. Nelson, (1977) 199 Neb. 97, 256 N.W.2d 657; State ex rel. Strykowski et al. v. Wilkie, (1978) 81 Wis.2d 491, 261 N.W.2d 434; Woods v. Holy Cross Hospital et al., (5th Cir.1979) 591 F.2d 1164. The highest courts of two states have held such acts unconstitutional. Arneson v. Olson, (1978) N.D., 270 N.W.2d 125; Wright v. Central Dupage Hospital Ass'n, (1976) 63 Ill.2d 313, 347 N.E.2d 736. None of these opinions is, of course, binding upon this Court; however, the reasoning in them has been useful.
I.
A.
Some appellants contend that impermissible delay and expense in getting to jury trial result from the requirement of the Act that the malpractice claim be submitted to a panel for an opinion. Indiana Code § 16-9.5-9-2, provides that:
"No action against a health care provider may be commenced in any court of this state before the claimant's proposed complaint has been presented to a medical review panel ... and an opinion is rendered by the panel."
Indiana Code § 16-9.5-9-3.5(a) provides that:
"The panel shall render its expert opinion within one hundred eighty (180) days of the selection of the last member."
Compensation of panel members and the chairperson may not exceed an aggregate of $1250 plus reasonable travel expenses and such fees "shall be paid by the side in whose favor the majority opinion is written." Further costs to the parties will result from the requirement that they submit *592 their evidence to the panel promptly. Ind. Code § 16-9.5-9-4. Appellants invoke Art. I, § 20, of the Indiana Constitution which guarantees that "In all civil cases, the right of trial by jury shall remain inviolate."
In Hayworth v. Bromwell, (1959) 239 Ind. 430, 158 N.E.2d 285, this Court concluded that former Rule 1-8A of this Court fixing the time within which a request for trial by jury must be made did not violate the right to trial by jury, saying:
"The provision of the Constitution of Indiana that the right to a trial by jury in all civil cases shall remain inviolate means that the substantial elements and incidents, which pertained to a trial by jury at common law, shall not be altered or changed by the Legislature or the courts and are preserved in substance as they existed at common law." 239 Ind. 437, 158 N.E.2d at 288.
"[I]t is the substance of the right which `shall remain inviolate,' not the manner in which it is exercised or waived." 239 Ind. at 435, 158 N.E.2d at 287.
That rule imposed a waiver of the right upon the failure to timely request a jury trial. Pursuant to the rule the decision to exercise the right was required to be made at a time certain during the pretrial period. The rule can be harsh in application where events occurring after a waiver create a need for a jury trial as the right could not thereby be resurrected. Nevertheless this waiver rule was held not to be a substantial impairment of the right and to be a reasonable regulation of it. In Warren v. Indiana Telephone Co., (1940) 217 Ind. 93, 26 N.E.2d 399, the claim that the Workmen's Compensation Act abrogated the right to trial by jury was rejected because the employee voluntarily elected to be bound by the Act and therefore "is in no position to complain that his right to a jury trial is no longer available to him." Nevertheless, as a practical matter the right of the workman was significantly burdened by the statutory presumption of such election from the failure to give a formal written notice of exemption.
It is quite clear that the Malpractice Act does not take away the right to a jury trial. The right is fully accorded after the delay and expense occasioned by the panel submission requirement. We must therefore attempt to assess the import of the requirement upon the right. In the Hayworth and Warren cases the right was subject to being entirely lost due to unknowing inaction by a party. Loss of the right is not within the risk created by the Malpractice Act.
Delay in the commencement of a trial and the expense of investigating and marshalling evidence are part and parcel of the preparation of any piece of civil litigation. Delay routinely occurs between the decision to prosecute a claim and the trial. Expenses for investigation and preparation attend the pre-trial preparation of all claims. The panel submission requirement generates evidence admissible at a future trial of the claim. The delay in the trial occasioned by this process and the cost attendant to it are in major part like those to be expected in any case. The participation by the parties in the panel processes will satisfy to a great extent their preparation needs. Such satisfaction will tend to reduce total aggregate time for trial preparation. Thus, the delay complained of will be offset to an appreciable extent. The cost to the party in whose favor the opinion is rendered would be in the range that such party would expect to pay to develop such evidence individually. And the cost to the party against whom the opinion is rendered has been subjected to a cost by the process which would be much the same as he expects to pay to discover his opponent's evidence. The panel submission requirement does impinge upon the right to trial by jury, but in so doing does not alter or change and does not impair the right contrary to constitutional limitation. The delay and expense complained of does not alter or change the substantial elements and incidents of the jury trial right for either party.
Relying upon the same constitutional right to trial by jury some appellants contend that the panel opinion will by its biased character and special potent probative *593 force when presented to the jury as part of the evidence violate the guarantee of the right to trial by jury. Indiana Code § 16-9.5-9-3, provides in part that:
"The medical review panel shall consist of one (1) attorney and three (3) health care providers."
According to appellants the opinion of the panel will be biased in favor of the health care provider against whom the complaint has been lodged. There is a large degree of speculation here. Each side to the controversy is entitled to select one of the panel members. The attorney chairperson will be committed by reasons of training and professional experience and standing to urge adherence to fair procedures and standards. These structural features will tend to ameliorate any tendency toward bias. And moreover, if there is a risk that the panel opinion will favor the health care provider, as perceived by appellants, simply by reason of the makeup of the panel, the jury can be made aware of it through articulate and imaginative advocacy. We are convinced that the jury drawing upon its collective experience and good sense, and under the oath to well and truly try the cause, will be fully capable of according the panel opinion the weight and credit to which it is justly entitled. The statute insofar as it permits the opinion of the panel of health care providers to be admitted in evidence does not constitute a substantial and impermissible restriction upon the right to trial by jury.
Appellants next argue that the practical effect of the introduction of a panel opinion unfavorable to the plaintiff is to increase the plaintiff's burden of persuasion before the jury, and is consequently violative of the right to trial by jury. It is fairly to be argued that the verdict of the jury will depend upon the impact of the panel's "expert opinion", and that the plaintiff must overcome such impact if he is to win. This effect, however, cannot be separated from the trial as a whole if its impact is to be fairly assessed. No panel opinion unfavorable to a plaintiff can reach the jury unless plaintiff has first presented a prima facie case, i.e., that he has presented evidence from which a reasonable trier of fact could reasonably conclude that the elements of the claim have been shown including the breach of duty by the health care provider defendant. It would be an exceedingly rare case in which expert testimony would not be included in the prima facie case. When after the prima facie case has been made and the panel opinion introduced by defendant, the jury considers its verdict, it will then weigh the competing expert opinions. For our purposes here we do not find this situation significantly different from the situation in which a plaintiff presents but a lone general practitioner witness and the defendant then fields three distinguished specialists. The legal burden of persuasion has remained the same, but the task of the plaintiff to persuade has been increased enormously. The increased expenditure of money and effort required in such circumstances to convince the jury that plaintiff should prevail is consonant with our adversary system and the constitutional guarantee of the right to trial by jury.
B.
Appellants contend that the delay and expense attendant to the panel submission requirement denies them due process and due course of law and access to the courts guaranteed by Art. I, § 12, of the Indiana Constitution and the Fourteenth Amendment.
This requirement bars the malpractice claimant from commencing his case in court until the review panel has rendered its opinion. To this delay is added the expense to the party in whose favor the opinion goes. Later this opinion can undoubtedly influence the outcome of any subsequent trial if introduced into evidence.
The Supreme Court of the United States has described the manner in which courts consider the authority of legislatures to alter common law rules:
"A person has no property, no vested interest, in any rule of the common law. That is only one of the forms of municipal law, and is no more sacred than any *594 other. Rights of property which have been created by the common law cannot be taken away without due process; but the law itself, as a rule of conduct, may be changed at the will or even at the whim of the legislature, unless prevented by constitutional limitations. Indeed, the great office of statutes is to remedy defects in the common law as they are developed, and to adapt it to the changes of time and circumstances." Munn v. Illinois, (1877) 94 U.S. 113, 24 L.Ed. 77, quoted in Hurtado v. State of California, (1884) 110 U.S. 516, 531, 4 S.Ct. 111, 119, 28 L.Ed. 232.
This same basic state legislative authority was addressed in the context of notice statutes and statutes of limitation limiting common law remedies by Justice Shake in Sherfey v. City of Brazil, (1937) 213 Ind. 493, 13 N.E.2d 568, thusly:
"If appellant is entitled, under the Constitution, to the enforcement of his common-law action, free of any legislative restraint, then the General Assembly possesses no power to prescribe any limit within which such actions shall be brought. Such a conclusion is wholly untenable." 213 Ind. at 508, 13 N.E.2d at 574.
The Medical Malpractice Act deals with the responsibility as between health care provider and patient. The relationship of health care provider and patient imposes on the health care provider a common law legal duty. The nature and extent of that duty may be modified by legislation. Hence, the Legislature may also validly act to restrict the remedy available for a breach of that duty. This challenged provision of the Act may not be regarded as repugnant to due process simply because it alters the standing manner of achieving a remedy in court, or because it restricts a longstanding remedy.
In dealing with the constitutionality of a statute of our State, we do not sit to judge the wisdom or rightness of its underlying policies. When a state legislature enacts a statute such as this which is related to the public health and welfare, such statute in order to be consistent with due process "need not be in every respect logically consistent with its aims to be constitutional. It is enough that there is an evil at hand for correction, and that it might be thought that the particular legislative measure was a rational way to correct it." Williamson v. Lee Optical of Oklahoma, (1955) 348 U.S. 483, 487-88, 75 S.Ct. 461, 464, 99 L.Ed. 563. Cf. Steup et al. v. Indiana Housing Finance Authority, (1980) Ind., 402 N.E.2d 1215.
The Legislature was undoubtedly moved because of its appraisal that the services of health care providers were being threatened and curtailed contrary to the health interests of the community because of the high cost and unavailability of liability insurance. This cost and unavailability was in turn in part the product of an increase in the number of malpractice claims and large judgments and settlements in connection with them, and that they were in turn in part the result of the fact that medical opinion, as free from influence and prejudice as possible under the circumstances, was not readily available to the parties and to the courts. The requirement of the statute that malpractice claims be first submitted to a medical panel for evaluation is one reasonable means of dealing with the threatened loss to the community of health care services in this situation. Everett v. Goldman, supra; Paro v. Longwood Hospital, supra.
Article I, § 12, of the Indiana Constitution states:
"All courts shall be open; and every man, for injury done to him in his person, property, or reputation, shall have remedy by due course of law. Justice shall be administered freely, and without purchase; completely and without denial; speedily, and without delay."
Appellants have also contended that Ind. Code § 16-9.5-9-2, which provides that "No action against a health care provider may be commenced in any court of this state before the claimant's proposed complaint has been presented to a medical review panel ... and an opinion is rendered by the panel" is contrary to the *595 guarantee of Art. I, § 12, that they should have access to the courts. As appellants construe this part of the statute no personal jurisdiction over the health care provider may be acquired in a tribunal having authority to adjudicate the merits of their claims before the panel produces its opinion. We agree with this construction. The medical review panel does not adjudicate the merits of the claim. The filing of a proposed complaint with the commissioner pursuant to Ind. Code § 16-9.5-9-1, and the delivery of copies thereof to the health care providers named in the complaint would not give any court personal jurisdiction over the named defendants. Appellants point out that during the period of time in which the medical review panel is engaged in its functions, the claimant is subjected to the loss of his entire case if the defendant should become unamenable to service of process from a court. Given the maintenance by the Legislature of the malpractice claim and the remedy through the adjudicative process in court, a justification for the imposition of this blanket prohibition must exist if the provision is to be upheld.
As previously concluded the dominant aim of this Act as a whole is to preserve health care services for the community. The delay in instituting suit required by this challenged provision must be reasonable in light of this aim if it is to pass constitutional muster. The delay accommodates the discernment of facts by the medical review panel and the forming of its expert opinion. The participation of the claimant, the insurer, and the health care provider in the panel processes results. Their knowledge and experience so gained will encourage the mediation and settlement of claims and discourage the filing of unreasonably speculative lawsuits. The mental, financial and time-consuming burdens imposed upon health care providers by lawsuits which should have been settled by their insurers or which should not have been instituted will be lessened, and the disruption of and impairment to their continued vital services reduced. Several factors also are present which would support the general proposition that health care providers are likely to be amenable to process after the panel opinion has been made. Each is licensed or legally authorized by the State to provide health care services, or alternatively, is an agent of the same. Most will be permanent fixtures in the communities where they are located, or maintain a practice or are employed. Individual health care providers will have made significant investments in acquiring their skills and will be dependent upon those skills for their livelihood. Moreover, health care providers and their insurers will have been in contact and will have been present and actively engaged in the panel processes up to the point when the panel is prepared to reach its opinion. Furthermore, we note that the prohibition against filing suit is subject to the right of the patient to seek limited discovery in court. Ind. Code § 16-9.5-10-1. This right tends to ameliorate a part of the risk attendant to the prohibition against filing in that it permits the preservation of evidence.
It cannot be doubted that the long standing rule has been that a plaintiff may bring suit as soon as his right of action accrues. Gallup, Executor v. Schmidt, Treasurer, (1899) 154 Ind. 196, 56 N.E. 443. It is also true, however, that conditions have long been imposed by law which must be satisfied before a suit may be filed. They carry with them the same danger as this provision of the Act that the potential defendant will leave the jurisdiction or disappear in the meantime and the remedy by court proceedings will be lost. Yet they are not considered as constituting an impermissible restriction upon access to courts. The requirement of prepayment of court costs or proof of indigency at the time of filing suit is one such requirement. Cf. Thompson v. Thompson, (1972) 259 Ind. 266, 286 N.E.2d 657. Indiana R.Tr.P. 3 and 4 compel the plaintiff to have a written complaint and prepared summonses at the time of filing suit. The law encourages and even requires that the decision to file suit in most instances be preceded by lawyer-client conferences, investigations, legal study, demands for payment, or settlement attempts. All are *596 time-consuming events during which the potential defendant may disappear or die.
The restriction upon the access to courts for patients under the Act is severe, yet based upon the above appraisal for constitutional purposes, it is not so restrictive as to violate the right to access to courts guaranteed by Art. I, § 12, of our Constitution. Accord: Everett v. Goldman, supra; Carter v. Sparkman, supra; Comisky v. Arlen, supra; Paro v. Longwood Hospital, supra.
The contention is made that the Act should be declared void for vagueness under Art. I, § 12, of the Constitution of Indiana guaranteeing due process and due course of law in that it fails to specify in detail the procedures and practices to be followed before the medical review panel. Appellant raising this issue has admitted inability to cite any firm authority that this constitutional doctrine is applicable in civil cases. He relies upon Cook v. State, (1901) 26 Ind. App. 278, 59 N.E. 489. There the Appellate Court voided a penal statute which barred the use of a narrow tired wagon on gravel roads during wet weather. The statute was invalid as uncertain in that it failed to define "narrow tired wagon". In the course of retailing cases, the court quoted from another jurisdiction which recognized the application of the doctrine in testing "public and private" statutes. We are not apprised that such statutes in that other jurisdiction carried no penal or like consequences. Given the clear penal nature of the statute considered by the court in Cook, the reliance in it upon the quotation from the foreign jurisdiction does not establish the proposition of law that the void for vagueness doctrine is applicable to testing non-penal statutes.
Were it applicable, we would not void this statute on this basis. The statute contemplates that the panel will function in an informal and reasonable manner. It is guided by a trained lawyer who presumptively will not deny to each party a reasonable opportunity to present its evidence and authorities. The scope of the panel's function is limited. It does not conduct a hearing or trial and does not render a decision or judgment. There is, therefore, no reason to mandate that the statute relegate burdens of proof or production and to otherwise specify procedures applicable in hearings and trials. The panel is conducting a rational inquiry into the extent and source of the patient's injuries for the purpose of forming its expert opinion. The absence from the statute of specific procedures is reasonable in light of this limited purpose and function and does not raise a serious constitutional question on the ground of vagueness or indefiniteness. There is little likelihood that appellant will incorrectly estimate the steps that should be taken in procuring and presenting evidence and authorities to the panel, and should he do so there is little or no risk that he will be harmed thereby.
The contention is made that the compensation of those serving on the panel is so low as to be confiscatory in violation of Art. I, § 21, of the Indiana Constitution, and that such inadequate provision for their compensation serves to deny the injured patient due process of law. We agree that the compensation appears exceptionally modest for most health care providers and lawyers. However, there is no support here for the claim that panel members will, as a consequence of low pay, fail to provide fair treatment to persons appearing before them. Most will undoubtedly view service on the panel as a public duty in the nature of jury service and service as a special judge, and give due regard to public and private interests being served. The Act is not unconstitutional on this basis.
C.
The panel submission requirement is next challenged on the basis that it subjects malpractice tort claimants to burdens not given to other tort claimants and grants corresponding benefits to health care providers in violation of the privileges and immunities clause of the Indiana Constitution in Art. I, § 23, of the Indiana Constitution, the prohibition against special legislation in Art. IV, §§ 22 and 23, and the equal protection clause of the Fourteenth Amendment. *597 The classification of tort claimants is based upon their status as patients and their injuries having arisen from a breach of duty owed them by a health care provider. The classification of health care providers is based upon the services they render. Neither classification involves a suspect classification such as race, wealth, lineage, alienage or illegitimacy. And a requirement such as this that a party engage in processes for improving the quality of evidence for settlement and litigation purposes does not impinge upon the exercise of a fundamental right such as voting, procreation, interstate travel, or to present a defense in a criminal action. The fair and substantial relation standard is to be applied here. Chaffin v. Nicosia, (1974) 261 Ind. 698, 310 N.E.2d 867. In order for this classification to satisfy the guarantee of equal protection, it "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." Royster Guano Co. v. Virginia, (1920) 253 U.S. 412, 40 S.Ct. 560, 64 L.Ed. 989; Reed v. Reed, (1971) 404 U.S. 71, 92 S.Ct. 251, 30 L.Ed.2d 225; Reilly v. Robertson, supra. The standard to be applied in protecting rights secured by Art. I, § 23, of the Indiana Constitution, is whether the legislative classification is based upon substantial distinctions with reference to the subject-matter, or is manifestly unjust or unreasonable. Steup et al. v. Indiana Housing Finance Authority, supra; Phillips v. Officials of City of Valparaiso, (1954) 233 Ind. 414, 120 N.E.2d 398. The same standard is applicable in testing a statute under Art. IV, §§ 22 and 23. Perry Civil Twp. of Marion Co. v. Indianapolis Power and Light Co., (1943) 222 Ind. 84, 51 N.E.2d 371. The statute is therefore presumed constitutional, and the burden was on appellants below to negative every conceivable basis which might have supported the classification. Madden v. Commonwealth of Kentucky, (1940) 309 U.S. 83, 93, 60 S.Ct. 406, 410, 84 L.Ed. 590; Lehnhausen v. Lake Shore Auto Parts Co., (1973) 410 U.S. 356, 93 S.Ct. 1001, 35 L.Ed.2d 351.
The legislative purpose to be served by this statute as a whole is clear. Its goal is to protect the health of the citizens of this State by preventing a reduction of health care services. The question for our determination is whether there is some "ground of difference" that makes clear the reason for the different and more burdensome treatment accorded medical malpractice tort claimants and explains the corresponding special consideration given the health care provider. We conclude that a ground does exist and was not negatived by appellants in the courts below. Each citizen is dependent upon practicing health care providers for the treatment of his illnesses and injuries. Medical malpractice cases against health care providers, by reason of their potential number and size, pose a special economic threat to the rewards which health care providers may enjoy in return for their services. They also routinely require the ascertainment of technical and scientific facts, procedures, and expert opinions for the purposes of determining whether a breach of legal duty has occurred. The panel submission requirement serves this requirement and tends to insure that a resolution of a dispute will be based upon the ascertainment of the true facts and circumstances and will be fair; and also tends to insure that the cost to the health care providers participating in a risk spreading combine will be no more than is reasonable and necessary.
We conclude that to the extent the panel submission requirement burdens patient claimants and benefits health care provider tortfeasors, it does so consistent with the equal protection clause and the privileges and immunities section of the Indiana Constitution, and Art. IV, §§ 22 and 23, of the Indiana Constitution. Accord: Everett v. Goldman, supra; Paro v. Longwood Hospital, supra.
D.
Article III, § 1, of the Indiana Constitution sets forth the doctrine of the separation *598 of powers of the governmental branches. Appellants contend that the requirement of the Act that the panel opinion be admitted in evidence is a usurpation of the judicial authority of the courts to rule upon the admissibility of evidence. Indiana Code § 16-9.5-9-7 sets forth the required contents of the written opinion of the panel and Ind. Code § 16-9.5-9-9 provides that it shall be admissible but not conclusive. This latter provision is a rule for the admission rather than the exclusion of evidence. As such it opens up the trial to the admission of evidence, and that evidence will be considered together with all other evidence presented in arriving at a true verdict or decision. The type of matter declared admissible by this provision, namely, the opinion of medical experts, has heretofore been expressly sanctioned by rules of evidence as declared by the courts. Dahlberg v. Ogle, (1978) Ind., 373 N.E.2d 159; Iterman v. Baker, (1938) 214 Ind. 308, 15 N.E.2d 365. Consequently, this Act does not take away from the courts their judicial authority. Paro v. Longwood Hospital, supra.
II.
A.
Challenges have been made to the limitations in the Act upon the amount recoverable for injury due to the negligent conduct of health care providers in rendering their services. The limitations of the Act apply when the health care provider voluntarily qualifies to come under the provisions of the Act. Ind. Code § 16-9.5-2-1. Indiana Code § 16-9.5-2-2 limits the total recovery for injury or death to a patient to $500,000. Indiana Code § 16-9.5-2-2(b) limits the liability of any health care provider to $100,000 per occurrence. Indiana Code § 16-9.5-2-2(c) provides that:
"Any amount due from a judgment or settlement which is in excess of the total liability of all health care providers . . shall be paid from the patient's compensation fund pursuant to provisions of IC 16-9.5-4-3."
This last section provides that "the court shall determine the amount for which the fund is liable and render a finding and judgment accordingly." Ind. Code § 16-9.5-4-3(5).
The half million dollar limitation is challenged as violative of the mandate of Art. I, § 12, of the Indiana Constitution that one shall have a complete remedy for injury done to him, and of the due process clause of the Fourteenth Amendment. Legislation will be sustained as within the authority of the Legislature if it is a proper exercise of the State's police power for the promotion of the peace, safety, health or welfare of the public. Steup et al. v. Indiana Housing Finance Authority, supra.
The legal analysis involves an appraisal of whether this recovery limitation is a rational means to achieve the goal which the Legislature through its enactment sought to reach. Ferguson v. Skrupa, (1963) 372 U.S. 726, 83 S.Ct. 1028, 10 L.Ed.2d 93; Williamson v. Lee Optical Inc., supra; Sidle v. Majors, supra. We conclude that the limitation is consistent with the state and federal due process clauses.
In Usery v. Turner Elkhorn Mining Co., (1976) 428 U.S. 1, 96 S.Ct. 2882, 49 L.Ed.2d 752, the United States Supreme Court considered the validity of a statute of Congress which among other things placed liability upon coal mining operators to compensate former employees who had worked in the mines for disability due to black lung disease. The court upheld this retrospective burden growing out of past mine working conditions upon individual operators who had employed such workers, even though the conditions causing the disease could not be deterred by the imposition of the burden and even though such operators could not be justly considered blameworthy for the conditions. The court held that the burden was justified because the individual operators had profited from the workers' labors. It would appear that any employer profits from his employee's labors, in the sense meant by the court, and that therefore any employer could have such a new and original burden thrust upon him for injuries to employees of many years past even though *599 the working conditions causing an injury were in accordance with safety standards, were deemed safe according to the best scientific knowledge available at the time, and were totally unpredictable. There is a distinct degree of arbitrariness under these circumstances in selecting the individual employer to be the source of compensation for its former employees. There is a similar arbitrariness in selecting injured patients to carry the burden imposed by the recovery limitation under consideration.
Of particular salience here is the recent case of Duke Power Co. v. Carolina Environmental Study Group, Inc., (1978) 438 U.S. 59, 98 S.Ct. 2620, 57 L.Ed.2d 595, which relies in part on the Usery case. The court considered the constitutionality of the Price-Anderson Act wherein it placed a dollar limit upon the aggregate liability of licensed private companies and the government due to a single nuclear incident. The limitation was upheld as against a due process and equal protection attack. The court held that the statutory limitation on liability bears a rational relationship to the intent of Congress to encourage private industry to become involved in the production of electricity by use of atomic power. It was recognized that the liability figure would not be sufficient to guarantee full compensation to those injured as the result of a nuclear disaster. There are parallels between the situation dealt with by Congress and the one dealt with by our Legislature. Both involved the lack of an effective risk spreading device for a private industry and a public need to have the industry provide its services. Both involved a private industry which was reluctant to provide its services because of the shortage of effective insurances for the risks attendant to production. In both the Price-Anderson Act and the Indiana Malpractice Act the governments established a form of government sponsored insurance, set limitations upon liability, and placed the burden of the limitation upon persons injured by the industry.
It would appear that the limitation upon recovery is the natural consequent of the establishment of an insurance type program. It provides a factor for calculating premiums and charges to those covered. An insurance operation cannot be sound if the funds collected are insufficient to meet the obligations incurred. It must, however, be accepted that the badly injured plaintiff who may require constant care will not recover full damages, yet at the same time we are impressed with the large amount which is recoverable and its probable ability to fully compensate a large proportion of injured patients. In the same vein, badly injured patients would have little or no chance of recovering large sums of money if the evil the act was intended to prevent were to come about, i.e., that an environment would develop in the State in which private or public malpractice insurance were unavailable or unused. Of some relevance here is also the fact that after suit and recovery against a health care provider is completed, there continues a total lifetime dependency upon other health care providers for vital treatment of the residuum of illness from the prior negligence and of new and unrelated illnesses. Thus to the extent that the limitation upon recovery is successful in preserving the availability of health care services, it does so to the benefit of the entire community including the badly injured plaintiff. Finally, there is evidence in the record before us that the Act with its limitation upon recovery is achieving its intended goal. Accordingly, we find that the limitations upon patient recoveries is not arbitrary and irrational, but furthers the public purposes of the Act in a manner consistent with due process of law guaranteed by our state and federal constitutions.
Some appellants claim that the limitation upon recovery denies due process of law in that it creates an irrebuttable presumption that an injured patient's loss can never exceed the limitation and precludes him from proving otherwise. A statute cannot survive a due process challenge if it denies rights and benefits on the basis of facts presumed to exist and to be true, without affording the individual an opportunity to defend those facts. Vlandis v. Kline, (1973) 412 U.S. 441, 93 S.Ct. 2230, 37 *600 L.Ed.2d 63; Stanley v. Illinois, (1972) 405 U.S. 645, 92 S.Ct. 1208, 31 L.Ed.2d 551. The Act before us does not create such an evidentiary presumption requiring the trier of fact to infer that the patient's damages are less than $500,000. It is not a presumption which prevents recovery of more than that amount, but the policy of the law in the statute. The limitation is not a denial of due process on this basis.
B.
Upon equal protection analysis some appellants assert that the limitation imposed upon the amount recoverable by patients is void. The limitation does, we agree, impose a special burden upon those persons damaged as a result of medical malpractice in excess of $500,000 which is not imposed upon those suffering damages from the same source with smaller claims. It also bestows a special benefit upon health care providers not enjoyed by others by limiting their liability for damages. We conclude that those features are consistent with the requirements of Art. I, § 23, and Art. IV, §§ 22 and 23 which prohibit special privilege legislation and are consistent as well with the equal protection clause of the Fourteenth Amendment.
Where neither a fundamental right nor a suspect classification is involved, the standard of review is that the classification not be arbitrary or unreasonable and that a "fair and substantial" relationship exist between the classification and the purpose of the legislation creating it. Sidle v. Majors, supra. It is the nature of the individual interests at stake which determines the applicable equal protection test. The severely injured patients against whom the limitation discriminates are permitted to recover a significantly large sum in partial satisfaction of their claims. Cases will arise however in which this sum will not cover total provable damages. In Dandridge v. Williams, (1970) 397 U.S. 471, 90 S.Ct. 1153, 25 L.Ed.2d 491, the highest court of the land considered the validity of a maximum family grant regulation which limited the total amount which any one family could receive because of the presence in the family of needy dependent children. Once the limit was reached the arrival of additional children would not increase the family grant although it was demonstrable that the grant would no longer meet the subsistence needs of the children. The court concluded that this regulation fell in the area of the State's social and economic concerns and that the traditional test of equal protection was properly being applied in evaluating it. In Sidle v. Majors, supra, the law under consideration there prevented the injured guest passenger from recovering any part of his loss due solely to the negligent conduct of the driver. In that case we deemed the fair and substantial relation test to be applicable. While the interest of the severely injured patient in full recovery rather than partial recovery to the extent of $500,000, is great for the purpose of selecting the appropriate equal protection test, it is not greater than that of the children needing but being denied subsistence level support in Dandridge, and is not greater than that of the injured plaintiff in Sidle who could recover nothing. In Duke Power Co. v. Carolina Environmental Study Group, Inc., supra, the Supreme Court applied the "fair and substantial relationship" test to a statutory limitation on liability for nuclear accidents, a limitation not unlike the one before us. We conclude that the same test is applicable here, and that it is likewise applicable to testing the Act on the state constitutional grounds used.
This statutory limitation is therefore clothed with a presumption of constitutionality. Reilly v. Robertson, supra. And the plaintiffs below, appellants here, had the burden to negative every conceivable basis which might have supported the dollar limitation on recoveries. Lehnhausen v. Lake Shore Auto Parts Co., supra.
The burden was upon those appellants below who have relied upon this argument to prove that there was no correlation between the limitation upon recovery and the promotion of health care. Jones v. State Board of Medicine, (1976) 97 Idaho 859, 555 P.2d 399. In considering whether the limitation *601 upon recovery furthers this end in a suitable manner, the reality must be confronted that one deals here with probabilities. In the absence of all insurance, that is a mechanism for spreading risk of loss due to malpractice, claims would have to be paid from the personal assets of health care providers. The probability that a wrongfully injured patient would in fact collect more than $500,000 in damages from that source would be very small. Even when malpractice insurance is available, as in the past, long before the enactment of this legislation, recovery could be stymied in part or in whole by the decision of the health care provider to have no insurance or by his failure to pay a necessary premium, thereby working a forfeiture of coverage. Even when the health care provider is covered by private insurance, and the injured patient has recovered a judgment, total recovery becomes only more probable. The policy limits involved may be less than the amount of the claim. Insurance companies have been known to go bankrupt and to leave those having claims and judgments against insureds of the company without any means of collection. There is good reason to believe that the interests of patients in ultimately transforming valid claims into money is furthered by the availability to the health care industry of some risk spreading mechanism at reasonable cost.
In the record before us evidence was presented for constitutional purposes that part of the private insurance industry did cease making malpractice insurance available to some health care providers in the State. There is support in the record for the proposition that this decision was made because of the number and size of malpractice claims being prosecuted. Some appellants have alluded to less neutral grounds which may have motivated these decisions. For constitutional purposes, the motivation behind the curtailment of the availability of malpractice insurance is of little moment. The fact of that curtailment is very important and is the reality with which the Legislature chose to deal. The Legislature responded by creating the patient compensation fund and the residual malpractice insurance authority, thereby providing a government sponsored risk spreading mechanism as an alternative to insurance strictly from private sources. In so doing it set the limitations upon recovery. The mechanism cannot operate without the voluntary participation of health care providers. The limitation may well provide health care providers with the incentive to participate. It also facilitates the determination of an annual surcharge to be paid by participating health care providers and the operation of the residual malpractice insurance authority. In effect it would serve the same purpose for the patient compensation fund that such limitations serve in private insurance contracts. The Legislature could have reasonably considered a set limitation upon recoveries to be an essential part of any operable plan to spread the risk of loss to participating health care providers and to regulate the cost to them, and thereby meet the danger it perceived to the public welfare. The classifications of health care providers and injured patients challenged here are but composite parts of the limitation itself and are likewise justified. Duke Power Co. v. Carolina Environmental Study Group, Inc., supra. We are aware that the Supreme Court of Illinois was unable to find a justification for a limitation of recovery in malpractice actions against health care providers erected by their own act at this same level. Wright v. Central Dupage Hospital Ass'n, supra. Unlike that court, we find a rational justification for the difference in treatment accorded the various groups identified within the rationality of the program launched by the Legislature to protect vital societal interests.
D.
Appellants take the position that provisions of the Act violate the right of trial by jury by removing the determination of damages in excess of $100,000 from the jury. Their premise is that the right to trial by jury includes the right to have the jury determine all damages. Cleveland, Cincinnati, Chicago & St. Louis Rwy. Co. v. *602 Hadley, (1907) 120 Ind. 204, 82 N.E. 1025; City of Terre Haute v. Deckard, (1962) 243 Ind. 289, 183 N.E.2d 815.
When a request is made to the trial court for an order to determine the amount due claimant from the patient's compensation fund after a trial by jury on the issue of damages has taken place and the trial court has rendered a judgment, no contest with regard to the total damages due claimant can or does exist. That issue has already been finally adjudicated by the trier of fact. When a prior verdict and judgment have already been rendered, as distinguished from a situation in which only settlement between the parties has been reached, the contested issues raised by the request to the trial court contemplated by the above provisions must therefore logically relate to other matters such as the proper manner of apportioning the total damages among health care providers, their insurers, and the patient's compensation fund. So considered the statute does not withdraw the fixing of damages in excess of the $100,00 limitation from the jury at all. Furthermore, there is no indication in the cases relied upon by appellants that the right to have a jury assess the damages in a case properly tried by jury constitutes a limitation upon the authority of the Legislature to set limits upon damages. The Legislature may terminate an entire valid and provable claim through a statute of limitation. It may validly cause the loss of the right to trial by jury through failure to comply with the requirement to assert the right by procedural rule. It is the policy of this Act that recoveries be limited to $500,000, and to this extent the right to have the jury assess the damages is available. No more is required by Art. I, § 20, of the Indiana Constitution in this context.
III.
Some appellants have presented the claim that the limitation in the Act upon attorney fees to be paid counsel for patient claimants is unconstitutional as it interferes with the individual's right to contract and to earn a living and has no rational basis in violation of due process and equal protection. Indiana Code § 16-9.5-5-1 provides:
"(a) When a plaintiff is represented by an attorney in the prosecution of his claim, the plaintiff's attorney fees from any award made from the patient's compensation fund may not exceed fifteen per cent of any recovery from the fund.
(b) A patient has the right to elect to pay for the attorney's services on a mutually satisfactory per diem basis. The election, however, must be exercised in written form at the time of employment."
The legislative purpose of this restriction is to prevent attorneys representing plaintiffs from receiving inordinately large fees where contingent fee arrangements have been made. We recognize that plaintiffs' attorneys frequently and energetically make arduous efforts on behalf of their clients in return for fees which cannot accurately be characterized as inordinately large. However, this Court has also noted that abuses of the contingent fee contracts have occurred and that parties aggrieved by clearly excessive arrangements will receive the protection of the courts. Scobey v. Ross, (1859) 13 Ind. 117; Draper v. Zebec, (1941) 219 Ind. 362, 37 N.E.2d 952, 38 N.E.2d 995. Contingent fee contracts are sanctioned by the Code of Professional Responsibility so long as the fee is reasonable.
In this case we examine the limitation imposed upon attorney fees for constitutional purposes alone. We find that there is a direct relationship between the limitation upon recovery and the limitation on attorney fees. The total amount recoverable by the injured patient was limited. The limitation on attorney fees follows naturally as a means of protecting the already diminished compensation due claimants from further erosion due to improvident or unreasonable contracts for legal services.
The specific limitation implanted by the Legislature does not seem to be one which will seriously impede the ability of the injured patient to employ effective counsel. It does not effect at all the enforceability of contracts made regarding fees to be paid *603 from the first $100,000 of recovery, as that amount is not received from the compensation fund. However, contracts providing for fees in excess of the limitation on awards from the compensation fund are not enforceable. The limitation will in practice result in legal fees ranging between about 20% to 35% of the total recovery. As a general proposition fees at this level are commonly considered reasonable in tort litigation.
In Buckler v. Hilt, (1936) 209 Ind. 541, 200 N.E. 219, this Court held that the limitation on fees charged by attorneys in workmen's compensation cases was a reasonable exercise of the police power and was not repugnant to due process and equal protection. We recognize that such cases have limited applicability here due to the provision in workmen's compensation acts that the workmen elect to come within their provisions. However, some of the reasoning in that case is applicable. Upon the foregoing analysis we conclude that the same test should be used in considering the limitation on attorney fees as was used in considering the limitation on recovery and that the former is germane to the public purpose of the Act and to be constitutional. The disparate treatment accorded plaintiffs and counsel in medical malpractice cases is the natural consequent of the fact that the Legislature sought in this Act to protect the public interest adversely being affected by a curtailment of malpractice insurance for health care providers.
IV.
The contention is made that the special time limitation and legal disability provision of the Act is contrary to due process and equal protection guaranteed by our Constitutions. It provides:
"No claim, whether in contract or tort, may be brought against a health care provider based upon professional services or health care rendered or which should have been rendered unless filed within two (2) years from the date of the alleged act, omission or neglect except that a minor under the full age of six (6) years shall have until his eighth birthday in which to file. This section applies to all persons regardless of minority or other legal disability." Ind. Code § 16-9.5-3-1.
This provision is different from the general limitation of actions statute, Ind. Code § 34-1-2-2, in that the period of time to which the malpractice claimant is limited commences to run from the date of the "act, omission or neglect" complained of rather than from the date the action "accrued". It is likewise different from the general legal disability statue, Ind. Code § 34-1-2-5, in that there is no legal disability of malpractice claimant by reason of their infancy as between age 6 and age 21. Those appellants raising this claim challenge the classification of claimants by age and by the nature of their action.
Stress is placed upon Chaffin v. Nicosia, supra. In that case this Court concluded that the general legal disability statute, Ind. Code § 34-1-2-5, was to be construed to grant a legal disability to infants up to the age of 21 years and that this grant was not in "irreconcilable conflict" with the then existing medical malpractice statute of limitation which granted two years in which to bring such actions. It was observed in that case that to deny infants a legal disability in malpractice cases would be unduly harsh and possibly unconstitutional. Since this case the Legislature has spoken and has expressly denied legal disability to infants between the ages of 6 and 21 years in malpractice cases, while retaining it for those under 6. An "irreconcilable conflict" exists between the general disability statute and this special malpractice disability provision and it is clear that the latter, being later and more specific, controls. O'Donnell v. Krneta et al., (1958) 238 Ind. 582, 154 N.E.2d 45; Payne v. Buchanan, (1958) 238 Ind. 231, 148 N.E.2d 537, 150 N.E.2d 250. We are, therefore, confronted with the constitutional issue raised.
The prior statutes as construed in Chaffin v. Nicosia, supra, gave a child until he reached age 21 plus two additional years for a total of as long as 23 years to bring a malpractice suit. This legal disability *604 granted to infants imposed a liability upon health care providers who help children which is unique in nature and extent. Institutional and individual health care providers make services available to hundreds, even thousands, of children in a single year. Children are particularly prone to certain diseases and minor accidental injuries. Each instance in which a child is given health care, the potentiality for a suit years in the future is created for some obstetrician, pediatrician, family practitioner or dentist to name but a few health care providers so affected.
The general purpose of a statute of limitation is to encourage prompt presentation of claims. United States v. Kubrick, (1979) 444 U.S. 111, 100 S.Ct. 352, 62 L.Ed.2d 259. When any alleged tortfeasor is required to defend a claim long after the alleged wrong has occurred, the ability to successfully do so is diminished by reason of dimmed memories, the death of witnesses, and lost documents. As the years between injury and suit increase, so does the probability that the search for truth at trial will be impeded and contorted to the benefit of the plaintiff. This harm can be exacerbated where the injured party continues to grow, develop and change, both physically and mentally, after the injury complained of has occurred. Even under the statute complained of here, the health care provider is subject to defend suits initiated as long as eight years after the injury complained of.
In balancing the interests involved here, the Legislature may well have given consideration to the fact that most children by the time they reach the age of six years are in a position to verbally communicate their physical complaints to parents or other adults having a natural sympathy with them. Such communications and the persons whom they reach may to some appreciable degree stand surrogate for the lack of maturity and judgment of infants in this matter. The Legislature may well have considered the fact of some importance that many health care providers are specially trained professional persons meeting state standards for licensing, and are therefore entitled to a special degree of trust.
In considering this challenge we regard the traditional test of constitutionality to be applicable and that considerable deference should be accorded the manner in which the Legislature has balanced the competing interests involved. Chaffin v. Nicosia, supra. The purposes of this Act, previously, repeated in this opinion, are furthered in a rational manner by limiting the legal disability of infants to those under six years of age, and the classification of those entitled to legal disability by age and type of claim bears a fair and substantial relationship to that same end.
V.
The contention has been made that the limitation on the pleadings and practice in court under Ind. Code § 16-9.5-1-6, is contrary to the due process and equal protection clauses of our state and federal constitutions, the free speech and writing provision of Art. I, § 9, of the Indiana Constitution, the separation of powers mandate of Art. III, § 1, of the Indiana Constitution, and is furthermore in conflict with our Trial Rules. The statute states:
"No dollar amount or figure shall be included in the demand in any malpractice complaint, but the prayer shall be for such damages as are reasonable in the premises."
It is to be discerned from this provision that the Legislature was concerned with the impact of the dollar figure in the complaint upon the amount of recovery ultimately granted by the trier of fact. The law does not regard the prayer as evidence of proper damages. In spite of the law's admonition, it is obvious that the amount prayed for is in fact the appraisal by some human being of the figure justly due plaintiff. So regarded, the dollar figure in any complaint is subject to being misunderstood by the trier of fact, and such figure could conceivably result in some irrational inflation of the recovery, although the likelihood thereof has never moved the courts to prohibit the practice. This likelihood provides the constitutional justification for the *605 adoption of this provision in malpractice cases as the Legislature was concerned with insuring the availability of malpractice insurance to health care providers at a reasonable cost. The right of the plaintiff to present evidence of damages and to argue them forcefully to the jury is not curtailed. We are unable to say that the prohibition is not a rational means of furthering the Act's legitimate goals.
In Neeley v. State, (1974) 261 Ind. 434, 305 N.E.2d 434, we held that the General Assembly and the courts shared the authority to create rules of procedure for the courts, but where a conflict arose between statutory rules and court rules, the latter shall prevail. It is clear that the Legislature in erecting this pleading requirement has not exercised an authority expressly reserved to the court by Art. III, § 1, or enacted a special law regulating the practice in courts contrary to Art. IV, § 22. Moreover, contrary to the position taken by some appellants, we do not find such a conflict between this prohibition against a specific demand figure in the complaint and Ind.R.Tr.P. 8(A) and 54(C) which would warrant our voiding the statutory provision. The rules implicitly approve a specific demand, but do not require one, and the pleading requirement of this statute clearly satisfies the express pleading requirements of both rules.
Article I, § 9, of the Indiana Constitution provides:
"No law shall be passed, restraining the free interchange of thought and opinion, or restricting the right to speak, write, or print, freely, on any subject whatever: but for the abuse of that right, every person shall be responsible."
One appellant has presented the claim that the pleading restriction is a denial of the right of free speech and writing guaranteed by the above provision. Under our State Constitution, such an alleged impingement must be weighed in the balance against the public health, welfare and safety served. State v. Kuebel, (1961) 241 Ind. 268, 172 N.E.2d 45. In the scales the impingement upon the freedom guaranteed by this constitutional provision resulting from the requirement that plaintiff demand reasonable compensation rather than a specific amount if discernible at all is small. On the other side of the scale the extent to which the public health and welfare is served by the restriction is also without considerable weight. Applying this test the scales weigh in favor of the public health and welfare. Accord: Everett v. Goldman, supra.
VI.
A challenge is made to chapter 4 of the Act which creates the patient's compensation fund to be administered by the Indiana Insurance Commissioner, Ind. Code § 16-9.5-4-1 through 16-9.5-4-3 on the basis that it violates Art. XI, § 12, of the constitution of Indiana which says in part:
"[N]or shall the credit of the State ever be given, or loaned, in aid of any person, association or corporation... ."
and Art. IV, § 23, which provides:
"In all the cases enumerated in the preceding Section, and in all other cases where a general law can be made applicable, all laws shall be general, and of uniform operation throughout the State."
Appellant contends that state tax money is used to aid a private enterprise, namely, health care providers, contrary to the Constitution when the cost of administering the compensation fund is paid from public funds. Appellant puts forth the fact that one million five hundred thousand dollars was appropriated from the general fund for the residual insurance authority by the Act. From the face of the statute it is evidence that the patient compensation fund is separate and distinct from the funds managed and controlled by the residual authority and therefore this appropriation is irrelevant to the claim which is made.
Pursuant to Ind. Code § 16-9.5-4-1(b) the patient's compensation fund is built from annual surcharges upon health care providers, and under Ind. Code § 16-9.5-4-1(h), "All expenses of collecting, protecting and administering the fund shall be paid from the fund." In creating and requiring the administration of the patient's compensation *606 fund in this manner the Act cannot be said to violate Art. XI, § 12 of our Constitution.
In McGuffey v. Hall, (1977) Ky., 557 S.W.2d 401, the Kentucky Supreme Court declared a similar act unconstitutional because it required that in the event the patient's compensation fund should become exhausted, further claims would be paid from the general fund. That exposure of the general fund was deemed contrary to § 177 of that state's constitution which prohibited giving or loaning the credit of the state to any person. In contrast, under Ind. Code § 16-9.5-4-1(j) of our Act, exhaustion of the fund results in a proration of amounts to be paid each claimant, and that portion of claims which is not paid will be paid in the following year. Because of this device, the general fund does not become guarantor of the obligations of the fund as was the case under the Kentucky statute, and therefore the case is unpersuasive.
The position of appellant with regard to the validity of the fund under Art. IV, § 23, is likewise not well taken. Appellant argues that the creation and management of the compensation fund inures solely to the benefit of a single segment of the State, namely, the health care providers, and is therefore special legislation. This argument again calls upon the Court to consider whether there is any rational basis for this classification. Perry Civil Twp. of Marion County et al. v. Indianapolis Power & Light Co. et al., supra. Throughout the State premiums for medical malpractice insurance were high and a large number of private companies were withdrawing their product from the market. These circumstances and conditions particularly affected health care providers and created the danger that health care services would not be maintained at their existing level contrary to the public interest. The classification was justifiable and the provisions of the Act creating the compensation fund are general and of uniform operation throughout the State.
The judgment of the trial courts in these four cases is affirmed.
GIVAN, C.J., and HUNTER, PRENTICE and PIVARNIK, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2080111/ | 388 Mass. 679 (1983)
448 N.E.2d 357
COMMONWEALTH
vs.
ABDUL J. MAHDI. ABDUL J. MAHDI, petitioner.
Supreme Judicial Court of Massachusetts, Hampden.
November 2, 1982.
April 8, 1983.
Present: HENNESSEY, C.J., LIACOS, ABRAMS, NOLAN, & LYNCH, JJ.
Richard A. Johnston (Robert D. Keefe & Christopher Weld, Jr., with him) for the defendant.
Dianne M. Dillon, Assistant District Attorney, for the Commonwealth.
LIACOS, J.
On May 28, 1968, the defendant, Abdul J. Mahdi,[1] was found guilty by a jury of the crimes of murder in the first degree, assault with intent to murder by means of a dangerous weapon, and two counts of armed robbery.[2] He was sentenced to the Massachusetts Correctional Institution at Walpole for life imprisonment on the murder conviction, for eighteen to twenty years on the assault conviction, and eighteen to twenty years on the armed robbery conviction. The latter two sentences were to take effect concurrently, but from and after the sentence on the murder conviction.[3]*681 Mahdi contends that his convictions should be reversed because (1) he was deprived of his constitutional right to effective assistance of counsel, and (2) affirmance would cause a miscarriage of justice resulting from improper and prejudicial questioning and closing comments by the district attorney.
We find the criticism by the defendant of his trial counsel's performance to be overdrawn, despite some slackness in defense counsel's preparation and advocacy. A more just description of the trial is that the interaction between a barely adequate defense attorney and an experienced but overzealous district attorney caused the intrusion of personalities and other irrelevancies which obscured the search for truth.[4] Cf. Commonwealth v. Johnson, 372 Mass. 185, *682 196 (1977). We conclude that the references by the district attorney to the exercise by the defendant of his right to remain silent after arrest, and to the racial origins and religious beliefs of the defendant, present a substantial risk of a miscarriage of justice and thus require reversal of the convictions.
The facts are summarized as follows.[5] Mahdi had been a Muslim since 1955. He was a member of the Muslim mosque in Springfield and spent many evenings and weekends engaged in religious activities, including travelling throughout New England and New York to disseminate religious publications. On the evening of December 29, 1967, he was asked to travel to New York city with Odris Hastings and Arthur Hurston, Jr.,[6] to pick up religious newspapers. After obtaining money from the mosque for gasoline, Mahdi purchased with these funds a gun and a blackjack which he carried around intermittently for the next three days.[7] After Mahdi picked up the other two men and drove with them to New York, they distributed newspapers at various cities in New England. They returned to Springfield the next evening. The following afternoon, December 31, Mahdi drove to Albany with Hastings, Hurston, and others for a religious meeting and returned to Springfield late the same night. *683 Plans were made to return to Albany the next day to distribute religious newspapers. Early the next morning, January 1, 1968, Mahdi picked up Hastings and Hurston for the drive to Albany. Mahdi claimed that he needed to buy a few grocery items for his family before leaving for Albany. Mahdi drove to the Knox Street Market operated by Ernest Ladner, Sr., and Ernest Ladner, Jr., because he knew it would be open. Ladner, Sr., knew Mahdi well because Mahdi was a former neighborhood resident, a regular customer of the store, and once had painted the store.
Inside the store, Hastings and Hurston bought some fruit from Ladner, Sr., at the front counter while Mahdi went to the rear. Mahdi then returned to the front of the store with Ladner, Jr., and, holding a gun, demanded money. Ladner, Sr., testified that, after taking approximately $180 from him, Mahdi directed him and his son into the store refrigerator and ordered them to stay there for fifteen minutes. A few seconds later, Mahdi returned and told them that he would have to kill them. According to Ladner, Sr., Mahdi asked Hastings and Hurston what he should do, and then he shot both of the Ladners. Hastings and Hurston both, however, testified that they were already out of the store when Mahdi shot the victims.[8] Mahdi testified that he remembered taking the money, and the gun going off in his hand. He testified, however, that he could not recall anything else that occurred at the store, and anything thereafter, for about twenty minutes until he was on the Massachusetts Turnpike. Ladner, Jr., was immediately killed by a single gunshot; Ladner, Sr., survived three gunshot wounds.
Hastings testified that on the way from the market to the automobile, he asked Mahdi what had happened in the store. Mahdi stated that he had shot the Ladners, but, when asked why, he did not know. Mahdi then drove aimlessly *684 around Springfield for twenty to thirty minutes, not saying anything. Mahdi eventually drove the automobile to Albany, still without talking. Once in Albany, they sold religious papers. In the only other conversation about the shooting, Hastings asked Mahdi what he intended to do, and Mahdi replied that he did not know. Hastings suggested that they return to Springfield. Upon returning to Springfield, Mahdi dropped Hastings and Hurston at their respective homes and returned to his own home.
Mahdi was arrested on January 2, 1968, after Ladner, Sr., identified him. On being given his Miranda warnings, Mahdi initially remained silent. Subsequently, he gave the police a written statement telling them where the weapon was located, authorizing a search of his house and garage, and giving fictitious names for Hastings and Hurston.
Mahdi retained counsel to represent him. On January 3, Hastings and Hurston went to Mahdi's counsel for legal advice and indicated their desire to surrender themselves to the police. Counsel gave them the names of several attorneys and said that he would represent them only for the purpose of surrender. On January 4, 1968, another attorney and Mahdi's counsel accompanied Hastings and Hurston to the Springfield police station. The other attorney told the police that Hastings and Hurston were the two men with Mahdi at the Knox Street Market. Thereafter, each codefendant was represented by separate counsel.
It was undisputed that Mahdi had committed the homicide. His sole defense was that he lacked the mental capacity to appreciate the criminality or wrongfulness of his conduct or to conform his conduct to the requirements of law. The insanity defense was based on a claim that he was under stress because of fear of excommunication from his religious group for failing properly to provide for his family, his financial pressures, his lack of sleep caused by anxiety as to fulfilling his religious obligations, his family background, and his ill health.[9] On February 2, 1968, Mahdi was ordered *685 by the trial judge to Bridgewater State Hospital to determine his competency to stand trial. After receiving the report of psychiatrists, the judge ordered the defendant returned to the Hampden County jail, and trial began on May 13, 1968.[10]
1. Ineffective assistance of counsel. The defendant contends that his convictions should be reversed because he was deprived of his constitutional right to effective assistance of counsel under the Sixth Amendment, applicable to the States through the due process clause of the Fourteenth Amendment to the Constitution of the United States, and art. 12 of the Declaration of Rights of the Constitution of the Commonwealth. See Cuyler v. Sullivan, 446 U.S. 335, 343-344 (1980); Gideon v. Wainwright, 372 U.S. 335 (1963).
a. Standard to measure effectiveness of counsel. We note, at the outset, that at the time of Mahdi's trial, counsel's assistance was held to be constitutionally inadequate when it was so deficient as to make the trial "a farce and a mockery of justice," when it created "an apparency instead of the reality of contest and trial," or when it "blotted out the substance of a defense." Commonwealth v. Saferian, 366 Mass. 89, 96 (1974), quoting Matthews v. United States, 449 F.2d 985, 994 (D.C. Cir.1971) (Leventhal, J., concurring). Commonwealth v. LeBlanc, 364 Mass. 1, 14 (1973). Commonwealth v. Bernier, 359 Mass. 13, 18 (1971), quoting Scott v. United States, 334 F.2d 72, 73 (6th Cir.), cert. denied, 379 U.S. 842 (1964). See Commonwealth v. Rondeau, 378 Mass. 408, 412 (1979); Commonwealth v. Dunker, 363 Mass. 792, 797-798 (1973). None of the defendant's allegations of the ineptitude of defense counsel would, if accepted, demonstrate that the conduct *686 of defense counsel, standing alone, fell short of the minimal standards of performance in effect at the time of trial.
This court since has adopted a more lenient standard. See Commonwealth v. Saferian, supra. "After Saferian, a defendant need show only that the conduct of his lawyer was `measurably below that which might be expected from an ordinary fallible lawyer.' ... In addition to a showing of incompetence of counsel, our cases usually require a demonstration of prejudice resulting therefrom." Commonwealth v. Rondeau, supra. See Commonwealth v. Harris, 387 Mass. 758, 761-762 (1982).
Current counsel for the defendant and the Commonwealth have not briefed or argued the question whether the standard set forth in Saferian should be applied retroactively to this 1968 trial. Thus, we do not reach the question whether defense counsel fell short of the Saferian standard. The inadequacies of defense counsel are relevant, however, to our disposition of this appeal. This is so because this question, considered with the actions of the district attorney, is material to whether a fair trial was afforded the defendant. Consequently, we discuss briefly the claims of error stemming from the conduct of defense counsel.
b. Performance of trial counsel. At the trial, defense counsel presented only two witnesses, Mahdi and Dr. John W. Donoghue, a psychiatrist.[11] Trial counsel had arranged for the psychiatrist to examine Mahdi on the day before the start of the trial for slightly more than two hours. During cross-examination of one codefendant, trial counsel did not ask any questions about Mahdi's appearance and mental condition at the time of the shooting. He did not cross-examine the other codefendant at all, despite testimony that both codefendants had observed the defendant prior to, and subsequent to, the murder. Furthermore, trial counsel did not call any lay witnesses to support testimony about Mahdi's *687 alleged financial anxieties, stressful family background, religious fears, or other emotional difficulties.
During the direct examination of the defendant, while attempting to elicit the defendant's family background, the trial counsel, the district attorney, and the judge became entangled in argument as to the proper breadth of the questioning. Trial counsel was attempting to elicit information as to family background to lay a foundation for the expert witness's testimony. The district attorney continuously objected. Finally, in a discourse with the trial judge, trial counsel mentioned, "[p]erhaps my questions are poorly phrased." The district attorney immediately seized upon this choice of words as an opportunity to suggest that trial counsel was improperly defending Mahdi. Trial counsel immediately asked to move to the other side of the bench to prevent the jury from hearing any further discussion. Upon inquiry by the trial judge, defense counsel stated that he considered himself qualified to handle a capital case. There was no further inquiry by the judge.
A similar entanglement arose in the direct examination of the defendant's expert witness. Confusion reigned, with repeated objections and interruptions by the district attorney and lengthy colloquies between the district attorney, trial counsel, and the judge. By the time order had been restored, the defense psychiatrist was unable to form an opinion at one point and did not understand the question on another occasion. Eventually, the psychiatrist was permitted to testify that, based on his actual examinations and the hypothetical question, the defendant did not have the substantial capacity to appreciate the criminality or wrongfulness of his conduct or to conform his conduct to the requirements of the law. His diagnoses of the defendant were that the defendant suffered a "severe character disorder with obsessive, compulsive trends, schizoid trends, and sociopathic trends, plus an acute condition on part of the date of January 1, 1968, which included a dissociational state, and a fugue state." He further stated that, in this acute state of dissociation, a person would appear to do *688 things in an outwardly consistent or normal manner." He felt that Mahdi was tortured by his religion.
The district attorney presented three expert witnesses. The first was the examining neuropsychiatrist at Bridgewater State Hospital. In connection with his assessment of the defendant's competency to stand trial, he had reported to the trial judge that Mahdi had a sociopathic personality disturbance and was an antisocial type with paranoid features primarily associated with his religious beliefs. Nevertheless, he testified that Mahdi did not have a serious mental illness or a defect in judgment and was well aware of his surroundings. On cross-examination by defense counsel, however, the prosecutor's psychiatrist admitted that he had not asked about or pursued Mahdi's membership in the Black Muslims. Counsel inquired if this witness testified on an average of once a week for the Commonwealth. The district attorney objected but then withdrew the objection. Counsel did not press for an answer.
The second neuropsychiatrist presented by the district attorney had observed Mahdi, while another examined him, for half an hour on January 13, 1968, in the Hampden County jail with one codefendant and police officers present. There had been no examination about Mahdi's religious involvement by the questioning psychiatrist, who was not testifying. The witness supported the conclusion that Mahdi was aware of his actions on January 1, 1968.
The final neuropsychiatrist who testified for the prosecution had never examined Mahdi. His opinion was based exclusively on his observations of the defendant in the courtroom. In addition to agreeing with the other prosecution experts, he was also permitted to testify that he believed that, because "his motivation was to destroy evidence," Mahdi stated that he could not recall the events.
The defendant contends that trial counsel inadequately prepared and presented his insanity defense. He claims that it was improper to call only one expert witness when the district attorney presented three; that defense counsel erred in arranging so late for his expert witness to examine the *689 defendant; that, as a result of the late examination, defense counsel had not prepared adequately the expert witness for his testimony; that defense counsel mishandled the direct examination of the expert witness; and that failure to cross-examine both of the codefendants and call corroborating witnesses was an egregious error.
As we have stated, we need not examine these claims in any detail. It is sufficient to say that the preparation and presentation of the sole defense of insanity showed ineptitude. There is no question that considerable squabbling ensued during the direct examination of the sole expert witness for the defense. "Every experienced trial lawyer has been present to witness the undignified and exasperating squabbles which erupt at the conclusion of the hypothetical as originally presented." H.M. Goulett, The Insanity Defense in Criminal Trials § 63 (1965). "Objecting counsel lists all of the alleged omissions, misstatements and inclusions of facts not supported by the evidence. The other attorney debates each and every point. The court then sifts and sorts the multitude of claims and directs modifications which confound the witness as well as the jury." Id. Obviously, counsel could have done more to prepare the witness and himself and to polish the hypothetical. The actions of the district attorney and the failure of the judge to remove this interminable squabbling from the jury's knowledge contributed little to the furtherance of a determination of the truth.
The defendant also alleges that trial counsel failed adequately to serve as a strategist and tactician by failing to object to an entirely white jury or to request inquiry into the possible racial bias of jurors, by failing to object to prejudicial questions and closing argument commenting on racial and religious beliefs, and by failing to object to comments by the district attorney about Mahdi's exercise of his constitutional right to remain silent at the time of his arrest.
The victims were white. The defendant and both codefendants are black. One month prior to the trial, Martin Luther King had been assassinated. Even though the trial *690 occurred prior to our opinion in Commonwealth v. Soares, 377 Mass. 461, cert. denied, 444 U.S. 881 (1979), the issue as to a racially biased jury is open here because this case is pending on direct appeal after the Soares decision. Id. at 493 n. 38. Nevertheless, the record is inadequate to raise the issue of a racially biased jury. While there is some evidence of racial tension, the record does not disclose the racial composition of the jury pool or the seated jury. There is no evidence whether or not peremptory challenges were being used to affect the racial composition of the jury.
Last, as to the defendant's complaints about defense counsel's failure to object to prejudicial questions and closing argument, we need not determine whether this failure demonstrates ineffective assistance of counsel. We consider, instead, whether the conduct of the district attorney warrants reversal under the standard of review embodied in G.L.c. 278, § 33E.
2. Prejudicial questioning and comments in closing argument by the district attorney. The defendant contends that his convictions should be reversed because of racially and religiously inflammatory questioning and closing comments by the district attorney, Commonwealth v. Graziano, 368 Mass. 325, 332 (1975), and because the district attorney's comments violated his constitutional right under the Fifth Amendment to remain silent at the time of arrest, Doyle v. Ohio, 426 U.S. 610, 611 (1976).
a. Failure to object. Ordinarily, a defendant is not entitled to appellate review of alleged errors unless his rights are preserved by proper objection, which was not done. We will consider such errors, however, if there is a substantial risk of a miscarriage of justice. G.L.c. 278, § 33E. See Commonwealth v. Tavares, 385 Mass. 140, 149 (1982); Commonwealth v. Cole, 380 Mass. 30, 38-39 (1980).
The defendant argues, and we agree, that this is a case where there is a substantial risk of a miscarriage of justice. Under the broad discretionary power of review accorded to this court by G.L.c. 278, § 33E, we turn now to the defendant's complaints.
*691 b. Prejudicial questions and closing comments about racial origins and religious tenets. At the close of his cross-examination of the defendant, the district attorney asked Mahdi about certain teachings of the Muslim religion which focused on concepts that the Commonwealth characterized in this appeal as "hateful" tenets.[12] The district attorney *692 began and ended his closing argument with references to these religious beliefs about black and white people: "You know what explains this, don't you, this whole killing and everything else? They talk about the Islamic religion. This is what it is. Who is the colored man? The Caucasian Jacob's made devil, skunk of the [planet] earth. That's exactly what they thought of Mr. Ladner, Sr. and Jr."; "Who was the colored man? The Caucasian Jacob's made devil, skunk of the [planet] earth. That's what they thought of the Ladners, and that's what they thought of all of them, and they eliminated these two men, these two men and felt that they'd really succeeded in pulling off the robbery of the year...."
The Commonwealth contends that, because the defendant opened the issue of his religious beliefs as part of his insanity defense, the district attorney was entitled to explore them fully. Commonwealth v. Boyd, 367 Mass. 169, 184-185 *693 (1975). In Boyd, the prosecutor also queried the defendant about the goals of the Muslim religion. The questions in Boyd, however, were designed to challenge the genuineness of the defendant's religious zeal, on which the defendant's expert opinion of insanity largely was based. This court concluded that such questions were properly allowed within the trial judge's discretion on the issue of the credibility of the expert's opinion. Here, the district attorney's particular references to the racial tenets of the Muslim religion had no probative value on the issues of this trial. The only apparent purpose of such questioning was to inject racial hatred into the trial. Considering the potential for racial tension in this trial, the district attorney "owed a particular care in discharging his duty to seek justice and not merely a conviction by trying the case factually and dispassionately without inflammatory tactics." Commonwealth v. Smith, 387 Mass. 900, 905 (1983).
Even assuming arguendo that the questions of the district attorney were acceptable under the holding of Boyd, the references in the closing argument clearly went beyond the boundaries of proper summation. There was nothing in the evidence which would sustain an argument that Mahdi committed the crimes because of either racial hatred or religious fanaticism. References to race or national origin principally to inflame jurors or appeal to their racial or ethnic prejudices or fears constitute prosecutorial misconduct. See Commonwealth v. Graziano, supra at 332. Even where the prosecutor takes his cue from defense counsel, we have held such references to be beyond permissible limits. Id. Appeals to racial, religious, or ethnic prejudices are especially incompatible with the concept of a fair trial because of the likelihood that such references will "sweep jurors beyond a fair and calm consideration of the evidence." Id., quoting Commonwealth v. Perry, 254 Mass. 520, 531 (1926). See Commonwealth v. Shelley, 374 Mass. 466, 470 (1978). Cf. Commonwealth v. Johnson, 372 Mass. 185, 197 (1977).
*694 c. Improper questions and closing comments about the defendant's silence after arrest. During his direct examination of the arresting police officer, the district attorney inquired what Mahdi had said after being advised of his Miranda rights. The witness responded that Mahdi had stated, "I prefer to remain mute." Later, in his summation, the district attorney commented on the defendant's choice to remain silent as a means of inferring sanity: "[W]hen told by [the police officer] why he was under arrest, and when he said, For the murder of Ladner and the shooting of the son [sic], and he said, Do you want to say anything about it? I prefer to remain mute. Pretty intelligent, pretty cute answer for a guy that wasn't aware. Why didn't he then pour his heart out and say, I blacked out, I didn't know what happened. He knew what happened, and so did the other two, and when he was arrested, they then fell right into place."
There is no question that, under the fundamental principles of jurisprudence, evidence of a criminal defendant's postarrest, post-Miranda silence cannot be used for the substantive purpose of permitting an inference of guilt,[13] and that taking the witness stand does not constitute a waiver of that constitutional right. United States v. Hale, 422 U.S. 171, 175, 181 (1975). See Commonwealth v. Mosby, 11 Mass. App. Ct. 1, 5 (1980); Commonwealth v. Bennett, 2 Mass. App. Ct. 575, 579 (1974). In Doyle v. Ohio, 426 U.S. 610 (1976), the United States Supreme Court broadened this principle by concluding that the due process clause forbids the use of such evidence for the purpose of impeaching an exculpatory story.[14]Id. at 619. This court also has held that comments on postarrest statements indicating a defendant's intention to exercise his or her right *695 to remain silent are equally unacceptable. Commonwealth v. Cobb, 374 Mass. 514, 518 (1978).[15]
The Commonwealth contends that evidence of sufficient lucidity to exercise the right to remain silent has particular probative value to show state of mind. Thus put, the question appears to be: May a prosecutor use evidence of a defendant's exercise of his or her Miranda rights, not to infer guilt nor to impeach an exculpatory story, but rather, to infer sanity? We question the probative value of the exercise of one's Miranda rights to indicate sanity. Insanity is not the equivalent of stupidity. Mahdi's preference to remain silent may have been nothing other than an indication of his intelligence, as the district attorney himself pointed out.
Nevertheless, assuming arguendo that there is some probative relationship between sanity and the exercise of one's constitutional rights, we fail to see how use of evidence to infer sanity substantively differs from use to infer guilt or use for impeachment purposes. The ultimate constitutional right at issue is still the right to remain silent. Doyle held that the exercise of one's Miranda rights could not be used for impeachment purposes for two reasons: (1) the inherent ambiguity of silence "because of what the State is required to advise the person arrested"; and (2) the implicit assurance of the Miranda warnings that the defendant's exercise of the announced right will carry no penalty. Doyle v. Ohio, supra, at 617-618. Such ambiguity does not change simply because the warnings are given to a person who exercised such rights and later claims to have been legally insane at the time of the crime. Fundamental unfairness results from the use of evidence of such silence regardless whether the person exercising his or her constitutional right to remain silent claims insanity as a defense. See Sulie v. Duckworth, 689 F.2d 128, 131-132 (7th Cir.1982) (Cudahy, J., dissenting); *696 People v. Schindler, 114 Cal. App.3d 178, 186-187 (1980). Thus, we conclude that the defendant's constitutional right to remain silent was violated by the district attorney's questions and closing comments. Cf. Commonwealth v. Smith, 387 Mass. 900, 908-909 (1983). Nevertheless, our analysis does not end here.
"Both Hale and Doyle suggested, however, that in some instances prosecutorial comment on post-arrest silence, although unconstitutional, might constitute a harmless error under the standard of Chapman v. California, 386 U.S. 18 ... (1967)." Morgan v. Hall, 569 F.2d 1161, 1166 (1st Cir.) cert. denied, 437 U.S. 910 (1978). See Commonwealth v. Cobb, supra at 521; Commonwealth v. Mosby, supra at 9; Commonwealth v. Bennett, supra at 582. The prosecutor's unconstitutional conduct, however, must be harmless beyond a reasonable doubt. See Chapman v. California, 386 U.S. 18, 24 (1967); Commonwealth v. Cobb, supra at 522; Commonwealth v. Bennett, supra. As the reviewing court, we must assess the record as a whole to determine the probable impact of the improper comments and evidence on the jury. Morgan v. Hall, supra. See Commonwealth v. Nordstrom, 364 Mass. 310, 316 (1973). In this assessment, we include the performance of defense counsel and the manner and circumstance in which this trial was conducted.
In determining whether or not an error is harmless by weighing the prejudicial effect of the improper evidence, there are several factors which this court and others have considered: (1) the relationship between the evidence and the premise of the defense;[16] (2) who introduced the issue at *697 trial;[17] (3) the weight or quantum of evidence of guilt;[18] (4) the frequency of the reference;[19] and (5) the availability or effect of curative instructions.[20] See Williams v. Zahradnick, 632 F.2d 353, 361-362 (4th Cir.1980). These factors are not exclusive or exhaustive. Id. Nevertheless, this scoreboard method to distinguish harmless from harmful error is useful.
The evidence of Mahdi's postarrest silence was being used by the district attorney to strike at the jugular of the defendant's insanity defense. The evidence was an issue introduced *698 and pursued by the district attorney.[21] The district attorney made not one, but two, separate references to the defendant's exercise of his Miranda rights. The prosecutorial comments were a matter to which the trial judge gave no curative instructions. All these indicators would point to a harmful error classification. To balance these, however, is the strong evidence of Mahdi's guilt.
The weight of the evidence alone is not sufficient, however, to make the district attorney's comments harmless error. The nature of a Doyle error is so egregious that reversal is the norm, not the exception. See Williams v. Zahradnick, supra at 363; United States v. Edwards, 576 F.2d 1152, 1155 (5th Cir.1978); Chapman v. United States, 547 F.2d 1240, 1250 (5th Cir.1977). The sole issue during the trial was the responsibility of the defendant for his actions. Mahdi admitted that he had robbed and shot the Ladners. The thrust of the improper comments went to the issue of sanity. The appropriate factor to consider, therefore, is the weight of the evidence that related to the issue of sanity. The psychiatric testimony was conflicting. The defense psychiatrist testified that Mahdi did not have the necessary mental capacity to understand his actions. The defendant testified to his lack of recollection. The insanity defense was not forcefully presented to the jury by defense counsel. We cannot say beyond a reasonable doubt that the jury would have reached the same conclusion had the district attorney not made his improper comments. "In so doing we note that the comment upon silence of the accused is a crooked knife and one likely to turn in the prosecutor's hand. The circumstances under which it will not occasion a reversal are few and discrete. We suggest that it be abandoned as a prosecutorial technique." United States v. Edwards, supra.
3. Conclusion. We conclude that the exploitation of the defendant's exercise of his Miranda rights, coupled with the improper questions and argument on the Muslim religion, *699 must be deemed harmful error. Our review of this record leads us to the conclusion that there was a substantial risk of a miscarriage of justice. Accordingly, the judgments are reversed, and the verdicts set aside. As to the companion case, the appeal is dismissed.
So ordered.
NOTES
[1] The defendant's name at the time of trial was Irvin Jones. In keeping with his religious beliefs, he was using the name Irvin 2X Jones at the time of trial, and he has since changed his name to that under which this appeal has been brought.
[2] An additional conviction for unlawfully carrying a firearm on the person was placed on file and is not before us on this appeal.
[3] The lateness of this appeal is partly explained by the following procedural saga. No appeal was filed on Mahdi's behalf after the trial. On April 9, 1971, after learning that no notice of appeal had been filed, Mahdi filed a pro se motion with the trial court to obtain the trial transcript. No action was taken on this motion by the trial judge for many years. On May 11, 1979, Mahdi filed a petition for writ of habeas corpus in the Superior Court in Hampden County. Counsel was appointed to represent the defendant, and the motion for the trial transcript was allowed in 1979. The district attorney later reported to the judge in that case that all copies of the trial transcript had been lost. When no action was taken on the petition for habeas corpus after oral argument, Mahdi filed a like petition in the Supreme Judicial Court for Suffolk County in 1980. A single justice transferred the petition to the Superior Court for appointment of counsel. Present counsel was then appointed. In October, 1980, the trial judge entered a judgment denying and dismissing the first habeas corpus petition. Mahdi appealed that judgment and successfully applied for direct appellate review by this court. While that appeal was pending, a single justice of this court, in connection with Mahdi's habeas corpus petition in the county court, referred the case in 1981 to the trial judge for a determination as to whether Mahdi had waived his right to appeal, or whether his trial counsel failed to apprise him of these rights or to assert them on Mahdi's behalf. In late 1981 the trial judge filed a preliminary report with the single justice indicating that both the Attorney General (representing the Commonwealth in the habeas corpus petition) and the district attorney had agreed to the reinstatement of Mahdi's right to appeal his 1968 convictions. In December, 1981, the single justice entered a judgment granting Mahdi leave to file a late notice of appeal from his 1968 convictions and ordered this appeal consolidated with the appeal from the dismissal of Mahdi's first habeas corpus petition. On January 18, 1982, Mahdi filed a notice of appeal of his three 1968 convictions. In February, 1982, the district attorney notified Mahdi's counsel that most of the trial transcript, previously believed lost, had been located. Because his right to appeal his three 1968 convictions has been reinstated, Mahdi no longer argues the issues raised in the consolidated appeal, and the issues in that appeal are deemed waived. The maneuvering for advantage between the parties in this process reflects similar attitudes at trial between the district attorney and trial defense counsel.
[4] On several occasions, the district attorney made disparaging remarks about trial counsel. On other occasions, he sarcastically questioned the defense expert witness and the defendant. This is not appropriate courtroom decorum. See Commonwealth v. Johnson, 372 Mass. 185, 197-198 (1977).
[5] Additional facts pertinent to specific issues are set forth elsewhere in this opinion.
[6] Hastings and Hurston were codefendants at this trial. They were indicted for murder in the first degree, armed robbery (two counts), assault with intent to murder by means of a dangerous weapon, four charges of being an accessory before the fact to each of the above offenses, four charges of being an accessory after the fact to each of the above offenses, and conspiracy. They were convicted of two counts of armed robbery, as accessory after the fact to murder, and as accessory after the fact to assault and battery with intent to murder by means of a dangerous weapon. No appeal relating to their convictions was taken. They did appeal, however, their sentences.
[7] Mahdi testified that he "accidentally" met someone who sold him the gun. He admitted, however, that he bought it with the intention to use it to rob someone. Before the shooting, during this particular weekend, Mahdi had gone to a Connecticut store intending to commit a robbery but had abandoned the attempt out of fear.
[8] The codefendants maintained that they had done nothing to stop the robbery and shooting because of their surprise and fear. On cross-examination, Hurston admitted that he had not made any effort to leave Mahdi's company following the shooting.
[9] Mahdi had been excommunicated once before for five months for failing to provide for his wife and family. He had six children by his second wife, ranging from three to ten years of age. Mahdi was a skilled machinist who was painting houses for a living. He claimed to be suffering from nervousness and ulcers resulting from financial pressures.
[10] Motions for a change of venue and severance were denied by the trial judge. Because of wide pretrial publicity, an extensive jury pool was needed to create an impartial jury. Nevertheless, the trial judge took the time to ensure that the jurors were indifferent.
[11] On cross-examination, the district attorney brought out the facts that the defense psychiatrist was not a diplomate or on the staff of any of the neighboring hospitals. Unlike the experts presented by the Commonwealth, the defense expert was not a neurologist.
[12] The actual exchange is as follows:
THE PROSECUTOR: "The principles and teachings of Islam, you believe in those, do you not?"
THE DEFENDANT: "Yes, sir, the religion of Islam and its principles and standards I believe in."
THE PROSECUTOR: "Right, and, as a matter of fact, at some time you became a member of this organization, there were certain principles that you were bound by and that were told to you and you adopted these as part of this religion, right?"
THE DEFENDANT: "Yes, sir."
THE PROSECUTOR: Certain teachings?"
THE DEFENDANT: "Yes, sir."
THE PROSECUTOR: "Teachings?"
THE DEFENDANT: "Yes, sir."
THE PROSECUTOR: "And there is what's called a Student's Enrollment, is there not?"
THE DEFENDANT: "That is correct."
THE PROSECUTOR: "And those are the rules of Islam, right?"
THE DEFENDANT: "To some degree, yes."
THE PROSECUTOR: "And some of the things are the ties of the world and all this sort of thing, right?"
THE DEFENDANT: "You have to explain that, sir; what do you mean?"
THE PROSECUTOR: "In square miles. In Student Enrollment, aren't there a series of questions and answers?"
THE DEFENDANT: "That is correct."
THE PROSECUTOR: "And, for example, a question such as, Who was original man?"
THE DEFENDANT: "Yes, sir."
THE PROSECUTOR: "And that part of the Student Enrollment, a series of questions and answers?"
THE DEFENDANT: "Yes, sir."
THE PROSECUTOR: "Among them, What is original man?"
THE DEFENDANT: "Yes, sir."
THE PROSECUTOR: "And you know what that is, and you still abide by that, do you not?"
THE DEFENDANT: "I don't understand what you mean."
THE PROSECUTOR: "Well, you tell us, who is original man? Give me the answer that your religion holds."
THE DEFENDANT: "You want the answer of who the original man is?"
THE PROSECUTOR: "Yes."
THE DEFENDANT: "The original man is the Asiatic black man."
THE PROSECUTOR: "Owner and maker, cream of the [planet] earth, father of civilization, God of the Universe. Is that the answer?"
THE DEFENDANT: "That is the answer."
THE PROSECUTOR: "And this is something you believe in, right?"
THE DEFENDANT: "Yes, sir."
THE PROSECUTOR: "And it says, in another one of the questions in Student's Enrollment, is Who is the colored man? Is that a question?"
THE DEFENDANT: "Yes, sir, that is a question."
THE PROSECUTOR: "And this is the answer, is it not (indicating)? That's the answer that's contained in your questions, right?"
THE DEFENDANT: "That's part of it."
THE PROSECUTOR: "Well, the part that's here is correct, right, and that is the Caucasian "
THE DEFENDANT: "Go ahead."
THE PROSECUTOR: "Jacob's made definitely skunk of the [planet] earth?"
THE DEFENDANT: "That is part of the answer, yes."
THE PROSECUTOR: "And that's one of the tenets that you believe in?"
THE DEFENDANT: "Yes, sir."
THE PROSECUTOR: "I don't think I have any other questions."
It appears that the purpose of the section of the Student Enrollment Book from which the district attorney quoted is to teach the history of the planet Earth, and that the section gives no instructions with reference to behavior in society.
[13] Compare Jenkins v. Anderson, 447 U.S. 231, 238 (1980) (Fifth Amendment is not violated, however, by use of prearrest silence).
[14] Compare Raffel v. United States, 271 U.S. 494, 499 (1926) (Fifth Amendment not violated when the defendant was impeached by silence at first trial while testifying at second trial).
[15] The right of a defendant in custody to remain silent is a long-established part of our common law. See Commonwealth v. Kenney, 12 Met. 235, 237-238 (1847). Nor may reliance on a constitutional right be used to create inferences adverse to a defendant. Commonwealth v. Burke, 339 Mass. 521, 532-533 (1959).
[16] See Commonwealth v. Mosby, 11 Mass. App. Ct. 1, 9 (1980) (not a case where subject of improper argument "only remotely or collaterally related to ultimate issue of guilt"); Commonwealth v. Bennett, 2 Mass. App. Ct. 575, 582 (1974) (improper testimony used to impeach crucial testimony); Morgan v. Hall, 569 F.2d 1161, 1167 (1st Cir.1978) (improper testimony was calculated to damage defense); People v. Schindler, 114 Cal. App.3d 178, 190 (1980) (improper to use exercise of right to remain silent to show state of mind when only issue was defendant's mental capacity).
[17] See Bradford v. Stone, 594 F.2d 1294, 1296 (9th Cir.1979) (defense counsel, by dwelling on justifications for silence, opened door for prosecutor to suggest contrary inferences); United States v. Lopez, 575 F.2d 681, 685 (9th Cir.1978) (defense counsel first placed issue before jury). But see Morgan v. Hall, supra at 1168 (defense counsel only exposed fact of silence, but prosecutor improperly used evidence to undermine defendant's story).
[18] See Commonwealth v. Cobb, 374 Mass. 514, 522 (1978) (impact of erroneously admitted statements is not trivial when sum of evidence is not overwhelming); Bradford v. Stone, supra at 1296-1297 (harmless error when evidence against defendant overwhelming and alibi inconclusive and uncorroborated); United States v. Edwards, 576 F.2d 1152, 1155 (5th Cir.1978) (harmful error when evidence is thin); United States v. Lopez, supra at 685; Morgan v. Hall, supra at 1167-1168 (harmless error when overwhelming evidence of guilt); Chapman v. United States, 547 F.2d 1240, 1249 (5th Cir.), cert. denied, 431 U.S. 908 (1977) (evidence of guilt so strong and story so implausible, error held harmless beyond reasonable doubt).
[19] See Williams v. Zahradnick, 632 F.2d 353, 365 (4th Cir.1980) (harmful error when prosecutor made not one but four references to defendant's silence); Chapman v. United States, supra at 1249-1250 (harmless error when single reference to silence was neither repeated nor linked to exculpatory story).
[20] See Commonwealth v. Cobb, supra at 521 (prejudicial remarks reached jury with full force and without potentially countervailing influence of cautionary instructions by judge); Commonwealth v. Mosby, supra at 9-10 (judge's instructions insufficient to cure prosecutor's error); Commonwealth v. Bennett, supra at 582 (error to permit prosecutor's attack in view of emphasis placed on defendant's silence in judge's charge); Morgan v. Hall, supra at 1168 ("[i]n no case has a prompt and forceful instruction alone been held sufficient to vitiate the use of post-arrest silence").
[21] The defense counsel attempted to defuse the prosecutor's question by eliciting more information about the defendant's silence. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1710121/ | 309 S.W.2d 853 (1958)
B. A. DUFFY et al., Appellants,
v.
Gib CALLAWAY, Appellee.
No. 3348.
Court of Civil Appeals of Texas, Eastland.
January 24, 1958.
Rehearing Denied February 14, 1958.
McMahon, Smart, Sprain & Wilson, King & Willoughby, Abilene, for appellants.
Gib Callaway, Brownwood, Scarborough, Black & Tarpley, Abilene, for appellee.
GRISSOM, Chief Justice.
In 1942 Callaway purchased 9,624 acres of land in Stonewall County. B. A. Duffy, A. S. Goodloe and E. W. Moutray then jointly owned 721 acres of minerals *854 scattered throughout that ranch. Amon G. Carter owned 984 mineral acres therein. In March, 1945, Callaway and Duffy, Goodloe and Moutray executed one oil and gas lease, for a primary term of ten years, on all of their separately owned interests in said ranch to F. L. Hawk. Carter executed a separate lease. In 1945 Hawk assigned approximately half of the lease to Honolulu Oil Corporation and the other half to George Livermore. On March 2, 1947, Livermore released all that was assigned to him. The Hawk lease did not contain a provision granting the lessee the right to surrender part of the leased premises and retain part. Approximately half of the entire tract covered by the community lease to Hawk was released to said lessors by Livermore. Callaway and Duffy, Goodloe and Moutray each accepted the release of his minerals and thereafter independently executed leases thereon to new lessees without the joinder of the other. Thereafter, neither claimed any of the bonuses or rentals paid on said new leases of the released minerals. At the time of the execution of said release there had been no development under the Hawk lease and there was no production on any of the land originally covered by said community lease until about eight years thereafter.
The Hawk lease contained no pooling agreement. It did not contain an entirety clause. See Eighth Annual Institute on Oil and Gas Law and Taxation, pages 153, 156 and Superior Oil Co. v. Dabney, 147 Tex. 51, 211 S.W.2d 563. It did not grant the lessee the right to release part of the leased minerals. It appears to have been written upon an ordinary printed lease form and no clauses were added except a provision that drilling should not stop payment of rentals on any land except the section upon which a well was being drilled. Callaway contends that this is a provision against pooling. We do not think so.
The first production was obtained on June 10, 1955, more than ten years after execution of the Hawk lease and eight years after the release by Livermore. There are now eight producing wells on land originally covered by the Hawk lease. Six of them are on land released by Livermore. Said six wells were drilled under new leases executed after said release by only the owner of that particular tract.
Callaway instituted this suit against Duffy, Goodloe and Moutray, or their successors, seeking a judgment declaring that their royalty interests were not pooled by the Hawk lease. Duffy, Goodloe and Moutray answered by seeking a judgment declaring they were pooled and that defendants are entitled to participate in production on all land originally covered by the Hawk lease, regardless of the release by Livermore, the acceptance by each of his own released minerals, the separate execution of new leases and collection and retention by each during all said time of bonuses and rentals paid thereon. The court held that the royalties were not pooled by the Hawk lease and that each was entitled to all the royalties paid on oil produced from his own land. Duffy, Goodloe and Moutray, or their successors in interest, have appealed.
Since the decision in French v. George, Tex.Civ.App., 159 S.W.2d 566 (Writ Ref.), our Supreme Court has consistently held under the facts not materially different from those in this case that the execution of a single lease by several owners of adjoining tracts, without expression of a contrary intention, has the effect of pooling the land covered by the lease, as a matter of law. See Ward v. Gohlke, Tex.Civ.App., 279 S.W.2d 422, 427 (Writ Ref.). The statement by Judge Calvert in Southland Royalty Co. v. Humble Oil & Refining Co., 151 Tex. 324, 249 S.W.2d 914, 916, seems to be conclusive of the proposition:
"It may be noted here that respondents suggest a re-examination of the Parker and George cases on the theory that the courts should not attribute to lessors jointly executing a general form lease, without more, and intent *855 to pool or unitize their properties; that the language of the general form lease was never intended to effect or to operate a pooling agreement. This argument is not entirely unappealing. The Texas rule in this respect is not of universal application. See 116 A.L.R. 1267 et seq. On the other hand, the law of the Parker and George cases has now become a rule of property in this state and `should not be changed in the absence of other controlling circumstances, even though good reason might be given for a different holding.' Tanton v. State National Bank of El Paso, 125 Tex. 16, 79 S.W.2d 833, 834 [97 A.L.R. 1093]. No doubt many such leases have been executed and delivered by lessors and accepted by lessees in reliance on the holding in the Parker and George cases that they effectively unitize the land included therein. It must therefore be held that when the parties executed the lease in 1932 they intended to create a unitized lease with all of the usual incidents and legal consequences thereof."
Hon. Leo Hoffman in the Seventh Annual Institute on Oil and Gas Law and Taxation, at pages 221, 222, said:
"It has been established in Texas as a matter of law and as a rule of property that when several individual owners of separate tracts unite in a single lease to a third party for oil and gas under the usual lease form, with no contrary provision, their royalty interests under the lease are pooled, and the royalties on production anywhere on the lease must be divided or shared among the lessors in the proportion that the acreage contributed by each bears to the total acreage. The Texas Supreme Court in Southland Royalty Co. v. Humble Oil & Refining Co., has also expressed the ultimate view of the matter by ruling that the pooling of royalty interests brought about by the community leases is not limited to the sharing of royalty income but constitutes a pooling for all purposes during the life of the community lease, so that actual production from one tract covered by the lease is established as constructive production from each tract and will thereby perpetuate a term mineral interest which exists in the tract having no actual production. All of that is an implied effect of the making of the community lease in Texas."
In Garza v. De Montalvo, 147 Tex. 525, 217 S.W.2d 988, 991, our Supreme Court held that when several owners of separate tracts executed one oil and gas lease treating the separate tracts in the lease as one, in the absence of an agreement to the contrary, they were thereby pooled for the life of said lease and the owners of the separate tracts were entitled to share in the royalties therefrom in proportion to their respective ownership of the leased land. We, therefore, hold that the royalty interests of Callaway and Duffy, Goodloe and Moutray were pooled and that they are entitled to share in the royalty from land still retained under said lease in proportion to their ownership of minerals in the retained premises. But our Supreme Court also held that when said lessors subsequently partitioned the leased land and separate ownership was recognized by the lessee the royalty interests were segregated so that each was thereafter entitled only to the royalty produced from his own land. The court said:
"The question remains whether the rights of the lessors were changed by the partition agreement, so as to limit the Garza plaintiffs to the minerals under the tracts set aside to them respectively. We have concluded that this was the effect of the partition agreement."
In Coates v. De Garcia, Tex.Civ.App., 286 S.W.2d 691, the owners of separate tracts pooled their royalty interests by execution of a community lease which, as *856 here, contained neither a pooling agreement nor an entirety clause, but subsequently the land was partitioned by judicial decree. The court held that this effected a segregation of the royalty interests of the lessors so that each was thereafter entitled to receive the royalties paid only on the oil produced from the tract allotted to him. See also Struss v. Stoddard, Tex.Civ.App., 258 S.W.2d 413, 419 (RNRE); Eighth Annual Institute on Oil and Gas Law and Taxation, page 143.
In Landgrebe v. Rock Hill Oil Co., Tex. Civ.App., 273 S.W.2d 636 (RNRE), there was a pooling of three tracts by the joint execution by separate land owners of one lease. Thereafter, there was a partition of only two of the three pooled tracts. Plaintiffs sought a judgment declaring that all of the three tracts covered by the lease were thereby relieved of the effect of pooling. The only production was from the tract which had not been partitioned. The court simply refused to sustain plaintiffs' contention that partition of two of the three tracts included in a pooled lease had the effect to "depool" all three tracts.
Although there was no provision in the lease in the instant case granting lessee the privilege to surrender a part of the leased premises and retain the remainder, an assignee of the lessee surrendered about half of the leased minerals, owned separately by Callaway and Duffy, Goodloe and Moutray, and each accepted same and leased his interest in the released minerals without joinder of the other and each collected and retained the bonuses and rentals paid on his minerals without regard to the pooling created by execution of the Hawk lease. This situation continued without dispute for about eight years. The effect of pooling would have remained throughout the life of the lease as to all the land unless changed by agreement. The life of the lease and the presumed pooling agreement could have been terminated by the unilateral act of the lessee in merely failing to drill or pay rent. The effects of such a pooling continued only so long as the lease remained in force. The right of the parties thereto to change such presumed pooling agreement was recognized in Southland Royalty Co. v. Humble Oil & Refining Co., supra. The lease did not contain the customary provision permitting the lessee to surrender part of the leased premises and retain the remainder. Nevertheless, the parties accepted a partial surrender and thereafter for many years each treated his own released minerals and the others as though they had never been included in the joint lease. Their action certainly evidenced an intention to terminate the presumed pooling agreement as to the released minerals and to partition the same. See Hoffman, Voluntary Pooling and Unitization, pages 67, 73; Fifth Annual Institute on Oil & Gas Law and Taxation, page 213; Edwards v. Edwards, Tex.Civ.App., 52 S.W.2d 657, 661 (Writ Ref.); Mitchell v. Allen, 69 Tex. 70, 6 S.W. 745; Abbott v. Gulf Prod. Co., Tex.Civ.App., 100 S.W.2d 722, 732 (Writ Dis.); O'Quinn v. Looney, 194 Va. 548, 74 S.E.2d 157, 159; Tanner v. Olds, Cal.App., 166 P.2d 366, affirmed 29 Cal. 2d 110, 173 P.2d 6, 167 A.L.R. 1219. The trial court could have concluded that they thereby terminated the pooling agreement so far as the released minerals are concerned and partitioned the released minerals and removed them from the effect of the presumed pooling agreement. J. M. Guffey Pet. Co. v. Jeff Chaison Townsite Co., 48 Tex. Civ. App. 555, 107 S.W. 609, 613; Simpson-Fell Oil Co. v. Stanolind Oil & Gas Co., 136 Tex. 158, 125 S.W.2d 263, 269, 146 S.W.2d 723; 17 Tex.Law Rev. 506; Laws v. Sturgill, 287 Ky. 37, 151 S.W.2d 423, 425. The judgment is reversed and the cause is remanded.
WALTER, J., disqualified and not sitting. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1742320/ | 907 S.W.2d 639 (1995)
Larry L. ROSE, Appellant,
v.
FIRST AMERICAN TITLE INSURANCE COMPANY OF TEXAS and Brian Scott Carr, Appellees.
No. 13-94-140-CV.
Court of Appeals of Texas, Corpus Christi.
August 24, 1995.
*640 Richard D. Schell, R. Bruce Phillips, Fleuriet & Schell, Harlingen, for appellant.
William M. Mills, Stephen C. Haynes, Lisa D. Powell, Atlas & Hall, McAllen, for appellees.
Before DORSEY, YANEZ and RODRIGUEZ, JJ.
OPINION
YANEZ, Justice.
Appellant, Larry Rose, appeals summary judgment entered in favor of appellees, First American Title Insurance Company of Texas ("First American") and Brian Scott Carr on his claims for libel, intentional infliction of emotional distress, and abuse of process. By seven points of error, appellant challenges the propriety of the summary judgment order. We affirm.
In the summer of 1989 appellant's sister-in-law sold her home. First American issued title policy insurance to the buyers in that transaction. After the sale, appellant's sister-in-law delivered $40,000.00 of the sales proceeds to appellant for him to invest. Appellant is a certified public accountant, but at no time did he perform any professional services for his sister-in-law.
It was later discovered that a Federal Tax Lien had been placed on the home for $35,713.78 in unpaid taxes. At the time of the home's sale, however, both parties claim that they did not know of the tax lien. First American paid the Internal Revenue Service the balance of the lien to remove the encumbrance for the buyer. First American then sued appellant and his sister-in-law for recovery of the lien amount paid to the I.R.S. First American named appellant in that suit because they believed that appellant's sister-in-law paid appellant the $40,000.00 in an effort to fraudulently defeat First American's and the I.R.S.'s rights to recover the unpaid taxes. In the course of that litigation, Brian Scott Carr, First American's attorney, sent a letter to appellant on October 12, 1990, seeking a settlement. In that letter, Carr outlined what he believed appellant could be held liable for, and he also indicated that he could report appellant to the Texas State *641 Board of Public Accountancy ("BPA"). Carr described that a grievance proceeding could be costly for appellant to defend and that appellant could be deprived of his "livelihood." Carr informed appellant that if he settled, First American would agree "not to pursue a Grievance Committee procedure."
Apparently, no settlement was reached; on November 11, 1991, Carr, on behalf of First American, sent a letter to the BPA. In the correspondence, Carr informed the board of appellant's alleged conduct. Carr stated that he believed appellant acted to defraud the I.R.S., acted to defraud First American, violated the organization's rules and practiced "chicanery." The BPA dismissed the claims against appellant. Appellant bases his claims of libel, intentional infliction of emotional distress and abuse of process on the November 11, 1991, letter to the BPA. Appellant contends that the letter and the initiation of the grievance process constitutes a libelous communication, intentional infliction of emotional distress, and abuse of process.
In order to sustain a summary judgment, we must determine that the pleadings and summary judgment evidence establish that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. McFadden v. American United Life Ins. Co., 658 S.W.2d 147, 148 (Tex.1983). We accept all evidence favorable to the nonmovant as true and all reasonable inferences must be indulged in favor of the nonmovant and any doubts resolved in its favor. Nixon v. Mr. Property Mgt. Co., 690 S.W.2d 546, 549 (Tex.1985). A defendant who moves for summary judgment has the burden of showing as a matter of law that no material issue of fact exists for the plaintiff's cause of action. Arnold v. National County Mut. Fire Ins. Co., 725 S.W.2d 165, 166-67 (Tex.1987). This may be accomplished by defendant's summary judgment evidence showing that at least one element of plaintiff's cause of action has been conclusively established against the plaintiff. Sakowitz, Inc. v. Steck, 669 S.W.2d 105, 106-07 (Tex.1984); Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970). Additionally, defendants are entitled to a summary judgment if they conclusively establish as a matter of law all elements of an affirmative defense. Casso v. Brand, 776 S.W.2d 551, 556 (Tex.1989); Swilley v. Hughes, 488 S.W.2d 64, 67 (Tex.1972).
When the trial court's order, as in this case, does not specify the ground or grounds relied on for the ruling, summary judgment will be affirmed if any of the theories advanced in the motion are meritorious. Rogers v. Ricane Enters., Inc., 772 S.W.2d 76, 79 (Tex.1989). Here, First American moved for summary judgment on the libel and intentional infliction of emotional distress claims based upon the affirmative defenses of absolute privilege and limitations. On the claim of abuse of process, First American argues that it is entitled to summary judgment because it conclusively established at least one element against plaintiff's cause of action.
By point of error one, appellant argues that First American failed to conclusively establish the affirmative defense of absolute privilege which bars his claim of libel. Appellant bases his claim on the letter First American sent to the BPA.
Communications in the due course of a judicial proceeding will not serve as the basis of a civil action for libel or slander, regardless of the negligence or malice with which they are made. James v. Brown, 637 S.W.2d 914, 916 (Tex.1982); Reagan v. Guardian Life Ins. Co., 140 Tex. 105, 166 S.W.2d 909 (1941). This privilege extends to any statement made by the judges, jurors, counsel, parties or witnesses, and attaches to all aspects of the proceedings, including statements made in open court, pre-trial hearings, depositions, affidavits and any of the pleadings or other papers in the case. James, 637 S.W.2d at 916-17. The rule that communications uttered or published in the course of a judicial proceeding are absolutely privileged, applies to proceedings before executive officers, and boards and commissions which exercise quasi-judicial powers. Reagan, 166 S.W.2d 909.
Appellant first argues that the filing of a complaint with the BPA does not amount to a quasi-judicial proceeding under the rule of privilege. Appellant does not disagree *642 that the BPA has quasi-judicial powers or that it is a quasi-judicial board. Appellant argues instead that only the Board may initiate a proceeding; the filing of a complaint does not automatically institute a proceeding. See TEX.REV.CIV.STAT.ANN. art. 41a-1, § 22(a) & (b) (Vernon Supp.1995). Thus, a complaint filed with the BPA does not constitute a communication published during a proceeding of a quasi-judicial board. The quasi-judicial proceeding has not yet begun at the time the complaint is filed. We recognize, nonetheless, that the BPA may initiate a proceeding on the complaint of any person. TEX.REV.CIV.STAT.ANN. art. 41a-1, § 22(b) (Vernon Supp.1995). Thus, a complaint may merely be the first step to a proceeding.
The question appellant raises has been addressed. In Reagan, the court held that complaints from the general public to licensing boards, as is the case here, fall under the protection of absolute privilege. Reagan, 166 S.W.2d at 913 (complaint to Insurance Board protected by privilege). Furthermore, James held that absolute privilege "attaches to all aspects of the proceedings, including... any of the pleadings or other papers in the case." James, 637 S.W.2d at 916. The letter First American sent to the BPA falls within other papers filed with a board of quasi-judicial power. The letter also falls within those communications contemplated by the doctrine of absolute privilege.
Appellant next argues that while privilege may generally apply, First American stepped out from under its protection. Appellant contends that by reading the October 12, 1990, letter seeking a settlement and the letter to the BPA together, it is evident that First American sought to abuse its absolute privilege. Appellant contends that First American sought to coerce and extort a settlement with the threat of filing a complaint with the BPA. Appellant asserts that when a party abuses its privilege, the court should not continue to shield that party from liability. Appellant, therefore, claims that several fact issues exist as to First American's motivation and interest in sending the complaint letter to the BPA. Appellant cites Levingston Shipbuilding Co. v. Inland West Corp. as supporting this position. Levingston Shipbuilding Co. v. Inland West Corp., 688 S.W.2d 192, 196 (Tex.App.Beaumont 1985, writ ref'd n.r.e.) (citing De Mankowski v. Ship Channel Dev. Co., 300 S.W. 118 (Tex. Civ.App.Galveston 1927, no writ)).
In Levingston the court found that when Levingston filed its lawsuit, its petition was privileged. Levingston, however, trampled beyond the privilege's protection. Id. Immediately after filing, a Levingston employee gave the petition to the news media which resulted in extensive publication and harm to the other party's reputation for confidentiality. Id. The Levingston court found that although the initial pleading was privileged, the subsequent acts and re-publication of the pleading were not. The Levingston employee acted outside what the privilege was intended to protect. In De Mankowski, the court likewise held that a petition filed with the court was privileged. Yet, when that party re-expressed the accusations made in the petition outside the judicial proceeding, the party was no longer protected by judicial privilege. De Mankowski, 300 S.W. at 122. The De Mankowski court held that
[t]he privilege accorded a litigant which exempts him from liability for damages caused by false charges made in his pleadings, or in the court in the course of a judicial proceeding, cannot be enlarged into a license to go out in the community and make false and slanderous charges against his court adversary and escape liability for damages caused by such charges on the ground that he had made similar charges in his court pleadings.
Id. (emphasis added).
We find the Levingston and De Mankowski holdings distinguishable from the facts of this case. Appellant does not allege that First American made any publication of the grievance letter other than to the BPA. Appellant simply argues that when First American sent its letter, it intended to abuse judicial privilege and was singularly motivated by retribution and extortion. Yet, under the rule of judicial privilege, the letter was protected when filed. No other action by First American or Carr is alleged to have created a circumstance where First American exceeded the privilege. First American used a *643 lawful method to communicate its grievance. Appellant does not claim that First American or Carr acted outside official judicial proceedings to defame him. Appellant does not argue, as in the Levingston and De Mankowski cases, that First American re-published the alleged defamatory accusations to any person or entity outside the judicial proceeding. Furthermore, the letter, as a petition to the BPA, was protected regardless of the negligence or malice with which it was made. James, 637 S.W.2d at 916; Reagan, 166 S.W.2d at 913 (when defendant filed his letter with quasi-judicial board, "he committed an act for which the law provides no redress in damages" even if the letter is false or forged).
First American, through Carr's letter, utilized a proper and legal method for dealing with its grievance. We find that the grievance letter was subject to the doctrine of absolute privilege. To hold that a properly directed grievance is not shielded by absolute privilege would be to nullify the principle of judicial privilege and its powerful practical underpinnings. If appellant believes that First American filed the letter simply to coerce and intimidate him, he may have recourse under a theory of malicious prosecution. See James, 637 S.W.2d at 918. There being no genuine issues of fact, summary judgment was proper on the affirmative defense of absolute privilege. Point of error one is overruled.
By his fourth and fifth points of error, appellant argues that summary judgment was improper for his claim of intentional infliction of emotional distress. We have already determined that the rule of absolute privilege applies to the letter Carr sent on behalf of First American to the BPA. Appellant argues, nonetheless, that the doctrine of privilege applies only to causes of action for defamation and not to intentional infliction of emotional distress claims. We disagree.
Absolute privilege also applies when the theory of recovery is intentional infliction of emotional distress. K.B. v. N.B., 811 S.W.2d 634, 640 (Tex.App.San Antonio 1991, writ denied); see also Motsenbocker v. Potts, 863 S.W.2d 126, 132 (Tex.App.Dallas 1993, no writ) (citing RESTATEMENT (SECOND) OF TORTS § 46 cmt. g) (outrageous conduct is privileged where actor "has done nothing more than to insist upon his legal rights in a permissible way"). If that were not the law, "a litigate could plead around the defamation privilege of James v. Brown by labeling his defamation case as one for intentional infliction of emotional distress." Id. "A different set of rules governs suits alleging malicious institution of civil proceedings." Id. (emphasis in original) (citing James, 637 S.W.2d at 918-19). Privilege also applies to appellant's claim for intentional infliction of emotional distress. Summary judgment was properly granted on this claim. Points four and five are overruled.
By point of error seven, appellant contends that First American failed to conclusively establish at least one element against him in his abuse of process claim. Appellant argues that First American abused the process when it filed the complaint letter with the BPA. Appellant argues that First American sent the letter merely to satiate its ulterior motives of coercion, extortion and intimidation.
The elements of an action for abuse of process are (1) that the defendant made an illegal or improper use of the process, (2) that the defendant had an ulterior motive or purpose in exercising such illegal or improper use of process, and (3) that damage resulted to the plaintiff from the irregularity. Snyder v. Byrne, 770 S.W.2d 65, 67 (Tex. App.Corpus Christi 1989, no writ); Martin v. Trevino, 578 S.W.2d 763, 769 (Tex.Civ. App.Corpus Christi 1978, writ ref'd n.r.e.). "The mere procurement or issuance with a malicious intent or without probable cause is not actionable. This is so because there must be an improper use of process after its issuance." Snyder, 770 S.W.2d at 67 (quoting Martin, 578 S.W.2d at 769 (institution or filing of civil action is not abuse of process)); see Tandy Corp. v. McGregor, 527 S.W.2d 246, 249 (Tex.Civ.App.Texarkana 1975, writ ref'd n.r.e) (mere issuance of process is not actionable as an abuse of process). In this case, appellant claims that the grievance letter sent to the BPA was an abuse of process because First American filed it with *644 malice and in an attempt to coerce a settlement.
First American argues that it did not make an illegal or improper use of the process simply by filing a complaint. We agree. First American merely filed an original complaint with the BPA which sought procurement and issuance for a grievance proceeding. Appellant points to no other circumstance beyond the filing of the letter where First American abused process. Summary judgment was proper on the abuse of process claim. Point seven is overruled.
Having reached a determination fully disposing of the case, we need not address appellant's remaining points of error. TEX. R.APP.P. 90(a). The trial court judgment is AFFIRMED. | 01-03-2023 | 10-30-2013 |
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